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17.23 Copyright—Affirmative Defense—Copyright Misuse

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This chapter is being reviewed in light of comments solicited by the Committee from the public.

17.23 COPYRIGHT—AFFIRMATIVE DEFENSE—COPYRIGHT MISUSE

Comment

The Ninth Circuit explicitly adopted copyright misuse as a defense to copyright infringement in Practice Management Information Corp. v. American Medical Association, 121 F.3d 516, 520 (9th Cir.1997), amended by 133 F.3d 1140 (9th Cir.1998). Copyright misuse is an equitable defense to copyright infringement. Vernor v. Autodesk, Inc., 621 F.3d 1102, 1115 (9th Cir.2010). It does not apply when there is no allegation of copyright infringement. Altera Corp. v. Clear Logic, Inc., 424 F.3d 1079, 1090 (9th Cir.2005). Copyright misuse precludes enforcement of a copyright during the period of misuse, but it does not invalidate the copyright. Practice Mgmt., 121 F.3d at 520 n.9.

Copyright misuse "forbids the use of the copyright to secure an exclusive right or limited monopoly not granted by the Copyright Office." Id. at 520 (quoting Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 977–79 (4th Cir.1990)). The purpose of the defense is to prevent copyright holders "from leveraging their limited monopoly to allow them control of areas outside the monopoly." Apple Inc. v. Psystar Corp., 658 F.3d 1150, 1157 (9th Cir.2011) (quoting A&M Records v. Napster, Inc., 239 F.3d 1004, 1026 (9th Cir.2001)); see also Practice Mgmt., 121 F.3d at 520-21 (finding misuse when copyright holder’s license agreement required licensee to use its copyrighted coding system to exclusion of other competing coding systems because it gave copyright holder a "substantial and unfair advantage over its competitors").

The contours of this defense are still being defined because courts do not need to address the issue when there is an unsuccessful claim for copyright infringement. See MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 941 (9th Cir.2010) (declining to address copyright misuse issue because there was no infringement); Vernor, 621 F.3d at 1115 (noting that district court did not decide copyright misuse because it found no infringement); Sony Comput. Entm’t, Inc. v. Connectix Corp., 203 F.3d 596, 608 (9th Cir.2000) (declining to consider copyright misuse issue when likelihood of success on merits insufficiently established injunctive relief on copyright infringement claim).

In Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772 (5th Cir.1999), the Fifth Circuit affirmed a jury decision that a copyright holder had engaged in copyright misuse by stating, "A reasonable juror could conclude, based on the licensing agreement, that ‘DSC has used its copyrights to indirectly gain commercial control over products DSC does not have copyrighted,’ namely, its microprocessor cards." Id. at 793.

There is a useful discussion of this affirmative defense in a concurring opinion in Omega S.A. v. Costco Wholesale Group, 776 F.3d 692, 699-706 (9th Cir.2015) (Wardlaw, J., concurring), that affirmed on other grounds a lower court decision that included a copyright misuse finding. However, the Ninth Circuit has not yet decided whether the equitable defense of copyright misuse should be submitted to the jury or is an issue for the court to decide.