Do you own, or license software? 9th circuit appeals court to decide

[Airhog]

Do You Own Your Software or Just 'License' It?

[SportsDino]

This is a tricky subject, I generally fall under the 'license' crowd.

The question is whether the product you bought is owned by you or not. If you read the agreement you implicitly agree to in order to use the product, you are licensed to use it under certain terms.

Most people think because they physically possess the copy they own it, because they are used to certain concepts of what a product is. Just because they think that, doesn't mean it is the case. And companies surely haven't done much to counter that notion in customer's heads.

In my opinion, the company has the right to sell a product under the terms that makes sense for its business model, notably the Autodesk case (which as they claim allows for their educational pricing model as well). If a consumer does not want the product on those terms, they should buy a product which has terms of resale as permissible. The end result would be a more expensive purchase for them.

Most people don't care about resale until they want to get rid of something, so they wouldn't pay for the right. However, those that are trying to make some money from a form of arbitrage (buy at edu-discount and sell just below retail as a third party) are the targets of such terms.

For the most part, creativity in licensing allows for software to be cheaper than it generally could be. If you limit software to being treated like a physical product it would be natural for prices to be reevaluated because they are technically selling a different product than they were in the past.

[JediKooter]

I'm not really sure the software resale market is big enough to damage sales from these companies. I think pirating has a much larger potential impact than reselling old software.

I highly doubt companies like Autodesk, Apple, Microsoft are losing money because someone is selling an old copy of AutoCAD, FinalCut Studio or Windows.

As for selling software that was sold originally at an educational discount or something similar, I know Apple makes those licenses un-upgradeable. So, there's really not much someone is gaining by buying at an inflated price as it is not fully functional in the aspect of being able to upgrade the software at a discount.

This really sounds like Autodesk is doing nothing more than pissing into a thimble.

[SirFozzie]

And I fall strictly in the own side. No one talks about going to the store and licensing software. They don't license things off of Amazon. They BUY. And if you Buy, you own.

[spleen1015]

Originally Posted by SirFozzie

And I fall strictly in the own side. No one talks about going to the store and licensing software. They don't license things off of Amazon. They BUY. And if you Buy, you own.

You are buying. You're buying a license that allows you to use the product.

[Mustang]

Originally Posted by spleen1015

You are buying. You're buying a license that allows you to use the product.

Couldn't you say that about any product then?

[Passacaglia]

So if you're buying a license to use the product, isn't that something that you can turn around and sell?

[bob]

Don't some hardware items also use this license idea (xbox, PS3, tivo)? Isn't that how they get away with bricking it or blocking it if you mod the system?

[MIJB#19]

They should start doing this on coffee mugs. Don't you hate it when somebody uses it for milk or tea? It should auto-destruct when you're not using it the right way.

[k0ruptr]

I really think this is a stupid argument, for the last 30 years we've been buying and owning software. Not licensing it.

[spleen1015]

Originally Posted by Passacaglia

So if you're buying a license to use the product, isn't that something that you can turn around and sell?

Not if the terms you agree to at purchase say you can't.

The problem to me with regards to video games and PC games is I don't believe you can see the agreement before you make the purchase.

[spleen1015]

Originally Posted by k0ruptr

I really think this is a stupid argument, for the last 30 years we've been buying and owning software. Not licensing it.

That's the thing! You've been licensing it this whole time. You just thought you owned it.

[spleen1015]

BTW, I don't really care one way or the other. I am just saying what the companies mean with the BS.

[Airhog]

This is the most relevent parts

Beck says the software industry is trying to get around the first-sale doctrine by using the word "license" to describe a transaction that, economically speaking, is clearly a sale.
"What [Autodesk] is saying is that, all copyrighted works can be restricted on resale if you say it's a license," says Beck. That throws off the balance created in the Copyright Act, which specifically limits copyright with the "first sale" doctrine, meaning that copyright owners can't control distribution after they sell their product. That means that copyright owners have to compete with secondary markets for their own goods, which benefits consumers, says Beck.


You have to ask yourself if its fair for you to purchase something, yet not be in control of it ultimately?

Also, I think one implication here is that these companies have gotten used to being able to sell their software based on what a person can pay. The secondary market kills this notion, and allows market forces to work as they should.

[Drake]

To me, the license vs. own distinction is about as worthless as the "you're not allowed to reverse engineer" language.

Like they can stop me. It amounts to a difference that makes no difference.

[Drake]

dola...

It should be noted that I'm speaking completely as a personal consumer, not a reseller or someone who distributes hacked/cracked materials. When I attempt to break a piece of software down to see how it works, I'm doing so solely for my personal amusement.

[Solecismic]

I would say you own a license. Which gives you the right to resell your copy, but not to make a copy or keep it once you've sold it.

The same theory would apply to more tangible goods. Let's say you buy a lamp. You have the right to resell that lamp. You have the right to purchase raw materials and construct your own lamp and sell it. But you don't have the right to copy the design of an existing lamp, buy your own raw materials and sell it.

[Glengoyne]

I'll agree with Jim here, but largely argue that we've been buying this whole time, and now someone wants to change the rules. This seems clear enough that even the ninth has a shot.

[CU Tiger]

If its a non transferable license then every product needs to come with a full evaluation period at which time if its no good, or doesnt deliver as advertised I can return for a full refund.

[SportsDino]

Here is my more detailed position:

First, terms of the license you agree to 'INSTALL' the product specifically mentions transfer rights.

Second, require registration and activation of the product in order to access the license, the act of registering and activating the product is agreement to the license with a confirmed second party (that is, if you buy the box and it is unopened, you can second sale it until someone opens the box an attempts to use the product).

Third, any reduced price sale option confirms license activation at the point of sale, so you lose any right to transfer the product immediately upon buying it, whether you install it or not. (Eliminate the price arbitrage market)

A company like Autodesk has already jumped through most of these hoops in their recent software, so it would be easily protected.

If a company doesn't go through these hoops, the standard secondary market options exist. Its the company's responsibility to identify first user.

I can see the case for protecting the idea of no restriction of distribution after first sale, I just think the option for companies to create contracts like the above should be protected. If the market really cares about second sale it can refuse to buy license restricted products, but the point is they do not care... people buy software to use it, not to resell it.

