809 F.3d 1071 (9th Cir. 2015), 12-17371, Adobe Sys., Inc. v. Christenson

Docket Nº:12-17371
Citation:809 F.3d 1071, 117 U.S.P.Q.2d 1257
Opinion Judge:M. Margaret McKeown, Circuit Judge:
Party Name:ADOBE SYSTEMS INC., Plaintiff-Counter-Defendant--Appellant, v. JOSHUA CHRISTENSON, an individual, DBA www.softwaresurplus.com ; SOFTWARE SURPLUS, INC., Defendants-Counter-Claimants--Appellees, v. SOFTWARE PUBLISHERS ASSOCIATION, DBA Software Information Industry Association, Third-Party-Defendant
Attorney:J. Andrew Coombs (argued) and Annie S. Wang, Glendale, California, for Plaintiff-Counter-Defendant--Appellant. Lisa A. Rasmussen (argued), Las Vegas, Nevada, for Defendants-Counter-Claimants--Appellees.
Judge Panel:Before: A. Wallace Tashima, M. Margaret McKeown, and Marsha S. Berzon, Circuit Judges.
Case Date:December 30, 2015
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
SUMMARY

This appeal arose from a copyright dispute between Adobe and defendant and his software company, SSI. The court affirmed the district court's dismissal of both Adobe's copyright and trademark claims. Although a copyright holder enjoys broad privileges protecting the exclusive right to distribute a work, the first sale doctrine serves as an important exception to that right. Under this doctrine,... (see full summary)

 
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Page 1071

809 F.3d 1071 (9th Cir. 2015)

117 U.S.P.Q.2d 1257

ADOBE SYSTEMS INC., Plaintiff-Counter-Defendant--Appellant,

v.

JOSHUA CHRISTENSON, an individual, DBA www.softwaresurplus.com ; SOFTWARE SURPLUS, INC., Defendants-Counter-Claimants--Appellees,

v.

SOFTWARE PUBLISHERS ASSOCIATION, DBA Software Information Industry Association, Third-Party-Defendant

No. 12-17371

United States Court of Appeals, Ninth Circuit

December 30, 2015

         Argued and Submitted January 29, 2015, University of Arizona, Rogers College of Law, Tucson, Arizona

          Appeal from the United States District Court for the District of Nevada. D.C. No. 2:10-cv-00422-LRH-GWF. Larry R. Hicks, District Judge, Presiding.

          SUMMARY[*]

         Copyright

         Affirming the district court's summary judgment in a copyright infringement case, the panel held that, while the copyright holder bears the ultimate burden of establishing infringement, the party raising a first sale defense bears an initial burden with respect to the defense.

         The first sale doctrine provides that, once a copy of a work is lawfully sold or transferred, the new owner has the right to sell or otherwise dispose of that copy without the copyright owner's permission. Adobe Systems, Inc., claimed infringement of its software. The panel held that Adobe established its registered copyrights in the software, and the defendant carried his burden of showing that he lawfully acquired genuine copies. Adobe, however, failed to produce license agreements or other evidence to show that it retained title to the software when the copies were first transferred. The panel held that the district court did not abuse its discretion in excluding evidence purporting to document the licenses, and general testimony and generic licensing templates were insufficient to meet Adobe's burden.

         The panel held that the nominative fair use defense barred Adobe's trademark infringement claim.

         J. Andrew Coombs (argued) and Annie S. Wang, Glendale, California, for Plaintiff-Counter-Defendant--Appellant.

         Lisa A. Rasmussen (argued), Las Vegas, Nevada, for Defendants-Counter-Claimants--Appellees.

         Before: A. Wallace Tashima, M. Margaret McKeown, and Marsha S. Berzon, Circuit Judges.

