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Consumer Rights: Court Rules Against Used Software Sales
ECN Magazine ^ | September 13, 2010 | Jason Lomberg

Posted on 09/13/2010 1:35:31 PM PDT by Still Thinking

The 9th Circuit of Appeals has reaffirmed the right of software companies to circumvent the first-sale doctrine by “licensing” rather then “selling” its products. The significance of this ruling cannot be overstated—it could singlehandedly destroy the used software market.

In 2005, one Timothy Vernor bought a sealed copy of AutoCAD Release 14 at a garage sale. In 2007, Vernor purchased four used copies of Release 14 from an authorized dealer, Cardwell/Thomas & Associates (CTA). He subsequently placed all but two copies on eBay, and in each instance, Autodesk appealed to the Digital Millennium Copyright Act (DMCA), alleging copyright infringement. In 2009, the courts ruled in Vernor’s favor, reaffirming his rights under the first-sale doctrine. But the 9th Circuit of Appeals recently overturned that decision—according to the ruling, the software license overrides the first-sale doctrine.

(Excerpt) Read more at ecnmag.com ...


TOPICS: Business/Economy; Constitution/Conservatism; News/Current Events
KEYWORDS: autocad; autodesk; copyright; copyrightlaw; dcma; dmca; license; rightoffirstsale; software; usedsoftware
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1 posted on 09/13/2010 1:35:36 PM PDT by Still Thinking
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To: ShadowAce

Tech list ping.

On the upside, this IS from the most reversed circuit in the nation.


2 posted on 09/13/2010 1:36:18 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: Still Thinking
I once read an interview with some asshat owner of a game company who wanted to get involved in selling used games because it would be better for the buyers and stop the company from getting ripped off by not getting a cut every time one of their products changes hands.

What happens when car companies decided to start selling "licenses" to drive a car? If the courts think that's farfetched, what makes software mfgrs so much more special than car makers?

3 posted on 09/13/2010 1:39:33 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: Still Thinking

Meanwhile, Adobe ENCOURAGES used sales to spread it’s software, and encourages you to buy the upgrades.

Two different companies, two different ideas


4 posted on 09/13/2010 1:40:19 PM PDT by tcrlaf (Obama White House=Tammany Hall on the National Mall)
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To: Still Thinking
This could get interesting.

A few years ago Microsoft beat a lawsuit over errors in Xcel on the basis that the software was sold, where is, as is, with no implied warranties. It was in one of the states that has really strict product liabilities laws (Ohio maybe).

Some construction company had messed up a bid because of the Xcel flaw. If the software companies are shown to have surviving “rights” in the software even after it is sold, they could also be shown to have surviving “liabilities” in the software after it is sold as well.

Given the amount of bugs in most of the software released today, this could be a double edged sword.

5 posted on 09/13/2010 1:42:26 PM PDT by I cannot think of a name
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To: Still Thinking

The arrogance of some sw companies is amazing.


6 posted on 09/13/2010 1:43:11 PM PDT by DonaldC (A nation cannot stand in the absence of religious principle.)
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To: Still Thinking
"What happens when car companies decided to start selling "licenses" to drive a car? "

Without making comments on the merits of this case, I'd point out you're comparing apples to oranges.

The copyright isn't for the physical CD/DVDs themselves. The copyright is for the intellectual property that is contained on the CD/DVDs. That intellectual property, and the functionality that it represents, is what is copyrighted.

When you buy a car, you are buying - and titling - the car itself. The physical property (not intellectual property) that is the car, is what is legally titled in the owner's name. The software license allows the licensee access to the intellectual property.

7 posted on 09/13/2010 1:44:59 PM PDT by OldDeckHand
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To: Still Thinking

Software doesn’t have wear and tear. There will never be a need to replace it.


8 posted on 09/13/2010 1:45:47 PM PDT by Borges
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To: OldDeckHand

This could be a problem for used book stores as well then.


