Vernor v. Autodesk – right decision, wrong reason

As I have stated before, I believe Autodesk to be in the right (morally, not legally) in its battle to prevent Vernor’s resale of old, upgraded copies of Release 14. In the latest installment, Autodesk has won its appeal to the 9th Circuit Court of Appeals. There will be be further legal moves yet, but Vernor’s chances of winning this case are now more slender. So the right side has won (at this stage). I should be happy, right?

Wrong. Although I think the latest court to look at this has picked the right side, it has done so for entirely the wrong reasons. (Again, morally wrong, not legally. I have no qualifications on legal matters, but I can spot an injustice a mile off). In a diabolical, dangerous, far-reaching decision, it has concluded that the doctrine of First Sale does not exist at all for products where the copyright owner merely claims not to sell its products, but rather to license them.

So all those programs, games, maybe even CDs, DVDs, books etc. you have at home and thought you owned? How about that laptop with its pre-installed Windows? Or that iThing with its iOs? If you’re in the jurisdiction covered by this ruling, you quite possibly now don’t own them at all. Check out the fine print on each of those items; if it includes the magic word “license”, then you may not legally own it, or be allowed to sell it if you no longer need it. If you’re not outraged by this attack on your private property rights, you should be.

What’s more, the Court ruling explicitly rewards companies for making the “license” terms as ridiculously restrictive as they can:

We hold today 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.

One of the Autodesk EULA’s more unconscionable and unenforceable restrictions, that of only being able to use the software within a certain geographical region, wasn’t used to point out the unreasonableness of Autodesk’s claimed power over its customers. Instead, it was actually used by the court to help justify its decision!

Amazingly, this ludicrous outcome wasn’t decided in ignorance. The court carefully considered the effects this decision would likely have, but apparently for reasons of legal nicety, decided to go ahead anyway. Common sense and justice be damned, a convoluted and narrow interpretation of partially-relevant previous decisions just had to rule the day.

We can only hope that this case is reviewed and overthrown (again). While such a revised outcome might be unfortunate in terms of failing to right a wrong (Vernor’s sale of already-upgraded software), that would be much preferable to the terrible damage that the 9th Circuit’s decision has inflicted on the people it is supposed to serve. I’m only glad I’m not one of those people.

Other commentary:

EFF: “Magic Words” Trump User Rights: Ninth Circuit Ruling in Vernor v. Autodesk

Wired: Guess What, You Don’t Own That Software You Bought

Techdirt: Appeals Court Destroys First Sale; You Don’t Own Your Software Anymore

ars technica: No, you don’t own it: Court upholds EULAs, threatens digital resale

Lawgarithms: In Autodesk case, 9th Circuit missed better reason to bar resales

Public Citizen: Ninth Circuit says consumers may not own their software

13 comments to Vernor v. Autodesk – right decision, wrong reason

  • Let me propose a scenario: Suppose the situation were the same, but the R14 packages were sold without the included software CD. That is, they were merely documentation packages.

    Would that change anything?

  • Interesting question, and one that has me pondering the pros and cons. Assuming it was just the manuals with no serial number, I’d lean towards it being OK to sell them. Trouble is, the likely customers would be warez users, which makes me uneasy. What do you think?

  • “Although I think the latest court to look at this has picked the right side, it has done so for entirely the wrong reasons. (Again, morally wrong, not legally. I have no qualifications on legal matters, but I can spot an injustice a mile off)”

    This attitude is really dangerous to society, where the law is viewed as an entirely separate sphere. While the law is indeed complex and we need specialists (lawyers and judges) .. the law built up over long periods of time based on what many people (including non-specialists) thought was reasonable. We can’t afford to break with that tradition.

  • It would be nice to think that the law reflected what most people thought was reasonable. Sadly, that is not the case as far as copyright is concerned. The average person’s views are so far removed from the current legal status that respect for the law is lost, and as a result people ignore the law in droves.

  • Terry S

    If my recollection is correct, the entity that sold Vernor copies of R14 that were used those licenses to upgrade to a later version of Autocad. For that reason, I think it is reasonable to restrict the resale. Upgraded products should be “out of play”. However, if a company owned multiple copies and downsized personel due to the economy, for example. They should be able to sell off extra licenses through a registration process with the publisher. I would even be OK with the software publisher charging a nominal fee for registration transfer. The publisher could then do fun things like charge for subscription.

  • John

    While it would be nice if developers allowed few restrictions regarding the transfer of licenses, this is rarely the case.

    Fairness really doesn’t enter into the equation. You don’t own the license, you pay a fee to use the software based on the whims of the licensor.

  • The “you don’t own it” thing is what software companies want to be the case, despite the fact that they use terms like “buy” and “purchase”. The majority of customers disagree with this viewpoint. Different courts have fallen on both sides of the argument. This month, in one location, one court has decided that customers have pretty much no rights. Fortunately, that decision is not binding world-wide, and it may not apply permanently in the US, either.

