Vernor v. Autodesk, Inc.

621 F.3d 1102 (9th Cir. 2010)

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Nature of the Case

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Facts

D makes computer-aided design software used by architects, engineers, and manufacturers. D holds registered copyrights in all versions of the software including the discontinued Release 14 version, which is at issue in this case. Since 1986, D has offered AutoCAD to customers pursuant to an accompanying software license agreement which customers must accept before installing the software. The license for Release 14 recites that D retains title to all copies. The customer is granted a nonexclusive and nontransferable license to use Release 14. It imposes transfer restrictions, prohibiting customers from renting, leasing, or transferring the software without D's prior consent and from electronically or physically transferring the software out of the Western Hemisphere. License termination will occur if the user copies the software without authorization or does not comply with the license restrictions. D licensed ten copies of Release 14 to Cardwell. Cardwell agreed to the license which appeared (1) on each Release 14 package that D provided. Cardwell upgraded to the newer, fifteenth version and was required to destroy the copies of previous versions of the software. Instead, Cardwell sold them to P at an office sale with the handwritten activation codes necessary to use the software. P never agreed to license terms, opened a sealed software packet, or installed the Release 14 software. D believed that he was not bound by the license. He posted the software copy for sale on eBay. P and D played the DMCA take-down notice game a number of times for each software copy that P sought to sell. On the fourth copy of the software, eBay suspended P's account because of D's repeated charges of infringement. P wrote to D claiming the first sale doctrine as a defense. D directed P to stop selling the software. P filed yet another counter-notice with eBay. When D again did not respond, eBay reinstated P's account. P's account had been suspended for one month, during which he was unable to earn income on eBay. P has two more copies to sell. In August 2007, P brought a declaratory action under the first sale doctrine. The district court held that P's sales were non-infringing under the first sale doctrine and the essential step defense. The district court granted summary judgment to P as to copyright infringement in an unpublished decision. D appealed.