“If an agency buys software through a reseller on a GSA Schedule contract, does the software vendor have a claim if the agency cancels the license? After all, it wasn’t the prime contractor. That’s the gist of a case just tossed by the Civilian Board of Contract Appeals. Smith Pachter McWhorter procurement attorney Joseph Petrillo brought the lessons learned so far in this case, to the Federal Drive with Tom Temin…”
“Joseph Petrillo: Sure. This is a case involving Avue Technologies software. As you know, all software is going to have a license associated with it when it’s sold, but some software sold through a dealer or distributor or reseller of some kind. And if that’s the case, in the government space, does the software manufacturer have direct rights under that license with the federal government and can it enforce those rights? In this case, Avue Technologies sold their software through a distributor Carahsoft under that distributor’s Federal Supply Schedule contract. That’s a big multi-award ordering vehicle administered by the General Services Administration. The GSA Schedule contract included the Avuew software license, and that license listed what the licensee could do with the software and had specific obligations in it that flowed directly to Avue Technologies. In this case, the software was sold on a subscription basis. And the order provided for a base year of subscription, and with four one-year options. The government in this case, it was the Food and Drug Administration, decided not to exercise any of the options. And the order came to an end after the base year. For some reason that’s not stated the opinion. Avue Technologies felt that FDA had misused the software or continue to use it in some way that was inconsistent with the license. So they brought a claim for infringement of the license. That claim was brought directly to FDA and GSA as well…”
“Tom Temin: We don’t know whether they continue to use it after they ostensibly, that is the FDA ended the license agreement, or perhaps they used it for some period of time to wind down use of it and transfer the data over. It’s hard to tell then, in other words?
Joseph Petrillo: Right, this particular ruling doesn’t go into the details of why you felt that there was an infringement. It just says that Avue submitted a claim on that basis. As I mentioned, the claim went to both FDA and GSA. It gets complicated in GSA Schedule contracts. Some disputes are within the ambit of the ordering agency. Other disputes have to go directly to GSA as the agency that administers the contract vehicle. And it isn’t always clear which, so in this instance, claims were denied. And Avue appealed directly to the Civilian Board of Contract Appeals. And initially, the government moved to dismiss saying that Avue was only a subcontractor, and the board said no, he was claiming rights under this license directly owed to it by the government. So it’s not just a subcontractor in that sense. After that happened, government then tried again to get the contract dismissed. And in this case, it said you don’t have jurisdiction to the board. Because this is not a procurement contract. The life software license is not a procurement contract…” Read the full interview here.
Source: Agency cancels third-party software license but original vendor still claims infringement – By Tom Temin, February 16, 2022. Federal News Network.
