Ambiguity surrounding the termination provision of a software license is a frequent source of dispute. Imprecise wording, particularly with respect to the damages amount due upon breach, can often precipitate costly litigation centered on the interpretation of a mere handful of words in a license.

The U.S. District Court for the Southern District of New York recently dealt with a dispute of this nature. In DRL Software Solutions v. JourneyPure, No. 17-cv-9125(DLC) (S.D.N.Y. Dec. 6, 2018), the court decided partial summary judgment motions from each party, one of which centered on the licensor’s motion claiming that the termination provision of the software license required the licensee to pay fees throughout the term of the agreement, irrespective of the license’s termination nearly a year and a half prior. Specifically, the competing interpretation of “all amounts due” under a license in the event of a breach was at issue. As discussed below, the court decided the motion on grounds familiar to any commercial court—the ambiguity (or lack thereof)—of the provision. While interesting for practitioners, requiring the court to decide a summary judgment motion on these grounds is an evergreen issue for litigants that invariably increases costs and in fact, can often negate any benefits previously derived from the underlying license.

Facts and Procedural Background