## Facts

- Wall Data, Inc. developed and sold copyrighted terminal-emulation software products, including RUMBA Office and RUMBA Mainframe.
- The Los Angeles County Sheriff’s Department purchased 3,663 software licenses (2,035 for RUMBA Office and 1,628 for RUMBA Mainframe).
- The license agreement limited each license to a “single designated computer” and prohibited use “in any other multiple computer or multiple user arrangement.”
- To speed deployment at its Twin Towers Correctional Facility, the Sheriff’s Department used hard-disk imaging and installed RUMBA on 6,007 computers.
- The Sheriff’s Department configured its system so that no more than 3,663 computers could use the software concurrently, but the software remained installed on more machines than licensed.
- Wall Data sued, alleging copyright infringement based on installation beyond the number of licenses purchased.

## Issues

1. Whether installing software on more computers than the number of per-machine licenses purchased constitutes copyright infringement even if concurrent use is limited to the licensed number.
2. Whether the Sheriff’s Department’s over-installation qualified as fair use under 17 U.S.C. § 107.
3. Whether the district court’s judgment (including damages-related rulings challenged on appeal) should be affirmed.

## Decision

- The Ninth Circuit affirmed the judgment for Wall Data.
- The court held the Sheriff’s Department infringed Wall Data’s copyrights by creating and installing copies on 6,007 computers when only 3,663 per-machine licenses were purchased, regardless of a concurrency cap.
- The court rejected the Sheriff’s Department’s fair use defense, concluding all four statutory factors weighed against fair use.

## Legal Principles

- Exceeding the scope of a software license by installing more copies than authorized can constitute infringement of the copyright owner’s reproduction right under 17 U.S.C. § 106(1).
- A technical restriction limiting concurrent use does not convert a per-machine license into a concurrent-user license when the agreement ties authorized use to installation on a single designated computer.
- Fair use under 17 U.S.C. § 107 is disfavored where:
  - the defendant makes exact, non-transformative copies for the same use as authorized copies;
  - the copying is undertaken to avoid paying for additional authorized installations (treated as commercially exploitative cost-saving);
  - the defendant copies the entirety of the copyrighted software; and
  - the copying substitutes for purchases the copyright holder would otherwise make through its licensing model, causing market harm.

## Conclusion

The Ninth Circuit held that installing proprietary software on more machines than permitted by per-machine licenses is infringing even if concurrent use is limited, and it further held that such over-installation is not protected by fair use because it involves verbatim copying that displaces licensed sales and harms the software’s licensing market.


Wall Data, Inc. v. Los Angeles County Sheriff’s Dep’t, 447 F.3d 769 (9th Cir. 2006)