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S.O.S., Inc. v. Payday, Inc - 886 F.2d 1081 (9th Cir. 1989)

Rule:

A licensee infringes the owner's copyright if its use exceeds the scope of its license. The critical question is not the existence but the scope of the license.

Facts:

Plaintiff S.O.S., Inc. filed an action against Defendant Payday, Inc. for copyright infringement, breach of contract, and misappropriation claims. Both parties sought damages resulting from the use of computer programs. The district court granted the defendant’s motion for summary judgment after concluding that, since defendant had had a license to use the payroll programs, it could not infringe plaintiff’ copyright.  Both parties appealed..

Issue:

Is the defendant liable for copyright infringement if its use exceeds the scope of the software license?

Answer:

Yes.

Conclusion:

The United States Court of Appeals for the Ninth Circuit reversed, holding that the district court erred in assuming that a license to use a copyrighted work necessarily precludes infringement. Here, Payday exceeded the scope of its license when it copied and prepared a modified version of the programs without S.O.S.'s permission. Whether these acts, unshielded by any license, infringed plaintiff’s copyright will be a matter for the district court to determine on remand.

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