47:5 Preserving The Copyright Balance: Why Copyright Misuse Should Invalidate Software Licenses Designed To Prohibit Resale And Oust Service Market Competition

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Abstract

In 1990 the Fourth Circuit held that the copyright misuse doctrine constitutes a valid affirmative defense against claims of infringement. This doctrine prohibits copyright holders from impermissibly expanding the scope of their copyrights. However, the courts have been hesitant to allow this defense in situations where copyright holders license primarily to restrict resale of copyrighted software or to prohibit third-party use of software licensed to a customer, even for general computer-servicing purposes such as trouble shooting and software maintenance. This Comment reviews the purpose of the copyright misuse doctrine and its application by the Federal Appellate Courts. It argues that in two specific scenarios the copyright misuse doctrine should be a viable defense against claims of copyright infringement.

The first scenario occurs when a copyright holder licenses its software primarily to restrict resale in the secondary market. Such licenses are simply sales disguised as licenses. Moreover, they exclusively benefit the copyright holder and entirely disregard the primary policy behind copyright law of securing for the public the benefits derived from the copyright worked. If all copyright holders began utilizing these types of licenses it could very easily lead to the demise of secondary markets, such as used book and software stores.

The second scenario occurs when a copyright holder prevents third parties from servicing a customer’s computer using software licensed to the customer. Such practices risk giving copyright holders an absolute monopoly on the service market associated with their software. While copyright law encompasses many rights, control of the service market for the copyrighted work is not one of these rights.