Court rules that copyright “first sale” doctrine does not apply to pre-installed software that was licensed to OEMs

In United States copyright law, the “first sale” doctrine allows the purchaser of a lawfully-made copy of a copyrighted work to  transfer the copy by a subsequent sale, rental, or other means.  The first sale doctrine originated in a 1908 Supreme Court decision, and it is codified at 17 U.S.C. 109(d).

In a recent decision from the U.S. District Court for the Northern District of California, the court ruled that the first sale doctrine did not apply to copies of software that are pre-installed on a computer and sold by the original equipment manufacturer with the computer itself.  In Adobe Systems v Hoops Enterprise LLC (N.D. Cal. Feb. 1, 2012), the court considered the case of a company that bought computer hardware from Dell and Hewlett-Packard and resold OEM-installed Adobe software on eBay, separate and apart from the hardware.

The court indicated that the key question was whether the Adobe software was sold or licensed to the OEM computer manufacturers.  If it were a sale, then the first sale doctrine could apply.  However, if it were a license, then the first sale doctrine would not apply based on the precedent of Vernor v. Autodesk, Inc. (9th Cir. 2010).

Adobe did enter into license agreements with the OEMs, but the defendants argued that those agreements did not create significant restrictions on transfer, nor did they impose notable use restrictions, and Adobe did not retain sufficient control over the copies, so the agreements were effectively sale agreements rather than license agreements.  The court disagreed, noting that there were “significant distribution restrictions” in the license agreements.

2 responses to “Court rules that copyright “first sale” doctrine does not apply to pre-installed software that was licensed to OEMs

  1. What would constitute a “sale” versus a “license”? Does a license imply the sale of commercial rights for multiple uses?

  2. The court’s opinion in the Adobe Systems case states: “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.” I recognize that this general statement from the decision may not address your specific question — and if so, it sounds like you may have a question about specific license terms. To assess how the court’s decision may affect your situation, I recommend that you contact an attorney to review your relevant facts.

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