This is just my opinion, but I think, in the EXTREMELY unlikely (and for all intensive purposes, hypothetical) that XF was found to infringe in some way on IB copyrights, I think nothing happens to the copies in the hands of purchasers.
This is a an excerpt from a District Court in the Ninth Circuit (which is the circuit where this case is being heard):
"III. The Copyright Act of 1976 does not authorize the impoundment of infringing property purchased by a non-infringing person.
Defendant Deborah Lindquist argues that the request for impoundment under Count III should be dismissed because Plaintiff has not alleged that Defendant Lindquist infringed any copyrights by purchasing or possessing "La Laveuse," and 17 U.S.C. § 503 does not permit the impoundment of infringing property once it has been purchased by an innocent third party. The issue hinges on the meaning of 17 U.S.C. § 503(a).
Before the passage of the Copyright Act of 1976, a copyright holder could not obtain the impoundment of infringing articles possessed by a non-infringing purchaser. Section 101(c) of the Copyright Act of 1909 provided: If any person shall infringe the copyright in any work protected under the copyright law of the United States such person shall be liable…. (c) To deliver up on oath, to be impounded during the pendency of the action, upon such terms and conditions as the court may prescribe, all articles alleged to infringe a copyright.17 U.S.C. § 101(c) (1970) (amended 1976). The words "such person" were interpreted to permit the impoundment of an infringing work only when it was possessed by a defendant who had himself infringed the plaintiff's copyright. See Foreign & Domestic Corp. v. Licht, 196 F.2d 627, 629 (2nd Cir. 1952) (finding impoundment improper when sought against a purchaser of copyrighted material because the "remedy of forfeiture and destruction is given only against an infringer" and "one does not infringe a copyright by buying an infringing copy" of a work); Jewelers' Circular Pub. Co. v. Keystone Pub. Co., 274 F. 932, 936 (S.D.N.Y. 1921) Circular Pub. Co. v. Keystone Pub. Co., 274 F. 932, 936 (S.D.N.Y. 1921) (holding that impoundment could not interrupt a bailee's possession because, 6under the 1909 Act, the remedy was "expressly limited to infringers"); Matenciot, Inc. v. Dash, Inc., 422 F. Supp. 1199, 1203 (S.D.N.Y. 1976) (describing an impoundment order concerning items in the infringer's "possession or control"); 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 14.07, at 14-160 (2006) ("Under the 1909 Act, impoundment and destruction were applicable only against an infringer."). n1
FOOTNOTES
n1 The United States Supreme Court Copyright Practice Rules, promulgated pursuant to § 25(e) of the Copyright Act of 1909, Pub. L. No. 60-349, 35 Stat. 1075, 1082, established procedural rules governing the remedy of impoundment. However, the Rules are silent on the issue of whether impoundment may be imposed against a non-infringing purchaser of infringing works. See Copyright Practice R. 3-13. Additionally, although the Rules were never explicitly abrogated by the 1976 Act, see Warner Bros., Inc. v. Dae Rim Trading, Inc., 877 F.2d 1120, 1124 (2nd Cir. 1989), there is some question as to their continuing validity, for they have been widely criticized as constitutionally infirm and inconsistent with both § 503 and Federal Rule of Civil Procedure 65. See, e.g., Paramount Pictures Corp. v. Doe, 821 F. Supp. 82, 87 (E.D.N.Y. 1993). Rather than apply the Rules, which require impoundment if the plaintiff files with the court clerk an affidavit and surety bond, a substantial body of authority orders impoundment only after it is deemed proper under the standards governing preliminary injunctive relief. See, e.g., Pearson v. Quickturn Design Sys., 1998 U.S. Dist. LEXIS 22572, at *9-13 (N.D. Cal. Jan. 23, 1998); Cybermedia, Inc. v. Symantec Corp., 19 F. Supp. 2d 1070, 1073, 1080-81 (N.D. Cal. 1998); Van Deurzen & Assocs. v. Sanders, 1991 U.S. Dist. LEXIS 12884, at *2 (D. Kan. Aug. 20, 1991).
Principles of equity were occasionally referenced in support of this interpretation. In Jewelers' Circular, for example, a writ of seizure was denied with regard to infringing books that the defendant bookstore had already lent to its customers. The result was primarily grounded in the language of § 101 of the 1909 Act. However, it was also noted that seizure of the books would have been inequitable as both "extremely disastrous" to the defendant's business and unhelpful to the plaintiff. 274 F. at 937.
Although sparse, the legislative history also supported the view that the old § 101(c) did not authorize the impoundment of infringing items purchased by non-infringing parties. Congressional analysis of the statute suggested that impoundment would target only items possessed by infringers. See, e.g., H.R. Rep. No. 60-2222, at 16 (1909) (explaining how the remedy of impoundment is "necessary in dealing with infringers"). Motivating this approach, it seems, was the view that impoundment is a severe remedy that is only appropriate in limited circumstances. See, e.g., Revision of Copyright Laws: Hearing Before the House and Senate Comm. on Patents, 60th [**7] Cong. 166, 169 [*1109] (1908) (statement of Albert H. Walker); Copyright Hearings: Arguments Before the Senate and House Comm. on Patents on S. 6330 and H.R. 19853, 59th Cong. 146 (1906) (statement of Ansley Wilcox, Esq.). n3
Societe Civile Succession Richard Guino v. Int'l Found. for Anticancer Drug Discovery, 460 F. Supp. 2d 1105, 1107-1109 (D. Ariz. 2006)
(Continued in next post)