Opinion
Case No. 2:04cv00056 PGC.
July 28, 2004
ORDER DENYING PLAINTIFF'S MOTION TO STRIKE DEFENDANT'S SIXTH DEFENSE
This dispute is before the court on a motion by defendant Microsoft Corporation to strike plaintiff Perseus Trading Corporation's Sixth Defense (the first sale doctrine) on the ground that the doctrine does not apply to claims based on the distribution of counterfeit software. While this proposition may turn out to be true, at this early stage in the litigation, it is not clear that Microsoft will establish that the software was counterfeit. The court accordingly DENIES this motion.
BACKGROUND
The Microsoft Corporation ("Microsoft") creates and sells numerous computer software programs. These programs are recorded on computer and compact discs and are distributed with user's guides, licence agreements, and certificates of authenticity. These certificates of authenticity are included with software programs so end users know they are using genuine Microsoft products. These certificates are produced in a way that makes unauthorized duplication difficult.On January 22, 2004, Microsoft filed a complaint alleging that defendants Perseus Trading Corporation, SOFTWAREMEDIA.COM, and Adam Childers (collectively "Perseus") infringed Microsoft's copyrights and trademarks. Microsoft claims that on at least four occasions Perseus distributed counterfeit licences and certificates of authority. Microsoft further claims that Perseus has, without authorization, used its trademarks, copyrights, slogans, and business methods in such a manner to lead to infringement.
On February 18, 2004, Perseus answered Microsoft's complaints, denying the allegations, listing ten affirmative defenses, and requesting a jury trial. Perseus's sixth defense reads, "The Plaintiffs are barred from any recovery by the First Sale Doctrine."
On June 14, 2004, Microsoft moved to strike this defense. The starting point of Microsoft's argument is a tautology: either the items were counterfeit or they were legitimate. If they were counterfeit, the first sale doctrine fails as a matter of law. If they were legitimate, then Microsoft's claims fail, and a fortiori, the first sale doctrine does not apply. Either way, the first sale doctrine does not apply, so in Microsoft's view the defense should be stricken.
ANALYSIS
Microsoft incorrectly assumes that if the items were not counterfeit, then its claims automatically fail. Microsoft has various causes of action against Perseus: copyright infringement, federal trademark infringement, false designation of origin description, false representation of Microsoft products, violation of Utah's Unfair Practice Act, Utah's common law unfair competition and unfair trade practices, and imposition of a constructive trust with illegal profits. So far as the court can determinate, a number of these causes of action do not require a showing that the software is counterfeit. Therefore, Microsoft could establish its claims without showing counterfeiting violations. Should this happen, Perseus might be allowed to raise the first sale doctrine.In light of these facts, the court will deny Microsoft's motion. However, in denying this motion, license is not given to Perseus to abuse the discovery process. Any discovery must be limited to issues relevant to this case. Moreover, should Microsoft offer a binding stipulation agreeing to dismiss all causes of action should the items be found not to be counterfeit, the court would grant the motion to strike the defense.
CONCLUSION
Microsoft's motion to strike defendant's sixth defense (#28-1) is DENIED.SO ORDERED.