## Facts

- Adobe developed and sold software, including discounted “Educational” CD-ROM versions intended only for students, faculty, and educational institutions.
- Adobe distributed educational products through a controlled channel: distributors could sell only to authorized educational resellers bound by an Educational Reseller Agreement.
- The Educational Reseller Agreement limited sales to qualified end users, required proof of academic status, and incorporated Adobe’s End User License Agreement (EULA).
- Adobe’s shrinkwrap EULA characterized the transaction as a nonexclusive license and reserved title in the software to Adobe while imposing use and transfer limits.
- Stargate, a discount reseller, acquired Adobe educational software from various sources, including non-authorized sellers, and resold the copies at low prices without verifying educational eligibility.
- Adobe sued for copyright infringement based on Stargate’s alleged unauthorized distribution of the educational software copies.
- Stargate asserted the first-sale doctrine under 17 U.S.C. § 109(a), arguing it lawfully owned the copies it resold.

## Issues

1. Whether Stargate qualified as the “owner of a particular copy” under 17 U.S.C. § 109(a) so it could invoke the first-sale doctrine for Adobe’s educational software.
2. Whether Adobe’s EULA and educational distribution restrictions meant recipients obtained only a license (not ownership), foreclosing a first-sale defense.

## Decision

- The court held that recipients of Adobe’s educational software obtained licenses, not ownership interests in the copies.
- Because Stargate (and its sources) were not “owners” for § 109(a) purposes, Stargate could not rely on the first-sale doctrine.
- The court granted Adobe’s motion for summary judgment in part as to the inapplicability of the first-sale doctrine and denied Stargate’s motion for summary judgment on that defense.

## Legal Principles

- The first-sale doctrine under 17 U.S.C. § 109(a) applies only to an “owner of a particular copy,” not to a mere licensee.
- In determining ownership versus license in software transactions, courts examine agreement terms and the practical allocation of rights, including retention of title and restrictions on use and transfer.
- Software distributed under agreements that (1) label the transaction a license, (2) reserve title to the publisher, and (3) impose substantial use/transfer limits—especially in a restricted program such as educational distribution—may be treated as licensed rather than sold, defeating a § 109(a) defense.

## Conclusion

The court treated Adobe’s educational software distribution as a licensing program with substantial eligibility and transfer restrictions, concluded that Stargate was not an “owner” of the copies under § 109(a), and therefore rejected Stargate’s first-sale defense at summary judgment.


Adobe Sys., Inc. v. Stargate Software, Inc., 216 F. Supp. 2d 1051 (N.D. Cal. 2002)