IP Law Daily, COPYRIGHT—S.D. Fla.: Bitcoin ATM software developer can pursue infringement claims despite disputed oral license, (Aug 26, 2026)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

A disputed oral software license did not defeat copyright infringement and trade secret claims because whether nonpayment made the license revocable presented a factual question.

The federal district court in Florida largely denied a motion to dismiss a software developer’s lawsuit accusing a Bitcoin ATM operator, a software developer and related parties of improperly transferring and exploiting its proprietary source code. AML Software, Inc. plausibly alleged copyright infringement, contributory and vicarious infringement, trade secret misappropriation, breach of fiduciary duty and entitlement to declaratory relief. However, the court dismissed with prejudice two conversion claims, including one concerning the software itself, because the Copyright Act preempted it (AML Software, Inc. v. Athena Bitcoin, Inc., No. 1:25-cv-24378-RAR (S.D. Fla. Aug. 25, 2026)).

Background. AML owned proprietary source code developed for use with Bitcoin ATMs. The software was protected by U.S. Copyright Registration No. TXu 2-507-802, issued September 9, 2025. AML also alleged that portions of the source code constituted trade secrets because they derived independent economic value from their confidentiality. AML asserted that it had not disclosed the source code to third parties generally and required developers with access to its secret portions to execute confidentiality agreements.

According to AML, its former president and primary code developer initially granted Bitcoin ATM operator Athena Bitcoin a revocable, nonexclusive oral license to use the software. AML understood that Athena would make monthly payments of just under $100,000 until it could purchase the software for $2 million. AML alleged, however, that the former president instead purported to transfer the software to PSBC, LLC through a $2 million consulting agreement and that PSBC subsequently agreed to develop a Bitcoin ATM platform for Athena for $5.5 million. AML characterized the transactions as a scheme to transfer its existing software while disguising the transaction as development of new technology. After AML stopped receiving the contemplated payments, it treated the oral license as terminated and sued Athena, PSBC, its former president, and other parties involved in the alleged transactions.

Ownership dispute. The court rejected the responding parties’ argument that no actual controversy existed concerning ownership of the software. The agreements attached to the complaint contemplated transfers of intellectual property rights, while AML alleged that the supposedly newly developed platforms were actually its proprietary software.

Notably, one agreement required development of a Bitcoin ATM platform within only nine days, while another contemplated delivery of software before that agreement’s effective date. Drawing reasonable inferences for AML, the court concluded that those circumstances plausibly indicated an attempted transfer of AML’s software and associated intellectual property. Whether the parties involved actually claimed ownership of the software presented a factual issue better resolved on a developed record.

AML also adequately alleged that its former president breached his fiduciary duties. Although AML’s principal knew about and accepted a licensing arrangement with Athena, that knowledge did not establish that he authorized the former president to sell or transfer ownership of the software. The allegations that the former president acted for his own benefit, purported to transfer AML’s intellectual property, and withheld third-party licensing payments were sufficient to allow the fiduciary-duty claim to proceed.

Copyright infringement. Athena and the other parties seeking dismissal principally argued that AML could not maintain copyright infringement claims because it had granted an irrevocable nonexclusive license. The court disagreed that the license’s irrevocability could be determined on the pleadings.

Under 17 U.S.C. § 204(a), copyright ownership generally cannot be transferred without a signed writing, although a nonexclusive license can be granted orally or implied from conduct. AML conceded that it had granted an oral nonexclusive license. The critical issue was whether that license remained effective after Athena allegedly stopped making payments.

Although consideration can make a license irrevocable, a material breach can render a copyright license revocable. AML alleged that the license depended on continuing monthly payments and that it terminated the license after those payments ceased. Whether nonpayment constituted a material breach sufficient to permit revocation presented a factual question inappropriate for resolution on a Rule 12(b)(6) motion. Jacob Maxwell, Inc. v. Veeck, 110 F.3d 749, 751-54 (11th Cir. 1997), similarly demonstrated that the effect of a breach on an oral copyright license depended on the nature of the parties’ agreement and conduct.

The court also rejected the contention that AML could not establish infringement merely because the oral license was supported by consideration. At the pleading stage, AML’s allegations permitted the inference that the payment obligation was sufficiently significant to the licensing arrangement that its breach could permit termination.

Because direct infringement remained plausibly alleged, the court also allowed contributory infringement claims against PSBC and its managing member and a vicarious infringement claim against the managing member to proceed. AML sufficiently alleged their knowledge of and participation in the purported arrangement to transfer and exploit the software for Athena.

Trade secrets. AML’s trade secret misappropriation claim under the Defend Trade Secrets Act, 18 U.S.C. § 1836, also survived. The parties seeking dismissal challenged misappropriation solely on the theory that their purported unlimited, irrevocable license authorized use of any trade secrets embedded in the source code.

That argument depended on the same unresolved premise underlying the copyright defense. Because AML plausibly alleged that the license was revocable and had been terminated following nonpayment, the court could not conclude at the pleading stage that Athena and the other parties retained authorization to possess or use the confidential source code. The factual dispute concerning the scope and continued validity of the oral license therefore also prevented dismissal of the trade secret claim.

Conversion claims. AML did not fare as well on its two conversion claims. Although intangible property could support conversion under Florida law and AML’s continued possession of its code did not necessarily foreclose the tort, the Copyright Act preempted the claim concerning the software. Computer source code fell within the copyright’s subject matter, and the alleged assertion of ownership did not supply an extra element making the state-law rights qualitatively different from the rights protected by copyright.

The separate conversion claim concerning third-party licensing payments also failed. AML did not identify specific funds or allege an obligation requiring its former president to keep particular funds intact and deliver them to AML. The court therefore dismissed both conversion counts with prejudice.

The court ordered Athena and the other responding parties to answer AML’s six remaining claims. It separately denied AML’s renewed motion for a preliminary injunction with leave to file a new request consistent with the court’s dismissal ruling.

The Case is No. 1:25-cv-24378-RAR.

Judge: Ruiz, R.

Attorneys: Perry S. Clegg (Johnson & Martin P.A.) for AML Software, Inc. Steven Myer Appelbaum (Saul Ewing LLP) for Athena Bitcoin, Inc.

Companies: AML Software, Inc.; Athena Bitcoin, Inc.

Cases: TradeSecrets FloridaNews TechnologyInternet GCNNews