To me it is not a case of copyright, its a contract law matter. If the court rules against these type of contracts then I would expect the first course of action for a number of companies would be to stop offering educational discounts until they can find a legal method of blocking resellers. Reselling is a big business in the software industry... and its bad enough with the illegal backdoors to distribution (piracy) but legalizing a path will certainly be exploited (I could see a number of multiple hundred or over a thousand dollar applications that an entrepeneur would gather up a bunch of students to run a scam on for easy profit).

There is no public policy reason to block this type of contract (in my opinion) so I think the court should rule for the status quo. You don't have to agree to the contract, just don't buy the product.

[SportsDino]

Originally Posted by CU Tiger

If its a non transferable license then every product needs to come with a full evaluation period at which time if its no good, or doesnt deliver as advertised I can return for a full refund.

I think this could qualify as fraud, if a product states it can deliver one thing, offers no proof prior to sale, and upon purchase fails to perform as advertised, it is a case of fraud.

Note, 'perform as advertise', is a tricky term, the product needs to perform to the standards claimed in its packaging and advertisements by the standards of a reasonable person. Rarely would it be applicable.

Evaluation periods are a feature to advertise the product, they shouldn't be mandated at law, it should just be the policy of a good business trying to draw more customers to give try before you buy experiences.

-----

I'm not trying to side with Autodesk being douchebags, I just like the law to be strongly enforced on the things that are important (copyright) and not overly complicated to please the selfishness or laziness of particular parties. In my opinion Autodesk has the right to contract its software however it sees fit as long as it suitably does the work to enforce those contracts itself (in this case it did, otherwise how would it have detected the resale).

If resale rights are of value in a purchasing decision then exercise your market force and refuse to buy the product. The 'rules' haven't been changed on anyone, that license agreement you click through without reading all the time may mention rights for transferring the license, and you are agreeing to not transfer it so you can install the product. Your laziness doesn't mean that it isn't enforceable.

All the court here can do is rule whether those terms in the contract are unenforceable in general, and if they do a lot of companies will need to scramble to protect themselves. Most will probably do nothing, a few that stand to lose money will raise prices and reduce discounts.

You have to ask yourself how much the right to resell a software license is worth to you. For the majority I'd say it would not be enough to prevent them buying the product, so tough luck to them.

[SirFozzie]

I'm sorry, copyright is not the end-all and be-all. You sell it to others without any formal contract, you lose the right to control what they do with it.

[kcchief19]

Originally Posted by spleen1015

Not if the terms you agree to at purchase say you can't.

The problem to me with regards to video games and PC games is I don't believe you can see the agreement before you make the purchase.

This is where the software industry claim of "license" has always fallen apart for me. The terms of the "license" are not available when you buy the product, only after you purchase the produce and open the box. Try returning opened software and see how that works.

I believe software company should have a right to ensure one operating install per software but they shouldn't have the right to prohibit me transferring ownership of the software to someone else. That would appear to be restraint of trade to me.

Just because you slap a license on something doesn't mean you have a license.

[kcchief19]

Here's a question ... just went on the Autodesk website. Nowhere does it say you are purchasing a license. In fact, it says "buy" everywhere on the site -- that you are "buying" their product. I went all the way to payment screen and nowhere did it provide me with the license info. The only note is a small asterisk noting the software is "licensed" only for use in the United States.

Further of note is that when you go to buy online you are using Digital River, which notes that it is an "authorized reseller" for Autodesk.

If Autodesk is claiming it is "licensing" its products rather than "selling" them to avoid first-sale copyright laws, how can their products be "resold" legally by Digital River? How can Digital River have right to resell Autodesk software buy if I buy it I'm not allowed to resell?

[CU Tiger]

Originally Posted by SportsDino

I think this could qualify as fraud, if a product states it can deliver one thing, offers no proof prior to sale, and upon purchase fails to perform as advertised, it is a case of fraud.

Note, 'perform as advertise', is a tricky term, the product needs to perform to the standards claimed in its packaging and advertisements by the standards of a reasonable person. Rarely would it be applicable.

Evaluation periods are a feature to advertise the product, they shouldn't be mandated at law, it should just be the policy of a good business trying to draw more customers to give try before you buy experiences.

-----

I'm not trying to side with Autodesk being douchebags, I just like the law to be strongly enforced on the things that are important (copyright) and not overly complicated to please the selfishness or laziness of particular parties. In my opinion Autodesk has the right to contract its software however it sees fit as long as it suitably does the work to enforce those contracts itself (in this case it did, otherwise how would it have detected the resale).

If resale rights are of value in a purchasing decision then exercise your market force and refuse to buy the product. The 'rules' haven't been changed on anyone, that license agreement you click through without reading all the time may mention rights for transferring the license, and you are agreeing to not transfer it so you can install the product. Your laziness doesn't mean that it isn't enforceable.

All the court here can do is rule whether those terms in the contract are unenforceable in general, and if they do a lot of companies will need to scramble to protect themselves. Most will probably do nothing, a few that stand to lose money will raise prices and reduce discounts.

You have to ask yourself how much the right to resell a software license is worth to you. For the majority I'd say it would not be enough to prevent them buying the product, so tough luck to them.

I understand your entire argument, and typicallly agree on principal.
The problem I have is not autodesk exclusively, it is the distribution channel as a whole. If I go buy (lets say) a pair of shoes and they are uncomfortable, I can take them backc and get a refund. If I buy a computer program and its crap, I am stuck with it. No store I am aware of accepts returns of software, often even unopened software is exchangeable for same title only.

As to consumer choice, not buy, etc.
Really many companies are approaching monoploy status here. Autocad is a great example, I can not buy but then I lose my business...there is no substitute that many, nay most, will accept.

So I am forced to buy a product with no equal, with no chance to review the terms or conditions, with no recourse to re-sale if it doesnt fit my needs and this is somehow an American ideal?

[Marc Vaughan]

Originally Posted by JediKooter

I'm not really sure the software resale market is big enough to damage sales from these companies. I think pirating has a much larger potential impact than reselling old software.

Its a hard call on all of this stuff - but you only have to look at the size of the second hand market at GameStop (and how much harder second hand games are pushed than new ones) to realise that the resale market DOES hurt publishers.

