The Ninth Circuit recently addressed the burden of proof applicable to the first sale defense to a copyright infringement claim. That defense provides that, once a copy of a work is lawfully sold or transferred, the new owner has the right to sell or otherwise dispose of that copy without the copyright owner’s permission. In Adobe Systems, Inc. v. Christenson, the panel unanimously held that, while the copyright holder bears the ultimate burden of establishing copyright infringement, the party raising a first sale defense bears an initial burden with respect to the defense.  At the summary judgment stage, this initial burden is discharged by producing evidence sufficient for a jury to find that the alleged infringer lawfully acquired ownership of genuine copies of the copyrighted work.  The burden then shifts back to the copyright owner to establish the absence of a first sale due to licensing or another non-ownership-transfer when the copy first changed hands.

The Court explained that this burden-shifting construct “makes sense” because the copyright holder is in a superior position to produce documentation of any license. The Court also noted that this approach is consistent with legislative history and general principles of fairness.

Applying this burden-shifting regime, the Ninth Circuit affirmed the District of Nevada’s grant of summary judgment against plaintiff Adobe’s “otherwise slam dunk” copyright infringement claim.  Although Adobe had established its registered copyrights in the Adobe software at issue, the defendant individual and his software company met their burden of showing that they lawfully acquired genuine copies of the software.  The burden then shifted back to Adobe, which failed to produce any license agreement or other evidence to document that Adobe retained title to the software when the copies were first transferred.

The Ninth Circuit also affirmed summary judgment against Adobe’s trademark infringement claim arising out of the defendants’ tactics of selling Adobe products on their website using the Adobe name.  The court explained that the “primary problem” with Adobe’s trademark infringement claim was that Adobe was effectively arguing for a false advertising or unfair competition claim, which Adobe had failed to plead in its complaint.  Therefore, the Court found that the nominative fair use defense barred Adobe’s trademark claim because the defendants’ “nominal use of [Adobe’s] 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.”

The Adobe decision serves as a cautionary tale to copyright owners to maintain and produce license agreements and other evidence to document that they retained title to their works when the copies were first transferred.  Otherwise, copyright owners risk having even “slam dunk” copyright infringement claims barred by the first sale defense.