Over the last few decades, copyright has evolved in dramatic and unprecedented ways. At the heart of this evolution lies a series of changes in the statutory scheme that have substantially expanded copyright's scope. There has also been a rise in private ordering as copyright holders increasingly use licenses to govern use of their copyrighted material and thereby supplant the default terms prescribed by the Copyright Act. Mediating and contributing to this evolution has been the judiciary. The judiciary has long played an active role in protecting copyright policy, and the dynamism of the last thirty years has only accentuated the importance of the judiciary's role of interpreting and applying copyright law. The Supreme Court has led the way, but lower federal courts have also issued a number of formative decisions.
One of the most significant moves by lower courts to protect the public policy embodied in copyright is the adoption by some of the doctrine of copyright misuse. Copyright misuse is an equitable defense to a copyright infringement claim based upon the doctrine of "unclean hands." While the doctrine's roots arguably go back half a century, copyright misuse was first successfully invoked by an alleged copyright infringer to escape liability in the 1990 case Lasercomb America, Inc. v. Reynolds. In Lasercomb, the Fourth Circuit held that the plaintiff had misused a software copyright when it included in its standard licensing agreement a term that forbade the licensee from creating a competing product. The court held that inclusion of such a provision, while not an antitrust violation, violated the public policy behind copyright and hence rendered the plaintiff's copyright unenforceable.
The doctrine has since reappeared in a number of cases dealing primarily, though not exclusively, with software copyrights. Both the Fifth and Ninth Circuits have accepted copyright misuse as an affirmative defense, and others have recognized the doctrine's validity. However, as recognized in Nimmer on Copyright, "Lasercomb remains the exceptional case. Other courts – without denying that illegitimate, anticompetitive conduct could lead to a misuse defense – tend to deny the existence of such conduct on the facts before them."
Rethinking Copyright Misuse,
Stan. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/961