Federal Court Says First-Sale Doctrine Covers Software, Too 509
New10k writes "The US District Court in Seattle has rejected Autodesk's myriad arguments regarding its software licenses and found in favor of eBay seller Timothy S. Vernor. The ruling started by ruling that Vernor was within his rights to resell copies of AutoCAD Release 14 he got in an auction. Once the court settled the legitimacy of reselling, it used that ruling as a lens to dismiss all of Autodesk's various claims. More than once the court described Autodesk's arguments as 'specious' and 'conflicted.'" Autodesk managed to have Vernor's eBay account pulled, after he listed for sale copies of AutoCad 14. He sued Autodesk in response.
Workaround (Score:5, Interesting)
Because that is exactly what World of Warcraft (and all MMO's, for that matter) does.
Autodesk would then give the software away for free, but sell the user accounts for whatever they want.
Antiquated Thinking (Score:3, Interesting)
Psystar (Score:4, Interesting)
Product Activation? (Score:5, Interesting)
What happens now with all the authentication and tying copies of software to the hardware it's first installed on such as Windows XP/Vista?
You have a right to sell your copy, but effectively you can't because it's been tied to your hardware.
First-Sale cuts both ways (Score:3, Interesting)
So why should people buy my video at $80 if they can get it for next to nothing on the web and most likely just burn their own copy? That's First-Sale Doctrine and it can also suck for the little guy.
Open packet to read agreement. (Score:5, Interesting)
How many of you have found the actual license agreement is on the media stored in the packet? So in order to read the agreement, you have to open the packet.
Nontransferable Licenses in question (Score:5, Interesting)
If this hold, it will largely eliminate the non-transferable license in software.
And why shouldn't it? As long as the original owner retains no copy, selling an unused license simply keeps that copy under maintenance (maintenance charges frequently exceed sales revenue) and keeps the money flowing to the authors.
Nontransferable licenses are usually attempted by companies that have some sort of a near monopoly lock, so that not only do they gain from a new sale, they also gain from maintenance charges. If there are multiple vendors of equivalent software you really can't get away with nontransferable clauses.
As a software author, I'd gladly accept continued maintenance fees instead of new sales revenue. If my customers know that unused licenses have residual value when their projects are completed its good for me, and good for them. They buy extra licenses to handle the surge effort of development, and retain a few licenses for maintenance.
No lawyer (Score:5, Interesting)
Re:Product Activation? (Score:5, Interesting)
It seems to me that the courts have not typically ruled against "effective" rights violations*. There's no law that says Microsoft can't require your PC to phone home to verify it's using the same hardware as before. So while this decision could be repeated if Microsoft tried to stop you from reselling Vista and you went to court over it, it would probably not have any effect on that sold copy of Vista being useless because Microsoft wouldn't activate it.
* See Eldridge v Ashcroft, "retroactive finite copyright extensions, repeated infinitely" doesn't violate principle of copyrights being finite.
Re:First-Sale cuts both ways (Score:2, Interesting)
As for it cutting both ways, this is no different than an author of a text for a limited audience, say a quantum physics prof writing an academic text, or a post-doc releasing their thesis to the public. Chances are they won't sell many and the ones they do sell will mostly be picked up by university libraries. Guess what? A good amount of students will borrow the book for FREE!!! Yes that's right, despite the fact that the tome, written through blood sweat and tears, is available for a paltry sum of >$80, students and professors alike will more often opt to borrow it from their library rather than shell out for a copy.
They can even photocopy the book for a mere fraction of the cost!
Does this suck? For the author yes in a way, but there are a few ways to work around this:
1) having it in libraries and avaialable for free to faculty and students increases the number of people who will become familiar with the author's work. Likewise with you, having your video rented at $15 a pop is going to expose more people to your name and efforts than likely would have happened had you continued to sell 30/year. If you ever decide to write about building boats or doing a follow up vid or something different, you will be immediately more recognizable. If your work was good in the first place, you will have an immediately respectful fanbase who might be willing to buy those future works.
2)selling it cheaper. My thesis advisor's first book (a reworking of his thesis) sells for about $140. He's sold maybe 1100 in 15 years. It's not likely to sell many more as the relevance shifts in the field. He didn't control the price outright, the publisher pushed a high price on him. Had it sold for $30 instead, many more people would have bought it, he's been told by fellow academes. Of course at $140, they just borrowed it.
Sell your DVD directly for $15 and you compete with the video store. You offer folks a legal fully made up copy vs. their home ripped version.
If the video is a hot renter, your video will be a hotter seller.
Re:First-Sale cuts both ways (Score:5, Interesting)
So why should people buy my video at $80 if they can get it for next to nothing on the web and most likely just burn their own copy? That's First-Sale Doctrine and it can also suck for the little guy.
