October 06, 2009

Judge rules against Autodesk in eBay software case

Second hand sales are not piracy

By Nancy Gohring

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A Seattle judge ruled in favor of a man arguing that he has the right to sell secondhand software, in a case that had some people worried about an end to used book and CD stores.

The suit was initially filed by Timothy Vernor after eBay, responding to requests by Autodesk, removed the Autocad software that Vernor was trying to sell on the auction site. eBay later banned Vernor from the site, based on Autodesk's complaints.

Vernor argued that since he was selling legitimate versions of the software, not illegal copies, he hadn't violated any laws.

Autodesk contends that it doesn't "sell" its software, but instead licences it, and therefore prohibits buyers from reselling it.

But no matter how Autodesk describes the agreement with customers, it is transferring ownership to end users, the judge, from the US District Court for the Western District of Washington, found. Autodesk had argued that its restrictions on the way that buyers can use the software show that users licence rather than own the software.

"A person who buys a home is nonetheless restricted in his use and subsequent transfer of the home by property laws, zoning ordinances, and fair housing statutes," Judge Richard Jones wrote in his ruling. "No one would characterise the person's possession, however, as something other than ownership. Similarly, the court cannot characterise Autodesk's decision to let its licencees retain possession of the software forever as something other than a transfer of ownership, despite numerous restrictions on that ownership."

The judge also agreed with Vernor's argument that owners of software have "first sale" rights under copyright law, which entitles them to "sell or otherwise dispose of" the copy they bought.

Autodesk said it will appeal the decision. In previous arguments, both sides warned of dire consequences that could follow the judge's decision. But he said he thinks the impact will be minimal.

Autodesk argued that if the judge decided that people own its software, prices will rise for end users. But that argument ignores the secondhand market, which offers better prices for consumers, the judge noted. "Although Autodesk would no doubt prefer that consumers' money reaches its pockets, that preference is not a basis for policy," Jones wrote.

Vernor has argued that if the judge ruled that the software was indeed licenced, then any copyright owner could impose severe restrictions on how their products are used. For instance, book publishers could bar resale and lending, eliminating the used book market as well as libraries.

Even if he had ruled against Vernor, such fear was "misplaced," the judge said. "Although the interpretation of 'owner' in the Copyright Act no doubt has important consequences for software producers and consumers, the court is skeptical that its ruling today will have far reaching consequences," he wrote.

The judge denied Vernor's charges against Autodesk of copyright misuse.

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