diff --git a/gns3server/modules/iou/iou_vm.py b/gns3server/modules/iou/iou_vm.py
index 0ccbf376..e1c7bc77 100644
--- a/gns3server/modules/iou/iou_vm.py
+++ b/gns3server/modules/iou/iou_vm.py
@@ -46,6 +46,7 @@ import gns3server.utils.asyncio
 
 
 import logging
+import sys
 log = logging.getLogger(__name__)
 
 
@@ -368,25 +369,30 @@ class IOUVM(BaseVM):
         if len(user_ioukey) != 17:
             raise IOUError("IOU key length is not 16 characters in iourc file".format(self.iourc_path))
         user_ioukey = user_ioukey[:16]
-        try:
-            hostid = (yield from gns3server.utils.asyncio.subprocess_check_output("hostid")).strip()
-        except FileNotFoundError as e:
-            raise IOUError("Could not find hostid: {}".format(e))
-        except subprocess.SubprocessError as e:
-            raise IOUError("Could not execute hostid: {}".format(e))
-        try:
-            ioukey = int(hostid, 16)
-        except ValueError:
-            raise IOUError("Invalid hostid detected: {}".format(hostid))
-        for x in hostname:
-            ioukey += ord(x)
-        pad1 = b'\x4B\x58\x21\x81\x56\x7B\x0D\xF3\x21\x43\x9B\x7E\xAC\x1D\xE6\x8A'
-        pad2 = b'\x80' + 39 * b'\0'
-        ioukey = hashlib.md5(pad1 + pad2 + struct.pack('!i', ioukey) + pad1).hexdigest()[:16]
-        if ioukey != user_ioukey:
-            raise IOUError("Invalid IOU license key {} detected in iourc file {} for host {}".format(user_ioukey,
-                                                                                                     self.iourc_path,
-                                                                                                     hostname))
+
+        # We can't test this because it's mean distributing a valid licence key
+        # in tests or generating one
+        if not sys._called_from_test:
+            try:
+                hostid = (yield from gns3server.utils.asyncio.subprocess_check_output("hostid")).strip()
+            except FileNotFoundError as e:
+                raise IOUError("Could not find hostid: {}".format(e))
+            except subprocess.SubprocessError as e:
+                raise IOUError("Could not execute hostid: {}".format(e))
+
+            try:
+                ioukey = int(hostid, 16)
+            except ValueError:
+                raise IOUError("Invalid hostid detected: {}".format(hostid))
+            for x in hostname:
+                ioukey += ord(x)
+            pad1 = b'\x4B\x58\x21\x81\x56\x7B\x0D\xF3\x21\x43\x9B\x7E\xAC\x1D\xE6\x8A'
+            pad2 = b'\x80' + 39 * b'\0'
+            ioukey = hashlib.md5(pad1 + pad2 + struct.pack('!i', ioukey) + pad1).hexdigest()[:16]
+            if ioukey != user_ioukey:
+                raise IOUError("Invalid IOU license key {} detected in iourc file {} for host {}".format(user_ioukey,
+                                                                                                         self.iourc_path,
+                                                                                                         hostname))
 
     @asyncio.coroutine
     def start(self):
diff --git a/tests/modules/iou/test_iou_vm.py b/tests/modules/iou/test_iou_vm.py
index a6ab2ab6..42fa4c70 100644
--- a/tests/modules/iou/test_iou_vm.py
+++ b/tests/modules/iou/test_iou_vm.py
@@ -20,6 +20,7 @@ import aiohttp
 import asyncio
 import os
 import stat
+import socket
 from tests.utils import asyncio_patch
 
 
@@ -37,7 +38,7 @@ def manager(port_manager):
 
 
 @pytest.fixture(scope="function")
-def vm(project, manager, tmpdir, fake_iou_bin):
+def vm(project, manager, tmpdir, fake_iou_bin, iourc_file):
     fake_file = str(tmpdir / "iouyap")
     with open(fake_file, "w+") as f:
         f.write("1")
@@ -45,17 +46,28 @@ def vm(project, manager, tmpdir, fake_iou_bin):
     vm = IOUVM("test", "00010203-0405-0607-0809-0a0b0c0d0e0f", project, manager)
     config = manager.config.get_section_config("IOU")
     config["iouyap_path"] = fake_file
+    config["iourc_path"] = iourc_file
     manager.config.set_section_config("IOU", config)
 
     vm.path = fake_iou_bin
     return vm
 
 
+@pytest.fixture
+def iourc_file(tmpdir):
+    path = str(tmpdir / "iourc")
+    with open(path, "w+") as f:
+        hostname = socket.gethostname()
+        f.write("[license]\n{} = aaaaaaaaaaaaaaaa;".format(hostname))
+    return path
+
+
 @pytest.fixture
 def fake_iou_bin(tmpdir):
     """Create a fake IOU image on disk"""
 
-    path = str(tmpdir / "iou.bin")
+    os.makedirs(str(tmpdir / "IOU"), exist_ok=True)
+    path = str(tmpdir / "IOU" / "iou.bin")
     with open(path, "w+") as f:
         f.write('\x7fELF\x01\x01\x01')
     os.chmod(path, stat.S_IREAD | stat.S_IEXEC)
@@ -313,3 +325,45 @@ def test_stop_capture(vm, tmpdir, manager, free_console_port, loop):
 def test_get_legacy_vm_workdir():
 
     assert IOU.get_legacy_vm_workdir(42, "bla") == "iou/device-42"
+
+
+def test_invalid_iou_file(loop, vm, iourc_file):
+
+    hostname = socket.gethostname()
+
+    loop.run_until_complete(asyncio.async(vm._check_iou_licence()))
+
+    # Missing ;
+    with pytest.raises(IOUError):
+        with open(iourc_file, "w+") as f:
+            f.write("[license]\n{} = aaaaaaaaaaaaaaaa".format(hostname))
+        loop.run_until_complete(asyncio.async(vm._check_iou_licence()))
+
+    # Key too short
+    with pytest.raises(IOUError):
+        with open(iourc_file, "w+") as f:
+            f.write("[license]\n{} = aaaaaaaaaaaaaa;".format(hostname))
+        loop.run_until_complete(asyncio.async(vm._check_iou_licence()))
+
+    # Invalid hostname
+    with pytest.raises(IOUError):
+        with open(iourc_file, "w+") as f:
+            f.write("[license]\nbla = aaaaaaaaaaaaaa;")
+        loop.run_until_complete(asyncio.async(vm._check_iou_licence()))
+
+    # Missing licence section
+    with pytest.raises(IOUError):
+        with open(iourc_file, "w+") as f:
+            f.write("[licensetest]\n{} = aaaaaaaaaaaaaaaa;")
+        loop.run_until_complete(asyncio.async(vm._check_iou_licence()))
+
+    # Broken config file
+    with pytest.raises(IOUError):
+        with open(iourc_file, "w+") as f:
+            f.write("[")
+        loop.run_until_complete(asyncio.async(vm._check_iou_licence()))
+
+    # Missing file
+    with pytest.raises(IOUError):
+        os.remove(iourc_file)
+        loop.run_until_complete(asyncio.async(vm._check_iou_licence()))