Intellectual Property Law

Ninth Circuit: AutoCAD purchasers are licensees, so first sale doctrine does not apply to resale

By McKee, Voorhees & Sease, P.L.C.

In a decision last week, the Ninth Circuit held the purchaser of a copy of AutoCAD software was not an owner of the copy, but instead a licensee.  As a result, the purchaser did not have the protection of the first sale doctrine (codified in 17 U.S.C. § 109(a)) when attempting to resell the software to a third party.  

The declaratory judgment plaintiff was attempting to sell used copies of AutoCAD on eBay.  Autodesk, makers of AutoCAD, sent takedown notices to eBay asserting copyright infringement, which resulted in eBay removing the auctions.  The plaintiff sued to have the sales declared noninfringing based on the first sale doctrine.  The district court agreed, holding the first sale doctrine protected the sales of the used copies of AutoCAD. 

The Ninth Circuit reversed.  Reconciling its earlier precedent, the court identified conditions where a purchaser is a licensee, rather than an owner of a copy.  Specifically, a purchaser is a licensee when:

[T]he copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions.

In this case it was undisputed the agreement stated the user was granted a license.  Further, the shrinkwrap license from Autodesk prohibited:  transfer of the software without its consent, transfer or use outside the Western Hemisphere, reverse engineering or modifying the software.  In addition, the license required destruction of prior versions of the software upon upgrading if an upgrade license was purchased.  Based on all of these restrictions, the court held the three criteria were satisfied, and the purchaser of the software was a licensee, not an owner, and therefore could not rely on the first sale doctrine as a defense to copyright infringement.

More detail of Vernor v. Autodesk, Inc. after the jump.

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Full post as published by FileWrapper on September 15, 2010 (boomark / email).