U.S. Appeals Court Draws Bright Line Between Software Owners, Licensees

SAN FRANCISCO — A federal appeals court on Friday ruled that copyright’s "first sale doctrine" doesn’t apply to software, and possibly DVDs and other licensed content, as long as the vendor saddles the transfer with enough restrictions.

The decision is significant because it ensures software buyers will rarely be software owners, and the potential effects of the decision could turn simple breach of contract claims into copyright infringement suits for violating end-user license agreements.

The first sale doctrine limits a copyright holder’s right to exclusive distribution by allowing owners of copies of copyrighted works to resell those copies, but it makes no such exception for a person who possesses such a copy without owning it, such as a licensee.

Limiting the first sale doctrine’s applicability to so-called “shrinkwrap” licensing agreements, the 9th U.S. Circuit Court of Appeals agreed with software producer Autodesk Inc. that the terms it required customers to accept before they could install its software made the customers licensees of the copies — not owners.

The ruling by a three-judge panel tossed out a U.S. district judge’s ruling that an eBay merchant could sell used copies of software regardless of any agreement binding those from whom he purchased the copies.

Timothy Vernor bought four packages of Autodesk's AutoCAD software at a garage sale and tried to sell them on eBay but Autodesk threatened Vernor with a copyright lawsuit, claiming that its software is only “licensed” — never sold — pointing to the fine print on the end-user license agreements it had with the original purchaser.

Vernor filed suit in Seattle against Autodesk, asking the court to clarify his right to resell the computer-aided design software packages that he purchased. He prevailed before a lower federal court in 2009, when a federal judge held that he was a successive owner and entitled to resell copies he purchased under the first sale doctrine. Autodesk later appealed to the 9th Circuit.

Writing for the 9th Circuit, Judge Consuelo M. Callahan ruled 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.”

The Electronic Frontier Foundation, which filed an amicus brief in the case, called Friday's decision "deeply disappointing" and "very bad news for consumers."

"We understand Mr. Vernor may seek en banc review of this decision," Corynne McSherry, an EFF senior staff attorney, told XBIZ. "We hope that the court agrees to review the case and treats it as an opportunity to put consumer rights and expectations ahead of the overreaching demands of software vendors."

The case is Vernor vs. Autodesk Inc., 09-35969.

Related:  

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

Falcon/NakedSword Turns the Page With FalconINK Publishing Launch

Your local bookstore may not be the first place you’d expect to take in the latest Falcon/NakedSword release, but that could soon change as the gay adult film studio turns the page with FalconINK, a full-service publishing venture offering original fiction in print, e-book and audiobook formats.

ChatGains Joins Pineapple Support as Partner-Level Sponsor

ChatGains has joined the ranks of over 70 adult businesses and organizations committing funds and resources to Pineapple Support.

Private Releases 2nd Volume of 'Horny Women: Mid-Life Crisis'

Private has released the second volume of “Horny Women: Mid-Life Crisis,” directed by Xavi Rocka.

Charlie Forde, Mickey Mod & Derek Kage Star in 'A Surprise for Charlie' From Dorcel

Charlie Forde stars with Mickey Mod and multi-XMAs winner Derek Kage in “A Surprise for Charlie,” from Dorcel.

VMG Celebrates 10th Anniversary of 'Vixen' Imprint

Vixen Media Group (VMG) is marking the 10th anniversary of its flagship studio imprint, Vixen.

Gal Ritchie, Rissa May Lead Latest From Bellesa Plus

Gal Ritchie and Rissa May star in the new release from Bellesa Plus, titled “Double-Booked.”

Ivy Ireland Toplines Vince Karter's 'Back to Dark'

Ivy Ireland headlines reigning and three-time XMAs Male Performer of the Year Vince Karter’s latest Evil Angel directorial, “Back to Dark.”

Jazmin Black Performs 1st All-Girl Scene in Her Girlsway Debut

Jazmin Black performs her first all-girl scene in her Girlsway debut, alongside Ella Reese and Jewelz Blu, in the studio’s latest release, “Throuple’s Counseling.”

Richard Mann Drops New Evil Angel Scene With Daisy Stone, Alexis James

Daisy Stone and Alexis James star in an Evil Angel scene alongside director/performer Richard Mann.

Abella Danger Serves Glamour and Gab at Live 'Danger She Spoke' Premiere

Multi-XMA-winning performer Abella Danger slipped into a sexy new role Thursday night, making her talk show host debut with "The Abella Show: Danger She Spoke," a new show and podcast featuring revealing conversations with fellow performers and industry personalities.

Show More