The question whether a transaction in which a copy of software is transferred for a set price to end users is a sale or license is long-standing. It has been raised again in a suit brought by Timothy Vernor against Autodesk, in which he is now represented by Public Citizen. Here is a link to their press release about the suit (including a link to the amended complaint), and a short excerpt from that release:
The lawsuit ... was filed in federal court in Seattle and contends that the software company’s actions are abusive and lead to higher prices for consumers. ... eBay vendor Timothy Vernor picked up his first used copy of Autodesk’s “AutoCAD Release 14” at a tag sale. Autodesk sells this product new in a shrink-wrapped box that contains a “license agreement” that the company claims prohibits the purchaser from reselling the software. Public Citizen argues that this contract language is unlawful under the Copyright Act, which guarantees that the owner of a copyrighted product can resell that product without permission.
The complaint seeks declaratory relief that no infringement occurred and has a count for unfair and deceptive practices arising out of the DMCA take down notices sent to eBay. Within the Ninth Circuit, Adobe has made some law on the question, although the courts are split. In the first case, Adobe Sys. Inc. v. One Stop Micro, Inc., 84 F.Supp.2d 1086 (N.D. Cal. 2000), Adobe distributed software to the educational market through authorized distributors who in turn transferred copies to authorized resellers. Those authorized resellers had an agreement with Adobe limiting sale to end users in the educational market. Defendant, a company not an educational end-user, bought a copy in the "open market," as the court described it. While the court found some ambiguity in the agreement on the question whether the parties intended a sale or license, using extrinsic evidence, it held that a license was intended due to the presence of restrictions on the types of sales, and expert testimony that software is generally licensed, not sold. This testimony was of course conclusory in nature; that is, it stated an opinion on the law, masked as testimony about facts. The court dismissed the language "purchase and sale" in the agreement as "convenient and familiar," but meaningless in light of the custom of licensing it found. The custom was, however, in how the industry wants such agreements to be legally construed, and not how they may be factually. For example, Adobe did not, I believe, require return of a copy. Characterizing such transactions as sales does not leave Adobe and others high and dry; rather, they still have available a breach of contract action against the party who breached the resale agreement.
In the next case, Softman Products Co. LLC v. Adobe Sys., Inc., 171 F. Supp.2d 1075 (C.D. Cal. 2001), the court reached the opposite result, disagreeing with the earlier decision, and noting that the industry's preference for describing the transactions as licenses ""does not alter the Court's analysis that the substance of the transaction at issue here is a sale and not a license."
Finally, in Adobe Sys., Inc. v. Stargate Software, Inc., 216 F. Supp.2d 1051 (N.D. Cal. 2002), the court agreed with the One Stop Micro court and disagreed with Softman, which it lamely attempted to distinguish as involving the disaggregation of a compilation of products.
In many ways, the debate hearkens back to Judge Easterbrook's ProCD case and his concerns about arbitrage, the effort to develop a market that impedes the copyright owner's efforts to market the work in a discrete way. In the Adobe cases, Adobe was targeting the educational market and perhaps offering terms different (and hopefully more favorable) than those it offered to the commercial market. One would want to encourage such efforts; yet, the question is how, consistent with the statute and the actual facts of the transaction. If, as the Softman court held, the substance of the transaction is a sale, calling it a license shouldn't change matters and copyright owners should be left to pursue contract remedies. If the substance is a license as that term is used in other fields of law, then there is no first sale. The type of restrictions pointed to by some courts -- restrictions on whom copies may be sold to -- is no different than any agreement where a sale is commonly found: you can sell copies of a CD in the U.S., but not Canada for example. It is unthinkable that this last agreement would be deemed a license. So too an agreement that says you can sell the software to the educational market but not the general market.