Vernor v. Autodesk

People and parties

Opinion author

Appeal2010

Plaintiff

v.

Defendant

Select a participant for details.

He bought the discs. Did he own the copies?

Timothy Vernor was selling used software, not manufacturing counterfeit copies. He had genuine AutoCAD Release 14 packages, and he had never installed the program or accepted Autodesk's software licence. Yet the Ninth Circuit held that his resales were outside the first-sale defense. The decisive transaction happened before he arrived: Autodesk had licensed the copies to its original customer, which could not pass ownership to him. [1, §§I.C, IV.B]

For a software reseller, a receipt can answer who paid whom while leaving the central copyright question unanswered. Under the court's software-licensing test, the original agreement can determine whether the buyer owns the copy at all. That classification affects both resale and the copying needed to install the program. [1, §§III–IV]

An office sale meets a software upgrade

Autodesk supplied AutoCAD Release 14 on CD-ROMs for computer-aided design work. Its customers had to accept a software licence agreement before installation, with a refund available if they declined. The agreement reserved title to the copies and restricted their use and transfer. [1, §I.A]

The copies central to the appeal came from Cardwell/Thomas & Associates, or CTA. In March 1999, Autodesk settled an accusation that CTA had used its software without authorization. As part of that settlement, it licensed ten Release 14 copies to CTA. The licence appeared in the settlement agreement, on the packages and during installation. CTA agreed to it. [1, §I.B]

CTA later upgraded to AutoCAD 2000, paying $495 per upgrade licence rather than $3,750 for a new licence. The upgrade terms required destruction of the previous software copies. CTA instead sold Release 14 packages to Vernor at an office sale, with activation codes handwritten on the boxes. The upgrade left CTA with old discs it had agreed to destroy. Those were the packages that reached the secondhand market. [1, §§I.A–B]

Vernor bought four CTA copies in April 2007 and listed them sequentially on eBay. Autodesk sent takedown notices; Vernor sent counter-notices; eBay restored listings when Autodesk did not respond. Repeated accusations eventually produced a one-month suspension of Vernor's account. He filed a declaratory-judgment action in August 2007 to establish that his resales did not infringe. [1, §§I.C–II]

Winning another round of notices would not give Vernor a lasting answer. He wanted a judgment he could rely on when listing the next copy.

From office sale to appellate ruling

1. March 1999

   Autodesk licenses ten Release 14 copies to CTA in settlement of an unauthorized-use dispute. CTA agrees to the software licence. [1, §I.B]

2. April–August 2007

   Vernor buys four CTA copies, offers them on eBay and files a declaratory action after repeated takedowns. [1, §§I.C–II]

3. October 2009

   The district court enters judgment for Vernor after granting summary judgment on copyright infringement. Autodesk appeals. [1, §II]

4. September 10, 2010

   The Ninth Circuit vacates summary judgment and remands, including for consideration of copyright misuse. [1, §VI]

5. January 18, 2011

   The Ninth Circuit denies rehearing. [4]

6. October 3, 2011

   The Supreme Court denies certiorari. [4]

Who owned the copy?

The issue was whether Autodesk's transfer to CTA was a sale of the software copies or a licence to use them. Ownership of a copy is distinct from ownership of the copyright: a person can own a book or disc without owning the right to reproduce the work. Here, even ownership of the particular copies was contested. [1, §III]

Two statutory defenses made that distinction consequential:

• Resale under §109(a). The owner of a particular copy lawfully made under the Copyright Act can sell or otherwise dispose of that copy without the copyright holder's permission. Mere possession does not supply that privilege. [2, §109(a), (d)]
• Essential-step copying under §117(a)(1). An owner of a program copy can make or authorize another copy or adaptation when it is an essential step in using the program with a machine and is used in no other manner. This addresses reproduction, including the installation copying at issue here. [3, §117(a)(1)] [1, §§III.B.2, IV.B]

The panel applied the same ownership analysis to both provisions. If CTA only held a licence, Vernor could not acquire title from CTA, and his customers could not acquire it from him. One classification therefore removed two defenses at different points in the resale chain. [1, §§III.B.2, IV.B]

Why each side thought the transaction mattered

Vernor: permanent possession looked like a sale

Vernor emphasized the transaction's economic substance: Autodesk received an upfront payment, imposed no recurring licence fee and allowed indefinite possession of the copies. He relied on United States v. Wise, a film-print case, to argue that the ability to keep the copy was decisive. He also invoked the first-sale doctrine's protection of resale and resisted treating restrictions in someone else's agreement as limits on his property. [1, §§IV.C, V]

