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By | OUT-LAW.COM 6th October 2009 10:09

US court says software is owned, not licensed

Vanessa Redgrave precedent stops Autodesk acting up

Software company Autodesk has failed in its bid to prevent the second-hand sale of its software. After a long-running legal battle, it has not been able to convince a court that its software is merely licensed and not sold.

Like many software publishers, Autodesk claims that it sells only licences to use its software and that those who pay for it do not necessarily have the right to sell it on. It sued Timothy Vernor, who was selling legitimate copies of Autodesk software on eBay, for copyright infringement.

The US District Court for the Western District of Washington has backed Vernor, though, in his claim that he owned the software and had the right to sell it on.

The Court said that there were two cases to use as a precedent and that they clashed fundamentally. It had no choice, it said, but to follow the earlier precedent, which was a dispute over the ownership of prints of Hollywood films sold to film stars.

While many of the film copies were explicitly only licensed, the court had previously found that in one case, involving Vanessa Redgrave, the agreement had transferred ownership of the print to the actress. This is called the Wise case.

One major consideration in that was the fact that the studio did not have the right, as it did in other agreements, to demand the return of the print.

The Court said that though the issue was complicated, software agreements were similar enough to those film agreements to act as a precedent.

"The Autodesk License is a hodgepodge of terms that, standing alone, support both a transfer of ownership and a mere license," said the ruling. "Autodesk expressly retains title to the 'Software and accompanying materials,' but it has no right to regain possession of the software or the 'accompanying materials'. Licensees pay a single up-front price for the software. Autodesk can require the destruction of the software, but only as consideration in the later purchase of an upgrade."

"The court concludes that Wise leads to the conclusion that the transfer of AutoCAD copies via the License is a transfer of ownership," it said.

The Court said that it had to follow that case's precedent because it was older than another conflicting ruling, and that it could not choose a precedent based on the most desirable policy.

"The court’s decision today is not based on any policy judgment. Congress is both constitutionally and institutionally suited to render judgments on policy; courts generally are not," the Court ruled. "Precedent binds the court regardless of whether it would be good policy to ignore it."

The Court did say, though, that Autodesk's claims that Vernor's actions were likely to result in the creation and sale of illegal copies of its AutoCAD software were not well founded.

"Autodesk’s claim that Mr. Vernor promotes piracy is unconvincing," the ruling said. "Mr. Vernor’s sales of AutoCAD packages promote piracy no more so than Autodesk’s sales of the same packages. Piracy depends on the number of people willing to engage in piracy, and a pirate is presumably just as happy to unlawfully duplicate software purchased directly from Autodesk as he is to copy software purchased from a reseller like Mr. Vernor."

Vernor had tried to argue that Autodesk's behaviour in suing him amounted to a misuse of its copyrights. The Court rejected that claim.

Copyright © 2009,

OUT-LAW.COM is part of international law firm Pinsent Masons.

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