First, make sure your License Manager is running. Open LMTOOLS and check the following:
1. On the Service/Licese File tab, make sure it is set for 'Configuration using Services'
2. On the Config Services tab, make sure all the paths are set correctly and that both boxes at the bottom are checked. Save the service.
3. Go to the Start/Stop/Reread tab and start the server.
4. Go to the Server Status tab and click the 'Perform Status Enquiry' button. Make sure that your licenses are showing up and there are no errors.
5. Make sure that the Windows Firewall and/or 3rd party firewalls are turned off or allow ports 2080 and 27000.
6. Make sure that you can PING the license manager by hostname from the client machine that has the error.
7. You may need to set some System Enviroment Variables for license file location and timeout.
Good luck.