First Sale upheld in software case

[Alexander Terekhov]

http://www.osnews.com/img/22270/order.pdf

The footnote says it all.

"Although the phrase “copy of copyrighted material” is awkward, the
court uses it to emphasize the distinction between the copy and the
copyrighted material. See 17 U.S.C. § 202. Autodesk’s copyrighted
AutoCAD software is its intellectual property, and Mr. Vernor makes no
claim to it. Copies of AutoCAD software are personal property embodied
in compact disks and other media scattered across the world. Mr. Vernor
claims to be the owner of two such copies, contained in the two AutoCAD
packages still in his possession."

Here's the EFF's coverage:

http://www.eff.org/deeplinks/2009/10/it-s-still-duck-court-re-affirms-first-sale-doctri

"October 5th, 2009

It’s Still A Duck: Court Re-Affirms That First Sale Doctrine Can Apply
to “Licensed” Software

Commentary by Corynne McSherry

Building on a prior ruling, a federal court has re-affirmed that a
Seattle man was not infringing copyright law by re-selling software he
obtained from an Autodesk customer.

The ruling is bound to frustrate the copyright industries, which have
struggled for years to convince courts and their customers that the only
thing you “buy” when you buy software is a limited and temporary right
to use that software under certain conditions. In other words, they
claim buyers aren't owners.

The distinction is no mere technicality. Under the Copyright Act, owners
of copyrighted material are given substantial rights in the particular
copies they purchase. One of the most important of these protections is
the "first sale" doctrine, which says that once you've acquired a
lawfully-made CD or book or DVD, you can lend, sell, or give it away
without having to get permission from the copyright owner. Without the
first sale doctrine, libraries would be illegal, as would used
bookstores, used record stores, video rental shops, CD-swapping
communities and so on. If those books, records, videos etc. were merely
licensed, the seller could use the license to could force consumers to
always buy new software, even if they would prefer to buy an older,
possibly less expensive, version.

Autodesk would like to do just that, which is why it carefully polices
secondary markets for its expensive AutoCad design software. After
Autodesk repeatedly alleged that Timothy Vernor was violating copyright
law by attempting to re-sell copies of AutoCAD software on eBay (which
he had obtained from an Autodesk customer), Vernor asked a Washington
federal court to declare that his activity was legal under the first
sale doctrine. Autodesk predictably responded by insisting that AutoCAD
is licensed, not sold, and therefore the first sale doctrine did not
apply. The court ruled for Vernor. Autodesk then recruited an expert,
put some additional facts on record, and effectively asked the court to
reconsider its decision.

Autodesk’s arguments were no more successful the second time around.
Judge Richard Jones found that while the sale was subject to numerous
restrictions, it was nonetheless a sale, which means the customer had
all the rights of an owner, and thus would not infringe AutoDesk’s
copyright by re-selling the software. The court noted that while
Autodesk imposed typical software industry contractual restrictions on
use and transfer, its license agreement allowed the customer from whom
Vernor bought the software to keep the copies forever, for a one-time
fee. In other words, the transaction looked more like a book purchase
(you pay your money, you get a copy to keep) than, say, a music
subscription service.

Autodesk is likely to appeal, which means this case is headed to the
Ninth Circuit Court of Appeals. The appellate court is already
considering similar issues with two other cases: UMG v. Augusto (EFF
represents Mr. Augusto, with Keker & Van Nest) and MDY v. Blizzard.
Let’s hope Ninth Circuit takes full advantage of this opportunity to
protect the rights and expectations of consumers. "

regards,
alexander.

--
http://gng.z505.com/index.htm
(GNG is a derecursive recursive derecursion which pwns GNU since it can
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards
too, whereas GNU cannot.)

[Rjack]

Post by Alexander Terekhov
http://www.osnews.com/img/22270/order.pdf

For all the folks who cheered the JMRI decision concerning the
Artistic License, they would be wise to observe the Judge's words in
this case:

"D. Wise and the MAI Trio Conflict Irreconcilably; this Court Must
Follow Wise.

With two sets of conflicting precedent before the court, the question
becomes which to follow. That question, at least, has a simple answer.
The court must follow the oldest precedent among conflicting opinions
from three-judge Ninth Circuit panels. United States v.
Rodriguez-Lara, 421 F.3d 932, 943 (9th Cir. 2005). This court is
loath, however, to apply this rule unless there is no way to avoid the
conflict between the opinions. As was the case in the prior order, the
court finds the conflict unavoidable."

The CAFC's JMRI decision irreconcilably conflicts with the older CAFC
panel's decision in STORAGE TECHNOLOGY CORPORATION v. CUSTOM HARDWARE
ENGINEERING & CONSULTING, INC., 421 F.3d 1307 (CAFC 2005):

"In light of their facts, those cases thus stand for the entirely
unremarkable principle that “uses” that violate a license agreement
constitute copyright infringement only when those uses would infringe
in the absence of any license agreement at all."

