How Can A Software Supplier Control Resale Of Its Software?

If you paid for a used but genuine CD-ROM containing autoCAD software with a "shrinkwrap license," could you resell it on eBay?  Is that any different from buying a used book then reselling that book on eBay, which is permitted under copyright law and is called the "first sale doctrine?"  That was the question before the Ninth Circuit in a case involving Autodesk, the owner of copyrighted autoCAD software.

An eBay "PowerSeller" named Timothy Vernor bought a used copy of autoCAD software on genuine CD-ROMs at a garage sale.  The "shrinkwrap" seal had already been broken, and prior cases have decided that a user opening the seal is legally bound to the terms written on the shrinkwrap sleeve.

Vernor then posted the used copy on eBay for resale under the "first sale doctrine."  Autodesk had very different views, and the matter went to court.

The district court found for Vernor because it considered the transfer by Autodesk to the original user to be a sale, and that Vernor was protected under the "first sale doctrine."  Autodesk appealed to the Ninth Circuit to overturn this ruling.

The Ninth Circuit did just that:  It reversed the district court's ruling based on answers to the following three questions:

1. Did Autodeak state in its "shrinkwrap" agreement that the user is granted a license?
2. In that "shrinkwrap" agreement, was the original user significantly restricted by Autodesk to transfer the software? and
3. Did Autodesk impose notable use restrictions on the original user?

Since the answers to all three questions were "yes," Autodesk won the appeal.

Accordingly, owners of copyrights in software should follow the Ninth Circuit's guidance to prevent resale.  Vernor v. Autodesk, (9th Cir., 09-35969, September 10, 2010)

http://www.metnews.com/sos.cgi?0910%2F09-35969