Softman v. Adobe

Citation: SoftMan Products Co. v. Adobe Systems, Inc., 171 F. Supp. 2d 1075 (C.D. Cal. 2001).

Factual Background
Counter-claimant, Adobe Systems, Inc. (Adobe), a software development and publishing company, alleged that counter-defendant, SoftMan Products Company, LLC (SoftMan), a software distributor, infringed its copyright in certain software products and violated the terms of its licenses. The matter came before the court on Adobe's application for a preliminary injunction. Adobe alleges that since at least November 1997, SoftMan has distributed unauthorized copies of Adobe software and by doing so, has infringed Adobe's copyrights in the products and violated the terms of Adobe's licenses. While SoftMan agreed that it was breaking apart various Adobe Collections and distributing the individual pieces of them as standalone products, SoftMan claimed that it was entitled to distribute Adobe software in this manner. There is no direct contractual relationship between Adobe and SoftMan. Adobe distributes its products through "licensing" agreements with distributors. Each piece of Adobe software is also accompanied by an End User License Agreement ("EULA"), which sets forth the terms of the license between Adobe and the end user for that specific Adobe product. By distributing the unbundled Collections, Adobe alleges that SoftMan exceeded the scope of the EULA and has infringed on Adobe's copyrights, specifically Adobe's right to distribute and control distribution. SoftMan contends that the first sale doctrine allows for the resale of Adobe's Collection software. Adobe counters that the first sale doctrine does not apply because Adobe does not sell or authorize any sale of its software, but rather licenses it. Adobe also contends that the EULA requires construction of the transaction as a license rather than a sale.

District Court
Before the court will grant a preliminary injunction, Adobe must show either a likelihood of success on the merits and the possibility of irreparable injury for its copyright or trademark claims, or that serious questions going to the merits were raised and balance of hardships tips sharply in its favor.

Copyright
The court found that the circumstances surrounding the transaction strongly suggest that the transaction is in fact a sale rather than a license. With respect to the EULA, the court found that SoftMan is not bound by it because there was no assent to its terms since SoftMan never attempted to load the software that it sells. Thus, the court concluded that Adobe has not demonstrated a likelihood of success on the merits of its copyright infringement claim. Since the court found that Adobe has not made a showing of a likelihood of success on the merits of its copyright claim, no presumption of irreparable harm is raised. Given that neither Adobe nor SoftMan had submitted any evidence of economic loss except broad, general statements, the Court considered the balance of hardships to be a neutral factor. The court also considered public policy considerations in determining whether to grant preliminary injunctive relief. The court found that important public policy considerations weigh on each side, but concluded that the factors weigh in favor of the counter-defendant, SoftMan.

Trademark
Whether consumers in fact can and do access Adobe customer support when they buy Adobe software from SoftMan is disputed. Therefore, the court found that Adobe has not demonstrated a likelihood of success on the merits of the trademark claim because questions of fact predominate as to the central issue. The court did not presume irreparable injury to Adobe because Adobe fails to make a showing of likelihood of success on the merits and found that public policy considerations do not weigh in favor of granting Adobe's request for a preliminary injunction. For the above reasons, the court vacated the preliminary injunction previously entered.