US court ruling nixes software End User License Agreement (EULA) sales restrictions

The Register ^ | 28 November 2001 | Andrew Orlowski

[buaya]

In an intriguing ruling picked up by LinuxJournal's Don Marti, a US district court has given encouragement to software users who want to extricate themselves from restrictive software licenses.

The judge, in the case Adobe vs Softman heard in the Central District of California, has ruled that consumers can resell bundled software, no matter what the EULA, or End User License Agreement, stipulates. Specifically, the ruling decrees that software purchases be treated as sales transactions, rather than explicit license agreements. In other words, consumers should have the same rights they'd enjoy under existing copyright legislation when buying a CD or a book. They can't make copies, but they can resell what they own.

"The balance of rights in intellectual property law is already tilted heavily in favor of the intellectual property owner," ruled Judge Dean Pregerson, in a burst of enlightenment.

In the case SoftMan was reselling Adobe software it received in bundles or "collections". Adobe claimed this was a breach of its trademark. Judge Pregerson wasn't convinced, and decided that existing copyright law should apply:

"... the purchaser commonly obtains a single copy of the software, with documentation, for a single price, which the purchaser pays at the time of the transaction, and which constitutes the entire payment for the 'license.' The license runs for an indefinite term without provisions for renewal. In light of these indicia, many courts and commentators conclude that a "shrinkwrap license" transaction is a sale of goods rather than a license."

The decision has its limitations, being merely a vacation of an earlier judgement. It doesn't even settle the Softman case. Given the powerful interests of the shrinkwrap software industry, it's likely to be appealed all the way to the Supreme Court.

But it does weaken the case for blanket, catch-all EULAs, and give users the opportunity to resell bundled shrinkwrap software.

[buaya]

Apparently, the "First Sale" principle - though bruised and bloodied - still lives.

[buaya]

ping

[theartfuldodger]

Even a small victory, such as this, is good news. Thanks for the post.

[newzjunkey]

Excellent. May this continue to be the findings of future courts!

[Grut]

I've always wondered at the enforceability of a contract where you have to buy - and open - the product before you can read the contract which sets conditions on the sale.

[buaya]

"I've always wondered at the enforceability of a contract where you have to buy - and open - the product before you can read the contract which sets conditions on the sale."

I agree.

The foundations of any contract are negotiation and mutual agreement to the terms. As you pointed out, I have to buy and pay for the product before I learn the true terms of the "contract." Furthermore, if I buy the product from a retail outlet, the sales person is in no position to negotiate - or even explain - the terms of the "contract." Obviously, there is no negotiation involved; it is a "take it or leave it" offer, and I have to buy the product to learn the full scope of the terms.

[bvw]

"The balance of rights in intellectual property law is already tilted heavily in favor of the intellectual property owner," ruled Judge Dean Pregerson, in a burst of enlightenment.

"Intellectual Property Owner" is not legit. The proper term is "Temporary Grantee of Exclusive Rights". We, as the sovereign in the formula of our government: "We the People"; we are the owners of all and any intellectual property rights. WE own, inseverably, the property rights to the copies and derivative works, yet we can and do grant temporary exclusive authority to copies to individuals and surrogate entities. We once hoped that those grants might encourage technical inventions and promote engineering and science.