Central Point Software v. Global Software

Citation: Central Point Software, Inc. v. Global Software & Accessories, Inc., 880 F. Supp. 957 (E.D.N.Y. 1995).

Factual Background
The defendant “sold” software to customers under a “deferred billing plan.” Under the plan, customers paid a small “nonrefundable deposit” for the software and were not billed for the balance if they returned it within five days.

Trial Court Decision
The judge held that the defendant’s software “sales” under the deferred billing plan amounted to software rentals in violation of 17 U.S.C. §109(b)(1)(A). The court found that the transactions were tantamount to rentals, since (a) defendant's brochures advertised the “nonrefundable deposit,” not the purchase price of software, (b) virtually all of the software was returned during the five-day period, (c) the deposits were comparable to rental fees, (d) the short term of the agreements was comparable to a rental term, allowing the defendant to use the same copy of the software in multiple transactions, and (e) the customer was not given the software manufacturer's registration card unless the full purchase price was paid.

The court also held the defendant liable for renting customers post-December 1, 1990 upgrades to programs it acquired prior to December 1, 1990 (the effective date of the rental prohibition statute). The court held that the company's right to lawfully rent software acquired before December 1, 1990 did not extend to later upgrades of the same software.