EU Court Says, Yes, You Can Resell Your Software, Even If The Software Company Says You Can't
from the good-for-them dept
You may remember that a couple years ago, an appeals court in the US ruled that, when dealing with software, as long as the provider calls what it sells "a license" rather than a "sale" it can take away your first sale rights. As you hopefully know, first sale rights are what let you resell goods that have copyright-covered material in them -- such as books -- without asking for permission from the copyright holder. However, for reasons that still don't make any sense, the 9th Circuit seems to think that as long as something is purely digital, first sale no longer applies.The Supreme Court refused to hear the appeal, so while technically the ruling still only applies in the 9th Circuit, it's what most consider to be the state of the law in the US (there is always the possibility a different circuit court could disagree and it could go back to the Supreme Court -- and one could argue that some other rulings in the 9th Circuit already conflict -- but for now, the Autodesk case is widely considered the standard). There is, also, the upcoming ReDigi case, of which there's a decent profile in the Boston Globe -- but that's focused on music, and it's not entirely clear how that one will come out either.
Over in Europe, however, it appears that the European Court of Justice (who has been pushing out some relatively insightful rulings on copyright issues lately) seems to recognize just how ridiculous the 9th Circuit's view on first sale and software really is. In a new ruling, it has upheld the right of first sale on software, basically saying that you are buying a license and that license is resellable.
The specific case involved a company, UsedSoft, that was trying to create a market in reselling used software. Oracle sued, claiming that its license agreement specifically stated that it could not be resold. However, the court found that the right of first sale applied. In the court's language, it talks about copyright "exhaustion" which is the idea that once you've sold something you've "exhausted" your right to control it.
It makes no difference, in a situation such as that at issue in the main proceedings, whether the copy of the computer program was made available to the customer by the rightholder concerned by means of a download from the rightholder’s website or by means of a material medium such as a CD-ROM or DVD. Even if, in the latter case too, the rightholder formally separates the customer’s right to use the copy of the program supplied from the operation of transferring the copy of the program to the customer on a material medium, the operation of downloading from that medium a copy of the computer program and that of concluding a licence agreement remain inseparable from the point of view of the acquirer, for the reasons set out in paragraph 44 above. Since an acquirer who downloads a copy of the program concerned by means of a material medium such as a CD-ROM or DVD and concludes a licence agreement for that copy receives the right to use the copy for an unlimited period in return for payment of a fee, it must be considered that those two operations likewise involve, in the case of the making available of a copy of the computer program concerned by means of a material medium such as a CD-ROM or DVD, the transfer of the right of ownership of that copy.There are some interesting side notes on this. First, the court also rules that if Oracle promised free maintenance updates to the original licensee, it must continue to provide those to whomever purchased the "used" software. However, it also puts a couple of limitations on this. The first one is somewhat obvious: the seller of the used license can no longer be using the software. Oracle argued that this would be hard to track, but the court rightly points out that this is the same issue that those who sell software on CD-ROMs and DVDs face, but they figure out how to survive:
As Oracle rightly observes, ascertaining whether such a copy has been made unusable may prove difficult. However, a copyright holder who distributes copies of a computer program on a material medium such as a CD-ROM or DVD is faced with the same problem, since it is only with great difficulty that he can make sure that the original acquirer has not made copies of the program which he will continue to use after selling his material medium. To solve that problem, it is permissible for the distributor – whether ‘classic’ or ‘digital’ – to make use of technical protective measures such as product keys.Separately, however, the court ruled that you cannot divvy up the number of seats in a license and sell them individually. That is, if you buy a 100 seat license to some software, and are only using 50, you can't then sell just those other 50 seats. This ruling says that the first sale only applies to the entire license agreement, basically.
There is some disagreement as to how "big" an impact this ruling will have. To be honest, I'm not convinced that the overall impact will be that large, but I think it is a good thing that the court appears to recognize that you cannot contract away certain rights granted to you under copyright. Copyright holders have long tried to remove the limitations and exceptions of copyright law through contracts and "licenses." Recognizing that those limitations and exceptions really do exist is important, and it's good to see the EU Court of Justice release a clear ruling on that issue.
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Filed Under: europe, european court of justice, first sale, resale, scotus, software license
Companies: oracle, usedsoft
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...it was as if a thousand CEOs suddenly cried out in terror and were suddenly silenced....
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Digital First Sale Doctrine
I disagree with that statement. The 9th Circuit has been relatively strict with respect to upholding license agreements governing digital transactions, but I'm not aware of any precedent that says that the first sale doctrine doesn't apply to digital goods.
