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California Court: EULAs are Inapplicable in Some Cases 391

(outer-limits) writes "In a significant ruling in a California court, a judge has ruled the standard EULA licensing agreement to be invalid. This must be the biggest upset in software licensing ever. No more are we powerless End Users of software, having to agree to every restriction a software company makes (Expect an appeal on this, though)." Note that this is about the resale of bundled software, so it's not like EULAs are dead, but this ruling could have broad effects. Update: 02/12 03:45 GMT by J : Yeah, this is a repeat - sorry.
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California Court: EULAs are Inapplicable in Some Cases

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  • by Raul654 ( 453029 ) on Monday February 11, 2002 @09:05PM (#2991392) Homepage
    When did the whole notion of buying software die, makeing licensing become necessary?

    • > When did the whole notion of buying software die, makeing licensing become necessary?

      I think "leasing" the license has long been the norm in non-PC markets. For instance, over a decade ago a shop I was associated with was leasing the OS and all the third-party software for their minicomputers. Most had rates that went up for faster machinces and/or more concurrent users.

      The current trend isn't new in an absolute sense, but it may qualify as "strategic bait and switch". I wonder how successful PCs would have been if they had been introduced with for-lease software?

    • It has been licensed for the 32 years I've been in the industry.

      Since the underlying protection mechanism is copyright, companies don't really want to sell it. I mean it would be really great to own Windows XP for a few hundred bucks and then to tell MicroSoft to cease and desist selling MY SOFTWARE. I'd love that. Ain't going to happen.

      Just like I don't sell the photos I freelance to publishers, I license them. Exactly the same thing. I may sell them a slide dupe along with the license but they don't own the photo, just a copy of it and their rights are restricted by license.

      Same deal if I sell you a print of one of my photos. You don't own the right to scan it and sell it to others or to publishers. Sorry 'bout that.
      • by cybermage ( 112274 ) on Monday February 11, 2002 @09:48PM (#2991681) Homepage Journal
        Since the underlying protection mechanism is copyright, companies don't really want to sell it. I mean it would be really great to own Windows XP for a few hundred bucks and then to tell MicroSoft to cease and desist selling MY SOFTWARE. I'd love that. Ain't going to happen.

        Isn't that a tad facetious. If I go out and buy a book, that doesn't make me the copyright holder, does it? Why should software be any different?

        The copyright on the software is all they need to assert their rights. Anything else is lawyers covering their asses and marketing people scheming things.

        • by Cuthalion ( 65550 ) on Monday February 11, 2002 @10:48PM (#2991963) Homepage
          If you buy a book you own the book. You don't own the novel. You can't turn around and publish it yourself, you can't sue the author, you can't photocopy the whole thing and give it away, etc.

          Is software any different? You buy software, you own the cdrom, but not the data.

          The differences are that software is easy to copy, and they try to legally restrict you from transferring the license (used software stores? uh-uh.) Certainly if it that happened, it would not be uncommon to buy a program, copy / install it, sell the original to someone else. People DO do this with music, they also would with software. The reason people can do it with music is that it's legal to transfer the license.

          I'm not saying I agree with restrictive EULAs. Just trying to answer your confusion.
      • The analogy isn't really the same. If I am an artist and sell someone a print, they are free to sell the print again. I can sell them a license to the print saying they photocopy it and such, but they can still sell the physical copy of the print that I hand them. They could probably even sell the license to someone else.
      • by rgmoore ( 133276 ) <glandauer@charter.net> on Monday February 11, 2002 @09:49PM (#2991686) Homepage

        I think that your understanding is fundamentally wrong here. The thing that prohibits me from making and selling copies of a work I buy from you is standard copyright. It doesn't have anything to do with the distinction between a license and a sale. That means that if I buy a print from you I have the right to resell the physical print as I damn well please. If I buy a book of prints from you, I have the right to tear the pages out of the binding, frame the individual pages, and to sell them for less than you charge for individual prints. That's the doctrine of first sale, which was established by the U.S. Supreme Court a long time ago.

        What software writers want to claim is something different. They say that when I buy software I don't necessarily have my normal rights under first sale. I might not be allowed to transfer my right to the software to somebody else, for instance. To try to enact those rules, they claim to sell you only a license to use the software, and not actually a copy of the software itself.

        What the judge has ruled in this case is that the nature of a transaction is governed by the nature of the transaction and not by what it's called by the seller. IOW, if I pay you a single, up front fee for a box of software that I'm allowed to use in perpetuity, that constitutes a sale whether you want to call it a sale or a license. That means that I have normal first sale rights- specifically the right to break up the pieces of a purchase and sell them separately as was done in this case- even if the "license agreement" that you try to impose specifically prohibits me from doing so.

        • I'm not responding to disagree with you, just to add my own little rant...

          We have laws. Laws are laws and you're not supposed to break them. But we have laws for a purpose. What is that purpose? Well, if you asked me, I'd probably respond with some vague handwaving generality like "to make the world a better place".

          Now when you start to have a conversation like this, it tends to veer off into dialectic diatribes about what the law "should" be. As opposed to what it is now. But if you head in that direction, you're sticking your neck out. You're questioning the law. The law which can't be broken. Are you some kind of demented criminal?!

          When it comes to issues of copyright and licensing, though, I think that's exactly the conversation that is most important. There are a lot of built-in assumptions about the utility of copyrights and licenses. We hold these truths to be self-evident (we have laws for christ's sake!). We compose paeons to these sacred cows.

          I don't.
          • ....the software vender demands that you sign license agreement at the point of sale, agreeing not to sell on, its just as sale, which means you can sell it on yourself when you know longer need it.
        • by jred ( 111898 )
          What software writers want to claim is something different. They say that when I buy software I don't necessarily have my normal rights under first sale. I might not be allowed to transfer my right to the software to somebody else, for instance. To try to enact those rules, they claim to sell you only a license to use the software, and not actually a copy of the software itself.

          Or in some cases, you don't even have the right to transfer software to a machine that you own.

