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Software Transferability? (or the lack of it)

BarefootClown asks: "We've all seen the stories about Microsoft forcing eBay to remove auctions hawking their software. Microsoft is certainly the most visible target, but there are others. Most every EULA includes a clause forbidding the transfer of ownership of software (there are exceptions, of course, and kudos to them). My question is, have these clauses been upheld in court?" What is so special about software (and their licenses), that allows it to avoid the protections consumers enjoy from more tangible products?

"I seem to recall hearing stories of courts overturning these schemes; does anybody have any specifics? Cases/judicial opinions, perhaps? I've checked FindLaw, Google, and others, but haven't found anything (haven't found anything upholding them, either...). Have these clauses ever even been to court, or do the companies just depend on FUD to bludgeon the end user into compliance? Anybody with experience, I'd love to hear it. Lawyers, your opinions? (Lawyers, would you be willing to fight one out in court, if given the chance?)"

As many of you may know, the concept of "owning" software is fallacy. You own nothing. What you do posess when you purchase your new piece of commercial software, is a corporate-skewed set of limited-use rights, which are getting more and more limited each day. For those interested, the latest print issue of Wired (October, 2001) has a big "article" on this (see p.170). It attempts to illustrate thru humorous example, what software has been seriously doing for decades.

No one would own (or lease) a car if the contract said, "You must not sell this car, in the event this car is no longer used, send it to the nearest junkyard.", so why is this true for software?

19 of 471 comments (clear)

  1. Software is licensed, not sold by ljnelson · · Score: 5, Insightful
    I'm not arguing that this is correct, but strictly speaking software is licensed, not sold. That means you don't own it. If you don't own it, you can't sell or resell it.

    To take an example from another arena: if I write to one of the media syndicates and get permission to use a Peanuts cartoon in some publication I'm working on, I can't then grant others access to use that cartoon, because I don't own it.

    Again, I'm not saying I agree or disagree with this particular way that people use/buy/license software.

    1. Re:Software is licensed, not sold by UnknownSoldier · · Score: 5, Insightful

      > but strictly speaking software is licensed, not sold.
      Correct.

      > If you don't own it, you can't sell or resell it.
      That's not entirely correct - IF the contract that you signed, gives you permission to sell/resell the thing you have licensed, then you can sell/resell it.

      The contract may also be a pseudo contract ("First Sale Doctrine")
      i.e. you have the right to sell music you buy, because it is "reasonable" that buyers have the right to sell what they purchase, even though you DIDN'T sign anything claiming privileges were transfered to the buyer.

      Things to think about:

      - If you don't own the software you have licensed, do you own the car you have "licensed" as well ?
      - Who owns your time and goods, if you need a "license" to engage in business?

      Remember, what does a license mean? Legal permission to do something, that normally you wouldn't have.

    2. Re:Software is licensed, not sold by dillon_rinker · · Score: 3, Insightful

      - If you don't own the software you have licensed, do you own the car you have "licensed" as well ?
      You buy the car and own it outright. The license gives you the non-transferable right to operate the car on public roads.

      - Who owns your time and goods, if you need a "license" to engage in business?
      You do. The license gives you the non-transferable right to operate the business. I'll granted that the gubmint controls your time and goods, but they do not own them.

    3. Re:Software is licensed, not sold by AaronStJ · · Score: 3, Insightful

      To take an example from another arena: if I write to one of the media syndicates and get permission to use a Peanuts cartoon in some publication I'm working on, I can't then grant others access to use that cartoon, because I don't own it.

      This anology isn't quite right. When you purchase software, you purchase the right to use it, not the right to dristribute it. It's more like if you bought a Peanuts book and read it. Don't you have the right to give the book to a friend?

      No lawyers are banging down the doors of used book stored, that's all I know.

      --
      Stupid like a fox!
  2. Caveat Emptor by HardCase · · Score: 3, Insightful
    No one would own (or lease) a car if the contract said, "You must not sell this
    car, in the event this car is no longer used, send it to the nearest junkyard.", so
    why is this true for software?


