Court Rejects First Sale Defense Relying on Vernor v. Autodesk Test
Relying on the test recently established by the Ninth Circuit in the Vernor v. Autodesk, Inc. (see here for more on that case), the Northern District of California rejected a first sale defense in another software resale case.
Adobe sued defendants for copyright and trademark infringement for selling Adobe software via eBay and another website. According to the court's opinion, the defendants obtained unbundled OEM versions of Adobe software from several companies including Dell and Hewlett-Packard and then sold that software. Defendants argued, in part, that their actions were protected under the first sale doctrine.
To determine whether the first sale defense applied, the court had to answer the question whether Adobe sold or licensed copies of its software to the OEM companies from which defendants obtained their copies of the software.
Looking to the test established by the Ninth Circuit in Vernor, the court easily concluded that Adobe licensed, rather than sold, its software to OEMs and therefore the first sale defense was unavailable to defendants.
Under Vernor, to determine whether a software user is a licensee rather than an owner, the court looks at whether 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."
In this case, Adobe's agreements specified that they granted a license (hardly a surprise). The court also found that the agreements imposed both significant transfer and use restrictions, although the opinion is light on details as the agreements were apparently filed under seal.
Thus, because the court found that Adobe licenses, rather than sells, the OEM versions of its software, the first sale doctrine did not apply and the court granted partial summary judgment in favor of Adobe.
The case cite is Adobe Systems, Inc. v. Hoops Enterprise LLC, N. C 10-2769 CW (N.D. Cal.).