          My company recently purchased an OEM copy of WinXP (we are qualified). As a network tech, I'm running into more & more copies of XP, so I needed to be familiar with it. I noticed that the little license sticker requires you to affix it to your PC. Now, as the best tech in the company (big fish in a small pond), I get to upgrade my hardware whenever possible. Whether it's a new video card, hd, cpu/mb, or case. But now I'm suddenly tied to my case. If we EOL it, there goes our copy of XP. With the older OSs, I've always slipped the little license sheet in the bottom of my case, and transfered it when I got a new box. No more of that, though. And *that* bothers me more than activation or any of the rest of the XP brouhaha.

      • No you don't. Just like you sell books, you can sell photos. You're selling a copy of the book/photo. The buyer doesn't own the book or photo, just owns the copy. Copyright applies.

        OTOH, you could sell the rights away if you want, but you probably don't.

        Of course, you could license photos if you want, but that would involve signing a contract, and you may well be doing that (seeing as the publisher will want to reproduce the photo, he'll need extra rights from you in order to do that reproduction, as otherwise it would break copyright law). But just selling a photo doesn't imply that buyer owns the rights to it, since a photo is ultimately just a copy in itself. If you sold the negatives then you might be implying that you're selling the rights, what what you're implying is a separate issue.

        IMHO an EULA should not be valid unless something was signed at the time of purchase. Otherwise it should count as any other sale, with you buying a copy of the software for use as restricted solely by copyright law.

        Offering a refund if you don't subsequently agree to a change in terms should not be allowed; that means that you were sold the software under false pretences, and in any case is an attempt to change the terms after you have already completed the purchase.

      • Copyright law clearly recognizes the distinction between owning a copy of a work, and owning copyright to a work.

        Owning a copy of a work not only gives you normal ownership of the physical copy of the work, but also fair use rights to the information expressed in that copy. These are transferred along with the physical copy, should you sell it or give it away.

        Owning copyright to a work gives you the exclusive privilege to create copies of the work. This privilege may be granted to others through licenses.

        If you sold me a print of one of your photos, I would be entirely within my rights to resell it, exactly as if you sold me a sack of potatoes.

        Software works like that, too. If you sell a copy of a program, you don't give up copyright on it, and the purchaser gains the right to install it, to run it, to back it up, and to resell it. Copyright law has been changed to handle the specific needs of over-the-counter software.

        it would be really great to own Windows XP for a few hundred bucks and then to tell MicroSoft to cease and desist selling MY SOFTWARE.

        This is ridiculous. If Windows XP was sold without a EULA, you would obviously be buying a copy, not the copyright.

        EULAs are no more necessary or beneficial to software than they would be for toasters or automobiles. This has been quite clear since at least the mid-80's, when the whole idiotic business should have been dropped.
      • No. You own the copyright of the work itself. If I go to your gallery and purchase a copy of that print, I certainly can resell that print later to someone else. Otherwise there wouldn't be much of a market for artwork. I can even make copies of your photo in limited circumstances under "fair use."

        The software industry is trying to license the _use_ of software itself. You don't own it, but can use it under the terms of the EULA. Soon, IMHO most software will be pay-per-use.

        As others have already stated, this concept is not new: mainframe software has been like this since the beginning. On the other hand, in a corporate setting the lease usually includes updates and support. Something that MS and others of course charge extra for.
      • You're a fool. Copyright still applies even if there is NO EULA, but you're still allowed to sell your copy of the software.

        I was going to reply properly to this message, but I know realise there are a number of people who have done that already. Go read their comments, then you'll understand the difference between software licences and copyright.
      • by Frater 219 ( 1455 ) on Monday February 11, 2002 @10:18PM (#2991854) Journal
        Since the underlying protection mechanism is copyright, companies don't really want to sell it. I mean it would be really great to own Windows XP for a few hundred bucks and then to tell MicroSoft to cease and desist selling MY SOFTWARE. I'd love that. Ain't going to happen.

        You are confounding buying a copy of the software with buying the copyright to the software. When you go to the store and lay down money for a box containing a CD-ROM of Windows XP, you are buying the copy -- not buying the copyright. This is rendered somewhat opaque not only by software makers' illicit "licensing" language, but also by news reports of companies "buying software" (meaning the copyright) from one another, e.g. "Microsoft bought Flight Simulator from SimLogic."

        The example of books usually clears things up. When I go to the store and buy Philip Pullman's The Golden Compass, I am buying a copy. I own that copy, and I may dispose of it in the usual ways I may dispose of any piece of my property. I may use it, alter it, destroy it, sell it to another person, write notes in the margins, and so forth. However, I do not own the copyright -- the right to make copies (identical or derivative) of Mr Pullman's novel.

        Moreover, I am not "licensing" anything. I do not need a "license" from Del Rey Books or from Mr Pullman to read the novel. I already have that right because the book (the copy, that is, not the copyright) is a piece of my property. I also don't need a license or other special privilege to comment on it in public; to excerpt from it under fair use in writing a review; to photocopy it at 200% magnification (and keep both copy and original) in case my vision becomes even worse; to lend the book to a friend; to donate it to a library; or the like. The book is mine, and I may do these things just as legally as I may burn it for fuel.

        I would need permission from the copyright owner only to exercise a privilege held exclusive to that owner under copyright law: for instance, to publish copies of it; to record myself reading it alound and distribute the recordings; to translate it into Russian and print that; and so forth. These (among others) are rights over which copyright law grants a monopoly to the owner of a work. Reading, selling, lending, and commenting are not.

        Here's another example, taken from patent law, which is similar though not identical to copyright. I recently bought a Ford Taurus car. I did not "license" that car; I own it, whole and entire. I own none of the patents that enter into the car's design, nor did I license any of the patents. Legally, may not manufacture and sell copies of the car. Yet I may sell the car, lend the car, modify the car to improve its performance or appearance (or for any other purpose), create aftermarket add-ons for the car and sell them to other Taurus owners, and so forth. I do not need special permission from Ford to do so.

        If you do not believe that you own the CD of Windows XP that you got from your local computer store, then here's a question for you: Destroying other people's property is illegal. If you take that CD and microwave it, whom have you wronged? In microwaving it, you have defaced the physical medium and destroyed the recorded work stored upon it. If that copy belonged to Microsoft, then you are guilty of a crime of vandalism or destruction of property. What do you think?