(I know nothing about boat building, but...) If building boats takes more than 5 weeks, or is slightly difficult, you'll have successfully adapted your business model to (cue scary-deep voice over) 'A Business Model For The Digital Age'.
Kerching!
Re:Autodesk = a true evil empire (Score:3, Interesting)
That was for a county (government) office though. The licensing might be different elsewhere or they could have changed their procedures somewhat. However, we don't have any special government contracts that I am aware of with AutoDesk. I suppose I could check with the commissioners office to see if they billed us for a new license or something. But I don't think they did. At least I didn't authorize anything like that when on the phone with them. The subject never came up. I found dealing with them far easier then dealing with MS and their activation. MS attempted to tell me I had to buy a new OEM version because I replaced a dead hard drive with a different brand drive in a system once. After about 2 weeks of that, they reactivated XP and Office for me.
It would be interesting to see what is so different that caused totally different impressions of the same company.
Re:Not really adding anything important but... (Score:5, Interesting)
Re:Vernor 'bound' by a license? (Score:3, Interesting)
The salesman assured me that if I were to move before the 1 year contract was up and SBC couldn't provide service in the place where I moved to, I wouldn't be charged the fee. I did move to another state where they didn't have service 10 months into the contract, but they charged me the fee, claiming that because I moved to another state where they didn't operate, this clause didn't apply. (It only applies if you move to a place where they do operate but they can't provide service to that specific house for some reason).
Needless to say I called BS on them because I was never provided with a copy of the agreement and they certainly don't have my signature on anything. Unfortunately, consumers have no legal rights when it comes to a credit report. It's not considered liable because credit reports aren't public information. Anyone have an idea of a legal argument I can make that would force them to tell the credit agencies the bill is invalid?
Re:First-Sale cuts both ways (Score:5, Interesting)
Re:Vernor 'bound' by a license? (Score:3, Interesting)
I mean, First Sale being defended is all fine and all but what really happened here is one of those giant self destruct events in the software/patent/licensing world of Imaginary Property was avoided. We need more of these insane IP implosions to succeed or we will never see large scale reform. You see, reform will never come from a sense of justice or rightness, it will come from economic motivations. Right now this IP nonsense is incredibly profitable, we need to make it unbelievably painful to get tied up in this crap and THEN the big boys will want to make the rules fair again.
Re:First-Sale cuts both ways (Score:4, Interesting)
The problem is that the OP is complaining that someone is making money off of his work. If the video is popular and is successfully renting for $15 (which is not a cheap rental...most rental stores I know are less than $5) then how can selling it for about that price not be a win win?
Your speculation on volume consumer goods would work if there was a high production cost. The problem is that the OP already spent the money on making the video. If it was expensive to do, moving 30 units/per isn't likely to make his money back or turn a profit any time soon. If the video is being rented frequently, it would only need to be rented 160x. Figuring that renting is mildly inconvenient (having to return it via the post in this case and if the OP is right in his assumption that most people copy it, then that extra effort figures into the hassle/cost.)
Sell it for $15 and who knows how many will sell? Certainly those that would rent it for $15 would buy it for that cost or might even pay a premium of $5 over the rental cost to get it a pro copy.
It really depends on the rental volume in this case. If it is rented out 10x year, the likelihood of him selling 10 more copies at 80 bucks is pretty nil, but if it is renting out 200 times a year, then he is turning a larger profit matching or just slightly increasing the price.
Otherwise, I agree, niche and high quality products usually demand a higher price and often people are willing to spend the money on it. But when the product is a silver disc and that silver disc can easily be rented...one can understand why $80 vs. $15 is going to be dramatic on sales. In the end this argument totally depends on the volume of rental sales.
If the OP's copyright policy clearly prohibits renting, then he should either slap the online company with a cease and desist order or come to some agreement where he gets some form of royalty from each rental.
Re:Not really adding anything important but... (Score:3, Interesting)
I think I have heard of some OS company doing some stuff to hurt competition in their favor too.
Re:Not really adding anything important but... (Score:3, Interesting)
Re:Not really adding anything important but... (Score:5, Interesting)
Re:First-Sale cuts both ways (Score:5, Interesting)
Re:First-Sale cuts both ways (Score:3, Interesting)
However, neither books, nor videos fall into those categories.
However, it could be argued that EULA bound software (that was not purchased), is supplied to you via rental by other means. Clayton may then prevail, giving you the right to sub-rent that software. Then again, I am not in the US, and this may be wrong (any US lawyers want to comment?). I just think that you were a bit off-base.
Check with your lawyer, before you proceed.
Re:there is NO SIGNIFICANCE to this ruling (Score:2, Interesting)
Two basic points.
