Federal Court Slaps Down Autodesk Arguments, Favors eBay Seller

" … Autodesk does not explain how a nontransferable license can bind subsequent transferees.” "

Just curious - how can there be a subsequent transferee if the license is not transerferable?

The author would do well to brush up on the significance of a summary judgment motion. Summary judgment motions are brought (and denied) in a majority of cases. They are designed to get rid of cases for which there are no facts in dispute and the law is settled -- a denial of a summary judgment request means nothing. All a denial means is that the case can proceed as it was before. Unfortunately Slashdot picked this up so the ignorance is spreading like wildfire. Great work.

My thoughts exactly, if the license is not transferable technically isn't anyone installing the software after the initial purchaser installing and using it without use of the license agreement and hence using it illegally? I'm by no means an expert but that was just my understanding of the whole point of a license agreement.

>>> All a denial means is that the case can proceed as it was before.

Incorrect. What this means is that there is now a ruling on the books that certifies the right of resale for software, regardless of a license that states otherwise. Should such a case come up in the future, this decision will act as precedent regardless of whether or not Mr. Vernor wins the case.

Personally, I'm rooting for Mr. Vernor. :-)

This does NOT mean there is a ruling on the books that certifies the right of resale for software. This ruling means that there is an issue of fact and the case proceeds. You generally can't even appeal some summary judgment decisions -- as I said it is a non-event. Go lookup summary judgment in the context of US federal courts.

Also, I don't know why you'd root for Mr. Vernor -- unless you believe software licenses (contracts entered into between two willing, free parties) should be superseded by the government. The US constitution protects the rights of 2 parties to freely contract.

> software licenses (contracts entered into between two willing,
> free parties) should be superseded by the government.

Shrink wrap licenses are not contracts. They are an attempt by software companies to restrict your rights AFTER the sale has been completed. If this where not the case, the "license" agreement would be on the OUTSIDE of the box.

If only software licenses were "contracts entered into between two willing, free parties" I would be a lot happier with them.

In reality, while there may be a freely entered contract between me as purchaser and a software retailer as vendor (I pay them money, they give me a shrink-wrapped box containing software), no such willing, free exchange typically happens between user and software company.

User inserts CD, an installation program starts up; at one step in an installation process, the user is asked to click a box indicating that they have read and agreed to abide by a license that has been displayed on screen. That license was not available to the user prior to purchase, and in most cases, the users has no ability to obtain a refund of the purchase price if they are unwilling to claim to abide by the license-- no matter what outrageous terms are written in the license.

As a result, there is no opportunity for discussion or negotiation-- the vendor and the software company have the user's money, and the user has no real choice but to agree to the previously secret license. It is not surprising that most users do not bother to read software licenses, and that most treat software as a product for which the same sorts of common sense fair use provisions should be in force.

Imagine if some books were sold encased in shrink-wrap-- after purchasing the book, the user could open the shrink wrap, to discover an End User Licensing 'Agreement' with terms that only one person could read the book, it could not be transferred to another reader or sold to a used book store, and that it could not be reviewed without written permission from the publisher. Provisions similar to these exist in many software EULAs.

Why should software producers be protected by licenses more restrictive than those held by copyright holders of other printed or creative material?

Well, if software licenses were contracts which people entered into freely and willingly, maybe you would have a point. Unfortunately, they are not. You cannot even read the contract until you have opened the product, and by opening the product in most cases you have voided your ability to return the product. Thus, you have either completely wasted your money, or you are compelled to accept the terms of the contract and proceed and install the software.

SteveB, those of us who have been following the SCO debacle on Groklaw have become intimately familiar with the purpose of a summary judgment: to dispose of the elements of a case where there are no facts in dispute. Where there are no facts in dispute, the judge makes a decision on matters of law. The summary judgment in this instance means the judge has concluded that the law dictates the First Sale Doctrine applies to software. Any subsequent cases brought in this jurisdiction can use this summary judgment decision to immediately dispose of cases claiming copyright infringement for reselling purchased software.

That is a decision in this jurisdiction that all lower courts must honor.

>> That license was not available to the user prior to purchase, and in most cases, the users has no ability to obtain a refund of the purchase price if they are unwilling to claim to abide by the license-- no matter what outrageous terms are written in the license.

Now *this* is an interesting point. I read the decision in this case, and what AutoDesk tries to argue is that Mr. Vernor is somehow bound by a license -- he didn't even clickthrough it, however! The judge rejects this silly argument out of hand. They call this relationship "privity of contract" -- and here, there is none between Mr. Vernor and Autodesk. So I don't know how Autodesk can take issue w/ Mr. Vernor, who is merely reselling a disk (which the ct. says is NOT a copyright violation). So, seems like AutoDesk will have to raise its beef only with whoever purchases and installs the software... (if we can surmise a final decision based on this intermediate ruling).

A software license isn't really a contract entered by two willing parties. Especially in this case, Mr Vernor supposedly purchased the software at an auction and attempted to resell them on EBAY to be stopped by autodesk.

