Important Facts In The Autodesk vs Vernor Case

Today the United State Court of Appeals for the Ninth Circuit overturned the decision of a lower court in the Autodesk vs Vernor case. In summary Timothy Vernor purchased old copies of AutoCAD 14 from an Autodesk customer called Cardwell Thomas & Accosiates (CTA) and sold them on eBay. The court ruled that CTA was not an owner of the copies of AutoCAD 14 because Autodesk licensed the software to them and did not sell it. Hence, they could not sell it to Vernor, who in turn, could not sell it to someone else on eBay.

I have my own views on whether software should be licensed or sold. But that’s not what I’m going to get into here. I’d like to point out some facts of this case in particular and the reasons why I was overjoyed at the courts decision to overturn the verdict of the lower court.

Here is a bit of history about this case. In 1999 Autodesk accused CTA of unauthorized use of its software and reached a settlement by which it licensed ten copies of AutoCAD 14 to CTA. Later CTA upgraded to AutoCAD 2000. They paid $495 to upgrade each copy instead of the $3750 for a new copy. According the license agreement that CTA agreed to, they were supposed to destroy the ten copies of AutoCAD 14, which they did not do. Instead they sold four of them to Vernor at an office sale with handwritten activation codes necessary to use the software. Vernor then proceeded to sell two of these copies on eBay for around $600 each, thereby making a profit of about $100 on each of them.

If this is not software piracy then I don’t know what is. And by the way, Vernor still has two copies of AutoCAD 14 that he hopes to sell on eBay one day.

  • Neil

    So if they hadnt upgraded on the cheap with the destroy proviso could they have sold their R14? Doesnt really settle that part of it. Sounds like a fortuitous legalistic loophole for Autodesk to me. Since we dont buy this software how about we return it when we are finished with it noting it is in the same condition as when we got it and ask for our money to be refunded in full for the surplus license.

  • http://twitter.com/ProENGINEERNet Wanderer

    Naughty CTA. /spank

  • R. Paul Waddington

    This outcome is entirely understandable. However, having read the court documents it is not all Autodesk way.
    What was really terribly sad is Autodesk could have solved ‘the problem” Vernon posed with a very simply piece of business thinking. They chose to make him an example and in effect, this latest finding, now leads them open to a much more serious hit.

  • http://www.deelip.com Deelip Menezes

    I am absolutely overjoyed that Autodesk decided to make an example of Vernor. In fact, I would be more happy if they had made an example of CTA. They started the software piracy by selling the old copies to Vernor. But Vernor should have known better as well. If you in the business of buying and selling stuff you had better know what exactly it is that you are buying and selling.

  • http://miletter.blogspot.com R. Paul Waddington

    I agree to a point, but you are assuming all are as smart as you; in this case there were other considerations and Vernon saw it a different way.
    The mistake here was not Vernon’s but the way Autodesk handle the situation. Smart management would have solved Vernon a completely different way and for considerably less cost to the share holders.

  • http://www.deelip.com Deelip Menezes

    Paul: “you are assuming all are as smart as you; in this case there were other considerations and Vernon saw it a different way.”

    If people are not smart enough to sell things on eBay then they shouldn’t. And this is not an innocent one time mistake. Vernor did this over and over again. His eBay account was suspended more than once. He knew exactly what he was doing. So please don’t even start to justify his actions.

    Paul: “The mistake here was not Vernon’s but the way Autodesk handle the situation.”

    Now hang on a second. You cannot blindly blame Autodesk all the time. This is precisely the problem that people face when they read the things you write. In this case what did you expect Autodesk to do? Make a deal with him whereby he could sell 5 of the 10 AutoCAD 14 copies. Send him a card for Christmas?

  • http://miletter.blogspot.com R. Paul Waddington

    On both accounts you should think laterally Deelip.

