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 © 2025 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

Pure Taboo Debuts 'Behind the Scenes Documentary' for Latest 'Under the Bed'

Pure Taboo has released a behind-the-scenes documentary on its series “Under the Bed,” spotlighting the episode “The Growth.”

Connie Perignon Toplines David Perry's 'Sexual Desires 2'

Connie Perignon headlines director David Perry's “Sexual Desires 2” from Evil Angel.

Proposed New Hampshire AV Bill Appears to Violate Constitution

A bill in the New Hampshire state legislature, aimed at requiring adult sites to age-verify users in that state, contains a provision that seemingly contradicts the Supremacy Clause in Article VI of the U.S. Constitution.

Rae Sixty Nine Makes Her TransAngels Debut

Rae Sixty Nine has made her TransAngels debut opposite Adam x Lee in the studio’s latest release, titled “Cock Ride.”

Ariel Demure Toplines 'TS MILFs' From TransSensual

Reigning XMAs Trans Performer of the Year Ariel Demure headlines “TS MILFs,” the latest title from Mile High Media studio imprint TransSensual.

AEBN Publishes Report on Fetish Trends

AEBN has published a report on fetish categories from its straight and gay theaters.

Online Child Protection Hearing to Include Federal AV Bill

A House subcommittee will hold a hearing next week on a slate of bills aimed at protecting minors online, including the SCREEN Act, which would make site-based age verification of users seeking to access adult content federal law.

Lana Wolf Returns to Immoral Productions

British star Lana Wolf stars in a new two-part scene from Immoral Productions alongside Dean Van Damme and studio honcho “Porno” Dan Leal.

Lulu Chu, Connie Perignon Star in 'Locked, Cocked & Loaded' From Brazzers

Lulu Chu and Connie Perignon star with Victor Ray in the latest release from Brazzers, titled "Locked, Cocked & Loaded."

Adriana Chechik Returns to Evil Angel With Blowbang From Jonni Darkko

Adriana Chechik has returned to Evil Angel with a blowbang from director Jonni Darkko.

Show More