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Insurance company Progressive embroiled in licensing dispute

Licensing disputes between companies are more common these days, especially with the proliferation of technology and increased computer software usage. Progressive Casualty Insurance Company (Progressive), a well-known provider of auto insurance, recently sued Pitney Bowes (Pitney), which had acquired a company that previously signed a site license agreement with Progressive. California businesses that are embroiled in licensing disputes of their own may find this case interesting. The claim was filed in a U.S. District Court in the Midwest.

The software license in dispute was reportedly first reached in 1991, back before use of the Internet became widespread. The license covered applications then sold by LPC (the company Pitney later acquired); applications which were used to assist in functions associated with finalizing mailing addresses for current and potential customers, along with other tasks.

One supplemental agreement between the companies established a specific installation site where the software was to be operated. That original site was later phased out after another supplemental agreement added a second installation site in 2001.

The license agreement allegedly allowed Progressive to make copies of the software and also allowed for remote access of the software. Reportedly, however, in September 2011 Pitney informed Progressive that the companies had been purportedly misinterpreting the terms of the license agreement for the past 20 years. According to Pitney, the agreement actually only allowed use of the software on one computer, instead of on various computers at one specific site. The company claimed that Progressive’s remote access of the software violated the terms of their license agreement, and it said that it would not renew Progressive’s license keys until the other company agreed to pay quite a bit more money.

At least one veteran software contract negotiator familiar with the case believes that licensing disputes like this one are tricky. On the one hand, he said that site licenses typically mean the whole “darn location,” which would translate to Pitney probably not being allowed to limit Progressive’s software usage to just one CPU. On the other hand, if applications are accessed via mobile devices, it could complicate things since the mobile viewing wouldn’t really be fixed to a set site location.

It is as yet unknown how this dispute will be resolved, and California businesses with similar licensing agreements may benefit from following the course of the litigation as it makes its way through the federal courts.

Source: PC World, “Auto Insurer Progressive Alleges Software License Shakedown by Pitney Bowes,” Chris Kanaracus, July 17, 2012