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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?

13 of 471 comments (clear)

  1. Re:Software is licensed, not sold by Hard_Code · · Score: 3, Interesting

    No but you can sell the LICENSE...that is if it isn't explicitly prohibited *in* the license...which it looks like it is. So do licenses deserve the same status as property? I mean, do I *own* the license, or am I just a party to it??

    --

    It's 10 PM. Do you know if you're un-American?
  2. Re:Software is licensed, not sold by TheCarp · · Score: 3, Interesting

    However, that is not thew way in which most people come into contact with software.

    Software is, typically, sold just like books. You go to a store, you buy the book. Just like you go to the store, and you buy the software media.

    The book, like the media, is then owned by you. You have signed no binding contract, you are bound to no "agreements" beyond that of copyright law.

    You may not copy and redistribute the book, NOT because it says you can't in the first few pages (which it almost always does), but because copyright law says you can't.

    I would hold that this entire concept of ":licensing" and especially "shrink wrap" licensing where one is expected to be bound to a license AFTER having bought the software media in question, and without signing any formal agreement is a complete fabrication of software companies to foster this attitude.

    This goes on all the time. Hell, I have a book that I recently purchased from a major bookseller. It was written long ago and the copyright has long since expired, as such, it contains no copyright notice... however the publisher STILL put a notice in the first few pages to tell me that I may not copy this book, in whol eor in part.... a paraphgraph with exactly 0 legal force whatsoever.

    -Steve

    --
    "I opened my eyes, and everything went dark again"
  3. Here is the skinny... by Distan · · Score: 5, Interesting

    I've sold my share of Microsoft software on eBay, and had my share of auctions cancelled by the beast, so I think I know how this works.

    I've considered suing Microsoft regarding all of this (seriously) but have put that on the back burner for now.

    Microsoft is of the opinion that they never sell their software, they only license it. Most people who have some MS CDs sitting around got them in one of two ways, either bundled with hardware or in a retail transaction. Those two cases are handled differently.

    In the case of bundled software, MS requires that it be resold with the orginal hardware. Since systems can be upgraded, they are pretty reasonable about what they will consider to be the original hardware. Since eBay can't police exactly what hardware is being sold with what software, you see people selling Microsoft Windows with broken hard drives and stuff like that. When I have to sell something and include some hardware, I usually tape a capacitor inside the envelope (no shit).

    In the case of retail packages, Microsoft requires that you sell the software complete with everything that was originally in the box. So if you threw away the friendly pamplet on "ten reasons you will love the talking paperclip" then you have rendered the rest of the package unsellable in the eyes of MS.

    One good way to get around all this is to use the "Buy-It-Now" feature of eBay. List your item with a reasonable BIN price and it can get snapped up quicker than MS can have it canceled.

    Asta!

  4. Re:It is because of piracy... by maetenloch · · Score: 5, Interesting

    The reason MS stopped those auctions is because most of them are pirated software. Or it is software licensed to OEM (you cannot separate the software bundled with the hardware) at a much lower price. If it is a shrink wrap package, I don't think you have a problem reselling.

    Just because the shrink wrap packaging has been removed doesn't mean that it's pirated. I tried to sell an old personal copy of Office 97 on Ebay, and Microsoft had the auction stopped. And my copy of Office was not a pirated copy - I bought it directly from a store. There is an appeals process where you can get Microsoft to allow the auction to be reinstated. Unfortunately Microsoft wanted me to show them the original receipt (which I don't have anymore). They also demand that when you sell Microsofot software, you must include *all* the original packaging including the box. Basically they stop all non-shrinkwrapped auctions of Microsoft software, and make the seller prove it's legit. Bastard jerks. They deserve all the piracy they get after this.

  5. Re:because... by Alien54 · · Score: 5, Interesting
    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).

    You know that someone is going to come along with a remake of the infamous Apple 1984 commercial, promoting a rebellion against the Beast. Maybe with a take on the old myths of hell, where all of the people think they are eating the finest grub, but instead are revealed to be eating ashes and slime from the Abyss. The number of Advertising campaigns that could be mocked up around this are amazing.

    And irony of Ironies, they could even be paid for by IBM. I can even imagine a voice over that says something like "hey we thought we were evil. Then we met Microsoft, evil on a scale that is simply awe-inspiring." Or mock commercials with the Ferengi advertising for Microsoft .Net

    All you have to do is push the idea of "Don't Get Suckered by Microsoft!"