      • Same deal if I sell you a print of one of my photos. You don't own the right to scan it and sell it to others or to publishers. Sorry 'bout that.
        I got burnt by a for hire photographer on just that subject. Believing the consumer is always right, I have since written all my own contracts for photographers labor... The key is labor. Most photographers refuse as they see it as an attack on their cash cow of reprints. To get a photographer, I send a copy of the labor agreement asking for bids for the labor. All proofs and negatives are my property, not the other way around. It's worth the effort to hire a photographer for his labor and be able to get the extra prints that are always needed at a wedding. You can hire him for the reprints if you like his work and prices. You can also have the negatives scanned and put on the web which traditional photographers copyright prohibits. Make sure you own the copyright of your important events.

        Walt Disney learned that the hard way. His first mouse was owned by the studio he used to work for. His name was Mortimer Mouse. Walt Disney did not have permission to use his creation. He created another mouse very much diffrent from Mortimer. He refused to give up ownership of Mickey to any studio. He saw loss of ownership of his creation never happened to him again.
    • Blockquoth the poster:

      When did the whole notion of buying software die, makeing licensing become necessary?

      I think we could argue that it has never been necessary... If instead we talk about when it became commonplace, I think it dates back to mainframes. IBM, at least, never sold a mainframe to a customer. They leased it, guaranteeing support but retaining control. The software, in those days, came bundled on the Big Iron and didn't really run anywhere else, so it was included in the lease. I believe -- but have no actual facts to back me up :) -- that the habit of licensing software arose then.
    • Software was first just something that came with the hardware, or developed in-house, then as the industry developed, software companies came along which would license one program out to multiple customers, and it just grew from there. Software was being *nudge* *wink* licensed over the counter in shrink-wrapped boxes since before it was 100% clear that copyright even really applied to computer software.

      When it was cleared up, and special provisions for software were written into copyright law (in 1980, in the USA), the pseudo-licensing was already a habit. Habits like turning disclaimers of quality into license terms ("You know all that stuff we claimed in the advertising? Well, if those were lies, you can't sue us!") are not casually abandoned in a litigious society.

      Basically, the ability to impose any terms on your customers is better than the deal normal copyright sale gives you, so once the industry was in the habit, they had no reason to change.

      Since newcomers usually just follow the herd, I sometimes wonder how many people in the software business even know that EULAs are not entirely necessary to sell software. The people most likely to know are the lawyers, and can you imagine a lawyer hired to write up a EULA telling his customer, "You know, you don't need me, you could just sell your product as they do in most industries." ?
  • by Anonymous Coward
    Anyone got a mirror of the actual decision?

    It seems, according to the article, that this ruling says that if you don't agree to the terms of the EULA, you have the right to resell the software, but not to use it.

    You still have to agree to the EULA if you want to use the software.
  • DUH. (Score:2, Interesting)

    by edrugtrader ( 442064 )
    of course you can resell something you pay for that you don't use. this is NOT going to be broad reaching... this is very similar to best buy's software policy: if you don't open it, you can return it.
    • Re:DUH. (Score:5, Insightful)

      by thesolo ( 131008 ) <slap@fighttheriaa.org> on Monday February 11, 2002 @09:15PM (#2991472) Homepage
      Tell that to Microsoft, who was getting Ebay to shut down auctions of unopened, bundled software.

      And lets not forget when those Linux Geeks went out to Redmond a few years ago and demanded their money back for the copies of Win95 that came with their PC that they never used. Did they get their money back? No.

      Believe it or not, this IS an important decision.
    • Re:DUH. (Score:3, Insightful)

      by Spy Hunter ( 317220 )
      Here are the relevant portions of the ruling (italics mine):

      [quote]

      Courts have required that assent to the formation of a contract be manifested in some way, by words or other conduct, if the contract is to be effective. [...] In the instant case, the Court finds that there is only assent on the part of the consumer, if at all, when the consumer loads the Adobe program and begins the installation process. It is undisputed that SoftMan has never attempted to load the software that it sells. Consequently, the Court finds that SoftMan is not subject to the Adobe EULA.

      [/quote]

      The court made no decision on the validity of EULAs (in fact it explicitly skirted the issue by saying if at all). This is only affirming the fact that if you don't agree to the EULA by performing some action then you are not bound by it.

    • Re:DUH. (Score:5, Funny)

      by sheetsda ( 230887 ) <doug...sheets@@@gmail...com> on Monday February 11, 2002 @09:59PM (#2991756)
      this is very similar to best buy's software policy: if you don't open it, you can return it.

      I always liked when the EULAs said "If you do not agree to the terms of this agreement please return this software..." By opening it to read the license agreement you give up your ability to return it, and by not opening it you can't read the license agreement. Catch 22. My solution? Exchange the opened software for an unopened copy and immediately return that one. (I've heard they're not suppose to let you do this, but no one has ever tried to stop me)
  • Like the article said...this is to important to the software industry. They will appeal this, and in the event that they lose in the appeal process, they'll buy some legislation which gets around this.
  • by coltrane99 ( 545982 ) on Monday February 11, 2002 @09:10PM (#2991420)
    "The Court understands fully why licensing has many advantages for software publishers. However, this preference does not alter the Court's analysis that the substance of the transaction at issue here is a sale and not a license," Judge Pregerson writes. If you put your money down and walked away with a CD, you bought that copy, EULA or no EULA." Quite a weakening of the standard 'anything goes' rule for EULAs.
    • "... you bought that copy, EULA or no EULA."

      The end quote implies that the judge wrote that last sentence, which was, in fact, Don Marti's commentary.

      The judge acknowledges the controversy surrounding shrinkwrap license, citing two conflicting cases. He dodges the issue by asserting that Softman, having never installed the software nor clicked "I Agree," didn't assent to the license. That, in itself, seems significant.

  • by Anonymous Coward on Monday February 11, 2002 @09:13PM (#2991441)
    Is it that thing I press "Next" on before entering the serial I got from astalavista?

