Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 1 of 26
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`HONORABLE RICHARD A. JONES
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`AT SEATTLE
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`CASE NO. C07-1189RAJ
`ORDER
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`TIMOTHY S. VERNOR,
`Plaintiff,
`
`v.
`AUTODESK, INC.,
`Defendant.
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`I. INTRODUCTION
`This matter comes before the court on cross-motions for summary judgment.
`Dkt. ## 49, 54. The court has reviewed the parties’ briefs and documentary evidence,
`and has heard from the parties at oral argument. For the reasons stated below, the court
`DENIES Defendant’s summary judgment motion (Dkt. # 49) and GRANTS in part and
`DENIES in part Plaintiff’s summary judgment motion (Dkt. # 54). The clerk shall enter
`judgment for Plaintiff.
`
`II. BACKGROUND
`The court first addressed this dispute in a May 20, 2008 order denying the motion
`of Defendant Autodesk, Inc. (“Autodesk”) to dismiss Plaintiff Timothy Vernor’s
`complaint. Vernor v. Autodesk, 555 F. Supp. 2d 1164 (W.D. Wash. 2008). Mr. Vernor
`makes a living selling merchandise on eBay, the well-known internet marketplace. In
`2005 and 2007, he attempted to sell what the court will refer to as “AutoCAD packages.”
`Each AutoCAD package is an Autodesk-commissioned box, inside which is a “jewel
`ORDER – 1
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 2 of 26
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`case” containing a compact disk encoded with Autodesk’s copyrighted AutoCAD
`software. LaHaie Decl. (Dkt. # 21) ¶¶ 10-11. The jewel case is sealed with a sticker
`advising that, among other things, “[t]his software is subject to the license agreement that
`appears during the installation process or is included in the package.” Id. ¶ 11 & Ex. B.
`The box also contains a copy of the Autodesk Software License Agreement (the
`“License”), and possibly other documentation as well. Id. ¶ 14.
`Upon discovering Mr. Vernor’s attempted eBay sale of AutoCAD packages,
`Autodesk invoked the “takedown” provisions of the Digital Millennium Copyright Act.
`17 U.S.C. § 512; see also Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d
`1146, 1179 (C.D. Cal. 2001) (describing takedown procedure). Autodesk’s 2005
`takedown efforts delayed Mr. Vernor’s sales. Its 2007 takedown efforts not only delayed
`one or more sales, they caused eBay to bar Mr. Vernor from selling anything for a month.
`Autodesk directed its 2007 takedown notices at Mr. Vernor’s attempted sales of
`AutoCAD packages that he acquired from a Seattle architecture firm, Cardwell/Thomas
`Associates (“CTA”), in a 2007 sale of office equipment. Although CTA had broken the
`sticker sealing the jewel case in each AutoCAD package, there is no dispute that the
`packages and their contents were authentic and otherwise identical to AutoCAD packages
`as Autodesk distributes them. There is no evidence or assertion that Mr. Vernor used
`AutoCAD software himself, or even installed it on his computer.
`Mr. Vernor succeeded in selling two of the AutoCAD packages he acquired from
`CTA, and brought this action seeking a declaratory judgment that his sales of the other
`two AutoCAD packages, and any other AutoCAD packages that he might acquire in the
`future, would not violate the Copyright Act.1 He also claimed that Autodesk’s campaign
`to stop his sales was an unfair trade practice under Washington law.
`
`
`1 The court previously rejected Autodesk’s contention that Mr. Vernor lacked Article III standing
`to seek declaratory judgment. Vernor, 555 F. Supp. 2d at 1167. Autodesk has not challenged
`that ruling in its current motion, and the court is aware of no changed circumstances undermining
`Mr. Vernor’s standing.
