Wall Data Inc. v. Los Angeles County Sheriff’s Department is a 2006 decision of the United States Court of Appeals for the Ninth Circuit holding that a customer infringed copyright by installing licensed software on more computers than it had licences for, even though it had configured its network so that no more workstations than licensed could access the software.[1] The Sheriff’s Department had bought 3,663 licences to Wall Data’s RUMBA terminal emulation software but installed RUMBA Office on 6,007 computers. The court affirmed a jury verdict of USD 210,000 and an award of attorneys’ fees and costs.[1]
Background
Wall Data sold RUMBA Office and the cheaper RUMBA Mainframe, terminal emulation programs that let personal computers reach data on systems running different operating systems. Between December 1996 and February 1999 the Sheriff’s Department bought, through an approved vendor, 2,035 RUMBA Office licences and 1,628 RUMBA Mainframe licences. The first purchase was eight units, each containing a CD-ROM and a volume licence booklet granting 250 licences, for USD 175,220, or USD 87.61 per licence.[1]
The click-through licence granted a licence to use the program “on a single Designated Computer for which the software has been activated”, defined as a stand-alone workstation or a networked workstation that does not share the software, and said the user “may not use the Software in any other multiple computer or multiple user arrangement”.[1]
The dispute
The Sheriff’s Department first installed RUMBA Office manually at its new Twin Towers Correctional Facility. To meet the opening deadline, and because it did not know where staff who needed RUMBA would work, it switched to “hard disk imaging”: copying a master hard drive with a baseline of applications onto the other computers. By mid-2001 RUMBA Office was on 6,007 computers. A network administrator limited access by assigning “logical units” to authorised workstations; on other machines the software stayed installed but unused. The Department said that the number of workstations able to access the software never exceeded its licences.[1]
Wall Data discovered the over-installation, settlement talks failed, and the Department removed the unlicensed copies of RUMBA Office and installed RUMBA Mainframe on many computers in their place. Wall Data sued on 11 January 2002, and the only claim that went to trial was copyright infringement. The Department relied on fair use and on the “essential step” defence in 17 U.S.C. § 117(a)(1).[1]
The district court granted summary judgment against the fair use defence. After a four-day trial the jury found the Department liable and awarded USD 210,000. The court awarded Wall Data USD 516,271 in attorneys’ fees, against the more than USD 1.5 million requested, and about USD 38,000 in costs.[1]
Decision or outcome
The Ninth Circuit affirmed on every point.[1]
Fair use. All four factors weighed against the Department. The copies were exact and used for the same purpose, so not transformative. The use was commercial because the copies “were made to save the expense of purchasing authorized copies”, “or at least the expense of purchasing a more flexible license”. The court stressed that efficient technology was not the problem: “it took in excess of what it bargained for”. On market harm, it said the Department “could have bargained for the flexibility it desired, but it did not”, and that its system of dormant “ghost copies” activated by an administrator created its own “sub-licensing” system that “made tracking infringement almost impossible”, because Wall Data could not verify which computers had used the software. A Department employee had admitted in an email that he was not sure how to tell which computers had accessed RUMBA.[1]
Essential step. Section 117 protects only the “owner” of a copy. Following MAI Systems v. Peak Computer, the court held that the significant restrictions in the click-through and volume licences made the Department a licensee, not an owner. In any case, imaging the software onto nearly every computer was “a matter of convenience”, not an essential step, since the Department could have imaged only as many computers as it had licences for.[1]
Damages and fees. The jury was properly told that damages could be the fair market value of the actual use or the lost licence fees for the unauthorised copies. Wall Data’s average price to the reseller was USD 189 and government entities paid USD 113 per copy. Depending on whether the jury counted 2,344 or 3,962 infringing copies, the award equalled roughly USD 53 to USD 90 per copy, within the range of the evidence. Wall Data was the prevailing party even though it recovered less than it sought, so the fee award stood.[1]
Significance for software licensing and SAM practice
Wall Data is binding precedent in the Ninth Circuit and is often cited on over-installation. Its practical holding is that, under a licence counted per designated computer, the installed copy is what must be licensed, and technical limits on access do not convert a per-device licence into a concurrent-use licence.[1]
The decision also shows how the licence metric shapes damages. In 2025 the Federal Circuit distinguished Wall Data when it refused per-copy damages in Bitmanagement v. United States, explaining that the Wall Data award rested in part on licence terms “specifically establishing a seat license, effectively prohibiting copying of the software”, whereas the Navy’s dealings with Bitmanagement were based on simultaneous users.[2]
The ruling on § 117 treated a customer under a restrictive software licence as a licensee rather than the owner of its copies.[1] The same question, in the context of resale, is discussed in Vernor v. Autodesk.
Lessons learned
- Under a per-device licence, installing a copy counts even if access controls stop it being used. The court held the Department liable for copies on 6,007 computers although access was limited to the licensed number.[1]
- Disk imaging a full software baseline onto every machine can create large licence shortfalls. The over-installation came from imaging a master drive onto all computers in a new facility for convenience.[1]
- A customer’s own control system that the vendor cannot verify does not replace compliance with the licence metric. The court criticised the “sub-licensing” system because Wall Data had to trust the Department that it was not over-using the software.[1]
- Over-installation can cost more in the vendor’s legal fees than in licence fees. The fee award of USD 516,271 was more than twice the USD 210,000 in damages.[1]