Seller's Remorse

Who owns your software?

Many software companies have argued that when consumers buy their products, all they're actually purchasing is a limited-use license, which often prohibits resale. A new federal court ruling suggests that, to the contrary, anyone who buys a legal copy of a piece of software owns that copy—and has a right to sell or transfer it to whomever he pleases.

The court case involved a dispute between Seattle resident Timothy Vernor and software maker Autodesk, which makes the popular AutoCAD architectural drafting software. Vernor, who earns his living as an eBay seller, had attempted to sell copies of AutoCAD through the online auction site. Autodesk, citing the Digital Millennium Copyright Act, not only managed to delay Vernor's sales attempts; it also got him barred from eBay for a month.

Vernor took Autodesk to court, seeking a declaratory judgment that any further sales of AutoCAD would be legal. On September 30, U.S. District Judge Richard Jones ruled that Vernor was entitled to the "right of first sale"—a legal doctrine that, as Jones explained, allows the "owner of a particular copy…to sell or otherwise dispose of that copy despite the copyright holder's distribution monopoly."

Jones acknowledged that three recent Ninth Circuit Court judgments seemed to weigh in Autodesk's favor but decided that, because it predated more recent judgments, and because the conflict between the precedents was deemed irreconcilable, a 1977 case involving the transfer of film prints between a studio and an actress was the controlling precedent. Jones then ruled that Autodesk's license agreement constituted a "transfer of ownership." In doing so, he rejected Autodesk's claim that Vernor's sale might cause piracy. "Vernor's sales of AutoCAD packages," he noted, "promote piracy no more so than Autodesk's sales of the same packages."