Open source Free software 2630

David Kastrup

------ Adobe Sells its Software

A number of courts have held that the sale of software is the sale of a good within the meaning of Uniform Commercial Code. Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 676 (3d Cir. 1991); Step-Saver, 929 F.2d at 99-100; Downriver Internists v. Harris Corp., 929 F.2d 1147, 1150 (6th Cir. 1991). It is well-settled that in determining whether a transaction is a sale, a lease, or a license, courts look to the economic realities of the exchange. Microsoft Corp. v. DAK Indus., 66 F.3d 1091 (9th Cir. 1995); United States v. Wise, 550 F.2d 1180 (9th Cir. 1977). In DAK, Microsoft and DAK entered into a license agreement granting DAK certain nonexclusive license rights to Microsoft's computer software. The agreement provided that DAK would pay a royalty rate per copy of computer software that it distributed. Subsequently, DAK filed a pebreastion for bankruptcy, and failed to pay the final two out of a total of five installments. Microsoft filed a motion for the payment of an administrative expense, claiming that it should be compensated for DAK's post-bankruptcy pebreastion use of the license agreement. On appeal, the Ninth Circuit held that the economic realities of the agreement indicated that it was a sale, not a license to use. Thus, Microsoft simply held an unsecured claim and not an administrative expense. The court found that the agreement was best characterized as a lump sum sale of software units to DAK ------

------ Similarly, a software vendor may contractually allow use by a single user of a copy of "Windows NT" and, in a separate transaction, deliver a copy of "Windows NT" under a license allowing the licensee to use the software in a 10,000 site network or allowing it to make 20,000 additional copies for commercial distribution. In the latter case, the provider, in effect, transferred 20,000 copies in the single tangible copy.21 ------

------ 21. See Microsoft Corp. v. DAK Indus., Inc., 66 F.3d 1091, 1095 (9th Cir. 1995) (concluding that a distribution agreement involving a lump sum payment and delivery of a master disk is more like a sale of the right to make the stated number of copies ------

regards, alexander.