9 posted on 09/13/2010 1:49:35 PM PDT by Teotwawki (Live free or die. Seriously. It's not just a state slogan.)
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To: Borges
Software doesn’t have wear and tear. There will never be a need to replace it.

Which is why we're all using Windows 3.1 these days.

10 posted on 09/13/2010 1:51:01 PM PDT by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: OldDeckHand

OK, then how is software different from books, or movies, or music.


11 posted on 09/13/2010 1:51:46 PM PDT by Drill Thrawl (Rahm and George at Doe's when the knife came down)
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To: I cannot think of a name

Interesting indeed. Makes one wonder how this could be applied to the resale of for example books. It’s not so much the value of the paper, but the ideas printed on it that gives it value. Also, how will software companies square this with their revenues for “sales”? Did they just sell a plastic disk? Did they lease it? Did they sell the disk but lease the intellectual property? A big ol can of worms.


12 posted on 09/13/2010 1:53:30 PM PDT by SpaceBar
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To: OldDeckHand

I agree with you, but modern vehicles have incorporated into their design, several computers. Presumably each runs some type of program. What do you suppose would prevent future assertion of intellectual property claims on the part of the manufacturer?


13 posted on 09/13/2010 1:53:34 PM PDT by Sgt_Schultze (A half-truth is a complete lie)
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To: Borges
There will never be a need to replace it.

That's funny!

14 posted on 09/13/2010 1:54:37 PM PDT by An Old Man
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To: I cannot think of a name

Exactly. They and the entertainment industry have both argued both license and sale, so they’ve lost their right to choose. I say whichever is the more consumer friendly prevails in any given case, similar to the way ambiguities in a contract are construed against the party that wrote the contract. If they can’t even tell themselves, they don’t get to hold us to whichever is more convenient for them on a case-by-case basis.


15 posted on 09/13/2010 1:55:39 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: Borges
A I write this, the lights on the router are going like mad. I can't wait to see what kind of crap is in today's upgrade.
16 posted on 09/13/2010 1:56:58 PM PDT by An Old Man
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To: Drill Thrawl

A decision that will no doubt help lawyers make their house, car, and kid’s college tuition payments for years to come.


17 posted on 09/13/2010 1:57:12 PM PDT by SpaceBar
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To: Still Thinking

You ever leased a car? That’s basically a license, you can’t resell it, you still gotta do most of the maintenance.


18 posted on 09/13/2010 1:57:51 PM PDT by discostu (Keyser Soze lives)
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To: SpaceBar
“Makes one wonder how this could be applied to the resale of for example books.”

I don't believe anyone has every tried it with books, but a know the music business made a run at used CD’s and got nowhere.

The funny part is this. I hope it does stand. I'd rather have the software companies keep “ownership” in their product - and then have to answer for it being full of bugs and mistakes!

I have a feeling that the lost revenue from resales is nothing compared to the cost of having to produce a product that actually does what they claim it will do.

19 posted on 09/13/2010 1:58:01 PM PDT by I cannot think of a name
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To: Still Thinking

Almost all computers and modern electronic devices depend on embedded software (like Windows) which is licensed. If this ruling stands any license holder of this embedded software could stop or put conditions on the resale of this equipment.

And because modern automobiles contain computers and embedded software, that would include used car sales.


20 posted on 09/13/2010 1:58:43 PM PDT by Inappropriate Laughter (Obama: Another illegal alien living in public housing)
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To: Still Thinking

Doesn’t a user have to install the software and agree to the license in order for said license to be deemed “used”? If the software package was not opened, the software not installed, and the license not agreed to, the license was therefore not used and I see no problem in reselling the package. In that instance, I wouldn’t call the software “used”.


21 posted on 09/13/2010 2:00:45 PM PDT by grateful
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To: Drill Thrawl

The first sale doctrine, which provides that the copyright owner’s exclusive distribution right ends upon the first sale of the product, is written into the copyright act. The text of the statute provides that it applies to books and phonorecords. That’s the difference.


