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Federal Court Says First-Sale Doctrine Covers Software, Too

Posted by timothy on from the it-better dept.

New10k writes "The US District Court in Seattle has rejected Autodesk's myriad arguments regarding its software licenses and found in favor of eBay seller Timothy S. Vernor. The ruling started by ruling that Vernor was within his rights to resell copies of AutoCAD Release 14 he got in an auction. Once the court settled the legitimacy of reselling, it used that ruling as a lens to dismiss all of Autodesk's various claims. More than once the court described Autodesk's arguments as 'specious' and 'conflicted.'" Autodesk managed to have Vernor's eBay account pulled, after he listed for sale copies of AutoCad 14. He sued Autodesk in response.

20 of 509 comments (clear)

  1. Workaround by Anonymous Coward · · Score: 5, Interesting

    Can autodesk skirt this by making its software connect to an autodesk server and validate the presence of a (non transferrable) user account?

    Because that is exactly what World of Warcraft (and all MMO's, for that matter) does.

    Autodesk would then give the software away for free, but sell the user accounts for whatever they want.

    1. Re:Workaround by thtrgremlin · · Score: 5, Interesting

      I really hate companies that operate on the basis of "we will stomp the rights of every customer that doesn't sue us" policy. Lots of places seem to be like this. Some often just break the law till you point it out to them, then they change it... for you, and will keep screwing the person right next to you. I actually got into an argument with a McDonald's manager that refused to give a 6 year old kid a free cup of water (he bought a lot of food for himself and his friends at the same time). The manager said that the only water they had was the bottled water, and it was $1.50. I informed the manager that I knew they were lying and knew the law, and I would be more than happy to call the Health Department if they didn't get the kid his cup of water... in so many words. In California, at least, restaurant, for a variety of reasons, must provide water with no charges or restrictions, other than there is no regulation on cup size, customer or not. Kid got his water, and he thanked me.

      Shame on them picking on a little kid for not knowing his rights. Now I think they just try to convince adults that anything but bottled water is poisoned or that only poor people drink water.
      Idiots!

      --
      Want Big Business out of government? Take away the incentive and start by getting government out of big business!
  2. Antiquated Thinking by ouvyt · · Score: 3, Interesting

    AutoCad aggressively attempts to make itself irrelevant. Why generate such bad press over a single copy... This follows the same backwards mentality of the book publishing industry, which thinks the less books in the hands of people the better.

  3. Psystar by oahazmatt · · Score: 3, Interesting

    A bit off-topic, but I'm wondering if Apple was actually waiting on this ruling before going after PsyStar for OS X.

    --
    Those who believe the Internet is private,
    find their privates are on the Internet.
  4. Product Activation? by nonsensical · · Score: 5, Interesting

    It's about the courts re clarified this for software. When you buy a physical product, you should have the right to sell it.

    What happens now with all the authentication and tying copies of software to the hardware it's first installed on such as Windows XP/Vista?

    You have a right to sell your copy, but effectively you can't because it's been tied to your hardware.

    1. Re:Product Activation? by Chris+Burke · · Score: 5, Interesting

      You have a right to sell your copy, but effectively you can't because it's been tied to your hardware.

      It seems to me that the courts have not typically ruled against "effective" rights violations*. There's no law that says Microsoft can't require your PC to phone home to verify it's using the same hardware as before. So while this decision could be repeated if Microsoft tried to stop you from reselling Vista and you went to court over it, it would probably not have any effect on that sold copy of Vista being useless because Microsoft wouldn't activate it.

      * See Eldridge v Ashcroft, "retroactive finite copyright extensions, repeated infinitely" doesn't violate principle of copyrights being finite.

      --

      The enemies of Democracy are
  5. First-Sale cuts both ways by Anonymous Coward · · Score: 3, Interesting

    I created a 4 hour video on building boats. I sell probably 30 a year. An online video rental site bought a legal copy and now rents my video out at $15 per week.

    So why should people buy my video at $80 if they can get it for next to nothing on the web and most likely just burn their own copy? That's First-Sale Doctrine and it can also suck for the little guy.

    1. Re:First-Sale cuts both ways by Naughty+Bob · · Score: 4, Interesting

      I created a 4 hour video on building boats. I sell probably 30 a year. An online video rental site bought a legal copy and now rents my video out at $15 per week.