How much it hurts them is entirely debatable (esp. as with GameStop a large amount of the money from trade-ins goes towards buying other games) ... personally I think it hurts the non triple-A games the most, those which might turn a slight profit and remain viable are made less profitable and thus leave us with less variety of games created.

(thats just my take on it)

[Chubby]

Originally Posted by Marc Vaughan

Its a hard call on all of this stuff - but you only have to look at the size of the second hand market at GameStop (and how much harder second hand games are pushed than new ones) to realise that the resale market DOES hurt publishers.

How much it hurts them is entirely debatable (esp. as with GameStop a large amount of the money from trade-ins goes towards buying other games) ... personally I think it hurts the non triple-A games the most, those which might turn a slight profit and remain viable are made less profitable and thus leave us with less variety of games created.

(thats just my take on it)

However, the problem is a good chunk of the non-AAA games are garbage especially since console games have gone the PC route of "rush the game out and patch it later".

If anything, having a resale market makes me more likely to buy a non-AAA game knowing that I can trade it in if it's not what I thought it was or it sucks donkey balls. Granted, I'm a lot more likely to rent said game 1st.

Why aren't game companies going after the Gamefly and Blockbusters that rent who rent then turn around and sell used? Because they'd rather go after the Best Buys and Gamestops who they have a better grip on.

[Marc Vaughan]

However, the problem is a good chunk of the non-AAA games are garbage especially since console games have gone the PC route of "rush the game out and patch it later".

Some have - but many haven't but are feeling the pinch all the same, I feel for people who are trying to break new genre's and styles of gameplay when publishers are increasingly reluctant to ...

Why aren't game companies going after the Gamefly and Blockbusters that rent who rent then turn around and sell used? Because they'd rather go after the Best Buys and Gamestops who they have a better grip on.

I think this is largely because Blockbusters rental is small fry comparatively to GameStops second hand business.

GameStop is also the largest (I believe) of the revenue sources for US first hand (ie. new) game sales - to have them continually undermining those sales in favour of their second hand sales is hugely insulting to publishers imho.

I've been in GameStop on the day of release of a title before and had second hand copies pushed in my face despite asking repeatedly for a new copy of a game, I've also seen GameStop push second hand copies which are higher priced than the new copies which are present on their shelves (especially true for older games).

Its THAT more than the fact there are second hand sales which developers and publishers object to.

You're starting to see publishers 'bite back' against second hand sales by having games with one-shot unlockable codes for aspects of the title (EA in particular are doing this) and tbh its entirely down to GameStop being so forceful with maximising their revenue stream through second hand sales, ironically GameStop are actually starting the process of killing themselves off imho because they're accelerating the move from bricks and mortar sales towards online sales.

(gets off high horse - sorry, but this is a touchy subject for me )

[Chubby]

Originally Posted by Marc Vaughan

Some have - but many haven't but are feeling the pinch all the same, I feel for people who are trying to break new genre's and styles of gameplay when publishers are increasingly reluctant to ...


I think this is largely because Blockbusters rental is small fry comparatively to GameStops second hand business.

GameStop is also the largest (I believe) of the revenue sources for US first hand (ie. new) game sales - to have them continually undermining those sales in favour of their second hand sales is hugely insulting to publishers imho.

I've been in GameStop on the day of release of a title before and had second hand copies pushed in my face despite asking repeatedly for a new copy of a game, I've also seen GameStop push second hand copies which are higher priced than the new copies which are present on their shelves (especially true for older games).

Its THAT more than the fact there are second hand sales which developers and publishers object to.

You're starting to see publishers 'bite back' against second hand sales by having games with one-shot unlockable codes for aspects of the title (EA in particular are doing this) and tbh its entirely down to GameStop being so forceful with maximising their revenue stream through second hand sales, ironically GameStop are actually starting the process of killing themselves off imho because they're accelerating the move from bricks and mortar sales towards online sales.

(gets off high horse - sorry, but this is a touchy subject for me )

I feel bad for them too. I certainly don't feel bad for the mammoth studios (EA, Activision, etc...) who have in part created this situation by pumping out crap and asking for $59.99 just because it's on PS3 and or 360. I totally get recouping dev costs, promotion, etc... but let's pick on EA here, when I get the same shit Madden pumped out every year with a fresh coat of paint on it and the same ole $60 pricetag I don't have 1 iota of sympathy for them. I love NHL but I'm not buying any EA games with their stupid Sports Pass BS because it instantly devalues my purchase as soon as I walk out the door of Gamestop. I don't expect companies to bow to my wishes or think that my non-sale will make a difference but that's the choice I make.

I am shocked at your experience at Gamestop. I am pretty good friends now with the store manager of the Gamestop behind my work. They are like top 10 in the country in sales so maybe this is more a function of him being a great manager but: I've never seen a used game priced higher than a new version (brand new games I think are usually $5 less than new which makes me buy new) and I've never had an associate push a used copy on me either.

Now, being in retail myself, of course they are going to put the higher margin stuff (accesories and used games) up front and more visible because they are in the business of making money too. Now whose fault is it that they make more on used games than on new?

I'm 100% on board with the game companies making sure used games aren't sold for more than new (but as I said, I think it's counterproductive to price this way). I think there will always be a place for bricks and mortar, the saturation point for # of stores in a market will just be lower is all IMO.

Special codes for unlockables at release are ok but what about Johnny Football who buys the game a week after release? He doesn't get those unlockables either so that argument is a little weak to me. Things like the Sports Pass are a slap at the consumer whether they are intended to hurt the Gamestops or not.

[Chubby]

Marc - I'm sure it's a touchy subject and I respect any dev who has opinions on it. I understand the why's of it but don't like that it has to hurt the consumer in the process of going after the retailer. That's not good business either and is only going to hurt brand loyalty.

Things like the Sports Pass hurt the hardcore gamer more than the casual. The casual isn't going to trade in games to begin with and certainly won't do it and buy a new game. Moms and pops aren't going to care when they go to buy Madden '11 6 months after release, they are only going ot care that it's $20 cheaper used. That too, isn't the fault of the Gamestops of the world

[Marc Vaughan]

Originally Posted by Chubby

Marc - I'm sure it's a touchy subject and I respect any dev who has opinions on it. I understand the why's of it but don't like that it has to hurt the consumer in the process of going after the retailer. That's not good business either and is only going to hurt brand loyalty.

