Ownership or License? Where to Draw the Line on Copyright Infringement

Posted on June 30, 2010

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Most likely, Craig Vernor had no idea the firestorm he would create when he decided to put used copies of AutoCAD, a 3-D modeling software often used by architects, up for sale on E-Bay. He wanted to sell the $4,000 software (when new) for about $400 online. (Vernor’s actions on E-Bay are by no means the first of their kind. At present, E-Bay has 19 sub-categories of software for sale.)

Autodesk, the software’s creator and parent company, immediately demanded that the items be removed from E-Bay due to copyright infringement. Their argument was that those who purchased the software accepted a license agreement (common and easily recognizable by anyone who has ever installed computer software) meaning that the original buyer, and only the original buyer, was entitled to use of the software. According to Law Technology News, “Autodesk’s position is that its customers are buying a license, and that the actual ‘ownership’ of the copy stays with Autodesk.” In short, they say that the parent company still owns that CD-ROM at your house despite whatever you paid at Best Buy for the information it contains and despite whether or not Autodesk has any intention of ever reclaiming the physical software.

After being suspended from E-Bay (and stuck with a bunch of AutoCAD software), in 2008 Vernor filed a pro se declaratory judgment lawsuit in federal district court in Seattle denying any such copyright infringement. The judge ruled in Vernor’s favor on summary judgment and Autodesk appealed.

If the 9th Circuit affirms the district court ruling in Vernor’s favor, this will call into question the legal validity of many standard software licenses. In order to avoid such a result, the Software and Information Industry Association filed an amicus brief in support of Autodesk’s position. On the other hand, an Autodesk victory on appeal could throw into question the legitimacy of the secondary market for software, which would be a largely significant outcome for a company like eBay and is why eBay filed an amicus brief in support of Vernor.

Vernor’s lawyer, Greg Beck, argues that Autodesk is “trying to get around the first-sale doctrine by using the word ‘license’ to describe a transaction that, economically speaking, is clearly a sale,” says Law Technology News. Copyright law has long limited copyrights by a “first sale doctrine,” meaning that copyright owners can’t control distribution after they sell their product.  For a clearer illustration of the terms at stake here, imagine what were to happen if books, music and movies were “licensed” rather than sold. There would be no market for used books, CDs or films, and libraries might cease to exist as they would not be able to offer books to more than one reader.

According to Law Technology News, Jerry Falk, the lawyer for Autodesk says, “This is a huge deal, involving one of the most important sectors of the American economy, which has grown and developed on this [license] model.  If somebody thinks it ought to be changed, that’s their prerogative, but they’ve got to go to Congress. There would be hearings … I don’t think Congress in a million years would do anything this radical.”

The Vernor v. Autodesk appeal was argued before the 9th Circuit panel on Monday June 7th. I’ll be sure to keep you updated on the progress of the case.

Elizabeth S. Ritter
Ritter Law Firm, LLC

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