`ORDER – 2
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 3 of 26
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`In Vernor, the court denied Autodesk’s motion to dismiss Mr. Vernor’s claims. It
`held that the first sale doctrine codified at 17 U.S.C. § 109(a) permitted Mr. Vernor to sell
`the AutoCAD packages without copyright liability. Vernor, 555 F. Supp. 2d at 1174. It
`also held that because persons to whom Mr. Vernor would sell the packages would use
`the software in accordance with 17 U.S.C. § 117, Mr. Vernor would not be liable for
`contributory copyright infringement. Id. at 1175. Factual disputes prevented the court
`from resolving Mr. Vernor’s state law claims. Id. at 1176-77.
`Little has changed in this matter in the seventeen months since the court decided
`Vernor. The parties have taken discovery, but it has revealed no facts materially different
`than those before the court in May 2008. The new developments are as follows:
`1) The parties settled Mr. Vernor’s state law claim, and the court dismissed it at
`the parties’ request. Dkt. # 47.
`2) Autodesk obtained a consent judgment against CTA in the United States
`District Court for the Northern District of California. Harris Decl. (Dkt. # 51),
`Ex. B (Feb. 6, 2009 judgment in Case 09-397-WHA). According to the
`recitals in the consent judgment, CTA agreed in 2002 to destroy all copies of
`AutoCAD software in the AutoCAD packages that it transferred to Mr. Vernor
`in 2007. Id., Ex. B at ¶ 7. CTA entered the 2002 agreement when upgrading
`its AutoCAD software. In the consent judgment, CTA agreed that it had
`breached its promise to destroy the AutoCAD packages, and that it had
`transferred those packages to Mr. Vernor in violation of Autodesk’s copyright.
`Id., Ex. B at ¶ 11
`3) Autodesk retained professor Raymond Nimmer as an expert witness. Mr.
`Nimmer provided two declarations in support of Autodesk’s summary
`judgment motion. Dkt. ## 52, 60. Mr. Vernor did not depose him, and he did
`not appear at oral argument.
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`ORDER – 3
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 4 of 26
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`4) Autodesk submitted a declaration from an employee regarding its licensing
`practices. Suppes Decl. (Dkt. # 50).
`5) Two district courts wrote decisions bearing on the issues that this court
`addressed in Vernor. MDY Indus., LLC v. Blizzard Entm’t, Inc., No. CV-06-
`2555-PHX-DGC, 2008 U.S. Dist. LEXIS 53988 (D. Ariz. Jul. 14, 2008); UMG
`Recordings, Inc. v. Augusto, 558 F. Supp. 2d 1055 (C.D. Cal. 2008).
`Despite these new developments, the motions before the court present the same
`issues that the court resolved in May 2008. The parties disagree over whether Mr.
`Vernor has a first sale right to resell the AutoCAD packages, and they disagree over
`whether Mr. Vernor’s sales are contributory copyright infringement. The court answered
`both questions in Mr. Vernor’s favor in May 2008, and for the reasons stated below, it
`does so again today.
`
`III. ANALYSIS
`The court begins by observing that nothing prevents it from revisiting the issues it
`resolved in Vernor. That order did not result in the entry of judgment for any party, and
`Federal Rule of Civil Procedure 54(b) confirms that the court can revise such orders at
`any time before the entry of final judgment. Of course, a prudent court will not change
`one of its orders absent new evidence or a demonstration that it committed legal error.
`Typically, a request to revise an order comes in the form of a motion for reconsideration,
`and there is no dispute that the time for such a motion has long passed. Local Rules
`W.D. Wash. CR 7(h)(2). In this case, however, Autodesk has asked the court to revisit its
`prior ruling not merely in light of new legal arguments that target that ruling, but in light
`of the new developments listed above. This distinguishes Autodesk’s motion from an
`untimely motion for reconsideration.
`The court considers the parties’ new and old evidence and argument under the
`familiar summary judgment standard. The court must resolve all disputes of fact in favor
`of the non-moving party, and grant summary judgment only if disputes resolved in this
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 5 of 26
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`manner, coupled with undisputed facts, establish that the moving party is entitled to
`judgment as a matter of law. Fed. R. Civ. P. 56(c); Addisu v. Fred Meyer, Inc., 198 F.3d
`1130, 1134 (9th Cir. 2000). The court applied this standard in Vernor, because Autodesk
`relied on evidence beyond the scope of Mr. Vernor’s complaint in its motion to dismiss.