    What were they saying in it anyway?
  • by werdna ( 39029 ) on Monday February 11, 2002 @09:14PM (#2991456) Journal
    The Softman case is significant, if not for anything else, than for the plain, common sense, view that whether or not a sale is a sale, depends, upon whether or not the sale is treated by the parties as a sale. Thus, a person who purchased the software, but who has not loaded the software (submitting to the click-wrap) is typically able to rely upon the first sale doctrine (the rule that allows you to resell books that you have bought).
  • As much as I like the idea that individuals should be able to resell software they bought that they did not use, I don't like the ruling in this particular case. Softman was being bundled Adobe packages and breaking them up and selling them individually for a profit. This is something different than Joe User selling his copy of Windows 98 that he got with his computer that he doesn't use. This is a company basically ripping off Adobe. They are selling the bundle cheaper, because it is a bundle. What will end up happening if this takes off is that bundled software will no longer be cheaper than the individual packages. If you want Photoshop and Pagemaker, you will have to buy them individually, because there is no reason for Adobe to sell the bundle that Softman then buys, breaks up, and resells the individual pieces and takes sales away from Adobe.

    For individual users, this would be great and make sense and help them out. This will do nothing but hurt the end users is companies are allowed to do it though.
    • "100 dollars off when you buy Pagemaker and Photoshop, and register them on-line after installation!"

      I think I just fixed your problem for you.
    • Softman was being bundled Adobe packages and breaking them up and selling them individually for a profit. This is something different than Joe User selling his copy of Windows 98 that he got with his computer that he doesn't use. This is a company basically ripping off Adobe.

      How on earth so? Adobe got paid for however much software was in the bundle, at a price set by Adobe. If the purchaser turns around and sells the individual packages for more than (bundle price)/(items in bundle), then Adobe left money on the table by selling the bundle too cheaply. Whyfore should that be anyone's problem but Adobe?

      • Well, software is usually heavily discounted when it's bundled with hardware. What the software publishers are trying to do is protect that discounted price, without worrying that resold bundled products will undercut their regular retail prices.

        One could argue that this ruling will increase the "price" of bundled software, at least in some subtle way, although it will be offset by the unbundled software that becomes available. Not sure which arrangement is preferable from the consumer's point of view, but it's nice to see EULA's being subjected to this sort of scrutiny.

        Interestingly, Microsoft's Not For Resale products have (or used to have) the same situation... resale was forbidden, but it was stated in the EULA. Of course, the EULA isn't binding until you opened the package, so Not For Resale copies can legally be resold, regardless of what it says on the box.
    • Softman was being bundled Adobe packages and breaking them up and selling them individually for a profit.

      ...
      This is a company basically ripping off Adobe.

      So if I buy the Necronomicon and De Vermis Mysteriis from a store and they give me $0.50 discount on the bundle, and then I resell them seperately at pull price, I am ripping off the store or publisher?

      If I buy 100 copies of the Unaussprechlichen Kulten and get a volume discount, and then resell them at retail price, am I ripping someone off?

      Breaking up bundles isn't ripping anyone off. The person doing the reselling is doing the extra work of finding customers to buy the stuff.

      • So if I buy the Necronomicon and De Vermis Mysteriis from a store and they give me $0.50 discount on the bundle, and then I resell them seperately at pull price, I am ripping off the store or publisher?

        Man, you're ripping off the Old Ones, and you've got a lot bigger problem than a silly EULA.

    • "This is something different than Joe User selling his copy of Windows 98 that he got with his computer that he doesn't use."

      One of the differences is that Joe User doesn't have the resources to fight EULAs. It required someone who was making serious money off of "legal" EULA violations to pull this case off.

      "They are selling the bundle cheaper, because it is a bundle."

      How is it being a bundle justification for the higher prices for the individual apps?

      When you buy a boxed set of books, often it is less expensive than the individual titles simply because the boxed set uses paperback binding, inherently cheaper than hard-covered books. But I see no glaring cost-saving in use with bundled software. They still have the same number of CDs, often the same instruction manuals included with it, and the only differences I can see are the packaging and maybe the jewel case. Sure, there are instances where bundled software is actually integrated together in the code, but from the sounds of it all we have here is Adobe taking the contents of five cheap boxes and putting them into one slightly larger cheap box.

      "What will end up happening if this takes off is that bundled software will no longer be cheaper than the individual packages."

      There's no reason for the bundles to be less expensive than the individual apps more than a few cents for the savings in cardboard. If the bundles save their money by not including paper manuals, then it's time for Adobe to condsider selling individual copies of software without paper manuals. Any other reason for the drastically lower pricing in bundles is a direct result of artificial mark-ups in the individual apps. Even claiming the drastic price difference is a result of stamping all the apps on fewer CDs is a joke, since we all know the price of blanks CDs.

      "This will do nothing but hurt the end users is companies are allowed to do it though."

      How? The only people I see getting "hurt" are the companies that are losing out on their artificial mark-up. The only money they'd be losing is money they shouldn't have made to begin with. And even then they're still turning a profit because they ARE selling the bundles. On the other hand, the re-seller could still get hurt if part of the bundle isn't as popular as the rest.

      I can't see the situation you're fearing as anything but capitalism at it's best. The publishers (Adobe in this instance) are now forced to compete with their own pricing schemes on a level playing field, putting market forces and the consumer in charge of the value of their software instead of the publisher.
  • EULAs (Score:2, Insightful)

    by solendril ( 415296 )
    Somewhere along the line, people forgot that ownership of an object meant something. Corporations have been using this to their advantage ever since. If I legitimatly buy a product, why is there any legal issue to be resolved in my selling it to another person, as long as this object isn't duplicated in the meantime?

    Now of course, this brings up the even larger discussion about the legitimacy of copyright law to begin with. I'm unclear on how creation implies ownership... Take the case of geneticly modified creatures. Can a corporation really create and then OWN all resulting creatures? What if these beings have minds of their own? I doubt a super-rat made in labratory test tube would take kindly to being owned body and soul by it's so called "creators." (Don't get me started about the legitimacy of THAT word.)

    But let me get back to my question of ownership. Inanimate objects are capable of being possessed, not simply because they can't argue (unlike slaves for example) but because they have no will. If you possess, do you not also own? Yet in our society, somehow ownership is still retained by the corporation. The end user is, of course, relegated to use. I don't know that this makes much sense. One of the basic, fundamental principles of humanity is the idea that things have innate value. I would argue, that this value comes from the idea of possession, that you somehow own the object, and thus it is valuble.