However, there are situation where the license's restrictive and unacceptable nature isn't known until after the software has been opened and the warning or license agreement is presented during the install or on the first run of the program. At this point store won't take the software back, the manufacturer's won't take it back, the person is stuck with either attempting to get some use from it or paying for software then can't use because of a license agreement that won't agree to. That isn't exactly a situation of contracts entered into between two willing, free parties.

I object to software license because they don't meet the minimal obligations to *be* a contract.

Per Wikipedia there are five requirement to a contract (My business law book is at home, but I'm pretty sure it lists six) "In common law, there are five key requirements for the creation of a contract. These are offer and acceptance (agreement), consideration, an intention to create legal relations, Capacity and Formalities. In civil law systems the concept of consideration is not central. In addition, for some contracts formalities must be complied with under what is sometimes called a statute of frauds."

For a contract to be formed, offer and agreement must happen *before* consideration is passed between the parties. I can't sell you a bag of popcorn, then expect you to be legally bound to give me your car because the writing on the inside of the bottom of the bag says you should.

The vast majority of these "licenses" fall into that range - I bought the CD, I *already* own all the software on it under the law. If, upon installing it, I have to click a license, it's too late. You accepted consideration for your software - I already own it. You can't grant me use of the software as consideration then, because you already accepted my original terms for a sale under the normal standards of U.S. Law.

Unless of course, you feel my right to enter a contract should be superseded by a software license I had no opportunity to review beforehand.

Jonnan

Shrink wrap licenses, of the type Mr. Vernor was dealing with, have been found unenforceable (ProCD, Inc. v. Zeidenberg, 908 F.Supp. 640 (W.D. Wis. 1996)) before because they are concealed in the box and not available to the buyer at the time of purchase.

Autodesk is abusing the DMCA. As Mr. Vernor points out in his suit, the DMCA takedown provision was meant for copyright infringement not contractual disputes. Violating a contract is not the same as copyright infringement.

Its also interesting to note that as a simple reseller (Mr. Vernor never installed/used the product himself) hes also neatly dodged that 'by installing/using this software you agree' clause so many EULAs have.

Autodesk is trying to hold Mr. Vernor to a licence hes never even SEEN.

He hasn't even had a chance to decline the contract, nobody has show him one yet!

StormReaver wrote: The summary judgment in this instance means the judge has concluded that the law dictates the First Sale Doctrine applies to software.

This has never been in dispute. I don't think you'd even need to cite to it -- the FSD applies to all copyrights (correct me if you think otherwise). I also don't think it is disputed that, by contract, one can contract away whatever FSD rights they would have had. THIS case is interesting because it is in the middle -- software for which there is a sale, but no license to enforce against the distributor.

The case is still in the trial court - only the rulings of a Appeals are binding. Summary judgments can be appealed, but are almost always upheld. Like someone said, summary judgement only means that "No material issue of fact exists and judgment may be made as a matter of law." (A phrase people who take any US bar exam have engraved upon their bodies.

A motion for summary judgment is a required pre-trial tactic. If al attorney doesn't automatically ask for it the attorney risks a malpractice (pursue the interest of the client zealously) suit. They (we) also ask automatically for a favorable judgement at the close of opposing counsel's case. That also is usually denied.

It would have been significant had the judge allowed summary judgement, but judgment being denied is no big deal. He also wants the parties to continue to settle out of court. Judges like to avoid in-court decisions because of the Law of Unintended Consequences.

SteveB please stop smoking crack. You can't enter into a contract you've never seen.

>SteveB... You ocan't enter into a contract you've never seen.

Totally wrong. Unconditionally, absolutely, without possibility of controversy wrong. In fact, virtually all contracts are unseen by either party.

When you order food at McDonald's and the clerk hands you your food, you don't get to treat it as a gift just because there is no explicitly stated offer and acceptance. It's an implicit contract established through, among other things, course of dealing (see UCC for domestric contracts and CISG for international contracts).

If I get hit by a bus and rendered unconscious, a passing surgeon whom I have never met can use his medical skills to revive me and then bill me under various contract theories. That is well established law even though it is obvious that I not only did not actually agree to a contract but it would actually be impossible for me to agree. And even if I had explicitly stated in the past that I would never willingly enter into such a contract, it will be upheld anyway as long as the surgeon had no reason to know of my preference to avoid the contract.

Courts can also create contracts where there is no existing "contract" (as you understand the term) under a theory such as unjust enrichment, which basically means that if the court finds that the interest of justice would be served by fabricating a contract between two parties then it just might do so.

As to whether there's a contract here, what the terms are, and how they might be enforced I express no opinion. However, the idea that you can't be bound by a contract that you've never seen is ludicrous on its face.

I believe that Congress passed a law about ten years ago making shrink-wrapped license contracts enforceable by law with certain provisions. I think it was named the Win95 Law or the Microsoft Law since it was designed to end lawsuits claiming such contracts were not valid. The law may not be applicable to this case however.

