Adobe Systems v. Christenson is a 2015 decision of the United States Court of Appeals for the Ninth Circuit on the burden of proof for the first sale defence in software resale disputes. The court held that “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”: the reseller must show lawful acquisition of genuine copies, and the burden then shifts back to the copyright owner to prove a licence or the absence of a sale.[1] Because Adobe did not produce the licence agreements under which the copies were first transferred, the court affirmed judgment for the reseller.[1]
Background
Joshua Christenson and his company Software Surplus, Inc. sold Adobe software, bought from third-party distributors, on the website softwaresurplus.com without Adobe’s authorization. Adobe sued in October 2009 for copyright and trademark infringement. Christenson raised the first sale defence and counterclaimed against Adobe and the Software & Information Industry Association over a press release about the case.[1]
The first sale doctrine in 17 U.S.C. § 109(a) lets “the owner of a particular copy” sell it without the copyright owner’s permission. Under Vernor v. Autodesk, a software user is a licensee rather than an owner where the copyright owner specifies a licence, significantly restricts transfer and imposes notable use restrictions.[1]
The dispute
Adobe argued that the defence could not apply because it only licenses and never sells its software. It relied on a declaration by its Anti-Piracy Enforcement Manager describing, in general terms, academic licences and Original Equipment Manufacturer (OEM) distribution, and on evidence that Christenson had sold academic and OEM copies.[1] Christenson argued that only Adobe knew the terms of its contracts with the original recipients and produced invoices for his purchases.[1]
During discovery, the magistrate judge precluded Adobe from relying on contracts or licences it had not disclosed under Rule 26(a), and the district court struck a licence template. The district court then granted summary judgment to Christenson on the copyright and trademark claims.[1]
Decision or outcome
The panel (Judges Tashima, McKeown and Berzon; opinion by Judge McKeown) held that Adobe had established a prima facie case of infringement, but that Christenson had carried his initial burden on the defence by producing invoices showing lawful purchases of genuine copies.[1] The burden then shifted to Adobe, which the court described as “not a difficult burden” because Adobe is the source of the software and controls its distribution; the court quoted Adobe’s own statement that “Adobe and Adobe alone knows the parties with whom it contracts.”[1]
The court found no abuse of discretion in excluding Adobe’s late licence evidence and held that “general testimony and generic licensing templates” could not satisfy Vernor, under which “the precise terms of any agreement matter” and “the title of the agreement is not dispositive”. There was no admissible evidence that Adobe significantly restricted transfer of the copies at issue.[1] The court also held that nominative fair use barred the trademark claim, because Christenson used the marks to identify genuine Adobe products; Adobe’s complaint about “full” or “retail” descriptions of academic and OEM copies was a false advertising theory it had not pleaded.[1]
Significance for software licensing and SAM practice
The decision does not change the Vernor test for whether software is licensed or sold; it decides who must prove what. A vendor asserting that resold copies were only licensed must put the actual terms in evidence, and the court observed that without the burden shift “the first sale defense would require a proponent to prove a negative”.[1] The copyrights at issue covered versions of titles such as Photoshop CS3 and CS4, and the copies included academic and OEM products.[1] Adobe’s current terms are covered in Adobe Named User licensing.
Lessons learned
- Keep the licence terms, not just the policy. Adobe lost because it could not produce specific licence agreements for the copies at issue; the court said that “the license/contract information is uniquely within Adobe’s knowledge”.[1]
- Document acquisition. Christenson met his initial burden with invoices showing purchases of genuine copies from suppliers, which is the kind of record a buyer of used or surplus licences needs.[1]
- Templates are not evidence of a transfer restriction. Generic templates and general testimony did not show that Adobe significantly restricted transfer, so the Vernor factors were not met.[1]