Case Note: Copyright First Sale Doctrine

A California court recently reaffirmed the principle that a restrictive software license is not a "sale" for purposes of the federal copyright laws, and that the license could not be used to assert a defense to copyright infringement based on the first sale doctrine.  Adobe Systems Inc. v. Hoops Enterprise LLC, No. 4:10-cv-02769-CW (N.D. Cal., Feb. 1, 2012).

Facts

Adobe licensed so-called "OEM" software, i.e., software that, by the terms of its license, could only be used when bundled as part of a sale of hardware.  Defendants obtained OEM software that had had been unbundled.  They then marketed the software on eBay "package[d] with items such as a piece of photo paper, a blank DVD, or a media card reader, which Adobe had not authorized for bundling."  Adobe's agreements with the hardware manufacturers made clear that that "Adobe provides only licenses to the manufacturer and that the manufacturer 'shall not at any stage have title to the physical property or the Intellectual Property in the Software Products.'"

Procedural Posture

Adobe moved for partial summary judgment on Defendants' counterclaims of copyright misuse based on the first sale doctrine, as well as on Defendants' affirmative defense invoking the first sale doctrine.

Result

"Because Defendants’ . . . copyright misuse and first sale affirmative defenses are all based on the applicability of the first sale doctrine to this case, the Court GRANTS Adobe's motion for partial summary judgment."

Analysis

Citing Vernor v. Autodesk, 621 F.3d 1102, 1106 (9th Cir. 2010), the Court explained that, with respect to the first sale doctrine (codefied at 17 U.S.C. §  109(a)):

The Ninth Circuit has also held that the first sale affirmative defense is unavailable to “those who are only licensed to use their copies of copyrighted works.” Vernor, 621 F.3d at 1107. “[A] software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions.” Id. at 1111.

Here, Adobe's license agreements imposed significant transfer, distribution, and use restrictions, and Adobe maintained significant control over the use of its software.  Therefore, "the first sale doctrine does not apply to the Adobe OEM software at issue in this case."

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