Autodesk Suit Could Affect Secondary Software Sales

A judge Tuesday heard arguments in a dispute over software sales that could potentially have repercussions on the secondhand sale of virtually any copyright material.

The suit was filed by Timothy Vernor, a seller on eBay, after Autodesk, citing the Digital Millennium Copyright Act, asked eBay to remove some of its software products that Vernor had listed for sale there, and later to ban him from the site.

Vernor had not illegally copied the software but was selling legitimate CDs of the products secondhand. For that reason, he argued, he was not infringing Autodesk's copyright.

Autodesk countered that because it licenses the software, rather than selling it outright, a licensee does not have the right to resell its products.

"The deal between Autodesk and the licensee is [that] you pay us for the software and you're not going to be able to sell it on the used market," Michael Jacobs, an attorney with Morrison and Foersters who is representing Autodesk, said in court Tuesday.

If the court sides with Vernor, the fundamental economics of Autodesk's business will be upset, he said.

While Jacobs acknowledged that this isn't a case where software was illegally copied, he argued that the end result is similar. That's because the original owner of the software can continue to use the software while the original CD is resold to someone else, without Autodesk profiting from the second sale.

In fact, Vernor originally bought the software from someone else, so Autodesk also argued that Vernor had unlawfully acquired it, because the software license did not give the original owner the right to sell it to him.

Vernor's lawyer responded that while Autodesk can call it a licensing arrangement in which it retains title to the software, in reality it is selling a product that an end-user then owns.

"There's no way for Autodesk to control the software once it's in the stream of commerce. The particular copy of software gets full value up front. Autodesk doesn't ask for periodic payments," said Greg Beck, a lawyer from the consumer advocacy group Public Citizen who is representing Vernor.

He drew a parallel with copyright books. Most books include the line "all rights reserved" in the front. That means someone who buys the book can't make copies of it or read it as a dramatic performance to a crowd. "That's different from saying you don't own the copy of the book you purchased. You do own it because you have the right to keep it or destroy it or burn it or do whatever you want to that copy, even though you don't have the greater rights," he said. By the same token, someone who buys a piece of software has the right to resell the software CD, he said.

If the person who sold the software to Vernor keeps a copy of it, in violation of the agreement with Autodesk, that doesn't make Vernor responsible for infringement, he argued. "That's the case with any copyrighted material. You never know for sure when you buy a book if the person [who sold it to you] has made a copy," Beck said. "You have no way of knowing."

Indeed, Beck has argued that the case could have wider ramifications for consumers. "If copyright owners could restrict resale of their products with these so-called agreements, used book and record stores would soon disappear," he said in a statement when Vernor's case was filed.

The two-hour hearing, in the U.S. District Court for the Western District of Washington in Seattle, was in response to motions for summary judgment filed by both sides. The judge can now rule for Vernor or for Autodesk or send the case to trial.

Beck expects the judge to rule for one party or the other, and for the loser to appeal. Early last year the judge declined a request by Autodesk to dismiss the case.

While Jacobs said the software industry is watching the case closely, few companies have commented on it publicly. Microsoft, the Software and Information Industry Association and the Washington Technology Industry Alliance did not reply to requests for comment.

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