Appeals Court Destroys First Sale; You Don't Own Your Software Anymore
from the let's-see-some-licenses dept
Earlier this year, we noted that the 9th Circuit appeals court was facing three separate important cases about the “first sale doctrine.” We also warned that the 9th Circuit can be wacky at times, and its first ruling of the three confirms that, by effectively wiping out the first sale doctrine and stating that buying a piece of software is not really buying a piece of software — and that, in many cases, you’ve merely licensed it and cannot resell it. The key point:
We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.
The full ruling is here:
Last year, the district court sided with Vernor, saying that Autodesk had no right to restrict his first sale rights (which allow you to resell a legally owned copyrighted product without first getting permission from the copyright holder), and that Autodesk’s “license” was really a license in name only, since at no point did the possessor of the software have to return it. Instead, the court pointed out that when you bought AutoCAD, there really was a transfer of ownership.
Tragically, the appeals court disagrees with that, and effectively opens the door to effectively killing off the entire concept of the first sale doctrine, by highlighting the rather simple steps anyone needs to take to make sure any “sale” is really considered a “license,” and thus removing the first sale rights. Basically, you just have to say there’s a license and that “license” has to have a few rather simple things in it. You know all those stories about video game companies hating the used game market? Well, video game companies just got their “kill the secondary market free” card from the 9th Circuit. Of course, as we’ve pointed out, having a secondary market tends to increase the value of the primary market, so software companies (and others selling copyrighted works) may wish to think carefully before wiping out the secondary markets.
The court does note that this ruling could have quite a negative impact, but says that it’s ruling based on what the law says, and suggests that perhaps Congress may wish to revisit this issue (fat chance of that happening, of course). While it is true that a court must rule within the law, even if it thinks the end result is bad, I think that the court here is using that as an excuse. The more you look at the details, the more you realize this is a license-in-name-only, and (as the lower court realized) the court could easily make that point and stay within the law, protecting these important first sale rights.
That said, this case is hardly over. Vernor’s lawyer on the case, Greg Beck from Public Citizen has already announced plans to ask the court to reconsider the case en banc (i.e., with the full panel of judges, rather than just the three judge panel who heard the case), and even if that fails, this case will certainly be appealed to the Supreme Court. Given the two other first sale cases soon to be heard, combined with what appears to be (even if the court denies it) a circuit split with at least the 2nd Circuit on first sale issues, hopefully the Supreme Court will set the record straight and reinstate first sale rights for software. It would be great, of course, for Congress to just step in and fix things, but it’s difficult to remember the last time Congress got something right when it came to copyright law… and with lobbying giants like the MPAA siding with Autodesk on this one, you can bet that no one in Congress will be able to secure enough votes to fix things.
This ruling is pretty depressing if you actually believe in property rights. It shows, once again, how copyright is not a property right, but often quite the opposite: restricting what people can do with their own property.
Filed Under: buy, copyright, first sale, license, software, vernor
Companies: autodesk, ebay
Comments on “Appeals Court Destroys First Sale; You Don't Own Your Software Anymore”
SaaS
The net effect will be to drive new business software as a service providers like Google where “freemium” supports the cash flow of small & medium organzations better.
Re: SaaS
does this mean I can no longer sell my used books?
Re: Re: SaaS
no because books were around (barely) when this judge was growing up so they made the common sense ruling on books
disc's
So, on that logic, if i ‘bought’ a cd of any software from Best Buy and that disc becomes scratched, can i get a full replacement since i can no longer use it? Who do i sue for those rights? If i am merely renting it, someone should replace it when my 360 game scratches.
Re: disc's
Oooh, excellent point, anyone willing to scratch their AutoCAD CDs? to see if this works?
Re: disc's
Actually you will find in the last few pages of most PC software manuals a number to call or website link does in fact exist that allows you to order replacement discs for your products. However you still have to pay the cost of the new physical disc and it’s shipping charges, but you don’t have to pay the entire cost of the product again (it’s “license”).
Re: Re: disc's
in the case of at least one large company (adobe) that replacement for cost charge ONLY applies to current shipping versions. so if you scratch your photoshop cs4 disc, you will not be able to get a replacement for that from adobe. they’d want to charge you the full upgrade price.
they will not replace non-shipping versions of their software.
dave
Re: Re: Re: disc's
With this courts decision, mabe someone can make the legal argument that they are now responsible for all replacements free of charge. I just wish someone with the means, does.
Re: Re: Re:2 Agreeing to the license?
But the seller in question never agreed to said license, I wonder if someone bought a shrink wrapped copy of said software, then tried to re-sell on ebay without opening it up, if said ruling would stand? I think this is a deplorable decision, and would have to require proof that the license was agreed to before such action could hold up in court.
Re: Re: Re: disc's
But if you already own a license for the older version, shouldn’t it be legal to purchase replacement media second-hand? I wonder how claiming, “I am not selling the license, I am selling replacement media” would hold up?
Re: disc's
Good point, the position of you own a license not a product implies that the provider has an obligation to keep your copy working properly.
Re: Re: disc's
And if that is so, wouldn’t that include free technical support/phone support as well? I suppose that depends on the wording of the license but if I’m paying thousands of dollars for a piece of software, why should I have to pay extra for support if I’m just “licensing” it?
Uh…yeah. Really stupid. These people now expect me to pay thousands of dollars for software that I have absolutely no rights or control over anymore? If they restrict software to the point where you can’t even give away a copy that you’re not using anymore, then that’s pretty shady. These software companies have gotten out of hand. It’s almost impossible to get paid for, legitimate software to install and execute as it is without disasters, due to their draconian “Protections”.
I can guarantee you that this type of power grab with have a very negative effect for the reputation of software companies, and will eventually effect sales.
Re: Re:
I agree it was rather stupid of the court to play it this way. It makes room for people to justify downloading pirated copies. Not that people need excuses. The software companies just shot themselves in the leg.
Re: Re: Re:
“I agree it was rather stupid of the court to play it this way. It makes room for people to justify downloading pirated copies.”
