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No Copyright Infringement for Internal Use

There is no copyright infringement where a company has a third-party build an assembly machine based on copyrighted drawings of another when the company had been granted a license to duplicate the machine for its own use.

Automation by Design, Inc. (ABD) sued Raybestos Products Company for copyright infringement and breach of a license agreement after Raybestos hired a third company to build a duplicate machine of one that ABD had designed and built for Raybestos several years earlier. ABD gave a copy of the design drawings to Raybestos and issued a “non-transferable” license that gave Raybestos the “right to duplicate any or all design copyrighted by ABD” for equipment “to be used exclusively by RPC.”

In affirming the trial court’s dismissal of the copyright claim, the Seventh Circuit found that the “right to duplicate the design” for equipment means that Raybestos could have a third party duplicate the equipment. The only restriction is that the equipment not be used for sale to others. “Once Raybestos secured the rights to duplicate the designs and ‘use the license’ to duplicate machinery, it could hire another party to manufacture parts for it if Raybestos lacked the tools or skills to do so itself,” Judge Posner wrote. “The license permitted Raybestos to employ the designs only for its own use-which is precisely what it did.” Since Raybestoes was acting within the license terms, there could be no copyright infringement. Moreover, ABD could not revoke the license at will to prevent the duplication by a third party.

Automation by Design, Inc. v. Raybestos Products Company et al., Seventh Cir. No. 05-1172, September 15, 2006.