    Did you know that the vast majority of land pollution is on publicly held land? What is owned by everyone is valued by no one, as I once heard. Because ownership by everyone isn't true ownership. One of the most powerful things I've ever seen was to go to a poor neighborhood in my city and have someone point out to me the houses that were owned, and the houses that had renters. The home-owners took 10 times as much care of their houses, even though they were very poor. (They had been helped to lease and own these houses through a new city program.) The change in atmosphere was striking and profound. If it's mine, I'm not going to mess it up!

    With software, EULAs are ridiculous. With art...(or life) I don't know. But the digital age has certainly brought challenges to our economic systems.
  • This is great. This means that draconian EULAs might not have the legal punch that the writers' expected them to. I mean, hopefully it will force EULA writers to not be as anal about what they put in EULAs. I won't give any specific examples, because anyone with Microsoft software will be able to open up some sort of EULA and read for themselves. Really, its all a matter of what the court deems fair and unfair. Microsoft has some pretty bad EULAs, and I know most people would NOT agree to them if they were written in plain, every day english.
  • Good deal! (Score:5, Interesting)

    by GSloop ( 165220 ) <networkguru@ s l o o p . n et> on Monday February 11, 2002 @09:21PM (#2991510) Homepage
    The sale of software should in general, follow the rules and protections of a sale of goods.

    This would prevent the slipping in of "contract" style wording, and the attendant need to have every software license reviewed by a lawyer. Sure, really wild terms in a software license might get thrown out in court, but that will take time and more importantly MONEY!

    This is why UCITA is 3 or 4 or 100 times as bad as the current situation. UCITA allows all software to be contracts, and formalizes the legal standing, so contracts become the norm.

    As a follow-up, I beleive that all software should also be subject to normal liability/tort law. If software doesn't do what it's supposed to do, and the vendor didn't take adequate care to ensure that it would, the vendor should be liable for damages.

    I made this point a day or two ago, but again...
    Sure, software might cost more to produce if it had to survive a "reasonable" test for correct function. But how much do the companies that employ us as consultants/help-desk people/network engineers, etc, spend having us chase bugs down that shouldn't have been there in the first place. Add that to the "cost" of the product, and you have the "real" cost. And I submit that it's way, WAY higher than most of us realize.

    Until there's some real threat to shipping crappy software, the usual suspects will continue to "ship early, fix bugs later" if ever. Oh, and while you're at it, "add lots of fluff, and cool UI elements" (Does this remind anyone of Windows XP - a totally gross fluffy UI (my opinion) and a HUGE GAPING hole in security.) Adding some teeth to the legal system will give everyone a _chance_ to slow down and get things right. The shareholders will understand, the board of directors will understand etc.

    Until we all require decent software that runs right, and a sale process that is fair, and understandable, we're going to continue to get screwed. UCITA and LONG LEGAL EULA's will always favor the software vendor. The court system may now be (finally) realizing that software isn't that much different than any other good, for example, shovels or cars or VCR's. These goods don't (AFAIK) have EULA's, and are subject to serious repercussions should they work incorrectly. Plus your ability to force the vendor to refund your money is much greater.

    Repeat after me...
    "Software just ain't that different from regular stuff we all use every day" In fact, software/firmware is in lots of devices, and we don't accept similar restrictions in their use...what about cell phones. Did you have to agree to a EULA to use it? Does it reboot/crash often? How about your VPR or Toaster or Car or Microwave?

    Screw EULA's. Screw UCITA. They're both just ways to tip the balance of power WAY over to the manufacturer/seller. They don't offer any protections that a resonable seller needs.

    Cheers
    • by stevenj ( 9583 )
      I think software manufacturers should be able to disclaim warranty, just like you can in any other industry: by prominently labeling the product to be "AS IS, no warranty" before money changes hands.

      For free software that you just download (i.e. excluding vendors such as Red Hat), no money changes hands, so it should be enough to have the warranty disclaimer attached clearly to the downloaded package. (Or better yet, for gratis software there should be a presumption of no warranty.)

      I never understood how unilaterally imposed "contracts" that take away rights you have by default under copyright law, and which you can't even read until after the sale (much less negotiate) could be held up as valid.

      • You say...
        I think software manufacturers should be able to disclaim warranty, just like you can in any other industry: by prominently labeling the product to be "AS IS, no warranty" before money changes hands.

        Well, in most "goods" sales, you can't disclaim warranty. It must be fit for the purpose designed. Actually, you CAN disclaim them, but a court will laugh at you is you try to use the disclaimer as a defense when you get sued.

        The point I've made is that this should then be an individually contracted process.

        One shouldn't be able to escape the difficulties of contracting by just including a EULA. If you want a contract, then you must negotiate with me - personally!

        If you just want to sell me software, you should have to sell me a copy. I get all the normal rights available to other intangible goods, but you can't impose additional restrictions.

        The GPL might have some difficulties under this system though... [sigh]
        • If you just want to sell me software, you should have to sell me a copy. I get all the normal rights available to other intangible goods, but you can't impose additional restrictions.

          Sounds good.

          The GPL might have some difficulties under this system though...

          Others have said it better - but it bears repeating, because so many people seem to miss this point: The GPL has the opposite function to a typical EULA: it gives additional rights, rather than purporting to take rights away.

          The GPL does not restrict your rights under copyright law. It gives you certain rights you do not have under copyright law -- namely, the right to distribute copies of the work, and to distribute modified copies ("derivative works"), subject to certain conditions.

          Without a license such as the GPL, you do not have the right to redistribute copyrighted software at all. With or without modifications. That's the whole point of copyright law.

          Your typical EULA, on the other hand, doesn't give you any rights you didn't already have. Instead, it claims to take away some of the rights you have -- namely, the right to use your software for whatever you wish (excluding redistribution - that's where copyright law steps in).

          (Note of course I say an EULA "purports to" and "claims to" do such and such. I refuse to agree with those who say that my cutting open a box or clicking on an icon, in the privacy of my own home, bears any resemblance to so much as a handshake with an authorized vendor rep, much less a seal or signature. How would you notarize a click?)

