It is best practice for companies to have standard end user licenses (“EULAs”) for commercial software licensed to the federal government due to the protections they provide. CiyaSoft Corporation, ASBCA Nos. 59519, 59913, June 27, 2018, an opinion by the Armed Services Board of Contract Appeals (“ASBCA” or “Board”), illustrates why EULAs are beneficial to companies.

CiyaSoft Corporation licensed 20 copies of its commercially available software to the government. The licenses were never reviewed nor negotiated by the contracting officer. The contract did not include FAR 52.227-19 Commercial Computer Software License, nor did the contract specifically address the government’s rights to use the software. The software was delivered to a technical point of contact at the government on 20 CDs. The CDs were accompanied by a long form license, had a short form of the license inside the shrinkwrap, and during the installation process there was a popup screen that referred to the license. The contracting officer never saw the software packages nor the licenses. CiyaSoft brought suit claiming a violation of the software license.

The government argued that the software license was not a valid part of the contract since it was never negotiated, referenced by the contract, or even seen by the contracting officer. The Board was unpersuaded by the argument:

“In any event, it does not matter that the licensing agreement was neither negotiated, nor the terms known by the contracting officer. It is the policy of the government, when licensing commercial software to accept the licensing terms customarily provided by the vendor to other purchasers, as long as the license is consistent with federal law and otherwise satisfies the government’s needs. … In this regard the FAR is in accord with the current commercial law of many jurisdictions, which generally recognize and enforce terms of licensing agreements, which are neither negotiated nor known to the user until the software has been paid for and delivered.”

Thus, contractors who sell software with EULAs, modified to be in compliance with the GSA FAR Deviation, should have those terms enforced against the government, including the number of machines a particular software package may be uploaded on or the number of users if the software is subscription based. Having standard EULAs is critical to protect a company’s investment in its intellectual property.

For more information, contact MWL Counsel Jody Reed.