Firstly I'm a huge believer in the non-existance of brand loyalty - its spoken about a lot but all 'brand loyalty' means is that presently someone thinks that the company in question makes the best value item in question for the money they want to spend on it. If that company stops doing so then most people will stop buying the product in question very quickly regardless of how strong that 'brand' might be percieved to be at the present time, this has been proved time and time again in business - a product stays successful by pleasing its consumers not by having a strong brand.

Secondly I don't think it actually will hurt the brands in question at all - consumers get the same thing when they purchase a new copy and the only change is for used copies and users will tend to blame the stores for deficiencies in that regard because thats where they bought the product from and they expected it to be the same as the new version (as thats what the stores generally tell them).

Shops who trade in second hand copies have the choice of either pricing to take into account the user having to purchase a 'pass' in addition to the game or not as they see fit.

From the publishers perspective the pass ensures that they recieve at least something from someone purchasing a second hand game (consider for a second that used titles contributed 42% of all GameStops profits in 2009 - that is from everything including hardware sales).

What it will probably end up doing is reducing the money being paid for second hand sales slightly and hopefully reduce the influx of second hand games meaning people are more likely to purchase new copies.

With regards to the price of games generally; I don't see that a game which gives 40 hours of entertainment for $50 as being bad value myself - especially not when it costs around that to take my family to see a movie. It amazes me that people complain about the price of games - when they have been fairly static in 'real' price since I started gaming at the age of 10 despite the costs of development having increased hugely.

The Inflation Calculator
What cost $50 in 2009 would cost $19.46 in 1980 ... now in 1980 according to my googling Atari was selling its games at wholesale for $20 meaning they're actually lower in real money terms today than they were back then.

Incidentally as things move more and more towards digital distribution I expect to see the price decline further in real-terms simply because by cutting the bricks and mortar store out of the equation its possible to do so and thus potentially increase the size of the market for a game without reducing the 'cut' which the developer/publisher recieves (for instance without digital distribution there would have been no way for FMH iPhone to be available at $9.99, sell it through a store and instantly there are production costs, distribution costs and store profit which have to be added onto the end price).

PS - Our games are lucky enough to be generally be fairly unaffected by second hand sales because of the nature of the titles; they generally have a long play-time for users which reduces the chance of them being traded in (as does the main title in question being PC based as few places trade second hand PC games).

[Chubby]

Who says publishers are entitled to profit from the 2nd hand sale? I think this is the crux of the argument.

Do I need to cut Graco a check when I sell my old baby stuff at a garage sale?

Does Honda get a % when I trade my car in (probably the best analogy)?

It's a money grab pure and simple. You think it's fair for consumers to blame the retail store for something the publisher did??? Come on now

As far as prices go, yes, if I'm getting hours of entertainment then sure it's a value. The problem is there's too many games that give you 10-15 hours of gameplay (or less if they suck)

[Marc Vaughan]

Originally Posted by Chubby

Who says publishers are entitled to profit from the 2nd hand sale? I think this is the crux of the argument.
Do I need to cut Graco a check when I sell my old baby stuff at a garage sale?
Does Honda get a % when I trade my car in (probably the best analogy)?
It's a money grab pure and simple. You think it's fair for consumers to blame the retail store for something the publisher did??? Come on now

Yes I think its fair - its the retail stores choice whether to take the hit and price according to the need to purchase the code or not, the publisher creates the software and hasn't had any say in it being sold second hand as you mentioned earlier ....

A better equivalent is purchasing a second hand item and expecting the non-transferrable warranty to transfer imho.

I think the main problem with 'analogies' is simply that for most physical sales an item decays after its purchase (ie. your car analogy) and so there are always kudo's for something being new. With software it doesn't - this combined with the main retail outlets favouring second hand items over new means publishers naturally have to play hardball to try and ensure they remain solvent (you doubt this check out how few games publishers are making a profit at present - hence their stance on this side of things).

As far as prices go, yes, if I'm getting hours of entertainment then sure it's a value. The problem is there's too many games that give you 10-15 hours of gameplay (or less if they suck)

Even if you get 10 hours of gameplay from a game then thats around $5/hour value (presuming its full console price) - which isn't 'bad' value imho (especially compared to many things today - ie. cinema, theme parks etc.).

[molson]

This is becoming an issue in other forms of digital media too - particularly e-books.

You're just "licensing" books from Amazon.com when you buy something on your Kindle. And part of that agreement is that they can just delete the book from your Kindle if they feel like it (this has happened in the past if there is some kind of licensing dispute between Amazon and the publisher).

You're also not allowed to let a friend read a e-book on your Kindle.

[Qrusher14242]

Thats one reason i havent got a Kindle yet. If i'm going to 'buy' an e-book, i want to own it. Not leave it in Amazon's hands whether i will be able to read it or not.If i buy a regular book, I'm not buying a license to read it.

I'm on the side of 'if you buy it, you own it'. Especially with games, i cant read the license until i install the game and if i disagree with it, i cant return it. I also dont care for Steam(although i have bought a couple games with it) because i cant sell those games when i am through with them.

[Marc Vaughan]

Originally Posted by Qrusher14242

I'm on the side of 'if you buy it, you own it'. Especially with games, i cant read the license until i install the game and if i disagree with it, i cant return it. I also dont care for Steam(although i have bought a couple games with it) because i cant sell those games when i am through with them.

I'm afraid the way I see things going within the next 5-10 years bricks and mortar game distribution will be as far as music shops are (ie. restricted to limited sections within WalMart in the main) with most purchases done online through specific stores such as iTunes, Xbox-Live etc.

It simply doesn't make sense for publishers to continually give away a huge chunk of their revenue stream to a third-party which shows no interest in supporting or promoting themselves or their products.

Ultimately I think this will actually lead to lower prices for users because of the savings publishers will make as some of the savings made trickle through to users.

I can understand people wanting to be able to resell things and feel they 'own' them - however there are MANY things which you can't own in this way which people rarely even notice* and tbh this isn't even a real 'change' its always been this way, just until GameStop got so agressive with the second hand sales there was no reason for publishers to take action against that market

I DO however agree people should be able to read a EULA before installing/purchasing software - that being said I've only very rarely heard anyone indicate they haven't installed software because of one .. and then only 'second hand' (ie. I've never met anyone who has done this).

