Vernor v Autodesk – why I think Autodesk is right

Well, there’s a statement I wasn’t expecting to make. Let me preface these comments with a disclaimer. I have no legal qualifications whatsoever. I make no claims of knowing who is legally right in this David v. Goliath legal battle; that’s for the courts to decide. When I make the statement that I think Autodesk is right, I don’t mean legally right, I mean morally right.

I have been following this fight with interest, but only in a half-baked way, third-hand via commentators (like myself, now). Based on my skimming of that commentary, my natural inclination to support the underdog, and my general dislike of of Autodesk’s previous and current legal adventures, I had been of the firm but privately held opinion that Vernor was right and Autodesk was wrong.

Today, after noting that new filings had been made, I had a proper look at some (not all) of the actual court documents themselves (thanks to Owen Wengerd’s CAD/Court), and surprised myself by coming to quite the opposite conclusion. I am now convinced that I was totally wrong.*

Until today, I was hoping that the court would support Vernor’s assertion that the First Sale doctrine applies in this case. Why? Because I feel that Autodesk is morally wrong in attempting to prevent the transfer of its software from one party to another.** At one time, Autodesk allowed AutoCAD to be resold (despite the EULA of the time saying that it wasn’t allowed) and indeed actively supported the transfer process. I felt at the time that Autodesk’s introduction of this restriction of a customer’s ability to resell AutoCAD was morally wrong. I still feel that way.

I also feel Autodesk is morally wrong in geographically restricting the sale of its software, and in several other areas of its EULA. I would be quite happy to have a court find that Autodesk is legally wrong in those areas, too. Despite that, I feel that it would be A Bad Thing if Vernor won in this case.

Why? Because Vernor was selling software that effectively didn’t exist. He was selling used copies of Release 14, when those copies had already been upgraded to AutoCAD 2000. To me, that’s clearly morally wrong.*** If the court finds that First Sale applies here, then that opens the floodgates to allow anyone to sell old copies of any software that has been upgraded, and keep using the new stuff. I really don’t think that would be good for anyone.

Those of you who have been upgrading AutoCAD for the last 25 years, I hope you held on to all your old copies, because you could be sitting on a gold mine. Of course, unless the court is going to compel Autodesk to acknowledge all these new “owners” of AutoCAD and support them with the various magic numbers required to keep them alive, there are going to be a lot of disappointed buyers around, the word will get around, and the bottom will quickly drop out of the market.

* This is not a first, I assure you.

** It has been stated elsewhere that Autodesk can actually be persuaded to allow the transfer of its software outside the usual restricted areas of merged companies, deceased estates and so on. This may be so, but it’s not something I would rely on.

*** This is a quite different moral proposition from somebody continuing to use an old version of software after upgrading, alongside the new version, on the same computer. That’s something I find entirely morally acceptable, whatever any EULA may stipulate.

21 comments to Vernor v Autodesk – why I think Autodesk is right

  • WOW.

    When I started reading your article I was ready to condemn you as another AutoCAD Fanboy whose only interest is expounding “AutoCAD, how great thou art”. But, having never heard that these packages had been upgraded already I am flabbergasted that their is any support for this thief in his quest to steal the software.

    This is like trading in your car for a new car, keeping a spare set of keys, selling the keys, and the new owner heading down to the car dealers lot after it has closed and driving away with the car. Is the new owner guilty of stealing? Perhaps not dependent on how the was conned, but the person selling the car that was not his is guilty.

    And, this is the first we are hearing that these were previously upgraded copies of the software… I have been following the story and I had not heard this before. Why is that? Are there not quality journalists in the CAD space that actually spend the time to find out facts and report them. Like many things reported in the CAD space they are failing miserably to point out truths and editorialize on the full and complete story. Shame on you, if you report the news for CAD you need to do some soul searching to find out if you are up to the job.

  • I’m sure there are some at Autodesk who would be as amused as me that somebody could possibly mistake me for a fanboy. :)

    While I don’t think Mr. Vernor has acted properly, I must disassociate myself from any accusation of theft. Reading the documents, it appears to me that he is under the impression that he has acted legally under the First Sale doctrine, and the court may yet agree with him.