First, Autodesk was trying to get his lawsuit against them dismissed on the basis that he had violated the license agreement. The court ruled that his lawsuit could proceed, on the basis that copyright law gave him the right to do as he had done, and the license agreement should be ignored because it didn't agree (no pun intended) with the law.
As such, that could be a pretty big deal with respect to license agreements that disagree with copyright law (which is nearly all of them). Then again...
Point two: though I'm not sure if it figures into the court's reasoning or not, this appears to be a case where he had not agreed to the software licenses before he re-sold the software. If that's the case, that could explain (at least in part) why the court ignored the license agreement.
Finally, I'd note that when/if Autodesk appeals the ruling, the appeals court can only reverse the ruling if they find a clear error in the ruling from the lower court. If there's any doubt as to the validity of the ruling, the appeals court is supposed to give the benefit of any doubt to the lower court, and let the ruling stand.
Re:First-Sale cuts both ways (Score:3, Interesting)
You're missing the point though. The video store can lower their price to $0.01 and still make a profit.
The guy who made the video had to carry all of the expense of making it in the first place. He didn't magically pull the video out of his ass and start selling it for some arbitrary amount of money. He deserves to be compensated for all the work he did to make it. And he can't do that when scumbags can take his end product, copy it, and sell it for half the price. [Emphasis added]
Re:Workaround (Score:5, Interesting)
Shame on them picking on a little kid for not knowing his rights. Now I think they just try to convince adults that anything but bottled water is poisoned or that only poor people drink water.
Idiots!
Re:Nontransferable Licenses in question (Score:4, Interesting)
Then again, if you file bankruptcy and dissolve the company, the company/person acting for the company who agreed to the license disappears. Would the Non Transferable license still be bound at that point? This case in question is a situation where someone purchased software at an auction (could very well be a bankruptcy sale) and didn't agree to any licenses before attempting to resell it on Ebay. If the software is confiscated from the company that agreed to it, is anyone but the company bound by the non transferable license anymore?
your response is naive (Score:2, Interesting)
As a lawyer . . . (Score:2, Interesting)
Re:Ummm.. NO... (Score:3, Interesting)
They didn't have a different price-point for rentals, they just released them first with insanely high prices, that they only marketed to rental outlets.
This first release was =intended= to be sold to rental outlets, the model of doing it this way was specifically designed to wring extra money out rental outlets. But to do it they had to hold off on releasing it at lower price. And they were allowed to sell them at retail, if they could find anyone to buy them, but of course, the retail market for $120-200 VHS tapes that would available at 90% off in 3-12months was pretty much nil. But most video stores would order and sell you a copy during that window if you 'just had to have it', although at the time, 'selling videos' was in its infancy.
Once window was up and it was released at the lower 'consumer price' video outlets could buy additional copies at the lower price too... but why would they? The movies were 3 to 12 months old, and were no longer in high demand as rentals... the shelves were filled with new new releases, and they were probably already looking to unload most of the copies they had as previously viewed.
small video stores would literally pay 5-8times the price for a copy destined to be rented repeatedly.
They were 'effectively' trapped paying 5-10x as much for movies if they wanted to be competitive and have the latest new releases.
But, for example if you were opening a new video store, you only had to shell out the big money for 'new releases' (because it was either that or not having any), but you could stock up your 'weekly rentals' with movies you bought used, or at kmart, or from your own collection...
Re:First-Sale cuts both ways (Score:3, Interesting)
> the copyright, to dispose of a copy by sale or
> otherwise are established. Rental, leasing and
> loaning are implicit in the "or otherwise"
Sorry Mr. beatdown
The Record Rental Amendment of 1984 and the Computer Software Rental Amendments Act of 1990 both amended Section 109 to prevent all owners of software copies or phonorecords, except non-profit educational institutions or non-profit libraries, to dispose of said copies through the acts of rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending unless authorized by the owners of the copyright.
You've got it exactly backwards. "Or Otherwise" is conditioned to explicitly EXCLUDES rental.
Re:Product Activation? (Score:1, Interesting)
I think, under the law, if microsoft refused, I could sue and the burden of proof would be on microsoft to show reasonable suspicion that I was copying the software, which would be difficult under nearly all circumstances of legitimate use.
Re:Troll?? (Score:2, Interesting)
:shrug: Speak for yourself, I buy almost all my music on CD.
Frankly I fail to see why I would want to spend the same or more, to get considerably less (no artwork / liner notes / lyrics, no physical backup, lossy not lossless audio, nothing I can meaningfully expect to resell ... Come to that I've also never ended up in bed with the cute girl who works at ITMS, unlike a physical local record store).
Of course, every time I raise this on slashdot, the only answer I get is "albums only have 1 good track on them, all modern music is rubbish anyway", which says a lot about slashdotters not caring to explore music properly, and essentially nothing about the relative merits of MP3 vs CD in the current consumer marketplace.
