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Consumer Rights: Court Rules Against Used Software Sales
ECN Magazine ^ | September 13, 2010 | Jason Lomberg

Posted on 09/13/2010 1:35:31 PM PDT by Still Thinking

The 9th Circuit of Appeals has reaffirmed the right of software companies to circumvent the first-sale doctrine by “licensing” rather then “selling” its products. The significance of this ruling cannot be overstated—it could singlehandedly destroy the used software market.

In 2005, one Timothy Vernor bought a sealed copy of AutoCAD Release 14 at a garage sale. In 2007, Vernor purchased four used copies of Release 14 from an authorized dealer, Cardwell/Thomas & Associates (CTA). He subsequently placed all but two copies on eBay, and in each instance, Autodesk appealed to the Digital Millennium Copyright Act (DMCA), alleging copyright infringement. In 2009, the courts ruled in Vernor’s favor, reaffirming his rights under the first-sale doctrine. But the 9th Circuit of Appeals recently overturned that decision—according to the ruling, the software license overrides the first-sale doctrine.

(Excerpt) Read more at ecnmag.com ...


TOPICS: Business/Economy; Constitution/Conservatism; News/Current Events
KEYWORDS: autocad; autodesk; copyright; copyrightlaw; dcma; dmca; license; rightoffirstsale; software; usedsoftware
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To: a fool in paradise

Many of the car companies like the treat the codes as proprietary info. Which is a completely different debate than licensing vs owning software. The smart companies don’t do it though because they know they gain no money with that and lose tons of goodwill.


61 posted on 09/13/2010 2:35:04 PM PDT by discostu (Keyser Soze lives)
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To: Inappropriate Laughter
Almost all computers and modern electronic devices depend on embedded software (like Windows) which is licensed. If this ruling stands any license holder of this embedded software could stop or put conditions on the resale of this equipment.

They already do this - Microsoft has conditions on the transfer of the Windows license for computers with OEM copies of Windows, and Apple has conditions on Macs (which essentially have an "OEM" copy of the OS, since you can only run the Mac OS on Apple hardware...)

Tehcnically neither are "embedded", in that they are installed separately from the hardware, and you can remove or overwrite them with another OS.

62 posted on 09/13/2010 2:37:17 PM PDT by Mannaggia l'America
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To: Still Thinking
With games, it might be different with cartridge games vs. CD/DVD games. Wouldn't you be giving back the cartridge without keeping the ability to still play the game?

On the other hand, it is not that much different from reselling books. I give up the physical medium, but still retain the knowledge of the story, while someone else gets to read the story without any compensation going to the author.

-PJ

63 posted on 09/13/2010 2:38:09 PM PDT by Political Junkie Too ("Comprehensive" reform bills only end up as incomprehensible messes.)
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To: dusttoyou
"With that thinking, the car company removes the intellectual property used to design the car at the end of the assembly line?"

The intellectual property that the automobile manufacturer is concerned about is called - by in large - a trademark. You don't buy the trademark of the car when you buy the car, you buy the physical property that is the car.

As I said to another poster, their is software in virtually every car. Some of that software is licensed for use in the car by the manufacturer, and some of that software is actually developed by the manufacturer themselves. The license that comes with that software may allow it's resale, but just because you own the car, doesn't mean you own the code that makes the car work.

Different software, different licenses, different limitations, obligation or privileges of the license holder.

64 posted on 09/13/2010 2:39:03 PM PDT by OldDeckHand
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To: Still Thinking

9th Circus strikes again


65 posted on 09/13/2010 2:39:29 PM PDT by NonValueAdded ("It's amazing, A man who has such large ears could be so tone deaf" Rush Limbaugh 9/8/10)
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To: Still Thinking
Wow, sounds....(yawn)...


Frowning takes 68 muscles.
Smiling takes 6.
Pulling this trigger takes 2.
I'm lazy.

66 posted on 09/13/2010 2:40:14 PM PDT by The Comedian
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To: I cannot think of a name

There’s lots of complex engineering based software that is riddled with bugs.