  • My opinion, short and sweet. Upgraded software is the same licensed item so the old version can’t be sold. New license is a different license so the old one should be able to be resold.

    That’s what I think.

  • R. Paul Waddington

    Steve, this is most interesting topic to discuss and one FAR more important than new software and one that is about to raise its ugly head again with respect to Autodesk’s ‘new’ portable licence functionality.

    First, let me say to resolve ALL issues relating to Autodesk’s licencing terms and conditions DOES NOT require a legal degree or lawyers. For we users it simply needs one to understand what defines a contract – very easy stuff; its and agreement between two or more parties – and then having the guts and commonsense to reach that agreement.

    The use of lawyers and the courts, by Autodesk in Vernon’s case, and by others in other cases is the equivalent of using a sledge hammer to crack a nut. The purpose of these actions is to destroy by crushing not to solve a problem or create a situation and environment that is suitable for both users of software and its creators.

    You are correct Vernon is not a thief and the merest suggestion is unfair, unjust and probably libel. I have been accused a thief also because of the stance I have taken; as I have paid for my Autodesk software those statements were equally incorrect!

    You introduced a moral component and I find that interesting. Bearing in mind Vernon was functioning within a defined set of rules as he understood them, Ebay’s and ‘The First Sale Doctrine’, all Autodesk needed to do, if they believed they ‘owned’ the licence, was approach the guy, explain their side of the story and BUY the software off him for an agreed value (pocket money to Autodesk). Autodesk, instead, chose a route that brought about the cessation of his business, his lively hood! To take a moral stance here in any form Steve means you have to look carefully at why and measure that against what actually happened . Without any doubt it is Autodesk who has NO moral ground to stand on. A wish to crush was the driver and ALL users, and society at large, should live in fear of ANY outcome that favours a software company behaving this way.

    Further more, that Autodesk have yet again chosen to go down the road they have, with respect to Vernon, demonstrates the action is about control, not to bring about a better working environment for Autodesk and its customers.

    To summarize thus far: Vernon vs Autodesk could have been easily settled by me, you or any competent thinking Autodesk representative, off line, out of the public eye with a satisfactory resolution for both parties. IT WAS AUTODESK WHO CHOSE TO MAKE IT A FIGHT when Vernon showed his hand. IT IS AUTODESK’S FAULT and a testament to their INABILITY THEY ARE STILL TRYING, NOT Vernon’s.

    You said the software ‘did not exist’: if that were the case Autodesk had no grounds to go the guy. This is interesting and has two twists; if you are of the belief* Autodesk’s licencing is an enforceable contract* then you will be aware the terms and conditions state just what should be done with ‘up>outdated’ software and associated documentation; and on that basis any person holding old copies on any format and its documentation are in breach of the licence agreement.

    Again from Autodesk’s perspective if this were true they simply have to ask for it back – or proof of destruction – and if you chose not too I am sure the courts would support Autodesk! Autodesk did not take this approach therefore this clearly indicates Autodesk know they are not on substantial ground; else they would have used it long ago!

    In Vernon’s case clearly the software EXISTED and he did with it what he did. If you are in the ‘it’s a contract camp’, you have to agree the licence terms and conditions cannot apply to him – he didn’t load it – and that is where you ‘agree’. Additionally, Autodesk ‘believe’ the software EXISTS so I am not sure how your argument about Vernon’s moral breach can be applied?

    Your moral argument, against Vernon, could be applied if it can be proved Vernon deliberately flouted – and knew of – laws prohibiting the ‘re-sale’ of Autodesk software and they do not exist. Alternatively, if a law was ‘found’ to support Autodesk the outcome for users and Autodesk will be worse than now and will support my position* as well; an outcome that would not suit Autodesk! Out of the fat – into the fire!

    *So we are back to the base question; are Autodesk Subscription and Licence Terms and Conditions enforceable contracts. The answer is NO!

    NO they are NOT. To arrive at this conclusion and fact required the use of no lawyers on my behalf. This comment is based on the fact I have communicated my concerns and issues to Autodesk and its legal council and retain those communications as a history of the proceedings leading up to the declaration I made.

