Intellectual Property | Real Estate | Technology | Software

Autodesk v. Flores case brief (selling unauthorized software on Craigslist)

Sep 14th, 2017 | By | Category: Copyright Litigation

Does Autodesk File Lawsuits against illegal internet sellers and retailers of their software?  In a word, YES!

 how to settle a software license review

Introduction

This case deals with a infringement case brought in the Northern District of California, (San Jose Division).  It deals with a Defendant accused of selling Autodesk software online for a fraction of the real cost.  This case deals with a motion for entry of default / default judgement (which is what happens when a Defendant in a software piracy case does not answer the complaint)

As you will read, this type of conduct can get both sellers (and buyers) of the software into legal trouble.  It could be deemed akin to receiving stolen property.  Like buying an 80 inch plasma screen out of the back of somebody’s van for $50 or $100 for example.

Case Facts

According to the decision issued by the Court in ruling on the default:

“Plaintiff Autodesk, Inc., develops, markets, distributes, and licenses a variety of copyrighted software products, including computer aided design programs. First Amended Compl. (“FAC”) Its copyrights are registered with the Copyright Office and cover products including AutoCAD® 2009 software and AutoCAD® 2010 software, as well as numerous other products. Autodesk also owns trademarks associated with its products, including the trademarks AutoCAD® and Autodesk®, which are registered with the United States Patent and Trademark Office.”

“According to the memorandum and declarations submitted in support of its motion for default judgment, Autodesk began investigating the conduct underlying this action in October 2009, when it received an email notifying it that advertisements offering illegal copies of Autodesk products had been posted on the website www.craigslist.org (“Craigslist”).

“The initial advertisement was titled “AutoCAD 2009 AutoCAD 2010” and indicated that the seller was located in San Diego, California. The advertisement offered to sell copies of the two Autodesk products and stated: “you’re getting a $4,000.00 program for 70 bucks.Please [sic] save the questions like, does it come with the manual and box, etc. It’s the full program, it works. You save tons of money.

“At the time, the suggested retail price for the Autodesk products was $3,995.  The ad also instructed interested buyers to “Call, text, or email” and provided a telephone number. The person who emailed Autodesk about the ad stated that when he contacted the seller and asked if the products were original, the seller responded with the following email:

They’re backed up from an original bro. I sell several a week and have no complaints about me on craigslist or anything negative for that matter. I can help install prior to payment to show you it works just fine. If not no problem however you won’t find this 4,000 dollar program for such a good price. Take care.”

Autodesk may use “secret shoppers” to find infringing products on Craigslist and other sites

The decision in this case also noted how the alleged unlawful conduct was found out:

“Subsequent investigation indicated that Defendant Gregorio Flores, aka Greg Flowers,1 had posted numerous ads on Craigslist offering various versions of several different Autodesk products, including AutoCAD® software, AutoCAD® Civil 3D® software, Autodesk® Revit® software, and Autodesk® 3ds Max® software.

Autodesk’s investigator purchased one of the products advertised by Defendants on Craigslist and received by mail a recordable digital videodisc (“DVD+R”) on which was hand-written “AUTOCAD 2010.” Autodesk subjected the disc to forensic analysis and determined that it contained an unauthorized copy of AutoCAD® 2010 software, as well as software used to circumvent the copyright protection measures built into the AutoCAD® 2010 software.

The disc also contained instructions for installing the AutoCAD® software in conjunction with the circumvention software so that the AutoCAD® software could be run without an activation code from Autodesk. Based on the information from its investigations, Autodesk filed the instant action on May 4, 2010, against Defendants Greg Flowers and Gregorio Flores, asserting the following four claims:

(1) copyright infringement in violation of 17 U.S.C. § 501;

(2) violation of the circumvention technology provisions of the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201(a), (b);

(3) trademark infringement and counterfeiting, in violation of 15 U.S.C. §§ 1114(1) and 1125(a);

and

(4) false designation of origin, in violation of 15 U.S.C. § 1125(a).

