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Autodesk case tests whether software can be resold

An eBay trader is taking software publisher Autodesk to court in the US over his right to sell on software he bought in a $10 million battle over how far a licence can control a customer's use of software.

If the case happened in the UK or elsewhere in Europe the man would not have a case and would have to stop selling the software, according to a software licensing expert.

Tim Vernor sold legally-bought copies of Autodesk software on eBay until Autodesk sent repeated claims of copyright infringement to the online auction house, which suspended Vernor's account.

Autodesk claimed that Vernor's sale of second-hand copies of the software violated the terms of the software licence, and that his sale of copies on eBay constituted copyright infringement. Vernor says that Autodesk used the Digital Millennium Copyright Act (DMCA) to have his sales removed from eBay's site on five separate occasions.

Vernor has sued Autodesk for $10m in punitive damages, plus $7,000 in lost sales. He claims that Autodesk did not take the right action when it sent notices to eBay. He also says that he has the right to trade the software under the principle of 'first sale', which in US law says that a legitimate buyer of software can sell it on with or without the copyright holder's permission.

The doctrine of first sale underpins the sale not only of second hand software, but of used CDs, DVDs and computer games.

It formed part of the 1976 US Copyright Act. "The owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord," says the law.

No such law applies to software licences in the UK, according to technology law expert Jon Fell of Pinsent Masons, the law firm behind OUT-LAW.COM.

"If I sell some software it will have a licence with it. The licence is a contract between you and the owner of the software. It will set out what you can and can't do," he said. "Some say you can move it around easily, others say you can't change it without their consent."

The same is not true for music or even computer games in the UK and Europe, said Fell. These are sold as products, not as licences. "They are not restricted in the same way. With DVDs and records there would be a right to sell it on. There the exhaustion of rights principle applies, preventing them from objecting to a resale. It is not a licence agreement."

In fact it is not clear cut in the US whether or not software is a product or not. Some states have ruled that it can be licensed, and that those licences can impose conditions such as that which Autodesk is seeking. Others have said that software must be sold as a product, and that first sale doctrine does apply to it.