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Hastings Communications and Entertainment Law Journal

Abstract

The merger and acquisition of companies using software technology can generate a need to transfer valuable software licenses from a target company to an acquiring company. As a default rule in the Ninth Circuit, a licensee cannot assign a non-exclusive copyright license without the express authorization of the licensor. Consequently, an acquired licensee may be forced to renegotiate an otherwise valid software license, even if it survives the acquisition and continues to operate as a subsidiary. Understandably, the issue of copyright license transferability continues to pose a problem in mergers, acquisitions and bankruptcies. This note analyzes the Ninth Circuit's decision to prohibit the assignment of copyright licenses and, more particularly, its impact on software licenses. Also, this note illustrates why a separate rule should be recognized for the assignment of software licenses in mergers and bankruptcies.

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