This case tests whether the "first sale doctrine" in copyright law -- which makes it legal to resell, lend, or give away books, CDs, DVDs, and software that you own -- will survive in the digital age of "licensed" content.

Timothy Vernor is an online software reseller who tried to auction four packages of Autodesk's AutoCAD software on eBay. Autodesk threatened Mr. Vernor with a copyright lawsuit, claiming that its software is only "licensed," and never sold. With the assistance of the public interest litigators at Public Citizen, Vernor filed suit in Seattle against Autodesk asking the court to clarify his right to resell the AutoCAD software packages. He prevailed before the district court in 2009, prompting Autodesk to appeal.

Autodesk's position is that its software is "licensed" rather than sold, and thus the first sale doctrine doesn't apply (it only applies to copies you "own " not those you merely lease). If that's right then it would violate copyright law lend or resell it without Autodesk's permission.

In an amicus curiae brief filed with the court of appeals EFF—joined by the Consumer Federation of America the American Library Association Association of Research Libraries Association of College and Research Libraries U.S. Public Interest Research Group and Public Knowledge—argued that copyright owners should not be able to trump the first sale doctrine by using a few "magic words" in a "license agreement."

Sadly, in a September 2010 opinion, the Ninth Circuit Court of Appeals agreed with Autodesk. The Court held that

a software user is a licensee rather than an owner of a copy where the copyright owner, in the documents included with the software packaging, (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.

In other words, the right “magic words” can turn unsuspecting buyers into renters, which means they can’t claim the longstanding protections owners normally get, such as the right to resell their legally purchased software when they are done with it. This decision is deeply disappointing, and it is bad news for consumers.

Fortunately, Vernor v. Autodesk might be limited to the specific context of software licenses. In UMG v. Augusto -- a case decided around the same time as Vernor -- the same three Ninth Circuit judges upheld the first sale doctrine in a case involving the resale of music CDs.