  • R. Paul Waddington

    “you don’t own it thing” as you put it Steve is very important and Matts Lombard’s (delete) thread brought the connotations of the word ‘buy’ right to the fore. The meaning of words, of course, can be different for different people and time (My grandmother can no longer say I am gay, as she could when I was a child, without invoking completely the wrong meaning – about me). To ‘buy’ however I don’t believe has moved much: it is, to many, ownership in the full sense; meaning to use and dispose of as the ‘owner’ sees fit (including resale) without the intervention of ‘manufacturer’. You buy, lease, rent or borrow etc. Each is different with the later three ‘limiting’ ownership by the person in possession.

    Two CEO’s had a good opportunity to put their case sensibly, in Matt’s blog, and they failed. They failed because they chose not to look at what was being said from a different point of view. Vernon’s case is similar in that those who chose to prosecute failed to see another point of view and in doing so look for an alternative solution(s). One I believe was staring them in the face. Another, brought before the court, they set out to avoid because to have had a decisions brought down against them would have changed the game for the whole software industry!

  • While I can appreciate the sentiment that it is “unfair” for a customer to resell a copy of software that had been upgraded, the fact is that the law doesn’t recognize the concept of “upgrades” or “full” versions of software. There is nothing in the Copyright Act that addresses these concepts. So, for the purposes of law, there is no such thing. The only thing the law can recognize are individual “copies” of software. A disc containing a “full” version is a copy, and a disc containing an “upgrade” version is also a “copy”.

    If you first buy the “full” version, you own that copy. If you later buy the “upgrade” version you also own that copy. You now own *two* copies. And the law will treat them as separate copies that you may do with as you wish (within your rights). Autodesk’s mistake is that in the upgrade agreement they do not specifically require that the buyer transfer ownership (and to be safe, possession) of the original copy back to Autodesk. If Autodesk had done this simple thing, it would have avoided this whole problem. Apparently, they are too lazy to be bothered with such formalities. But you know what? I have no sympathy for them. Their laziness is no excuse to ignore the law and pretend that somehow the customer stops “owning” the original copy once they buy a new “upgrade” copy.

    Admittedly, in this specific instance, the original owner (CTA) probably was in breach of contract for not destroying the R14 copies. But that *should* have limited Autodesk to going after CTA for breach of contract. They should never had any right to interfere with Vernor’s Ebay sales.

  • R. Paul Waddington

    Dan, Your comment about laziness I fully agree with. Autodesk have always known what is the correct ‘thing’ to do but that come with a sting. For instance; if you ‘make’ a customer read a ‘contract’ s/he is going to take notice and that is what Autodesk and many other software vendors are desperate to avoid; a customer paying attention is going to equate to more understanding and questions about why?

    “They should never had any right to interfere with Vernor’s Ebay sales.” Yes this was a stupid move by Autodesk. Thought Vernon was a easy meal they could use as an example and, it has turned out to be a serving with a cost they had not anticipated, mostly to their reputation. Autodesk’s management should be ashamed of themselves and apologize to their shareholders.

  • Emmanuel Garcia

    I’d propose to let the “Free Market” settle the issue thus: Allow companies and individuals to produce and sell their intellectual property as they see fit. If customers feel that certain restrictions are onerous, excessive or otherwise undesirable, it’s a “Free Market,” let them buy something else. I also see value in letting parties to agreements be able to stipulate the transferability, or lack thereof, to rights. These details are part of the bargaining and decision making that goes on when deciding to buy/agree or not.

    It is concerning to see many agreement clauses or entire agreements thrown out because the buyer claims they didn’t know or understand what they were getting into. However, it’s not that simple. There are legal doctrines that limit what can be enforced in an agreement. For example, since most software users don’t have much of a bargaining power beyond “taking it or leaving it,” then software sellers aren’t at full liberty to simply pontificate terms.

  • a) that’s what court cases are for, to clarify these things so there’s no mistake later on.

    b) it’s nobody’s fault but your own if you don’t know what you paid for. Paying for something doesn’t constitute ownership. Paying for a car doesn’t mean you own it, it means you can rent it, and you must pay licensing and registration before you can drive it, and even then, ONLY LEGALLY.

    c) Autodesk didn’t “merely claim” that they never sold it, the burden of proof is on the purchaser to show he’s actually bought it. I know most people will go buy conventional wisdom or the popular illusion, that if it’s common to believe a software bearer is the owner, the burden of proof is not on him. However, not all ownership is debateable, for the ones which ARE debatable, you have every right and obligation to know your rights.

  • Let me put it this way, WAKE UP, somehow people like you have the belief that you’re entitled to “own” things you didn’t pay enough for. Nobody’s forcing you to pay for any software, or copyrighted work. You have no right to access or utilize software unless the originator allows it, THAT is private property.

    Granted, fine print may be hard to read, but you’re free to not buy something if you feel you may not get what you want. I suppose you believe speeding laws are a violation of property because you own your car, gun laws are a violation of property because you own your gun. Property taxes are a violation of property because you own your house.

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