On June 27, 2018, in the appeal of CiyaSoft Corporation, ASBCA Nos. 59519, 59913 the Armed Services Board of Contract Appeals (“ASBCA”) held that the Army violated a software license agreement, which limited use to one user per license. The Army argued that it never agreed to the terms of the software license. The Army’s sole source contract to CiyaSoft Corporation did not include such a restriction. The Board found, however, that the Army had implicitly agreed to the software license when it broke the seal on the software package. The software package stated that “by breaking the seal, you accept the terms of the license agreement.” The Board noted that the Army never requested an opportunity to review the license agreement prior to awarding the sole source contract and did not object to the license upon its receipt.
The ASBCA held that the Army violated the license agreement by allowing more than one user per license. In so holding, the Board stated that “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 agreement is consistent with federal law and otherwise satisfies the government’s needs.” The Board also noted that “the law generally does not permit a party to avoid the terms of a contract on the ground that he or she failed to read it.”
This case sends a clear message to the Government that it too is subject to commercial software license agreements and cannot avoid them by claiming ignorance.