    I do not and never have condoned Vernon’s actions but then I come with a background of knowledge about software licencing he saw differently. And Deelip, you cannot say he was alone in his thinking else it would not have developed the way it did; and that development has help Autodesk less than if they had approached it another way.

    “Now hang on a second. You cannot blindly blame Autodesk all the time.”

    I don’t!

    “This is precisely the problem that people face when they read the things you write.”

    What problem?

    “In this case what did you expect Autodesk to do? Make a deal with him whereby he could sell 2 of the 4 AutoCAD 14 copies. Send him a card for Christmas?”

    No, but if that is the best thinking you can do well……

  • http://johnevansdesign.net John Evans

    Guys, this issue really lies in the face of having knowledge that Autodesk (and any other software vendor) licensing intent would forbid this practice. The case has historically stated ‘views of what should be right’ with licensing agreements, etc. Rebelling against the obvious and dabbling in software piracy is a decision to go headon with the bull just because you ‘Should be able to’. If you don’t agree with the dealer’s intentions, then it is dishonorable to accept them, then state later that you don’t agree with the intended terms… but then I am laughed at when I mention honor in a serious statement.

  • Dennis

    If people are just buy a license of the software. Then how are cad vendors leasing software? Won’t that be the same thing.

  • http://miletter.blogspot.com R. Paul Waddington

    John I would not be one to laugh at your statement; honour is very important but there is a sting.

    I continue to use Autodesk software having very publicly stated I do not accept their T&Cs: and the reason is very simply. There was a period where the T&Cs were ‘reasonably’ acceptable, and then they changed, for the worse, without notice. In the attempted and failed negotiation process which followed, due to Autodesk refusal to do so, left me with a very difficult choice. But that is what business is about making choices and I believe I have done the correct thing, in this instance.

    I have absolutely no qualms with a software licencing business model; but in such instances both parties need to act with honour and, regrettably, I am afraid that is not the case.

  • Murray

    If someone else who paid retail for Autocad and is now shutting up shop puts it on ebay, they’re fully entitled to sell it under the terms established by the lower court. What the higher court has found is that Vernor didn’t actually own the software because of its history in this specific instance. The higher court ruling made no refinement of general principle.

  • murray

    “his ebay account was suspended more than once” is not a legal judgement. The insinuation that a relationship with ebay is consistent with legal or societal standing is offensive.

  • http://www.deelip.com Deelip Menezes

    Nobody is making legal judgments. I am simply stating facts. Make of them what you will.

  • Hawkins Tom20

    It’s hard to sympathize with ADSK, they have helped ensure that software licensing laws are written to protect profit, not to protect any sense of justice or logic. They have a near-monopoly on this level of design software, and they ruthlessly abuse that position to squeeze more money out of the industries that they serve. In fact, it is very clear that their primary product is not software at all – their primary product is profit and their software is their vehicle to that end. I’m a pure-blooded capitalist, but when ADSK formulates a business model that forces updates and subscription, and then delivers half-baked products that will eternally be fixed ‘in the next release’, it becomes clear that ADSK itself has become a 21st century pirate. Besides, they dropped all support for R14 in January of 2005 (I think), so they breached first.

  • Hawkins Tom20

    Sorry, Autodesk stopped supporting R14 on January 31, 2002. Does it violate anyone’s sense of fair business practices that they still claim control over the licenses after that date?

  • Pingback: AskOS | Blog | It looks like you don't actually own that software you just purchased

  • Lawrence D. Wood

    Cloning the software versus selling an obsolete copy that you paid the full price for is another thing altogether.
    The software vendors used to say that their software was like a book, one copy per computer. Now, you “rent” the software, and pay yearly fees.
    This will end, as no one will put up with that kind of malarkey if they are spending their own money.
    I believe that one has the right to sell the outmoded copy, as, like a book, once you’ve bought it, it is yours. That is how it should work with software.
    One is not pirating software when one merely sells one’s copy to another. Making illegal copies is piracy.

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