*for instance my internet connection, DirectTV subscription, cell phone minutes etc. ... I'd love to be able to sell my unused cell phone minutes I've loads of em

[JediKooter]

I still have some of the boxes my old Atari 2600 games came in. I have Pac Man and I believe the price tag on there is 54 dollars and some change.

[SportsDino]

Games keeps being brought up, and while the market is sadly heading that way, it is somewhat different than the thousand dollar productivity app market. For instance Autodesk no doubt has some elaborate activation mechanism so that when you install their product, some server within their company takes down your info and says that serial number XYZ belongs to Joe Bob.

When Joe Bob sells to Billy Jim, Billy tries to install the product, it goes up to the server and says 'Hey Joe Bob owns this product, stop thief!'. Because thousand dollar software and confirming identity of rightful owners is fairly important (so you can get support or re-activated in case of technical problems) and theft is such a massive problem (piracy, with this particular mechanism being a result of the key posting strategy so naturally they countered with something, activation, its an arm race sadly).... the issue of transferring licenses is added into the legalese.


I can see the problem with unique software (for instance AutoCAD), but resale is a tangential problem of that issue at best. The problem is the monopoly power of the organization in the first place on a differentiated product... if they decided to make every copy a million bucks, does that suddenly make it legal for another party to sell it for a dollar? No. The fact there is a single source is not enough to change legality... the question returns to whether they are allowed to prevent resale (or reactivation really) through license terms.

I could get behind the court forcing companies to publish license information before first sale. It seems like legitimate information as part of any transaction, and I don't see any company not being eager to throw their EULA out in front of a deal. So any easy reform that fits the existing law.

But legislating that activation is illegal is not going to happen. Also I'm doubtful that they will require them to create new contracts that allows licenses to be transferred (we'll see I guess).

I mean, what is the legal reason for any change? It is not a question about whether people are getting hung up on the definition of 'buy' and how license contracts work. There isn't even grounds that the companies are being deceiving either, so you can't use an attack based around playing on common misperceptions to illegally profit. The specific case is can a person agree to a license contract that says they will be the sole party to activate the product, then later sell that product and have another person then try to activate the product.

Sure you 'bought' the box from someone else, but it was someone who had signed away the legal right to transfer the critical activation component to you.

In my opinion, as long as that component is controlled and within the company, and they do the legwork to maintain and enforce it, and that enforcement does not interfere with the operation of the software by anyone who has purchased and legally executed the license... well I think it should be considered protected by the existing contract law. Generally this law has been interpretted very strictly when it comes to meddling around with third parties, the first party can commit the second party to perform services for a third party that was not in the original terms of the contract to begin with. In fact, the contract specifically states they will not and cannot.

The question of copyright never comes up... it is not really the focus in my opinion (if they try to defend on those grounds I think they would lose).

[RendeR]

Originally Posted by Marc Vaughan

*for instance my internet connection, DirectTV subscription, cell phone minutes etc. ... I'd love to be able to sell my unused cell phone minutes I've loads of em

Mark this is a complete failure of a comparison. Everything you are using as examples are either consumable items (your phone minutes) or commodities (cable subscriptions and internet connection) they are not hard and fast items they are "services". Software, of any kind, is not a service. It is a physical item. Such items are expected to be owned when purchased. Decades of precedent with anything from houses to automobiles to baseball card collections support this.

The perfect example was already given. You don't give back a percentage of the money when you sell off that 10 yr old VW sitting in your driveway. You say software doesn't degrade over time the way those items do, but frankly thats wrong, because within 6 months of any software package being released it can and usually IS obsoleted by something new.

[Chubby]

Hell, the game devalues the second you open it much the same way the car devalues the second you drive off the lot.

[sterlingice]

Originally Posted by RendeR

Mark this is a complete failure of a comparison. Everything you are using as examples are either consumable items (your phone minutes) or commodities (cable subscriptions and internet connection) they are not hard and fast items they are "services". Software, of any kind, is not a service. It is a physical item. Such items are expected to be owned when purchased. Decades of precedent with anything from houses to automobiles to baseball card collections support this.

The perfect example was already given. You don't give back a percentage of the money when you sell off that 10 yr old VW sitting in your driveway. You say software doesn't degrade over time the way those items do, but frankly thats wrong, because within 6 months of any software package being released it can and usually IS obsoleted by something new.

If either a "good" or a "service" were a perfect comparison for software, we wouldn't have this thread, tho.

SI

[Marc Vaughan]

Originally Posted by RendeR

Mark this is a complete failure of a comparison. Everything you are using as examples are either consumable items (your phone minutes) or commodities (cable subscriptions and internet connection) they are not hard and fast items they are "services". Software, of any kind, is not a service. It is a physical item. Such items are expected to be owned when purchased. Decades of precedent with anything from houses to automobiles to baseball card collections support this.

I actually think they're a good example for just that reason - 'Software' isn't a physical package either, the disk you purchase isn't the same thing as the software itself and the disk on its own can do very little (but serve as a coaster for drinks ).

It needs to be combined with a computer/console to run it - in the same manner that an internet subscription has to be combined with a router etc.

To use things like houses and automobiles avoids the problem that they can't be perfectly copied at marginal cost and then resold, which is part of the issue which is being protected against via the licencing.

The perfect example was already given. You don't give back a percentage of the money when you sell off that 10 yr old VW sitting in your driveway. You say software doesn't degrade over time the way those items do, but frankly thats wrong, because within 6 months of any software package being released it can and usually IS obsoleted by something new.

I think the petrol for that car is a better example than reselling software, there are laws preventing you from reselling it and so you can only use it not sell it on.

Without the car (or other device to use it within) the petrol is largely worthless to you as software is without the device to run it.

To use your car analogy however - the software publishers aren't stopping you reselling the disk HOWEVER they are indicating that some things are non-transferable to a second owner (ie. the unlockable content). Non-transferrable warranties and suchlike are fairly common with some items outside of software and is probably the best equivalent to the circumstances which are present in the software we're discussing.

