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

[Alexander Terekhov]

<chuckles>

http://www.lexology.com/library/detail.aspx?g=adf5904a-f482-43c6-8226-deaf30fe5a4f

"Ninth Circuit rules on license versus sale of software

Proskauer Rose LLP Jeff Neuburger USA 

September 24 2010 

The Register of Copyrights may have concluded that precedents defining
the difference between a license and a sale of software are conflicting
(see our prior blog post on that point), but a panel of the Ninth
Circuit had no difficulty in resolving the issue in its recent opinion
Vernor v. Autodesk, Inc., 2010 U.S. App. LEXIS (9th Cir. Sept. 10,
2010). The panel reconciled a series of prior panel rulings deemed
inconsistent by the lower court, and ruled that proposed resales of
packaged software via an eBay auction were not protected by the
copyright first sale doctrine because the initial transaction between
the software developer and its transferee was a license, not a sale.    

The ruling will please software developers seeking to limit resales and
other downstream transfers of their products, and will likely also
benefit content owners who distribute their content digitally. In brief
summary, the court held that “a software user is a licensee rather than
an owner of a copy where the copyright owner (1) specifies that the user
is granted a license; (2) significantly restricts the user’s ability to
transfer the software; and (3) imposes notable use restrictions.”

The transaction between Autodesk and its transferee was deemed to have
met that test without difficulty. Licensing attorneys should take note
of the specific factors that the court considered:

The software was initially transferred by Autodesk pursuant to a
Softtware License Agreement that expressly retained title to the
software.

The SLA included express prohibitions against further transfers or
leases of the software without the developer's express written consent;
use outside the Western Hemisphere; modifications, translations or
reverse-engineering; removal of proprietary marks on the software or
related documentation; or circumventing any copy protection device.

The SLA also provided for termination of the license for unauthorized
copying by the licensee, or for failure to comply with other license
restrictions.  

The appeals court rejected the argument that the dispositive factor in
distinguishing a license from a sale is whether the transferee was
entitled to retain possession of the copy of the copyrighted work in
question. The court also rejected the argument that is ruling created a
split of authority with the Federal and Second Circuits.

There are some other elements pertinent to the transaction that the
court recited in the opinion although it did not specify that these
affected the determination of the license/sale issue, perhaps in order
not to unduly narrow its ruling. Nevertheless, note should be taken of
them.

The SLA accompanying the software had to be accepted before installing
the software. If a customer chose not to accept the SLA, the software
could be returned for a full refund.
The developer offered several different SLAs with different terms for
commercial, educational institution and student users, with the
commercial license (which applied to the software at issue) being the
most expensive, but with the fewest restrictions.

The SLA provided that if the software is an upgrade of a previous
version, the customer must destroy any previously licensed copies,
including those resident on a hard drive; the developer reserved the
right to require proof that the copies had been destroyed.
The developer utilized license enforcement measures that included the
use of serial numbers attached to each copy. Customers were also
required to input a separate activation code, obtain from the developer,
within a month after installing the software. This code could be reused,
however.

The Ninth Circuit panel heard oral argument in Vernor v. Autodesk in
June. On the same day, the same panel heard arguments in two other cases
that presented similar or related issues. The appeal from the ruling in
MDY Industries, LLC v. Blizzard Entertainment, Inc. (D. Ariz. 2008)
concerns whether a purchaser of a copy of a videogame is the owner of
the copy under 17 U.S.C. § 117(a). The appeal from the ruling in
Universal Music Group v. Augusto (C.D. Cal. 2008) concerns ownership of
a copy of a music recording on a promotional CD.

The court has yet to release opinions in those cases.  

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regards,
alexander.

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