It's no secret that almost no one actually reads end user license agreements (EULAs) these days -- because, if you would, you'd almost never agree to what's in the license. In fact, there is some question to whether or not EULAs are enforceable at all, since they are often agreed to without any chance to negotiate the agreement. Ed Foster is running a series of interesting posts about a recent Ninth Circuit case that may spell bad news for copyright law when it comes to EULAs. In the case, the Los Angeles Sheriff's Department was sued because they installed copies of a piece of software on all of their computers (it was part of the image), but then limited who could use it via some sort of security token. The software company claimed that all those installations were beyond the number of licenses. The department responded that since only a limited number of people could use the software via the security token, there was no breaking of the license (claiming that only copies of the software that were used should be considered "activated"). While the case was officially a copyright case looking at whether this violated fair use rules, in the end, it apparently hinged upon the EULA -- with the Ninth Circuit court ruling that basically having an EULA trumps the provisions in section 117 of the Copyright Act that allow for fair use, and making this entirely a contractual dispute over the EULA. As Foster notes, this effectively kills that part of the Copyright Act and allows firms to simply put in their EULA that you are only buying a license to the software, and therefore things like "fair use" don't even apply. Don't think other industries won't take notice and start creating EULAs for music and movies as well. Of course, this completely contradicts a ruling we wrote about last year in the Second Circuit, that noted a EULA could not trump your Section 117 rights. Two conflicting Circuit Court rulings is the type of thing that the Supreme Court looks for in taking on a case, so perhaps one of these days we'll see the Supreme Court take on EULAs, and whether or not they can get rid of your fair use rights.
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