`555 F. Supp. 2d at 1167 (citing Fed. R. Civ. P. 12(d)). As was the case in May 2008, and
`as the parties confirmed at oral argument, there are no disputes of material fact.
`Although the parties have some factual disagreements, they agree upon every fact that is
`material to the court’s decision. The parties’ material disputes are purely legal.
`A.
`Rights Belonging to an “Owner” of a Copy of Copyrighted Material: The
`First Sale Doctrine of § 109 and the Reproduction Exception of § 117
`Some of the copyright principles bearing on this dispute are not controversial, and
`the court summarizes them here. No one disputes that Autodesk holds the copyright in
`the AutoCAD software and the printed materials in the AutoCAD packages. The
`Copyright Act grants several exclusive rights to copyright holders. 17 U.S.C. § 106.
`Most relevant to this dispute are the exclusive rights to control distribution (§ 106(3)) and
`reproduction (§ 106(1)) of copyrighted material. Exceptions to these rights inure to an
`“owner” of a copy of copyrighted material.2 The first, commonly known as the “first
`sale” right, entitles the “owner of a particular copy” of copyrighted material to “sell or
`otherwise dispose of” that copy despite the copyright holder’s distribution monopoly. 17
`U.S.C. § 109(a). The second is the privilege of the “owner of a copy of a computer
`program” to reproduce the program if doing so is an “essential step in the utilization of
`the computer program.” 17 U.S.C. § 117(a)(1). Because the ordinary use of a computer
`program inevitably entails copying all or part of the program in the computer’s memory,
`§ 117 ensures that people who own computer software copies can use them without fear
`
`2 Although the phrase “copy of copyrighted material” is awkward, the court uses it to emphasize
`the distinction between the copy and the copyrighted material. See 17 U.S.C. § 202. Autodesk’s
`copyrighted AutoCAD software is its intellectual property, and Mr. Vernor makes no claim to it.
`Copies of AutoCAD software are personal property embodied in compact disks and other media
`scattered across the world. Mr. Vernor claims to be the owner of two such copies, contained in
`the two AutoCAD packages still in his possession.
`ORDER – 5
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 6 of 26
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`of copyright liability. See Madison River Mgmt. Co. v. Bus. Mgmt. Software Corp., 387
`F. Supp. 2d 521, 537-38 (M.D.N.C. 2005).
`Mr. Vernor claims to be the “owner” of the copies of software in the AutoCAD
`packages in his possession, and seeks refuge in both § 109 and § 117. He contends that
`Autodesk transferred ownership of the AutoCAD packages to CTA, that CTA transferred
`ownership to him, and that he has a first sale right to sell those packages. For the same
`reason, he contends that anyone to whom he sells an AutoCAD package will become its
`owner, and will thus be privileged to use the software in his or her computer without
`violating Autodesk’s right to control reproduction of the software.
`Autodesk believes that it still owns the AutoCAD packages in Mr. Vernor’s
`possession. It contends that it never transferred ownership of the AutoCAD packages to
`CTA. Indeed, in Autodesk’s view, it never transfers ownership of AutoCAD packages to
`anyone. Instead, it licenses AutoCAD packages without transferring ownership of them,
`and thus remains the “owner” of the copies of copyrighted material contained therein.
`Autodesk claims that Mr. Vernor’s sales of AutoCAD packages violate its distribution
`monopoly and contribute to violations of its reproduction monopoly by the persons to
`whom he sells. It thus claims that Mr. Vernor’s sales constitute both direct and
`contributory copyright infringement. See Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d
`259, 261 (9th Cir. 1996) (contrasting direct and contributory infringement).
`B.
