eBay Seller Sues Autodesk for $10 Million

[Editor's Note: With the exception of a few spelling corrections, this item is a press release published verbatim. In an unusual move for me, I offer no comment except to say it will be interesting to see what happens next.]

A lawsuit has been filed in Federal Court (US District Court for the Western Washington District C07-1189 JLR) that alleges Autodesk, Inc maker of the industry standard AutoCAD software and their attorney Andrew S. Mackay have devised an illegal scheme to have used copies of their software removed from the eBay site using the Digital Millennium Copyright Act.

The law passed in 1998 was designed to give intellectual property rights owners a way to have content removed from the internet that violates copyright law. An example would be a television show uploaded to YouTube without permission from the production company. The right to sell an item that has been legally purchased is protected under copyright law. The first sale doctrine allows an individual to transfer ( i.e. sell, giveaway etc.) a lawfully made copy of an item without permission once it has been obtained. The doctrine has been part of US law since the Supreme Court recognized it in 1908 and covers everything from books and DVDs to clothing and automobiles.

Autodesk is using the Digital Millennium Copyright Act to have legal copies of their software removed from eBay so they can sell more new copies. The latest version of AutoCAD software is around $4,000 a copy. Autodesk's lawyer, Andrew S. Mackay states "AutoCAD software is licensed, not sold and that license is not transferable." AutoCAD software is available for purchase at most major software retailers. There is no indication your purchase would be different from any other until you get it home and open the box. There is a piece of paper tucked inside that says it is a licensing agreement with the statement "by opening the sealed software packet(s), you agree to be bound by the terms and conditions of this license agreement".   This is called a "shrink wrap" contract. It cannot be read until you open the package which according to the contract constitutes agreement. US courts have not held a "shrink wrap " contract to be valid. Furthermore the Digital Millennium Copyright Act is only intended to enforce copyright violations, not breach of contract.

The lawsuit also alleges perjury since the notice that was sent to eBay is required to be signed under penalty of perjury and fraud. Using illegal means to make a legal gain (i.e. sell more new copies) is a civil definition of fraud. Autodesk's attorney Andrew S. Mackay is currently under investigation (# 07-24456) by the California State Bar Association for his actions in this matter.

Timothy S. Vernor, a Seattle resident, filed the suit when his eBay account was suspended after Autodesk sent eBay five takedown notices over a two-year period. For seven years he has made his living selling used items on eBay under the user name happyhourcollectables and has positive feedback comments from over ten thousand satisfied customers posted on the eBay site. He says "I tried to reason with (Autodesk) but they just would not take me seriously until I filed the suit."

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