I was also going to make that same point. If you look at music infringement you see that once people start infringing there is no way to make them stop. This ruling could wipe out the used software business. If it does, the people that won’t pay full price because of cheapness, frugality, or poverty will become accustomed to downloading infringing material and won’t go back.
Be careful what you wish for …
Re: Re:
In this SOLE CASE, the people were selling their old version to someone else AFTER getting a substantial decrease in price by buying an upgrade version.
The 9th Court should have ruled that in this VERY NARROW CASE…. you do not have the right to resell your bought software.
I'm not surprised...
AutoDesk is very aggressive with takedowns. I’ve been a victim of it myself. This is despite the fact that I never even undid the shrinkwrap or accepted the license.
The only sensible thing to do (and which is what I did) is to just give the software away for free.
Chris.
Re: I'm not surprised...
or tell everyone to never buy from them
The courts should be providing a loop-hole for the user.
Say, what if I only need to license it for 1 month, I should be able to pay a fraction of the actual price of the software.
Also, make it so that I cannot run the software without a CD or dongle, thus giving me the right to sell it after. But doesn’t AutoDesk require a dongle to use it.
Re: Re:
Every autodesk software is trivially cracked upon release, dongle or not.
Re: Re:
My wife needed SPSS for a statistics class. It’s like a $200 program but she found on their site (not sure if this was before IBM acquired them) where she could lease it for 6 months for $30. Pretty cool but if they’re leasing it for 6 months, what’s the difference in that and the full license, except for term of license, in light of the court decision?
And that is why I use only free software.
Yes you can do CAD with open source.
I will never buy an Autodesk product.
I have other options for 3D software and this has further entrenched my loyalty to free open source software. I don’t need 3D Studio, Maya, Mudbox, nor SoftImage. I have Blender. It’s more user friendly in version 2.5 than their offerings and very stable considering it’s still in beta.
These companies are killing any good will they had for themselves with these tactics and it will only add more fuel to the piracy culture. They should be giving their software out for the opportunity to get people to train on their software, that way there is an abundance of people who know their platform looking for jobs. Will all of those people trained on Autodesk software, they have the studios in the palm of their hand. But they’d rather just piss all over their potential sales tool.
Assets
I am not an accountant, but I would think this could have a huge effect on the balance sheet of certain business. If you’re a small company which uses AutoCad or other high dollar software, a large part of the assets on your books could be in software. If you really treat all software as non-transferable licenses, you could potentially slash the net worth of some companies. The law of unintended consequences for the loss.
Re: Assets
Fair point, this implies that buying anything copywritten is 100% loss, because it retains no value. Wonder if Uncle Sam will change his mind when business claim 100% deductions rather than annual depreciation.
Re: Re: Assets
That is an awesome point.
p.s. It’s copyrighted. I have an amusing **AA (I don’t remember which one) propaganda poster photo I’ll try to track down for you that says your word on it.
ignorant question
Is there any software that competes with AutoCAD? If so does it suck or something?
Re: ignorant question
I used VectorWorks back in 2003 for Stage Design, but I can’t speak for its engineering potential.
Re: ignorant question
Bentley Microstation is substituted for autocad in some companies.
Re: ignorant question
Yes, if you are doing trivial things.
No, if you are doing professional engineering work.
Re: ignorant question
Open source alternatives are many, the 2 I know about are Blender and BRCAD(developed by the U.S. Army).
Both very good options.
Re: Re: ignorant question
This is going to cause more people to go open source for applications.
Re: ignorant question
Yes there are dozens of competitors to the AutoCAD software. SolidWorks, Solid Edge, Microstation, Pro/Engineer, etc. How much any of them suck is a matter of opinion. Depending on exactly what you do many of them are better/more powerful then AutoCAD.
they are just stating what the companies have been doing for along time, just try to play a single player, offline game without first “activating it” it wont let you install, how is that “first sale doctrine”, how do you “own it” if you can’t even install it
or the online games, thinking mainly MMO’s, you don’t legally “own” a server, they shut it down, you cant play anymore
sure you can play private servers, till they sue your ass for violating the trademark/copyright/right to get money every month out of you etc…
Re: Re:
Actually, single player off-line games IF YOU GET A CRACK (sometimes even without one) can be played with activating them.
It’s only EA games that insist on activation before playing or an ‘always on’ internet connection.
Re: Re:
but the sever is a huge part of mmo`s there is nothing preventing autocad to be resold
"That's all folks"
*sigh* And I was just getting used to the idea of actually paying money for software and games again–now that I make more than I did as a snot-nosed downloader.
Oh, well. Hi-ho, hi-ho, back to pirating I go.
; P
Re: "That's all folks"
i agree
everyone should just pirate autocad just to seed it or a very very long time
What have we really learned this last decade more than anytime in the history of this country. THE GOVERNMENT DOES NOT GIVE A FUCK ABOUT THE PEOPLE.
Ripple Effects
I guess this means that people will no longer be able to sell a car that has a nav system or uses extensive software to help control the automobile. I am willing to bet there are EULAs loaded into those programs as well. This decision can and will trickle down to ridiculous levels.
Re: Ripple Effects
Before I left my SaaS comment, I thought about how complex this issue really is. With questionable EULAs and how pervasive software is in traditionally mechanical objects (home appliances like refrigerators) this decision has the ability to cripple our economy. Cars, phones, appliances, TVs, etc. All have software. All could come with EULAs that restrict 1st Sale by a “license.” Wait until EULAs are written into your credit card PoS device not just for the terms of the merchant & credit card company but for the terms of the objects you’re licensing. (I wonder if I could patent a method to do that??) :-/
The courts might have realized the ruling is a bad one even if the right one under the law, but they might not have realized is how bad this idea really is in the broader sense.
I will say this, though. If the day ever comes where you can’t sell your car because of EULA or software license, the world would go crazy.
Re: Re: Ripple Effects
Bingo. I didn’t even think about cars, but that is another perfect example. Everything has embedded software these days, and if this ridiculous ruling gets upheld, the implications will be astronomical.