    It's true for software because the buying public has come to accept it as a condition for using the software licenses that they purchase. Obviously cars aren't software, particularly since when you buy a car, you buy the car. In a way, of course, a lease is like a license to use the car and, I suppose, the lessor could put that language in the contract, but the buying public wouldn't accept it. The bottom line is the subject line.


    -h-

  3. Re:copying by swordgeek · · Score: 5, Insightful

    However, at present you can legally resell music that you legitimately buy, and you definitely can make a perfect copy of an audio CD.

    The only think that makes software 'special' is the license agreement saying, "You don't own this item. You have the right to use the contents of it according to our restrictions, and exactly nothing else."

    That's the key--not the copyability of it.

    --

    "People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
  4. Legality doesn't matter by swordgeek · · Score: 5, Insightful

    "Hi, my name is Bill, and this is my 900lb gorilla. Although I really don't know what he's going to do, if you do something I don't like, I'll try to make him stomp on you. Do you want to take that chance?"

    In other words, unless you are guaranteed to win the case, you're not likely to take MS to court over their license agreement. At that point, the license agreement becomes a de facto law.

    --

    "People who do stupid things with hazardous materials often die." -- Jim Davidson on alt.folklore.urban
  5. Car Leasing by wiredog · · Score: 3, Insightful
    No one would own (or lease) a car if the contract said, "You must not sell this car

    If you sold a car you were leasing you would be tossed in jail for grand theft auto, it's sort of implicit in the idea of lease. Which is why MS and others are moving (back to) a software leasing model.

  6. Re:because... by Anonymous Coward · · Score: 5, Insightful

    Well, close, but not quite.

    Yes, MS can keep on selling the product, just like a prostitute can. However, the sale of software concerns a tangible good, whereas prostitution is a *service*.

    Since software is a tangible good, it is possible for the consumer to recover part of their initial investment by reselling ("transferring") it to someone else. This is what is prohibited by the EULAs, since the software vendors a) don't want old copies of their software out there and b) want everyone to upgrade to the latest version of everything.

    Since "transfer of title" clauses in EULAs have largely been ignored by consumers and unenforced by the courts and software manufacturers, they are now trying to figure out how they can accomplish a) and b). The answer is software *services*, or the ASP model. By doing this, everyone signs a contract saying "for $xxx my 50 employees can use Office 2005 for 1 year." Since the software is never distributed on CD-ROM, the service is never placed into a form that people can resell (transfer). Since people are forced to go to the manufacturer for the software, and since the manufacturer determines what versions are available when, for how long, and at what cost, they can accomplish both a) and b).

  7. Re:In Germany you are allowed to do this. by Masturbating+Vulcan · · Score: 4, Insightful

    A German court has ruled that you can even sell your OEM versions, and Microsoft can't do anything against it (even though they tried). But in the US this is probably different, thanks to the DMCA...

    Your facts are legitimate, but your conclusion is illegitimate and downright wrong. The DMCA is a revision to copyright law that prohibits trafficking in circumvention devices. It has nothing to do with the enforcability of End User License Agreements. There is a law which is being supported at the state level called UCITA which deals with this topic.

    Obfuscating the purpose of the DMCA lessens the logicical correctness of our argument against it and in so doing weakens our cause. In the future, please be more vigilant.

    --
    I DO NOT GET EMOTIONAL ABOUT ANYTHING!!!!!!!!!!!!!!!
  8. Tracking and Verification Next by DumbSwede · · Score: 5, Insightful
    Given the opportunity, I'm sure Ford, GM, Dodge, etc., would love to have a no resale clause. Book publishers have not always been happy with the existence of libraries. Software companies treat us this way because we let them, and because they have deep pockets to engage in lobbying and filing lawsuits until they get their way.

    It is true that software has a more ephemeral quality than other products of our modern civilization, but the trend is clear. The Music, Publishing, Broadcast, Cable and Movie industries are taking notes, and getting more viscous and devious in their pursuit of squeezing every possible dime of revenue from the public.

