U.S. Court Ruling Nixes EULA Sales Restrictions

Raziel writes: "The Register is reporting in this article that a district court has ruled in favour of "software users that wish to extricate themselves from restrictive software licenses". The case in question is Adobe vs Softman, and in its ruling, the District of California seems to vacate Adobe's claims of "irrepairable damage" caused by the resale of Adobe products without forcing the use of Adobe's registration process. The full ruling is available in PDF format here. Any chance of a precedent here?" You can also read the Don Marti piece piece that sparked this discussion.

Comments

Could backfire on consumer

[RadioheadKid]

This might be more of a reason for software companies to sell their product as a service which is valid for a set amount of time then as a product which is good for use indefinetly.

Ruling contradicts the DMCa (yay!)

[brunes69]

According to the judge:

If you put your money down and walked away with a CD, you bought that copy, EULA or no EULA

So, if you bought that copy, and you own it, it is yours. And according to property law, I can do what I want with what I own, including disassemble it. Correct? So therefore, I can defeat any copy protectoin schemes on the software I buy. Correct? Does this not contradict the DMCA? Assuming a DVD is software, this makes DeCSS totally legit. Hopefully the SUpreme Court will uphold this ruling, and it can be used in DMCA cases!

Hooray!

[ackthpt]

Now I can fire up FrontPage and make sport of Microsoft! Ha! Ants do have rights!

Don't break out the champaigne yet

[BranMan]

This ruling is very good to see, but we should not get our hopes up too much. I can't see the text of the ruling (slashdotted already I guess) but the idea here was (I gather) that EULAs didn't apply because the buyers never installed or used the software, so never got the point of clicking through a license.

This is extremely important for even though the Don Marti article stated the judge determined that "if it looks like a sale it is a sale, EULA notwithstanding". The ones who sold the Adobe software hadn't seen or agreed to the EULA at any point.

The problem is contract law - if the software vendor (Microsoft for example) can point out that you DID click "I Agree" to their EULA then the game is basically over. That EULA will be upheld as a contract between you and the vendor - and in a contract you can surrender any (almost) rights you want to. Including agreeing to "license" the software instead of "buying" it, surrendering the right to resell it, reverse engineer it, etc.

As far as I can see it, reselling your old Windows CDs will still be contested by Microsoft. But, on the bright side, now at least you can sell the Windows CD that came with your laptop as you wipe the hard drive to install Red Hat.

Good decision, but not in this case

[dirk]

Normally, I would say this is a good decision, but in this case I can't really support it. I agree you should be able to seel unused software. If you haven't opened it, you should be able to sell it. But if you look at this case, they are buying BUNDLED software, and then breaking it up and selling it. This has been illegal for normal good for many years. Notice all the stuff you buy that says "This item part of a package. Not for resale" or something there-abouts. Why should software be any different?

If you buy a copy of Adobe Photoshop, don't open it, and want to resell it, I'm right there with you. If you buy an Adobe package, take what you want from it, and sell the rest, I'm not down with that. This should be a case of standard rules applying to software as well as regular goods.

Nice, but won't matter

[legLess]

Don't think that software sellers haven't seen this coming. Here's a quote from the riling (lifted from the article):

"... the purchaser commonly obtains a single copy of the software, with documentation, for a single price, which the purchaser pays at the time of the transaction, and which constitutes the entire payment for the 'license.' The license runs for an indefinite term without provisions for renewal. In light of these indicia, many courts and commentators conclude that a 'shrinkwrap license' transaction is a sale of goods rather than a license." (emphasis mine)

The judge has given a roadmap for getting around his ruling: subscriptions. In his judgement a subscription would clearly be a license, not a sale, thus no "first sale" doctrine would apply. Not coincidentally, many large software sellers are moving to a subscription model. This ruling will only serve to accelerate that process. By the time it gets appealed to the Supremes, it won't matter.

Re:No UCITA; meaningless

[the_2nd_coming]

well, that would be nice except this is a US district court. UCITA is a state law. federal law overrides state laws when there is a conflict. UCITA is now in a state of flux, if the supree court rules that EULA are illegal then UCITA is irrelivent.

'Donations' of copies of software

[Ed Avis]

I got in trouble for donating 500 licences of MS Office 98, and MS windows that had been bundled with our machines when we changed to all open source. Apparently the IRS does not consider donation of microsoft software as a charitable contributuion of any value.

Interesting... I thought Microsoft managed to 'donate' thousands of CDs costing $0.50 each to manufacture and write it off against tax at the full retail price of that software. If the IRS counts it as tax-deductible when Microsoft does it, why is the ruling any different when another party makes the same donation?

Re:No UCITA; meaningless

[Cy Guy]

Of course IANAL, but:

Since it it is in Federal court, whether or not a state has passed UCITA is irrelevant, as the decision doesn't involve state law of any kind. I would assume that for the time being it only applies to the district in which it was decided, but as it works its way through the Federal system it should apply to all residents within that jurisdiction. Presumably Adobe will apeal it to the 9th Circuit, but that tends to be a fairly liberal circuit and would likely side with SoftMan. So it would likely go to the Supreme Court that with its current makeup is more likely to side with Adobe both because the user agreed to it, and because the lower court has the appearance of making new law. Consumers would probably be best served if the Supremes decide not to hear it, since most major software companies are in the 9th circuit and would for all practical purposes be bound by any decision of the 9th circuit.

Excellent News

[ewhac]

I read most of the decision a couple of weeks ago. Indeed, a ray of enlightenment seems to have struck the California courts.

Adobe complained that Softman wasn't allowed to unbundle the Adobe Collection, as that was a violation of their license. According to my (inexpert) reading, the court applied what I call the "duck test" to the transaction that took place between Adobe and Softman: If it looks like a sale and walks like a sale and quacks like a sale then, no matter how persistently and shrilly you call it a "license," it's a sale, because that's the behavior you engaged in.

The court stopped short of stating that the EULA was non-binding. Since Softman never installed the software (triggering the EULA activation clauses), there was no need for the court to address this point. So whether EULAs are binding is still an open question. It may be possible to argue that, if one purchases the software but then refuses the EULA, the terms of the earlier sale apply. That means you would get to use your software, no matter what the EULA says (U.S.C. 17, Sec. 117(a)).

Perhaps Slashdot user Werdna would care to chime in with a more expert analysis?

There is the danger that software industry lobbyists will now lean harder on the California legislature to get UCITA rammed through. So if you're a Californian, get on the horn to your state representative and tell them, as a consumer, you're very happy with the court decision, and that UCITA would undo their good work and should be avoided.

Schwab

Re:Good decision, IN this case

[A Commentor]

Notice all the stuff you buy that says "This item part of a package. Not for resale" or something there-abouts.

Everything I have seen says: "Not Labeled for individual sale". I think this is to protect the end-user, not restrict the seller. This is typically seen on food, since the FDA (government) has strict laws on nutriational labeling.

If I buy a new Car and want to totally strip it and sell the pieces, there is no law (or agreement with the car company) that says I can not do that.

GPL?

[aozilla]

The judge, in the case Adobe vs Softman heard in the Central District of California, has ruled that consumers can resell bundled software, no matter what the EULA, or End User License Agreement, stipulates.

So does this mean we can resell GPLed software without distributing the source code?