Re: Re: Re: Ripple Effects
What about embedded software for the purpose of preventing resale? Things that would not normally have software in them, suddenly do, and as a result can’t be resold…
This ruling could apply to everything from calculators, to hair dryers… simply put a digital clock on the object, or maybe even just a cheap RF tag, and poof… no resale!
Re: Re: Re:2 Ripple Effects
“What about embedded software for the purpose of preventing resale? Things that would not normally have software in them, suddenly do, and as a result can’t be resold… “
The abuse of the DMCA’s circumvention clause is a prime example of this exact problem. Now that “circumvention” is illegal, lots of things suddenly have DRM or copy protection-like mechanisms added on so that no one can reverse engineer or make compatible things (see toner and ink especially, and things like garage door openers). This creates vendor lock-in and stifles innovation and workalike products.
Re: Re: Re:2 Ripple Effects
Just as software is cracked by groups like Fairlight, Razor, et al, there will be people that can and will “crack” your vehicle or TV or whatever item it is that has that software in it.
I really doubt it goes that far, but I could see it happening if the Supreme Court doesn’t knock some sense into the 9th Circus Court of Appeals.
Piracy and misuse
If you can’t own software you purchase and receive a copy of, then your not stealing software you pirate. It may still be illegal to to use out of license, but this will have a much harder time holding up across international borders.
Licensing also implies that I am free to make the software available to anyone, so long as I give it to them with the understanding that they must approach X company for a license. They would then either hack or license the software, independent of my responsibility.
“The case involved a regular eBay seller, who bought some copies of Autodesk at an “office sale” from a company who was no longer using them.”
Wouldn’t this mean that the initial purchase of the Autodesk software was illegal as well?
Re: Re:
Yep.
Re: Re:
Here’s a more interesting point: how is the retailer even allowed to sell the product now? One poster above stated that his auctions for brand-new, shrink-wrapped software were taken down via an AutoDesk DMCA notice. How does that sale differ from Best Buy “reselling” their copies from their shelves?
Re: Re: Re:
“how is the retailer even allowed to sell the product now?”
If amazingly this law sticks even through the Supreme Court, retailers will simply purchase something along the lines of a right-to-resell licence directly from the software company.
Not a sale buit a license?
Good news, I guess that means when you buy a computer, the windows license is a facultative option that can be immediately suppressed and reduce the price, paying 200$ less in the very store.
Unless I’m dreaming
Re: Not a sale buit a license?
That would be great, even though I can not sell my computer with windows still on it I can just keep reusing my last license till updates are no longer supported.
So can they take away my license as they wish now, similar to the DMV?
Because AutoCAD is not a hard find in MacArthur Park- err, torrents.
…equal and opposite reaction
Q – Why does the Devil make you sign in blood?
A – He has a tough appeals court.
Q – Why is a click on a computer good enough for Autodesk?
A – They own the appeals court.
Don’t be fooled in to thinking EULAs or even a great many traditional contracts are meant to be followed because people actually do what we agree to do. Their audience is the court. Length and obscurity is deliberate, a fraud to promise the world up front then take it away and more in the EULA.
The judges love this stuff because they are all lawyers. They make their living in this world of sophistry, clever language to defraud the unwary. Don’t want to be a sucker? Budget heavily for legal advice. Law as a high stakes sporting contest reaches deeply in to every corner of life, even that box you buy or program downloaded off the web.
Normal might want to keep it simple. You sell it it isn’t yours any more. You buy it is yours. The law doesn’t work that way because the legislature and courts are full of people who’s importance rises as law with all this complexity and uncertainty reaches ever farther in to every corner of life.
AutoDesk
Autodesk does not require a dongle to use. I am a student, and 3700 dollars is a tad bit too much for me, so i turned to torrents
of course, when i graduate and become an engineer, i will gladly buy the software, as it is a beautiful piece of work and very useful
they didnt allow a system for me to use it cheaply, its their fault really
Re: AutoDesk
Umm actually any student that has an .edu email address can download AutoCAD, Revit, and about a dozen other programs for free… However dont take this message as pro-license, I am all for first sale rights.
Tax implications?
If I’m only a licensee and have no ownership then I guess I should be able to expense the FULL cost of the software on my taxes in the year I purchased it.
First-sale isn’t a right so much as it’s a doctrine and a defense. And it’s not that you don’t own your software anymore, it’s that perhaps you never owned it in the first place–you merely possessed it. The first-sale doctrine only applies to things you own, not to things you possess, so this decision isn’t too surprising. It is a disappointing outcome nevertheless. I agree that the law should be changed. I’m not as skeptical that it won’t be changed though. Application of this holding to things likes books will help Congress realize that the law needs to change.
Re: Re:
“I agree that the law should be changed.”
but by your own logic because the status quo is the status quo no one should ever argue that the law should be changed. You have no basis to claim that the law should be changed because the law says so.
Re: Re: Re:
Um, I never said that, so I don’t really follow you. Sorry.
So what about electronic hardware with embedded software?
I can’t help but wonder: Should this ruling hold up at the SCOTUS level, what are the implications for hardware with embedded software (e.g. cell phones.)
If the purchase of any electronic device containing embedded software entitles only the first purchaser to the license of the software contained therein, then it will automatically be illegal to resell any electronic hardware with software embedded in it. Forget re-selling old microwave ovens, televisions, and cameras, let alone cell phones! Talk about planned obsolescence!
This is a perfect example of why the Ninth Circuit’s decision is stupid, short-sighted and ultimately dead wrong. Hopefully, however argues this in front of SCOTUS will use this example to demonstrate the inanity of overturning the first sale doctrine.
Who would be dumb enough to buy something that has no resale value?
Opportunity?
This looks like a great opportunity for some up-n-coming software or game company.
1) Write their EULAs to specifically *allow* transfer or sale.
2) Set up a simple mechanism to transfer that license with a small fee (say 10% to 20% of the original retail cost)
3) Profit.
This allows for the freedom to transfer, sell or give away software or games that you purchase. With the prevalence of software that phones home to validate licenses, this is a very good way to allow the end user to buy used software or sell the software.
