Tabberone is pronounced tab ber won
not tay ber own
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Tabberone is pronounced tab ber won |
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| This information is taken directly from the court opinion. It is not taken out of context nor is it altered. |
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From Softman Products v Adobe Systems, 171 F. Supp. 2d 1075 (C.D. Cal. 2001)
A number of courts have held that the sale of software is the sale of a good within the meaning of Uniform Commercial Code. Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 676 (3d Cir. 1991); Step-Saver, 929 F.2d at 99-100; Downriver Internists v. Harris Corp., 929 F.2d 1147, 1150 (6th Cir. 1991). It is well-settled that in determining whether a transaction is a sale, a lease, or a license, courts look to the economic realities of the exchange. Microsoft Corp. v. DAK Indus., 66 F.3d 1091 (9th Cir. 1995); United States v. Wise, 550 F.2d 1180 (9th Cir. 1977). In DAK, Microsoft and DAK entered into a license agreement granting DAK certain nonexclusive license rights to Microsoft's computer software. The agreement provided that DAK would pay a royalty rate per copy of computer software that it distributed. Subsequently, DAK filed a petition for bankruptcy, and failed to pay the final two out of a total of five installments. Microsoft filed a motion for the payment of an administrative expense, claiming that it should be compensated for DAK's post-bankruptcy petition use of the license agreement. On appeal, the Ninth Circuit held that the economic realities of the agreement indicated that it was a sale, not a license to use. Thus, Microsoft simply held an unsecured claim and not an administrative expense. The court found that the agreement was best characterized as a lump sum sale of software units to DAK, rather than a grant of permission to use an intellectual property. The court in DAK noted: |
| Because we look to the economic realities of the agreement, the fact that the agreement labels itself a "license" and calls the payments "royalties," both terms that arguably imply periodic payment for the use rather than sale of technology, does not control our analysis. |
| DAK, GG F.3d at 1095, n.2. Other courts have reached the same conclusion: software is sold and not licensed. See, e.g., RRX Indus., Inc. v. Lab-Con Inc., 772 F.2d 543, 546 (9th Cir. 1985); Applied Info. Mgmt., Inc, v. Icart, 976 Supp. 149, 155 (E.D.N.Y. 1997) finding that whether a transaction denominated a "license" was in act a sale conveying ownership was a disputed question of fact); Novell, Inc. v. CPU Distrib., Inc., 2000 U.S. Dist. Lexis 9975 (S.D. Tex. 2000). In Novell, a software manufacturer was pursuing a discount retailer for copyright infringement. Like Adobe, CPU argued that it purchased the software from an authorized source, and was entitled to resell it under the first sale doctrine. Novell claimed that it did not sell software but merely licensed it to distribution partners. The court held that these transactions constituted sales and not a license, and therefore that the first sale doctrine applied. 2000 U.S. Dist. Lexis 9975 at *18. |
