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Legal risks of buying and selling software products online

Posted by Steve Vondran | Jun 18, 2016 | 0 Comments

Copyright Bullies & Trolls – Tales from the Trenches!

Introduction – risks of buying and selling software online

The variation of copyright trolls is virtually limitless.  Here is an email from another case we handled recently.  Basically, in this case our Client purchased a printer on Ebay.  The printer came with a separate piece of software that did not have a license attached to it or disclosed in any way.  It was just a piece of software.  To the casual purchaser, you would assume that the software was free to do as you please with.  In other words, the buyer should be able to use it, destroy it, sell it, or even give it away.  In other words, there were NO NOTICEABLE RESTRICTIONS placed on the use of the separately packaged and bundled software.  The printer likewise contained no restrictions on the use of the disc.    My Client therefore sold the software online to recoup part of the investment on the printer.

So it came as a surprise to the online purchaser who then received a Notice of Copyright Infringement threatening Client with $150,000 in willful copyright infringement damages.  This blog discusses our dealing with opposing counsel who tried to bully me as well as the client.  The public needs to be aware of this due to the significant amount of damages being sought in these types of case.  It is unfair to try to strong arm people into settlements under these conditions.

The Infringement Allegation by Adobe (could be any software company)

We naturally contested the aggressive behavior and unwillingness to even try to be civil about the issue given my Client was completely innocent.  But here is what we were told in an email:

Mr. Vondran,

“As I'm sure you are aware, given that your website indicates that you practice intellectual property law, Adobe's software is licensed, not sold, from inception. Given that no title has ever passed from Adobe to any distributor, your client has received no title and thus cannot simply do what he wishes with the product.

Moreover, the software that your client was selling was not a full retail version of the software. It was limited functionality OEM version that came bundled with a piece of hardware. It cannot be separated from the hardware, and it cannot be resold. Your client violated Adobe's exclusive rights when he sold this product separate from the hardware.

For your education on this point, I direct your attention to Adobe Systems Inc. v. Kornrumpf, CAND No. C10-02769 CW. I'm giving you the case number instead of a Westlaw cite because this entire case would be quite helpful in demonstrating Adobe's position and the Court's interpretation of the laws relating to software, and in particular, Adobe's software. In this case, a person sold OEM versions of Adobe software without the accompanying hardware – identical facts as those of your client. He argued throughout that the first sale doctrine applied and that he was not subject to any license. Both the district court and the 9th Circuit disagreed with him repeatedly. The order granting Adobe's motion to dismiss Defendants' counterclaims, 780 F. Supp. 2d 988 (N.D. Cal. 2011), gives a good analysis of software licenses. Also, there is an order for a preliminary injunction that is instructive. The order for partial summary judgment finding that the first sale doctrine does not apply to Adobe's software licenses is good too. This order was affirmed on appeal in Opinion No. 12-16616 (June 2, 2014).

Additionally, please see the following cases, which also support Adobe contentions (I was then cited to a slew of case law):

Adobe Systems Inc. v. Bea's Hive LLC, Southern District of Florida Case No. 9:14-cv-81102-JIC, Document 55 – Order Granting Preliminary Injunction (September 18, 2014)

Apple Inc. v. Psystar Corp., 658 F.3d 1150 (9th Cir. 2011)

Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010)

MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928 (9th Cir. 2010)

Pegasus Imaging Corp. v. Allscripts Healthcare Solutions Inc., 2010 WL 497720 (M.D. Fla. Feb. 9, 2010)

Metal Morphosis, Inc. v. Acorn Media Publishing Inc., 639 F. Supp. 2d 1367 (N.D. Ga. 2009)

Wall Data Inc. v. Los Angeles Cnty. Sheriff's Dept., 447 F.3d 769 (9th Cir. 2006)

Sun Microsystems, Inc. v. Microsoft Corp., 188 F.3d 1115 (9th Cir. 1999)

Adobe Systems Inc. v. Stargate Software Inc., 216 F. Supp. 2d 1051 (N.D. Cal. 2002)

Adobe Systems Inc. v One Stop Micro, Inc., 84 F. Supp. 2d 1086 (N.D. Cal. 2000)

Triad Systems Corp. v. Southeastern Express Company, 64 F.3d 1330 (9th Cir. 1995)

Microsoft v. Harmony Computers & Electronics, 846 F. Supp. 208 (E.D.N.Y. 1994)

MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993)

The response from Adobe's IP lawyers continued:

“Therefore, Adobe stands behind its allegations. We can try to settle this case now, or Adobe can take this to Court, as it has done many times. If your client wishes to settle, then he needs to provide the disclosures that I addressed with him – namely, a full and complete accounting of all Adobe sales and documentation identifying his supplier, quantities purchased and purchase prices. At this time, Adobe has much more flexibility in terms of settlement. However, if your client forces Adobe to pursue litigation, please be advised that Adobe will pursue its remedies to the fullest extent of the law, including maximum damages and attorneys' fees.

This is what we refer to jokingly as the “love letter” – not much room to be friendly or engage in an honest discussion here, and that is made abundantly clear.  This is even before there was ever even a phone call to my law office to discuss or try to be reasonable.  In other words, a total copyright bully.  I responded by asking if they had any proof that my Client would have been aware of any licensing restrictions.  I did not hear back for about a month or so, then I received the following response:


“Your client only receives the title that his supplier had. Since Adobe never passed title to anyone, he never acquired it. Whether or not he has a contract with Adobe is irrelevant.”

Note that I had achieved at least a modicum of respect for asking a very basic question, and I had transformed from “Mr. Vondran” to “Steve” so I at least give credit for trying to turn cordial.  At any rate, this is an example of what you can expect if you are faced with buying or selling software online, so I advise my Clients to do it carefully.  You may want to discuss with legal counsel before you sell videos, games, software, music discs, or other digital content on Craigslist, eBay, or even on your own personal website.  The “IP cops” are definitely out monitoring the web and they may sue you, serve you with a subpoena or demand you settle your case paying the typical copyright infringement damages.

Luckily, we have not heard back, and hopefully this means the case is closed which is a fair and just conclusion.

Contact a Copyright Lawyer

If you feel pressured into settling a lawsuit, responding to a DMCA take down notice, responding to a ISP subpoena, or dealing with a software audit, call us, we can help.  We have fought for many clients, and while we respect companies enforcing their IP, it needs to be done in a fair and respectable manner.  Most people who buy and sell online do not hold “intellectual property law degrees.”  We handle copyright infringement cases throughout the United States including international companies being sued in the US District Courts of California (ex. Northern District) or Arizona.  We offer low flat rate fees for many cases, (pre-litigation cases), and we have substantial federal court experience.  Call (877) 276-5084 for free initial conversation. 

About the Author

Steve Vondran

Thank you for viewing our blogs, videos and podcasts. As noted, all information on this website is Attorney Advertising. Decisions to hire an attorney should never be based on advertising alone. Any past results discussed herein do not guarantee or predict any future results. All blogs are written by Steve Vondran, Esq. unless otherwise indicated. Our firm handles a wide variety of intellectual property and entertainment law cases from music and video law, Youtube disputes, DMCA litigation, copyright infringement cases involving software licensing disputes (ex. BSA, SIIA, Siemens, Autodesk, Vero, CNC, VB Conversion and others), torrent internet file-sharing (Strike 3 and Malibu Media), California right of publicity, TV Signal Piracy, and many other types of IP, piracy, technology, and social media disputes. Call us at (877) 276-5084. AZ Bar Lic. #025911 CA. Bar Lic. #232337


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