Sold, not licensed

May 30th, 2008  |  Tags: , , , ,

Here’s a fascinating ruling from the US District Court in Seattle, indicating that the transaction by which someone acquires a copy of a software package and the legal right to use the same is a sale and not a license:

[A]s Vernor’s lawyers pointed out, the distinction between a lease and a sale is based on the actual characteristics of the transaction, not merely on how the transaction is described by the parties. […] AutoCAD customers pay a lump sum at the time of purchase, with no obligation to make further payments or to return the software at the conclusion of the supposed lease.

As a consequence of this, the first sale doctrine applies, and Autodesk is unable to prevent customers from disposing of copies of AutoCAD by transfer or sale. I can’t imagine that this won’t be tied up in appeals for at least a decade, but I’m reeling at the implications.

Let me share a brief anecdote: A dumbed-down version of Propellerheads Reason came with my first real audio interface. It was crippled in nearly every way and basically served more as an advertisement for the real product than as a productive tool. I’m sure one could have used it to make real music, but I didn’t; I played with it for a little while and then shelved it. One day, after installing some additional memory in my powerbook, I tried running this fractional Reason again. It demanded that I re-authorize, since I was “running on a different computer.” This level of draconian copy protection — on, essentially, a piece of shovelware — was enough to get me to drag the Reason folder to the trashcan and never think about it again.

My initial reaction to this ruling is: “well, it would be nice if all of these weird special-cases for copyright as it relates to sequences of bits were abrogated,” but I think the future is probably a lot darker. If “no resale” provisions are unenforceable, then it seems that the copy protection schemes for commercial software are about to get a hell of a lot more onerous. You think that you shouldn’t have to tie a serial number to a particular machine or authorize on-line? Wait until you have to tie your license to a statistical model of your typing patterns, or re-authorize online every time you start the application. You think that a scheme that sees a RAM installation or operating system upgrade and says OMG WTF THIS IS A TOTALLY NEW COMPUTOR is ridiculous? Wait until you lose your authorizations by switching to a different wireless network, or installing some new user-space applications. (This is not too far off, as those of us who remember MAC address-as-machine-ID schemes know….)

Think about two other things that were “licensed, not sold” before this ruling: DRM-infested digital media and fonts. In the case of subscription-model or rental digital media, this ruling appears not to apply — since those are transferred via a transaction that does not resemble a sale. In other cases, though, like iTunes movie “purchases,” or pay-per-song music downloads, one would have to circumvent some DRM in order to resell a song or movie. Therefore, it seems that the first sale doctrine (as re-established by this case) conflicts with the DMCA, which prohibits circumvention of copy protection (and does not have first sale, fair use, or even “hey, this copyright is expired” provisions). Of course, one could argue that it is fine to resell the bits constituting a digital download — they’d just be useless to anyone other than the original purchaser.

It’s perhaps more interesting to consider how DRM-free downloads (like Amazon MP3 or iTunes Plus) are affected, since there is no DMCA conflict here, and these are sold under conditions that explicitly forbid resale. An even greater version of this conundrum comes up with commercial fonts, which not only prohibit resale but are licensed with a whole host of restrictions ranging from more-or-less reasonable (don’t copy our font files for your printing company) to mildly outrageous (don’t actually use these fonts to produce documents or designs that anyone else can see). Of course, people who abide by these licenses do so because (1) hey, we agreed to this and it’s the right thing to do and (2) our license to use this font will be revoked if we don’t, rendering our investment worthless. If the transaction in which, for example, I give some money and they send me a bunch of weights of some nice face is a sale and not a license, though, that seems to impact point 2.