Timothy S. Vernor v. Autodesk, Inc. The Future, or Demise, of the First Sale Doctrine and Essential Step Defense in Copyright

“[T]he owner of a particular copy... 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...”

“[I]t is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided: (1) That such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner....”

When a license agreement that (1) provides for a one- time payment and (2) does not require that copies be returned to the copyright holder, the licensee becomes an “owner” of the copy, despite severe use restrictions: “[T]he court cannot characterize Autodesk’s decision to let its licensees retain possession of the software forever as something other than a transfer of ownership, despite numerous restrictions on that ownership.”

“We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.”

“Whether the Ninth Circuit correctly held that the owner of a copyright in a work, by granting a limited license, can withhold ownership of particular copies of that work and thus deprive the public of: (1) The right to ‘sell or otherwise dispose’ of those copies under § 109(a) [the ‘First Sale Doctrine’] and (2) As to computer programs, the right to make additional copies that are essential steps in the program’s use under § 117(a) [the ‘Essential Step’ defense]?”

Sitting by Designation, Justices Mike Atkins, Douglas Grady, and Randy Moeller For Petitioner, Vernor: For Respondent, Autodesk: Mark WaltersParker Folse For the Amici: Brian Bodine