Comments on: Vernor v. Autodesk and the End of the First Sale Doctrine http://www.stlr.org/2010/11/vernor-v-autodesk-and-the-end-of-the-first-sale-doctrine/ Tue, 23 Apr 2013 18:27:00 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: Charles Carreon http://www.stlr.org/2010/11/vernor-v-autodesk-and-the-end-of-the-first-sale-doctrine/comment-page-1/#comment-15132 Charles Carreon Wed, 10 Nov 2010 00:30:37 +0000 http://www.stlr.org/?p=1075#comment-15132 I agree with this analysis of what the case will do, and hope the Ninth Circuit re-hears en banc. Check out this analysis, at the link below, that argues that the issue the Ninth Circuit should have decided is whether, when a software user "upgrades" to a newer version, thus "keeping the software," this is a "first sale," at all. Seems to me that the answer is, "Of course not. The original owner still has the software." Preventing software users from strategic behavior by buying the upgrade and selling the original version is appropriate, but the Ninth Circuit has unnecessarily expanded the power of licensors to write transfer-of-title restrictions into the law of personal property. Interestingly, in the usual case, since those licenses aren't effective until after the user opens the software and clicks "yes" to the EULA, something that happens after the purchase has been made, the sale can't be said to be conditional upon the license terms. Which is of course exactly what Dan has said in his third comment.<br><br><a href="http://uchicagolaw.typepad.com/faculty/2010/09/vernor-v-autodesk-copyright-software-upgrades-and-secondary-markets.html" rel="nofollow">http://uchicagolaw.typepad.com/faculty/2010/09/vernor-v-autodesk-copyright-software-upgrades-and-secondary-markets.html</a> I agree with this analysis of what the case will do, and hope the Ninth Circuit re-hears en banc. Check out this analysis, at the link below, that argues that the issue the Ninth Circuit should have decided is whether, when a software user “upgrades” to a newer version, thus “keeping the software,” this is a “first sale,” at all. Seems to me that the answer is, “Of course not. The original owner still has the software.” Preventing software users from strategic behavior by buying the upgrade and selling the original version is appropriate, but the Ninth Circuit has unnecessarily expanded the power of licensors to write transfer-of-title restrictions into the law of personal property. Interestingly, in the usual case, since those licenses aren't effective until after the user opens the software and clicks “yes” to the EULA, something that happens after the purchase has been made, the sale can't be said to be conditional upon the license terms. Which is of course exactly what Dan has said in his third comment.

http://uchicagolaw.typepad.com/faculty/2010/09/vernor-v-autodesk-copyright-software-upgrades-and-secondary-markets.html

]]> By: Dan http://www.stlr.org/2010/11/vernor-v-autodesk-and-the-end-of-the-first-sale-doctrine/comment-page-1/#comment-15128 Dan Tue, 02 Nov 2010 22:59:52 +0000 http://www.stlr.org/?p=1075#comment-15128 You've done a good job pointing out how the Vernor test undermines the policy concerns behind the first sale doctrine. In addition to that problem with the test, I see at least three other specific problems with it.<br><br>First, it is logically flawed because the basic premise of the test is that the terms in the license agreement are valid and binding on the user. However, this premise itself depends entirely on the very question the court is attempting to answer: is the user an "owner of a copy"? If we assume the user *is* an owner of a copy, then terms in the license agreement that purport to restrict a copy-owner's rights are simply invalid. Yet the test plainly assumes that the terms are valid, meaningful, and therefore useful for determining copy ownership. This is known as "begging the question" and is a well-known logical fallacy.<br><br>Second, the test fails to recognize that an owner of a copy might also happen to be a licensee. This is quite obvious, but the test doesn't provide for this possibility. Under the test, a user is either an owner or a licensee -- never both.<br><br>Third, the test conflates the act of licensing intangible rights with transfer of ownership of personal property. It treats them as one and the same, but in reality most software transactions involve two parts: a transfer of possession (and possibly ownership!) of personal property, *and* a grant of a license. To determine the ownership status of a *copy*, which is by definition a piece of personal property, the court must examine the former part. The test must address whether or not the transaction that resulted in the transfer of possession was a sale or other transfer of ownership. The terms of the license agreement are completely irrelevant to this determination, because they are (usually) not part of the transaction in which the user obtained possession. Consider software sold at retail: the retail sale is a transaction entirely separate from the grant of license; the copyright owner isn't even a party to the retail transaction so it seems absurd to assert that their license agreement controls this transaction.<br> You've done a good job pointing out how the Vernor test undermines the policy concerns behind the first sale doctrine. In addition to that problem with the test, I see at least three other specific problems with it.

First, it is logically flawed because the basic premise of the test is that the terms in the license agreement are valid and binding on the user. However, this premise itself depends entirely on the very question the court is attempting to answer: is the user an “owner of a copy”? If we assume the user *is* an owner of a copy, then terms in the license agreement that purport to restrict a copy-owner's rights are simply invalid. Yet the test plainly assumes that the terms are valid, meaningful, and therefore useful for determining copy ownership. This is known as “begging the question” and is a well-known logical fallacy.

Second, the test fails to recognize that an owner of a copy might also happen to be a licensee. This is quite obvious, but the test doesn't provide for this possibility. Under the test, a user is either an owner or a licensee — never both.

Third, the test conflates the act of licensing intangible rights with transfer of ownership of personal property. It treats them as one and the same, but in reality most software transactions involve two parts: a transfer of possession (and possibly ownership!) of personal property, *and* a grant of a license. To determine the ownership status of a *copy*, which is by definition a piece of personal property, the court must examine the former part. The test must address whether or not the transaction that resulted in the transfer of possession was a sale or other transfer of ownership. The terms of the license agreement are completely irrelevant to this determination, because they are (usually) not part of the transaction in which the user obtained possession. Consider software sold at retail: the retail sale is a transaction entirely separate from the grant of license; the copyright owner isn't even a party to the retail transaction so it seems absurd to assert that their license agreement controls this transaction.

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