The first-sale doctrine and computer software
The first-sale doctrine as it relates to computer software is an area of legal confusion. Software publishers claim the first-sale doctrine does not apply because software is licensed, not sold, under the terms of an End User License Agreement (EULA). The courts have issued contrary decisions regarding the first-sale rights of consumers. Bauer & Cie. v. O'Donnell and Bobbs-Merrill Co. v. Straus are two US Supreme court cases that deal with copyright holders trying to enforce terms beyond the scope of copyright and patent, but calling it a license. Many state courts have also ruled that a sale of software is indeed a sale of goods under the UCC at the point where funds are exchanged for the physical copy of the software. The licensed and not sold argument is held mostly in the 8'th and 7'th circuits while other circuits tend to support the opposite, thus leading to conflicting court opinions such as seen in the third circuit Step-Saver Data Systems, Inc. v. Wyse Technology and fifth circuit Vault Corp. v. Quaid Software as opposed to the eighth circuit Blizzard v. BNETD (Davidson & Associates v. Internet Gateway Inc (2004)), which have not been resolved by higher courts.
District courts in California and Texas have issued decisions applying the doctrine of first sale for bundled computer software in Softman v. Adobe (2001) and Novell, Inc. v. CPU Distrib., Inc. (2000) even if the software contains a EULA prohibiting resale. In the Softman case, after purchasing bundled software (A box containing many programs that are also available individually) from Adobe Systems, Softman unbundled it and then resold the component programs. The California District Court ruled that Softman could resell the bundled software, no matter what the EULA stipulates, because Softman had never assented to the EULA. Specifically, the ruling decreed that software purchases be treated as sales transactions, rather than explicit license agreements. In other words, the court ruling argued that California consumers should have the same rights they would enjoy under existing copyright legislation when buying a CD or a book.
In a more recent case involving software EULA's and first-sale rights [Davidson & Associates v. Internet Gateway Inc (2004)][3], the US District Court for the Eastern District of Missouri issued a ruling which appears to contradict the position of the Californian and Texan courts. The first sale reasoning of the California District Court in Softman v. Adobe was challenged, with the court ruling '"The first sale doctrine is only triggered by an actual sale. Accordingly, a copyright owner does not forfeit his right of distribution by entering into a licensing agreement.' In addition, the Court found the plaintiffs EULA, which prohibited resale, was binding on the defendants because 'The defendants .. expressly consented to the terms of the EULA and TOU by clicking "I Agree" and "Agree."' This runs counter to Softman v. Adobe. The difference in these rulings has yet to be resolved by a superior court.