The First Sale Doctrine and Copyleft

by on August 14, 2008 · 12 comments

Over at Ars Technica, I cover an important decision from the Federal Circuit. For the first time, a federal appeals court has held that distributing copies of a free software product in violation of its license term is copyright infringement, and not merely a breach of conract.

I think Mike is a little bit off base here in comparing the decision to the recent “promo CD” case:

Creative Commons seems to basically do the same thing that stamping “not for resale” does on CDs: it creates a separate license on top of copyright, and then tries to use copyright’s defenses against breaking that license. The court in the Universal Music case seemed to indicate that such claims on top of copyright weren’t enforceable. But this Artistic License decision seems to say that some claims on top of copyright can be upheld.

In the Universal case, the court found that the “not for resale” language wasn’t enforceable because there was no “exchange” that resulted in the “license” (also known as “consideration” — which is usually required for US contracts to be binding): “UMG gives the Promo CDs to music industry insiders, never to be returned. … Nor does the licensing label require the recipient to provide UMG with any benefit to retain possession.” The same is true of Jacobsen’s software, as well. The software is given, never to be returned, and the license doesn’t require the end user to provide Jacobsen with any benefit in return.

I address this point in the final paragraph of my story:

Tthere was a crucial difference between [the promo CD case] and [this free software case]: the first-sale doctrine, which says that selling a given copy of a work exhausts the copyright holder’s rights with respect to that copy. In the previous cases, the dispute was over a single copy of the work—a promo CD in one case and a box of software in the other. The courts held that no license was needed in those cases because under the first sale doctrine, the lawful owners of those copies didn’t need any further permission to use them. This week’s case, on the other hand, involves a firm that was creating and distributing new copies of a work, a situation in which the first-sale doctrine simply doesn’t apply.

The issue in the promo CD case, in other words, wasn’t whether the defendant had exceeded the terms of the license. Rather, it was whether a license was needed at all, because under the first sale doctrine the copyright holder’s rights with respect to a given copy are exhausted when he conveys that copy to a third party. No permission from the copyright holder—and hence, no license—is required to re-sell an extant copy. In contrast, it’s undisputed that a license is required to make new copies of a copyrighted work, which is what the defendant was doing in this week’s case.

That means that this decision has no implications at all on proprietary software EULAs, which almost never give people the right to distribute additional copies. It certainly isn’t in the same category as last month’s ridiculous ruling that it’s copyright infringement to create World of Warcraft bots in violation of the software EULA. The reason that ruling was wrong is that (contrary to software companies’ claims) shrink-wrapped software is sold, not licensed, and so under the first sale doctrine no license is required to use it. But in that case, no additional copies were being distributed, so the reasoning of Wednesday’s decision doesn’t really apply.

  • http://linuxworld.com/community/ Don Marti

    Copyleft licenses leave you with all the rights that you would normally have in your _first_ copy of a work. You can resell your one copy of GPL software without ever accepting the GPL.

  • http://linuxworld.com/community/ Don Marti

    Copyleft licenses leave you with all the rights that you would normally have in your _first_ copy of a work. You can resell your one copy of GPL software without ever accepting the GPL.

  • LarsG

    “The reason that ruling was wrong is that (contrary to software companies’ claims) shrink-wrapped software is sold, not licensed, and so under the first sale doctrine no license is required to use it.”

    Unfortunately, there seems to be legal precedent that a license is required for using/running software (i.e., the act of loading a copy of the software in the PC’s RAM). I think it was Peak vs MAI or Vault vs Quaid. In any case, it is a very bad situation since it effectively provides software makers with the hook/”consideraton” required to make EULAs stick; the act of simply running the software requires a license.

    The situation in Europe is different, EU (C) has a clear exemption saying that whoever possesses a legal copy has the right to make additional copies (i.e., copy to RAM, install to HD) for the purpose of using the software.

  • LarsG

    “The reason that ruling was wrong is that (contrary to software companies’ claims) shrink-wrapped software is sold, not licensed, and so under the first sale doctrine no license is required to use it.”

