9th Circuit: Restrictions on Software Resale

Post date: Sep 13, 2010 1:57:11 PM

This past Friday, the Ninth Circuit Court of Appeals handed down an opinion that will severely restrict the resale market of digital content.

Here is the quick summary of Vernor v. Autodesk: Vernor sold used copies of a computer program on eBay -- that he had acquired legally -- but Autodesk told Vernor to quit selling the programs, claiming that the resale was in violation of the End User License Agreement (EULA) that was digitally signed by the original owner when the program was installed. Vernor sued Autodesk in order to enforce his potential rights under the "first-sale" doctrine, and based on the fact that he never personally signed the EULA because he never installed the programs. That didn't work out so well for Vernor, obviously. The case seemingly turned on the difference between a "license" and a "sale". The 9th Circuit explained the difference as follows:

"We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions."

Essentially what this means is that EULAs are enforceable (which are contained on items such as computer programs and song downloads, etc.) and that the first-sale doctrine does not apply to a licensee because the digital media was never technically sold.

For the rest of the article, along with the full copy of the court opinion, go HERE.