Re: Utterly imbecile pinky communist Ninth Circuit 'judges' (Vernor scandalous ruling)

[Alexander Terekhov]

<chuckles>

http://www.lexology.com/library/detail.aspx?g=b1c3d9f0-8541-49c6-b45c-78a5c687e721

"Ninth Circuit finds Autodesk software licensed, not sold

Townsend and Townsend and Crew LLP Mehrnaz Boroumand Smith and Tyler J.
Gee USA 

September 28 2010 

On September 10, 2010, the Ninth Circuit issued its decision in Vernor
v. Autodesk Inc., holding that, where software is transferred pursuant
to a license agreement that restricts its use and distribution, the
first sale and essential step defenses to copyright infringement do not
apply. In its decision, the Court articulated a 3-part test for
distinguishing between a license and a sale. According to the Ninth
Circuit, an agreement is a license if it (1) states that the user
receives a “license,” (2) restricts transfer of the copyrighted work,
and (3) restricts types of permissible use.    

Timothy Vernor brought a declaratory judgment action against Autodesk to
establish that his resale of authentic used software on eBay was
protected by the first sale and essential step defenses. These defenses
allow for, respectively, distribution and copying in limited
circumstances without the authority of the copyright owner. Under the
first sale defense (17 U.S.C. § 109), an “owner” of a “lawfully made”
copy is permitted to resell that copy. Under the essential step defense
(17 U.S.C. § 117), an “owner” of a copy of a computer program is
permitted to make a copy in certain narrow circumstances. Both
affirmative defenses only apply to an “owner” of a copy and do not apply
to a licensee. Although Autodesk distributes its proprietary software
pursuant to a software license agreement (“SLA”) that prohibits
transfer, the district court held that Vernor was an “owner.”

Overruling the district court’s decision, the Ninth Circuit held Vernor
was a licensee. According to the Court, Autodesk’s SLA explicitly
granted only a license. Moreover, it imposed transfer and use
restrictions, and contained a termination provision in the event the
user failed to comply with the SLA’s restrictions. Finding the agreement
to be a license, not a sale, the Court reversed the district court’s
decision that Vernor was protected by the first sale and essential step
defenses.

The Court was careful to note that no single factor is dispositive, and
specifically rejected the district court’s reliance solely on the fact
that Autodesk’s customers were not required to return the software.
Similarly, the Court dismissed any requirement that recurring royalties
are needed to form a license. Though unnecessary to reach its resolution
of the case, the Court found that the legislative history of the
Copyright Act also supported its conclusion that the first sale and
essential step defenses apply only to “outright sales” to an “owner” –
not merely a “rightful possessor.”

Conclusion and Application. A licensee’s right to transfer and use
copyrighted software, including the right to copy the software into
random access memory (RAM) of a computer, is conferred by the terms of
its license agreement. If the use or transfer is not permitted by the
SLA, there may be copyright infringement. Therefore, it is important
that software companies seeking to restrict distribution of their
software ensure that their SLAs clearly state that only a limited
license to the software is granted. The 3-part test in Vernor v.
Autodesk provides some useful guideposts for provisions that may be
deemed sufficient to create a license and avoid a “sale.” Most
importantly, SLAs should be labeled as limited use “licenses” and
provide significant restrictions on the use and transfer of the
software  

Tags USA, Information Technology, Intellectual Property, Litigation,
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regards,
alexander.

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