Some software can't be resold, appeals
court rules
By Michael Liedtke
Associated Press
Posted: 09/10/2010 02:57:37 PM PDT
SAN FRANCISCO -- A federal appeals court has sided with the computer software industry in its
effort to squelch sales of secondhand programs covered by widely used licensing agreements.
Friday's ruling by the 9th Circuit Court of Appeals raised worries that it will embolden music labels,
movie studios and book publishers to circumvent the so-called "first-sale" doctrine in an attempt to boost their sagging sales.
The doctrine refers to a 102-year-old decision by the U.S. Supreme Court that determined
copyright holders can't prevent a buyer from reselling or renting a product after an initial sale, as long as additional copies aren't made.
It's a legal principle that allows used book and music stores to operate, as well as DVD subscription services such as Netflix.
But a three-judge panel of the 9th Circuit concluded the first-sale doctrine didn't apply to
used software programs that online merchant Timothy Vernor peddled in his store on eBay.
Vernor had bought the unopened software, made by Autodesk, at garage and office sales, without
ever agreeing to the licensing agreement imposed on the original buyer.
That contract made it clear the rights to install Autodesk's software were being licensed rather
than sold, according to the 9th Circuit's interpretation.
Without a definitive sale, the first-sale doctrine is moot, the appeals court reasoned in its
decision overturning a lower federal court in Washington state.
Autodesk, based in San Rafael, said it was pleased with the decision. The Software &
Information Industry Association had filed documents supporting Autodesk's position in the
case.
The ruling sets the stage for even more legal skirmishes over the definitions of a sale and a
license, said Corynne McSherry, an attorney for the Electronic Frontier Foundation, a group
fighting to set the boundaries of digital copyrights.
"I am sure there are going to be others (in the media) trying to find the magic words that
prevent a buyer of intellectual property from being considered the owner," McSherry said.
Another round in the 3-year-old battle pitting Vernor against Autodesk seems assured.
Vernor's attorney, Gregory Peck of Public Citizen, said he intends to ask a full panel of 11 judges in
the 9th Circuit to review Friday's decision before considering a possible appeal to the U.S. Supreme Court.
For the moment, Beck and another attorney involved in the case, Sherwin Siy of Public
Knowledge, said they expect the 9th Circuit's decision to have a chilling effect on the used
software market.
That's something that eBay had hoped to avoid. The San Jose e-commerce company filed a brief
in support of Vernor's legal arguments citing the protections under the first-sale doctrine.
Many other popular software programs already installed on home and office computers are
covered by licensing agreements using similar language to Autodesk's programs, Beck said.
"That means the infrastructure already is in place for other software makers to say their
customers don't really own those programs," he said.
