Software companies have long claimed that
software is not sold to users but licensed, and many software
licences forbid the resale of the software. A Seattle District
Court has found, though, that the packages of software in question
were sold, not licensed, and that the licence is not binding on
subsequent buyers.
Timothy Vernor bought several copies of
Autodesk's AutoCAD design software in 2005 and 2007 from businesses
that had originally bought the software from Autodesk. He then put
the software up for sale on eBay. Each package contained discs, a
copy of a licence agreement and other documentation.
Each time, Autodesk issued a Digital Millennium
Copyright Act (DMCA) take-down notice asking eBay to suspend the
auction, which it did.
Each time that happened Vernor wrote to
Autodesk asserting his rights and saying that the software was
legitimate and not a pirated copy, but received no reply. Ebay
reinstated the auctions. At one point eBay suspended his seller's
account for a month for repeat infringements of its policies when
Autodesk had complained a number of times.
Vernor applied to the Court for a declaration
that he had the right to sell the software because he believed that
this process would be repeated every time he tried to buy and sell
software.
The court said that Autodesk's initial transfer
of the software to the businesses was a sale, not a licensing
arrangement. Those businesses, therefore, had the right to re-sell
the software with or without the permission of Autodesk.
The 'first sale doctrine' is an important part
of US copyright legislation. Richard Jones, the judge in the case,
said that if invoked, the doctrine would protect Vernor.
"If there were no License, there is no dispute
that Mr. Vernor’s resale of the AutoCAD packages would be legal,"
he said in his ruling. "The first sale doctrine permits a person
who owns a lawfully-made copy of a copyrighted work to sell or
otherwise dispose of the copy."
The Court relied on a 1977 decision involving
prints of films, in which the US government took action against
Woodrow Wise, who operated a film sales operation in Los
Angeles.
That case was the first to look at what is a
licensing arrangement and what is a sale, Jones said. It found that
in cases where a company expected the material to be returned – as
it would if loaning a print to a cinema for display – that was a
license arrangement. Where it never expected the material to be
returned – such as when a studio allowed actress Vanessa Redgrave
to have a print in return for money – that was a sale.
Jones said that subsequent decisions had backed
Autodesk's contention that software distribution could be a sale,
he had to stay consistent with the earliest relevant ruling, which
was that of the case of Wise.
"Although technology has changed, the question
at the core of this case is not technological," said Jones. "Mr.
Vernor does not seek to take advantage of new technology to ease
copying, he seeks to sell a package of physical objects which
contain copies of copyrighted material. The essential features of
such sales vary little whether selling movie prints via mail (as in
Wise) or software packages via eBay."
The ruling also dealt with the extent of the
power of the original software licence. Vernor asked the Court to
declare that the original licence, which forbade the re-selling of
the software, did not control his behaviour.
The Court said that the argument Autodesk had
earlier made – that Vernor should not be allowed to own the
software because the licence was non-transferable – must govern to
whom it can apply.
"Not only has Autodesk failed to surmount the
thorny issues of privity and mutual assent inherent in its
contention that its License binds Mr. Vernor and his customers, it
has ignored the terms of the License itself," said the ruling. "The
Autodesk License is expressly 'nontransferable.' License: Grant of
License. Autodesk does not explain how a nontransferable license
can bind subsequent transferees."
The software industry relies on categorising
what consumers often think of as software sales as software
licensing agreements. If followed by other courts, the Autodesk
ruling could affect the ability of software publishers to restrict
the transfer of their technology in that way.
The court denied Autodesk's motion for
dismissal or summary judgment. The case continues.
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