Is Software Licensed or Sold?

by Craig Buckler

Selling software is a legal minefield. When you purchase a digital product, you’re not buying the CD/DVD and packaging, but a license to use the software. The license is a legally-binding agreement that determines how you may use that product. If software was “sold”, you would be the legal owner and could do what you wanted, e.g. install it anywhere, disassemble it, give it away or anything else that didn’t contravene copyright laws.

However, what happens when you no longer need that product? Is it possible to re-sell your software license to another party in the same way that you can sell a second-hand book, music CD or movie DVD? It’s a legal grey area which has been highlighted by the case of Vernor v. Autodesk, Inc.

A SitePoint forum post by Dan Schulz describes the full legal arguments in detail. In summary, Vernor attempted to sell legal copies of AutoCAD on eBay but had his account suspended following intervention by Autodesk Inc. Vernor sued Autodesk in federal court:

• Vernor claimed he purchased the license from vendors who must have been the legal owners of the software. Therefore, the ownership transferred to him on purchase.
• Autodesk contended that ownership was never transferred, Vernor’s sale infringed copyright, cited that its license was a “computer software agreement”, and the industry normally restricted ownership transfers.

The court disagreed with Autodesk and felt it had “little competent evidence of software industry practice” presented before it. The ruling therefore allows the licensed party to transfer software ownership and the copyright owner has no say in the matter. Software companies are selling a product that an end-user owns; if they receive the full value up-front, they cannot control that software once it’s in the stream of commerce.

Autodesk may yet appeal, but at least a dozen copies of AutoCAD are currently available on eBay.com.

Could the ruling be good news for web developers? End users rarely purchase web applications or “own” the software — they subscribe to a service. Many software companies will be re-considering their software distribution options.

[via Sitepoint.com]