`Autodesk’s Transfer of AutoCAD Packages to CTA
`The key to resolving this dispute is determining whether Autodesk transferred
`ownership of the AutoCAD packages to CTA. Assuming that it did, no one disputes that
`CTA transferred whatever ownership it had to Mr. Vernor. Autodesk unquestionably
`transferred possession of ten AutoCAD packages to CTA in a 1999 settlement of a
`dispute. Harris Decl., Ex. A. In the 1999 settlement agreement, CTA promised to
`“adhere to all terms of the Autodesk Software License Agreement.” Id., Ex. A at ¶ 4. No
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 7 of 26
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`one disputes that the license agreement to which the settlement agreement refers is
`materially identical to the License contained in each AutoCAD package.
`The License governs both the use and disposition of the AutoCAD packages. It
`limits installation of AutoCAD software to two computers, with a ban on simultaneous
`use of the software on those computers. License: GRANT OF LICENSE.3 It prohibits
`modification or reverse engineering of the software. License: RESTRICTIONS. It bars any
`use or transfer of the software outside of the western hemisphere. Id. It bars any transfer
`of the software without Autodesk’s written permission. Id. It also declares that “[t]itle
`and copyrights to the Software and accompanying materials and any copies made by you
`remain with Autodesk.” License: COPYRIGHT. Finally, the License dictates that a user
`who obtains the software via an upgrade from Autodesk must destroy any copies of older
`AutoCAD software in his possession. License: UPGRADES AND UPDATES.
`The court also assumes for purposes of this order that in 2002 CTA upgraded the
`software contained in the AutoCAD packages that Autodesk transferred to it in the 1999
`settlement agreement, and violated its agreement to destroy the copies of the software in
`those packages. This assumption requires some explanation. The sole “evidence” of
`CTA’s agreement to destroy the software in its 1999 packages is the recitals included in
`Autodesk’s 2009 consent judgment against CTA. Harris Decl., Ex. B. Those recitals
`include the inaccurate statement that CTA’s 1999 settlement agreement and the License
`included with the AutoCAD packages received in that settlement agreement required
`CTA to destroy the software in those packages upon upgrade. Id. ¶ 7. This court
`repeated a variation of that inaccurate statement in its prior order. Vernor, 555 F. Supp.
`2d at 1170 n.5. The 1999 settlement agreement does not mention any upgrade-and-
`destroy policy. The License to the version of AutoCAD (AutoCAD 14) that CTA
`received in that settlement does not require destruction of the AutoCAD 14 copies that
`
`3 Because the License contains no numbered paragraphs, the court cites it by reference to its
`boldface headings. The License is in the record at Exhibit A to Exhibit A of the LaHaie
`Declaration, and at Exhibit A to Exhibit 2 of Exhibit B of the Harris Declaration.
`ORDER – 7
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`CTA received. Instead, the License requires destruction of older versions of the software
`in the event that the AutoCAD 14 software was itself obtained as an upgrade. License:
`UPGRADES AND UPDATES (“If this Software is being licensed to you as an upgrade or
`update to software previously licensed to you, you must destroy the software previously
`licensed to you . . . .”). It would not be surprising if the license agreement Autodesk
`included with the upgraded software (AutoCAD 2000) it transferred to CTA in 2002
`included a similar requirement to destroy older copies, but there is no evidence of that
`license agreement before the court. Autodesk purported to submit a copy of the
`AutoCAD 2000 license in its 2009 consent judgment (Harris Decl, Ex. B at ¶ 8 (citing
`Ex. 6)), but the submitted exhibit is merely the first page of the “click-through” license
`for AutoCAD 14. The court assumes that CTA agreed to destroy the AutoCAD 14
`software in 2002 only because the assumption ultimately does not prejudice Mr. Vernor.
`Importantly, however, CTA made no agreement to destroy the AutoCAD 14
`software when it acquired it in 1999. It made that agreement in 2002 because CTA
`offered an enormous discount as an incentive to agree to destroy the software when it
`upgraded to AutoCAD 2000. Harris Decl., Ex. B at ¶ 7 (noting that AutoCAD 2000
`software retailed for $3750, but sold for $495 as an upgrade).