22 posted on 09/13/2010 2:00:56 PM PDT by Publius Valerius
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To: Still Thinking; 537cant be wrong; Aeronaut; ├čudda├čudd; bassmaner; Bella_Bru; ...
The 9th Circuit of Appeals has reaffirmed the right of software companies to circumvent the first-sale doctrine by “licensing” rather then “selling” its products.

No reason they couldn't put the same sort of seal onto CDs and DVDs of other entertainments.

There are already plenty of DVDs with DVD-ROM content alongside the video content. Ergo it is "software".

Digital downloads carry no provision for resale (although some have tried to get the lawsuits to do so established).

23 posted on 09/13/2010 2:02:17 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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To: OldDeckHand
Sorry, but your analogy fails. Today when you buy a car it's like you purchased a tiny laptop, with installed software, that is carried around by a large metal object that burns gas.

The computer controls on a motor vehicle are really no different ~ yet you not only can sell your car without being attacked for violating the implied "license" to use the software on the chip(s) it would probably be impossible to get an upgrade anyway.

24 posted on 09/13/2010 2:02:45 PM PDT by muawiyah
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To: Drill Thrawl
"OK, then how is software different from books, or movies, or music."

It's a little complicated, and this isn't my area of law so my answer probably won't be as precise as it should be, but they really aren't significantly different.

When you buy a movie, a book or music DVD, you are agreeing to an implicit license - that license it allows you to enjoy your Book/CD/DVD so long as you enjoy it yourself, or in the privacy of your own home. The implicit license does not allow you to play that CD/DVD in a commercial setting - like at a bar or club (unless you've paid ASCAP or BMI fees). That is the limitation of the license. Nor, are you allowed to copy that CD/DVD or book - again, another limitation of the implicit license.

The software license is an expressly articulated license. The buyer, upon purchase and installation of the software, agrees (enters into contract) to behave in a certain way. If the buyer does not wish to behave in a certain way, he does not have to buy and install the software.

Since I haven't familiarized myself with the relevant case law, I may be wrong here, but I don't believe its disallowed to resell unopened software. IOW, I could buy MS Office from Best Buy, and then sell it to you so long as the box is unopened. So, in the strictest sense, just like with movies/cds, I can resell software. I just can't resell it after installation.

25 posted on 09/13/2010 2:03:36 PM PDT by OldDeckHand
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To: Still Thinking

The ninth circus was created so the SCOTUS would have a dummy to beat up on.
.


26 posted on 09/13/2010 2:05:24 PM PDT by editor-surveyor (Obamacare is America's kristallnacht !!)
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To: Still Thinking
it could singlehandedly destroy the used software market

That's not all. The same arguments could be used to prevent the sale of used DVDs, CDs and even books.

The next time you buy a book, better make sure it doesn't have a EULA hidden in the packaging.

27 posted on 09/13/2010 2:05:41 PM PDT by Bubba_Leroy (The Obamanation Continues)
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To: Still Thinking
What happens when car companies decided to start selling "licenses" to drive a car? If the courts think that's farfetched, what makes software mfgrs so much more special than car makers?

Actually that tried that in their lease program's years ago, trying to make users purchase their oil brands and etc, are it violated the lease. It lasted about five minutes before a judge.

28 posted on 09/13/2010 2:06:21 PM PDT by org.whodat
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To: OldDeckHand
Since I haven't familiarized myself with the relevant case law, I may be wrong here, but I don't believe its disallowed to resell unopened software.

Ah, ok. I read that Mr. Vernor had bought a sealed copy from the garage sale and thought the other 4 copies were sealed as well. That may have not been the case.
29 posted on 09/13/2010 2:07:38 PM PDT by grateful
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To: muawiyah
"Sorry, but your analogy fails. Today when you buy a car it's like you purchased a tiny laptop, with installed software, that is carried around by a large metal object that burns gas."

Sorry, but your "failure" of my analogy, fails itself.

When you purchased you car, does the manufacturer make you agree before starting the car that you won't resell it? No, they don't. But, that is precisely what some software licenses make you do - and those are the software licenses that we're talking about.

