Bait and switch on different versions of the same brand isn’t TM infringement

Adobe Sys. Inc. v. Christenson, No. 12-1731 (9th Cir. Dec.
30, 2015)
 
Adobe loses this case because of pleading and discovery
choices, allowing the 9th Circuit to avoid harder first sale
questions.  Christenson sold Adobe
software, which he purchased from a third-party distributor, without Adobe’s
authorization.  Adobe argued that first
sale didn’t apply because Adobe never sells (copies of) its software. A
declaration by its Anti-Piracy Enforcement Manager described different ways that
Adobe licenses software.  Adobe also
submitted evidence of customer returns and complaints in which customers
complained that they had received software licensed for academic use from
Christenson despite having understood that they had purchased software
appropriate for non-academic users.  However, Adobe pled trademark infringement,
not false advertising.
 
Christenson filed a motion to preclude Adobe from relying on
contracts, licenses, or agreements that Adobe failed to disclose under Rule
26(a), which was granted.  Since it was
uncontroverted that Christenson purchased genuine copies of Adobe software, the
trial court reasoned that the burden shifted to Adobe to show that there had
been no first sale, which it could not do. 
The trademark claim failed because the use was nominative.
 
On appeal, the court of appeals noted that “some purported
software licensing agreements may actually create a sale.”  But first: who bears the initial burden of
showing ownership through lawful acquisition? 
The answer: the party asserting the defense, to wit, the defendant.  (Which is too bad for anyone who doesn’t keep
receipts for the books they buy.)  To
pass summary judgment, “the party asserting a first sale defense must come
forward with evidence sufficient for a jury to find lawful acquisition of
title, through purchase or otherwise, to genuine copies of the copyrighted
software.”  If the copyright owner claims
that the defendant couldn’t acquire title because the software [read “copies of
the software”] was never sold, only licensed, the burden shifts back to the
copyright owner to show such a license. 
The copyright owner is in a superior position to show the terms of any
such licenses.  “[F]airness dictates that
a litigant ought not have the burden of proof with respect to facts
particularly within the knowledge of the opposing party.” And, without the
burden shift, the defendant would have to prove a negative; a downstream
possessor “is hardly in a position to prove either a negative—the absence of a
license—or the unknown—the terms of the multiple transfers of the software.”
 
Christenson discharged his burden by showing legitimate
sales from third-party distributors of Adobe software. Adobe didn’t produce its
alleged licenses until too late, and excluding its evidence was not an abuse of
discretion.  Its “effort to substitute
general testimony and generic licensing templates in lieu of the actual
licensing agreements does not withstand scrutiny.”  Calling an agreement a “license” is not
dispositive; the precise terms matter for first sale, and here there was no
admissible evidence about those terms.
 
As for the Lanham Act claim, Adobe “confuses the claim that
it made—trademark infringement—with the claim it wishes it had made—unfair
competition, or false advertising.”  It
pled infringement, and nominative fair use precluded that claim.  On appeal, Adobe argued that Christenson
engaged in a “bait and switch” tactic of selling Adobe products licensed as
academic or OEM products by describing them as “full” or “retail” versions,
misleading consumers as to which version they would receive. But that was a
false advertising theory, not a trademark infringement theory, since there was
no claim that the marks weren’t applied to genuine Adobe products, or that
“Adobe Acrobat Pro” was only the mark for the non-academic/OEM version.  Christenson’s use of the marks was to
identify the products themselves and not to “inspire a mistaken belief on the
part of consumers that the speaker is sponsored or endorsed by the trademark
holder.”

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