"When prosperity comes, do not use all of it." -- Confucius

Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

Posted on Tuesday, September 25, 2007 2:11 PM
By Randall S. Newton
Editor-in-Chief

Public Citizen, a nonprofit consumer advocacy organization founded by Ralph Nader, has agreed to represent Timothy S. Vernor, the eBay seller who filed a federal lawsuit against Autodesk after the company on several occasions took action to stop him from selling used copies of AutoCAD Release 14 on eBay. Public Citizen will take on the case at no charge to Vernor, who has until now been serving as his own lawyer. There is a link at the bottom of this article for those interested in donating  to Public Citizen to help in the Vernor case.

This is not the first time Public Citizen has represented an eBay seller. The advocacy group has identified elements of the Vernor case as one of its key litigation priorities for 2007.  A statement on the Public Citizen site reads as if it were written specifically for the Vernor case:

 

One of the many advantages of the Internet for consumers is the competition it creates. When Internet shoppers can easily compare the prices of hundreds of dealers online, it is difficult for any one dealer to get away with charging more. Thus, prices fall and consumers benefit.

 

Not surprisingly, however, some companies don’t like their prices being undercut on the Internet and have devised a variety of strategies to squelch unwanted competition. One common strategy is to use the provisions of the Digital Millennium Copyright Act of 1998 (DMCA) to interfere with legitimate competitors. eBay implements the DMCA through its "Verified Rights Owners" (or VeRO) program. Although the program is designed to allow intellectual property owners to assert legitimate claims against sellers of counterfeit merchandise, corporations sometimes exploit the program to curtail unwanted competition by small online retailers.

Abusive DMCA claims threaten the First Amendment right of online merchants to truthfully advertise their goods, and ultimately hurt all consumers by reducing the availability of cheaper generic products. Repeated wrongful claims can also lead to the termination of a seller’s eBay account. For small online merchants who depend on the Internet to make their living, this kind of termination is the equivalent of them showing up at their stores to find all their goods out on the curb. And without the resources to fight back in court, these small online sellers usually have no way to dispute the company’s claims.

Public Citizen staff attorney Greg Beck is assigned to the case. Before entering law school, he worked for four years as a computer programmer, including a stint as a software engineer at Microsoft. “I developed not only a knowledge of computer technology,” Beck explains in a statement on the Public Citizen website, “but also a sensitivity toward issues of online privacy and freedom. I became fascinated by issues of intellectual property, privacy, cryptography, and free speech as they related to technology. In particular, I grew concerned about the power of large computer and software companies to stifle technological innovation and thereby harm consumers."

Beck just started on the case yesterday, but was willing to comment generally to AECnews. He believes the central issue of the case is Autodesk’s use of the eBay VeRO program (Verified Rights Owner), which allows vendors to protest the sale of a product on eBay under terms of the Digital Millennium Copyright Act. He noted that Vernor acquired the copies of AutoCAD Release 14 in a garage sale and therefore had no contractual relationship with Autodesk.

Vernor has cited the “first sale” doctrine as one basis for his right to legally sell used copies of Autodesk software on eBay. “There is a strong argument that you can’t contract away your rights,” Beck says, commenting on the idea that vendors like Autodesk can extend their copyright claims beyond original sale of a product. “We see more license terms these days like ‘no quotations without prior written permission’ or ‘no reviews of the software may be written without permission.’ These restrictions threaten fair use under copyright laws,” Beck says. “If companies can contract out of first sale or fair use, then the copyright system is replaced by private contracts. Even if that were a good idea, there is no way for consumers to opt out.”

Public Citizen was founded by Ralph Nader in 1971, and takes on cases in a variety of consumer rights and free speech disputes. Persons interested in donating to Public Citizen to help defray expenses in the Vernor case should visit:

https://secure.citizen.org/shop/custom.jsp?donate_page_KEY=761&t=DIA_Secure.dwt&track=w7join


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# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/25/2007 6:36 PM by Evan Yares
I have to chuckle about this. The first few messages I saw on Vernor's case were some quiet emails, passed around between a few industry pundits. The gist of them was "I think he ought to lose," and "I think he ought to win." On one side were people saying, essentially, that whatever policy Autodesk had should rule. (Autodesk's software... Autodesk's rules.) On the other side were those who thought Autodesk was playing the heavy.

Ultimately, though, it's not about Autodesk. It's about the underlying laws that define the relationships between businesses and consumers. In this case, a license that is automatically invoked by the installation of the software, and that automatically terminates on the sale of the software (as does the AutoCAD license) makes makes for an interesting situation.

