Bankruptcy Court Holds Software Product Sales May Constitute Technology Services “Performed for Others for Compensation”
The United States Bankruptcy Court for the Western District of Wisconsin, applying Wisconsin law, has held that software development and product sales could constitute technology services “performed for others for compensation” under a technology professional liability policy. In re CivilGEO, Inc., 2026 WL 1283561 (Bankr. W.D. Wis. May 8, 2026). The court rejected the insurer’s contention that the policy covered services but not software product sales.
An insured software developer’s competitor filed a lawsuit alleging that the insured incorporated the competitor’s proprietary source code into its own software products. The software developer’s technology professional liability policy afforded specified coverage for wrongful acts in providing “Professional Services,” defined by endorsement to include “Technology Services . . . performed for others for compensation.” “Technology Services,” in relevant part, was defined as “software installation, customization, and support” or “programming and development.” The insurer denied coverage, contending that the allegations in the lawsuit concerned the sale of software products rather than services performed for others for compensation.
On cross-motions for summary judgment, the court ruled in favor of the insured, holding that the phrase “performed for others for compensation” was ambiguous and must be construed in favor of the insured. The court rejected the insurer’s proposed distinction between services and products, reasoning that the policy did not limit “Professional Services” to services rather than products and did not distinguish service fees from revenue generated through product sales. Because the underlying complaint alleged that the insured developed software, sold it to customers, installed it, and supported it, the court concluded that the insured’s software sales could reasonably constitute compensation for technology services performed for others.