          OPINION

          [117 U.S.P.Q.2d 1258] M. Margaret McKeown, Circuit Judge:

         This appeal, which arises in the context of software licenses, requires us to address the burden of proof applicable to the first sale defense to a copyright infringement claim. Although a copyright holder enjoys broad privileges protecting the exclusive right to distribute a work, the first sale doctrine serves as an important exception to that right. Under this doctrine, once a copy of a work is lawfully sold or transferred, the new owner has the right " to sell or otherwise dispose of" that copy without the copyright owner's permission. 17 U.S.C. § 109(a). Of course, the defense is contingent on rightful ownership. The old adage " possession is nine-tenths of the law" has no traction under § 109(a).1

         This appeal stems from a messy copyright dispute between Adobe Systems, Inc. and Joshua Christenson and his software company, Software Surplus, Inc. (" SSI" or " Software Surplus" ).2 In the district court, litigation of this case was punctuated by discovery disputes, sanctions, and multiple rulings on the admissibility and exclusion of evidence. The importance of these factors, which the parties emphasize on appeal, is diminished by the central issue--who bears the burden of proving the first sale defense in a software licensing dispute. While the copyright holder bears the ultimate burden of establishing copyright infringement, the party raising a first sale defense bears an initial burden with respect to the defense. At the summary judgment stage, this burden is discharged by producing evidence sufficient for a jury to find that the alleged infringer lawfully acquired ownership of genuine copies of the copyrighted software. Once this initial burden is satisfied, the burden shifts back to the copyright owner to establish the absence of a first sale, because of a licensing or other non-ownership-transferring arrangement when the copy first changed hands.

         The district court correctly held that Adobe established its registered copyrights in the disputed software and that Christenson carried his burden of showing that he lawfully acquired genuine copies of Adobe's software, but that Adobe failed to produce the purported license agreements or other evidence to document that it retained title to the software when the copies were first transferred. We affirm the district court's dismissal of both the copyright and trademark claims.

         Background

         In October 2009, Adobe filed this lawsuit against Christenson. The factual basis for Adobe's claims was simple: on his website, Christenson sold Adobe software--which he purchased from a third-party distributor-- [117 U.S.P.Q.2d 1259] without Adobe's authorization, allegedly infringing Adobe's copyrights and trademarks in the process. Christenson asserted numerous defenses, including the first sale defense to the copyright claim. He also filed a counterclaim against Adobe and a third-party complaint against the Software Information Industry Association (" SIIA" ) for defamation, disparagement, and more, on the basis that SIIA issued a press release about this case stating that Christenson and his company " sold infringing copies, including counterfeit versions" and " swindled" consumers.

         The following chronology helps explain why neither party completely closed the loop on proof. The case began as many do: The district court referred the case to a magistrate judge to set discovery and dispositive motions deadlines. A protracted series of discovery exchanges and disputes eventually overlapped with briefing on cross-motions for summary judgment, and the case then departed somewhat from the expected course.

         Adobe, with SIIA, moved for partial summary judgment on liability for the copyright and trademark claims and for summary judgment on the counterclaims and third-party claims pertaining to the press release. On the copyright claim, Adobe argued that the first sale defense did not apply because Adobe only licenses and does not sell its software. For support, Adobe relied on a declaration to that effect by its Anti-Piracy Enforcement Manager, Chris Stickle. Stickle generally described different ways that Adobe licenses software, such as by limiting copies to academic users or distributing copies bundled with hardware under restrictive terms, the latter being known as Original Equipment Manufacturer (" OEM" ) products. Other evidence submitted by Adobe included a list of specific copyrights, a list of Adobe product licenses that had been produced by Christenson, excerpts of Christenson's deposition in which he acknowledged that he sold academic and OEM software, screenshots of the Software Surplus website stating that it sold academic and OEM software, and customer returns and complaints in which customers complained that they had received software licensed for academic use from Christenson despite having understood that they had purchased software appropriate for non-academic users. Regarding the trademark claim, Adobe also argued that Christenson should be liable for false advertising, although as the district court later pointed out, Adobe's complaint did not include this claim.

         Christenson, in turn, moved for summary judgment on the copyright and trademark claims. In response to the copyright claim, Christenson argued that only Adobe had access to the terms of its contracts with the original recipients of the copies at issue; Christenson, as a downstream distributor, did not have this information. He thus urged the court to place the burden on Adobe " to disprove the first sale doctrine." With this burden in mind, Christenson asserted that Adobe could not disprove...

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