Attorney Steve Bonus: Here is a list of other ways Autodesk may find out about unlicensed software.

Hefty monetary damages sought for infringement

Since the Defendant failed to answer the lawsuit, Autodesk moved to have the Court enter a monetary judgement for the damages they allege were suffered.   In this regard, the unpublished decision noted:

“The Copyright Act authorizes statutory damages of up to $30,000 per infringed work. 17 U.S.C. § 504(c)(1). In cases where the copyright owner sustains the burden of proving that the infringement was committed willfully, the Copyright Act authorizes enhanced statutory damages of up to $150,000 per infringed work. Id. § 504(c)(2).”

“The Lanham Act, similarly, authorizes statutory damages of up to $200,000 per mark, as well as enhanced statutory damages of up to $2 million per mark for willful infringement. 15 U.S.C. § 1117(c).”

“In addition, under the DMCA, a copyright owner can receive an award of up to $2,500 in statutory damages for each act of circumvention or for each circumventing product. 17 U.S.C. § 1203(c)(3).”

“Here, Autodesk argues that Defendants acted willfully and requests the following statutory damages: enhanced statutory damages of $30,000 each for infringement of the copyrighted AutoCAD® 2009 and AutoCAD® 2010 software ($60,000 total); enhanced statutory damages of $20,000 each for infringement of the AutoCAD® and Autodesk® trademarks ($40,000 total); and the statutory maximum of $2,500 for one instance of trafficking in circumvention technology, as documented by Autodesk’s investigator. In the aggregate, Autodesk seeks $102,500 in statutory damages.”

To learn more about potential copyright damages view the video below

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The “False Designation of Origin” claim

For those not familiar with this claim, here is what the Court had to say about it:

“False Designation of Origin and False Descriptions Autodesk’s fourth and final cause of action alleges false designation of origin and false descriptions in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Section 43(a) prohibits the use in commerce of any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which:

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, 15 U.S.C. § 1125(a).

Autodesk alleges that Defendants used the Autodesk trademark to falsely designate the origin of their products and made misleading descriptions of fact concerning those products.

Autodesk further alleges that these false designations and descriptions have caused consumer confusion regarding the affiliation of Autodesk with Defendants’ products and the approval by Autodesk of Defendants’ products.

In addition, as discussed above, Autodesk has submitted copies of advertisements in which Defendants used the Autodesk trademark and suggest that they are selling fully licensed versions of Autodesk software.

This false description of Defendants’ products and use of Autodesk’s trademarks could lead consumers to believe that Defendants are offering products affiliated with and originated by Autodesk.

Thus, Autodesk has sufficiently established a claim for false designation of origin and false description.”

Court enters default judgment

The Court, after reviewing the default package, agreed to enter judgment as follows:

“For the foregoing reasons, the Court GRANTS Autodesk’s motion for entry of default judgment, issuance of a permanent injunction, statutory damages, and post-judgment interest. The Court DENIES the request for attorney’s fees without prejudice. Autodesk may file a renewed motion for costs and fees, with documentation establishing the reasonableness of the rates and hours sought, within 30 days of this Order. Because the Court has resolved Autodesk’s motion without need for oral argument, the motion hearing scheduled for February 3, 2011, is hereby VACATED.”

The Court continued:

“In accordance with the above determinations, the Court hereby orders as follows:

1. Defendants shall pay Autodesk statutory damages in the amount of $82,500.

2. Post-judgment interest shall accrue from the date of judgment as provided by 28 U.S.C.1961(a).

3. A permanent injunction hereby issues enjoining and restraining Defendants, and each of them, and their respective agents, servants, employees, successors, and assigns, and all other persons acting in concert or conspiracy with Defendants or affiliated with Defendants, from:

a. copying, reproducing, distributing, or using any unauthorized copies of Autodesk’s copyrighted software products;

b. otherwise infringing any of Autodesk’s copyrights;

