Software Copyright Owners, Make Your License Agreements, Exclusive Distribution Rights Explicit, and Keep Copies!

When a person accused of infringing a software copyright raises a “first sale defense” (which allows the lawful owner of copies of copyrighted material to sell the copies without the copyright owner’s permission (17 U.S.C. § 109(a)) and produces sales invoices, then to defeat the defense the copyright owner must produce the specific license agreement under which it retained title when the software first changed hands. So ruled the US Court of Appeals for the Ninth Circuit in Adobe Systems Inc. v. Christenson1.

A distributor sold Christenson surplus Adobe software who then resold it on his website without Adobe’s permission. Adobe sued for copyright and trademark infringement, alleging that the defendant had violated its exclusive distribution rights under Section 106 of the Copyright Act. Christenson raised a first sale defense under Section 109(a) of the Act in response to the copyright claim.

In affirming the district court’s order of summary judgment in favor of Christenson, the Ninth Circuit stated that the defendant’s invoices demonstrated that he bought copies of Adobe software prior to reselling them. The Court went

on to say that a copyright owner’s license forms and general licensing practices, which Adobe proffered, are not a substitute for specific licensing agreements and will not defeat a first sale defense.

The Court also upheld the district court’s dismissal of Adobe’s trademark infringement claims, stating that Christenson’s  use of Adobe’s marks was to identify the software (the “nominative fair use” defense), not to mislead consumers to believe that Adobe endorsed Christenson.

Bottom line: software copyright owners must carefully document relationships with distributors and be able to produce the actual license agreements under which they claim an accused infringer obtained copies of their software to overcome a first sale defense.

  1. Adobe Systems Inc. v. Christenson. No. 12-17371, 2015 WL 9487887 (9th Cir. Dec. 30, 2015)