## Facts

- Autodesk distributed AutoCAD Release 14 on CD–ROM subject to a Software License Agreement (SLA) that users had to accept before installation; users who declined could return the software for a refund.
- The SLA stated Autodesk retained title to all copies and granted customers a nonexclusive, nontransferable license.
- The SLA imposed transfer restrictions, including prohibitions on renting, leasing, or transferring the software without Autodesk’s prior written consent, subject to narrow conditions.
- The SLA imposed use restrictions, including limits on installation and simultaneous use, limits to internal business use, and prohibitions on reverse engineering and related activities.
- Cardwell/Thomas & Associates (CTA) acquired multiple Release 14 packages under the SLA, later upgraded, and sold the Release 14 copies to Timothy Vernor as part of a sale of office assets despite the SLA’s transfer limits.
- Vernor resold the copies on eBay; Autodesk sent DMCA takedown notices that removed listings and led to a temporary suspension of Vernor’s account.
- Vernor sued for declaratory relief that his resales were noninfringing and asserted related statutory and misuse theories.
- The district court ruled for Vernor on summary judgment, concluding CTA was an “owner” of the copies and that Vernor’s resales were protected by the first-sale doctrine and the § 117 essential-step defense.

## Issues

1. Whether CTA received AutoCAD copies as an “owner” of the copies or only as a “licensee” under the SLA for purposes of the Copyright Act.
2. If CTA was not an owner, whether Vernor could rely on the first-sale doctrine, 17 U.S.C. § 109(a), to resell the copies.
3. Whether § 117(a)’s essential-step defense was available where the recipient was a licensee rather than an owner of a copy.

## Decision

- The Ninth Circuit reversed the summary judgment for Vernor, vacated the district court’s rulings on §§ 109 and 117, and remanded.
- The court held Autodesk’s direct customers, including CTA, were licensees rather than owners of their AutoCAD Release 14 copies.
- Because CTA was not an owner, Vernor could not invoke § 109(a) to justify resale of the copies.
- For the same reason, § 117(a)’s essential-step defense was unavailable, as it applies only to an owner of a copy.

## Legal Principles

- A possessor of a copyrighted copy is not necessarily its “owner” for purposes of § 109(a) and § 117(a).
- In the Ninth Circuit, a transaction is treated as a license (not a sale) when the copyright holder:
  - specifies the user receives a license,
  - significantly restricts transfer, and
  - imposes notable use restrictions.
- Contract terms reserving title, limiting transfer without consent, and restricting installation and use support licensee status even when the user pays a one-time fee and retains the physical media.
- The first-sale doctrine, 17 U.S.C. § 109(a), protects disposition only by an “owner of a particular copy,” and downstream recipients cannot obtain § 109 protection through a transferor who was merely a licensee.
- The essential-step defense, 17 U.S.C. § 117(a), is limited to an “owner of a copy” and turns on the same ownership inquiry relevant to § 109(a).

## Conclusion

The Ninth Circuit held that Autodesk’s SLA created a license relationship rather than transferring ownership of AutoCAD copies, defeating both first-sale and essential-step defenses for downstream resale and requiring further proceedings on remand.


Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010)