For Canadian software companies who license their software in the US, this decision will be encouraging (Vernor v. Autodesk Inc. (September 10, 2010, US Ninth Circuit Court of Appeals, No. 09-35969). Timothy Vernor purchased several used copies of Autodesk, Inc.’s AutoCAD Release 14 software from one of Autodesk’s customers. Then he resold the copies on eBay. Vernor never installed the software or agreed to the terms of the software license. 

Is it copyright infringement to re-sell a used copy of software?

The “first sale doctrine” is a defence in the US that says no, it’s not infringement because a copyright owner’s right to control sale or disposition of the copyrighted work is exhausted after the first sale occurs.  In other words, owners of copies of copyrighted works can resell those copies without needing the copyright owner’s consent.

The essence of the court’s conclusion in Vernor is that a software license is an important exception to the “first sale” defence. This is because the court found that Autodesk had not sold copies but merely licensed copies of the copyrighted work.  Where an end-user license (or EULA) is a limited license agreement in which the copyright owner reserves title to the software copies and imposes significant use and transfer restrictions on end users, then this type of license is an exception to the “first sale” defence.  In the court’s words: 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.”  Canadian software vendors should review the terms of their end-user licenses to ensure that they can take advantage of this remedy in the US. 

Calgary – 10:30 MT