There will always be ways around the license protection schemes, but this at least allows legitimate paying customers the ability to conduct their business in the way they see fit.
Once you have that in place, *advertise* that you allow this. Make it a marketing point. Make sure the world knows that your competitor wants to control how you use their software, etc…
Scott
Re: Opportunity?
Forget that, I’ll just pirate it.
Re: Re: Opportunity?
And it’s people like you that empower the **AAs to point and say, “See how evil and selfish the pirates are? We have to stop them!” Here is a legitimate method for treating the customer reasonably, and that’s your response?
Re: Re: Re: Opportunity?
The point I was trying to make is that it doesn’t treat the customer reasonably. It still treats the consumer base as potential thieves. You must “activate” a license by some auxiliary method to confirm they got their pound of flesh from you. By default, the software assumes you are a criminal and on top of that, you have to give the creator money for software that was already paid for to begin with. How is that fair? What if you had to pay Ford 10, 20, or 30 percent when you sell your 1964 Mustang? That’s the business model you’re supporting.
Let’s apply this to Autodesk software. You pay someone $2000.00 for a pre-licensed copy of 3D Studio Max 9. Based on this model, Autodesk is entitled to $200.00 for 10% and $600 for 30%. Now let’s say we do this with the Mustang. The Mustang sells for $50,000.00. Ford would be entitled a cut of $5,000.00 to $15,000.00 for the sale of that car. Now, did Ford do anything to deserve that cut?
So, I feel I must re-emphasize my point. I’d rather pirate the software than be subjected to that kind of agreement. Nevertheless, I already mentioned in another post, that I want nothing of their software because I have alternatives that I can utilize that are free and at least as good as Autodesk’s offerings.
Re: Opportunity?
More likely we will see:
1) Write their EULAs to specifically *allow* transfer or sale. with the standard we reserve the right to change the rules fully and completly (like every EULA).
2) once the sale is complete change the EULA to no longer allow transfers or sales.
Re: Opportunity?
2) Set up a simple mechanism to transfer that license with a small fee (say 10% to 20% of the original retail cost)
Where do you get Profit if your spending the 10% to 20% to a program company your all ready selling for much less then you payed for it or got it cheep and reselling it so that 10 to 20% was your intake now just turned in to the software makers packets not yours!
Re: Re: Opportunity?
I”m having a little bit of trouble parsing what you’re asking.
The 10% is paid by the purchaser of the used software to transfer the license from the seller into their name.
The 10% covers the cost of the license transfer service and is, in effect, pure profit for the software company after that.
The software company does not need to produce new manuals, boxes, cd/dvds, dongles (does anyone still use dongles??), etc. It’s merely book keeping.
It’s also a way to legitimize and monetize the first-sale doctrine into the EULA framework.
If your competition restricts their customers, you do what you can to remove any restrictions from your customers. It adds value to your product, adds a small additional, recurring revenue stream.
Everybody, but your competition, wins.
It could get crazy....
What about an alarm system for my house? Or my electronic thermastat water heater? or my remote control gas fireplace? or my Sprinkler system? Or my digital stove? Microwave? …….. How the hell am i going to sell my house? Take it completely apart? lol
Re: It could get crazy....
Eyeah, careful what you sign when you buy a home:
http://consumerist.com/2010/09/developers-spiking-homeowner-contracts-with-hidden-resale-fee-covenants.html
"So, he sued Autodesk..."
Why exactly was that done? I suppose out of pique, but since courts are always a crap-shoot, he should have gone as high up in Ebay as possible to point out that he’s already answered DMCA notices in exact same circumstances three times without response, so it’s SETTLED, and Ebay should ignore Autodesk in future.
And exactly how is Autodesk using DMCA to prevent sale of software? Since first-sale seemed previously settled “law”, and no duplication was alleged, it’s a mis-use of DMCA, which doesn’t provide enforcement of “licensing”.
Laws are for fool!
The government and those that make the laws stick up for big business and those with more money! Don’t think Autodesk
in the wrong every one tries to make more money and hold on to it! In the end the one that is wrong as always for letting some thing like this happen is William C. Canby Jr.the judge for allowing Autodesk to keep a first sale doctrine of no sales in a copyright contract. Copyright law in and of it self was only to protect the information sold so it can’t be copied and mass sold!
This is what is wrong with law after all the wins in court over copyright law and company’s trying to get away with adding to the copyright laws and a Judge backs them up makes president for all other cases, soon we won’t be able to resell CD’s, DVD’s, games, software or any other item with a copyright, witch is about every thing you own even your computer your reading this on and the OS running it. Soon you will own nothing And just pay to be able to use it. If this ruling by William C. Canby is not over thrown by a higher court. We own the license William C. Canby were not selling the program changing it in any way witch by the way a judge ruled that we can even change a program or license legally when the jail break on cell phone law was passed last month, When Apple tried to change the copyright laws to suit there wants and needs!
A pirate would look at this and say. “Tor on, isohunt up, autocad downloaded… Look ma! no license!”
Software is sold in three places, The Market, The Aftermarket, and The Blackmarket.
Where do you think the business will go if you eliminate the Aftermarket? To the DRM loaded, corperate spyware infested, over priced, under funded, customer hating, licensed software market? (Which you now officially cant actually own.) Or to the easy, low-risk, and often FREE Blackmarket?
Licenses
Just like they tried to say with music purchases being a “license” of the work, does this entitle me to download a new copy if the original is destroyed? My license is fine, and that’s the actual property anyway, yeah?
Re: Licenses
That is the way I see it!
This disc is scratched, here is my license.
Embedded software? You guys lack imagination. Remember the omega watch case with the small copyrighted design? That’s all it takes.
The reason why...
The reason why I am boycotting MS products and have migrated totally to FOSS (Free and Open Source Software). Use Linux and FOSS, and forget about this cruft!
Re: The reason why...