    --
    "It is a greater offense to steal men's labor, than their clothes"
  6. First sale doctrine, etc. by markmoss · · Score: 5, Interesting

    As someone with a very strange cognomen pointed out earlier, a long time ago some book publisher tried this "licensed, not sold" stuff with a contract printed on the flyleaf of the book. The courts disallowed this, and created the first sale doctrine. That is, when you sell it, you have no say over what they buyer does with it.

    The difference with software is less because of the less tangible nature of the product (bits aren't tangible, but the CD and manuals certainly are), but that judges are over-impressed with arguments that cyberspace is different. And precedents concerning software license agreements were set several decades ago, when the judges were not sure whether copyright law covered bits at all, and software patents were even more dubious, so the (then generally quite reasonable) license agreements were the only real protection software writers had. Since then the copyright law has been amended to clearly protect bits, the old ban on patenting mathematical algorithms has somehow disappeared, and so software does not need license agreements to protect against piracy. But they are still putting out those license agreements, and getting more unreasonable about the terms every year.

    Maybe eventually enough technical savvy will filter into the courts that the judges will decide that software should sell under the same rules as everything else. That does not imply just the first sale doctrine -- what would really hurt MS is if the courts decide to apply the UCC's mandatory warranty of merchantibility to consumer software sales -- that is, if software follows the usual rules, the software vendor would be responsible for the software working _right_ in home computers. Given that possibility, their continued pushing of egregious license agreements and on-line activation seems almost like a corporate death wish, an attempt to push until they fatally tick off some judge.

    But right now it might be more effective to agitate for legislative action, instead. The software vendors may be flooding Congress with contributions, but the corporations that buy software instead of selling it outnumber them many times, and they are getting hurt by this !@#$%^.

    We need an anti-UCITA:

    First Sale: Purchasing an individual software distribubution gives you the right to put it on any one computer of your choosing, to resell it, give it away, or even loan it as long as you can ensure it is operable on only one computer at a time. (Note that this does not apply if it is leased, not purchased, but the package had better make it clear that this is a lease for a specific time period. Also, it does not apply to site licenses, IF the full licensing agreement is presented before the sale.) Nor can individually purchased software be locked to the first computer you install it in, or shut itself down after a time period. If the vendor chooses to install and use a remote-shutdown feature to combat piracy, then if they shutdown a legal copy, they are liable for $100/hour until it's back up, and all incidental and consequential damages.

    Implied Warranty: The UCC law makes many common "limited warranty" clauses null and void, like one saying that if the steering linkage falls off your car, your heirs are entitled only to a new steering linkage. Per UCC, the carmaker is responsible for the accident, too. Putting software fully under that now would put software vendors out of business, but as long as they get off scot-free for bad quality and even get to charge you for the bug-fixed version, most of them won't improve their quality. We need at a minimum the right to take the software back and get a full refund if bugs, which prevent it from operating as advertised, are not fixed promptly and at no cost. Also there should be compensation for phone bills and time and hold, and punitive damages when tech support tells you it isn't a bug and they already know about it.

  7. Here's why..it's an ongoing battle. by mindstrm · · Score: 4, Interesting

    And here's the root of the problem.

    To Microsoft, you are not 'purchasing' a product. You are *licencing* software. This is fundamentally different than buying a car, or a book, or anything else, where there is a definite product. This is how they try to tell you you can't re-sell it.

    Now.. the problem is, according to the average consumer.. it LOOKS like a product, you can walk into the store and buy it off the shelf.. there are no negotiations, no lawyers involved... just a click-wrap agreement that we all know nobody reads.
    Stores *Treat* it like a product.....

    So it's a deception.

  8. Re:because... by billybear · · Score: 3, Interesting

    Please....If I purchase a bunch of paper with ink printed on it, it's still a book that I OWN. The author didn't provide the information provided in the book as a service. I purchased the information in that book the same way I purchased the information contained on my CD. I don't have the right to re-print more books, but I have the right to sell the book the same way I do my software. YOU may think of software as a service, but currently it is not sold as a service. When's the last time you went to the services department in Best Buy to pick up software? Can you feel the content of a book? Just because my brain in crunching the content, it doesn't make it any less of a *tangible* good.