CAFC Local Rules clearly state that a three judge panel may not
overrule an earlier three judge panels' precedent -- this must be done
by the CAFC sitting en banc.

Sincerely,
Rjack

[Hyman Rosen]

Post by Rjack
"In light of their facts, those cases thus stand for the entirely
unremarkable principle that “uses” that violate a license agreement
constitute copyright infringement only when those uses would infringe
in the absence of any license agreement at all."

Fortunately, since copying and distributing computer programs
infringes upon the author's copyrights in the absence of any
license agreement at all, the JMRI decision continues to be
perfectly sound.

[Rjack]

Post by Hyman Rosen

Post by Rjack
"In light of their facts, those cases thus stand for the entirely
unremarkable principle that “uses” that violate a license
agreement constitute copyright infringement only when those uses
would infringe in the absence of any license agreement at all."

Fortunately, since copying and distributing computer programs
infringes upon the author's copyrights in the absence of any
license agreement at all, the JMRI decision continues to be
perfectly sound.

Nobody said copying and distributing without permission (which the
Artistic License *does* freely permit) wasn't infringement.
The attribution requirement wasn't a "condition" to the license -- it
was a contractual covenant. There is no right of attribution listed in
17 USC 106.

Sincerely,
Rjack

-- "In light of their facts, those cases thus stand for the entirely
unremarkable principle that “uses” that violate a license agreement
constitute copyright infringement only when those uses would infringe
in the absence of any license agreement at all."; Storage Technology
Corp. v. Custom Hardware Engineering Inc., 421 F.3d 1307 (CAFC) --

[Alexander Terekhov]

Another nice article.

http://cyberlawcases.com/2009/10/01/court-rules-again-that-vernor-can-sell-autodesk-software/

"Court rules (again) that Vernor can sell Autodesk software

Posted October 1st, 2009 by Brian and filed in Contract, Copyright
Limitations and Exceptions

In this blog’s previous coverage of the “Copy Ownership Cases,” I
attempted to briefly summarize three important cases where ownership of
copies is critical and so did not delve into a detail relevant to this
update.

The decision in Vernor v. Autodesk from May of 2008 was a decision on
Autodesk’s motion to dismiss the case. Motions to dismiss are among the
first motions one might file in a federal case and occur prior to the
exchange of documents or the deposition of witnesses that occurs during
the discovery process. Typically once that discovery process is
complete, the parties may bring motions for summary judgment in which a
party will argue that, based on the undisputed facts, and resolving any
disputed fact in favor of the other party, the court can simply apply
the law to those facts and rule in their favor. In a grand demonstration
of the ability of opposing lawyers to take on diametrically opposed
world views, parties often both file such summary judgment motions,
which are called “cross-motions” for summary judgment.

Such cross-motions for summary judgment were filed in Vernor v. Autodesk
and the court held oral argument on the motions on Tuesday, Sep. 29,
2009. A few news outlets covered the oral argument: PC World, Zeropaid,
Slashdot.

With somewhat dizzying speed, the court issued its opinion on the
cross-motions for summary judgment the next day, Sep. 30, 2009. Having
seventeen months to consider any new developments, the court was
obviously not persuaded that anything important had changed as it
reached the same conclusions for the same reasons, and directed the
clerk to enter final judgment for Vernor.

The court’s opinion is, like its earlier opinion, careful, methodical,
well-researched, and thorough. So many courts addressing the issue of
copy ownership have dispensed with the question just by noting that
software distributors claim to merely “license” and not to sell their
software. The Vernor court finally cuts through this misleading way of
framing the question by noting that “the use of software copies can be
licensed while the copies themselves are sold.”

The court explains again why the Ninth Circuit precedent that it is
bound to follow, United States v. Wise, requires the result that Vernor
is the owner of the copies of the software. “Wise requires the court to
look at a transaction holistically, and the court finds no basis for the
conclusion that an agreement to permit perpetual possession of property
can be construed as reserving ownership.” This is the key factor in copy
ownership cases: perpetual possession. When a transaction results in an
individual being entitled to perpetual possession of the copy, as was
the case for Vernor, then courts should find that such individuals are
owners of their copies, entitled to a “first sale” right to resell the
copy if they so choose.

Autodesk now has to decide whether to appeal this ruling and has to do
so without the benefit of Ninth Circuit guidance in UMG Recordings, Inc,
v. Augusto, which has all the briefs filed but has not yet had oral
argument and MDY Industries LLC v. Blizzard Entertainment, Inc., in
which the briefing on appeal is still ongoing. Decisions in either of
these cases could greatly clarify how things will go for Vernor and
Autodesk, but the Ninth Circuit’s decisions in these cases are likely
over a year away. However, the Vernor court has now, twice, provided a
valuable roadmap for future courts that address the issue of copy
ownership.