I’d love to. When the FOSS software can compete in both features and depth of workflow with products like Lightwave, Photoshop, Premiere, AfterFX, Illustrator, Soundbooth, Lightroom and Media Converter, I’ll look at moving my entire studio to Linux.
I use all of those packages on a daily basis for even small videos like the one I edited for a recent SciFi/Fantasy convention.
Wine doesn’t cut it. Emulation doesn’t cut it. I don’t have time to use anything that forces me into ‘work arounds’ just to get basic functionality.
I understand and agree with the FOSS movement and what’s being done there. *anywhere* I can use FOSS software, I do. But until there are seriously comparable packages, I and many others are stuck in the land of EULAs.
Re: Re: The reason why...
“When the FOSS software can compete in both features and depth of workflow …”
That will never happen. The proprietary software companies will always be able to outspend the FOSS companies in niche markets. Proprietary has got more money, and they are getting it from people like you. If you expect free software which is comparable to proprietary software, that is an unrealistic expectation for actively developed software. Once it is a stable target, like office software, then the game changes.
It is time for you to grow a pair. Say to yourself, “I will not be treated this way by any supplier, dammit!” Then transition to FOSS as fast as you can. If there is some feature you are desperate to have, ask for it. Wave some of the money you just saved by not buying proprietary. Stop sleeping with the enemy.
Re: Re: The reason why...
“that forces me into ‘work arounds'”
Well, if patents didn’t exist then there would be no patents to work around.
Licenses are Contracts
I agree, this is atrocious. But, at the hear of this it’s not about copyright, it’s about the license that was on the software. Basically, when you buy software, most contain a single use clause within the license, whether it’s an “i agree to the terms” or a shrink-wrap license. And, if the person buying it didn’t like it, they would have the opportunity to return the software as they wished. So, basically, sure if you have a copyrighted work, and you own it, yeah you can sell it. The problem is, that if that copyrighted work (or in this case software) contains a license, then you get into trouble. The ruling was that he didn’t purchase the copies from an “owner,” rather the individual in this case, was a licensee who had no right to sell the software, so technically, Vernor could probably recover against him.
I know it sucks. But such is the law. The problem isn’t in the copyright law necessarily either, it’s in contract, and licensing. Basically, courts are willing to allow pretty much anything into a contract as long as it’s not unconscionable. I’m sure many could make an impassioned argument that this is the case, but I doubt it would hold up in court.
Re: Licenses are Contracts
I agree, this is atrocious. But, at the hear of this it’s not about copyright, it’s about the license that was on the software.
The problem, if that’s true, is that it effectively makes copyright law meaningless, because every copyright holder would just create a license that writes copyright’s restrictions (first sale, fair use, etc.) out of it. Copyright, remember, is supposed to be about enlarging the public domain, and thus courts have *usually* found that you can’t write copyright’s exceptions out contractually.
Saying that it’s merely a contractual issue destroys the exceptions to copyright law and makes copyright something entirely different than its intended purpose.
Re: Re: Licenses are Contracts
But, that’s what the court decided upon. And I’m not sure that it’s entirely true that courts have found that you can’t write out copyright exceptions out contractually. But that’s besides the point. The issue here, is that the entire transaction of the original software was not a sale, it was a license. And licenses can basically do whatever they want so long as their not unconscionable. And that is generally true of most software, I’m actually rather surprised that you wrote about that as if it were shocking. Licenses on software have been screwing people over for years. The court is generally bound by precedent, and I do agree with the 9th Circuit that Wise is less informative on this case than the MAI trio, but their reconciliation is not absurd. Also, the court distinguished the 2d circuit case fairly conclusively, so I’m not sure we’ll see the Supreme Court hear this one.
So what to do? Well, the best bet is to say screw you to the major software devs and use open source where possible, to try to send the message that the restrictive licenses under which the software companies are selling the software is not acceptable. From a legal standpoint, it would be interesting to see whether an unenforceable contract of adhesion claim would fly. The court mentions this argument was made by the ALA, the problem there is that for the contract to be unenforceable it usually requires a “necessity of life.” Now, obviously computers are entering into that realm, but there are several other hurdles that have to be crossed.
Point is, this decision sucks, but it has less to do with copyright and more to do with general rules of contract. Doesn’t mean we can’t try to fix it…
Re: Re: Re: Licenses are Contracts
Could someone clear this up? How is a contract or license binding if I have no knowledge of what’s in it until AFTER I purchase the product/license/which-is-it-today?
In an above post you state that we could return the software if we don’t agree with the terms in the EULA, yet, in the US anyway, this is a difficult or prohibitive task at most retailers. And (I’m thinking mainly of video games here) any EULA doesn’t present itself in its entirety until installation has begun. Not to mention that they usually containing wording about changing those terms at will whenever they like.
It just doesn’t square.
Re: Re: Re:2 Licenses are Contracts
Perfectly reasonable question.
In licenses such as these, if you object, your issue is not with the person who you purchased the software from (say best buy), it’s with the individual issuing the license. So you are able to return the software to them for your money back, not to the retailer. This is true generally because the retailers won’t take back the games once the shrink wrap is open. So you have to go through the arduous process of returning the software to the manufacturer. While this is difficult, it is not so difficult as to be unacceptable in the eyes of the law.
As for the changing of the terms. While this does happen, more than likely, if you object to the changing of the terms, and write to them stating such in writing, you should have some cover legally speaking. You may also be able to return the software if you object strongly enough to the terms. I’m not 100% on that, but it’s probably a good bet that courts would allow that.
The problem is that all of this stuff is a pain in the ass. And we’re so used to things being easy, that most people never want to go to the trouble of going through the steps to return software, or object to terms when they’re changed. This leaves a great position for the software companies because they can write whatever they want into the EULA’s and SLA’s and more than likely not hear a thing about it.
Re: Re: Re:3 Licenses are Contracts
What if I’m in The Netherlands, and the game developer isn’t based in my country? You have any idea how arduous the process is then?
EULAs should have no legal standing whatsoever. There have been reports of EULAs containing such ridiculous language (such as “you sign your soul over”, etc) that I can’t imagine any actually have a legal leg to stand on in court, and quite frankly I’m surprised to see that this court ruling happened.
