Federal Court Says First-Sale Doctrine Covers Software, Too

New10k writes "The US District Court in Seattle has rejected Autodesk's myriad arguments regarding its software licenses and found in favor of eBay seller Timothy S. Vernor. The ruling started by ruling that Vernor was within his rights to resell copies of AutoCAD Release 14 he got in an auction. Once the court settled the legitimacy of reselling, it used that ruling as a lens to dismiss all of Autodesk's various claims. More than once the court described Autodesk's arguments as 'specious' and 'conflicted.'" Autodesk managed to have Vernor's eBay account pulled, after he listed for sale copies of AutoCad 14. He sued Autodesk in response.

Not really adding anything important but...

[Uncle Focker (1277658)]

Score one for the little guy!

Workaround

[by Anonymous Coward]

Can autodesk skirt this by making its software connect to an autodesk server and validate the presence of a (non transferrable) user account?

Because that is exactly what World of Warcraft (and all MMO's, for that matter) does.

Autodesk would then give the software away for free, but sell the user accounts for whatever they want.

Re:Workaround

[FooAtWFU (699187)]

The difference is that World of Warcraft has something interesting on its servers. With Autodesk, all the really interesting stuff is on the desktop. As such, it's much less trouble to hack Autodesk to play for free than to hack MMORPGs (not that this has stopped a few random free "shards" showing up in various spots from time to time, game to game).

Re:Not really adding anything important but...

[by Anonymous Coward]

without uninstalling...

So, did Vernor? Or are you just throwing some bullshit out there like "We should just kill everyone because they might commit a crime"?

Re:Not really adding anything important but...

[Uncle Focker (1277658)]

And the same could be said when reselling books, movies, cds, etc. But it's been ruled we have a right to resell such things and it's about time the same thing was clarified for software. It's a shame if the company goes under, but they don't have a right to undermine the rights of the users.

So true

[Weaselmancer (533834)]

I mean, look at how libraries have put all those authors and publishers out of business.

You can get the books for free there! It totally destroyed the book selling market.

Re:So true

[Uncle Focker (1277658)]

And clearly Netflix, Blockbuster and Hollywood Video, etc have ravaged DVD sales!

Re:Not really adding anything important but...

[TheRealMindChild (743925)]

Their concern isn't actually piracy in this regard. They don't want some CAD operator to sell a two-version-old-Autocad for $5 to someone who needs a CAD package. Instead they want that person who needs it to spend multitudes of money on a brand-spanking-new copy.

Re:First-Sale cuts both ways

[icebike (68054)]

That act is specifically prohibited by the Copyright act. (At your discretion of course).

See http://en.wikipedia.org/wiki/First-sale_doctrine [wikipedia.org]

Autodesk = a true evil empire

[by Anonymous Coward]

Those of you who have not had to deal with their software and their heavy handed approach to licensing and upgrades are lucky.

Re:Autodesk = a true evil empire

[TheRealMindChild (743925)]

I can surely attest to this. While in school for CS, I was a junior administrator in the MIS department, doing things like... well, everything that went wrong on the computer network. We dreaded when anything went wrong with Autocad. It was a bloody nightmare. Dongles would just stop working and their customer support would pretty much tell us that we were lying and trying to pirate the software. And it was like talking to a brick wall. No amount of sales receipts or serial numbers mattered. They didn't even care. Their solution every single time was to "Buy a new copy".

On top of that, upgrading almost never worked. It got to the point where an upgrade to Autocad meant loading up a new system image, then installing it first before anything else.

What about the ebay account?

[Nichotin (794369)]

What I could not figure out from the article was: What happens now to his ebay account? If it was pulled, I hope ebay restores it. Bugs me that ebay, google, youtube etc. always gets away for enforcing bogus claims. I did RTFA, but please enlighten me if I have missed something.

Re:What about the ebay account?

[phpmysqldev (1224624)]

This article [blog.com] goes into more detail about that. Apparently his eBay account was restored (and good thing, I would be livid if I had a 10k+ feedback powerseller account taken from me)

Likewise in Finland since a number of years

[vinsci (537958)]

A similar ruling is in effect in Finland since a number of years. The case was vs. Microsoft, decided by the supreme court that reselling MS Windows licenses is perfectly OK and Microsoft can't stop it. Don't have the reference handy, sorry.

Re:Likewise in Finland since a number of years

[Sique (173459)]

Same in Germany. Google for "Microsoft" and "Snogard".

Product Activation?

[nonsensical (1237544)]

It's about the courts re clarified this for software. When you buy a physical product, you should have the right to sell it.

What happens now with all the authentication and tying copies of software to the hardware it's first installed on such as Windows XP/Vista?

You have a right to sell your copy, but effectively you can't because it's been tied to your hardware.

Re:Product Activation?