    Unfortunately, there seems to be legal precedent that a license is required for using/running software (i.e., the act of loading a copy of the software in the PC’s RAM). I think it was Peak vs MAI or Vault vs Quaid. In any case, it is a very bad situation since it effectively provides software makers with the hook/”consideraton” required to make EULAs stick; the act of simply running the software requires a license.

    The situation in Europe is different, EU (C) has a clear exemption saying that whoever possesses a legal copy has the right to make additional copies (i.e., copy to RAM, install to HD) for the purpose of using the software.

  • dio gratia

    @LarsG

    Actually, the act of loading a program into memory doesn’t appear to be copyright infringement otherwise requiring a license. 17 USC § 117. Limitations on exclusive rights: Computer programs:

    (a) Making of Additional Copy or Adaptation by Owner of Copy.— Notwithstanding the provisions of section 106, it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

    (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or

    Vault v. Quaid appears primarily concerned with the conflict between state law and §117, wherein the state law gave authority in a contract of adhesion in excess of that allowed by copyright law (perpetual ban on making copies, versus lifetime of the author plus 50 years). Archival copies were found to be non-infringing under §106 as allowed by §117(a)(2), and the contract of adhesion (read EULA) was found to be invalid.

    §117 can be described as maintaining the balance of rights between the copy owner and the copyright holder when viewing the intended use of software, where transient or incidental copies are required by the technology. Peak vs. MAI addressed balance issues, and may have resulted in a 1998 amendment to §117 to provide for copies for repair purposes, the issue being that the repairer was not the owner of the copy as specified in §117 (a)(1).

    Neither case affected the rights of the owner of legal copy of a software to load the software into memory for execution.

    IANAL, etc.

  • DioGratia

    LarsG,

    It doesn’t appear to be copyright infringement for the act of loading a copy of software for execution, otherwise requiring a license. 17 USC § 117. Limitations on exclusive rights: Computer programs:

    (a) Making of Additional Copy or Adaptation by Owner of Copy.— Notwithstanding the provisions of section 106, it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

    (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or

    Vault v. Quaid appears primarily involved with the conflict between state law and §117, wherein the state law gave authority in a contract of adhesion in excess of copyright law (perpetual ban on making copies, versus lifetime of the author plus 50 years). Archival copies were found to be non-infringing under §106 as allowed by §117(a)(2), and the contract of adhesion (read EULA) was found to be invalid.

    §117 can be described as maintaining the balance of rights between the copy owner and the copyright holder when viewing the intended use of software, where transient or incidental copies are required by the technology. Peak vs. MAI addressed balance issues, and may have resulted in a 1998 amendment to §117 to provide for copies for repair purposes, the issue being that the repairer was not the owner of the copy as specified in §117 (a)(1).

    Neither case affected the rights of the owner of legal copy of a software to load the software into memory for execution.

    IANAL, etc.

  • DioGratia

    LarsG,

    It doesn't appear to be copyright infringement for the act of loading a copy of software for execution, otherwise requiring a license. 17 USC § 117. Limitations on exclusive rights: Computer programs:

    (a) Making of Additional Copy or Adaptation by Owner of Copy.— Notwithstanding the provisions of section 106, it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided:

    (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or

    Vault v. Quaid appears primarily involved with the conflict between state law and §117, wherein the state law gave authority in a contract of adhesion in excess of copyright law (perpetual ban on making copies, versus lifetime of the author plus 50 years). Archival copies were found to be non-infringing under §106 as allowed by §117(a)(2), and the contract of adhesion (read EULA) was found to be invalid.

    §117 can be described as maintaining the balance of rights between the copy owner and the copyright holder when viewing the intended use of software, where transient or incidental copies are required by the technology. Peak vs. MAI addressed balance issues, and may have resulted in a 1998 amendment to §117 to provide for copies for repair purposes, the issue being that the repairer was not the owner of the copy as specified in §117 (a)(1).

    Neither case affected the rights of the owner of legal copy of a software to load the software into memory for execution.

    IANAL, etc.

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