by Mike Masnick

Filed Under:
copyright, first sale, license, software, vernor


Supreme Court Won't Hear Case Saying That You Have No First Sale Rights With Software

from the too-bad dept

We had just mentioned the infamous decision in the Vernor v. Autodesk case last week, in discussing the Psystar decision. If you don't recall, the court in the Vernor case effectively decimated the concept of "first sale" in software, making it questionable if you could ever resell software that you'd bought. To make that work, the court argued that software sales (even though it's "bought" in stores) are really "licenses," similar to rentals, rather than product sales and, thus, you can't resell. Of course, as someone noted in our comments, then why does Apple have a "How to Buy" page for its software, in which it is entirely described as a product you are purchasing.

In the Vernor case, the court gave a recipe for effectively destroying first sale. All anyone has to do is claim that they're licensing you something, even if it has every indication of being a full purchase. This seemed to contradict with the entire First Sale doctrine (and numerous other cases), but apparently the Supreme Court doesn't want to be bothered with this. It refused to hear Vernor's appeal, meaning the existing ruling sticks. This is one case where I could definitely see another appeals court coming to a different conclusion, meaning that, hopefully, the Supreme Court will revisit this issue at some point in the future. In the meantime, the first sale doctrine is severely limited to the point of near non-existence in software.

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  1. identicon
    Andrew D. Todd, 5 Oct 2011 @ 1:50am

    The Case Is About Something Quite Different.

    Vernor vs. Autodesk has only very limited application to most first-sale cases. The key issue of Vernor was that there really was a contract. The initial purchaser had entered into a contract with AutoDesk to get upgrades for only $495 each, instead of $3,750 each (on four copies), in exchange for surrendering his first sale rights, and agreeing to physically destroy the disks containing the original program. The disks were therefore not his to sell. The contract was not created by the shrink-wrap license, but by the transfer of valuable considerations, to wit, a new version of AutoCAD, with various improvements.

    The existence of a contract is practically related to the price of the software, $15,000 or more. It was worth someone's trouble to go through certain legalities to get better terms, and worth someone else's time to make sure all the paperwork was in order. I'm pretty sure that AutoCAD is about the most expensive program which is sold as package software. Most high-end varieties of CAD/CAM software are sold under straight licenses, with negotiated terms and arrangements. There are only a relative handful of organizations which need to use that kind of software, because it is effectively cognate to machine tools, and suchlike. Big companies like General Motors buy CAD/CAM software for the whole company, commissioning what features they need. In short, AutoCAD is a kind of borderline case between package software and semi-custom software. It is mostly used by architects.
    http://en.wikipedia.o rg/wiki/BRL-CAD

    Incidentally, the real threat to AutoDesk is not pirates. It is the United States Army, specifically the Ballistics Research Laboratory at the Aberdeen Proving Grounds, Herman Goldstine's old outfit, and institutional sponsor of the ENIAC. The United States Army has come to believe in Open Source, and their reserves are virtually limitless.

    The underlying facts of Vernor have little or no application to things like popular books, music CD's, movies, or video games, which do not cost a fortune. For such purchases, there never was a bona fide side-contract, because it is not economically feasible to meet the necessary conditions. A store in the mall sells things to unknown members of the public. Can you imagine what would happen if people in the checkout line at Wal-Mart started trying to read ten different sets of terms and conditions each? They would ask the checkout girl questions, and if Wal-Mart allows the girl to answer the questions, she becomes, ipso facto, their recognized bargaining agent, and a judge can take cognizance of whatever she is telling customers, and force Wal-Mart to make good on her promises. Alternatively, they can call the store manager every time someone has a legal question about the contract, and the cash register line backs up for miles...

    Any time children are a large portion of the market, that presents a major disconnect. Children cannot, in general, form contracts, and in the limited circumstances where they can contract, there are all kinds of restrictions to prevent them from being taken advantage of. Judges get involved, sooner or later. There are some interesting legal cases which have arisen when doctors have hard decisions to make involving juvenile patients, with no assurance of success either way. So the doctors wanted judges to certify that they were doing the best they could.

    Movie theaters let teenagers into R-rated films when accompanies by an adult (what the industry calls an adult guardian) but they do not check the paperwork to establish that the adult really is the teenager's legal guardian, and not, say, a noncustodial divorced parent, and that taking the teenager to that movie is consistent with the terms of the order of custody resulting from said divorce. Obviously, that kind of checking would cost much more than they could hope to make on a movie admission. The theater only goes through the motions.

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