Some software is unlicensed, or allows resale in its implicit license - like the software in my car analogy. Some other software is not. It's the "is not" that is in question here.

30 posted on 09/13/2010 2:08:42 PM PDT by OldDeckHand
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To: I cannot think of a name

Very interesting point.


31 posted on 09/13/2010 2:08:54 PM PDT by DB
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To: OldDeckHand

Then how come software patents are allowed instead of just copyright protection? They want it both ways.


32 posted on 09/13/2010 2:10:42 PM PDT by DB
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To: DonaldC

Yes but they’ve been burnt a time or two so they have resigned themselves to playing the pay-for-votes game which leads, ultimately, to having the ‘right’ kind of judges in place for rulings such as this one.


33 posted on 09/13/2010 2:12:02 PM PDT by relictele (Me lumen vos umbra regit)
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To: DB
"Then how come software patents are allowed instead of just copyright protection?"

Because there is nothing inventive about music, per se. However, there is a great deal inventive about software. Copyrights protect artistic works, and limit reproduction. Software enjoys a copyright and a patent because not only does software enjoy "copy" protections, it also enjoys the inventive protection of the patent.

34 posted on 09/13/2010 2:15:00 PM PDT by OldDeckHand
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To: OldDeckHand
The implicit license does not allow you to play that CD/DVD in a commercial setting - like at a bar or club (unless you've paid ASCAP or BMI fees)

ASCAP and BMI only handle the MUSIC publishing rights. You'll need to be up on your ASCAP and BMI fees in a bar even if you just put the television on (argument is that a song they "own" could be played on a video, tv commercial, or on tv show or movie). The movie owner is still not authorizing you to play the movies in a bar.

Note that CDs don't have a disclaimer "for private use only unless you are up on BMI/ASCAP fees....

35 posted on 09/13/2010 2:15:10 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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To: Still Thinking
What happens when car companies decided to start selling "licenses" to drive a car? If the courts think that's farfetched, what makes software mfgrs so much more special than car makers?

You can't copy a car.

If I buy software (that is, a license to use said software, if it is sold that way), I could copy the bits onto my hard drive or removable media, then try to sell the original media.

Once sold, I could keep using the software, using the copy I made. And now the person to whom I sold the original can use it (or repeat what I did).

You can't do that with a car - if you sell it to someone, it's gone from your possession - the buyer has it, and you can't drive it any more (at least not at the same time the new owner is driving it).

36 posted on 09/13/2010 2:15:40 PM PDT by Mannaggia l'America
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To: OldDeckHand
There are 10s of thousands of lines of code in the average new car today. Plenty of room for intellectual property challenges there.

/johnny

37 posted on 09/13/2010 2:15:45 PM PDT by JRandomFreeper (Gone Galt)
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To: Lurker; Borges

> “Software doesn’t have wear and tear. There will never be a need to replace it.”

> “Which is why we’re all using Windows 3.1 these days.”

.
A poor analogy to the AutoCAD software question.

Some of the older versions (Ver 12 in particular) are considerably better drafting engines than the current versions. The recent versions are, to put it rudely, a pain in the ass to work with for most users, which has caused demand for the easier to use older versions to climb.

If your comparison to Windows were valid, the stuff wouldn’t sell at all.


38 posted on 09/13/2010 2:15:59 PM PDT by editor-surveyor (Obamacare is America's kristallnacht !!)
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To: I cannot think of a name
I hope it does stand. I'd rather have the software companies keep “ownership” in their product - and then have to answer for it being full of bugs and mistakes!

Don't kid yourself, never going to happen that way. They own the software, you own the bugs.

39 posted on 09/13/2010 2:16:38 PM PDT by ChildOfThe60s (If you can remember the 60s, you weren't really there.)
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To: OldDeckHand

“Software” can be a CD-ROM of clipart (nothing new created except for a compilation of fair use images stored as JPGs, BMPs, and TIFs).

