The error comes in two cases:
When both pilots use the same license file. Sometimes the user could copy wrong file by mistake. To check the license, please open the key file with Notepad and compare it content for both pilots. The files should have different key string.
When one of the pilots tries to connect himself. This could be done if the user enters in the Direct Connection window the IP address of own PC (which is selected in Setup window). To solve the error, please enter correct IP address of your partner.