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

ERIKALUST Releases 'Close Up'

Spookie Shelbie and Delfine Dahlia star in the latest release from ERIKALUST, titled “Close Up.”

Lexi Lore Makes Her Vixen Debut

Lexi Lore has made her debut for Vixen Media Group's flagship imprint alongside Parker Ambrose in the studio's latest release.

Goddess Lilith Launches New Official Website Through PAYSITE

Goddess Lilith has rolled out her new official site, QueenGoddessLilith, through PAYSITE.

Penthouse Names Madiiitay as October's 'Pet of the Month'

Penthouse Magazine has named Seattle content creator and professional modeling newcomer Madiiitay as Pet of the Month for October.

Pineapple Support to Host 'Reclaiming Intimacy' Support Group

Pineapple Support is hosting a free online support group for performers with trauma-impacted intimacy issues.

Wendy Marvell, Shadow Dimitri Make Their Immoral Debuts

Wendy Marvell and newly crowned XMA Europe Male Performer of the Year Shadow Dimitri have made their debuts for Immoral Productions alongside Marvell's husband Matt Bird, Irish Bull, John Price, and studio honcho "Porno Dan" Leal.

Ofcom Cites Web Prime, Porntrex for Alleged AV Violations

U.K. media regulator Ofcom on Tuesday notified two operators of adult websites of the agency’s provisional determination that the companies have failed to comply with provisions of the Online Safety Act.

Mick Blue Tops TT5 Podium at NASA Championships

Mick Blue took first place this past weekend in the national Time Trial 5 (TT5) race at the 2026 NASA Championships at Sebring International Raceway.

FSC: Utah Excise Tax on Adult Content Goes Into Effect October 1

The Free Speech Coalition (FSC) has issued an advisory that the Utah Excise Tax goes into effect tomorrow.

Show More