The district court accepted the key precedent argument. It read Wise as establishing a first sale when the recipient could keep the copy, found that rule incompatible with later Ninth Circuit software cases, and followed the earlier decision. It granted summary judgment to Vernor on copyright infringement. [1, §§II, IV.A]

Autodesk: the restrictions defined what CTA received

Autodesk relied on the agreement's reservation of title, restrictions on transfer and limits on use. Its position was that CTA had never acquired the ownership that §109 required. The problem for Vernor therefore preceded any question about whether he personally promised to obey the licence. [1, §§I.A, III, IV.B]

The policy arguments pulled in opposite directions. Autodesk said restricted licences supported tiered pricing and helped combat piracy. Vernor and supporting amici stressed alienability, affordable used copies and secondary markets. The panel acknowledged those concerns but treated circuit precedent as controlling; it left changes to that balance to Congress. These were competing policy claims, not judicial findings that licensing necessarily lowers prices or improves welfare. [1, §V]

The three-part software-licensing test

The Ninth Circuit held that a software user is a licensee rather than an owner of a copy when the copyright owner:

1. Specifies that the user receives a licence;
2. Significantly restricts the user's ability to transfer the software; and
3. Imposes notable restrictions on its use. [1, §IV.B, PDF p. 17]

Autodesk satisfied all three. Its agreement reserved title and described a nonexclusive, nontransferable licence. Transfer or leasing required consent, and the software could not be transferred outside the Western Hemisphere. Use restrictions included geographical limits and prohibitions on modification, reverse engineering, removing proprietary marks and defeating copy protection. Noncompliance could terminate the licence. [1, §§I.A, IV.B]

The panel reached that test by reconciling Wise with MAI Systems, Triad Systems and Wall Data. Those software decisions had treated customers under restrictive licences as nonowners for §117 purposes. The panel read Wise as examining the whole agreement, with indefinite possession only one consideration. That reading removed the conflict on which the district court had relied. [1, §§III.B–IV.C.1]

The distinction is narrower than saying that every document headed “licence” defeats first sale. The test also examines substantive transfer and use restrictions. Equally, a single payment and the ability to keep a copy indefinitely did not, by themselves, establish ownership. [1, §§IV.B–C]

Vernor lost the defenses, but the case went back

Because CTA was a licensee, the court held that CTA could not convey ownership to Vernor. His resales infringed Autodesk's distribution right under the panel's analysis, and his customers could not use §117's essential-step defense for installation copies. Vernor's own failure to accept the licence did not repair the missing title in that chain. [1, §IV.B]

That does not mean an authorized licensee infringes merely by running software. A licensee's permission to make necessary copies comes from the licence itself. The court expressly distinguished that contractual permission from the statutory defense available to an owner. [1, §IV.B n.13]

Judge Consuelo M. Callahan wrote for the three-judge panel, with Judges William C. Canby Jr. and Sandra S. Ikuta. The disposition was to vacate Vernor's summary judgment and remand, expressly including consideration of his copyright-misuse defense. It was not an appellate damages award or a decision resolving that remaining defense. [1, cover, §§VI–VII]

The Supreme Court denied certiorari on October 3, 2011. That ended the request for Supreme Court review; it did not turn the Ninth Circuit's reasoning into a Supreme Court holding. [4]

Later cases show where the rule stops

Promotional CDs: a label could not do the whole job

In UMG Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir. 2011), the same circuit allowed resale of unsolicited promotional music CDs. UMG's restrictive labels did not establish a licence agreement with the recipients. The discs were sent without prior arrangements, were not individually tracked, and were subject to the unordered-merchandise statute. The court treated the distribution as a transfer of title and distinguished Vernor's software arrangements. [5, PDF pp. 6–12]

Augusto matters because it directs attention back to the actual transaction. Writing a restriction on a physical object does not necessarily preserve ownership in the sender.

Online games: licence status did not settle infringement

In MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928 (9th Cir. 2010), as amended in 2011, the court applied Vernor to World of Warcraft users. Blizzard's title reservation and transfer and use restrictions made them licensees, so they could not invoke §117(a)(1). [6, §IV.A]

But the analysis continued. A term whose breach supports only a contract claim is different from a condition limiting the copyright licence's scope. The court required a nexus between the breached condition and an exclusive copyright right; it treated the prohibition on bots as a contractual covenant and rejected the secondary copyright theory based on that breach. Separate DMCA issues were also litigated. [6, §IV.B]

Read together, the cases require two distinct inquiries: whether the user owns the copy, and whether the challenged conduct infringes a copyright right. Losing an ownership-based defense does not automatically convert every violation of a software agreement into copyright infringement.