    I have clearly detailed my position relating to Autodesk’s Subscription and Licence Terms and Conditions and if your readers what to know what that is it is all documented in my blog titled ‘Caveat emptor’. In Caveat emptor I outline some of the communication between Autodesk and myself and more importantly I have published a declarations relating to the fact that, whilst I continue to use Autodesk software – AutoCAD/MDT, Inventor etc.- I do not accept a single component of Autodesk’s Subscription Terms and Conditions.

    Autodesk have NOT argued against this stance and on that basis alone it is fair to say I can assume their terms and conditions are ‘out’ and that Autodesk have accepted my terms and conditions.

    I do not consider this to be the best for Autodesk or myself but as Autodesk chose the route they did with Vernon so they have determined the route they did with me and the outcome. Autodesk chose NOT to negotiate a very important component of their terms and conditions and as a result have rendered the entire document void.

    You and your readers may not agree with me or the stance I have taken but I can assure you if more people came out and supported what I have done it would be possible to solve Autodesk’s licencing issues without a single lawyer and the final outcome would suit all parties equally; and be a better solution for the industry at large.

    But to do so does mean Autodesk’s customers have to learn to stand on their own two feet and start making the type of business decisions engineering staff should make instead of waiting for ‘somebody else’ to do it for them at great unnecessary expense to Autodesk and some poor individual who is game enough to tackle a behemoth.

    Finally; any argument about this issue, and those I have raised, that starts with the premise software licencing and its associated terms and conditions – applied as Autodesk do – is an enforceable contract is starting out incorrectly and will arrive at incorrect conclusions.

    Once you understand Autodesk’s Subscription Terms and Conditions are nothing more than a ‘code of conduct’; a guide as to how Autodesk would LIKE its users to behave, then you will come to understand why I have done what I have done and why Vernon has done nothing incorrect nor morally wrong!

  • To me, the moral rights and wrongs of this have nothing to do with the EULA, the enforceability of that or any other terms and conditions, or any other aspect of your dispute with Autodesk.

    It’s simple: Vernor bought and sold software that had already been upgraded to another release. If you see nothing morally wrong in that, then we must agree to disagree. I can’t accept that it’s OK to upgrade software and then sell the old materials, or for that buyer to on-sell the materials to some sucker who probably thinks they are getting a legitimate copy. You’re on your own with that one.

    As far as I’m concerned, the original buyer (who already had a history of AutoCAD piracy) had no moral right to sell the software materials to Vernor and Vernor had no moral right to sell it to anybody else. That includes Autodesk; I can’t follow your reasoning that Autodesk should have paid Vernor for them.

  • R. Paul Waddington

    Interesting, “the moral right and wrongs have nothing to do with the EULA”?

    Disagree we might, but their are those that consider what I have done is also morally wrong as I do not accept the conditions laid out in the EULA and continue to use the software.

    The EULA is central to Vernon’s original case, it is the licence agreement Vernon is said to have breached. He was not been challenged for a breach of copyright, and Autodesk settled*.

    As I said before, if you are in the ‘the licence is a contract camp’, and have read and understood the EULA – it defines the licence – you will know the upgraded R14 software and supporting documentation should have been returned or destroyed (Autodesk failed to ensure this was done – it’s their licence if your in the EULAs a contract camp) and on that basis it should not have been available for sale.

    So the issues is still why was Vernon treated as he was when there was another more obvious ‘person’ to prosecute? Answer: because he lost his business (as a result of Autodesk actions), took action to protect ‘his rights’ and the EULA cannot be enforced.

    “I can’t follow your reasoning that Autodesk should have paid Vernor for them.”

    *I liked this comment and much could be said; but lets just say the cost thus far to Autodesk in settling with Vernon has been how much Steve? I don’t know and I suspect you may not either but it would have been far greater keeping Vernon on side with the settlement than to have paid him out in the first place and kept it under wraps. Would have been ok for Vernon, better for Autodesk’s reputation (and less cost) and few if any outside those two would have known it occurred.

    Disagree if you like, that’s fine by me, but just consider this; if the EULA gains more teeth than it currently has (none) no Autodesk customer is immune to the invasive intent of Autodesk and those who support the EULAs acceptance as an enforceable contract will rue the day along with those of us that have signaled the warning!

