

"Magic Words" Trump User Rights: Ninth Circuit Ruling in Vernor v. Autodesk - keyist
http://www.eff.org/deeplinks/2010/09/magic-words-trump-user-rights-ninth-circuit-ruling

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dctoedt
1\. It's not over yet.

2\. The facts in this case are not insignificant: An Autodesk customer
upgraded its installation, paying a heavily-discounted price (~87% discount)
for copies of the new version. _It then sold its copies of the old version to
the "reseller," along with a handwritten copy of the license codes._ See the
court's recital of the facts at PDF page 6 of
[http://www.ca9.uscourts.gov/datastore/opinions/2010/09/10/09...](http://www.ca9.uscourts.gov/datastore/opinions/2010/09/10/09-35969.pdf).
I wonder how many HN readers would want _their_ customers doing that?

~~~
jellicle
The facts of the case are that software is being Sold, with a capital S, at
retail stores in exactly the same manner as all sorts of goods are sold, and
that in some fine print which is totally unavailable to the purchaser at the
time of purchase, the software creator is then retroactively revising the
agreement to be only a time-limited, restricted lease rather than a sale.....
and the courts are buying that argument.

~~~
dctoedt
I certainly understand your point, but 25-plus years of "custom and usage"
have made it hard to argue convincingly that purchasers don't know there's a
click-wrap EULA. [EDIT: Enforceability of the EULA is usually predicated on
the purchaser's having a reasonable period, usually 10 days or so, in which to
return the software and get a refund if the EULA's terms aren't acceptable.]

The danger of the "Sold, not leased" approach is that vendors likely would
stop offering such steep discounts for upgrades. Getting an upgrade would be
be like buying a car: You want the new model, you pay the new-model price; and
sure, by all means do whatever you like with your old model.

~~~
Zak
Car dealers usually take trade-ins. The upgrade model is essentially
equivalent, but might need to be tweaked in a legal/technical sense. It would
be more ethical than clickwrap agreements that could contain anything.

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10ren
Logically, book vendors could impose similar restrictions with similar
language and achieve the same result viz. circumvent the first sale doctrine.

There's a question: would anyone buy such a book? If you were offered
identical books, one you could resell and one you couldn't but it was half the
price - which would you buy?

I don't know the legal history of the first sale doctrine, but I assume it's
mostly based on public policy, and to support things that people were already
doing: reselling, lending etc. An interesting data point is that software in
the form of video games is regularly resold and lent.

IIRC, a distinguishing feature of the autodesk software in this case is that
it is very high-end commercial software, and thus not a consumer product.
Buyers and sellers in business transactions are generally assumed by the
courts to know what they're doing, and so the courts tend not to intervene
with whatever bargain they've struck. That is: this is likely inapplicable to
consumer software like video games.

~~~
kgermino
WRT your question about buying a book for half price that you can't resell
it's been going on for a little while now with college textbooks.

Case in point: my accounting textbook (a new edition) comes in three versions:

a $200 hardback book which can easily be resold at the end of the semester
like any other book

a $120 unbound version that is three hole punched (so you can put it in a
binder) but that no bookstore will buy at the end of the year, making it hard
to sell

a $40 e-book that you can load from virtually any device (I believe that there
is a iPad app even) but the e-book is impossible to resell thanks to the magic
of DRM.

Based on my experience in the class there is a about even spread among the
three.

~~~
tylerritchie
That's interesting and actually reasonable. Well, reasonable as far as pricing
for a disposable license to a text that's required for a course.

You'd be hard-pressed to sell the $200 book for $160 at the end of the
quarter/semester.

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pbhjpbhj
This is huge. A US court decision clarifying that companies can disclaim there
product from being a product and instead turn it into a license for use -
making resale tortuous, for example.

~~~
ouhjygj
And leading to 1000s of companies having to rewrite all their asset registers
and the IRS claim lots of depreciated write downs.

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shasta
With the increasing ubiquity of "online activation", the legal status of the
first sale doctrine is of decreasing importance, anyway. There is a satisfying
(if not practical) way to fix this problem: require that all such commercial
licenses, sales, and contracts be between transferable entities. Anytime you
have contracts between what are effectively anonymous parties, where the
particular individuals are not essential to the transaction, require that the
roles in the contract be transferable by whomever owns the rights of that
role. In other words, we could fix this problem with a capability based
society.

~~~
kiuyhjk
No problem. My copy of Autocad is owned by XYZ-software installation inc. A
wholly owned subsidiary whose only asset is a copy of Autocad, I can sell the
company to anyone I want - the license is never transferred.

~~~
dctoedt
Some license agreements state that a change of control of the corporate owner
is deemed an assignment requiring the licensor's consent.

[EDIT: Autodesk's EULA is one such - see section 9.1 in
[http://images.autodesk.com/apac_sapac_main/files/autocad_200...](http://images.autodesk.com/apac_sapac_main/files/autocad_2009_eula_-
_all_other_countries.pdf.)]

~~~
kiuyhjk
Pity Sun didn't think of that one !

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jrockway
The more I think about this, the more it seems like the old email signature
"by reading this, you owe me a million dollars" is actually enforceable.

In the US, nobody has any obligation to pay me a million dollars. Similarly, a
copyright holder has no right to regulate what happens to their CD-ROM after
they legally sell it to someone.

But the court ruled that a piece of paper included with the CD-ROM that was
not required to fully use that CD gave Autodesk some new rights and created
the obligation for the original purchaser to ask Autodesk for permission to
perform an otherwise-legal activity, selling the disk. So it follows that a
little message that you _do_ read at the end of my emails should be equally
enforceable.

Actually, I think this decision is on its way to reversal.

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njharman
Ok, I'm not selling the software I'm selling the _license_. Or, I'm selling
the media and packaging not software, no way.

I'm sure it's not the case but more absurd things are held up regularly. Just
need expensive lawyers to argue the point with a straight face and earnest
demeanor.

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aidenn0
Couldn't you just sell "a bunch of shiny plastic discs that may or may not
have software on them" and not run into this issue? I'm assuming these discs
were printed by Autodesk. Copyright doesn't apply if you're not making a copy
of anything, right?

~~~
dctoedt
Unless the <http://en.wikipedia.org/wiki/First-sale_doctrine> applies, under
copyright law you're not allowed to _distribute_ copies without permission
from the copyright owner. See 17 USC 106(3), at <http://goo.gl/ySAs>.

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tylerritchie
"By endorsing this check you agree that all previous and future licenses sold
by Autodesk to any individual, business or other entity afford licensee all
rights and privileges under the first sale doctrine..."

It seems like buying direct via check might be able to cause all kinds of
problems. Seeing as how language clearly matters more than common sense.

~~~
dctoedt
That would only work for sales by Autodesk directly to the customer, where
Autodesk actually cashed the check.

Most companies' accounts-receivables clerks, however, are trained to look for
that kind of endorsement language on payment checks.

Chances are that Autodesk, upon receiving a check like that, would return the
check and take whatever action it deemed appropriate for a past-due invoice.

