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?

Comments

Software is licensed, not sold

[ljnelson]

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.

Re:Software is licensed, not sold

[UnknownSoldier]

> 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.

Re:copying

[swordgeek]

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.

Legality doesn't matter

[swordgeek]

"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.

Re:because...

[Anonymous Coward]

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).

Re:In Germany you are allowed to do this.

[Masturbating Vulcan]

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.

Tracking and Verification Next

[DumbSwede]

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.

Re:software AND licenses?

[S.Lemmon]

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.

This is very uncapitalistic

[SIGFPE]

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.

Re:because...

[cpt kangarooski]

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.