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Vernor v. Autodesk, Inc. - 621 F.3d 1102 (9th Cir. 2010)

Rule:

The Copyright Act confers several exclusive rights on copyright owners, including the exclusive rights to reproduce their works and to distribute their works by sale or rental. 17 U.S.C.S. § 106(1), (3). The exclusive distribution right is limited by the first sale doctrine, an affirmative defense to copyright infringement that allows owners of copies of copyrighted works to resell those copies. The exclusive reproduction right is limited within the software context by the essential step defense, another affirmative defense to copyright infringement. Both of these affirmative defenses are unavailable to those who are only licensed to use their copies of copyrighted works.

Facts:

Defendant Autodesk, Inc. developed "AutoCAD," a popular computer-aided design and drafting program, and sold several of its AutoCad packages to an architectural firm. The sale was made under a limited license agreement that stated that the license was nontransferable and the software could not be transferred or leased without Autodesk's written consent. That firm later sold its office equipment, including the AutoCad programs, to plaintiff Timothy S. Vernor, who later tried to sell them on eBay. Autodesk attempted to stop the sales, but Vernor ultimately sold two packages. Vernor then filed a lawsuit against Autodesk in federal district court seeking a declaratory judgment that the two sales, and sales of other AutoCAD packages that he might acquire in the future, would not violate the Copyright Act. Autodesk claimed it was still the owner of the software packages. The parties' filed cross-motions for summary judgment, and the district court granted Vernor's motion, holding that the sales of the AutoCad packages were lawful because of two affirmative defenses: the first sale doctrine of 17 U.S.C.S. § 109(a) and the essential step defense of 17 U.S.C.S. § 117(a)(1). Autodesk appealed.

Issue:

Could Vernor invoke the first sale doctrine and the essential step defense under the Copyright Act?

Answer:

No.

Conclusion:

The appellate court vacated the district court's judgment and remanded the case for further proceedings. The court ruled that pursuant to the license agreement, the architectural firm was a licensee, not an "owner of a particular copy" of the AutoCad packages and was not entitled to resell its copies to Vernor under § 109(a)'s first sale doctrine. Vernor did not receive title to the copies from the firm and accordingly could not pass ownership on to others. Thus, Vernor could not invoke the first sale doctrine. Nor could Vernor assert an essential step defense on behalf of his customers. The sales by both the firm and Vernor infringed Autodesk's exclusive right to distribute copies of its work under 17 U.S.C.S. § 106(3). Because Vernor was not an owner, his customers were also not owners of the AutoCad packages. Therefore, when they installed the software on their computers, the copies made during installation infringed Autodesk's exclusive reproduction right because they too were not entitled to the essential step defense under 17 U.S.C.S. §§ 106(1), 117(a)(1).

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