## Facts

- Cincom Systems, Inc., an Ohio software developer, licensed its proprietary SUPRA and MANTIS software in 1989 to Alcan Rolled Products Division (“Alcan Ohio”) for use at a specified facility in Oswego, New York.
- The license identified Cincom’s software as proprietary and confidential, restricted use to designated computers, and granted a “non-exclusive and nontransferable” license.
- The agreement required Alcan Ohio to obtain Cincom’s prior written consent before any transfer of rights or obligations under the license.
- Beginning in 2003, Alcan Ohio’s corporate group carried out internal reorganizations and mergers in which corporate entities were created, merged, and renamed; Alcan Ohio ultimately ceased to exist as a separate legal entity.
- The surviving entity, later named Novelis Corporation, continued using the Cincom software at the Oswego facility without obtaining a new license or Cincom’s written consent.
- Cincom sued in federal district court for copyright infringement under 17 U.S.C. § 501, alleging the restructurings effected an unauthorized transfer of the license.

## Issues

1. Whether mergers and internal corporate restructurings resulting in a new surviving corporation constituted a prohibited transfer of a nontransferable software license.
2. Whether Ohio merger law’s “vesting” of assets in the surviving corporation avoided any “transfer” that would trigger the license’s anti-transfer provision.
3. Whether the license’s intent and language permitted continued use when ownership and facility use remained substantially the same but the named licensee ceased to exist.

## Decision

- The Sixth Circuit affirmed summary judgment for Cincom.
- The court held the mergers and restructuring resulted in an impermissible transfer of the software license from the named licensee (Alcan Ohio) to a different legal entity (Novelis) without Cincom’s consent.
- The court rejected reliance on Ohio merger-statute wording to avoid the anti-transfer clause, concluding that automatic vesting in the surviving corporation functionally effected a transfer for purposes of an IP license.
- Novelis’s continued use after the corporate change, without Cincom’s prior written approval, supported liability for copyright infringement.

## Legal Principles

- Under federal common law, nonexclusive intellectual property licenses are presumptively nonassignable and nontransferable without the licensor’s express consent.
- Federal policy favoring licensor control over the identity of the licensee limits the extent to which state corporate merger law can enable transfer of IP licenses contrary to a license’s restrictions.
- A merger can constitute a “transfer” for a nontransferable IP license when rights and obligations vest in a surviving entity and the original licensee ceases to exist.
- Contract interpretation begins with the license’s plain language; an express “nontransferable” term and a requirement of prior written consent are enforced even where business operations and facility use remain unchanged.

## Conclusion

The Sixth Circuit held that a nontransferable software copyright license did not pass to a new surviving corporation through merger without the licensor’s prior written consent; continued post-merger use by the surviving entity constituted an unauthorized transfer and infringement.


Cincom Sys., Inc. v. Novelis Corp., 581 F.3d 431 (6th Cir. 2009)