copyright question
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Dear Dr. ©:

I want to buy some new software for my PC, and have found that the prices on eBay are lower than in my local computer store.  Provided that the eBay seller is reputable, why not save a lot of money, since the software is now many times more expensive than the computer hardware?

Software Cheapskate

Dear Cheap:

Until a couple of weeks ago, your skinflint solution to the cost of software seemed like a lead pipe cinch (which, I suspect, you have never seen, and have no idea what it’s used for, but I digress…)  There are plenty of reputable businesses on eBay and elsewhere that sell copies of both current and old version software at good prices.  Many of these buy the software from stores and other companies that go out of business.  Much of it is “NIB” (eBay slang for new, in box) and comes with the manuals, registration numbers, and disks.

Unfortunately, a couple of weeks ago, the Ninth Circuit Court of Appeals threw a bit of a sabot (a wooden clog worn by French factory workers in the 19th Century) into your plans.  (Vernor v. Autodesk, Inc. (No. 09-35969, 9th Cir.))  You see, the Court ruled that since software is “licensed” and not “sold”, the software companies are able to insert legal language into the licenses to prevent transfer of the software from the original licensee to anyone else.  The Court specifically said that the “first sale doctrine” under copyright law (that after a copyrighted work is sold for the first time, the seller can’t control what is done with it thereafter) does not apply when there is never a first sale (because it’s only a first license!)  It’s the first sale doctrine that allows used book and record stores to operate, and NetFlix to send you your movie DVDs (because after NetFlix buys the disk, it can do whatever it wants with it, as long as it doesn’t make copies.)

If you read the license language on the EULA (End User License Agreement) that came with your software, you may find restrictions on transfer.  Such restrictions are common and exist in the Windows EULA, the Microsoft Office EULA, and many others.  You never bought the software, only a license, and thus, your use and transfer may be restricted.

If you think that this situation is bad, I have news for you…it gets worse.

For instance, that music and those movies that you thought you bought from iTunes: it’s actually just licensed to you (the legal terms and conditions run over 50 pages.)  Your new car contains dozens of microprocessors, and the software that runs the car…you guessed it – licensed.  Your new Blackberry, your new digital television, your new microwave oven…all contain licensed software.  In fact, even such non-computer things as the light switches, thermostats, portable telephones, refrigerators, garage door openers, doorbells, fire alarms, water heaters, furnaces, air conditioners, and music keyboards all contain licensed software.  This phenomenon has led some to conclude that we are witnessing the death of sales.  From now on, all you will get for your money is a license. (“Excuse me, miss, but I noticed in the produce aisle that the lettuce is licensed for garnish, but not for salads.  Can I use it to make a BLT?”)

Under the Ninth Circuit’s reasoning, there is no limit to the restrictions that could be imposed in licenses.  It is possible that one day soon, you may not be able to have a garage sale that includes anything electronic without providing written notification (and possibly payment) to the dozens of licensors who own the software in your stuff.  You may not even be permitted to sell or rent your house because doing so may violate one or dozens of software licenses.

Until this question is addressed by state and federal legislatures, the area is a murky one.  You can count on the fact that companies will want to impose the most restrictive terms that they can get away with.  For computers and software, these terms will mean that you don’t own what you thought you bought.  For other types of products, the terms will be tempered by traditional notions of sale – at least until the licensing lawyers get ahold of it.

So, Cheap, at least for now, it looks like you’d better have a larger software budget.  Those good deals on eBay just became a minefield and you just can’t afford to step in the wrong place.  If you have any questions about licenses, ask the lawyers at LW&H.  They wade through that legal mumbo-jumbo every day!

— Lawrence A. Husick, Esq.