Does A EULA Wipe Out Fair Use Provisions?

from the everything-becomes-a-contract-dispute dept

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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Comments on “Does A EULA Wipe Out Fair Use Provisions?”

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Oliver Wendell Jones (profile) says:

Written Contract

Plain and simple – require a signed written contract at the time of purchase of any movie, music or software.

Not a simple “please sign here to accept this agreement”, we need to have the cashier read the entire agreement out loud (just like when I signed up for my cable companies VOIP offering today, I had to listen to him read me the lengthy federally-mandated warning about 911 and power outages) and after several minutes of that, then and only then can the consumer buy the item. To make it even better, they should be forced to listen to the contract for every single licensed item in their cart.

I can pretty much guarantee that will put an end to this whole “you’re stuck with our agreement, like it or not” argument once and for all.

Michael says:

Sorry -- Not a circuit split

Unfortunately, the 2nd Circuit case has nothing to do with EULAs, but rather is focusing on the question of whether one can own a copy of software that has been licensed to one. Further, the 9th Cir. case has nothing to do with the enforceability of EULAs in general, it again turns on whether or not licensees can also be owners.

So, I’m afraid this isn’t the circuit split you are hoping for.

Susheel Daswani (user link) says:

Fair Use can be waived....

There are other cases that have held that consenting to a EULA “can get rid of your fair use rights.” For example, the district court ruling in the Blizzard case held that the participants in the bnetd project “waived their fair use right to reverse engineer by agreeing to the licensing agreement.”. This case was affirmed by the 8th circuit, so now we’ve got at least two circuits with that holding.

As much as I’d like to make one’s fair use rights ‘inalienable’, doing so may be drifting away from the utilitarian basis of our intellectual property laws. If I’m aware that I’m signing away my fair use rights and I voluntarity do so, it would wrong of a court to invalidate that agreement.

Which isn’t to say there isn’t a huge problem with EULAs – the main issue is with notice, as most consumers 1) aren’t aware they are giving away their fair use rights, and 2) don’t even know what it means to do so.

claire rand says:


i’d say they can enforce EULAs when its actually possible to ‘return the product for a full refund’ when you don’t agree.

since nowhere will actually give you a refund for this reason, and most places would only offer a copy for any other reason (though make a fuss and you’ll get your money back on a defective disc) this term is pure BS. once they have your money it doesn’t matter if there are only rat droppings in the box, your not getting your money back.. the EULA basically makes sure of that.

but I’d be happy with an EULA on three conditions:

1, law of the land still applies, the land I’m standing on, same as all the other laws I’m subject to.

2, The agreement doesn’t ntry to ‘opt out’ of any liability the company has for a product, you made it, stand by it.

and the biggy

3, I have a chance to see the agreement in FULL before parting with cash.

I dare say companies have a big problem with #2 since that could get expensive real fast, ditto #1 really. given these terms are never their for your benefit.

#3 is a problem for retailers, given just how big the boxes would have to be.

online software works better since you can see the agreement before buying, but points #1 & #2 still apply. though again with on line if you don’t like the laws where I am, you don’t have to offer me the product.

Neal says:

What's the problem

when all we independent software developers need to do is write our own EULA’s. Just be sure to bury, somewhere deep, that by using the software others agree not to restrict users of any of THEIR software from copying, running, etc. and not to include DRM on future releases. Wait for each of the big companies to buy and install the software then call them on it with a test case where THEY will be the ones claiming EULA’s aren’t enforcable.

Bandito says:

Standardized Images

I worked for a bank where we did the exact same thing. Standardized images, restricting software usage by security token. The problem we had is that we had to get agreement from each and every software vendor that it was ok to use this method. If they said no, it’s not like we’d all of a sudden license hundreds more copies of their software. Instead, it just added management overhead to image maintenance and forced us to install “one-off” pieces of software for users. No one wins in that scenario. However if the software vendors agreed in their EULAs that in this scenario restriction by security was ok, I’ll bet that they’d actually sell more copies of their software to organizations that were on the fence between them and their competitors.

Bandito says:

Not to mention...

that determining how many users in the organization were using the software (and hence how many licenses were actually required) was a piece of cake. Count the members of the security group, buy that many licenses. Someone needs the software that wasn’t identified before? No problem… add them to the group.

Jaymes says:

I have a question...

If EULAs will have to be written to specify that we’re only buying a license to music/movies, does that mean that anything we bought before would be considered our “property” as opposed to something we licensed? And if that’s the case, don’t we all get to do whatever we want with our own things? Seems to me the RIAA/MPAA need to tread lightly should they consider doing a EULA on the discs…

under says:

Part of WIN XP EULA, notice the last line.. REDUND


License Agreement (“EULA”) is a legal agreement between you

(either an individual or a single entity) and Microsoft

Corporation for the Microsoft software product identified above,

which includes computer software and may include associated

media, printed materials, “online” or electronic documentation,

and Internet-based services (“Product”). An amendment or

addendum to this EULA may accompany the Product. YOU AGREE TO BE






Disgruntled says:

Eula imbalance

Have you ever noticed that while binding you down the the four corners of the earth, EULA’s completely set the company free from any harm done to you ? For instance, if I buy Micro$soft products and install them, I have no guarantee that it will work andif it completely melts my system just after it blast all my personal info to every user on the internet… they are not responsible and don’t have to give me squat or do anything for me…. because I clicked ‘yes’ on the EULA.

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