Fifth Circuit Holds That Grant of Access to Licensee's Attorneys Breaches License Agreement
Licensors licensed database technology to Licensee to allow Licensee to prepare residential 
mortgage loan documents. The license agreement explicitly allowed access to the technology by "Originating Lenders" and Licensee's general counsel, an outside law firm. Licensee granted access to another law firm to prepare loan packages for Licensee.
Licensors claimed that the license agreement expressly prohibited any use of the licensed technology that was not specifically authorized and nothing in the license agreement gave explicit authority for access by the loan package preparing law firm. The Licensee said that nothing in the license agreement prohibited such access when it was done exclusively for the benefit of and on behalf of the Licensee.
A lower court had relied on Geoscan, Inc. of Texas v. Geotrace Technologies, Inc., 226 F.3d 387 (5th Cir. 2000) and Hogan Systems, Inc. v. Cybresource International, Inc., 158 F.3d 319 (5th Cir. 1998) for the proposition that the use of a licensed property by a third party solely on behalf of and for the benefit of the licensee is not a transfer or sublicense of that property.
The Fifth Circuit reversed and said it disagreed with the district court that the Geoscan and Hogan decisions allowed a court to look past the actual language of a licensing agreement and absolve a licensee who grants third party access merely because that access is on behalf of, and inures to the benefit of the licensee.
The Fifth Circuit added that the agreement in the subject case did not contain a provision that generally permits the Licensee to grant third party access and in fact, expressly prohibited it except for the two express exceptions set out above. "Because the licensing agreement in this case withholds rights not expressly given, Geoscan and Hogan Systems are of limited relevance, and we therefore decline to interpret the agreement to allow general third-party access on behalf of and for the benefit of (Licensee)." Compliance Source, Inc., et al v. Greenpoint Mortgage, Docket No. 09-10726, Decided October 18, 2010 at page 13.
Licensors concerned about third party access (almost all of them) should review the language in this case and compare with their relevant documents.
