Re: First Sale upheld in software case

[Alexander Terekhov]

Another nice article.

http://cyberlawcases.com/2009/10/01/court-rules-again-that-vernor-can-sell-autodesk-software/

"Court rules (again) that Vernor can sell Autodesk software

Posted October 1st, 2009 by Brian and filed in Contract, Copyright
Limitations and Exceptions 

In this blog’s previous coverage of the “Copy Ownership Cases,” I
attempted to briefly summarize three important cases where ownership of
copies is critical and so did not delve into a detail relevant to this
update.

The decision in Vernor v. Autodesk from May of 2008 was a decision on
Autodesk’s motion to dismiss the case. Motions to dismiss are among the
first motions one might file in a federal case and occur prior to the
exchange of documents or the deposition of witnesses that occurs during
the discovery process. Typically once that discovery process is
complete, the parties may bring motions for summary judgment in which a
party will argue that, based on the undisputed facts, and resolving any
disputed fact in favor of the other party, the court can simply apply
the law to those facts and rule in their favor. In a grand demonstration
of the ability of opposing lawyers to take on diametrically opposed
world views, parties often both file such summary judgment motions,
which are called “cross-motions” for summary judgment. 

Such cross-motions for summary judgment were filed in Vernor v. Autodesk
and the court held oral argument on the motions on Tuesday, Sep. 29,
2009. A few news outlets covered the oral argument: PC World, Zeropaid,
Slashdot.

With somewhat dizzying speed, the court issued its opinion on the
cross-motions for summary judgment the next day, Sep. 30, 2009. Having
seventeen months to consider any new developments, the court was
obviously not persuaded that anything important had changed as it
reached the same conclusions for the same reasons, and directed the
clerk to enter final judgment for Vernor.

The court’s opinion is, like its earlier opinion, careful, methodical,
well-researched, and thorough. So many courts addressing the issue of
copy ownership have dispensed with the question just by noting that
software distributors claim to merely “license” and not to sell their
software. The Vernor court finally cuts through this misleading way of
framing the question by noting that “the use of software copies can be
licensed while the copies themselves are sold.”

The court explains again why the Ninth Circuit precedent that it is
bound to follow, United States v. Wise, requires the result that Vernor
is the owner of the copies of the software. “Wise requires the court to
look at a transaction holistically, and the court finds no basis for the
conclusion that an agreement to permit perpetual possession of property
can be construed as reserving ownership.” This is the key factor in copy
ownership cases: perpetual possession. When a transaction results in an
individual being entitled to perpetual possession of the copy, as was
the case for Vernor, then courts should find that such individuals are
owners of their copies, entitled to a “first sale” right to resell the
copy if they so choose.

Autodesk now has to decide whether to appeal this ruling and has to do
so without the benefit of Ninth Circuit guidance in UMG Recordings, Inc,
v. Augusto, which has all the briefs filed but has not yet had oral
argument and MDY Industries LLC v. Blizzard Entertainment, Inc., in
which the briefing on appeal is still ongoing. Decisions in either of
these cases could greatly clarify how things will go for Vernor and
Autodesk, but the Ninth Circuit’s decisions in these cases are likely
over a year away. However, the Vernor court has now, twice, provided a
valuable roadmap for future courts that address the issue of copy
ownership.

See Also:

•Thom Holwerda, Judge Sides with Vernor, Slams Autodesk, OS News (Oct.
1, 2009).
•Nancy Gohring, In Autodesk Case, Judge Rules Secondhand Sales OK, PC
World (Oct. 1, 2009).

This work, unless otherwise expressly stated, is licensed under a
Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States
License."

regards,
alexander.

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