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Entities continue business relationship after contract dispute

Many business owners in Houston seek government contracts in an effort to better their business. Government contracts offer stable income, increase the value of your company and make your client portfolio more impressive. Furthermore, there are typically a number of government contracts set aside for small business owners and minority owned businesses. As with any other type of business agreement, however, contract issues may arise with the government that require litigation.

A Texas software company filed a lawsuit against the United States Army after the government entity allegedly purchased licenses for logistical software in 2004, cancelled the contract in 2006 but continued to use the software. When the software company learned in 2009 that its product was still in use without the government paying for multiple server and device licenses, the two entities could not resolve the issue themselves even after trying to do so for two years. As a result, the company filed a lawsuit in federal court in 2012. The army recently settled the lawsuit with no admission of fault, agreeing to pay $50 million in damages. The software company claims this is only a fraction of what the licenses were worth; they were seeking $225.5 million. The government maintains that they respect intellectual property rights. Despite the contract dispute, the two entities entered into another multi-million dollar licensing agreement in 2011.

Some CEO’s might be hesitant to settle contract disputes in the legal system because they don’t want to damage a business relationship that can still be potentially lucrative. This case illustrates that contract litigation does not always terminate business relationships. Those who feel that they are victims of a breach of contract would be well advised to speak with an attorney regarding their legal options.

Source: armytimes.com, “Army settles in $50M software license lawsuit,” Joe Gould, Dec. 2, 2013

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