    What make this all the more insidious and timely is the tracking and invasion of privacy most of these schemes require to enforce. Encryption is a bandaid that will never work without tracking and verification. If companies offered a good product at a fair price that we had complete control of how we wished to use these products, software pirates, cable tappers, CD rippers, would be seen as petty criminals instead of modern day robinhoods.

    Mark my words in the wake of the WTC bombings, media companies of all types will jump on the band wagon of information tracking, where no individual may view or own any type of information without someone, somewhere, knowing what they are looking at.

    It doesn't get much more Orwellian than this.

  9. Re:software AND licenses? by S.Lemmon · · Score: 5, Insightful

    This stikes a chord. Is it just me or are we moving into a kind of digital serfdom and an age of modern feudalism? It seems big corporations want do do away with private ownership altogether. Just like the pesants of old were tied to the land the aristocrats allowed them to use, we're held prisioner to software licenses that strip us of all rights and subject us to any corporate whim.

    As long as we "know our place", pay our Microsoft tax, and don't speak against our lord and masters, they'll graciously allow us to use their software. However, anyone who dares speak out risks loosing everything.

    With no real competition, large corporations can make demands that would have been unthinkable a few years ago - all we can do is accept. In the digital age, software is no longer a luxury, and it becomes increasingly difficult to function without it. Those who control that software and can dictate the terms will have more power than any government - and who do they answer to?

    Even a land-owning aristocrat could take pity on his peasants now and again, but a corporation is a soulless entity who's only concern is maximizing profit.

  10. EULAs on books and music by TheSHAD0W · · Score: 3, Insightful

    Oh, but record labels and book publishers would LOVE to limit sales of used product. There was recently a push to prevent music stores from carrying used CDs; see this article. Garth Brooks, the country singer, was particularly outraged that his CDs could be resold without his getting a cut of the profit.

    Further, book publishers have recently been getting miffed that public libraries let people read books without having to buy them, and are looking to set higher prices for public libraries, or worse yet, to ban libraries from making certain books available. (I'm having a problem finding a reference for this.)

  11. Re:Ah but it is! by Oliver+Wendell+Jones · · Score: 3, Insightful

    Only as long as you didn't buy an upgrade licensed version of Office 97, or Office 2K. If you bought an upgrade, then you still only have the one license, and you can't (legally) sell or give away your previous version.

    --
    A computer once beat me at chess, but it was no match for me at kick boxing -- Emo Phillips
  12. This is very uncapitalistic by SIGFPE · · Score: 4, Insightful
    In a capitalist economy I can try selling product X to A and B but if I overcharge A and not B then A can get B to buy it and then buy it off B. This keeps prices in check. This is one of the key elements of a capitalist economy that makes it work so efficiently for both buyer and seller. It seems to me that EULAs put much more of the power into the hands of the seller than the buyer and we actually lose many of the great benefits of capitalism.


    IMHO one of the great things about ebay is that it brings capitalism to the masses. Millions of people all over the world can now now make their lives more efficient (in an economic sense) by trading even the most trivial things that they own. It's a grand bazaar where everyone profits. So it's not surprising that we see EULAs in conflict with the philosophy of ebay.


    EULAs are anti-capitalist. They are the product of a lobby economy - one where people who bribe politicians get to determine where resources in an economy should go.

    --
    -- SIGFPE
    1. Re:This is very uncapitalistic by SIGFPE · · Score: 3, Insightful
      Yes, you're right. This is still capitalism. But I think that capitalism has changed in meaning over the years.


      There are, as far as I can see, (at least) two ways to view things like constitutional rights. Either they exist because they are basic 'natural' human rights that exist for their own sake - or they are a means to an end. For example I think property rights are a good thing not just because individual people want to have them for themselves. They are also good because private property and the right to trade it gives an economy where people try to maximise their utilities and the net result seems to produce a far better (by many standards) allocation of resources than, say, a command or feudal economy.


      The reason we have things like intellectual property rights is similar - it encourages innovation and it means that everyone as a whole can get to use intellectual property to the advantage of lots of people.


      But it seems to me that we've shifted towards the former view more. Companies aren't interested in innovation etc. They are interested in protecting their 'rights' (whatever the 'right' of an abstract entity means). I believe we have lost sight of the reason for having a capitalist economy in the first place. So in a sense I think that practises like EULAs are turning us away from what capitalist economies are meant to be for.