`There is no dispute that Autodesk licensed its software to CTA. The court makes
`this observation because the parties and their witnesses too often suggest that their
`dispute is about whether Autodesk “sold” rather than “licensed” its software. That
`dispute is not determinative, because the use of software copies can be licensed while the
`copies themselves are sold. Autodesk unquestionably licensed the software in that it
`limits the right to use it. For example, the License takes away fair use right to reverse
`engineer the software. License: RESTRICTIONS. The License also expands the right to
`use software. For example, it permits the licensee to install the software on two
`computers, whereas § 117(a) would permit only a single installation. License: GRANT OF
`LICENSE. There is also no question that most software is transferred to consumers via
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`licenses that restrict and expand their right to use it, although no party has presented
`competent evidence of the terms of any other software maker’s license. The question
`before the court is whether the Autodesk License is a license that transfers ownership of
`the software copies included in AutoCAD packages. To capture that distinction, the
`court will use the terms “mere license” and “mere licensee” in reference to licenses that
`do not transfer ownership of any copies. The question before the court is whether Mr.
`Vernor is the “owner” of the copies of copyrighted material in the AutoCAD packages he
`acquired from CTA, or whether CTA was a mere licensee who had no ownership to
`transfer to Mr. Vernor.
`C. Who is the “Owner” of the AutoCAD Packages? The Ninth Circuit Gives
`Two Different Answers.
`In Vernor, this court concluded that Ninth Circuit precedent gives two different
`answers to the question of what distinguishes an “owner” from a mere licensee. In
`United States v. Wise, 550 F.2d 1180, 1190-93 (9th Cir. 1977), a panel examined
`numerous agreements governing the transfer of film prints to determine which transferred
`ownership and which did not. Although no line of demarcation between transfers of
`ownership and mere licenses emerges from Wise, the opinion establishes that even a
`transfer that places severe restrictions on the use and disposition of a copy of copyrighted
`material can transfer ownership of that copy. Three later panels, considering software
`licenses, were more deferential to the characterization of a transaction as a mere license.
`MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993); Triad Sys. Corp. v.
`Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995); Wall Data Inc. v. Los Angeles
`County Sheriff’s Dep’t, 447 F.3d 769 (9th Cir. 2006). In each of these cases the panel
`deemed the transfer of possession pursuant to a license to be a mere license, rather than a
`transfer of ownership. The court examined the conflict between Wise and the “MAI Trio”
`in its prior decision, and does so again today.
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`ORDER – 9
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`1.
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`The Wise View: The Distinction Between a Transfer of Ownership and
`a Mere License Turns on the Terms of the Transfer Agreement.
`Wise called upon the panel to examine several transfer agreements for movie
`prints. Many were generic distribution agreements transferring possession of prints to
`theaters and other outlets for display. Virtually all of the distribution agreements “were
`designated as ‘licenses’,” and they transferred only “limited rights for the exhibition or
`distribution of the films for a limited purpose and for a limited period of time.” Wise,
`550 F.2d at 1190. The “[t]ypical” distribution agreement “reserved title to the film
`prints” in the studio and “required their return to [the studio] following expiration of the
`contract term.” Id. Two different agreements governed the transfer of film prints to
`ABC and NBC for televised display. Id. at 1191. Several other agreements were “V.I.P.
`licenses” that “reserved all rights and title in the studios, restricting the licensee to
`possession of the print for his own personal use.” Id. at 1184. Others were agreements
`transferring possession of film prints to salvage companies so that they could be
`destroyed or obscured and recycled. Id.
`The Wise panel noted that the “complicated” nature of agreements transferring
`rights in copyrighted works required an analysis of each transfer agreement before it.
