Vault Corp. v. Quaid Software, Ltd. 847 F.2d 255 (5th Cir. 1988) is the most celebrated decision on intellectual property pre-emption.  In that case, Vault Corporation developed a program called "Prolok", which was designed to prevent the unlawful duplication of other software by "locking it" (in this regard it can be considered as an example of a "trusted system" which we shall be looking at this week).  Prolok was sold with a shrinkwrap license which provided, inter alia, that the purcahser could not copy or reverse engineer any part of the software.  Quaid Software, Ltd purchased the software and reverse engineered it so as to find a way to defeat Prolok's locking system.  It then incorporated this knowledge into an "unlocking" product called "Ramkey".  The final version of Ramkey did not contain any material copied from Prolok.  Vault Corporation sued Quaid alleging copyright infringement and violation of the shrinkwrap license.  The Fifth Circuit found that there was no copyright infringement by reverse engineering or producing the product Ramkey.  With regards to the shrinkwrap license, the court found that it was unenforceable as a contract of adhesion unless the Louisiana Software License Enforcement Act, which purported to validate such licenses, was enforceable.  In this regard, the Fifth Circuit held that the Louisiana statue directly conflicted with the rights of purchasers of copyrighted works set out in section 117 of the Copyright Act, and thus was pre-empted by federal copyright law.  As such, the shrinkwrap license was deemed to be invalid.

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