Now obviously I'm somewhat biased in this because I make my living through creating computer software, but I personally think most software is darn good value for money considering the time and effort it takes to produce it - as I mentioned previously its actually far cheaper in real-terms to purchase software today (especially games) than it was 30 years ago BUT the software is far more complex and expensive to produce.

I realise that if you are someone who regularly trades in games this must be off-putting to you, however you can always look at it from the point of view that GameStop could easily offset the cost by cutting their margins somewhat - heck having seen my daughters friends trade in games (my kids aren't allowed to) I've regularly seen them get sub-$10 for a game which will be pushed back onto the shelves at between $19.99 and $29.99 ... thats a heck of a mark-up.

That the companies involved are protecting their businesses and (horror of horrors ) trying to ensure they make a profit is fairly standard practice tbh, I don't see anything wrong with it and if they are incorrect that this is the right approach then economic law dictates that cheaper alternatives will become available ultimately forcing them to change their ways or bankrupting the companies involved.

What I think will happen is that software will continue to become cheaper in real-terms and the second hand market will be driven out, along with most dedicated brick and mortar games stores (ie. GameStop) as everything heads towards online sales.

[Airhog]

Originally Posted by Marc Vaughan

To use your car analogy however - the software publishers aren't stopping you reselling the disk HOWEVER they are indicating that some things are non-transferable to a second owner (ie. the unlockable content). Non-transferrable warranties and suchlike are fairly common with some items outside of software and is probably the best equivalent to the circumstances which are present in the software we're discussing.

In the Autodesk case, the software publishers want to completely stop you from reselling the disk. I understand why they do this. they subscribe to the software model make people pay what they can afford. And there is nothing wrong with that model either. But if your going to adopt that model, why should you be able to prevent a secondary market from opening up and reselling your software cheaper? I still don't see this as being a huge issue even in the autodesk case. Its not as if I can buy 10 copies of their software at the student price and resell them.

[CU Tiger]

Originally Posted by Marc Vaughan

Now obviously I'm somewhat biased in this because I make my living through creating computer software, but I personally think most software is darn good value for money considering the time and effort it takes to produce it - as I mentioned previously its actually far cheaper in real-terms to purchase software today (especially games) than it was 30 years ago BUT the software is far more complex and expensive to produce.

You continue to make this point, but honestly speaking just from a games perspective it is patently wrong. Atari games cost a developer about $9/per cartridge to produce. CD's and digital distribution are darn near free (DVD's/CD's being what $.04 each?)

The software is more complex, but just the ability to copy and paste txt sure speeds things up...

Originally Posted by Marc Vaughan

I actually think they're a good example for just that reason - 'Software' isn't a physical package either, the disk you purchase isn't the same thing as the software itself and the disk on its own can do very little (but serve as a coaster for drinks ).

It needs to be combined with a computer/console to run it - in the same manner that an internet subscription has to be combined with a router etc.

To use things like houses and automobiles avoids the problem that they can't be perfectly copied at marginal cost and then resold, which is part of the issue which is being protected against via the licencing.

Well to be fair, if my computer takes a dump I dont have to buy a new router, or if I just want a new computer...or hell even to take the router to a friend's house and play it.

Originally Posted by Marc Vaughan

I think the petrol for that car is a better example than reselling software, there are laws preventing you from reselling it and so you can only use it not sell it on.

Without the car (or other device to use it within) the petrol is largely worthless to you as software is without the device to run it.

Well to be fair, software isnt exactly a hazardous chemical that can literally kill you if mis-handled...though i am not sure I am aware of laws prevent its resale either....

Originally Posted by Marc Vaughan

Now obviously I'm somewhat biased in this because I make my living through creating computer software, but I personally think most software is darn good value for money considering the time and effort it takes to produce it

I have never once traded a game in at game stop and personally Id rather throw it in the wastebasket then get the minimal returns they offer, but this value argument is very subjective. I have a software package at my office I paid $3500 that literally will not work with our accounting environment the way i was promised. It has provided $0 value and I should not legally be allowed to sell it. Yeah Right

Originally Posted by Marc Vaughan

I realise that if you are someone who regularly trades in games this must be off-putting to you, however you can always look at it from the point of view that GameStop could easily offset the cost by cutting their margins somewhat - heck having seen my daughters friends trade in games (my kids aren't allowed to) I've regularly seen them get sub-$10 for a game which will be pushed back onto the shelves at between $19.99 and $29.99 ... thats a heck of a mark-up.

Or you could combat the issue by raising you initial price to a point whee you are comfortable with an owner re distributing the software as they see fit.

Frankly for a normally intelligent poster you are seeing this through such self colored glasses its almost laughable.

[Marc Vaughan]

Originally Posted by CU Tiger

You continue to make this point, but honestly speaking just from a games perspective it is patently wrong. Atari games cost a developer about $9/per cartridge to produce. CD's and digital distribution are darn near free (DVD's/CD's being what $.04 each?)

Ok a couple of things - for every console game a large cut of the price is directly given to the hardware manufacturer these days for 'production' - so while yes the DVD's/CD's are physically cheaper that doesn't affect developers.

The software is more complex, but just the ability to copy and paste txt sure speeds things up...

Thanks - glad you appreciate how complex developing software is

To give an example my 'little' iPhone game runs to 250,000 lines of code ...

Well to be fair, if my computer takes a dump I dont have to buy a new router, or if I just want a new computer...or hell even to take the router to a friend's house and play it.

I've taken computers to friends houses when I was younger, heck I still lug consoles with me for my kids when we go to stay at their grand parents places .... but then tbh I don't really see your point anyway as the physical movement of an object doesn't really say that much about it imho.

Well to be fair, software isnt exactly a hazardous chemical that can literally kill you if mis-handled...though i am not sure I am aware of laws prevent its resale either....

Contracts are wonderful things, if you digitally sign a EULA which indicates its not to be resold, then well you've digitally signed a contract saying you won't sell it on ...

I have never once traded a game in at game stop and personally Id rather throw it in the wastebasket then get the minimal returns they offer, but this value argument is very subjective. I have a software package at my office I paid $3500 that literally will not work with our accounting environment the way i was promised. It has provided $0 value and I should not legally be allowed to sell it. Yeah Right

That surely though is an entirely different area and complaint - thats you being sold something which isn't 'fit for purpose' - you shouldn't have to sell that on second hand and pass your issue potentially onto some other 'sucker', you should be able to get the right software from your supplier for the job (esp. if they told you it'd work in a specific manner).

