Covenant Or Condition: When Can A Licensor Sue Its Licensee For Copyright Infringement?

Software companies who use aggressive software audits to increase revenues often threaten their customers with lawsuits for copyright infringement and breach of contract, as leverage in order to try to drive sales of additional software products.  In fact, we have seen software companies like Quest Software file lawsuits against their customers for copyright infringement arising out of an audit, when in reality their only claim is one for breach of contract. How do you know if the licensor of your software can sue you for copyright infringement for your alleged over-deployment of software?  It basically comes down to whether the license provides a remedy for over-deployment such as paying additional fees should an audit uncover excess use.  If it does, the clause is viewed by courts as a covenant and not a condition, the breach of which gives rise to only a contract claim.  In California, as in other states, conditions are not favored and a court will construe a clause