A transaction involving the transfer of packaged software from a developer to a user was a license, not a sale, under the copyright first sale doctrine, the U.S. Court of Appeals for the Ninth Circuit ruled. The appeals court held “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 court also noted, among other things, that the developer expressly retained title to the software, prohibited further transfers or leases of the software without the developer's consent, and provided for the termination of the license for unauthorized copying.

Vernor v. Autodesk, Inc., 2010 U.S. App. LEXIS 18957 (9th Cir. Sept. 10, 2010) Download PDF

Editor’s Note: This ruling is discussed further on the Proskauer New Media and Technology Law blog here and here.