      --
      -- SIGFPE
  13. My Sis by Marcus+Brody · · Score: 3, Insightful

    My sister has, for the last few years, been running a "grey import" company. Basically, some guy in the states buys up a load of microsoft products which are marked purely as OEM, not for resale, not to be sold outside of the US etc. As far as I understand it, the guy in the US is basically classified as a villian, even though he buys most of his stock from US system builders who have gone bust. However, my sister buys his stock after he has shipped it to the UK, where all these dumb clauses aren't applicable under EU law. Therefore her company is completely ligit - a publicly owned company, with a 'net presence etc., and able to sell microsoft products at a vastly reduced price to normal retail outlets.
    A few years ago, microsoft were really trying to stamp out companies selling grey imports: Basically turning up at the office of some tiny company one monday morning with 15 lawyers and 70 boxes of legals. These companies closed down pretty darn quick. However, I think one of these companies took the case all the way to the EU court and won! Hence, my sister is now safe in her business.
    I'm sorry I cant rember the exact details, but my sister has this great legal schpiel whenever anyone accuses her of being a crook - EU case numbers, reference subsections, grand judge rulings (I'll try and get her on slashdot later to fill in the details). All I can remeber about her little diatribe is that it usually ends with the sentence "Microsofts license is almost as buggy as its software".
    She has allways been a good bussinesswoman & salesperson (she even managed to flog me one of those millenium bug kits, convincing me my computer would die otherwise, even though I know for a fact ahe actually knows nothing about computers!).
    A while back she was approached by one of the major linux distributors about being their UK distributor. She took one look at the GPL and almost died laughing. I remember her words:

    "How the fuck am I supposed to make money selling this? It makes the MS licence look good."

    As I said, she's allways been a good bussinesswoman!

  14. Re:because... by cpt+kangarooski · · Score: 5, Insightful

    Any good could be considered as a service by that line of non-reasoning. (e.g. 'I bought a car' v. 'You bought the right to go places, not a car')

    No, the truth of it is that you bought a copy of a work. Rather like a book. And a hundred years ago, it was determined that copyright holders cannot, merely by virtue of their copyright, restrict in any way, people from reselling that work. It's called the First Sale doctrine.

    The question really is whether or not the licenses included with software are valid in whole, or in part, and if so, at what time do they become active? It has very, very little to do with software specifically, but rather contract law in general.

    --
    -- This and all my posts are in the public domain. I am a lawyer. I am not your lawyer, and this is not legal advice.
  15. Re:because... by Billly+Gates · · Score: 3, Insightful
    So, to sumarize, software is not like tangible things. In some views, it is just like copyright, and is completely re-sellable. Even after use.

    Ahh, but here is the catch. The EULA license agreement was not between you and microsoft, but rather between Microsoft and your OEM. So in actuality if you sell your copy, oops I mean the OEM's copy of windows you commit theft. Your OEM paid for each os install and agreed to be bound by the EULA. The EULA agreement was provided by Microsoft as a service for OEM's, and not individuals to provide an OS for customers. This loophole means as a consumer you are powerless under protection of various consumer laws including first sale doctrine. After all, you never really paid for it. Your OEM is the true consumer who is eligable under these specific laws. Obviously the OEM's will not protest to the government. So your OEM is legally allowed to sell their copy of windows but if they do, MS will stop selling them any more copies. You legally have no protection at all whatsoever unless you buy the more expensive non OEM version. Oh wait! You agreed under the EULA not to do this when you bought it yourself! Remember if you buy it yourself then you must agree to the EULA. Great legal loophole, hu. :-)

    It seems those guys at Microsoft really put alot of effort and thought thru this to get away with everything from consumer protection laws, to first point of sale laws, to even wiping out potential competitors by having the OEM's decide for consumers which OS we use. Very clever trick. Bill Gates was a law student at Harvard before he left to found Microsoft. I am sure he learned some these tricks through there as well from his father who is a very sucessfull lawyer.