You know that software you bought? You are not the owner!

This week’s Free Style Friday post is based on a market that I have never paid much attention to:  used software.

Last week a federal appellate (one step removed from the US Supreme Court) ruled that a software maker could prevent end users from reselling their used software.  For about 100 years, the “first sale doctrine” has protected sellers of legitimately purchased products.

The doctrine refers to a 102-year-old decision by the U.S. Supreme Court that determined copyright holders can’t prevent a buyer from reselling or renting a product after an initial sale, as long as additional copies aren’t made.

However, the 9th Circuit concluded the first-sale doctrine didn’t apply to used software programs that online merchant Timothy Vernor peddled in his store on eBay.  Mr. Vernor bought the unopened software, made by Autodesk Inc., at garage and office sales, without ever agreeing to the licensing agreement imposed on the original buyer.  This is an interesting argument but the Court did not accept it.

The license agreement accompanying the software laid out that the right to install Autodesk Inc.’s software was being licensed rather than sold, according to the Court’s interpretation.  The Court concluded there was no definitive sale so the first-sale doctrine was moot.

The first sale doctrine works fairly well with actual products but not so smoothly with software.  Software presents a bit of different issue since it is essentially bytes and it is nearly impossible to verify that a seller has not kept a copy.  For now, the market for used software is on shaky grounds.  However, this is an issue that will likely end up in the United States Supreme Court within a few years.

Read more about the decision here.

Posted by Shawn Roberts

On this blog, I write about and try to answer practical Oklahoma legal questions. My focus and most experience is in estate planning and business issues including Oklahoma non-compete law. I make a living as an attorney in the law firm I founded, Shawn J. Roberts, P.C. in Oklahoma City. I live in Edmond with my wife Amy and my two children, Sam (19) and David (11). We live precisely in the path of where the "wind comes sweeping down the plains."