Smith v. Saulsbury

Although the ultimate sale of the defendants' software might have violated federal copyright law, such illegality was incidental or collateral to the parties' contract for advertisement of the software.

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Richard Saulsbury sued David Arnan Smith and T. J. Hunter “Defendants”, asserting claims for breach of contract, fraud, and promissory estoppel. The Defendants moved for summary judgment, alleging that the contract was illegal and therefore unenforceable, and the trial court denied the motion. A jury returned a verdict in favor of Saulsbury on his claim for breach of contract. On appeal, the Defendants contend that the trial court erred in denying their motion for summary judgment and in excluding certain evidence. We affirm, for reasons that follow. David Arnan Smith was the sole member of More2Save, LLC and T. J. Hunter was an employee of the company. More2Save marketed and sold “CloneMyDVD,” an online software product used to copy DVDs. CloneMyDVD contains a program that decrypts the protection included on a commercial DVD, allowing users to make copies of the DVD. In March 2003, More2Save engaged Saulsbury to advertise CloneMyDVD via the internet by sending mass electronic mail “e-mail” messages. The sales were processed through PaySystems, a third-party merchant system. The parties’ oral agreement provided that More2Save would pay Saulsbury approximately $25 for each completed sale.

In May 2003, the Defendants learned that the motion picture industry had initiated lawsuits against sellers of products similar to CloneMyDVD for copyright infringement, and that one lawsuit in particular had been successful. In an effort to avoid “further legal exposure,” More2Save stopped producing CloneMyDVD in May 2003. PaySystems froze the More2Save account pending the processing of all remaining payments, voids, and returns. As a result, More2Save stopped payment to Saulsbury for his remaining earned commissions.

Smith v. Saulsbury

Although the ultimate sale of the defendants' software might have violated federal copyright law, such illegality was incidental or collateral to the parties' contract for advertisement of the software.

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