Adobe: the claimed licence still had to be proved

Vernor left the civil burden-of-proof question open because the relevant facts and transfer chain were undisputed. Five years later, Adobe Systems, Inc. v. Christenson, 809 F.3d 1071 (9th Cir. 2015), supplied an important evidentiary qualification. At summary judgment, a reseller asserting first sale must produce evidence from which a jury could find lawful acquisition of title to genuine copies. Once that initial burden is met, a copyright holder claiming that the copies were only licensed must establish the licence or absence of a sale. [1, §III.A n.7] [7, pp. 14–16]

Christenson met his initial burden with purchase invoices and sworn evidence. Adobe's late licensing evidence was excluded after discovery failures, and general testimony and generic templates did not establish the relevant restrictions. The court affirmed summary judgment for the reseller on copyright infringement. Vernor's test survived; Adobe lacked admissible evidence to satisfy it. For counsel, preserving and producing the actual licensing record can matter as much as drafting restrictive terms. [7, pp. 16–18]

Start with the original transaction

For a lawyer evaluating a proposed software resale, Vernor makes the original acquisition documents central. The practical work begins with four questions:

• What did the first customer receive? Obtain the applicable agreement, evidence of acceptance and any title reservation. Keep purchase invoices and testimony too: under Christenson, they can satisfy the reseller's initial burden and require the copyright holder to substantiate its licensing claim. [7, pp. 14–18]
• What happened when the software was upgraded? Check destruction obligations and transfer permissions. In this case, the old packages survived an upgrade that required their destruction.
• Which copyright right is implicated? Keep distribution of an existing copy separate from reproduction during installation or another transfer process. Section 109 does not itself authorize new copies.
• What remains beyond ownership? Assess licence permission, whether the disputed term is a condition or covenant, and any independently supported defense. Vernor's misuse defense remained for remand.

The case's lasting lesson is concrete: authentic software, physical possession and payment did not establish ownership of these copies. The agreement and transfer history supplied the answer. Its rule is a Ninth Circuit software-licensing holding, and applying it elsewhere requires checking the governing jurisdiction and the actual transaction. [1, §§IV–VI] [6, §IV]

Sources and citations

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

   Official opinion · September 10, 2010 · Facts and procedure, §§I–II (PDF pp. 4–9); governing law, §III (pp. 9–17); application, §IV (pp. 17–23); policy and disposition, §§V–VII (pp. 23–25). Contract terms are described as reported in this opinion.

2. 17 U.S.C. §109 — Transfer of a particular copy

   Statutory text · Subsections (a) and (d) · First-sale defense and possession without ownership.

3. 17 U.S.C. §117 — Computer programs

   Statutory text · Subsection (a)(1) · Essential-step copying by an owner of a program copy.

4. Supreme Court docket No. 10-1421

   Vernor v. Autodesk · Rehearing denied January 18, 2011; certiorari denied October 3, 2011.

5. UMG Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir. 2011)

   Official opinion · January 4, 2011 · PDF pp. 6–12 (printed pp. 330–336): transfer of title, unsolicited CDs and distinction from software licences.

6. MDY Industries, LLC v. Blizzard Entertainment, Inc., 629 F.3d 928

   Ninth Circuit · December 14, 2010, amended February 17, 2011 · Amended opinion, §IV.A–B, PDF pp. 10–16: Vernor test, conditions, covenants and copyright nexus.

7. Adobe Systems, Inc. v. Christenson, 809 F.3d 1071 (9th Cir. 2015)

   Official opinion · December 30, 2015 · PDF/printed pp. 14–18: initial first-sale burden, proof of licensing, discovery exclusion and application of Vernor.

Image references

The Callahan portrait is a generated illustration based on the Portia Project photograph. The Autodesk image is a generated interpretation of its historical wordmark, referenced from 1000logos. These images are identifiers, not photographs of the proceedings. A verified portrait of Timothy Vernor was not found; his entry uses the shared unavailable-portrait illustration.

Later treatment checked against selected public sources on October 6, 2026. This review does not establish comprehensive citator clearance or a verified outcome of the post-remand copyright-misuse proceedings.