You can book a victory for resale rights

We all basically understand how we are legally allowed to treat one type of copyrighted product: a book. With software and other digital products, though, it’s not so clear. But a terrific court decision last week at least suggests that we can treat all copyrighted products the same as a book — even when they have sneakwrap license “agreements” that prohibit us from doing so.

The U.S. District Court in Seattle last week issued a decision denying a motion by Autodesk to dismiss a lawsuit filed by Timothy Vernor. Vernor’s attempts to sell used copies of AutoCad on eBay had been repeatedly interrupted by Autodesk’s DMCA takedown notices. Vernor, represented by Public Citizen and Seattle attorney Michael Withey, had sued to force Autodesk to concede his right to sell legally acquired copies of the software under the First Sale doctrine of copyright law. Autodesk’s motion to dismiss argued that the AutoCad EULA prohibited Vernor from re-selling the software, but Judge Richard A. Jones ruled in Vernor’s favor and the case will proceed.

The First Sale doctrine originated over a century ago when book publishers started putting the equivalent of today’s software license agreements on their products, usually for the purpose of prohibiting or limiting re-sale of the book. Litigation eventually led the U.S. Supreme Court, and the U.S. Congress (in Section 109 of the Copyright Act), to set the rules straight. The copyright holder’s rights to restrict the distribution of a particular copy end with its first sale. So basically, the First Sale doctrine says having legally acquired a copy of a work, you can then re-sell it, lend it, destroy it, or anything else you want except make another copy.

So why shouldn’t that apply to software? Well, the software industry has of course always claimed that their products are licensed, not sold. By that way of thinking, First Sale doesn’t apply because there is no sale. But is it a license just because the software publishers say it is? If so, then why can’t the book publishers just start proclaiming that their books are licensed, not sold, as well? That was the issue the court in the Vernor case had to deal with.

Vernor’s team had a particular challenge in this regard because the case was being heard in 9th Circuit territory, meaning the worst possible software court ruling ever would be an applicable precedent. As we’ve discussed before (see “Do Software Customers Own a Copy?”), in MAI Systems v. Peak Computer, the 9th Circuit ruled in favor of an oppressive reading of a software license agreement in obvious contradiction of the intent of copyright law and the interests of the public at large. If Judge Jones adopted the MAI court’s perspective on software ownership, Vernor would be out on his ear.

Fortunately, there was another precedent for the judge to consider, one involving neither books nor software but movies. In United States v Wise, the 9th Circuit panel had to wrestle with whether a number of films had been licensed or sold. Using the rules of that case, it was clear that Autodesk’s original transaction was a lot more like a sale than a license. And, to his credit, Judge Jones didn’t try to sidestep the fact that the Wise and MAI precedents are in conflict on the question of software ownership – he just chose the wise course and found for Vernor.

And while it’s just one decision on a very long road, I think Judge Jones’ ruling will prove ultimately to be a significant event. The thing that the courts in the MAI case and others have failed to realize is that software isn’t really that different from other copyrighted products. Whether they are books, movies, or programs, we as customers should have the fundamental First Sales rights to do as we please with the products we buy. Just imagine how different our world would be if the Supreme Court in 1908 had ruled in favor of book sneakwrap agreements. Libraries as we know them would not exist, used bookstores would be an alien concept, and Amazon, eBay, and others might never have gotten off the ground. The software industry itself would be very different if CP/M and VisiCalc had come with ironclad EULAs sporting all the anti-competitive no-reverse-engineering and no-reviews-without-permission terms their successors employ.

Because it is going to be a long road, let me add one more thing. You know that Autodesk, the BSA, etc. are not just going to roll over on this. Believe me, I’ve seen what the software industry can do when it rallies its legal and political resources — I watched UCITA being made, after all. It can be a steamroller. So let me just suggest you consider visiting the Public Citizen website and clicking on that “Donate” button.

Post your comments about this story below, or write me at Foster@gripe2ed.com.