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Software "sold" not "licensed" – Softman Products Company, LLC v. Adobe Systems, Inc., 171 F.Supp.2d 1075 (CDCA Oct 19, 2001)

Software distributor Softman sued Adobe and Adobe brought counterclaims against Softman including copyright infringement. Softman purchased, at a discounted price, Adobe software programs, such as Adobe PageMaker, Acrobat, Photoshop and Illustrator, that Adobe bundled together and sold as a collection. Softman then unbundled the collection and re-sold each software package separately. Adobe claimed that it never "sold" its software but rather licensed it, that Adobe retained ownership of the copyright in the programs and of the media on which the programs were distributed, that its end user agreement prohibits re-distribution of the unbundled programs, and that Softman was bound by Adobe’s end user agreement. The court decided in favor of Softman finding that the transaction between Adobe and Softman constituted a sale, not a license, that the first sale doctrine applied, and therefore, Softman, as the owner of lawfully made copies of the Adobe software, had the right to re-sell or otherwise dispose of the possession of its copies. The court also found that because Softman never signed a distribution agreement with Adobe and never loaded Adobe’s software on any computer, Softman never assented to the terms of Adobe’s end user license agreement.

Thus, software companies should seriously consider using written contracts with their distributors detailing the distribution model and each parties’ rights and obligations.

Caution:

This abstract summarizes the cited case only. The legal effect of a particular case can change for various reasons including the outcome of an appeal, a later court decision, or new legislation. This abstract is provided as an illustration of a specific outcome under the specific conditions and laws in effect at the time of the decision. You should not rely on this abstract or this case as representing current law without conducting further research. To request further information about this case or a related issue, contact us at 301.332.4850 or click here to send us an email.

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