Legal Briefing: You Don't Own Your Software, So You Can't Resell It

A daily look at legal news and the business of law:

Autodesk Wins Appeal: Software Is Licensed, Not Sold

Timothy Vernor ran a store on eBay where he sold secondhand software, including products by Autodesk (ADSK) that he had purchased at yard and office sales. According to the Ninth Circuit Court of Appeals, what Vernor did is illegal. That's because, the court ruled that when the people and companies who sold Vernor the Autodesk products "bought" the software, they actually didn't -- instead, they licensed it. Since they licensed it, they didn't have any right to resell it to Vernor, who also didn't have the right to resell it on eBay.

Vernor's attorneys at Public Citizen say Vernor will ask the whole Ninth Circuit to consider the case because this decision was rendered by a panel. If he loses at that stage, he may take it to the Supreme Court. And if he were to lose there, then a longstanding, commonsense part of copyright law will be destroyed.

Copyright law allows people who bought copyrighted material to resell it as long as no copies are made, under the "First Sale Doctrine." If you own it, you can dispose of it as you wish: sell it, loan it, whatever. It's the principle that allows libraries to loan books.

As Public Citizen notes, since any copyright owner can distribute any "fine print" document with its copyrighted work that it wants, nothing stops music, video, book or other copyright holders from attaching similar license "agreements," which would jeopardize all sorts of resale markets. Even Autodesk's attorney acknowledged that e-book owners might do that, reported Am Law Litigation Daily. As books increasingly shift toward the electronic medium, it's possible to imagine a world in which libraries can't loan out lots of titles. Way to go, Ninth Circuit.

This isn't the first time the Ninth Circuit has undermined the First Sale Doctrine. Public Knowledge and the Electronic Frontier Foundation have both urged the Supreme Court to reverse the Ninth Circuit's holding that the First Sale Doctrine doesn't apply in the context of goods made overseas. In that case the court decided that if the good was made overseas, it wasn't made pursuant to U.S. copyright law, and so the First Sale Doctrine doesn't apply. That decision also affects resellers, whether on eBay or Main Street, because so many goods are made overseas.

Deceptively Profiting at Dead Soldiers' Expense Isn't Necessarily Illegal

Prudential and MetLife have come under fire for the way they handle life insurance proceeds, including those from policies sold to soldiers. Although beneficiaries believe they are getting the full payout at once, and that payout is placed in an FDIC-insured account, they're not. Beneficiaries are given access to all the proceeds, but until they take all the money, it sits in accounts at the insurers that are not FDIC-insured, earning much less interest than Prudential and MetLife make investing the money.

A case challenging the practice was just dismissed in Nevada. The federal judge held that the beneficiary didn't have the special relationship necessary to sue, reports Bloomberg, even though MetLife's account holding the money was "inherently deceptive" because its title suggested the money was FDIC insured.