The U.S. Court of Appeals for the Ninth Circuit has upheld the right
of software companies to deny consumers the right to resell their products.
The ruling came as the result of a long-standing case involving used computer software sales on eBay, but its wide-ranging implications could threaten the resale of all digital content, including video games.
The case involved the sale of copies of AutoCAD, software that defendant Timothy Vernor had picked up in an architect's office sale. Vernor then put the software up for sale on auction site eBay, complete with serial numbers and a reassurance that no versions were currently installed on any other machine.
However, AutoCAD's developer, Autodesk, claimed the End User License Agreement (EULA) that users agreed to before using the software stated that the program was merely licensed, not sold, and that the user's license was non-transferable.
Furthermore, the agreement specified that, if the user upgraded to a new version of the software, the old version had to be destroyed.
Autodesk claimed that the copies Vernor had obtained should have been destroyed. Vernor counter-argued that, as he had not agreed to any license, he was free to sell the copies on and, on the verge of being banned from eBay, sued Autodesk to protect his business.
The court affirmed Vernor's right
to sell the used software in 2008, but Autodesk appealed and last week the Court of Appeals for the Ninth Circuit reversed the earlier decision.
The ruling aims to distinguish between when a piece of software is sold and when it is merely licensed, with the user potentially unable to resell if it's the latter. The judge presiding over 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."
The ruling could have severe implications for other forms of digital media that are subject to license agreements, potentially preventing users from selling on their used video games. Indeed, Electronic Arts' standard EULA, while not mentioning resale policy, explicitly states
: 'This Software is licensed to you, not sold.'
Libraries that loan digital media could also be subject to restrictions following the decision. The American Library Association, fearing that publishers could now forbid rental or lending unless libraries agree to more expensive licenses, filed an amicus brief in the case, which the judges reportedly showed some sympathy for, before concluding that they were forced to follow precedent.
The Court did, however, state that: "congress is free... to modify the first sale doctrine and the essential step defense if it deems these or other policy considerations to require a different approach."