Public Citizen

When Seattle resident Tim Vernor put a used copy of software for sale on eBay, the software’s maker, Autodesk, demanded that eBay cancel the listing. Although Vernor was selling an authentic, original copy of Autodesk’s software, the company pointed to a “license agreement” contained in the software’s box that prohibited anyone from selling or giving the software away. Vernor had purchased the software at a garage sale and had never agreed to abide by Autodesk’s terms, but the company nevertheless argued that Vernor’s failure to abide by the licensing terms infringed its copyright.

These kinds of abusive licensing terms are increasingly common and are bad for consumers. When a company prohibits resale, it eliminates the secondary market for used copies of the product. And with fewer copies on the market, competition is reduced and prices go up.

Vernor, however, refused to back down, instead repeatedly putting Autodesk’s software up for sale on eBay. Each time, Autodesk demanded that the sale be terminated, until its repeated claims of copyright infringement caused eBay to shut down Vernor’s account entirely. Vernor then filed suit and, represented by Public Citizen, argued for a ruling that he did not need Autodesk’s permission to resell its software.

Today, a federal court agreed with Public Citizen, rejecting Autodesk’s expansive claims of copyright infringement and holding that the company cannot prevent Vernor from reselling authentic copies of its software. The decision is good news for consumers and signals that companies cannot use a form contract to restrict competition and curtail consumers’ traditional right to resell products that are lawfully theirs.

The court’s decision and other documents in the case are available here.