Court Says First Sale Doctrine Doesn't Apply To Licensed Software 758
An anonymous reader wrote to tell us a federal appeals court ruled today that the first sale doctrine is "unavailable to those who are only licensed to use their copies of copyrighted works." This reverses a 2008 decision from the Autodesk case, in which a man was selling used copies of AutoCAD that were not currently installed on any computers. Autodesk objected to the sales because their license agreement did not permit the transfer of ownership. Today's ruling (PDF) upholds Autodesk's claims: "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. Applying our holding to Autodesk’s [software license agreement], we conclude that CTA was a licensee rather than an owner of copies of Release 14 and thus was not entitled to invoke the first sale doctrine or the essential step defense. "
Not Quite (Score:1, Interesting)
Court Says First Sale Doctrine Doesn't Apply To Licensed Software
No, that's not what the Court said. Here's a more accurate sound bite:
the first sale doctrine is "unavailable to those who are only licensed to use their copies of copyrighted works."
What the Court is saying is that *if you agree* to a licence that prohibits you from reselling the software, than you can't resell it. It's a licencing issue, not an ownership issue.
What to learn from this? Don't agree to this sort of licence. Build software in-house (or have built for you), or use Open Source. This sort of licence will start to fade as more and more Open Source projects attain "enterprise quality". Tell these software houses that still use this sort of licence to hit the road.
This should really go to the Supreme Court... (Score:5, Interesting)
It would be good once and for all to find out whether or not EULAs (especially ones that do not appear until after the software is open) are enforceable. I would prefer all contracts require written signatures, as well as modifications of such, so that companies can not arbitrarily change clauses willy-nilly even if the contract has wording to allow such. (Think cell phone contracts, I never signed anything). First sale should be first sale, period. On the other hand, I am afraid as to what the Supreme Court would rule in such a decision.
EULA-mania (Score:4, Interesting)
Re:Yay! (Score:3, Interesting)
/. is being stupid.
Expect one with your next CD or book.
At least we aren't stealing any more (Score:5, Interesting)
If we are just a licensee, then that means they can't sue for intelectual property theft. It went from 'breaking and entering' charges to 'trespassing'.
Re:Yay! (Score:3, Interesting)
Yep. It's a done deal. There was actually a panel at PAX that addressed this directly. What you buy is a license, and the contract you sign is the EULA you click through when you install the software. You can abort the installation at that point, and the publisher (not the retail store) is supposed to refund you your purchase.
It's really, really important to read the EULA. It's not that people can put anything they want into it, but it's fairly close. Short of signing over constitutionally protected rights, anything goes. And the First Sale Doctrine is just that, a doctrine - not a federally protected right.
And yes, everyone and their brother will try to emulate this. The only good news is that it is much harder to enforce a license when buying an actual good, because people aren't used to having to sign a document when buying a stove or a TV. But since everyone is used to just clicking accept in the EULA, they are enforcable in software.
Re:Not Quite (Score:5, Interesting)
What if you bought the software, and since you weren't presented with the license before sale, try to sell it after not agreeing to the license and not installing it on your computers?
Re:9th Circuit (Score:3, Interesting)
This has nothing to do with the 9th Circuit Court. This is strictly a contract issue. Can you enforce a contract that gets signed after money has already exchanged hands? That's it.
You also managed to repeat the misleading statement that it is the most overturned - it is also by far the one that gets cases most often to the Supreme Court, and one of the two busiest circuits in the nation.
Re:Bad consequences (Score:5, Interesting)
No. We need them to add it ASAP and push the issue hard.
This is one of those "on the internet" type things where the judges are missing reality because they are not seeing it in a familiar context.
Push the license for books, CD's, cars, clothing, everything you can.
class action lawsuits against retailers (Score:0, Interesting)
Now we should all file class action lawsuits against retailers (including Microsft too) for calling it "Sale" at their stores for software when they actually meant "License".
Re:Why just software vendors? (Score:3, Interesting)
Interesting that you say "retroactively" since from their perspective, there's no retroactive. It's just something you agreed to when you clicked the button upon install.
If there is any contract to be agreed to when purchasing or licensing a good, it should be signed and understood prior to exchanging money for the good.
I'm not saying that is the law, only that it should be the law. It should basically be illegal to enter into a contract using a mouse-click. All contracts should require person-person interaction with a full discussion of the contract. I don't care how inconvenient and silly it is. If it's worth having a signed contract then it worth spending the time to discuss and explain it. If your customer gets angry and leaves because you want to waste 20 minutes explaining this crap to him, that's your problem. Get rid of the license in that case.
If the seller fails to make the full nature of the contract clear to the purchaser prior to taking his money, then he should be liable to be sued for at least three times the price of the good being sold in addition to being on the hook for triple damages to the consumer should he get sued by the publisher plus agreeing to take the product back.
