Adobe Systems v. Brenengen d/b/a/ Software Exchange

Citation
Adobe Systems, Inc. v. Brenengen d/b/a/ Software Exchange, 928 F. Supp. 616 (E.D.N.C. 1996) (full-text).

Factual Background
Adobe Systems, Inc., a manufacturer of computer software, brought a copyright infringement suit against Brenengen, an operator of a software rental business.

Trial Court Proceedings
Adobe filed a motion for a preliminary injunction; the standard for evaluating relief for this motion is the balance of hardship test.

The four parts of the balance of hardship test is: (1) the likelihood of irreparable harm to plaintiff if the preliminary injunction is denied; (2) the likelihood of harm to defendant if the injunction is granted; (3) the likelihood that plaintiff will succeed on the merits; and (4) the public interest. The court’s decision whether to grant or deny this motion depends on the flexible balance of all four factors considered under the balance of hardship test.

A copyright infringement action such as this raises the presumption that the plaintiff, namely Adobe, can demonstrate the likelihood of success and irreparable harm that is necessary for preliminary injunctive relief.

In order to establish a prima facie case of copyright infringement, Adobe was required to prove (1) ownership of copyrights that were allegedly infringed and (2) that Brenengen, the owner of software rental business, participated in unauthorized rental, lease, or lending of copyrighted software for purposes of commercial advantage. 17 U.S.C.A. Section 109(b)(1)(A), (b)(4), 501(a). The means through which Adobe could prove this was the Computer Software Rental Amendments Act of 1990, which prohibited software rental businesses that began operations before the effective date of the Act to engage in rental of post-1990 property.

The court granted Adobe’s motion for a preliminary injunction and enjoined the defendant from the rental, lease, or lending of copyrighted works belonging to the plaintiffs for commercial advantage. Its decision was based on the four parts of the balancing hardship test, as analyzed below.


 * (1) Adobe was required to prove ownership of copyrights that were allegedly infringed. Plaintiffs attached to their motion copies the certificates of copyright registration for each of the copyrights involved. These copyright certificates are prima facie evidence of the “validity of the copyright and the facts stated in the evidence,” therefore plaintiffs have satisfied this first element.
 * (3) Adobe was required to prove that Brenengen participated in unauthorized rental, lease, or lending of copyrighted software for purposes of commercial advantage. They also satisfied this element, thus establishing a prima facie case of copyright infringement. Brenengen’s own admissions at hearing and the Declaration of T.V. O’Malley reveal that Brenengen is engaged in the for-profit rental of plaintiffs’ software through his business, the Software Exchange, without the authorization of the plaintiffs.

Thus, plaintiffs established a prima facie case of copyright infringement, satisfying both the likelihood of success on the merits (prong 3) and irreparable harm (prong 1) of the preliminary injunction/ balance of hardship test.

Further analysis under the remaining two prongs of the test further revealed that the balance of hardships test favors entry of a preliminary injunction:
 * (2) Likelihood of harm to the defendant if the injunction is granted. Because defendant is engaged in infringement, the only hardship that he will suffer as a result of any injunction is court-ordered compliance with the copyright laws. This will result in him losing only profits derived from illegal distribution of plaintiffs’ software.


 * (4) The public interest. An injunction will serve the public interest by protecting the “special reward” of copyright which motivates “the creative activity of authors, inventors,” and programmers.