I’ve got one set of software tools that cost over $40k with a yearly maintenance fee of 15% that crashes often, outputs incorrect/missing data etc. Every version over the last 11 years I’ve used has had some major issue to deal with/work around.

I really try to avoid doing any software updates in the middle of a project. It is begging for grief... What you thought was complete and behind suddenly is broken... In general the only time I do updates is between projects or when I’ve hit a brick wall due to a bug that I can’t find away around. Then I’ll update hoping the bug is resolved or at least different in the newer version. In my experience that works maybe 50% of the time...


67 posted on 09/13/2010 2:40:51 PM PDT by DB
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To: OldDeckHand
Doesn't matter if the manufacturer currently prohibits resale ~ this ruling says they could.

Let's go down the road a few years and all our cars are actually operated by a robotic system that steers clear of obstructions, accidents, and cops. The system will require a few more servos than our cars presently have, but the computer and software aren't going to take up any more room than today's computer controlled ignition and performance monitoring systems.

I can easily imagine a manufacturer prohibiting resale due to the fragile nature of the robotics and the need to maintain them within the frame work of the manufacturer's warranty policies and upgrade requirements.

We have a court in this case that's extending the scope of some very limited statutory standards well beyond the existing legislative intent regarding the transfer of property.

Time to get this business out of the way before we end up having to jack our robotic cars up on blocks out back simply because the software company wants them back~!

68 posted on 09/13/2010 2:42:47 PM PDT by muawiyah
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To: OldDeckHand
When you buy a car, you are buying - and titling - the car itself. The physical property (not intellectual property) that is the car, is what is legally titled in the owner's name. The software license allows the licensee access to the intellectual property.

Yes, that's how they do it now. There's nothing to stop them from deciding they want to go the license route, and if you think the result is absurd, then it follows that this decision is incorrect.

69 posted on 09/13/2010 2:47:37 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: Still Thinking
Yes, that's the one area in which mine is an apples to oranges comparison, and would be amply addressed by saying that if you want to sell the software, you may not keep a copy. There's no need to make the transaction this one-sided to address that one issue.

Yes, and actually most software license agreements allow for this. Autodesk's was very restrictive.

I admit some bias here because I am in the software business and have software that I have written and sell ("license") to the public.

Overly restrictive EULA's are a hassle on both sides. I don't have lawyers on staff to sniff out and fight EULA violations, and on the other side I don't want my customers to think I am the Gestapo.

Mine simply says that the customer can transfer the license to another party at any time, but in it's entirety - they give up the license, and the new party must accept the terms of the license. Enough said, and I think fair to both sides.

70 posted on 09/13/2010 2:52:31 PM PDT by Mannaggia l'America
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To: Still Thinking
"There's nothing to stop them from deciding they want to go the license route,..."

Sure there is - hassle - as in the automobile manufacturers wouldn't want the hassle of keeping track of software licenses. Why? Because they aren't in the software business, they're in the car business. Whatever the value of the software is in that car, it's but a TINY fraction of the value of the car.

71 posted on 09/13/2010 2:55:33 PM PDT by OldDeckHand
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To: OldDeckHand

Regarding music, I was talking about music being inventive or not, not some legal definition. Being “inventive” does not require that it have physical utility.


72 posted on 09/13/2010 3:01:07 PM PDT by DB
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To: OldDeckHand

Who said anything about software? I’m TALKING about licensing the car, per se. Don’t you think the auto companies would love to contractually prohibit used car sales for the same reason the software companies like to for their product?


73 posted on 09/13/2010 3:11:01 PM PDT by Still Thinking (Freedom is NOT a loophole!)
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To: Borges

A good reason to support open sources software.


74 posted on 09/13/2010 3:13:59 PM PDT by ully2 (ully)
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To: Borges
Software doesn’t have wear and tear. There will never be a need to replace it.

Don't worry, the software companies have a solution.

It's called file format upgrades.

AutoDesk applies this fairly gently - usually files created with an AutoDesk program can be used with other versions over a 2 to 3 year period. Newer versions can always open older files.

Solidworks tightens this up. All newer versions can open older files - NO older version can EVER open a newer file.

Many conmpanies have had supposed "upgrades" that make me want to organize active boycotts of their products.

