In re: DAK INDUSTRIES, INCORPORATED, Debtor. MICROSOFT CORPORATION, Appellant, v. DAK INDUSTRIES, INCORPORATED; OFFICIAL COMMITTEE OF UNSECURED CREDITORS; THE TOKAI BANK, LIMITED, Appellees., 66 F.3d 1091

Summary

Appellant and debtor entered into a license agreement that granted debtor certain nonexclusive license rights to appellant's computer software. The agreement provided that debtor would pay a royalty rate for each copy of the computer software that it distributed. Upon signing the agreement, debtor became obligated to pay appellant a minimum commitment in five installments. Subsequently, debtor filed a petition for bankruptcy and failed to pay the final two installments. Appellant filed a motion for the payment of an administrative expense, claiming that it should be compensated for debtor's post bankruptcy petition use of the license agreement. On appeal, the court held that the economic realities of the agreement indicated that it was basically a sale, not a license to use. Thus, it was simply an unsecured claim and not an administrative expense.