[Chris Burke (6130)]

You have a right to sell your copy, but effectively you can't because it's been tied to your hardware.

It seems to me that the courts have not typically ruled against "effective" rights violations*. There's no law that says Microsoft can't require your PC to phone home to verify it's using the same hardware as before. So while this decision could be repeated if Microsoft tried to stop you from reselling Vista and you went to court over it, it would probably not have any effect on that sold copy of Vista being useless because Microsoft wouldn't activate it.

* See Eldridge v Ashcroft, "retroactive finite copyright extensions, repeated infinitely" doesn't violate principle of copyrights being finite.

Open packet to read agreement.

[Hankapobe (1290722)]

FTFA: There is a piece of paper tucked inside that says it is a licensing agreement with the statement "by opening the sealed software packet(s), you agree to be bound by the terms and conditions of this license agreement."

How many of you have found the actual license agreement is on the media stored in the packet? So in order to read the agreement, you have to open the packet.

Nontransferable Licenses in question

[icebike (68054)]

The ruling is important because it calls into question the whole concept of a Non Transferable license. The court found that âoefirst saleâ doctrine of copyright law did apply. http://en.wikipedia.org/wiki/First-sale_doctrine [wikipedia.org]

If this hold, it will largely eliminate the non-transferable license in software.

And why shouldn't it? As long as the original owner retains no copy, selling an unused license simply keeps that copy under maintenance (maintenance charges frequently exceed sales revenue) and keeps the money flowing to the authors.

Nontransferable licenses are usually attempted by companies that have some sort of a near monopoly lock, so that not only do they gain from a new sale, they also gain from maintenance charges. If there are multiple vendors of equivalent software you really can't get away with nontransferable clauses.

As a software author, I'd gladly accept continued maintenance fees instead of new sales revenue. If my customers know that unused licenses have residual value when their projects are completed its good for me, and good for them. They buy extra licenses to handle the surge effort of development, and retain a few licenses for maintenance.

No lawyer

[lantastik (877247)]

Wow, that guy has some rocks. In the second link, you find out he sues them without a lawyer. That's not an easy thing to do in a US District Court.

there is NO SIGNIFICANCE to this ruling

[by Anonymous Coward]

I just read this article. The author has no idea what a summary judgment motion is, nor the significance of having it denied. Summary judgment motions are just long shot motions brought early in a case to try to dismiss it if there are no facts in dispute. The significance of a *denial* of such a request simply means there are facts in dispute, or the law isn't so clear. IT IS A NON-EVENT. Nobody has won -- the case simply proceeds.

Vernor 'bound' by a license?

[Jason Levine (196982)]

I'm glad to see this was slapped down. From my understanding (from reading the article) is that Vernor obtained boxed copies of AutoCAD (through some legal means) and then sold them on eBay. AutoDesk was claiming that Vernor was bound by their software license agreement. Even if you accept the validity of a click-through license (a big IF, I know), how would he have been bound by a license that he never clicked "I Agree" to? In AutoDesk's reasoning, did his mere purchasing of the boxed software bind him to the license? I can see how a judge would laugh this out of court. At least with a click-through license, you can present the license's text. In a "buy the box, bound to the license" agreement, where would the license be presented to you? As you were about to pay for the box, would the Best Buy checkout clerk hand you a 10 page agreement to sign? If they didn't, then the license can't be binding (you need to be able to read a contract before agreeing to it), if they did, a lot of people wouldn't feel comfortable signing a big, legal looking document every time they picked up a piece of software.

Expect it to settle out of court

[Zontar_Thing_From_Ve (949321)]

Well, this is what happens when you go to court. You sometimes lose. Expect Autodesk to quickly settle this out of court with quite generous, but non-disclosed, terms to Mr. Vernor. I don't see how they can take the risk that an appeals court will uphold this, so I expect them to pay him a lot of money (maybe $100,000 or more) and have him agree to a non-disclosure of the settlement. The court case will be dropped and Autodesk will not admit to wrong doing and the ruling won't apply since they settled. This will keep the door open that Autodesk or some other company might be able to try a similar case in the future and get a ruling in their favor.

Anyone knows how these laws work in Canada?

[urbanriot (924981)]

I have a client that was recently nailed by the BSA for having illegitimate copies of Autocad, because they purchased them online through various Ebay auctions (they only needed 2005 LT, not the latest and greatest, expensive version). The BSA deemed their less than 10 copies to be illegal, and nailed them with a hefty fine. My client wanted to avoid a legal battle, so they settled and paid this fine.

That being said, does anyone know what the laws are in Canada regarding reselling retail, boxed Autocad, and if my client had a foot to stand on?

Re:Antiquated Thinking

[qoncept (599709)]

People don't use AutoCad because they like the company behind it, they use it because they've decided it's the best tool for the job. The people using it cost a whole lot more than software, so you give them what will make them the most productive.