Once you do that, you'll see that no retail outlet is going to want to spend 20 minutes per customer per title they buy just to make sure the license conditions are understood and accepted and signed in triplicate. That should put an end to this nonsense.
Again glad I live in Canada (Score:4, Interesting)
The law does not allow companies to place restriction on the lending, or selling of a license. Please note I said companies, governments for obvious reasons do not allow this for things such as driver's licenses.
This law is the basis for why downloading a file from a P2P network, or other source is not illegal. The license is for using the material, so you have not committed a crime until you use the material without a license.
For example, if I have All My Loving on a Beatles record and I download the MP3 and listen to it, that is perfectly legal. If I downloaded and listened to Poker Face which I don't have a license to, that would be illegal.
Re:Bad consequences (Score:3, Interesting)
No, that's not true.
I have thousands of books, CDs, vinyl, and none of them have a EULA that prohibits me from selling any of it at all.
It's all about the EULA, if you'll RTFA, including export restrictions (as cited, out of the Western Hemisphere in the case of AutoDesk).
Re:Yay! (Score:3, Interesting)
It's already happening with home builders.
http://money.cnn.com/2010/08/23/real_estate/home_resale_fee/index.htm [cnn.com]
Re:Bad consequences (Score:4, Interesting)
Don't worry, they can't apply restrictions retroactively. You'll always be able to sell everything you have now, the question is about things you buy in the future. Just keep an eye on Slashdot and you'll see if anyone tries this BS with books, CDs, DVDs, etc. When that happens, simply don't buy those goods.
Finally, even if you do buy goods licensed that way, you can still sell them, just not in the USA. Look for some type of Craislist-type site in Europe or elsewhere, and sell your stuff there. As long as Customs doesn't open it to inspect it, you should be OK.
However, when it does come to that point, you'll probably want to consider simply packing up and moving out of the USA, because that'll be a sign that things are about to turn really ugly here.
Re:Yay! (Score:3, Interesting)
yes, they said it and until now it was nothing more that a load of bullshit, this ruling makes it so.
you no longer own your music collection.
Re:Yay! (Score:3, Interesting)
In my best Morbo voice (Score:5, Interesting)
CONTRACTS DO NOT WORK THAT WAY!
Contracts aren't something you can trick someone in to, they aren't something you can say "By nodding your head in that way you agree to all this stuff." In general, a contract must have few things that an EULA fails at:
1) A contract must be an exchange. Contracts can't be one sided, they have to be an exchange. That's why if you do something like a quit claim deed (meaning you helped someone buy property and are now letting them have it) it'll say something like "For the sum of ten dollars and other valuable consideration I quit all claim," and so on. Even when the intent is to give something over, there MUST be an exchange for it to be a contract. An EULA just acts to tell you what you can't do.
2) A contract has to be prior to the exchange or sale. This is why you sign all the paperwork related to a home purchase before it is yours. That contract is only binding if you sign it before things happen. They can't sell you something and then say "Oh by the way, here's the contract." Sorry, too late. Same deal with prenuptial agreements. They are "pre" the nuptial for that exact reason. You can't tack on terms after something is done, has to happen before hand.
3) A contract must be open to negotiation. You don't have to accept what the other side proposes, of course, but you have to be open and available for it. You can't hand over a contract and then vanish. When my university signs a contract with MS or someone for a Software Assurance pack, there is negotiation. They send us the contract, our lawyers change it and send it back, they change it and send it back and so on. That has to be there, that opportunity. A contract cannot be a one sided demand, both sides have to discuss and mutually agree.
None of this is new or special, this is how contracts work, this is why things are done as they are. For some reason though some people, including the 9th circuit, seem to be ignoring that for software and saying "Sure it is perfectly ok to put a bunch of requirements on shit ex post facto, never mind that we'd never allow that for other situations."
I do not get this logic (or rather lack of logic).
Re:Not Quite (Score:3, Interesting)
I think they can hit you with illegal "sublicensing", licenses as such are not products.
What they really are trying to dodge is copyright law itself. AIUI, copyright is very clear that if you buy a copy of a copyrighted work you OWN that copy, and can do (nearly) whatever you want with it, including reselling it. You are not making more copies so you are not in violation of copyright. By claiming that the physical media is inconsequential to what you actually paid money for, they are trying to prevent you from exercising rights you would have under copyright law.
In summary: Someone should smack their heads around until they stop being jerks to their customers.
Re:Yay! (Score:5, Interesting)
Let's look at two scenarios. In one case, a person is buying a loaf of bread. In another case, a person is buying software. I'm not going to tell you which is which.
Scenario 1: person walks into store, takes [censored] off the shelf, carries it to cash register, pays $n dollars cash, does not sign or click anything, cashier places [censored] into a bag, and customer walks out of the store, carrying the bag.
