Digital copyright disputes throw around terms such as “sale”, “license”, “first sale”, and “right ownership.” The distinction of these terms began in 1908 by the Supreme Court determining that a “sale” serves as a defense as opposed to a “license” under a copyright claim. In a cited case, Bobbs-Merrill, the defendant purchased copies of a book at a discount in order to sell it at less than retail. There, as in the Adobe Systems, Inc. v. Joshua Christenson (Software Surplus, Inc., i.e., SSI) case from the 9th Circuit, the plaintiff did not have a right to control the future sales by the defendant as the court stated, copyright owner “who has sold a copyrighted article, without restriction, has parted with all right to control the sale of it.”
When Congress amended the Copyright Act in 1976 and revised the first sale defense under 17 U.S.C. § 109(a), it stressed to require the defendant seeking to avail itself of the first sale defense to actually own a copy of the righted material. The effect of this limits the first sale defense to the owner of the righted material. A distinction was then made from those who acquired the righted material by rent, lease, or loan. The distinction held for lack of existing ownership.
While the Adobe system’s 2009 lawsuit was considered straightforward, the hinging issue was to determine who would bear the burden of proving the first sale defense in this software licensing dispute. Court noted that Adobe had the burden to establish copyright infringement while SSI who was raising the “first sale defense” had the burden of that defense. SSI had to produce sufficient evidence to convince a jury to find that it lawfully had ownership of the copyrighted materials. Adobe argued that the first sale defense did not apply because it issues licenses and it does not sell the software. SSI argued that since it was only a ‘downstream distributor’ it did not have access to the terms of the Adobe contracts with the original recipients, i.e., third-party suppliers. It further stated that then the burden should be on Adobe, who has access to the terms of those contracts, to produce evidence to disprove the first sale defense. While Adobe could not disprove that a first sale occurred in the absence of it demonstrating the terms of any actual contract, SSI provided evidence of its purchase of copies of the Adobe software from third parties.
In its ruling for SSI, the court stressed that there was no doubt that SSI lawfully purchased genuine copies of Adobe software from third-party suppliers before it resold those copies. This was restated as similar to the facts in 1908 before the age of computers in the Bobbs-Merrill case. With the burden shifting to Adobe to produce evidence that “it merely licenses and does not sell” the copyrighted software, the court noted that Adobe would be unable to do so because it was precluded under Fed. R. Civ. P. 26(a), for not having provided such evidence as previously required to do so. Throughout the case SSI stressed that its activity was exempted from Adobe’s distribution rights under the first sale doctrine. That doctrine avails the lawful owner of a copy, with that lawful title, or any person authorized by such owner, without the authority of the copyright owner (i.e., Adobe) to sell or otherwise dispose of the possession of that copy. The take away from the Adobe v. SSI case is that the language reduces the copyright owner’s exclusive distribution right “only to the first sale of the copyrighted work”, once the righted material is in the marketplace, hence the owner no longer controls the distribution of the work.
See Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 350 (1908). Bobbs-Merrill held the copyright to the novel “The Castaway” and sued Macy & Company for copyright infringement. Each copy of the book had a notice on the title page that the retail price was one dollar and “a sale at a less price will be treated as an infringement of the copyright.” Id. at 341.
 Id. at 350
 17 U.S.C. § 109(a).