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Re: Digital First Sale Doctrine
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Impact
I've said it for years: DRM technology needs to be legally recognized as a hacking tool whose only use is to interfere with the property rights of computer owners, and its use needs to be criminalized. Until that happens, we'll never truly have any meaningful rights of ownership on our computers.
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Re: Impact
Not only should there not be a law banning DRM circumvention but as you state, DRM itself should be banned.
To be honest, we have to assume that it would save various industries a small fortune if DRM was banned while in no way increasing the level of copying that goes on, given that the most important point is that DRM doesn't stop piracy, it simply and solely infringes the rights of the paying customers.
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Re: Re: Impact
1. OK, I'd really rather copyright just go away.
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Toss the DMCA
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Re: Re: Re: Impact
Copyright has always existed for things that people can understand directly. If you read a book, you can see all the words in the book and analyze them, and from this you can learn to write similar books. If you watch a movie, you can observe the acting, the filming angles and lighting, and various other aspects of the film, and analyze them and learn to create a similar film. And in fact, high-quality specimens of each art are frequently used exactly this way, as examples and teaching aids in literature and filmmaking classes.
Software is likewise written in a way that makes sense to human beings and can be analyzed and understood, but it is then compiled to a form that makes sense only to a computer, and any analysis is both exceptionally difficult and only made possible at all due to sophisticated tools designed to automate the process of reinterpreting the compiled code in ways that are easier for human beings to understand.
Compiled software cannot (reasonably) be analyzed and learned from, and indeed the use and analysis of actual real-world examples is notably lacking from computer programming curricula, to the detriment of the discipline. Because the stated constitutional purpose of copyright is to promote the progress of science and the useful arts, and because compiled software cannot be used for such a purpose, no copyright should be granted on any software that is not distributed with full source.
This does not mean, of course, that the software must be licensed under "open-source licensing." That's a completely different matter, and indeed as a programmer I have access to the source code of a number of proprietary coding libraries that I am not legally permitted to redistribute. But simply having the code available is a great aid in working with the libraries, to the point where it is a policy at the company I work for to never use a library with no source available.
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Re: Re: Re: Re: Impact
I can't understand French so do you think every book in French I buy should come with an English translation?
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Re: Impact
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Re: Re: Impact
In fact, you can already see this by the several 'Run your personal cloud yourself with our box!'-things that are popping up now. The loop contained in that one sentence baffled and amused me at first, but now I think it does make sense if you look at it from the right angle, and given the current saas popularity.
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Re: Re: Impact
While SaaS has a role to play, I do think that in the long run it won't be the predominant way that software is done (except perhaps with smartphones). There are a TON of downsides to it, most of which people haven't realized personally yet, which limits its utility. Eventually, people will rediscover why the software industry evolved away from this paradigm the first time around.
Regardless, this issue won't affect me personally at all, as (outside of trivial software I don't care about, like smartphone games) I don't use software that I am only licensing. I only use software I can rely on, which means software that I can actually own.
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Re: Impact
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Re:
http://www.gamesindustry.biz/articles/2012-07-03-consumers-can-resell-downloaded-games-rules- eu
You have to register to see reactions from the developers, but reactions tend to be varied. Some are saying this will push the move to SaaS such as OnLive and Gaikai, others are saying it will push for more DLC, and someone also suggested it could create a new marketplace. Overall, I don't think this is going to be some radical change in the industry, but it might hurt some DRM products as they will have to now update for license transfers and older products could cause a few headaches.
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When will Games get the same treatment?
Case in point: Ubisoft sold a game called Silent Hunter 5 back in March 2010. The game was released in pretty much a broken and almost unplayable state. To this day, over a year later, the game is still relatively broken. Certain features that are REQUIRED or necessary to play the game successfully are still broken to this day and Ubisoft dropped all support
pretty much right after release of the game.
If a company, and it should matter if it a game developer/publisher or a business oriented dev/pub, sells a "LICENSE" for said product, should they not be held liable that they did not keep up their end of the bargain? As a gamer I see this time and time again and NO ONE does anything about it. I think it is unfair and TOTAL legal negligence by the US Legal system. I pay money for a product that is supposed to perform a certain way, yet there is absolutely ZERO recourse for me to make a developer or company follow through on their promise of a working product.
And I don't want to hear from some people that argue "varieties of hardware, setups, etc". I work as an IT guy in a firm of over 250 people. I run several servers and many varieties of clients with varying hardware. It is a poor excuse. If the companies making the products can't ensure proper viability, then they shouldn't be making the product. Period!
Who pays back all the people that bought Silent Hunter IV? Who backs them up and says, "Yes, you've been wronged?". No one. Who says, "Here's what you can do to rectify the problem...". No one. The publisher sure won't give you the money back!
