Over at Ars, I discuss the implications of this week’s Autodesk decision:
In a 21-page decision, Judge Jones sided with Vernor. Citing the 1977 case of United States v. Wise, which involved the sale of used films obtained under dubious circumstances, Jones found that the Ninth Circuit’s precedents suggested that the circumstances surrounding the sale of AutoCAD software constituted a sale, not merely a license. Therefore, the First Sale Doctrine applied, and Vernor was not bound by any of the terms in Autodesk’s license agreement.
But the judge acknowledged that three more recent Ninth Circuit decisions involving software seemed to cut in the opposite direction without explicitly overturning Wise. Jones found that Wise was controlling precedent, and ruled in Vernor’s favor. If the case gets appealed to the Ninth Circuit, the conflict among these precedents is likely to occupy the court’s attention. The trio of more recent cases hints that the Ninth Circuit is sympathetic to characterizing software sales as licenses for legal purposes. However, none of those cases involved circumstances exactly like Vernor’s, and the court never dealt squarely with the question of what factors determine whether software is sold or licensed.
If Jones’s ruling is upheld on appeal, it will have important consequences for the software industry, where the legal fiction that software is merely licensed is widely employed. In addition to discouraging the market for used software, software firms have also attempted to use the “licensed, not sold” theory to enforce restrictions on reverse engineering that would otherwise be fair use under copyright law. If software is sold, rather than licensed, then no license is required to install and use the software, and the terms of shrink-wrap licenses may not be legally binding.
I love understated sarcasm in judicial opinions. From yesterday’s Autodesk decision:
Not only has Autodesk failed to surmount the thorny issues of privity and mutual assent inherent in its contention that its License binds Mr. Vernor and his customers, it has ignored the terms of the License itself. The Autodesk License is expressly “nontransferable.” License: Grant of License. Autodesk does not explain how a nontransferable license can bind subsequent transferees.
This decision from a district judge is a victory for the First Sale Doctrine and common sense. But it highlights conflicting Ninth Circuit precedents, and explicitly chooses one in favor of the others, so the Ninth Circuit seems likely to step in and resolve the conflict.
Over at Techdirt I channel Adam Thierer and take the ACLU to task for its inexplicable decision to weigh in on the media ownership fight. I would think that if anything, as a civil liberties organization they would be on the side of opposing government regulation of private media outlets, but what do I know?
The opinion of the Techdirt readership is almost unanimous in their disagreement with me, but a lot of the comments don’t make a lot of sense. I focused on one specific claim in the ACLU’s press release: that the media universe is controlled by six media companies. This isn’t even close to true, which I documented in some detail. But this seems to have totally gone over the heads of Techdirt’s readers. The commenters either (1) changed the subject to some other media ownership pet peeve (Clear Channel sucks, local news is too concentrated, the media are too liberal, the media are too conservative) or (2) ignored what I wrote altogether, writing as if it were an established fact that 6 companies controlled all media outlets. One representative commenter wrote “having 6 or so conglomerates control the information the non-Techdirt reading elite see is bad.” But as I pointed out, this pseudo-statistic isn’t even close to being right. Even leaving aside Internet sources, there are a lot more than six companies controlling significant media outlets. Maybe the industry is still too concentrated, but the first step is to at least get the facts right.
For reasons I don’t really understand, this seems to be an issue on which peoples’ opinions are particularly impervious to facts and rational argument. For whatever reason, people really hate the media, and so they’ve somehow managed to convince themselves that one of the most fiercely competitive industries around is in fact a cozy oligopoly. It’s not true, but it seems to make people happy to believe it is, and no amount of contrary evidence seems to make an impression on them.
Megan McArdle’s critique of Dean Baker’s post on free trade is mostly solid, but I think her reply on copyright and patent protections is a little bit off base:
Property rights are not inconsistent with free trade. I cannot justify selling stolen televisions on the grounds that this is just the working of the free market. The US thinks, with good reason, that intellectual property protections benefit everyone in the country over the long run. Thus, it enforces them by preventing other industries from selling property here that has, legally, been stolen.
How is this different from labor and environmental standards, liberals will ask. Well, we have copyright and patents because otherwise, you have goods with an enormous positive externality, but virtually no positive internality. Companies that use patented ideas without paying for them are creating a big negative externality–reduced incentive to innovate–while internalizing all the benefit from doing so. This is one of those situations where we look for some sort of legal arrangement, which we might call, oh, “intellectual property law”, to keep those skewed incentives from making us all ultimately worse off.
In the case of labor and environmental standards, whatever negatives there are are largely internalized to the countries. The awfulness of low wages and environmental standards is presumably even more awful if you are already extremely poor with limited recourse to a safety net. You’re unlikely to end up with an inefficient outcome.
There are a number of problems with this argument:
It’s inaccurate, or at least begging the question, to say that a company that infringes a patent is “creating a big negative externality.” Such a company is certainly failing to create an incentive for future patenting, but this is only a negative externality if we assume as our baseline a world in which all infringers obtain licenses and all patent royalties create incentives for innovation. In the real world, neither of these conditions hold. For example, when an extremely poor nation allows local pharmaceutical companies to produce patented drugs for the local market, it is not necessarily the case that the patent holder is thereby deprived of significant income. Most of the people who buy such patent-infringing drugs would not have been able to afford the drugs at anything close to full price.
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Yglesias points to “Money Ruins Everything”, a paper by John Quiggin and Dan Hunter about the rise of peer production and its implications for public policy. It covers much the same ground as (and cites) Greg Lastowka and Dan Hunter’s excellent Cato Policy Analysis “Amateur-to-Amateur.” The basic point is that non-pecuniary motives have become more important in recent years, as illustrated by the success of projects like Wikipedia and Linux.
I’ll have more to say about the paper at Techdirt, but I wanted to note a couple of minor quibbles:
Criticism the first: On p. 235 the authors draw a distinction between free software (which has a sharp distinction between producers and consumers) and the blogosphere (in which producers and consumers are often one and the same). I don’t think this dichotomy works on either side of the ledger. On the one hand, free software has made the most progress in precisely those areas where software producers and consumers are the same people. A lot of Apache contributors, for example, work as commercial web developers and submit patches they’ve developed for their own use or the use of their clients. While certainly, there are a lot more users than developers for almost any software project, it’s quite common for the developers of a project to be drawn from the same pool as the users.
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Ezra Klein links to Kevin Drum, who thinks that “40 years ago there were a small number of what you might call mega-intellectuals — people like Buckley and Chomsky and Galbraith and Friedman — who had a bigger influence on public discourse than any single public intellectual does today. Nobody on Dan’s list really seems to compete on quite the same plane as some of those 50s and 60s superstars.”
Ezra agrees with him. I don’t. Or, at least I don’t think this is obviously true. Here’s the thing: we consider Milton Friedman a giant because everyone in the libertarian political quandrant grew up reading him, while everyone in other quandrants grew up seeing him refuted. Contrariwise, Chomsky is considered a giant because everyone on the left idolized him in college and lots of non-lefties criticized him.
But of course, people in the 1950s didn’t have those attitudes because back then Friedman and Chomsky were brilliant young professors just beginning to make names for themselves. If you’d made a short list of important public intellectuals in 1970, Friedman and Chomsky would have been on it, but the list probably would have included a lot of other people that few remember today. Likewise, if we tried to make a list of the 100 most important public intellectuals today, that list would no doubt include some people that will one day be regarded as “giants,” but we don’t have any particular way to predict who they’ll be. What will determine that is whose ideas continue to be discussed as the next generation of intellectuals is growing up, and we won’t know who those are until we’ve actually had the discussions.
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