  • Paul, I don’t care how you spin it, selling software that has been upgraded is wrong. It’s that simple.

  • R. Paul Waddington

    “selling software that has been upgraded is wrong. It’s that simple”

    In your opinion; and I accept and can respect that point of view however, you have made a judgement call relating to the morality of an individual that cannot and is not supported by the facts of the case. If you are talking in the wider sense then that is OK provided your aim and pot shot is correctly targeted.

    More specifically if software is sold – and remember this has been found to be the case – the upgraded software can be re-sold. Vernon’s case as Autodesk has settled!

    If however, in ‘purchasing’ a software licence it is recognized, and properly documeted, it is a licence and not a sale then you are correct. In the case of Autodesk’s ‘licencing’ it is a sale and therefore can be resold!

    You see it not me who is doing the ‘spinning’ hear it is all to do with what the software guys want you/(users) to believe their terms and conditions allow them to do; and at the moment that is not true, and it is not in any persons interest to let it become true!

    Your latest poll is interesting in that it does not take into account if those answering actually know their rights in relation to software usage (understandable) nor does it allow for the fact that different software is ‘obtained’ differently, eg. if I have a licence chances are the software is not mine to sell. In the case of Autodesk software this is not the case so the answer is YES. This applies equally to upgraded software.

    You see, ‘it’s not that simple’, but it could be if the software companies just did their job properly; it is they who have created the mess and for the moment are perpetuating it whilst they work diligently to have their power carved in stone.

  • Again, my view on what is morally right and wrong has nothing to do with any terms and conditions. It has nothing to do with what the court eventually decides, or any settlement between Autodesk and Vernor. It has nothing to do with what rights you think you have, what rights Autodesk thinks you have, and what rights you actually do have.

    My opinion is based on what is a reasonable expectation when handing over your hard-earned in exchange for software and software upgrades. Does a reasonable fair-minded person expect to be able to sell the software down the track if it turns out they no longer have a use for it? Probably. Does that person expect to be able to sell the software ten times over if they have paid full price for the original software and much smaller amounts for nine upgrades? Almost certainly not.

    That’s it. It’s a matter of what’s fair and reasonable, nothing else. Everything else is tangential. You don’t agree with me. Autodesk doesn’t agree with me. Fine, I’m happy here in the middle.

  • For the record (re AI’s claim that nobody discussed the fact that Vernor’s AutoCADs were previously upgraded), I mentioned it immediately:
    http://www.cadcourt.com/NewsFeed/tabid/53/EntryID/50/Default.aspx

    I’m sure Public Citizen wasn’t happy to learn the sordid history of these AutoCAD licenses, but one must be careful to not assign the blame for this on Vernor. I think we can generally agree that the company that sold the AutoCAD boxes to Vernor were pretty slimy characters. But remember, Autodesk already conceded some of Vernor’s claims and presumably paid him handsomely for his trouble. The way Autodesk abused the DMCA caused real injury to Vernor, and he has been justifiably compensated for it.

    The legal questions remaining in this lawsuit are much more profound than a simple “right or wrong”. As is often the case, there are compelling moral arguments to be made either way, and the merits of those arguments are not necessarily based upon whether or not the AutoCAD licenses were previously upgraded. These are much bigger principles that transcend the specific facts in this case, and for better or worse, they will eventually get settled not by one person’s intuitive sense of what is right and what is wrong, but by the laws of the land.

  • I am indeed aware of some of the legal complexities, and made it quite clear that I wasn’t addressing them. :)

    My instinct has always been on the side of supporting First Sale, because it would force Autodesk to do what I think it has a moral (there’s that word again) obligation to do: allow people to sell the asset they paid for. It’s very unfortunate that this case involves upgraded software. The whole concept of upgrading software throws a real spanner in the works as far as my support for First Sale is concerned. It’s something that indicates to me that there is something about buying software that’s inherently different from buying a book, a car or even a music CD. Those things don’t get upgraded in the same way, people just buy new ones when they want the “new version”.

    Regardless of anyone’s opinions of what’s right and wrong, it’s a very interesting case with potentially huge implications. Thank you for making it easy for people to follow it directly.