Scenario 2: person walks into store, takes [censored] off the shelf, carries it to cash register, pays $n dollars cash, does not sign or click anything, cashier places [censored] into a bag, and customer walks out of the store, carrying the bag.
In which of these scenarios did a person acquire a license to use something, and in which did they become the new owner of a physical object?
Re:Bad consequences (Score:4, Interesting)
Yes. It's a common tactic to ask for the moon and then fall back to your previously hideously unreasonable position and play the conciliator, willing to compromise so much.
The only reason to expect anything different at all is because patents are an artificial restriction and a country with them is going to get left behind by unrestricted competitors. Now that we're broke it's getting harder to force the world into ruinous treaties. At some point we'll be left with patented cats and the rest of the world will just cut us and our insane laws off until we starve.
Re:Not Quite (Score:3, Interesting)
Refund from who? Retailers will tell you they have posted signs everywhere they don't refund open box CDs/DVDs/software. Some even make you sign that statement when you make a purchase. Manufacturer (software author) will tell you they didn't perform any business transaction with you and don't owe you anything. If the post-sale single-sided "we'll take your firstborn son" click-through EULAs are legally binding contracts, you - the consumer - don't have many options besides not buying software (or any products containing software) which is known to have an EULA.
Moreover, after this ruling, if you buy such software, agree to the EULA (because otherwise it's a shiny coaster), and you find the product doesn't meet your needs or expectations, you can't even delete it from your device and give/sell it to your friend or neighbor because the court says the EULA has turned you into a "licensee," and the transaction formerly known as "sale" has been negated and overridden by such EULA.
In fact, let's go one step further - I'd like to see these types of licenses on books, periodicals, DVDs, etc. where you agree to the EULA when you tear it open; and as soon as you do that the first sale doctrine goes out the window. I'd also like to see how libraries will be "licensed" books at a different rate than the retail price because the library license would allow multiple viewings. In fact, you could even charge a nominal monthly licensing fee to the libraries.
If you go even one step further, you could sell cars with software EULAs; so that you can't sell your car because your car contains critical software to which you are just a "licensee" and since you can't transfer the car ownership without transferring the software you can't do it at all - or we'll take the standard 30% cut on approved sales, thank you! Come to think of it, most electronic products have some sort of software in them (TVs, DVD/Bluray players, microwave ovens, telephones, alarm clocks, air conditioners, etc., etc.). Wouldn't all manufacturers like to have a choke hold on second hand sales? Sure, just claim it in your software license!
Re:Bad consequences (Score:3, Interesting)
I feel a bit sick saying this, but this would be an instance of #3 with the caveat that the group in violation of the license (they had 'returned' the software in exchange for a discount on the next version) sold that which was not theirs to sell to a third party who then tried to resell the infringing copies.
Re:Bad consequences (Score:3, Interesting)
Given that companies currently ignore the provisions in the EULAs that say that "if you don't like these terms you can return them", I don't see how they can be enforced at all, really.
I think all the guys needed to win would be a videotape of them trying to return AutoCAD after it had been opened.
Re:Yay! (Score:1, Interesting)
Both.
And whichever one is the software cannot be used because the EULA hasn't been agreed to. You can use the box, but not the software.
You can carry the damn box all around the world, but until you click through the EULA, you can't legally use the software in that box.
It's not nearly as hard to understand as you are making out.
Re:Yay! (Score:4, Interesting)
I bought the physical media. I don't need a copyright license to do that. And now owning a "copy" (defined in 17 USC 101 to be the physical media), I have the right per 17 USC 117 to install and run the software on that copy.
Yes, you have that right. However, the vendor of that software is not (as I understand it) bound to give you that right, and laws such as the DMCA make it very difficult to legally install anything if the vendor has chosen to use copy protection. Basically you have rights that you cannot legally exercise and that a vendor can take away from you on a whim ... so for the government to continue calling them "rights" is, to me, just insulting.
... just get out of my face. I won't make illegal copies, but telling me what I can do with it after I've bought it will just get me to seek out alternatives. As this behavior becomes prevalent, when sites like E-Bay start taking down thousands upon thousands of auctions because the software was "sold" with a "non-transferable license" ... well. It just opens up business opportunities for companies willing to treat their customers will more respect. Look, just because something is perfectly legal doesn't mean there's a good business case for doing it, and squeezing one's customers too hard usually has consequences.
