Software Developer Contracts Itself Out of Copyright Infringement Claim

SunGard, a global software developer, entered into a software license with Piper for use of SunGard’s Global Trader software. The agreement was amended to include additional software products. The contract included two standard limited liability clauses: (1) Neither party shall be liable for incidental, indirect, consequential, or punitive damages; and (2) Any tort liability is limited to the license fees paid by Piper.

SunGard terminated the contract citing failure by Piper to pay fees, and Piper filed this lawsuit claiming breach of contract. SunGard counterclaimed for copyright infringement for Piper’s continued use of software products after the contract was terminated. SunGard sought Piper’s profits.

The court agreed with Piper that the copyright infringement claim arose of the contract. The court found that Piper’s profits were not direct damages to SunGard, and applying the limited liability provisions of the contract, the court held Piper could not be liable for copyright infringement. Parties have extensive freedom to structure intellectual property rights via contract and can sometimes contract themselves out of an intellectual property claim.

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