Congrats to the Seattle folks. Still sounds like a good reason to investigate the Open Source versions that can import and export AutoCAD formated files. I have an engineering friend that has run his small business on Linux and OSS CAD that can read Acad files.

The line of reasoning could legalize software piracy.

A point worth noting is this: if I buy software and don't open the box, it is impossible for me to agree to a shrinkwrap license inside it or its software. If I never install the software, the question of the legal force of shrinkwrap licenses is totally moot. In this case, the man is reselling software, not installing it on his own machine, so it's a no-brainer for the judge.

Law Guy:

Perhaps you are not aware of the meaning of "contract". There may be special circumstances where the law dictates that "agreement has been reached" even if it really hasn't, but in most normal circumstances this just doesn't happen. This particularly doesn't happen in the case at hand, where the shrink-wrap license (maybe) binds the *software itself*, not the *box of CDs*. The examples you give are ones where no contract exists -- perhaps you could find some better ones?

con·tract (kntrkt) n. 1. a. An agreement between two or more parties, especially one that is written and enforceable by law.
- http://www.thefreedictionary.com/contract

Perhaps you meant to say that we can be bound by laws we don't know, which is true, but as for your claim about entering into agreements that we don't know about (and thus can't possibly agree to), it's simply false by definition.

YDX wrote: "The line of reasoning could legalize software piracy." that's an extreme - it's just that if I bought something and never used it - why can't I sell it to someone else who wants it? Even if I used it and now I bought a newer version - why can't I sell the old one or give it away? I can do that with a car . . . a boat . . . a tv or anything else - I even sold my old CDs and tapes to people . . .

This is a company overstepping their bounds trying to claim "piracy" but it is nothing of the sort. If anything, this should allow users with boxes full of old software an easier way to dispose of it besides the landfill.

Lawguy: When you order food at McDonald's and the clerk hands you your food, you don't get to treat it as a gift just because there is no explicitly stated offer and acceptance. It's an implicit contract established through, among other things, course of dealing (see UCC for domestric contracts and CISG for international contracts).


This is verbal contract, apart from being governed by sales of goods and services acts which in itself sets up a number of rules, where food order and reciprocal acceptance of the order together with the McDonlds staff entering the amount of consideration on their till forms the agreement part. Your acceptance of the terms (the imlplied delivery of advertised product in return for consideration) forms a contract with McDonald, albeit verbal such.
If McDonalds don't deliver, they are in breach, and you have a bunch of rights.
If you don't pay the consideration, McDonalds don't have to deliver.

Same thing with the doc saving your life after walking under the bus.
The contract is formed - i save your life, you pay me for my efforts, in lack of better knowledge and from common practice and reasonable assumptions taken the circumstances in the case, that it can be assumed to be in the best interest of yours (staying alive), while you are unable to make a decision or provide the information that you are NOT to be revived. On the other hand, if you don't stay alive, and the doc fails to uphold his part of the contract, you don't have to pay him the consideration...

It is therefore not the best example to describe what is at hand - the dealing with a unilateral contract, or one where one side dictates the terms, and that the mere possession of the goods would form a binding contract with undisclosed terms.

Someone a bit further up put it quite elegant - the popcorn sale analogy, where there's a note at the bottom saying that by opening the popcorn bag, you agree that the deeds to your car is now mine.

This is a unilateral "contract", and as such not valid, as it lacks the "agreement", and where the initial agreement and consideration has already been passed.
In the sale of a software, you agree to buy the software for a specific intended use, as expressed on the box, and you pay the consideration for that use.

You now have a contract formed based on the agreement between the supplier (not the same as the agent or retailer) and the purchaser, where the supplier agrees to that the software can be used for, and in line with the terms of what is expressed on the outside of the box, and the buyer accepts these terms (agreement) by opening up his wallet and paying for the goods (consideration).

Anything thereafter, is a "popcorn bag case", where the buyer is supposed to follow additional rules not agreed to at the agreement phase.
Rules such as copyright, trademarks, patents and so on always takes precedence as it is the law, and may (or may not) limit you in some ways as to what you can do with what you bought, but the mere notion that a unilateral contract can ultimately be enforced because of it's mere existence, is a wild fantasy and most software companies wet dreams...

Such "contracts" fails on the basis of the lack of agreement, taken that consideration has already been passed. There is a strict order that has to be followed in the formation of a contract, unless there is a case of emergency where any legalities has to be sorted later, in the favor of saving life or minimizing damage.

In fact, if such "contracts" were enforceable, everyone, in every kind of trade would use them. Why is it then that a car manufacturer for example don't use shrinkwraps that states you can no resell the car, based on their design rights?
The answer is simple - there are no legal basis for upholding them.

The other thing is, no such contracts has been ultimately tested in court, and held as enforceable - on the contrary - in many countries, such contracts are deemed illegal and unenforceable, and only the parts of them that coincides with the already existing law is considered valid.

Lawguy:
MAN if it were true then I would produce something that stated in the box: By picking up this box you agree to buy this product.

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