`Wise, 550 F.2d at 1189. Designating an agreement as a “license” does not determine
`whether it transfers ownership. Id. at 1192 (finding that some contracts “consistent with
`their designation as loans or licenses” did not transfer ownership). The panel noted
`several relevant characteristics of transfer agreements, but they were ambiguous in the
`sense that those characteristics were present in both transfers of ownership and mere
`licenses. For example, although an agreement that fails to include a clause reserving title
`in the transferred copy to the copyright holder is suggestive of an ownership transfer, that
`failure is not dispositive. Id. at 1191 (“The mere failure to expressly reserve title to the
`films does not require a finding that the films were sold, where the general tenor of the
`entire agreement is inconsistent with such a conclusion.”). Similarly, a single, up-front
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`payment by the transferee for a particular copy is suggestive of a transfer of ownership,
`but not dispositive. Compare id. at 1191 (finding no transfer of ownership despite
`provision permitting licensee to order film prints “at its expense”) with id. at 1191
`(finding transfer of ownership where agreement permitted licensee to retain a film print at
`its “election and cost”). An agreement requiring the transferee to destroy transferred
`copies is not dispositive of whether ownership transfers. Compare id. at 1191 (finding no
`transfer of ownership despite clause requiring transferee to either sell prints to copyright
`holder or destroy them at copyright holder’s election) with id. at 1193 (finding transfer of
`ownership in agreements requiring transferee to destroy film prints for salvage).
`A clause in an agreement reserving title to the transferred copy in the copyright
`holder is also an ambiguous characteristic in Wise. With only one likely exception, in
`every agreement containing an express reservation of title in the copyright holder, the
`panel found a mere license. Id. at 1191 (discussing generic film print distribution
`agreements and agreement for transfer of “Camelot” prints to NBC), 1192 (discussing
`V.I.P. loans to “actors of major stature” of “The Sting,” and “Paper Moon”). The likely
`exception was an agreement to transfer a print of “Camelot” to actress Vanessa Redgrave
`(the “Redgrave Contract.”). Like all of the V.I.P. agreements, that agreement “reserved
`all rights and title in the studios, restricting the licensee to possession of the print for his
`own personal use.” Id. at 1184. Nonetheless, when coupled with an upfront payment for
`the cost of the print and “the rest of the language of the agreement,” the panel found the
`Redgrave Contract transferred ownership. Id. at 1192. It reached that conclusion despite
`restrictions that prevented the sale, lease, license, or loan of the print “to any other
`person,” and eliminated all uses of the film except for Ms. Redgrave’s in-home display.
`Id. The court acknowledges, however, that the panel’s discussion of other V.I.P.
`agreements twice noted that the agreements contained a reservation of title, despite
`having already made that observation earlier in the opinion. Compare id. at 1184
`(describing V.I.P. agreements collectively) with id. at 1192 (describing V.I.P. agreements
`ORDER – 11
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`individually). It is possible that the panel’s collective description was not meant to apply
`to every V.I.P. agreement, and that the Redgrave Contract lacked an express reservation
`of title. The court finds this interpretation unlikely after a careful reading of the opinion,
`but notes it as a possibility, as Autodesk’s counsel did at oral argument.
`Only one characteristic was unambiguous in that it appeared only in agreements
`that the Wise panel deemed to be transfers of ownership. In each instance in which the
`transferee could, at his election, retain possession of the transferred copy indefinitely, and
`the copyright holder had no right to regain possession, the court found an ownership
`transfer. Id. at 1191-92 (discussing transfers of prints of “Funny Girl” to ABC and the
`Redgrave Contract). By contrast, the copyright holder’s right to regain possession of the
`transferred copy was characteristic of a mere license. Id. at 1191 (discussing agreements
`requiring the return of the prints to the studio at the expiration of the contract term), 1192
`(discussing V.I.P. transfer of a print of “Paper Moon” subject to studio’s right to demand
`its return and a “revocable” consent to Robert Redford to use a print of “The Sting”).
`The Autodesk License is a hodgepodge of terms that, standing alone, support both
`a transfer of ownership and a mere license. Autodesk expressly retains title to the
`“Software and accompanying materials,” but it has no right to regain possession of the
`software or the “accompanying materials.” Licensees pay a single up-front price for the
`software. Autodesk can require the destruction of the software, but only as consideration
`in the later purchase of an upgrade. The decision to upgrade, and thus the decision to
`accept Autodesk’s destruction requirement, is entirely in the control of the licensee. 4
`Autodesk severely restricts the use and further transfer of the software.