  9. Re:Nothing is special... by ichimunki · · Score: 5, Interesting

    It does apply to tangible goods. People lease cars, the phone company used to own your actual phone, my cable modem belongs to RoadRunner, and just about anything in the world can be rented to own. The real difference with that stuff is that you have to actually sign a contract that clearly states the terms and agreements-- and you get to read the contract before you pay the money to the vendor. But in most of those lease cases, one of my terms of agreement is that I can keep the item in question by paying a fee (which would allow me to later sell it).

    However, if I buy software from Best Buy or Fry's or Computer City without signing a lease agreement, in standard retail parlance I haven't leased (or licensed) anything. I *bought* it. I don't think we need to worry about Joe Sixpack revolting, Joe Sixpack will just bitch about it over Buds during commercials on TV. What we need is for corporations and businesses and people with legal ability to take a stand against this sort of crap, instead of knuckling under when the BSA comes calling with their extortion racket.

    --
    I do not have a signature
  10. Real crux of the matter - What IS software? by dpilot · · Score: 3, Interesting

    Clearly Microsoft (and most of the software industry, not to single out just Microsoft.)is trying to have it both ways. They want to sell it like a product, but continue to collect revenue on it like a service. Another model says give away the software, and sell the service. Unfortunately that model hasn't worked very profitably so far.

    But just because the 'software as a service' model hasn't worked yet doesn't mean it's wrong. Nor does it make 'software as a tangible good' or 'software as a tangible + continuing revenue' good.

    In practice, it appears that after taking a considerable amount of time to bring a given piece of software up-to-snuff, it really is mostly done. Then, in order to treat it as a 'tangible + continuing revenue' product, you have to keep overdeveloping it, adding features and junk to 'justify' the continuing revenue stream. Hence the mess we call MS Word today, dancing paperclips and all.

    The historical side of all of this is that software is sufficiently new, and the hardware it sits on has evolved so much that we've barely reached 'maturity' on anything. So thus far, software has had the appearance of tangible goods. I suspect that MS Office may be one of the few/first pieces of software to move past that category.

    We're really talking about something fundamentally new in the past 20 years: Revenue for IP. Up until 20 +/- years ago, IP was sufficiently bound into some form of matter (books, records, etc) that it wasn't commonly distinguished from something physical. Now it is, due to super-cheap media like CDs and the ease of electronic distribution of the Internet.

    Publishing (music, text, software, what-have-you) has always had two aspects, content creation and duplication/distribution. In a very fundamental way, the duplication/distribution part of the publishing industry is as obsolete as a buggy whip. But the duplication/distribution side is where most of the publicly perceived value lies.

    Therefore the publishing industry is hanging on to that role as hard as they can, trying to keep their buggy-whip in the pre-automotive model, and using the government and copyright law to do it.

    They're simply making too much money to let go of that revenue stream.

    Same as prostitution.

    --
    The living have better things to do than to continue hating the dead.
  11. Time to get the CA AG again by cprael · · Score: 4, Interesting

    Interesting. About 4 years ago, Microsoft was doing this, and I got a little tired of it. A quick restraint-of-trade complaint to the CA AG's office, they talked to eBay, and Microsoft shut up and went home. Looks like eBay needs to be reminded of this, and have it pointed out that that they've already had their hands slapped on this once.

  12. Re:Software is licensed, not sold by haystor · · Score: 3, Interesting

    Well if you pay me, I'll install MY license on your computer. I'll also leave the disks over at your place too.

    The license will still be owned by me, and it will be operated on only one computer. How is this not legal?

    In fact even though I own the license there is nothing to stop you from doing the install yourself as long as ownership of the license remains with me. This would require a bit of trust, but doesn't seem to be at odds with transferring the license.

    --
    t
  13. Selling Licences by os2fan · · Score: 3, Interesting
    Software is like any other copyrighted stuff.

    When you buy some software, or a book, or a record, you own the distribution media, and a licence to use the material contained thereon. Even though I don't own "Amipro" or "Imagine" or "Regular Polytopes", I do own a licence to use a copy of it on my machine. Buying any of these do not give me the right to set myself up as a redistributer.

    So, technically, you don't own the copyright to the software, you do own the right to use a copy of it, and to hold such backups of the media as allowed in the agreement.

    And it is that right that you might transfer under the cover of sale.

    --
    OS/2 - because choice is a terrible thing to waste.