Especially when a company can change an EULA afterwards without giving you any warning that they EULA has changed. So in a way, by purchasing a shrink-wrapped licensed product, you sign a blank contract. And we all know how dangerous signing a blank contract can be.
Re: Re: Re:4 Licenses are Contracts
Okay, look. Contracts can say whatever they want. If you don’t read them, without any extenuating circumstances or unconscionability, courts will uphold them. Saying EULA’s should have no legal standing is basically like saying your agreements with your credit card companies should have no legal standing. Contracts are a basis on which our country runs. It’s the fabric of business in the US and around the world. Again, if you object to the terms of the EULA, then don’t sign it. Return the product. You have a legal right to do so. Again, it’s a pain, but it’s not impossible, nor would it be viewed as unreasonable by the courts.
Re: Re: Re:5 Licenses are Contracts
Thanks for responding, Seamus, and yes, I can return to the manufacturer and MAYBE they’ll refund me (I don’t know that is a given, actually), it still doesn’t square with me.
How can I agree to terms I cannot see prior to sale? It’s like completely a sale of a print of a painting I’ve done and THEN whipping out a EULA dictating to the customer what s/he can or cannot do with that print – how it can be framed, where it can be hung, who can view it, when or if it can be resold or given away. No one would stand for it.
Re: Re: Re:6 Licenses are Contracts
*completeING, not completely.
Re: Re: Re:6 Licenses are Contracts
On your first point, legally the software manufacturer would HAVE to refund you. If they don’t you can take them to court.
On your second point I’m not 100%, but there’s some distinction here. First, you’re agreeing to terms prior to your “use” of the software, and if you disagree with how they want you to use the software, then you have a right to return it. As for the painting example, if you bought a painting, and then all the sudden they slapped a bunch of use restrictions on it, again, you should be able to return the painting to the individual owner, however, it’s unlikely that they would present the use after the sale.
I know it seems strange, but obviously, the software companies do what they do for a reason. It’s a pain in the ass to return software BECAUSE THEY WANT IT TO BE. It means they’ll get less returns. I know when you buy a disk it feels like you’re buying something. But like they say in the case above, the purchase IS NOT the physical CD, it’s the software contained on it. So, prior to your USE of the software, not your purchase of the CD, you have to agree to the terms of the EULA. Again, if you disagree, you can return it to the manufacturer if the retailer you bought it from won’t take it back.
Re: Re: Re:7 Licenses are Contracts
Actually, there is another part of the equation that people keep leaving out of the “return it” issue:
Who exactly are you supposed to return it to? The company that wrote the code? The company that published it? Another company entirely?
I have seen games that have 4 or more different “companies” listed in the opening screens.
Which one is the right one to talk to?
How many times are you going to get the run-around from companies saying “sorry, that’s not our issue, you need to talk to company.”
What if the right company to get the refund from doesn’t exist anymore? Maybe you waited 6 months or so after a game comes out to buy it, and that group is now out of business.
Saying you just have to return it to the manufacturer is too simplistic and vague, especially in today’s world of entertainment.
Heck, I wouldn’t be too surprised if you start seeing “companies” put together for the purpose of making a single game, and then disbanding afterwards, like happens with movie productions all the time.
Re: Re: Re:7 Licenses are Contracts
Still not square.
“First, you’re agreeing to terms prior to your “use” of the software, and if you disagree with how they want you to use the software, then you have a right to return it.”
I cannot agree to terms I cannot see PRIOR to completion of a sale. Seems it would invalidate any agreement if money changes hands first and terms come second.
“As for the painting example, if you bought a painting, and then all the sudden they slapped a bunch of use restrictions on it, again, you should be able to return the painting to the individual owner, however, it’s unlikely that they would present the use after the sale.”
But presenting terms after the sale is exactly what happens when you pick up a video game, for example, off the the shelf at Target, proceed to checkout and pay, then find out what those terms are after opening the software and beginning installation.
You mention credit card agreements – those I can read beforehand so I know what I’m getting into. I’ve never had that opportunity while making an impulse purchase of software in Staples.
Re: Re: Re:8 Licenses are Contracts
I don’t know how to explain this any better. If you disagree to terms on software YOU HAVE A REMEDY, YOU CAN RETURN IT. The fact that it’s not at the point of sale, is because it’s pruchased through third parties, and you don’t start to use the software yet. That’s what the law says for a variety of reasons that you should be smart enough to figure out. I don’t know how to make it any clearer.
Re: Re: Re:9 Licenses are Contracts
Seamus, I’m honestly not trying to be dense or wheedling about this, but despite any after the fact remedy, a contract cannot be considered valid if terms are imposed after a sale is completed. The court decision prior to this appeal seemed to agree in that the purchase was made as a ‘simple’ sale rather than paying for a license.
If I sent along a contract to a video game company after I purchased one of their products with a list of things I required them to agree to or rescind in respect to that product, wouldn’t they just all die laughing?
If EULAs were presented on, or even just inside, packaging, it would be fine by me and a much better solution for everyone. But until that happens, EULAs, to me, are a questionable device.
And we can certainly agree it’s to keep the advantage in the vendor’s court, as far as making returns a pain in the A.
Re: Re: Re:2 Licenses are Contracts
Plus, these days, if you open any computer software, you cannot bring it back for a refund. So if i were to not agree to the licensing terms, i still lose my money.
Re: Re: Re:3 Licenses are Contracts
Not necessarily. You would just have to get a refund from the developer, not the store. Which again, is a pain in the ass.
Re: Re: Re:4 Licenses are Contracts
so, if i buy a thousand copies from best buy (at retail price), and change my mind after reading the eula, i should just ask for refund from the developer? at retail price that i paid?
(btw i’m so dense, so i open all those shrink wrap and hoping to find a different eula on each copy…so no chance of returning the unopened copies)
bet that will cause a commotion for the developer…
Last though!
