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On the Right to Own Software

Written by: Glen Morris

Article Overview: Software companies say software is leased now owned, but a new court decision says differently. For once, the rights of the SMB might just matter.

On the Right to Own Software

This column marks two milestones; it is the beginning of my 15th year writing this column, and the first time in 24 years my byline has appeared in print without a byline by Tom Mulvey in the same publication, making this a truly bittersweet occasion. Thanks for everything Tom.

When the Constitution and Declaration of Independence were written there was debate about adding a provision that guaranteed individuals the right to own property. It was dropped, in part, because it seemed too obvious. That may have been a mistake.

The end user license agreement (EULA) that comes with most software imposes limits on the end user ownership of that the founding fathers never dreamed of. Among the latest of these limitations is a prohibition against reselling the software to anyone else, thus ending a valuable aspect of the right to own software. However, a Washington circuit court recently issued a ruling tossing out those restrictions. If upheld, the ruling could have far reaching consequences for all software users.

The case was brought by an eBay seller, named Tim Vernor, who specialized in selling used items on eBay. Some of the items he tried to sell were previously owned, but unopened, legitimate copies of Autodesk software. This bothered Autodesk, who don't want people to have the option of buying used copies of their rather expensive software.

So Autodesk asked eBay to prevent Tim Vernor from selling used Autodesk software on eBay, arguing it was a copyright infringement under the terms of the Digital Millenium Copyright Act (DMCA). Vernor kept at it and eBay eventually suspended his account for a month, effectively ending his income for that time period. Vernor sued in a Washington state district court, arguing that Autodesk was abusing the DMCA and asked that his actions be declared legal under the DCMA on the grounds of First Sale Doctrine.

Fortunately for us end users, the court agreed that the terms of the transaction between Autodesk and its customers clearly were that of a sale, and not a license. The legal criteria for a license is continued payments for as long as the product is used by the user and a cessation of use when the payments stop. For a sale, the criteria includes a one time payment and unlimited continued use of the product after the payments stop. It's really simple, but the software developers found a loophole, and it's a big one.

The problem is the concept of “legal fiction,” where even if something walks, quacks and looks like a duck, it can still be a banana for legal purposes, if people can be made to “voluntarily” agree to call it a banana.

The difference between whether something is licensed or sold has a profound impact on the rights that apply. Generally speaking, when a product is sold the rights of the seller and buyer are defined by the First Sale Doctrine, as determined by the Supreme Court in a 1908 decision. This decision upheld the right of owners of copies copyrighted works to resell used copies of the work. This decision makes used bookstores possible.

Over the years the contributions of special interests to Congress have been responsible for a serious erosion of First Sale rights. The most recent compromise to first sale rights was the Digital Millennium Copyright Act which reads like it was written by industry lobbyists, and as near as we can tell, actually was. (According to some pundits, it's also unlikely that anyone who voted on the DMCA actually bothered to read it.)

The DMCA in many ways contradicts previous end user rights and makes previously legal acts a criminal offense. For instance, you have a right to make backup copies of software you own, but you can go to jail for defeating the copy protection that is designed to keep you from making copies you are entitled to make.

The DMCA recently was used to sue, and win, damages of $222,000 against a single mother for illegally distributing 24 songs on the Internet, or $9250 per song. You get an idea of just how far off the deep end Congress and the lobbyists have gone when you consider that if this level of award was made against someone who shared 1000 songs on the net, and each song was illegally downloaded by 1000 people, the total damage awards would be $9,250,000,000.00. This amount would dwarf the total amount Exxon paid out for the Exxon Valdez oil spill, which did grave damage to Alaskan ecosystem and economy. At least we can be sure what our government's priorities are.

If upheld, the Washington court's decision will have a major impact on our industry, and the software we depend on to run our businesses. However, the software industry will likely come up with a new boilerplate EULA that tries to address the problem (from their point of view).

One of the first issues we can expect new EULAs to address is the issue of transferability. The judge ruled that since there was a clause in the EULA that said the license was non-transferrable, Autodesk could not successfully argue that Vernor, or anyone who bought used copies of the software, was subject to any of the EULA provisions.

Other actions by the software developers will depend on how this case does on appeal, and the chances it will be upheld by the Supreme Court are dubious at best.

Despite the Constitutional and Declaration of Independence guarantee of inalienable rights, the Supreme Court has consistently ruled that the only inalienable right citizens can be sure of is our right to voluntarily give up all of our other rights, including the right to take businesses to court to settle disputes.

For years we've agreed to EULAs without wasting the time to read them because we didn't have much choice. We had to have the software to run our businesses so we agreed to any terms the manufacturers demanded.

It's time we started reading every EULA we agree to, and it's time we started writing our “hired help” in Congress and letting them know if they want to be reelected, they'd better start considering our needs for a change. Our industry has clout, it's time we started using it. If we don't, the way things are going it's only a matter of time before we deeply wish had.

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Article Tags: 24 years, autodesk, autodesk software, copyright infringement, dcma, declaration of independence, digital millenium copyright act, dmca, ebay, ebay seller, end users, eula, founding fathers, license agreement, own software, prohibition, software users, tom mulvey, vernor, washington state district



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