Also, the concept that P2P allows Joe Basement to produce the next Britney- or LOTR-beater, whilst an enduringly popular slashdot belief, rather fails to tally with reality. I grant you that in the case of music, technology has near-flattened barriers to entry in terms of production and distribution; in film, perhaps not so much yet, although it's only a matter of (not very much) time IMHO. However, we're yet to see a solution to the third, critical aspect required: promotion/marketing.
Or to put it another way: go make some stunning music, share it on P2P, post it on the web, do not pay for exposure and hype on radio, MTV, tv chat shows, magazine interviews etc, and watch the downloads spectactularly fail to accrue. As yet, sadly, people do not tend to flock to artistic products lacking in marketing clout, and the famous examples supposedly to the contrary (Arctic Monkeys, Sandi Thom etc) only go to prove the point. They were signed before Myspace, and the "OMG, unheard-of band explodes due to the interwebs!" column inches were merely the latest manifestation of good old industry-driven marketing.
Re:Anyone knows how these laws work in Canada? (Score:3, Interesting)
Anyone know if Canada has any laws similar to the US's Racketeer influenced and Corrupt Organizations Act [wikipedia.org]?
Re:Workaround (Score:3, Interesting)
I wouldn't suggest that. I'd be even less likely to purchase something if I had to run home to read the contract, then come back. I just want all the contracts to be presented up front before the purchase, so I have the opportunity to read them before the sale is complete. And specifically that anything not in those contracts will NOT be presented later as a requirement for being able to use what was purchased.
Re:AM Radio (Score:4, Interesting)
http://www.free-culture.cc/
IMHO, Lessig is a really amazing person. Not to spam, but his "Last Lecture" on Free Culture at Stanford University is about Eldred v. United States, among other things which I would bet you would enjoy if you are into this kind of history. Also a CC work
http://www.opensourcecinema.org/lessigfinal
You may end up being his boss... (Score:3, Interesting)
Re:Workaround (Score:3, Interesting)
According to my sources, duress is defined as a "threat of harm made to compel a person to do something against his or her will or judgment; esp., a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition."
It seems to me that threatening to 'take back' software that has already been bought and paid for if you don't accept some new contract after you've already agreed to a common sense implied contract of "I spend this money, I own this software and, by natural common sense extension, the right to use it for it's intended purpose on my PC" is using a wrongful threat of harm to compel a person to 'click through' this agreement.
The wrongful threat of harm increases with the cost of the software or device involved. If you bought a brand new $10,000 alienware PC only to not have use of it because you don't like the EULA of Windows Vista, basically Microsoft is holding your $10,000 computer hostage after you've paid for it with the implicit, common sense contract of "You've spent $10,000 on a new computer including Windows Vista, that price includes the cost of licensing and media, you have the right to use your new computer"
By contrast, the GPL doesn't hold but the right to distribute modified software, which you never had any other right to, implied or otherwise. Even if you paid for the product, copyright law implicitly protects all copyrighted software from redistribution in any form without the contract.
Hell, the current regime still permits post-purchase refusal and refund
The current regime does NOT permit de facto post-purchase refusal and refund, becuase software retailers don't allow refunds on opened software, and computer vendors don't have a system in place for a reasonable person to recieve a refund for software they have declined to accept the EULA for. There is no reasonable ability to refuse the contract, because it requires going to extraordinary lengths like these. This man was denied a refund three times. [netcraft.com.au]
Good lord, almost every freaking consumer product you buy now has licenses included.
You'll have to point to examples. I've bought a lot of things over the past couple years, and the only thing that's come with a contract is software.
I've bought a truck, it came with no EULA. I've bought a skidoo, no EULA. I've bought dishes, pots, pans, and no EULA. I've bought furniture. No EULA. Got a great deal on a Queen size bed. No EULA. I've bought a wireless phone, and while it came with a piece of paper clarifying it's status under the appropriate laws regarding it's creation of interference which could affect other devices, but no EULA. Barbeque, despite being a dangerous gas appliance, no EULA. Propane for the barbeque, despite being an extremely dangerous substance which can't be dispensed without a proper license, no EULA.
I've even bought 3 cellular phones, 2 pay-as-you-go and 1 regular, and while I had to sign a contract before they'd accept my first payment and give me service for the regular phone, I didn't have to spend 2 seconds looking at a EULA, because there was none -- and there was none for the pay-as-you-go phones at all.
The only thing I've bought that has come with a EULA or equivilent contract to be agreed to after money has changed hands under threat of denial of service is software.
I'm sure there's contrary case law, but that's a failure of the legal system. Far too many geriatrics will accept a ridiculous legal arguement because the phrase 'on computers' is thrown in front, and that's going to be a roadblock for younger, less ignorant lawyers and judges as they transition into positions of judicial authority over the next decade.