  • Perhaps the problem with software is not that it’s different, but simply that manufacturers have found novel ways coax profit from it before the legal system can catch up with it. I think that if selling discounted upgrades creates the sort of moral and legal dilemmas that the Vernor case represents, then the practice begs for reform. What would be the effect on the software industry if the practice of discounted upgrades disappeared? Autodesk has made their opinion clear, but I’m not convinced.

  • I’m not sure that companies offering discounted software upgrades can be considered some kind of sneaky profit-grabbing exercise. What about companies that have provided free upgrades for years, like CADLock and Manusoft? Are they even more evil? ;)

    I definitely wouldn’t like to have to do without discounted software upgrades. There is certain software that I use regularly, which I refuse to upgrade because the cost of the upgrade is too close to the cost of a new release. Instead, I’ll wait a few years and maybe buy a new copy eventually. Or maybe I won’t. Maybe I’ll buy something else instead. I don’t think this situation is as good for me or the software company as a more heavily discounted upgrade scenario.

    If that situation became the norm as a result of Vernor v. Autodesk, I certainly won’t be popping any champagne corks in celebration of a great victory for the consumer.

    I see a case for reform, though. Instead of a moral and legal dilemma, I’d prefer to see a clear legislative framework that enshrines as rights the reasonable expectations of fair-minded software customers, while protecting the rights of the copyright holders. I don’t fancy the chances of it happening any time soon in your country or mine. Maybe in the EU?

  • I plan to blog about this topic soon, so I don’t want to belabor the point here, but consider that the existing legal framework already works fine for used cars. Why exactly can’t it work the same way for used software?

  • The analogy falls over because the low cost of materials associated with software makes cheap upgrades practicable in a way that’s not possible with hard objects like cars. You can’t buy a new car, then a year or two later buy another new car from the same vendor for a small fraction of the cost. The closest you can get is the trade-in, where you are, at a negotiated cost, passing not just legal ownership but material possession back to the vendor. Unfortunately, you can’t make a quick and cheap copy of the old car first to use in case you find that the new car isn’t as good as the old one…

  • R. Paul Waddington

    The last several exchanges are interesting to read and I would like to pick-up Steve’s comment about assets. Quite clearly, some years ago, a former Autodesk senior executive made it very clear Autodesk’s product(s) are NOT business assets; they are “consumables” he very forcefully said; “no different to pens and paper”. His response was a direct reply to a question relating to the pricing of upgrades and the transference of licences.

    This, of course, immediately translated to a question of ownership: his statements did nothing to address the wider issues, only clouding it further, but it left every one in no doubt Autodesk believed they had an argument that licence transfers were not possible – even tho’ they were in the middle of doing just that for a client of ours – even with the sale of a business. Dumb tho’ his statement was, that meant Autodesk licences could not be sold even in the context of the sale of a business; it is what he wanted us to believe and what he, when questioned, later confirmed: but it was never going to work!

    It is true if Autodesk’s software is found not to be a sale – but a licence – it CANNOT be considered a business asset and cannot be ‘sold’ as part of a business. As a licence it can only be transferred with the licensors agreement.

    So yet again we are back to a central question: Is Autodesk software a sale or a licence? Autodesk says a licence but they ‘sell’ it as a consumable. Buy an AutoCAD licence and then an upgrade to that licence and Autodesk provide new media and as the first lot was ‘sold’ it is now in the position of being able to be re-sold. That is one area Autodesk has just simple not done correctly either in understanding their own position, or in getting their dealers, and customers, to understand just what is ‘right and wrong’ from Autodesk’s point of view.

    As for the pricing of up-grades: I do not see it as a discount, I have always seen it as a marketing tool; ‘you have my software, I’ll upgrade/give you a new product for a lesser price than a new purchase’; it’s a simple business decision with its roots in keeping customers on side and in tow. If Autodesk was to stop this practice it would be very damaging, (unless preceded by substituting 100% with subscription), and building new business just that little more difficult for the dealers.