I doubt that Public Citizen would have taken this case on had not the underlying issues been important. The organization is one of only a few handful, including the Electronic Frontiers Foundation and the Chilling Effects Clearinghouse, that works in the public interest on modern intellectual property issues.

Personally, I'd be very happy to see this case go to trial, and address the issues of licenses and first sale rights, for the simple reason that large software vendors tend to push the limits of law (as their cost of doing so is negligible.) The only practical way to draw a line in the sand is to find a case with which to create case law.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 5:16 AM by burris
You're confused, one doesn't need a license to use or sell a legitimate copy of software. These aren't exclusive rights protected by copyright. Autodesk is trying to enforce a contract that may not be valid in the first place and Vernor never agreed to in any event.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 9:08 AM by Randall Newton
Dear Commentor Burris, If Evan is confused, we are all confused. He would be on anybody's short list to appear as an expert witness for the plaintiff in this case.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 12:32 PM by The Gaunt Man
I have to take issue with the following (quoted) statement: "“If companies can contract out of first sale or fair use, then the copyright system is replaced by private contracts. Even if that were a good idea, there is no way for consumers to opt out.”"

Setting aside my own opinions on private contracts vs. the copyright system, if the system were replaced by private contracts there would be a very simple and elegant way for consumers to opt-out: don't enter into the contract in the first place. If I don't like the price someone is selling a car for, I don't whine about how I need a car to get around and demand they lower their price. If I don't like the terms of an employment contract, I don't sue that company to force them to hire me on terms I like.

There is a very large and clear distinction between unethical coercion and ethical enforcement of a freely entered contract.

Please note, this entire posting is in reply to that one quote above. It is in no way intended to be a statement on the case in question or a person's rights under the current system.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 1:02 PM by B.Rodman
Let me see if I’m right, say I buy a copy of Vectorworks or any other program for $1,700 then a few months later buy the upgrade to the next version for $495.

Now some how it OK for me to sale my old copy of the software for $1,000 or maybe more on eBay.

Sound like real deal to me.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 5:47 PM by Sanji Himura
You are all missing the bigger picture here. What if Autodesk would have sued Cash American Pawn, or, god forbid, the RIAA would have sued Half Price Books for selling used CDs just because they are not getting the bigger piece of the pie?

The whole issue at point here is Autodesk using a feature on Ebay that is supposed to protect copyright holders. Does Autodesk own the copyright to the program in question? Obviously, yes, however they used a feature to shut down a seller that has every right to sell things that he doesn't use, need or whatever. It is also clear that Autodesk is trying to control a contract of a copy of a program beyond the first use. I would not be surprised that he does get millions out of Autodesk for misuse of copyrights.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 7:29 PM by Evan Yares
"You're confused, one doesn't need a license to use or sell a legitimate copy of software."

I'm not confused at all... because you're right. 17 U.S.C. § 117 (http://www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000117----000-.html) of the US Copyright Act specifically provides rights to copy a program (that is, into memory, or onto disk) "an essential step in the utilization of the computer program in conjunction with a machine..."

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 8:04 PM by Evan Yares
> I have to take issue with the following (quoted) statement:
> "“If companies can contract out of first sale or fair use,
> then the copyright system is replaced by private contracts.
> Even if that were a good idea, there is no way for consumers
> to opt out.”"

Is it is good public policy to allow consumers to contract away their legal rights? And, in the specific case of click-through software licenses (which, under California law, are procedurally unconscionable to start with), is it appropriate that an consumer, with only limited understanding of the law, be held to substantively unconsionable terms drafted by teams of million-dollar per year IP attorneys?

(No, it's not a rhetorical question.)

The consumer is in a very unbalanced negotiating position. I have a friend who has been trying for several years to get answers regarding the terms of an important software license. The company refuses to answer him -- and just has its lawyers send him threatening letters.

The beauty of Vernor v. Autodesk is that it's clean, and doesn't have to address these issues. There are no problems of of copyright or license violation, and Vernor has done nothing that could cause him to be painted as a "bad guy." There's little that Autodesk's attorneys can do through discovery or motion practice that would make things painful for either Vernor or Public Citizen.


# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/26/2007 9:44 PM by matt
I would venture to guess that first copy only allows the sale or resale of said first copy. Although the right to produce a copy for archival purposes is protected, I can't imagine sale of said copy can be allowed. I would think the same protection would apply to "obsolete" versions, supreceded by upgrade priced current versions. Seems fair those would no longer be first copies eleigible for sale.
Likewise, it seems that AutoDesk et al absolutely push the limits with policies that limit the ability to sell the first copy of a spare seat or license without punitive fees imposed by the publisher.
I suppose there might be a question of acquisition in Vernor's case, but if he can document first copy, he should win.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 4:41 AM by Michael Wagner
I use AutoCAD and so am a bit familiar with their licensing practices. This all gets easier to analyze when you know the history a bit. Autodesk, for a while, sold AutoCAD licenses with a dongle (a piece of hardware containing some encrypted magic sequence that could be interrogated). If you bought a multi-seat license, you got a multi-seat dongle (I have no idea how that worked - I imagine the sequence said "I'm good for 3 copies" or whatever).

What they were trying to enforce is, if person A sold his copy to person B, then A couldn't run it any more. Seems pretty reasonable to me.

The problem was, the dongles were a flop, both technically and because the legitimate buying public were offended by the assumption of dishonesty.

In a garage sale, it's hard to establish that person A no longer has the ability to run the software, which is, as I understand it, what Autodesk is trying to establish.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 5:07 AM by Tomato
This will be intresteing to see what happens, as this is a excerp from the AutoCAD EULA:
The installer must "accept" these terms prior to continuing to install.

If you can't sell it, then once it licensed, it is still "the property of the original buyer" even if the company or person is defunct??

3.2 Prohibited Actions. Autodesk does not permit any of the following actions and You acknowledge that such actions shall be prohibited:
3.2.1 -Use <bla bla bla>
3.2.2 -Reverse Engineering <bla bla bla>

3.2.3 Transfers. You may not distribute, rent, loan, lease, sell, sublicense, or otherwise transfer all or any portion of the Software or User Documentation, or any rights granted in this Agreement, to any other person without the prior written consent of Autodesk.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 10:31 AM by B.Rodman
I bet yares does not allow anyone to resell his software on eBay.
So why knock Autodesk, are is that just the type of person he is.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 10:52 AM by Randall Newton
B. Rodman -- I'm sure Evan Yares will be by shortly to defend himself. Your comment tells me you don't know Evan very well. What software would he be selling?

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 11:12 AM by Wendall Cada
If what Autodesk is doing was legitimate, then every time a company was sold, the new owner would have to repurchase all software again, etc, etc. It's just idiotic to think that this is in any way a good idea. Apply this model to the art world and see how far your arguments for Autodesk get you. This is yet again an example of a company abusing people's rights with a bad piece of legislation, aka DMCA. Even more frustrating is the fact that most people see software as some mysterious black box, so removing rights to the contents of the box may seem natural.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 12:42 PM by B.Rodman
Randall Newton -- you are right I should have said.
I bet yares would not allow anyone to resell his software on eBay if he had any software to sell. So why knock Autodesk, are is that just the type of person he is.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/27/2007 1:56 PM by Popper
There seems to be some sort of confusion about what actually happened with the case.

If I understand it correctly, the Plaintiff bought the software at a garage sale and then tried to sell it in eBay. The software being sold was not a copy but the original software. It is unknown who the original purchaser of the software is, whether they kept copies or whether they still have the software installed on their system.

Apparently Autodesk has quite a substantial user license for their software, which includes an agreement by the purchaser that they may not re-sell the software. This goes directly against the "first sale" doctrine of the copyright laws, which basically says that a purchaser of copyrighted material may sell that material to someone else without permission or grant from the copyright holder; e.g., you do not infringe on the copyright when you sell your Harry Potter book or your old Who record album.

However, the primary question in this case should be - does the user/purchaser agreement entered into by the original purchaser apply to a subsequent purchaser who buys the software at a garage sale ? And we might add that we do not know exactly how many hands this software passed through before it got to the garage sale.

First, in contract doctrine, there is no "privity" between Autodesk and Vernor. There was no accord, offer, acceptance, consideration etc., etc.. Therefore, I find it a stretch to hold Vernor to any contractual agreements that Autodesk may have had with the original purchaser. This will be a good test case and may have applications to OEM software that is acquired through a chain of ownership.

Second, if a court could find that Autodesk had been harmed by an actionable breach of the original purchase agreement/contract, who is liable ? It couldn't be Vernor as he is not a party to the contract. Autodesk's remedies should be limited to enforcement against the original purchaser, not a subsequent bona fide purchaser.

