Intellectual Property Law

If It Looks Like a Duck . . . Seattle Judge Finds Software Was Sold, Not Licensed

By Corynne McSherry

In a major victory for consumers' rights, a federal district judge has firmly rejected software vendor AutoDesk's claim that its license agreement restricts its customers from re-selling the software they lawfully owned.

As we've discussed before, the copyright industries have struggled for years to convince courts and their customers that software is merely licensed, not sold. Why? Because the Copyright Act includes various protections for buyers of copyrighted material that limit sellers' ability to restrict how their customers can use their software. One of the most important of these protections is the "first sale" doctrine, which simply says that once you've acquired a lawfully-made CD or book or DVD, you can lend, sell, or give it away without having to get permission from the copyright owner. Without the "first sale" doctrine, libraries would be illegal, as would used bookstores, used record stores, video rental shops, CD-swapping communities and so on. If those books, records, videos etc. were merely licensed, the seller could simply refuse to give their customers permission to re-sell the material they bought, or put other onerous restrictions on resale. That way, they could force consumers to always buy new software, even if they would prefer to buy an older, possibly less expensive, version.

This proposition is being put to the test in the context of eBay sales. After Autodesk repeatedly alleged that Timothy Vernor was violating copyright law by attempting to sell copies of Autodesk's copyrighted AutoCAD software on eBay, Vernor (with the able assistance of Public Citizen attorney Greg Beck) asked the court to declare that his activity was legal under the first sale doctrine. Autodesk predictably responded by insisting that AutoCAD is licensed, not sold. Nonsense, said the court -- Autodesk may have called the transfer a license, but it didn't look much like one. For example, the license didn't require consumers to return the software when they were done with it, nor to make ongoing payments for continued use. Thus, the "license" might put some restrictions on use, but those restrictions did not void the first sale doctrine.

Kudos to Judge Richard Jones for seeing that if it looks like a duck and quacks like a duck, chances are it's a duck. And big congratulations to Vernor and his counsel, Greg Beck, for striking a major blow for consumer rights.

William Patry has an excellent post on the ruling and what this case can tell us about the DMCA safe harbors.

More information on the case available here.

Full post as published by Electronic Freedom Foundation - Deep Links on May 22, 2008 (boomark / email).