## Facts

- Inslaw, Inc. developed PROMIS case-tracking software; an earlier version (“old PROMIS”) was agreed to be in the public domain.
- After converting to a for-profit entity, Inslaw claimed it created proprietary modifications and improvements (“enhanced PROMIS”).
- The Department of Justice (DOJ) contracted with Inslaw to provide and install PROMIS in U.S. Attorneys’ Offices.
- The parties disputed whether the contract entitled DOJ only to old PROMIS (Inslaw’s view) or also to enhanced PROMIS (DOJ’s view).
- During the contract term, Inslaw installed enhanced PROMIS in 22 U.S. Attorneys’ Offices and provided copies to DOJ.
- Inslaw filed for Chapter 11 bankruptcy.
- After the bankruptcy filing and after the contract expired, DOJ continued using enhanced PROMIS in the 22 offices and installed enhanced PROMIS in 23 additional offices without Inslaw’s consent.
- Inslaw asserted the post-petition use and expansion infringed its proprietary rights and violated the automatic stay under 11 U.S.C. § 362(a), particularly § 362(a)(3).

## Issues

1. Whether 11 U.S.C. § 362(a)(3) bars the government’s post-petition continued and expanded use of software already in its possession under a pre-petition claim of right, when the debtor asserts proprietary rights in the software’s enhancements.
2. Whether alleged infringement or misuse of the debtor’s intangible rights can be treated as an “act … to obtain possession” of, or “to exercise control over,” property of the estate for purposes of the automatic stay.

## Decision

- The D.C. Circuit reversed the district court’s judgment affirming the bankruptcy court.
- The court held the automatic stay did not extend to DOJ’s continued use of PROMIS that DOJ already possessed under a claim of right at the time of the bankruptcy filing, even if that use might later be found to violate Inslaw’s rights.
- Because there was no stay violation, the bankruptcy court’s stay-based injunction and damages award could not stand.

## Legal Principles

- Section 362(a)(3) stays acts to obtain possession of, or to exercise control over, property of the estate; it does not automatically reach mere continued use of property already possessed under a colorable pre-petition claim of right.
- The automatic stay is not a substitute for litigating underlying disputes over ownership, contract scope, or intellectual-property rights.
- Disputes over entitlement to property and related relief should be pursued through turnover and related procedures (e.g., 11 U.S.C. § 542) and other applicable statutory remedies, rather than recast as stay violations.
- A bankruptcy court may not impose stay-violation remedies when the challenged conduct falls outside § 362(a)’s prohibition.

## Conclusion

The D.C. Circuit concluded that § 362(a)(3) did not make DOJ’s post-petition continued and expanded use of PROMIS a stay violation where DOJ already possessed the software and asserted a pre-petition right to use it; any remaining contract or proprietary-rights disputes had to be addressed through non-stay mechanisms.


United States v. Inslaw, Inc., 932 F.2d 1467 (D.C. Cir. 1991)