      So why should people buy my video at $80 if they can get it for next to nothing on the web and most likely just burn their own copy? That's First-Sale Doctrine and it can also suck for the little guy. Contact the video rental site. Send them an 'updated', Hi-Def version of your tutorial. Include on this a number of unobtrusive ads for your product, and maybe throw in a few free support calls (then start charging...).

      (I know nothing about boat building, but...) If building boats takes more than 5 weeks, or is slightly difficult, you'll have successfully adapted your business model to (cue scary-deep voice over) 'A Business Model For The Digital Age'.

      Kerching!
      --
      "Be light, stinging, insolent and melancholy"
    2. Re:First-Sale cuts both ways by shawn(at)fsu · · Score: 4, Interesting

      I think they do. My sister used to work at a video rental store and I saw the catalog they used to order VHS tapes from. They were easily 4 to 5 times as expencive as buying it from walmart or what have you. This also led to fun times when someone would leave a video in their hot car in Florida and were shocked when told how much it was to replace the tape.

      --
      500 dollar reward for tip(s) leading to the arrest of the person(s) who stole my sig.
    3. Re:First-Sale cuts both ways by Zanth_ · · Score: 3, Interesting

      Everyone needs protection so they won't get screwed. If the big guys get screwed it means the little guys will likely get screwed even more.

      The problem is that the OP is complaining that someone is making money off of his work. If the video is popular and is successfully renting for $15 (which is not a cheap rental...most rental stores I know are less than $5) then how can selling it for about that price not be a win win?

      Your speculation on volume consumer goods would work if there was a high production cost. The problem is that the OP already spent the money on making the video. If it was expensive to do, moving 30 units/per isn't likely to make his money back or turn a profit any time soon. If the video is being rented frequently, it would only need to be rented 160x. Figuring that renting is mildly inconvenient (having to return it via the post in this case and if the OP is right in his assumption that most people copy it, then that extra effort figures into the hassle/cost.)

      Sell it for $15 and who knows how many will sell? Certainly those that would rent it for $15 would buy it for that cost or might even pay a premium of $5 over the rental cost to get it a pro copy.

      It really depends on the rental volume in this case. If it is rented out 10x year, the likelihood of him selling 10 more copies at 80 bucks is pretty nil, but if it is renting out 200 times a year, then he is turning a larger profit matching or just slightly increasing the price.

      Otherwise, I agree, niche and high quality products usually demand a higher price and often people are willing to spend the money on it. But when the product is a silver disc and that silver disc can easily be rented...one can understand why $80 vs. $15 is going to be dramatic on sales. In the end this argument totally depends on the volume of rental sales.

      If the OP's copyright policy clearly prohibits renting, then he should either slap the online company with a cease and desist order or come to some agreement where he gets some form of royalty from each rental.

    4. Re:First-Sale cuts both ways by JonWan · · Score: 4, Interesting

      The first video store I ever visited did this. You purchased the Tape for the retail price (about$80) and returned it for a refund. They deducted $5 for each day you had the tape. If you needed a VCR they would rent one to you for $10 per day plus a $300 deposit.

  6. Open packet to read agreement. by Hankapobe · · Score: 4, Interesting
    FTFA: There is a piece of paper tucked inside that says it is a licensing agreement with the statement "by opening the sealed software packet(s), you agree to be bound by the terms and conditions of this license agreement."

    How many of you have found the actual license agreement is on the media stored in the packet? So in order to read the agreement, you have to open the packet.

  7. Nontransferable Licenses in question by icebike · · Score: 5, Interesting

    The ruling is important because it calls into question the whole concept of a Non Transferable license. The court found that âoefirst saleâ doctrine of copyright law did apply. http://en.wikipedia.org/wiki/First-sale_doctrine

    If this hold, it will largely eliminate the non-transferable license in software.

    And why shouldn't it? As long as the original owner retains no copy, selling an unused license simply keeps that copy under maintenance (maintenance charges frequently exceed sales revenue) and keeps the money flowing to the authors.

    Nontransferable licenses are usually attempted by companies that have some sort of a near monopoly lock, so that not only do they gain from a new sale, they also gain from maintenance charges. If there are multiple vendors of equivalent software you really can't get away with nontransferable clauses.

    As a software author, I'd gladly accept continued maintenance fees instead of new sales revenue. If my customers know that unused licenses have residual value when their projects are completed its good for me, and good for them. They buy extra licenses to handle the surge effort of development, and retain a few licenses for maintenance.

