Evan on Engineering Software

Randall Newton recently wrote The Man Who Dared to Sell AutoCAD R14 on eBay, about Tim Vernor, an eBay seller who is suing Autodesk over the right to resell original copies of old versions of AutoCAD.  Owen Wengerd has the court documents on his website, www.adskvoda.com.

The issues at hand in this case are not unique to Autodesk or AutoCAD.  The Electronic Frontiers Foundation filed suit against Universal Music Group a month ago, in a case that deals with many of the same issues.

Following is my understanding of the background of the case.  I will admit ahead of time that I'm going to make some presumptions, since I've not seen the relevant ebay listings, and don't have any inside information as to who did exactly what.  But I think most of my presumptions are reasonable.

Tim is in the business of selling products on eBay.  He bought an original copy of AutoCAD R14 -- presumably including the documentation and disks -- from a third-party, then offered it in an auction on eBay.  Autodesk filed a "Notice of Claimed Infringement" with eBay, whereupon eBay cancelled Tim's Auction.  Tim appealed the cancellation with eBay, and after Autodesk didn't respond to the appeal, eBay reinstated the auction.  Actually, Tim went through this process five separate times over a two year period, with five separate copies of AutoCAD R14.  After the fifth time, eBay suspended his seller account, presumably because of too many notices of infringement -- even though Autodesk never followed up to stop the auctions after Tim appealed.  Although Tim was ultimately able to get his account reinstated, he decided to sue Autodesk -- the only recourse he had available to stop them from filing further notices of infringement, and endangering his ability to make a living.

When Autodesk filed its notices of claimed infringement with eBay, it would have almost certainly used eBay's electronic form, which has two significant sections:

• The first is a statement, signed under under penalty of perjury, that they have "a good faith belief that the listings identified... offer items or contain materials that are not authorized by the IP Owner, its agent, or the law, and therefore infringe the IP Owner’s rights."  

• The second is an section where they must identify, from a predefined list, the legal basis for the notice.   In this case, the only relevant choice would have been the following: "3.1. Software offered for sale in violation of a license."

Seems pretty clear cut, doesn't it?

Actually... it's clear cut enough that Autodesk may be in trouble here.

Tim was offering items that were genuine, original, and came from Autodesk.  He wasn't offering fake goods, or unauthorized copies.  The box, the documentation, and the disks were all the real thing. I presume that he was not offering his own  license to use the software (which would not have been authorized by Autodesk), but was just passing along whatever was in the box.

You might counter that Tim was violating the AutoCAD R14 license agreement by selling this package.  But Tim wasn't subject to the license agreement.  He'd bought the package from someone else.  Since he didn't install it (I hope he didn't), there was never a contract formed between him and Autodesk.  

It might help to understand this if I explained that there is a difference between a software package, and software in the abstract.  A software package may consist of a number of components, including packaging, books, documentation, serial numbers, activation codes, and disks.  Software in the abstract is just the set of instructions -- effectively a blueprint -- separate from physical manifestation (The Supreme Court made this a lot clearer a few months ago, in AT&T v. Microsoft.)  Tim wasn't selling software in the abstract.  He was selling a box, some books, documentation, and disks.  All tangible goods.

In most parts of the United States, when you go into a computer store, and plunk down your hard-earned cash to buy a software package, the terms of that purchase are subject to an important law: The Uniform Commercial Code.  Here is the text of the California Commercial Code. Lawyers love to argue about whether software in the abstract is a good or a service, and thus whether it's subject to article 2 of the UCC.  I suppose the argument is interesting if you order the software electronically, and its delivered by the internet, as a series of pulses of light across miles of fibre optic cable.  The argument is a little less interesting with AutoCAD R14, which comes in a box you can put on the shelf.  Try and tell Best Buy stores that all those boxes of software they have sitting around aren't "goods" under the UCC. 

Another important law relating to this matter is the US Copyright Act, 17 U.S.C. § 109, which gives owners of a legal copy of a copyrighted thing the right to sell it.  This is called the first sale doctrine.

The typical response from software vendors about the first sale doctrine is to point out that their software is licensed and not sold.  Thus, the license trumps the first sale rights provided under copyright law.  This argument holds water -- if the customer has actually assented to the license.  Until that assent, there is no contract formed.  Adobe tried this tack a few years ago, and lost -- making case law in the process.

In Tim's case, I see a couple of interesting potential twists.

• The person who signed the eBay notice of claimed infringement, Andrew S. Mackay, likely had no good-faith basis to believe that the goods and materials offered by Tim were not genuine, and thus not authorized by Autodesk.  Nor did he apparently have any basis to believe that a license agreement existed between Tim and Autodesk which would have limited Tim's statutory rights.  So, in short, he likely perjured himself.

• If it's Autodesk's policy to send notices of claimed infringement on many AutoCAD products that are being listed on eBay, without first checking to see if there exists a license agreement between the seller and Autodesk, then it gets more interesting... because it shows a pattern of potentially fraudulent behaviour.  This could open up RICO and class-action claims.

• Autodesk might try to show that Tim, in the process of acquiring the AutoCAD R14 packages, induced the sellers to violate the terms of their license agreements with Autodesk.  Might be hard to do, if he bought the packages in the normal course of business. (It could be even more fun if he bought them through a bankruptcy trustee sale -- since a judge would have already ordered their sale.  It could get complicated.  Autodesk might first have to establish that there was a valid license agreement in effect for each package, then it would likely have to defend the conscionability of any clauses which "took back" ownership of disks and documentation.  Autodesk's recourse would more than likely be against the original customer, not Tim.

Who knows how long Tim wants to ride this?  If he's serious, he's going to probably need to file a second ammended complaint, to clean up some of his claims and requests for relief.  I think he ought to contact the Chilling Effects Clearinghouse, to see if he can get high quality representation.  Autodesk always hires top-gun lawyers -- I'd not want to go up against them pro se.

In any case... I'm not a lawyer.  I can't give Tim any legal advice.  But I can watch to see what Autodesk has to say in responding to his complaint.