After all, COMPLETELY changing the user interface is not to benefit the user, but to sell many thousands worth of "training" after hiding the old commands in new, obscure places. Or adding commands which you might use once in a blue moon that occurred on the seventh leap year's day when the sun was shining purple. Hey, it may slow down your machine (buy a new one) or use obscene quantities of file space (buy more hard disks) or just have a nicer splash screen - but it's an UPGRADE, by heaven.

75 posted on 09/13/2010 3:29:40 PM PDT by jimt
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To: discostu; a fool in paradise

No product is perfect, bugs don’t necessarily prove that the mfg deliberately delivered a faulty product.

The basic test it seems to me, is does the product do what it is intended to do? If it is a toaster, does it toast?

Legally there is some latitude between what a product is intended to do and how well it does it. That latitude means that the software company cannot reasonably be expected to provide a perfect product. Remember also that most warranties exempt user misuse or incorrect use. It is not easy to prove you the user did everything correctly, thus the software company cannot be held liable for your ineptness. If you doubt the logic of that, work for a week or two as a phone support tech for anything computer related. It is astounding.


76 posted on 09/13/2010 3:35:32 PM PDT by ChildOfThe60s (If you can remember the 60s, you weren't really there.)
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To: Still Thinking
"Don’t you think the auto companies would love to contractually prohibit used car sales for the same reason the software companies like to for their product?"

Again, it's complicated because automobiles are titled, unlike software. There is an entirely different element of law that deals with real property, and its encumbrances. Licensing isn't one of the allowable encumbrances.

Even still, in answer to your question, probably not. The resale value of a car is a benefit of ownership, an attraction for potential first-time buyers. Mercedes are premium cars, with premium prices, but one benefit is they tend to retain their value better than some other makes. Mercedes actually markets this benefit, and they surely wouldn't want to do anything to complicate it.

Automakers have other less burdensome (to them) ways of adding value - and collecting revenue - from potential resales, and that is with their "certified resale" programs.

77 posted on 09/13/2010 3:41:31 PM PDT by OldDeckHand
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To: ChildOfThe60s

No product is perfect, and certainly bugs/ faults exist that the software company/ mfg didn’t know about when they shipped it. But we also know from various lawsuits (like Pinto) that faults exist that were known before the product was released to the wild but they shipped anyway. I’ve been in the software business for 15 years and I’ve never been involved in a release that didn’t have open bugs on ship day, some we intended to fix later, some we never intended to fix.

Now one thing the software industry does that opens the door to extra criticism is we believe strongly in 3 levels of good enough to ship. The highest level, the level most people wish was the only level is medical software, medical software really does need to be nearly perfect, especially the stuff that’s embedded in medical hardware like those drug dispensing machines. Next is the “moves metal” level, generally what we’re talking about there some of the stuff in your car, elevators, airplanes, and missiles, the part of the software that moves metal in a way that could kill people needs to be pretty bulletproof, the rest though isn’t that big a deal (we’re OK with elevators occasionally putting you on the wrong floor, so long as it doesn’t go THROUGH the floor at high speed). Then there’s all the rest of the software, software that can’t possibly kill anybody, pretty much the quality target for that is not being sued, followed closely by not being embarrassed, everything beyond that is gravy.


78 posted on 09/13/2010 3:45:10 PM PDT by discostu (Keyser Soze lives)
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To: I cannot think of a name

I understand completely.

I have been a Corel Draw user since v2. I am married to it for a host of reasons.

You know what we call the first 50,000 purchasers of the latest version of Draw?......Beta testers.

I never upgraded until the upgrade had reached patch C or D. And now, only when I absolutely have to have a new feature, which isn’t often.


79 posted on 09/13/2010 3:45:49 PM PDT by ChildOfThe60s (If you can remember the 60s, you weren't really there.)
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To: discostu
pretty much the quality target for that is not being sued, followed closely by not being embarrassed, everything beyond that is gravy.

LOL. I get it. I don't doubt it, either.

80 posted on 09/13/2010 3:48:45 PM PDT by ChildOfThe60s (If you can remember the 60s, you weren't really there.)
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