Third, as a matter of public policy, should private contracts be permitted to contain agreements that make void or run contra to Federal Laws and policies ? The short answer is no. But the courts will have to weigh the competing interests in this case.

Autodesk et al are trying through private contract to create a new paradigm for the commercial stream of intellectual property, and it is running afoul of existing doctrines and exposing novel interpretations and situations to be litigated.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/28/2007 5:15 AM by Robert

To many times it seems as though software companies do more than simply push the line of legality, they have no problems trashing it at their leisure. But that is not limited to software companies only.
However eBay at the same time, is one of the biggest problems when it comes to their own VERO program.
While I have no issue with a legitimate company, stopping someone from selling what is obviously copied or pirated versions of software, music, movies, jeans, art, et al; I do have a problem where eBay and companies like eBay allows 'just anyone' to submit a VERO or VERO type claim, without any real proof what-so-ever of the true ownership of that copyright.
I am an artist. Been an artist in one medium or another most of my life. From pen and paper, to tattooing, to digital design. And I do sell a lot of my original design artwork on eBay, and a site called CafePress.com.
While eBay does have a so-called system in order to 'try' to defend yourself from the average Joe-Shmoe trying to screw his competition by throwing out false VERO's, which sometimes work and sometimes do not, CafePress.com on the other hand, has NO such policy.
Many, many times I have had CafePress yank one of MY ORIGINAL idea designed artworks, because some numnut would send an email 'claiming' I was violating their copyright. And even on the occasion's I would waste my time argueing with CafePress, and even when they would expressly tell me they did NOT agree with the so-called copyright holder and his claim, CafePress would still NOT allow MY artwork on the site. Only thing I would be given from CafePress would be a basic contact to the person claiming to be the holder and that I would have to contact that so-called copyright holder. Which I have yet to see a single one respond back to me.
And all of this was even with absolute proof that I personally created a design, in at least one case, over 25 years ago. But some idiot gets to come along, send a bogus claim or email, to eBay, CafePress, or whoever, and the small legit businessman like myself, once again gets the shaft.
So, you go Vernor. Get Autodesk, eBay and squeeze them till it hurts. Then one more time, for me.
Robert

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/28/2007 6:01 AM by Carol
I agree that everyone should have the right to resale something that they have purchased. This has happened to me with some figures and the VeRO program is flawed in that they do not give the seller any rights to give their side and the company will not reply to my emails stating the "first sale" doctrine. Also others can sell the same items and not be stopped. I feel that ebay also should be included in his lawsuit as they are wrong also. It would be great if everyone could afford to take their cases to court and get this all straightened out. Good Luck.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/28/2007 7:18 AM by John
The VeRO system itself is flawed. Anyone with a fax machine and an email address can claim that something for sale on ebay violates said person's copyright, trademark, patent or intellectual property. Once eBay receives a letter claiming a seller is in violation, they immediately take down the listings.

Seller has no recourse to explain their side of the story or prove that they are not in violation of any laws until they wait 15 days (or more) and file a counter claim. They then have to wait another 10 days to see if the claim is answered. If the seller relists items that eBay took down they are immediately suspended. After all is said and done, the seller can potentially lose a months income on a false report.

eBay's position is that they are just following the law. They will not talk to you and answer most questions with one of their famous canned emails. If you want to see some examples and get further detail, google tabberone who is an eBay seller that has successfully challenged eBay and many Vero claims.

# re: Watchdog Agency Public Citizen Agrees to Represent eBay Seller Vernor in Suit Against Autodesk

9/30/2007 11:11 AM by Popper
It probably is not fair to critize eBay's VERO program and how it operates becuase their VERO program follows the Federal laws regarding take-downs. I suppose like everything else eBay touches they had to brand it and so they named it the "VERO" program.

As a matter of Federal law, if eBay receives the proper notice to take down, eBay must comply or risk liability.

This system was brought about by our Congress to qwell the complaints of rights holders about the ease of which their rights were infringed on the internet and how expensive and time consuming pursuing every violation would be if they were forced to use the courts and lawyers.

In "balancing" the concerns of the rights holders and the public, Congress allowed the informal take down process BUT also allowed the informal counter-notice.

I suppose it does seem vexing if your material is taken down, but weigh this against witnessing your intellectual property being stolen in the vast and ethereal internet and not being able to act to protect it without spending a huge amount of time and money for each and every occurence.

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