Digital Law Online: Copyright Misuse

The exclusive rights given to the copyright owner – reproduction, adaptation, distribution, and public performance and display – are quite broad, even when the special exceptions are considered. But sometimes copyright owners may try to use their exclusive rights to gain even more protection than is granted under the copyright laws. This is considered copyright misuse.

The copyright misuse doctrine is similar to the better-developed patent misuse doctrine. The classic patent misuse occurs when a patent owner conditions the use of a patented item (such as a salt spreader) on the purchase of a nonpatented item (such as salt) also supplied by the patent owner. The courts have found that such an action attempts to improperly enlarge the scope of the patent, and therefore when the patent owner comes to court, it is with “unclean hands” and the court will refuse to enforce the patent until the misuse ends and its effects no longer exist. The misuse does not have to be against the alleged infringer – any misuse can be used to defend against the infringement suit.

Before 1990 there were many cases regarding patent misuse, but essentially nothing regarding copyright misuse. But in that year, the Fourth Circuit explicitly recognized copyright misuse as analogous to patent misuse in Lasercomb America v. Reynolds. {FN77: 911 F.2d 970, 15 USPQ2d 1846 (4th Cir. 1990)} Lasercomb produced a computer-aided design program that Reynolds and his company licensed. Reynolds’ s use went far beyond the license it had from Lasercomb, since it found a way to circumvent the system that limited the number of active copies. Lasercomb sued for copyright infringement.

Reynolds asserted that even though it had infringed Lasercomb’s copyright, it should not be found liable because Lasercomb had misused its copyright in the license agreement for the software, and the court agreed. As part of the Lasercomb agreement, a licensee had to agree not to develop a competitive computer-aided design program for 99 years, well beyond the period of protection given Lasercomb’s program by the copyright laws at that time, 75 years. The court found that Lasercomb was trying to effectively extend the term and scope of its copyright beyond what copyright law permitted, and that would prevent people from legitimately developing competitive software. That was a misuse by Lasercomb and the court refused to enforce their copyright against Reynolds.

An interesting aspect of the case is that Reynolds and his company had never signed the license agreement. But that made no difference – Lasercomb had misused its copyright in getting others to sign the agreement, and the court said that it could not bring any infringement suits until it had purged its past misuse and its effects.

The copyright misuse defense is similar to an antitrust claim, where a copyright owner has misused the limited monopoly granted by the copyright. However, the Lasercomb decision made it clear that the copyright misuse defense is available even when the misuse does not reach the level of an antitrust violation.

Related to copyright misuse is “fraud on the Copyright Office,” where somebody has registered a copyright by providing false information or concealing important information. An example would be somebody claiming and registering the copyright in a work that is not his, such as a work prepared as an employee within the scope of that employment (a work made for hire). As with copyright misuse, the result of copyright fraud is that the courts will not enforce the copyright covered by the registration.

The Lasercomb case has been cited with approval in a number of cases since it was handed down, but in most of those cases copyright misuse was not found. In Atari v. Nintendo, {FN78: 975 F.2d 832, 24 USPQ2d 1015 (Fed. Cir. 1992)} a case decided shortly after Lasercomb, the Federal Circuit used copyright misuse not to prevent the enforcement of a copyright but to refuse a fair use defense. Even though it found that the use would otherwise be fair, because the defendant had misled the Copyright Office to get a copy of the program source code and therefore came to court with unclean hands, the defendant could not use the equitable fair use defense.

While the exact dimensions of the copyright misuse defense will be known only after considerably more cases are decided, its consequences should be considered by anyone who is trying to use his or her copyright to go beyond the protection of the copyright laws. The penalty for copyright misuse – unenforceability of the copyright in court until the misuse has been purged and its effects no longer exist – is tantamount to losing the copyright.

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