See Also:

•Thom Holwerda, Judge Sides with Vernor, Slams Autodesk, OS News (Oct.
1, 2009).
•Nancy Gohring, In Autodesk Case, Judge Rules Secondhand Sales OK, PC
World (Oct. 1, 2009).

This work, unless otherwise expressly stated, is licensed under a
Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States
License."

regards,
alexander.

--
http://gng.z505.com/index.htm
(GNG is a derecursive recursive derecursion which pwns GNU since it can
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards
too, whereas GNU cannot.)

[Hyman Rosen]

There is no right of attribution listed in 17 USC 106.

There is no right to payment listed either. That is because
the list of rights lists the things that the rights holder
alone may do or authorize, not the forms of compensation he
may elect to receive.

[Rjack]

There is no right of attribution listed in 17 USC 106.

There is no right to payment listed either. That is because the
list of rights lists the things that the rights holder alone may do
or authorize, not the forms of compensation he may elect to
receive.

Awww... com'on Hyman. 17 USC 106(3):

"to distribute copies or phonorecords of the copyrighted work to
the public by sale or other transfer of ownership, or by rental,
lease, or lending;"

The implementation (interface with others) of this right is through
contractual agreement. Please remember that even a condition precedent
is a contractual term (compare and contrast with a scope of use
restriction):

1) "I promise to pay you $100 dollars if you let me copy your work"
is a contractual *covenant*.

2) "You must pay me $100 before you may copy my work" is a *condition
precedent*.

3) "You may copy my work for any non-commercial purpose" is a *scope
of use* restriction.

Sincerely,
Rjack :)

--"In light of their facts, those cases thus stand for the entirely
unremarkable principle that “uses” that violate a license agreement
constitute copyright infringement only when those uses would infringe
in the absence of any license agreement at all."; Storage Technology
Corp. v. Custom Hardware Engineering Inc., 421 F.3d 1307 (CAFC 2005)--

[Alexander Terekhov]

Post by Hyman Rosen

There is no right of attribution listed in 17 USC 106.

There is no right to payment listed either. That is because
the list of rights lists the things that the rights holder
alone may do or authorize, not the forms of compensation he
may elect to receive.

http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=2nd&navby=case&no=969224

"Third, James argues that the license was voided when Graham breached
its conditions by nonpayment of royalties and removal of James's
copyright notice. This argument turns--and fails--on the distinction
in contract between a condition and a covenant. Generally, "[i]f the
[licensee's] improper conduct constitutes a breach of a covenant
undertaken by the [licensee] . . . and if such covenant constitutes an
enforcible contractual obligation, then the [licensor] will have a
cause of action for breach of contract," not copyright infringement. 3
Nimmer on Copyright , supra , § 10.15[A], at 10-120. However, "[i]f
the nature of a licensee's violation consists of a failure to satisfy
a condition to the license . . ., it follows that the rights dependant
upon satisfaction of such condition have not been effectively
licensed, and therefore, any use by the licensee is without authority
from the licensor and may therefore, constitute an infringement of
copyright." Id. at 10-121 (citations omitted); see also Fantastic
Fakes, Inc. v. Pickwick Int'l, Inc. , 661 F.2d 479, 483-84 (5th Cir.
1981). A condition has been defined as "any fact or event which
qualifies a duty to perform." Costello Publ'g Co. v. Rotelle , 670
F.2d 1035, 1045 n.15 (D.C. Cir. 1981) (citing Corbin, Conditions in
the Law of Contract , 28 Yale L.J. 739 (1919)).

We think that the payment of royalties and the inclusion of a notice
crediting James's authorship are to be considered covenants, not
conditions. The construction of the licensing agreement is governed by
New York law. See Bartsch v. Metro-Goldwyn-Mayer, Inc. , 391 F.2d 150,
153 (2d Cir. 1968). Generally speaking, New York respects a
presumption that terms of a contract are covenants rather than
conditions. See Grand Union Co. v. Cord Meyer Dev. Co. , 761 F.2d 141,
147 (2d Cir. 1985) ("In the absence of more compelling evidence that
the parties intended to create a condition, the negotiation provision
must be construed as a promise or covenant."); Warth v. Greif , 106
N.Y.S. 163, 165 (2d Dep't 1907) ("The law favors covenants, rather
than conditions precedent."), aff'd , 193 N.Y. 661 (1908). "

Stop being utter idiot, Hyman.

regards,
alexander.

--
http://gng.z505.com/index.htm
(GNG is a derecursive recursive derecursion which pwns GNU since it can
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards
too, whereas GNU cannot.)