A LAST NOTE, software lease is like what McAfee does charges $100 for a one year key once that key expired the program quits working but if there is 6 month left on that key I can give it to some one or sell it! They make it clear that it is a lease.
When you pay for autocad you pay with Subscription Electronic Download – $4,425.00 That is not a lease you bought it no matter what they say. If you buy a car for that price and get told you can’t resell it and get back some of that money, every one would flip out! That is more then wrong it is criminal and we as a hole would not stand for it, but since it is just a software program that few use and care about Timothy Vernor will not get any where with this case he will run out of money first!
Subject
This is similar to a manufacturer expecting someone to pay big bucks for a car, but it comes with the condition that they can never actually own it and can not sell it to anyone else once it’s of no use to you. NO ONE would buy such a thing.
I think AutoDesk has just sent a message to ALL potential customers, and now MANY of them will simply choose to download the free/cracked torrent instead.
From now on I’ll be sure to install the cracked version on the computers of friends and family if they ever need it.
Re: Subject
“I think AutoDesk has just sent a message to ALL potential customers, and now MANY of them will simply choose to download the free/cracked torrent instead.”
Very few people who use AutoCad for their livelihood, whether contractors or companies, will do so. When you get into projects that utilize software of this complexity, support and access to the developer community built around it are essential.
When you’re working on a six or seven figure project, you want to be able to pick up the phone or e-mail and get someone on there to help you with a problem. You are not just paying for a shiny plastic disk with some tiny pits and valleys in it.
Re: Subject
“I think AutoDesk has just sent a message to ALL potential customers, and now MANY of them will simply choose to download the free/cracked torrent instead.”
Very few people who use AutoCad for their livelihood, whether contractors or companies, will do so. When you get into projects that utilize software of this complexity, support and access to the developer community built around it are essential.
When you’re working on a six or seven figure project, you want to be able to pick up the phone or e-mail and get someone on there to help you with a problem. You are not just paying for a shiny plastic disk with some tiny pits and valleys in it.
what about considering the actual circumstances
the way i understand it, the original company bought licenses for one version but ran afoul with Adobe on how they used them (not as important). they then purchased UPGRADE licenses from Adobe (for something like $400-500), who, as part of the license agreement, told the company to destroy the original software (discs). they did not but instead gave/sold them to this other guy. when he tries to pawn them off, he got busted. the terms of the upgrade license weren’t fulfilled. that’s the beef.
Re: what about considering the actual circumstances
the way i understand it, the original company bought licenses for one version but ran afoul with Adobe on how they used them (not as important). they then purchased UPGRADE licenses from Adobe (for something like $400-500), who, as part of the license agreement, told the company to destroy the original software (discs). they did not but instead gave/sold them to this other guy. when he tries to pawn them off, he got busted. the terms of the upgrade license weren’t fulfilled. that’s the beef.
Then the sole legal beef would be between Autodesk and the original owner of the software. Autodesk has no say in whether or not this guy can then resell the software he purchased.
Re: Re: what about considering the actual circumstances
Not true if the original sale was an unlawful sale of copyrighted material, which the court said it was. The copyright holder has the sole right to distribute their copyrighted work. And in this case if no sale occurred, but rather, a license, then you can’t invoke first sale, as there was no qualified purchase which occurred to invoke first sale. While the second sale (CTA -> Vernor) seems lawful, the fact that the first never occurred (Autodesk -> CTA), means the second and third sales couldn’t happen.
Also, in response to OP, the issue isn’t that they violated the license agreement in failing to destroy the disks, but whether or not CTA (the people Vernor bought from) were owners or licensee’s. The court found that they were licensee’s, and therefore, could not sell it.
All this being said, Vernor has a slam dunk case against CTA to recover the cost of him purchasing the disks…
Re: Re: Re: what about considering the actual circumstances
I buy a second-hand bike from a store.
That store got that bike from someone else. (not knowing whether it’s stolen or not, let’s say in the time span between the theft and the reporting of the theft)
Later they find out, that that bike was in fact stolen, making my sale (and the shopkeepers initial purchase) unlawful.
Do I get to keep the bike?
If not, who compensates me?
Re: Re: Re:2 what about considering the actual circumstances
The owner of the bike can recover against you, or against the bike shop owner at their discretion under the common law. Again, you would then have the right to recover against the bike store or whomever sold you the bike.
Group ownership is better than individual ownership?? NOT
The whole concept of private citizens owning tangible goods is under assault in this country. Entertainment media is being converted from objects you can own, to subscription services. Tools that are essential to modern business are now for rent only, as in this example (If you can call it rent, since the price would appear to reflect a full purchase rather an installment). Home buyers are being told in some parts of the country that the original developer will be collecting a tax on all future transactions, as if the first buyer was not allowed to take ownership of all of the value in the real property when the home was sold.
—
The last time group ownership was tried on a wide scale, it was millions of citizens (in the form of a central government) owning tangible assets that private individuals were instructed to use in the most productive way possible, even though they were not allowed to actually own those assets.
–This time, group ownership is coming in the form of thousands, or perhaps even millions of stockholders owning corporate assets that are licensed (loaned??) to private individuals, who again are expected to make the most efficient use possible, while not being able to take full ownership.
–As we know from past experience, the problem is that if you don’t truly own something, you don’t value it as much, and aren’t likely to use it in an efficient manner. The private individual is not allowed to make, and act on all the decisions that a true owner would be able to pursue.
Let’s hope it doesn’t take another 70 years of trouble before people come to their senses and this nonsense ends… as it did the last time around.
FOSS FTW!
Then people start switching in mass and they will be left complaining on how open source will destroy their world.
And they wonder why people pirate software?
This is another reason why people will continue to use pirated and hacked versions of software. Look at the torrent sites and see that software such as Photoshop are at the top of the most downloaded list. This is why. If they could buy an older version for cheaper prices, they might not download the new hacked version. In the end, the only loser is the software vendor.
Number of Issues
– “As is” and rentals seem to be mutually exclusive.
– EULAs are presented after the sale is complete.
– EULAs are not properly recorded. (ie software companies should have to maintain a legal copy of each and every
license they issue just like a normal contract.)
