When YoU pURChaSe a software package, the package will often inform you (or the software will inform you when you install it on your computer), that you are not the “owner” of a copy of it, but only a “licensee” whose entitlement to use the software is subject to certain restrictions. This may include a restriction on transferring your copy of that software to anyone else.
Suppose you ignore the no-transfer restriction and sell the software to someone. Have you breached an enforceable contractual obligation to the software’s developer? By transferring the package to someone else, have you infringed copyright or induced the purchaser of the software to infringe copyright? Is the purchaser of the used software an infringer when he loads it on his computer? Is he too bound by the license restrictions?
illustration By alicia kuBista
There is, oddly enough, no definitive court ruling on these questions. In Vernor v. Autodesk, Inc., a judge recently ruled that a purchaser of used software could lawfully sell the package on eBay because he was entitled to the benefits of the “first sale” rule of copyright law. This rule provides that although copyright owners may control distributions of their works to the public, the first sale of a particular copy to the public exhausts their right to control any further distribution of that copy. The rule applies to all transfers of ownership, including gifts or bequests, but not to licenses.
Reinforcing the Vernor ruling was UMG Recordings, Inc. v. Augusto , in which a judge recently refused to enforce a restrictive legend forbidding recipients of promotional CDs from selling or otherwise transferring the CDs to other people. As in Vernor, the court ruled that it was lawful for Augusto to sell the used CDs on eBay under the first sale rule.
UMG has already appealed the Augusto ruling to the Ninth Circuit Court of Appeals (which reviews lower court
decisions from California and Washington where Vernor and Augusto were rendered), and Autodesk is likely to appeal as well. I predict that the Augusto ruling will be affirmed. Vernor is a closer case, but it too may be affirmed unless the Ninth Circuit overturns one of its long-standing precedents.
UMG v. Augusto
Augusto buys and sells promotional CDs that UMG, among others, ship
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