An estimated 1.3 million people worldwide make some or all of their living selling goods on eBay, and Timothy Vernor is one of them. In a recent US District Court ruling, the court found that Mr. Vernor could invoke the “first sale” doctrine. This decision means that his resale of AutoCAD packages on eBay is not a copyright violation.

In 2005, Mr. Vernor put up for auction on eBay authentic used packages of Autodesk’s AutoCAD software. Autodesk sent eBay a takedown notice under the Digital Millennium Copyright Act claiming copyright infringement, and eBay suspended the auction. When Mr. Vendor responded that his sale was lawful, eBay reinstated the auction and he sold the packages. This scenario repeated itself a number of times.

In 2007, Mr. Vernor acquired more packages of the software from a third party, Cardwell/Thomas Associates (CTA). CTA had received the packages from Autodesk in a settlement of an unrelated dispute. The Settlement Agreement required CTA to adhere to the terms of the Autodesk Software Licence Agreement, which imposed restrictions on the transfer of the software without Autodesk’s consent.

Anticipating that Autodesk would likely try to block his sale of the CTA packages, Mr. Vernor sought a declaration that his resale was lawful. Autodesk moved for dismissal or summary judgment in response.

At issue was whether Autodesk’s transfer to CTA was a sale or a mere transfer of possession pursuant to license. If the transfer to CTA was a sale, the “first sale” doctrine would apply and Mr. Vernor’s resale of the packages on eBay would not constitute copyright infringement. That doctrine “permits a person who owns a lawfully made copy of copyrighted work to sell or otherwise dispose of the copy.” Relying on decisions dealing with prints of films, the court concluded that the transfer of the packages from Autodesk to CTA was a sale with contractual restrictions on use and transfer of the software. The court based its conclusion on the fact that the Settlement Agreement and Licence:

  • allowed CTA to retain possession of the software copies in exchange for a single up-front payment;
  • imposed onerous restrictions on transfer of AutoCAD copies; and
  • required CTA to destroy the software in the event that it purchased a software upgrade.

Consequently, Mr. Vernor could invoke the “first sale” doctrine and legally resell the packages on eBay. The court noted that “although technology has changed, the question at the core of this case is not technological. Mr. Vendor does not seek to take advantage of new technology to ease copying, he seeks to sell a package of physical objects which contain copies of copyright material. The essential features of such sales vary little whether selling movie prints via mail … or software packages via eBay.”

Autodesk had also failed, on the motion, to establish that its licence binds Mr. Vernor or his customers. The court noted that the licence was expressly stated to be “non-transferable,” and therefore Autodesk would have to explain how the licence could bind downstream transferees. While the court denied the motion for dismissal or summary judgment, it did indicate that Autodesk could file a new motion to address that argument.