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Softman Products v Adobe Systems, 171 F. Supp. 2d 1075 (C.D. Cal. 2001)

PLAINTIFF: SoftMan Products Company is a Los Angeles-based company that distributes computer software products primarily through its website, www.buycheapsoftware.com.

DEFENDANT : Adobe Systems Inc. is a leading software development and publishing company.

Adobe alleged that since at least November 1997, SoftMan was distributing unauthorized Adobe software, including Adobe Educational software and unbundled Adobe "Collections." By distributing the individual pieces of Adobe Collections, Adobe contended that SoftMan was infringing Adobe's copyright in these products and violating the terms of Adobe's licenses. While SoftMan agreed that it was breaking apart various Adobe Collections and distributing the individual pieces of them as single products, SoftMan claims that it was entitled to distribute Adobe software in this manner. There was no direct contractual relationship between Adobe and SoftMan.

On August 27, 2001, the District Court granted a temporary restraining order and seizure order against SoftMan. On September 10, 2001, the District Court entered a preliminary injunction.

In this opinion, the District Court declared there was little likelihood that Adobe would prevail in its infringement claims and vacated the preliminary injunction declaring that software is sold, not licensed. The Court stated":

"In short, the transfer of copies of Adobe software making up the distribution chain from Adobe to SoftMan are sales of the particular copies, but not of Adobe's intellectual rights in the computer program itself, which is protected by Adobe's copyright. SoftMan is an "owner" of the copy and is entitled to the use and enjoyment of the software, with the rights that are consistent with copyright law. The Court rejects Adobe's argument that the EULA gives to purchasers only a license to use the software. The Court finds that SoftMan has not assented to the EULA and therefore cannot be bound by its terms"

"The Court finds that the provisions contained in Adobe's EULA purport to diminish the rights of customers to use the software in ways ordinarily enjoyed by customers under copyright law. Therefore, these restrictions appear to be inconsistent with the balance of rights set forth in intellectual property law."

"In this case, through the use of licensing, Adobe seeks a vast and seemingly unlimited power to control prices and all channels of distribution. On the other hand, in the absence of copyright law violations, the market can often best regulate prices and all subsequent transactions that occur after the first sale. Sound policy rationales support the analysis of those courts that have found shrinkwrap licenses to be unenforceable. A system of "licensing" which grants software publishers this degree of unchecked power to control the market deserves to be the object of careful scrutiny. "

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