ZilYen, Inc. v. Rubber Mfrs. Ass'n

A copy made by an owner, created as an essential step of utilization of the computer program, which was used in no other manner is an affirmative defense to copyright infringement.

Opinion (Walton): ZilYen, Inc. ("ZilYen") brought a copyright infringement suit against Rubber Manufacturers Association ("the Association"). ZilYen, a producer of compact discs ("CDs"), was contracted by the Association to design, produce and deliver CDs for distribution among the Association’s members. The content of the CD was provided by the Association, but revised by ZilYen. During testing, Association found an error on the CD and subsequently refused to pay the remaining balance of the contract. In response, ZilYen registered a copyright for the CD software. ZilYen alleged that the Association’s testing of the CD created an unlicensed copy of its content on the random access memory (“RAM”) on the Association’s employees’ computers when they tested it. The Association moved for dismissal, arguing that testing the CD did not constitute an infringement because creating a RAM copy of the CD was an essential step in using the CD, and that ZilYen had authorized that use, impliedly licensing the Association’s test. The Association further asserted that the CDs constituted joint work of the parties, thereby making them joint owners. The Association argued that these factors satisfied the requirements for an affirmative defense under §117 of the Copyright Act. The Court held that because the contract permitted the Association to indefinitely possess the CD, the ownership requirement was satisfied. Further, testing the CD was part of their agreement and the copy of the program in random access memory was an essential step of that testing and it was not used in any other manner. The Court also held that the ZilYen granted the Association an implied license to use the CDs, which necessarily results in a creation of RAM copies. Accordingly, the Association’s motion to dismiss was GRANTED and ZilYen’s motion to dismiss was DENIED as moot.