c. manufacturing, importing, offering to the public, providing, or otherwise trafficking in any technologies, products, services, devices, components, or parts thereof primarily designed to or produced for the purpose of circumventing either a technological measure that effectively controls access to one or more of Autodesk’s software products or a protection afforded by such a technological measure (collectively, “Circumvention Technology”);

d. copying, reproducing, advertising, offering for sale, or distributing any goods or services in connection with the unauthorized use of any of Autodesk’s trademarks or any other marks confusingly similar thereto; e. using in any manner any of Autodesk’s trademarks, any marks confusingly similar thereto, or reproductions, counterfeits, copies, or colorable imitations thereof in connection with any of Defendants’ goods or services in such a manner that is likely to create the erroneous belief that said goods or services are authorized by, sponsored by, licensed by, or are in some way associated with Autodesk; and f. otherwise infringing any of Autodesk’s trademarks.

4. Pursuant to 17 U.S.C. § 503(b), 17 U.S.C. § 1203(b)(6), and 15 U.S.C. § 1118, Defendants are further ordered to immediately destroy:

a. any and all infringing copies of Autodesk’s software products;

b. any device or product involved in Defendants’ manufacture, importation, offering to the public, provision, or otherwise trafficking in any Circumvention Technology;

and

c. all labels, signs, prints, packages, wrappers, receptacles, and advertisements bearing any of Autodesk’s registered trademarks without authorization; any materials containing false designations of origin, false descriptions, or misrepresentations of fact concerning Autodesk’s software products or any services or products of Defendants; any materials bearing any reproduction, counterfeit, copy, or colorable imitation of Autodesk’s registered trademarks; and all plates, molds, matrices, and other means of making the same.

IT IS SO ORDERED.”

Buying illegal software can trigger an license review or autodesk audit letter

So this case discusses the problems with SELLING unauthorized software online (make sure you review the First Sale Doctrine as a possible defense), but what about if you were the BUYER of this software.  This presents a tricky situation.  For one, people and business owners EXPECT to be able to find GREAT DEALS online, and purchasing software is no exception.  Companies are looking for low cost Autocad, Siemens Software, Vero, and Microsoft Office products without the hefty price tags.  However, you have to keep in mind that there is a point where it becomes “too good to be true” and being the buyer of illegal software  (like buying stolen property) may trigger one of the following:

A.  Autodesk Software Review

B.  You receive an audit demand letter from Donahue Fitzgerald

C.  A copyright lawsuit could be filed

D.  Cease and desist letter could be sent

In each of these instances, you may want to hire a software compliance law firm to assist in defending or responding.

To learn more about how we deal with Autodesk compliance issues watch this video

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Contact an Autodesk Compliance Defense Law Firm

If you need help dealing with a legal issue with Autodesk, we are the premier firm to handle that issue.  We have likely done more software audits with this software company than any other firm in the United States.  We have handled software reviews, software audits, and even litigation with Autodesk counsel.  Call us at (877) 276-5084 for a free initial consultation.  For many non-litigation cases we are able to offer low flat rate (predictable) legal fees.

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We are a business and civil litigation firm with a focus on copyright infringement cases involving illegal movie downloads (torrent cases such as London Has Fallen, ME2 Productions and Malibu Media defense), software audits (ex. Microsoft audits, SPLA, Autodesk audit notification letter, Siemens PLM defense, SIIA, Adobe and Business Software Alliance defense) and other software vendors threatening piracy and infringement. We also handle cases involving internet law, anti-SLAPP, media law, right of publicity, trademarks & domain name infringement, and we have a niche practice area handling California BRE licensing disputes, accusations, subpoena response, statement of issues and investigations. We have offices in San Francisco, Beverly Hills, Newport Beach, San Diego & Phoenix, Arizona and accept federal copyright and trademark cases nationwide. All content on our website is general legal information only and not a substitute for legal advice, and should not be relied upon. Decisions to hire counsel should not be based on advertising alone. Blogs, videos and podcasts are authored by Steve Vondran, Esq. unless otherwise noted. We can be reached at (877) 276-5084.

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