– EULAs are fundamentally not valid contracts since only one party can set terms.
Re: Number of Issues
I also enjoy the EULAs for online games that state that they can be changed at any time and without notifying you.
GPL for the rescue yay!
Where?
Okay, I’m passed the point of talking.
Where do I put my money to help the real cause?
Do I donate it to the EFF, or split it between them and other causes?
Plenty of people donate to feed the homeless, etc, but I’m ready to donate to help the law/constitution/rights you speak about here all of the time.
Where is the best place to send/spend my money to promote this type of open thinking?
Software sale
Xerox got into this a while back with the software needed to run the larger copiers. They tried to prohibit third part vendors from servicing copiers by not supplying them with the necessary software to make the machine operate. The lost that one big time in court as I remember.
I smell opportunity...
Why do most companies insist the software be properly licensed prior to use? When they sell a product / service built using it they need it to be legal and supported.
So… “Help Wanted” to start-up a tech company with fully licensed versions of all the EULA encumbered crap.. and we will either convert your FOSS to whatever flavour.. or open a “draft” copy you happen to have – save it nicely- and viola fully compliant file can sell / use anywhere.
Wonder if you can use per seat license with Adobe… and start a rental-market for seats using a follow the sun model? Why buy when we can ‘loan’ you the 15 seats your architects need from 7am to 7pm for a fraction of the cost? Only pay for what you use?
Why (if I can think of these better options) if you are going to sell licenses do you not use a subscription model rather than (to borrow the analogy) the car-sales model. Heck – lease em. Use a lease as it is a well regarded contract type and precludes selling etc outside of the lease anyway. At least then you are upfront and honest about what the suc%$… er ‘customers’ get for their money.
And they really wonder why people pirate software???
any EULA should be only 4-5 bullet points… its a unilateral license not a legal contract.
If they keep this up I will be giving up mainstream gaming – $80 for mediocre games is not worth it. Indie games FTW.
*sigh* have to stop typing now… so much more to say.
For physical media
One option for second hand sales of physical media that I can think if is, advertise the license as free, but you just happen to be charging $80/$4000/whatever for the physical media itself.
Alternatively, Make the software free, and charge a fee for support/access (As in Activision Blizzard with World of Warcraft). I mean, it’s not that hard to come up with a more viable business model than free software with charged tech support.
Need I remind people that the 9th Court is the most OVERTURNED court in the United States, with 8 out of 11 of their cases being overturned on appeal!
Seriously, what the 9th Court says is WORTHLESS in almost all cases.
The ninth circuit is insane.
i would recomend what hal turner recommended but we see what happened to his free speech rights.
Warranty Legal Agreement change imposed after sale
I read this thread and article and think how this thinking/changing could apply to other products. Within the IT home/use realm.
I had an experience a few years ago buying several high power UPS for home use. I got them home, read the Warranty Agreement and thought it was ok, so I began installing them where I had planned. These were not inexpensive at all. One failed and I spoke to the store manager who said that it was over 30 days and I had to pursue the Warranty with the vendor.
I called the vendor, went through a number of questions. I had worked out a list of what was plugged into it, the burden, etc and sent it along with the filing. I had only burdened the UPS 45% if all devices were on at once. It gave me a conservative protection in time and any reasonable spikes that might occur. The vendor offered to repair their product but to do it, I would have to surrender any future warranty claims. That wasn’t in the agreement and I said so. I did not file for the warranty repair. I questioned their product quality and warranty (which I considered to be part of the cost I paid for the product. Warranties aren’t free.) I had a $1000 UPS sitting dead, and maybe 15 more wondering if they were lemons too.
I tried to escalate my concerns and got to a VP in that company and not only got a refusal, but pretty indignant attitude. (More than indignant. But seriously nasty and in writing.) I explained that I felt that this was a breach of contract in my mind and that I’d need to learn more.
I was stuck.
I began to get calls from a lawyer representing the vendor. But I didn’t respond immediately. Getting calls from a vendors lawyer, I felt I needed some help and advice with Consumer Protection.
I live in DC, bought them in Maryland and the company was in another state. This allowed me to file complaints with full details to the FTC, Maryland Attorney General, the BBB and that state’s Attorney General.
I had planned a second mailing to all the companies the vendor used on their web-site who were customers willing to be known to be consumers of the companies UPS. But I held that back.
In a news article I found the name of the companies president and using the format of the VP’s email, I emailed the complaints and the indignant email from the VP. I copied it to the Store (corporate and the chain) where I made this purchase and explained that the vendor didn’t honor their warranty unless I would agree to void it to get warranty service. If the product was a lemon or they wouldn’t honor the warranty I paid for in the purchase, I wanted to return them all.
I waited for all the filings to be done. And whatever emails that might have been exchanged between the resellers and the vendor. I never heard back from that president. but got an apology from the VP, voice and in writing. And an offer to replace the UPS without modifying my warranty.
I sent the letter to all the agencies to ask advice. Could I trust this not be to a 1 time offer if others fail. I waited for answers and the VP started to contact me periodically to get me to accept the offer. She increased the offer to advance ship a replacement and send a vendor-paid shipper. The lawyer kept leaving messages.
Once I got the answers from the agencies I accepted the offer and everything was fine.
After all that business was done I did take a call from the lawyer. I can’t remember why he started to call, but it wasn’t for any bad reason. But the filings from the agencies made it more visible. He asked for my help to close all the open cases as some needed the complaintant’s agreement that the situation was solved in a satisfactory manner to close them.
If the court is going to get into EULA’s, will they get into Warranties too?
The reason I wrote all this out is, if the courts interpretation of EULA’s change, it’s a modification of the rights we purchased, known/understood, at the time of sale.
If everyone who is effected by a re-interpretation of EULA’s for software they already own file Consumer Protection complaints, would this influence the circuit courts or future courts decisions?
randy
Update
Whatever became of this?
Update
http://www.scottandscottllp.com/main/Supreme_Court_Allows.aspx
Ripple Effects
Nope, they use open source software.