In the UK you'd have the right to refund on that because of how it was sold and that it doesn't work properly (yeah they might be a pain in the butt about it initially but you'd get it). In a similar manner returning a game which doesn't work on your system is protected back home also (one of the reasons its vital to make sure you release a good game which is stable).

Frankly for a normally intelligent poster you are seeing this through such self colored glasses its almost laughable.

I've admitted that my feelings on this are obviously biased by the nature of my profession - but I also think that you're also looking at things though a simplified nature because of your own experiences (this is unfortunately something which is very common with people generally) and the financial benefit to yourself of being able to make second hand sales/purchases.

Which of us is right - neither really, we both have agendas and beliefs tailored to them ... both of which will frankly be outdated within the next 5-10 years when everything is sold via. a download and locked away invisibly behind non-accessible drives .. at which point second hand sales will be impossible (consider Xbox Live downloads for instance).

All I'm doing in defending my position is trying to lodge an argument in favor of helping the viability of non-blockbusted games at retail in the meantime. At present any game which isn't a 'new release' is only ever available as a second hand copy - that means that 75% of all revenue from sales comes in the first month of a titles release which is ludicrous compared to most other items and creates a huge hit/miss problem for publishers, in turn discouraging innovation.

[CU Tiger]

Originally Posted by Marc Vaughan

Ok a couple of things - for every console game a large cut of the price is directly given to the hardware manufacturer these days for 'production' - so while yes the DVD's/CD's are physically cheaper that doesn't affect developers.

And that hasn't changed. At one point in time Atari required their programmers to code the games so not only did you have a much greater hardware cost you also had a similar licensing fee

Originally Posted by Marc Vaughan

Thanks - glad you appreciate how complex developing software is

To give an example my 'little' iPhone game runs to 250,000 lines of code ...

Ok dont twist my words here. I understand developing software is more complex than typing out code. But you seem to thin that it was totally easy to write programs in 1980 because they were only what 12,000 lines of code. Code that was largely proprietary, or totally unknown and there certainly wasnt google to research an error message. Plus it is a fair statement that from a strictly labor stand point, the fact that once code was developed it had to be hand entered and each line typed in full is not to be discounted. I have an uncle that developed and sold 5 Atari 2600 games, one of his expenses was hiring a secretary to "key entry" his short hand written code into a compiler. I would argue that while the strings have gotten more complex the availablee tools and resources actually make development easier today then it was in the pioneer days.

Originally Posted by Marc Vaughan

I've taken computers to friends houses when I was younger, heck I still lug consoles with me for my kids when we go to stay at their grand parents places .... but then tbh I don't really see your point anyway as the physical movement of an object doesn't really say that much about it imho.

if i buy software with a single use digital license I can not freely move that software between my avenues. That is my point.

Originally Posted by Marc Vaughan

Contracts are wonderful things, if you digitally sign a EULA which indicates its not to be resold, then well you've digitally signed a contract saying you won't sell it on ...

But you quoted a section where I was describing the gas or petrol re-sale which you said was illegal and I was pointing out why it is different than software....you know the whole extremely flammable and explosive nature/

Originally Posted by Marc Vaughan

That surely though is an entirely different area and complaint - thats you being sold something which isn't 'fit for purpose' - you shouldn't have to sell that on second hand and pass your issue potentially onto some other 'sucker', you should be able to get the right software from your supplier for the job (esp. if they told you it'd work in a specific manner).

In the UK you'd have the right to refund on that because of how it was sold and that it doesn't work properly (yeah they might be a pain in the butt about it initially but you'd get it). In a similar manner returning a game which doesn't work on your system is protected back home also (one of the reasons its vital to make sure you release a good game which is stable).


I've admitted that my feelings on this are obviously biased by the nature of my profession - but I also think that you're also looking at things though a simplified nature because of your own experiences (this is unfortunately something which is very common with people generally) and the financial benefit to yourself of being able to make second hand sales/purchases.

Which of us is right - neither really, we both have agendas and beliefs tailored to them ... both of which will frankly be outdated within the next 5-10 years when everything is sold via. a download and locked away invisibly behind non-accessible drives .. at which point second hand sales will be impossible (consider Xbox Live downloads for instance).

All I'm doing in defending my position is trying to lodge an argument in favor of helping the viability of non-blockbusted games at retail in the meantime. At present any game which isn't a 'new release' is only ever available as a second hand copy - that means that 75% of all revenue from sales comes in the first month of a titles release which is ludicrous compared to most other items and creates a huge hit/miss problem for publishers, in turn discouraging innovation.

Again I have no dog in this fight I do not buy or sale video games, I am trying to ebay the aforementioned software though I have been considering just burning it on top of the salesman boxter for giggles...Ill pay the extra 2gs for a paint job just for the look on his face. But that's an exception.

I approach this from a consumer protection, personal freedom POV, if you buy a car with OnStar, should GM be allowed to remotely disable your starter if you are late on your payments? Or if you drive it in a manner they dont like?

You should set your price at a level you are comfortable selling once I buy i should be able to do whatever the hell I want (not distribute it to multis illegally...I mean resale) with what i have purchased.

Even if I have purchased a license I should be able to re sale that license on the free market and forfeit my rights when doing so.

[Marc Vaughan]

Ok dont twist my words here. I understand developing software is more complex than typing out code. But you seem to thin that it was totally easy to write programs in 1980 because they were only what 12,000 lines of code. Code that was largely proprietary, or totally unknown and there certainly wasnt google to research an error message. Plus it is a fair statement that from a strictly labor stand point, the fact that once code was developed it had to be hand entered and each line typed in full is not to be discounted. I have an uncle that developed and sold 5 Atari 2600 games, one of his expenses was hiring a secretary to "key entry" his short hand written code into a compiler. I would argue that while the strings have gotten more complex the availablee tools and resources actually make development easier today then it was in the pioneer days.

Sadly I know the joys of assembler programming also and have developed on a variety of platforms including pre-unix boxes, developing various early DOS programs/games (including the joys of coding your own graphics engines with specific routines for each card type) ..... yes there was a fair bit more that was 'arcane' in those days, but trust me its a much more intensive and consuming experience today.