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`4 Autodesk provides evidence that its policies at one time required the return of older software to
`Autodesk as a condition of upgrading, rather than the destruction of the older software as in the
`License. Suppes Decl. ¶¶ 18-19. Autodesk is free to demand any consideration it wishes for
`software upgrades. Unless its customers choose to upgrade, however, Autodesk has no right to
`demand either the return of older copies of the software or their destruction. Thus, neither the
`upgrade policy reflected in the License nor previous versions of that policy alter the court’s
`conclusion that Autodesk had no right to regain possession of the software copies it transfers.
`ORDER – 12
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`Case 2:07-cv-01189-RAJ Document 71 Filed 09/30/09 Page 13 of 26
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`Despite these competing considerations, the court concludes that Wise leads to the
`conclusion that the transfer of AutoCAD copies via the License is a transfer of
`ownership. Of all the agreements that the Wise panel analyzed, the License is most
`analogous to the Redgrave Contract. Like the License, the Redgrave Contract purported
`to reserve title in the copy to the copyright holder, but made no provision for the
`copyright holder to regain possession of the copy. Like Ms. Redgrave, Autodesk
`licensees pay a single price to the copyright holder at the outset of the transaction. Like
`the License, the Redgrave Contract severely restricts the use and transfer of the copy.5
`But, like the panel in Wise, this court concludes that the License transferred ownership of
`the software copy despite those restrictions.
`The court’s conclusion, moreover, would be the same even if the Redgrave
`Contract did not contain an express reservation of title to the film print to the studio. If
`the Redgrave Contract had no such clause, then the Wise panel had no occasion to
`consider an agreement that both retained the copyright holder’s title in transferred copies
`and permitted the transferee to retain the copies indefinitely. In this court’s view,
`retaining title in a copy is meaningless unless the copyright holder has some means to
`regain possession of the copy. Wise requires the court to look at a transaction
`holistically, and the court finds no basis for the conclusion that an agreement to permit
`perpetual possession of property can be construed as reserving ownership. Autodesk’s
`attempt to establish the common understanding of “ownership” by citing a legal
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`5 Seeking more analysis of the importance of the copyright holder’s express retention of title in a
`license, the court directed the parties to prepare supplemental briefing. Dkt. # 66. Among other
`things, the court asked Autodesk to address any of its business practices other than the license
`that are consistent with retention of title. In response, Autodesk pointed out that it takes
`measures to enforce the prohibition on transfer of software by assigning a unique authorization
`code to each licensed copy of the software, and revealing that code only to registered licensees.
`Autodesk insists that this measure strengthens its argument that it has retained ownership of
`those copies, but the court disagrees. Although Autodesk may be serious about enforcing its
`transfer ban, there is no indication that the film studios in Wise were any less serious. As both
`Autodesk and the studios know, measures to enforce transfer bans are not likely to succeed
`against a determined licensee. CTA circumvented Autodesk’s measures by simply writing
`authorization codes on the software copies it sold to Mr. Vernor.
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`dictionary equating ownership with unrestricted ownership is consistent neither with
`Wise nor with common understanding. Autodesk Mot. (Dkt. # 49) at 10. For example, a
`person who buys a home is nonetheless restricted in his use and subsequent transfer of
`the home by property laws, zoning ordinances, and fair housing statutes. No one would
`characterize the person’s possession, however, as something other than ownership.
`Similarly, the court cannot characterize Autodesk’s decision to let its licensees retain
`possession of the software forever as something other than a transfer of ownership,
`despite numerous restrictions on that ownership.
`Autodesk did not regain ownership of the software copies it transferred to CTA
`when it upgraded CTA’s software. Instead, years after Autodesk transferred ownership
`of the software copies to CTA, CTA agreed to destroy the copies as consideration for a
`discounted upgrade to new software. See supra Part III.B & n.4. As the court concluded
`in its prior order, “[t]here is no basis to distinguish