  • *Sigh*... (Score:3, Informative)

    by harlows_monkeys ( 106428 ) on Monday February 11, 2002 @09:31PM (#2991572) Homepage
    OK, time to clear up the usual misconceptions.

    1. It's a district court. No precedential value. Only appeals courts make precedent. The appeals courts have tended to look favorably on EULAs.

    2. It's a district court. District courts are highly concerned with the facts of the particular case. It's hard to draw conclusions from district court decisions.

    3. It was a ruling on a request for a preliminary injunction. A preliminary injunction ruling takes into account things that have nothing to do with the merits of the parties positions, such as whether or not a party will suffer irreparable harm if they don't get an injunction. Since the only extra harm Adobe suffers if they don't get an injunction and then go on to win is minor extra financial loss, which can be made up by a larger damage award if they win, they would have to show that they are almost certain to win to get an injunction. Losing this round just means that they weren't able to show that eventual victory for their side is certain.

    This is not to say that I think the ruling was wrong. Indeed, I think the appeals courts are wrong, and in fact the district court's reasoning is almost the same as mine, so I'm of course quite pleased with it. :-)

    However, this ruling is nothing to get excited about. (And it wasn't anything to get excited about when it actually happened weeks ago and so might have been newsworthy).

    • 1. With the lack of a rulling from a court of appeals, a judge or lawyer may look to a district court for precedence. (If it wasn't appealed, then it does stand and is precidence in that court and all the courts, regardless of its merits.)

      2. District courts are where legal and moral justice is decided and handed out. It where almost all of the wheels of justice turn. It's where the facts get the rules of law applied to them. District court rulings are usually very clear on the rule of law, they have to be. Don't discount it, just because it isn't one of the big boys.

      3. preliminary injuctions can make law just as district court decisions and appeallete court decisions. Any thing that happens in a court room can clarify and make law.
    • Nope. (Score:5, Interesting)

      by rjh ( 40933 ) <rjh@sixdemonbag.org> on Monday February 11, 2002 @10:42PM (#2991940)
      1. It's a district court. No precedential value.

      Heaven forbid, no. You're underestimating the power of the courts so vastly that it's almost comedic. Every court in America (except Louisiana, it must be said) establishes precedent throughout its jurisdiction for all matters which come before it. If a local police court judge--which is pretty damn low on the totem pole--makes a decision about how the speed limits are to be applied, that decision is precedent and all later courts are bound by it.

      All later courts. Including the Supreme Court. What a higher court can do is say "Judge Smith's decision on the case did not take into account factors X, Y and Z", and thus invalidate the decision on those factors--but if Judge Smith took all the relevant factors into account, and if the parties before the court received a fair hearing, Judge Smith's ruling stands.

      Judges aren't allowed to run willy-nilly over each other. It's actually written there in the Constitution that it's not allowed to happen. Within a judge's area of influence, his power is unquestioned, unchallenged, for as long as the judge "hears courteously, answers wisely, considers soberly and decides impartially".

      2. It's a district court. District courts are highly concerned with the facts of the particular case.

      ... Like, say, the Watergate trials, where District Court Judge John "Maximum John" Sirica decided the facts of the particular case before him, and in so doing shaped the modern application of judicial power?

      Nixon thought exactly the same thing you do. That a district court couldn't have the power to challenge the President. That a district court couldn't set precedents, that a district court basically had no real authority except to decide only that one particular thing set before him. Nixon turned out to be spectacularly wrong, as he found out again and again.

      It's true that courts often only decide the facts of the particular case before them. This happens most frequently among judges who subscribe to Constructionist or Textualist interpretations of the Constitution. The habit of only deciding the issue before the Court is called "judicial restraint", and is endorsed by no less than the Founding Fathers themselves in The Federalist Papers.

      3. It was a ruling on a request for a preliminary injunction.

      Okay, this much is true. The other two, though, are utter balderdash, which gives me considerably more hope for this case. :)
      • Re:Nope. (Score:2, Informative)

        "Judges aren't allowed to run willy-nilly over each other. It's actually written there in the Constitution that it's not allowed to happen. Within a judge's area of influence, his power is unquestioned, unchallenged, for as long as the judge "hears courteously, answers wisely, considers soberly and decides impartially"."

        Care to quote? I certainly don't remember that bit of Constitution...

        What you are talking about is "stare decisis", and it is a driving force behind the legal system. If the laws that are made are not enforced consistently, the courts become a farce; for people to respect the law, they have to have an expectation that similar cases brought to the bench will have similar outcomes. Thus, courts are loath to overturn the decisions of other courts.

        This goes double for the circuit courts and four times for the district courts; if a higher court gets an appeal on a case that was ruled in contradiction to an established precedent, the appellant is much more likely to win their appeal. Only if the judge in the district court had a really good reason for thumbing his nose at convention will the circuit or SC side with them for doing so. (Don't laugh, this does happen!)

        However, precedent isn't absolute, as this case demonstrates. Take the Hopwood decision. In the Ninth Circuit, it's illegal for a public university to use race as a factor in university admissions. Elsewhere, it's fine. The precedent set by the Ninth Circuit holds for all the courts under them, because any of them can expect to be slapped down if they try to reverse it... but the other Circuits may or may not rule in this manner (some have ruled the opposite way, in fact.) Until a case hits the Supreme Court, there won't be one precedent to follow.

        Now, you're correct that a case -not brought before- a court can't be summarily overturned by that court; if Adobe doesn't appeal (snort), then the district court's decision is final, they don't get another go at the same issue in another court. (But they could try to sue another reseller, and see if that judge felt differently...)

        But courts are free to reverse each other if they have to; the SC has ruled the exact opposite way on cases in adjacent sessions, for goodness' sake!
      • Re:Nope. (Score:2, Informative)

        by Rosey ( 91362 )
        wow...you have absolutely no idea what you are talking about.

        your description of how precedents work is so far removed from reality that i think we are all now dumber for having read it.

        to make a long story short, court decisions are binding precedent only on courts subordinate to the one making the decision. courts on the same level (here the district court) or on a higher level may look to the decision for its persuasive value, but thats about it.

        for a brief summary of how the US court system actually works please read this [findlaw.com] and refrain from subjecting the readers here to any more of your idiocy. there is even a short section on precedents for you.

        i don't mean to sound overly harsh, but please don't act like you know what you are talking about when you are just pulling shit out of your ass. the author of the parent post has a clue, you don't.

        that is all.
      • Re:Nope. (Score:4, Informative)

        by zerocool^ ( 112121 ) on Tuesday February 12, 2002 @12:33AM (#2992376) Homepage Journal

        Every court in America (except Louisiana, it must be said) establishes...

