BMC Software, Inc. v. International Business Machines Corporation

The owners of copyrighted software, who have the federal-law right to control the terms on which they will (or will not) license that software, frequently rely on license agreements to protect their interests. Those agreements often place restrictions on the licensee, providing that the copyrighted software can be used for some purposes but not others. In this case, the Fifth Circuit held that a use restriction in a commercial software license would be unreasonable and likely unenforceable if it prevented a licensee from freely replacing the licensor’s copyrighted software with the licensee’s own products at the request of a third party. The question presented is: Whether the Fifth Circuit erred in overriding a license agreement’s plain language and holding that a contractual provision regarding the use of copyrighted software would be unreasonable and an unlawful restraint on trade if it could limit the commercial options available to third parties. (I)