Saturday, September 12, 2020
The place a software program license settlement precluded the licensee from growing related software program for an undefined time period, the license settlement inhibited “free commerce” and was subsequently unreasonable and unenforceable. Triage Logic Administration & Consulting, LLC v. Progressive Triage Companies, LLC, 2020 NCBC 57 (J. Robinson). Consequently, the Enterprise Courtroom held the licensor couldn’t preserve a declare for breach of this provision of the license settlement.
Plaintiff Triage Logic Administration and Consulting, LLC (“TLMC”) developed a software program platform (“System”) for call-in triage nurses to make use of to deal with a affected person’s particular medical questions. The patient-specific attribute of the System distinguished TLMC’s software program from related merchandise. In 2011, TLMC agreed to license the System to Defendant Progressive Triage Companies, LLC (“Progressive”). Inside the License Settlement, TLMC included varied “Protecting Covenants,” together with a provision whereby Progressive agreed to not develop software program much like the System. Though the License Settlement was apparently of restricted length, the Protecting Covenants explicitly “survive[d] the top of the license time period” with no specified finish date. Previous to the Spring of 2019, Progressive allegedly contracted with one other firm, PQC Tech, to create software program much like the System, allegedly offering PQC entry to TLMC’s software program packages within the course of. PQC then created a software program platform that competed with and had many related options of TMLC’s System. Within the Spring of 2019, TLMC terminated the License Settlement with Progressive and filed swimsuit, alleging Progressive breached the License Settlement by, inter alia, growing a software program much like the System. Progressive sought to dismiss this declare, contending that the Protecting Covenant’s indefinite ban on growing a competing product was unreasonable and unenforceable.
The Enterprise Courtroom agreed. Though it didn’t undertake Progressive’s effort to analogize this specific Protecting Covenant with a non-compete within the employment context, the Enterprise Courtroom nonetheless adopted Fourth Circuit precedent and located that the Protecting Covenant’s complete lack of any expiration date inhibited “free commerce” in North Carolina and was subsequently unreasonable and unenforceable as a matter of legislation. Consequently, no declare for breach of that exact provision may very well be maintained.
Primarily based upon this resolution, a enterprise could wish to be certain that any restrictive covenant in its license agreements has a sundown provision to make sure its enforceability.
Extra authorized factors from this resolution:
A declare for breach of a software program license settlement could probably be pre-empted by federal copyright legal guidelines until the declare requires an “additional aspect” apart from the acts of replica, efficiency, distribution or show. (Opinion, ¶¶28-30).
In an effort to preserve a typical legislation unfair competitors declare, a criticism should allege the defendant to be a competitor whose actions deceived the general public. (Id., ¶56-57).
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