        Before any one asks, yes, Louisiana's law system is vastly different from many in the united states. The origins of this go back to the Eastern Roman Empire, if you believe it. Emperor Justinian (527-565) and his Justinian code of law, the Corpus Juvis Civilis (body of civil law) are the major law documents that made it through the German invasions of the Roman Empire and into Gaul, which is modern day France. This is largely due to the fact that the Eastern R. Emp. was busy fighting the Persians and, later, Muslims, so they just said screw it and bribed the Germanic nomads. As a result, much of the literature of the West was lost, but this Eastern work survived. It came to be the chief code of law used by the Merovingian and Carolingian dynasties, throughout the feudal period, and much of it survived (in tradition at least) in modern day. France, of course, is the largest national influence on early Louisiana, and as such, many of their laws are different from the rest of the U.S., which uses a more British law code.

        To take it back to a previous discussion today, yeah, I left the computer field because of lack of job certainty, and I am now a history major, eventually working towards a teaching certificate.

        ~z
  • by ThomasMis ( 316423 ) on Monday February 11, 2002 @09:31PM (#2991578) Homepage
    I write software for companies so I can eat. On a contract I don't retain ownership of the code, I could usually care less. But I include a clause that says something to the effect that my software is good for no particular purpose and that if it breaks, I'm not liable. This is a good thing for small time guys like me. As I can't really afford to run to a lawyer all the time. But if that doesn't hold up anymore, am I going to face trouble when my call into a Win32 API hangs?? I call LPTRSomeWin32Function() in my software, it blows up and end user sees an error box pop up in the application that I wrote. Is the court going to tell me that I'm liable for broken software when the libraies I use that I didn't write cause the process to go boom?

    I don't know... this is all food for thought. If I'm sued can I turn around and sue the developer of teh library? If I'm linking into glibc and it breaks can I sue GNU? Richard Stallman?
    • This is a fundamentally different situation. The contract in this case is not a license for your clients' use of the software you develop while the contract is in effect, but for your services as a programmer. All rights to your work are therefore owned by your client, not licensed by you to your client, as it was "work made for hire". Work made for hire is a special case under copyright law, and means they'd own all rights even if your contract didn't specifically grant such to them. This isn't a license at all, and certainly not one made after the fact as a EULA on software that comes in a shrink-wrapped box is.

      I'm not a lawyer, but since my wife is a freelance writer I have some general awareness of copyright law.

      You can sue RMS all you'd like for whatever reason you'd like, but whether or not you'd win is a different question.

    • Big difference!

      There's a big difference in that your typical code jockey will (should) set up a contract with a client. Both parties agree to certain terms, and those terms are ideally carried out. Both the end-user and the code monkey are protected because of that contract.

      The shrinkwrapped click-thrus take away all rights from the consumer and only benefit the company. They take away rights to sell the software (whether you agree to the contract or not). Huh?

  • by bollocks ( 80650 ) on Monday February 11, 2002 @09:33PM (#2991584)
    One thing that I have always been curious about with EULA's has been how they can be considered binding if your agreement to the conditions comes after the completion of the contract (when you pay at the register). I don't know about US law, but I did study Australian contract law, and I seem to remember quite clearly that conditions added to the contract after the acceptance of an offer have no legal force.

    I also remember cases we studied where taking something from a shelf to the cash register and paying for it is considered acceptance of the contract. If you can't read and accept the conditions of the contract before you accept the offer (ie pay the purchase price) then you shouldn't be bound to those conditions.
    • The arguments here are a) it says on the box that by buying it, you're agreeing to the license you haven't read yet, or b) you bought the physical media; you need to agree to the license to get to the bits on it.
    • Agreed. Honestly that's always been sort of this issue in the back of people's minds but I am not aware of any court cases that have decided the issue.

      I believe UCITA has language in it which makes shrinkwrap licenses legally binding... sort of a "well just in case, we'll put this in there."

      This software licensing area has gotten quite ridiculous. I don't have a license when I buy a CD, book or any other copyrighted material off the shelf... why software?

      It's time we start applying copyright law to software and move away from this nebulous in between copyright and trade secret. One or the other, but not both.
  • by gordguide ( 307383 ) on Monday February 11, 2002 @09:34PM (#2991590)
    ... (in my opinion) was that the Judge found that because:
    1) A one-time fee paid for the software and the license; and
    2) The license granted use of the software forever for this one-time payment;
    Then the transaction became subject to all the ordinary laws about buying any good.

    Implied in that (again, as I see it) is that SW developers can get out from under this judgement by employing:
    A scheme similar to what MS is proposing for corporate clients (the annual subscription); or
    Creating Software that expires; or
    some other, new licensing scheme designed to thwart the ruling.

    Standard Disclaimer: I am not a lawyer and I always seem to interpret these judgements differently than real lawyers do (or at least that's what lawyers keep telling me).
  • Whew! (Score:5, Funny)

    by cdgod ( 132891 ) on Monday February 11, 2002 @09:35PM (#2991599) Homepage
    Is it just me, or did you just feel a HUGE wight lifted off your shoulders?

