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

Anissa Kate Fronts Latest From MILFY

Anissa Kate stars with Goldey in the latest release from Vixen Media Group (VMG) studio imprint MILFY.

Suki Sin Stars in Latest From Family Strokes

Suki Sin stars with Rion King in the latest release from the Family Strokes series "PervMom."

Digital Playground Premieres Ricky Greenwood's Action Feature 'The Tribunal'

Digital Playground has dropped “The Tribunal,” a futuristic, dystopian action film from multi-XMAs winner Ricky Greenwood.

Segpay Opens New Global Headquarters in Boca Raton

Segpay has selected Boca Raton for its new global headquarters.

X3 Euro All-Stars Paint Amsterdam Red in Billboard Campaign

The X3 Expo Euro All-Stars are making a splash on the vibrant streets of Amsterdam as the creator-first fan event prepares to make its debut on the continent.

Kendra Sunderland, Alina Lopez Lead Latest From Vixen

Kendra Sunderland and Alina Lopez star with reigning and three-time XMAs Male Performer of the Year Vince Karter in the second installment of the Vixen showcase series “The Angel Anthology.”

Tiny Secret Games Taps Pauline Schmiechen for Growth and Partnerships Advisor

Adult game studio Tiny Secret Games has named Pauline Schmiechen as its new growth and partnerships advisor.

BranditScan Names Aerie Saunders as Community Manager

BranditScan has named Aerie Saunders as its new community manager.

Greta Foss Makes Her Immoral Debut

Greta Foss has made her debut for Immoral Productions alongside Megan Longoria, Matt Bird, and studio honcho “Porno Dan” Leal.

Grooby Producer/Director Louie Damazo Passes Away

Longtime Grooby producer and director Louie Damazo passed away Sunday at his home in Brazil at the age of 58.

Show More