    --
    Sig Battery depleted. Reverting to safe mode.
    1. Re:Nontransferable Licenses in question by sumdumass · · Score: 3, Interesting

      You know, you just brought up a pretty interesting observation. How would this Non Transferable license effect sarbanes oxley compliance? If there is no liquid value in a non transferable license, then as soon as a company purchases it, it ceases to be an asset of value. You couldn't list it as value towards bankruptcy either, I wouldn't think. But claiming $20,000 in computer software as an asset when if it ever needed to become liquid to satisfy debt or something, it would be worthless in essence might seem like a violation of some sorts.

      Then again, if you file bankruptcy and dissolve the company, the company/person acting for the company who agreed to the license disappears. Would the Non Transferable license still be bound at that point? This case in question is a situation where someone purchased software at an auction (could very well be a bankruptcy sale) and didn't agree to any licenses before attempting to resell it on Ebay. If the software is confiscated from the company that agreed to it, is anyone but the company bound by the non transferable license anymore?

  8. No lawyer by lantastik · · Score: 5, Interesting

    Wow, that guy has some rocks. In the second link, you find out he sues them without a lawyer. That's not an easy thing to do in a US District Court.

  9. Re:Not really adding anything important but... by mikael · · Score: 5, Interesting

    You give the software away for free, but you charge a free for a license key (eg. Microsoft) that unlocks various features of the software. For potential customers, you provide edit and load functionality. For students, you allow all the edit, load and save features, but any printed files have a watermark copyright. For professional users, you provide all features.

    --
    Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
  10. Re:Vernor 'bound' by a license? by Anonmyous+Coward · · Score: 3, Interesting

    I wonder if this also applies to subscription services like DSL. I'm currently in the middle of resolving a dispute over a DSL early cancellation fee. Before I purchased the service, I asked for a copy of the license agreement. SBC said they didn't provide written copies of the agreement (At present, you can get them on the web, but you couldn't, or at least the salesman didn't tell me that I could at the time).

    The salesman assured me that if I were to move before the 1 year contract was up and SBC couldn't provide service in the place where I moved to, I wouldn't be charged the fee. I did move to another state where they didn't have service 10 months into the contract, but they charged me the fee, claiming that because I moved to another state where they didn't operate, this clause didn't apply. (It only applies if you move to a place where they do operate but they can't provide service to that specific house for some reason).

    Needless to say I called BS on them because I was never provided with a copy of the agreement and they certainly don't have my signature on anything. Unfortunately, consumers have no legal rights when it comes to a credit report. It's not considered liable because credit reports aren't public information. Anyone have an idea of a legal argument I can make that would force them to tell the credit agencies the bill is invalid?

  11. Re:Not really adding anything important but... by thtrgremlin · · Score: 3, Interesting

    Agreed. Restricting access to alternatives is a "good" way to force customers to buy more than they need. I once went to a club/resort place and was informed that membership was some $500 initiation and $1800 per year, or there was an upgrade for some $600+$2000/yr. Quite a bit more than anticipating, but after investigating and looking through the contract, turned out they had a $50+$30/month ($360/yr) student package and a "standard" package that wasn't much more. They had been trying to sell me their premium and platinum packages that had amenities that I didn't even want.

    I think I have heard of some OS company doing some stuff to hurt competition in their favor too. :)

    --
    Want Big Business out of government? Take away the incentive and start by getting government out of big business!
  12. Re:Not really adding anything important but... by drinkypoo · · Score: 4, Interesting

    drinkypoo the human dictionary says: the word for features-limited-until-paid shareware is crippleware. It's not very P.C., but it is very descriptive. Fight crippleware: use Free Software! (I understand some of you out there make a living on Shareware. Good for you! I hope when you abandon the software you'll Open the Source.)

    --
    "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
  13. Re:AM Radio by thtrgremlin · · Score: 3, Interesting

    There is a good wiki article on him, not to mention Free Culture, where I read about this history, is licensed under creative commons; it is free to read online/PDF, though 30 pages in, I bought a copy. :)
    http://www.free-culture.cc/

    IMHO, Lessig is a really amazing person. Not to spam, but his "Last Lecture" on Free Culture at Stanford University is about Eldred v. United States, among other things which I would bet you would enjoy if you are into this kind of history. Also a CC work :)
    http://www.opensourcecinema.org/lessigfinal

    --
    Want Big Business out of government? Take away the incentive and start by getting government out of big business!