From a practical perspective, I have no problem with a corporation wanting to license their software to me, under whatever restrictions they care to place upon it. If I don't like them, I won't rent that software. However, this crap about charging the full retail price for a product under the false pretense of selling it is ridiculous. You want to charge me a nominal monthly fee for the use of your software, fine. I buy the item outright, and you give me the box with the shiny plastic disc in it
Seriously, this is going to present a better and better case for open source products, wherever viable alternatives to commercial shrink-wrapped software exist. That's not always the case, I know (don't want to start a GIMP/Photoshop flamefest here), but if I'm a big company that has traditionally resold old copies of major closed-source apps, I'd think twice before I buy the next version, maybe I'll look at what's out there before sending in that P.O. that, in the past, would have been a no-brainer. At the very least, corporations are going to be scrutinizing those license agreements a bit more closely in the future.
In any event, Congress needs to be replaced far more often than it is. Those fuckers are the ones that sold us out (and there's no other term for it.)
Re:Bad consequences (Score:4, Interesting)
Probably.. however.. I would laugh my ass off, if it opened the software house to lawsuits for crashing your computer, destroying your data, and whatnot despite the release from liability in the license.
After all, if I own the software and am licensing its use, its my property interfering with and damaging other property of mine. But now, I don't own the software. The development house does. And its property is damaging my property.
Re:Bad consequences (Score:4, Interesting)
So would this be a demonstration of GIGO in the legal arena? Logical steps (court process) arriving at a socially undesirable conclusion (prevention of resource transfer) because the initial parameters were garbage (allowing licenses to forbid resale for no reason other than to profiteer by artificially limiting resource availability)?
Re:Bad consequences (Score:5, Interesting)
Re:So let me get this straight... (Score:2, Interesting)
Note that just because you can transfer the box to someone after step 1 does not mean that the transferee will be able to accept the license. For example, if you buy the student version of a program and sell the box to a non-student, that non-student will be legally precluded from accepting the terms of the license agreement, assuming the license specifies that it is only to be used by students.
and what would happen if it said it may only be used by albino dwarves of Irish decent? or only white people may use it?
I hate all this software licensing shit. Its so intensely artificial. Only a lawyer or MBA could come up with this mind contorting argument!
Re:So let me get this straight... (Score:2, Interesting)
Then why Autodesk is not suing CTA? They are the ones that broke the law. Vernor has 10 valid licenses of AutoCAD R14. Full product, not upgrade. CTA has 10 licenses of AutoCAD 2000 Upgrade without software product which allows to use those licenses. Autodesk has right to sue CTA for upgrade license violation. They have no right to sue Vernor. Vernor only bought full AutoCAD R14 license from CTA.
Are you sure that it was "destruction of R14" and not uninstallation? If R14 is destroyed, AutoCAD 2000 upgrade owner loses product which justifies installation of 2000 upgrade.
Re:Bad consequences (Score:1, Interesting)
So essentially, there never was a strong principle of first sale that could not be easily worked around by a bit of legalese. The only reason that the idea of "licensed, not sold" was stopped short on the book market was that the book seller didn't have smart enough lawyers.
Interestingly, it wasn't the first new consumer market after books, i.e. music records, that changed the practice from selling to licensing - only once the software market emerged did the new practice of licensing instead of selling become commonplace.
Re:Bad consequences (Score:5, Interesting)
An absolutely brilliant point. And following up on that point, I went to their website to see how they phrased it, and indeed they are using the language "reasons to buy" and "review and buy" on their product pages.
Re:Bad consequences (Score:4, Interesting)
Re:So let me get this straight... (Score:3, Interesting)
Software companies imposing restrictions on customers through licensing agreements helps them perform price discrimination, which often benefits customers.
We'll I'm an American software developer, so excuse me if I'm hesitant to believe legally allowing (big multinational corporations) to 'price discriminate' is in the consumers 'best interest'. I say this as I've been hearing for years from these same companies how I need to work harder, longer, and for less pay in order to compete with the world's workers. This competition, of course, is not exactly accurate as the truth is that the workers with whom I'm competing are able to work for far less wages since they're the beneficiaries of this price discrimination on nearly all goods and services - prescription drugs, books, media, property taxes, speeding tickets, etc. If the world is now truly Flat, it should be for both the owners and the workers, and legal price discrimination should be allowed only in very special circumstances.
Re:Yay! (Score:4, Interesting)
And whichever one is the software cannot be used because the EULA hasn't been agreed to.
So what happens if I use it *without* agreeing to the EULA? Say I load up the installer in a debugger, click "I disagree" and make the software continue installing anyway. What if I make the EULA display something different (you know, just like a *real* contract, where you can strike sections out or amend it before you sign) and agree to that?
I believe that would be like whiting out sections of the contract after it was signed and carefully inserting your own text in the handwriting of the other party. IE, no way would that pass legal muster.
Couldn't you amend the contract as desired, sign it, and send it to the publisher with a note saying, "if you disagree, let me know"? Isn't that pretty much what the click-through-license does? Then if they disagree and let you know about it, you could resell the box.