    Click to agree? Yes/No

    (By clicking you are abidding by the following license: The clicking action does not guarantee the quality of the opinion of the user nor the author of the message. The user takes full liability for any negative outcomes of posting their optinions on a website. The user gives up their rights to own the speech of their opinion. By clicking the user hereby gives permission to all who read the opinion to have full access to their harddrives with and without any prior notice.)
  • So apparently, possession really is 9/10's of the law
  • by Pollux ( 102520 ) <speter&tedata,net,eg> on Monday February 11, 2002 @09:40PM (#2991631) Journal
    ...so here [google.com] is a link to Google's cache of the file (converted to HTML from its original PDF).
  • The distributors pay full value for the merchandise and accept the risk that the software may be damaged or lost. The distributors also accept the risk that they will be unable to resell the product. The distributors then resell the product to other distributors in the secondary market. The secondary market and the ultimate consumer also pay full value for the produce, and accept the risk that the product may be lost or damaged. (page 13 of ruling, emphasis mine)

    Does this imply that software sold under the license model has an implied guarantee by the distributor that the product will not be "lost or damaged"? Since it is a license for a service, then the original distributor is responsible for any problems in the distribution - that's why they slap the EULA on the software, to protect against malfunctions, etc. But this implies that the distributor is responsible for guaranteeing the media - if it breaks, they would HAVE to replace it, so long as I could prove I bought it. They would have to replace it for the duration of the licence - in many cases, forever. You scratch a Windows 95 CD? They gotta replace it - at cost, because it's a licensed service and not a sold product.

    IANAL - but wouldn't this create some additional problems for distributors, if people actually make use if this?

    • Are you kidding? The software vendors want to have their cake and eat it, too:

      - You can't resell it. It's licensed.

      - Your CD melted? Sucks to be you. Guess you'll have to buy another one.

      In an ideal world, the claim that software is only licensed would require lifetime replacement of media for the cost of shipping, and would at least make copy protection a bit less of a shafting for the public.

  • by Seth Finkelstein ( 90154 ) on Monday February 11, 2002 @09:52PM (#2991708) Homepage Journal
    This is the Softman vs Adobe case, which has already been covered on Slashdot before, not just once [slashdot.org] but twice [slashdot.org]

    And it's months-old news by now!

    Grumble, grumble, are front page slots really going begging? It's unseemly to complain. But at a certain level, it's very sad that I can't get any Slashdot coverage [nytimes.com] for my anti-censorware work [sethf.com] these days, because of What Happened To The Censorware Project (censorware.org) [sethf.com] while months-old news is recycled over and over. Really guys, if you need a good story, I have plenty of deserving ones that are languishing for lack of journalistic backing!

  • OK, here's my take on the whole "EULA" mess.

    First: When you buy something (music CD, software, book, etc.) covered by copyright, you're actually buying it. This is very straightforward, and has been held up in court (book publishers attempting to sue used book stores.)

    OK, so you've bought software, you go to install it - you open it and read the EULA - and are disgusted that you now have to give your firstborn child to Bill Gates, so you think "No, I don't agree to this."

    So - you've not agreed - you click "I agree" (because it's the only way to install the software) and you continue to use it.

    You're 100% legally entitled to do this.

    First and foremost, the argument of the EULA as a contract is absurd. A contract is an agreement negotiated between two parties - since there was no negotiation, there is no contract.

    Second, there's the argument of "you clicked 'ACCEPT', so therefore you agree to the EULA" - Wrong. I rejected the EULA - as in ALL of the EULA - so what's saying that I'm bound by clicking 'I accept'? That's right: the EULA that I rejected. Since I rejected the EULA, it has no bearing over what I can and can't do with the software. Clicking 'ACCEPT' doesn't mean that I accepted the EULA - it means that I rejected the EULA, and am not bound by it in any way.

    Clicking 'I ACCEPT' doesn't mean anything. Besides the fact that the EULA is not a contract, clicking 'I ACCEPT' wouldn't bind you, because there is no way to prove that you're the one who clicked. That's why real contracts are signed - to prove that the person who accepted it is one of the parties to it.

    Now, since the EULA has no hold over me, what's allowing me to use the software? Standard copyright law, that's what. I am bound by the limits of copyright law, which doesn't say anything about using the software (copyright only deals with distributing copies.)

    Now, if the EULA was presented to me before I bought the software, and I signed it - then it would be a whole different story.. and I realize that with the advent of UCITA, this may change, but for the time being, EULA's aren't worth anything.
    • Tested in court? (Score:3, Insightful)

      by andaru ( 535590 )
      I have often wondered about this. Does anyone know if this has been tested in court?

      I remember opening a copy of the Borland C++ compiler on floppies. There was a little circular seal on the envelope and a notice which said that breaking the seal constituted agreement.... I cut the envelope open and left the seal intact (which basically amounted to a private joke between me and the envelope).

      But seriously, Mr. Jones (who knows very little about computers) has Jimmy from down the street come over and set up his computer. Jimmy may agree to all sorts of licences while installing all of the software that came with Mr. Jones's system (Mr. Jones is in the kitchen making a souffle during all of this). Mr. Jones hasn't agreed to anything (except maybe to share the souffle), so he isn't bound by any licence.

      Jimmy may even install some software he pirated. Mr. Jones may think that the software came with the system (or is part of the OS, as if he would know the difference).

      Ignorance of the law is not supposed to be an excuse, but what if the average person cannot reasonably be expected to know if they are breaking the law?


    • Now, since the EULA has no hold over me, what's allowing me to use the software? Standard copyright law, that's what. I am bound by the limits of copyright law, which doesn't say anything about using the software (copyright only deals with distributing copies.)

      Yes, and IIRC, some blockheaded judge bought the argument that copying the software from disk to RAM constituded making an illegal copy according to copyright law. You're not allowed to do that. The license grants you the right to do that. So congratulations. If the EULA is invalidated you simply have no legal way to use the software.


      Ridiculous, of course, but it makes a bizarre sort of sense if you accept the premise that copying the software to RAM is "copying". It is, but only as much as your reading these words is making a copy on your retina. Time for an entrance exam for judges, IMO.

  • by bwt ( 68845 ) on Tuesday February 12, 2002 @01:17AM (#2992514) Homepage
    As I posted when Slashdot ran this story on 28-Nov-2001 (which was four weeks late, as the opinion was available 1-Nov-2001 it happened)...

    From my submissions page:

    Here are your recent submissions to Slashdot, and their status within the system:

    * 2001-11-01 22:36:46 Federal Court rules Software Sold, not merely Licenced (yro,news) (rejected)

    WTF. News should be, well, new. My rejected submission was made the day after the opinion was published. I'm glad this very important decision is getting the attention it deserves, but I have to wonder how Slashdot could justify rejecting it when it was timely, then running it twice when it wasn't.

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