    Up-graded car trading does have an analogy that is very similar to that of software, it is not the trade-in however, but a long term lease/rent, which has various names but is, one where the ‘user’ is not the owner of the car or computer/software but pays a continuous rent. Under this scheme the customer can request up-grades to another vehicle/item/latest software and the rent is adjusted according. ‘Ownership’ is never in the hands of the customer, for tax reasons the ‘object’ is NOT a business asset and CANNOT be sold by the user; even with the sale of a business! From a software point of view a transaction similar to this is clear cut and even if a copy was made (sold or not) the copyright laws protect the vendor not licencing terms and conditions! (I personally don’t want a system like this for privacy and ownership/IP issues which can arise as an unintended consequence.)

    I do agree with Owen; an existing sales and legal frame work exists that is perfectly suitable for application to the software industry; across the board (and computing sales people have been likened to used car salespersons ;-) ). What is missing is a maturity and knowledge of how to apply the existing systems appropriately and fairly in the market place, by some software vendors (Autodesk included) and more importantly their dealers; who are completely useless and incapable of handling the commercial aspects of Autodesk’s Terms and Conditions!

    Steve said, “I see a case for reform, though. Instead of a moral and legal dilemma, I’d prefer to see a clear legislative framework that enshrines as rights the reasonable expectations of fair-minded software customers, while protecting the rights of the copyright holders.”

    Steve I know this, in part, already exist here in Aust.’ and other parts of the world. I am also aware more is being done to expand it, here. Part of the reason this is coming about is because of what has been recognized as the unconscionable actions and intentions of vendors as defined in their terms and conditions. That which is in place has some teeth but it has, hither to, gone un-noticed as being available by the majority of consumers; that will change!

    And as much as it is unpalatable to consider, all the issues surrounding the vendor and software, being discussed here, is always going to come back to the issue of sale or not, and the contents and enforceability of any terms and conditions that encompass and define the transaction between vendor and client.

    In Autodesk’s case, I have often said, and will repeat, it is very easy to sort out; but for their own reason(s) Autodesk keeps muddying its own waters. You would have to conclude that its actions are deliberate and the reasoning is not hard to determine.

  • I didn’t ask why software *does not* work like cars. I asked why it *cannot*.

    Saying that the low cost of software makes cheap upgrades practicable is just another way of saying what I said earlier about companies finding novel ways to coax profit from software. Just because something is possible doesn’t make it right or good (or bad, for that matter). Furthermore, I think you are too quick to assume (or believe) that low cost upgrades are good for you, the consumer.

  • Owen, I am quite prepared to listen to reasoned arguments about a new pricing model for the software industry. Presumably, you’ll blog about it at length when you’re ready and I’ll give it careful consideration.

    For now, I’m struggling to work out why repeatedly paying full price for each new version and then trying to sell the old version (which is the model I think you’re suggesting) is better for me than simply paying a fraction of that amount each time for an upgrade.

    Let’s say the software industry does happen to adopt such a model. There may be other benefits that you haven’t yet described, but what do you think would be the net effect in terms of the total amount of money we pay for software? It would depend on the amounts charged and the frequency of the new release purchases, but can you imagine the companies arranging their prices in such a way that they actually receive less money?

  • Right on, Steve. Yes, I can imagine a net result where companies make as much or more money *and* are motivated to create better products in order to keep existing customers. Unfortunately, a lack of time and the fact we’ve gone on a bit of a tangent here may result in a less cogent case than I had planned, but I do indeed intend to make a case on my blog for why we should stop the bleeding at the neck instead of the ankle.

  • I can’t imagine how I would have missed these details before. Thanks for reporting.

  • Dan

    If it’s true that Vernor was selling old copies, which had been used as the basis for upgrades, then yeah what he was doing may have been a bit shady *. But I can’t fault him for being entrepreneurial. It seems that what he was doing was definitely within the bounds of the law.

    Really, it’s Autodesk’s own fault that they will *sell* two copies to a single person — the second at a substantial discount — without requiring that the buyer also return the original copy. That was *their* mistake, not Vernor’s.

    * In the eyes of the law, the original buyer is now the owner of *two* copies. And both of those copies may now be sold, vis-a-vis the first sale doctrine. Shady? Perhaps, considering that it certainly seems “unfair” to the software company. But let’s be real here: if the company is that careless (to allow both copies to be sold), then they deserve what they get, even if it seems unfair.

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