US Court Of Appeals Overturns Defendant’s Right To Re-Sell Software

The US Court of Appeals for the Ninth Circuit has ruled that defendant Tim Vernor did not have the right to re-sell Autodesk’s AutoCAD software on ebay.

Autodesk cited the End User License Agreement (EULA) (also referred to in the court documents as Software License Agreement – SLA) which stated that the software was merely licensed, not sold, to Vernor, and that the license was non-transferable. Vernor’s right to sell the used software on ebay was initially supported in 2008, but has now been overturned on appeal.

In a key statement, the judge in the case said: “We hold today 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.”
On the surface, it appears that this ruling could have major implications for all forms of used software in the US. Indeed, multiple gaming sites are reporting the story in this fashion. However, the details of the case are extremely specific and make the ruling a lot more complex than it first appears.

The court papers state that Cardwell/Thomas & Associates Inc. (CTA) purchased the AutoCAD software in 1999. CTA later upgraded its AutoCAD software to a newer version, making use of a discount offer which required the destruction of all previous versions of AutoCAD. Instead, however, the older versions were sold to Vernor. Vernor then put the used software (complete with serial keys) on ebay. He never agreed to any Software License Agreement (SLA,) because he never installed the software.

The appeals court ruling states that Vernor still did not have the right to re-sell the software, as CTA did not have the right to sell it to him in the first place. Despite Vernor not having agreed to the specific SLA which required the destruction of prior versions of AutoCAD, that License Agreement was still enforceable.

Though this does establish some legal precedent for a software user only being a licensee, and the potential for a publisher or developer to add resale restrictions to said License Agreement, the case involves a highly specific set of circumstances. As a result, it seems unlikely that games publishers would be able to use it as a reason to prohibit used game sales without first pursuing further, more expansive, legal action.