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13 Sep 2010
A recent case decided by a three-judge panel in the Ninth Circuit has been widely reported as saying that shrink-wrap license agreements on software supersede the traditional first sale rule, and mean that software vendors can keep customers from reselling packaged software. Having read the decision, it's a case with a messy set of facts that don't quite mean that first sale is dead.
The software in question is AutoCAD release 14. Autodesk has a fairly onerous commercial license, which requires that customers send in the serial number and get an activation code to keep each copy working, and that when they upgrade from one version to another, they destroy the old version. The copies were sold to a company called CTA who had unambiguously agreed to the license under the terms of a 1999 settlement with Autocad, related to prior unauthorized use of Autodesk software.
The plaintiff in the case, Vernor, bought four used copies of Autocad 14 at a garage sale and offered them on eBay. The copies had activation codes handwritten on the boxes. Autodesk sent DMCA takedown notices, claiming that the sale infringed their copyright. After a couple of rounds of takedown and response, Vernor sued Autodesk for a declaration that he was indeed allowed to sell the software that he'd bought. Vernor never agreed to Autodesk's license agreement, and never installed or used the software. So how could the license apply to him? Here's where things get messy.
Autodesk argued, and the court agreed, that since CTA had only licensed the software, they didn't have the right to sell it in the first place, thus voiding the subsequent chain of sales. In that sense, it's sort of like Vernor bought a painting that turned out to have been stolen, a situation that has happened often enough that there's rules about what to do when it happens. This seems like a plausible outcome, although it now means that whenever someone buys a used copy of anything that's copyrighted, the buyer potentially has to do a background check on the product to see if a prior owner might have agreed to a license, a pretty heavy burden to put on someone at a garage sale or on eBay.
Is that a fair burden to put on buyers? You might think so until you read this footnote in the decision:
Prior to using activation codes, Autodesk required users to return one disc of an earlier version of the software to upgrade to a later version. Autodesk has abandoned this return policy, deeming it slow and unworkable.
That is, Autodesk used to collect the copies of upgraded software that weren't supposed to be resold, but it was too much of a hassle, so now it's the job of everyone else in the country to try and figure out which ones Autodesk would have collected had they bothered to do so. I have no argument with Autodesk licensing their software, but it's just wrong for them to foist the costs of doing so on the rest of us.
There are even technical approaches that would probably work. For example, to install an upgraded version of most Microsoft software, you have to stick in an install disk of the original version so the upgrade installer can check that you still have it. (I have an old floppy of Powerpoint V4 which still worked the last time I did an Office upgrade.) It's not foolproof, but it makes it considerably harder to leak old software accidentally on purpose, which appears to be what happened in this case. Autocad could take more measures to police their licensees, and, since the benefits of the license policy flow entirely to them, the court should tell them to do so.
Vernor says he'll appeal to the full 9th Circuit, so I guess I should read the amici and see if any of them make this point.
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