The US Court of Appeals for the Ninth Circuit revived a software owner’s copyright infringement suit because the district court erred in granting summary judgment of no infringement by failing to analyze whether the accused infringer exceeded the scope of a copyright license. Oracle America, Inc., et al. v. Hewlett Packard Enterprise Company, Case No. 19-15506 (9th Cir. Aug. 20, 2020) (Smith, J.).

Oracle owns registered copyrights for Solaris software, including copyrighted software patches. Oracle requires its customers have a prepaid annual support contract, for each server they desire to be under support, to access the software patches. Customers under a support plan can access patches through an Oracle support website.

Hewlett Packard Enterprise (HPE) provides a “one-stop-shop” for support to its customers, including HPE servers running Solaris. HPE provides this support directly and through its partners. One of HPE’s partners is Terix Computer Company. Terix arranged for joint HPE-Terix customers to have Oracle support for all of their servers through a single server support plan. Terix accomplished this by downloading Solaris software patches, using the customer’s credentials (created using a Terix-supplied credit card), to make copies for servers that were not part of the support contract.

In 2013, Oracle sued Terix for copyright infringement. The court granted Oracle summary judgment, and Terix stipulated to a judgment on the claims without admitting liability. Oracle and HPE entered into an agreement, effective May 6, 2015, to toll the statute of limitations for any claims Oracle might assert against HPE.

In 2016, Oracle sued HPE for direct copyright infringement concerning HPE’s direct support customers, and for indirect infringement concerning joint HPE-Terix customers. Oracle also sued for claims of intentional interference and unfair competition under California state law. The parties did not dispute that the tolling agreement applied, so the court considered whether the copyright infringement claims were barred for conduct before May 6, 2012. The Copyright Act provides that a copyright infringement claim is subject to a three-year statute of limitations, which runs separately for each violation. Under Ninth Circuit law, a copyright infringement claim begins to accrue “when a when a party discovers, or reasonably should have discovered, the alleged infringement.” Importantly, actual or constructive knowledge triggers the statute of limitations. The Ninth Circuit has explained that suspicion of copyright infringement places a duty on the copyright holder to investigate further into possible infringement or lose the claim.

Oracle conceded that it had concerns about Terix and suspicions about HPE as early as 2010, but argued that HPE used fraudulent means to keep Oracle unaware of its actions, so it had no duty to inquire. The district court disagreed, finding that once Oracle had constructive knowledge, the doctrine of fraudulent concealment was no longer an option to toll the limitations. Because Oracle failed to investigate HPE, the court determined that HPE was entitled to summary judgment on the infringement claims for pre-May 6, 2012, conduct. Oracle appealed.

The Ninth Circuit explained that to prove indirect infringement, Oracle had to show that [...]

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