Corp A, a U.S. corporation, owns the copyright in a computer program, Program X, and copies it onto disks. Each disk is placed in a box covered with a shrink-wrap license stated to be perpetual. Under the license no reverse engineering, decompilation, or disassembly is permitted. The transferee receives the right to use the program on two of its own computers provided only one copy is in use at any one time, and the right to make one copy on each machine as an essential step in using the program. The transferee may sell the copy so long as it destroys any other copies and imposes the same license terms on its purchaser.
These disks are made available for sale to the general public in Country Z. In return for valuable consideration, P, a Country Z resident, receives one such disk.
Under paragraph (g)(1) of this section, the label “license” is not determinative. None of the copyright rights described in paragraph (c)(2) have been transferred, but P has received a copy of the program, so under paragraph (c)(1)(ii) P has acquired solely a copyrighted article. Taking into account all of the facts and circumstances, P is properly treated as the owner of that copyrighted article, so under paragraph (f)(2) there has been a sale of a copyrighted article rather than the grant of a lease.
Under paragraph (g)(1), calling the agreement a “license” does not control. The transaction is classified by what actually passes, not by its label.
None of the copyright rights in paragraph (c)(2) — the right to copy for distribution, prepare derivative works, publicly perform, or publicly display — are transferred to P.
Because P receives a copy of the program, under paragraph (c)(1)(ii) P has acquired a copyrighted article rather than copyright rights.
Taking into account all facts and circumstances, P is the owner of the copyrighted article, so under paragraph (f)(2) the transaction is a sale, not a lease.