Techdirt should really have a legal section regarding stuff like this. If we do not start bringing issues like this to the forefront publishers and developers will continue to take advantage of their consumers.
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Re: When will Games get the same treatment?
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Low impact would be GOOD
This ruling is a step back, reinforcing the laws that have been slowly eroding - eroding to the point where even films produced in Sweden for Swedish audiences start with a copyright screen that fraudulently claims that making copies for personal use is illegal, which of course is a load of dingo's kidneys, and should in all honesty land a few rich execs in prison until they learn not to lie to the people about their consumer rights.
From my Swedish standpoint, no, I don't see any huge impacts on how things are done, but this may just keep the industry in check, reminding them that legally they are treading on thin ice, and that continually violating consumer rights may just turn out to land them in a shit-storm that simply wasn't on their forecast.
While first sale rights may be going out the window in the US due to outsourced production and license agreements, this hasn't really happened in Europe yet. Hopefully, this means that it never will. I think in this case, no big impact is a good thing, as it means we are hitting the breaks on the Americanization of Europe.
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Probably won't be huge for large licenses or corporate software. But for games software I think it might be a different story. Could be large implications for services like Steam and Origin and just the digital games market in general. Let alone the consoles markets push to destroy used sales by taking more content off the disc and using digital licenses.
Probably wont be long until someone tries to open a digital version of Gamestop. Buy cheap and sell at a massive profit but without the physical product to ship and store.
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how do i remove the software for distribution
in the past i have only given value to the hardware not the software. i laptops are 'nuked' and than given a clean install of windows.
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Clarification on 'Dividing' the Licences
In any case, this court ruling puts a massive dent in the FUD (Fear, Uncertainty & Doubt) tactics employed by the software vendors. However, worth noting that Usedsoft's use of a ‘Notary’ (in part, to hide where the licences came from) was deemed illegal by the German courts and Usedsoft is now also going through insolvency proceedings. There are other secondary software licence suppliers whom adopt more transparent business models that do not rely on the Exhaustion Principle eg: www.discount-licensing.com.
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Re: Clarification on 'Dividing' the Licences
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Bigger impact than you might think
Does this now mean that "used MP3" sites are now legal?
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The end of OEM licences?
Apparently in the EU we're now allowed to resell the software. But it wouldn't come with a computer anymore if I decide to remove the OS from my brand new laptop and resell it. Microsoft no doubt already registered the properties of the system it was primarily installed on, and a potential buyer might not even be able to install it on their own system if it is too different from the laptop it came from?
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or is it on the burden of the new buyer to run a hack/crack to get things working?
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UsedSoft vs Oracle - the ramifications
http://blog.softwareinsider.org/2012/07/04/news-analysis-usedsoft-vs-oracle-ruling-opens- up-monopolistic-practices-by-software-vendors/
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Does this mean...
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Software
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reg. software licence
What If a person sell the whole computer with loaded software, does that not amount to resale of software also?
what if a company is bought over by another company wherein the IT infrastructure will also be taken over by new company. Does that not amount to resell of all softwares and licenses ?
In general trade practice, if a person buy a hardware and resell it, the seller and buyer has got the right to do the transaction. Even in the above two examples also both buyer and seller has got the right to exercise so.
In that case, why only software cannot be sold out?
The older version is still useful for those people who have simpler or lite functional needs.
I think that both legal infrastructure and manufacturers of softwares (including games) / digital nature should reframe the legalities.
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Cheap price for wholesale buyers!
Contact me: cheapkeysonly@gmail.com
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Unlimited Use Licence
Hello, I have been confused by this. I do live in the US, and I am very likely unfamiliar with how software and copyright works in the EU.
What does an unlimited licence mean? Is it required in order to count for ownership of the software under the ruling?
Or is it trying to argue as long as legal software is legally being sold without any limited period (basically, if it's just a normal sell, like a video game for 59.99)?
In the USA, some legal software is sold with a license agreement claiming it's "limited", and doesn't say at all it's unlimited.
And some software (usually physical video games) doesn't even come with any "license agreement" in the US for what I know.
If it's similar in the places covered by this ruling, how does that work? Are they all by default a form of unlimited license grant by law or does the actual creator have to actually make an agreement with specific statement?
If anyone understands way better than me, then that's good.
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Currently, developer companies are allowed to use DRM to circumvent your ownership rights. They will simply make the authentication server (or any other) require the new buyer to re-register for a fee equivalent to the purchase price. You know, the same trick that Microsoft and Sony are talking about on their next consoles. My company now uses software from https://www.timesolv.com/ and they also use similar methods to protect their product
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