On May 17th, the Ninth Circuit handed down its opinion in Wall Data Inc. v. Los Angeles Sheriff's Department. The opinion has a number of interesting observations on fair use and license restrictions. Plaintiff created terminal emulation software that permitted PCs using one operating system to access data stored on computers using different operating systems. There were two versions of this software, called RUMBA, both of which were, according to plaintiff, licensed, not sold. Defendant Sheriff's department bought 3,663 licenses of the RUMBA software.
Initially, the Sheriff's department manually loaded each piece of software. This is found to be too time-consuming, and so the Sheriff's department resorted to hard disk imaging in which the entire contents of a single "master" hard drive (including RUMBA) were copied on to the other computers. The total number of computers with RUMBA copied on to the hard drives was 6,007, a number far in excess of the number of licenses purchased. In something of an effort not to blow the license terms, the Sheriff's department limited the number of terminals that could access RUMBA at any one time to 3,663, the number of license purchased. Plaintiff wasn't amused and sued.
Both parties moved for summary judgment on fair use, which was denied. The district court reconsidered, though, and granted plaintiff's motion, holding no fair use as a matter of law. The rest of the case then went to a jury, which awarded plaintiff $210,000 in damages. The cops appealed, and lost again.
While there was a Section 117 argument, I will only address fair use. The Ninth Cicruit found the use wasn't transformative, with transformative defined as "where a defendant changes a plaintiff's copyrighted work or uses plaintiff's copyrighted work in a different context such that plaintiff's work is transformed into a new creation." Format changes were not considered a transformative "change." (The court of appeals mistakenly cited to Kelly v. Arriba Soft as ruling on Mp3 files; sloppy work, law clerks). The Sheriff's use was also deemed commercial, as a repeated exploitative copying, and in violation of the license restrictions. The second and third factors were whizzed past on the way to the market factor. Here the court of appeals rejected defendant's argument of efficiency, and that it wouldn't have bought more licenses anyway. Of particular interest is the great solicitude shown to the vulnerability of software copying.