Do you really own that software?

The US first-sale doctrine of 1909 states that the owner of a “particular copy” of a copyrighted work does not need the copyright owner’s authorisation to sell or dispose of that copy. Pretty straight foward, right?

…except that a court has just ruled that you can possess a copy of a copyrighted work without actually owning it: like when you license computer software. If you don’t own it, you can’t sell it.



A federal appeals court in the US has said this week that software makers can use shrink-wrapped or click-wrapped licenses to forbid the transfer or resale of their products. The 3-0 decision was made by the 9th US Circuit Court of Appeal – and, if it stands – means that publishers and copyright owners may be able to insert clauses into their sales agreements to prohibit the resale of their wares.

This all came about when an eBay seller posted a handful of copies of Autodesk’s AutoCAD Release 14, back in 2007. The seller, Timothy Vernor, explained that he had purchased the software from a company who was required to “dispose” of the software under a licensing agreement.

Autodesk complained, invoked the Digital Millennium Copyright Act, and demanded eBay remove the items from the site. They did, and when Vernor disagreed with the decision and re-posted his sale, eBay promptly terminated his account. And there we have a lawsuit.

The first case, heard in a lower court, decided that the first-sale doctrine applied whenever the consumer is entitled to keep “a copy” of the work – so consumers could resell purchased software as they saw fit. Autodesk weren’t too keen on this decision, and took it to appeal.

Upon closer reading, Autodesk have imposed a “significant” number of transfer restrictions – their software cannot be transferred outside the Western Hemisphere, and (more importantly), the product cannot be transferred or leased without written consent from Autodesk.

Greg Beck, defense attorney in the case explains:

“The terms of the software license in the case are not very different from the terms of most software licensing. So I think it’s safe to say that most people don’t own their software.

The other ramification, there is no reason a similar license could not be put into the cover of a book. It wouldn’t be difficult for everybody to implement this.”

Unsurprisingly, Autodesk have some heavyweights on their side – the Software & Information Industry Association (including Adobe, McAfee, Oracle, Google and others) joined the Motion Picture Associaion of America in urging the court to rule against the defense.

Lady Justice

It's an interesting thing.

But! eBay and the American Library Association took the other stance, with the librarians echoing fears that these new licensing practices could be picked up by other copyright owners – record labels, movie studios and even book publishers. (In direct response to these worries, the appeals court mentioned that US Congress is free to modify copyright law “if it deems these or other policy considerations to require a different approach.”)

While the appellate courts have previously supported companies imposing terms on how their software may be used, this is believed to be the first ruling which addresses whether a company can forbid resales of software in their user agreement. The decision covers nine western US states, including California.

…and it’s not over yet, with defense Attorney Beck explaining that he will ask the San Fransisco-based appeals court to rehear the case, with 11 judges. Stay tuned.

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