Back then you needed specialist knowledge and patience to develop a triple-A console game but it was possible, today to make a triple-A console product (ie. 360 etc.) you need quite a sizable team for the 'equivalent' title because of the nature of the product, expectations of the target audience etc.

Heck we've more graphics artists within SI now than we had people in the entire company when I first joined it and SI is considered a 'small' team.

You should set your price at a level you are comfortable selling once I buy i should be able to do whatever the hell I want (not distribute it to multis illegally...I mean resale) with what i have purchased.

So you think it should be legal to enforce selling items in a particular manner even to the detriment of most consumers? - surely that runs against the grain of the idea of capitalism itself, if the price or approach taken is wrong then capitalism dictates that ultimately it will be unsuccessful ...

There are precedents for preventing people from purchasing/using second hand items which simply don't 'decay' in value after usage in industries vastly different to software.

As an example I give you 'subway' (underground in English parlence) tickets. Most cities allow you to buy an 'all day' pass for a nominal fee, you use it to get around as you like BUT importantly you aren't allowed to sell it onto anyone else.

The reason being otherwise people would use it as much as they want and then off-load it at the end of their activities to another person, this would lower the amount of tickets sold because there is nothing 'advantageous' over having a new ticket over one someone has used previously - they would both work identically.

This is a near identical situation to that of the software industry - yet is known and accepted throughout the world because it allows the transport involved to be run at a lower cost for everyone ... which is my argument in favour of such things being available as an option to the software industry.

[Mustang]

Who the F is in the 9th circuit court?

In a nutshell, seems if I bought say, a boardgame that was only released in the UK, brought it over to the states and resold it, I would be in violation.




Can you sell your imported gadgets? Court guts "First Sale"


Let's say a relative gave you an imported Omega watch over the holidays. It's a nice piece, but it's not exactly your style, so after agonizing over the issue for the appropriate number of months, you decide to sell it over eBay.

Not so fast. Thanks to a decision by the Ninth Circuit Court of Appeals, that might not be so easy. In fact, the store that sold it, Costco, shouldn't have sold it in the first place, the court recently ruled, because the doctrine of "First Sale" has limits. Section 109 of the Copyright Act says that a copyright owner of a product has the sole initial right to distribute it. Then the subsequent buyers have the right to "to sell or otherwise dispose of the possession of that copy"—in other words, sell it again.

But now the Ninth Circuit says this doesn't necessarily apply to items in which a company's copyrighted logo was inscribed on a product made abroad, as in this case. The Public Knowledge advocacy group calls this decision "a terrible idea," and has filed an amicus brief with the Supreme Court, which is reviewing the case.


"What happens to Netflix, Amazon and eBay," PK's Anjali Bhat worries, "if they have to find out where each item was made, whether it has a copyrighted logo made outside the US (if the item itself isn't a copyrighted work), and then buy licensing rights from the copyright owner if the item was made abroad? That's an enormous economic burden to put on businesses who follow that model."

Costco didn't directly buy these logoed watches from Omega. Instead, it purchased them at a bargain price via the so-called "gray market"—from distribution companies authorized to sell the items overseas. A company called ENE Limited bought them up and sold them to Costco, which put them up for sale at its stores in California. When Omega found out about this activity, it sued Costco for infringement.

Standing in the way of the company's complaint was the Supreme Court's 1998 Quality King Distributors decision, which put limits on this sort of litigation. In that case, California hair care product maker L'anza sued Quality King for illegal distribution of L'anza products. These US-made items came to Quality King via a similarly circuitous route. The company bought them extra cheap from a distributor in Malta, which had purchased them with affixed copyrighted labels from L'anza's United Kingdom wholesale outlet.

L'anza charged that because King bought its products outside the US, Section 109 protections didn't apply. Those protections were said to be overruled by Section 602, which prohibits unauthorized importation of copyrighted works acquired outside of the country. But the High Court saw it otherwise, contending that the First Sale principle "is applicable to imported copies."

602's "literal text is simply inapplicable to both domestic and foreign owners of L'anza's products who decide to import and resell them here," the Supremes declared at the time.

So Omega ran a new line of argument past the Ninth Circuit in this latest dispute. Even though the Omega Globe Design logo is a US copyright, "the watches bearing the design were manufactured and first sold overseas." That makes this case different, the company's lawyers contended.

The Ninth concurred. "We hold that Quality King did not invalidate our general rule that § 109(a) can provide a defense against" unlawful importation claims "only insofar as the claims involve domestically made copies of US-copyrighted works." Thus, the First Sale doctrine doesn't apply in this instance.

What's the precise logic here? Let's go back to the exact language of Section 109. We've added italics to the key phrase:

"The owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

The Ninth interprets the "lawfully made under this title" phrase to mean, "legally made and sold in the United States."

The Electronic Frontier Foundation (EFF), which joined the amicus brief, calls this logic "outrageous" and a "bogus copyright theory," as does Public Knowledge. "There is no textual support for this interpretation of 'lawfully made under this title'," writes PK's Bhat. "'Under this title' usually isn't synonymous with 'in this country'."

As the brief argues, if Congress had actually wanted the statute to apply to works made "within the United States," why didn't it explicitly say so, as it has in thousands of other instances within United States code?

And does this mean that now all a company has to do is manufacture its products abroad, stamp them with a copyrighted image logo that costs less than $50 to register, and the company can suddenly dictate the terms of redistribution long after the products are first sold?

"Under the Ninth Circuit's ruling, a manufacturer would obtain the right to control its product even after the first sale," the groups warn, "and would maintain this right until it authorizes the product's sale within the United States. Buyers, in contrast, are left without the first sale doctrine to protect their subsequent disposition of the good."

The implications of this decision are huge, creating potential liabilities for anyone who distributes anything en masse: libraries, booksellers, or your local DVD or video game rental store.

"In an increasingly interconnected world," the amicus brief concludes, "where the manufacturing of tangible products and knowledge goods can be distributed easily and widely, consumers should be confident that they retain the same rights to their belongings regardless of where those goods or their labeling were produced."

[Airhog]

I have a feeling that this case is headed to the supreme court.