Thursday, December 31, 2015

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.”

1 comment:

Anonymous said...

I don't know if this comment will ever be seen but I hope someone in 2023 will take a look at Adobe's current practice of allowing direct downloads of all forms of "trial" software from their website, even versions that are no longer officially supported. They then allow the "Buy" button to work in that software but the license generated will not properly activate it. Burried on their massive website there are disclosures that they only sale the current version, but those disclosures are not prominently displayed on the download page where earlier versions of software are found, nor is the "Buy" button on the trial software disabled (grayed out) to signal that the product cannot be activated. If one is a casual user of products such as Photoshop Elements (aimed at consumers, not professionals) or a newcomer to these products it can be difficult to appreciate that the working "Buy" option available on software directly downloaded from the Adobe website is misleading. In fact, upon moving to the Buy screen where payment details are input it will state under specifications that "multiple" operating systems are supported by the product, which can be construed to mean that the license key that will be electronically delivered to the recipient's email will be consistent with the system requirements of the trial product. I can vouch for the fact that this is NOT the case: One will receive a license key wholly INCOMPATIBLE with any prior version of the software, even if that software is only one year earlier (i.e. Photoshop Elements 2022 trial will result in a Photoshop Elements 2023 license key). Essentially what this means is that the company is engaging in bait-and-switch because upon being contacted immediately thereafter they will state that under no circumstances will they provide the license key that the consumer thought they were purchasing. In other words, they will take payment under less-than-clear circumstances and refuse to refund it, even if the customer does not have the ability to run a current version of the software (due to limitations of their Mac or PC hardware). Adobe needs to be taken to task for the practice of allowing WORKING "Buy" buttons to exist in non-supported software downloaded directly from their website. Either remove the software or remove the "Buy" option from the trial. What's more, it should not be legal for a software company to render obsolete only ONE version behind the current version. This is not about retiring 5-year-old products. This is about making ONE YEAR OLD software ineligible for activation even though consumers are permitted to buy it directly from within the software trial itself.