Software can also be something like a pdf of a movie script on a DVD or a simple flash animation/game.


40 posted on 09/13/2010 2:17:03 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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To: ChildOfThe60s

The software industry is the only one I know of that knowingly ships faulty product and is exempted from liability lawsuits.


41 posted on 09/13/2010 2:18:04 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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To: grateful
"Ah, ok. I read that Mr. Vernor had bought a sealed copy from the garage sale and thought the other 4 copies were sealed as well. That may have not been the case."

I skimmed the nutty 9th decision, and they are saying just that - whatever 1st Sale protection the seller enjoyed, is superceded by the software license - typically nutty by the 9th.

As I said to another poster, I really don't have an opinion on the merits of the case, but I was just trying to illustrate the difference software license and a implicit music/movie license that comes with a DVD/CD.

42 posted on 09/13/2010 2:18:42 PM PDT by OldDeckHand
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To: OldDeckHand; Still Thinking
When you buy a car, you are buying - and titling - the car itself. The physical property (not intellectual property) that is the car, is what is legally titled in the owner's name. The software license allows the licensee access to the intellectual property.

Okay, then they'll start licensing the software that runs the car...

43 posted on 09/13/2010 2:20:03 PM PDT by raybbr (Someone who invades another country is NOT an immigrant - illegal or otherwise.)
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To: a fool in paradise

Neither of those statements is true. Most industries knowingly ship faulty products, they just tend towards minor errors that they decided weren’t a big enough deal. And software companies aren’t exempt from liability lawsuits, they get sued all the time for the side effects of bugs, and tend to lose.


44 posted on 09/13/2010 2:21:05 PM PDT by discostu (Keyser Soze lives)
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To: JRandomFreeper
"There are 10s of thousands of lines of code in the average new car today. Plenty of room for intellectual property challenges there."

Sure, if you extrapolated that code from whatever PROM they were encoded on, then repurposed and resold just the software, I'm sure you would be sued, and I'm sure you'd lose.

But, the license for that particular software allows the user to resell it as part of the car it was initially installed on. This case isn't that.

45 posted on 09/13/2010 2:21:14 PM PDT by OldDeckHand
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To: Bubba_Leroy

In Texas, the pawn shop owners tried to put the used book/dvd/CD/record stores out of business (or at least in a sad state) by requiring them to “hold” all used merchandise for 30 days before stocking it on the shelves as inventory and checking with all police departments for reports of stolen items (also getting fingerprints and contact information on all persons selling used books, etc.).


46 posted on 09/13/2010 2:21:29 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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To: Mannaggia l'America

> “If I buy software (that is, a license to use said software, if it is sold that way), I could copy the bits onto my hard drive or removable media, then try to sell the original media.

Once sold, I could keep using the software, using the copy I made. And now the person to whom I sold the original can use it (or repeat what I did).”

.
That is not what is in question here.

The software involved in this ruling was traded back to an AutoDesk licensed dealer, for value, in exchange for a new version, and then later resold by the dealer when it became more valuable.


47 posted on 09/13/2010 2:21:40 PM PDT by editor-surveyor (Obamacare is America's kristallnacht !!)
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To: discostu

The software I use by numerous name vendors all the way up to microsoft include a “dislaimer” that I am forced to check understaning that they do not take responsibility for their software impairing my computer and possibly causing it to crash.


48 posted on 09/13/2010 2:23:29 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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To: Inappropriate Laughter

Technically most of them already do. If you want to completely follow your license agreements any used computer you sell should be scrubbed of probably all your software.

Software in cars isn’t licensed, it’s part of the car.


49 posted on 09/13/2010 2:23:40 PM PDT by discostu (Keyser Soze lives)
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To: discostu

Bit different than a liability lawsuit because a pentium chip had math errors.


50 posted on 09/13/2010 2:24:10 PM PDT by a fool in paradise (Ask yourself,where does Saudi Arabia fit on a scale of "passive" to "moderate" to "extremist" Islam?)
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