Owning Copyright

EU Says First Sale Doctrine Applies to SoftwareToday the European Court of Justice ruled that software is like a book. Once you buy it, you can lend it, you can resell it, you can light it on fire, you can lose it, you can laugh when it crashes your computer, and you can transfer it electronically. Although the Court was far too recondite to articulate the true implication of their ruling, the upshot really is that – at least in the EU – if you buy software, you “own” it.

What does this mean for practical purposes?

It means you (the European you, anyway) can now resell not only your CDs, DVDs, Sims Games, WoW, and other trifles on eBay, you can also sell: (a) your old version of Adobe Reader Pro; (b) your installation disk for Snow Leopard; (c) the 5-disk Rosetta Stone package you bought when you thought you would learn French; (d) that novel writing program you got for Christmas but could never really get into; (e) your iPod downloads; (f) your e-books; and (f) all the other software whose “clickwrap” licenses forbade you from ever even thinking about transferring it to someone else once you got bored, tired, irritated, or simply upgraded to a system which was no longer compatible with the product.

For those of you who thought you could blithely sell these things anyway (i.e., prior to this ruling), please take note of the fact that you could not. If you did, you did so at your peril.

The current rule in the United States is contrary to the European rule, with the vast majority of the courts to have considered the issue holding that software is something that is “licensed” rather than “owned,” and that the First Sale Doctrine – which provides that copyright holders may only control and impose limits on the “first sale” of their goods – does not apply to software. (See, e.g., Vernor v. Autodesk).

What does the new law mean for intellectual property, apart from the obvious fact that the goal of having uniform copyright laws remains elusive? Well, it could mean that it is now legal for a United States citizen to buy or resell used software in the EU, or that it is legal to download it from an EU server.

Will Oracle sue a U.S. citizen for doing so? Probably.

Will the United States government take the position that the EU rule does not apply to products shipped to the U.S. or downloaded to any U.S. server? Maybe. The federales have been known to get fairly aggressive with offshore companies which may or may not abide by United States copyright laws and may or may not incur liability as a result  (see, e.g.,  Rojadirecta.org and/or Megaupload).

The only sure bet is that the ruling — whether you like it, hate it, agree or disagree —  is going to create turmoil in the market for years to come. So prepare yourself. As the Chinese are wont to say, in chaos lies opportunity.


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  2. matt says:

    I have been really interested in this topic and read your posts. Looks like, in my opinion, the Euros are smarter about this stuff than we are.

    Reason I got interested is I have a good friend who owns a very small architectural design company (industrial steel framing etc). A few years ago before he started his company, he was working for another company that eventually went out of business. In lieu of substantial wages the company owed him, they offered, and he accepted, their copies of a design software product instead of cash. He thereafter started his business and has been using the software for three years. The software was sold as a finished, stand alone product – it does not require updates etc. The software company has come out with subsequent versions but my friend and his company have merely continued to use the circa 2008 version. The copies he has been using are authorized copies and he has not made or distributed any copies. Out of the blue the software company sent him a letter demanding he stop using the product or pay $80,000 for a “new license” claiming that the software was only licensed to the old company which had no right to sell/transfer to him.

    That just doesn’t seem right to me. For reasons that should be obvious to normal people. Or so I thought. I also don’t see how they could come after my friend – HE didn’t sign any agreement or license with these people, the old company did.

    Anyway, seems to me this greedy company is trying to ruin my friend and put him literally out of business for no good reason. Heck, others I know in other businesses do this all the time: Concrete company goes out of business, it sells its trucks and mixers to other folks who use them in their businesses; Coffee house goes bust it sells its machines to other coffee houses etc.

    Can you give me any idea whether this poor dude is out of luck or not?


    • Unfortunately, he may be out of luck, though without knowing the specifics of the situation it’s hard to give you an informed opinion. I would recommend that he go talk to a reputable IP attorney in his area and see what he thinks about the demand. $80K is a fairly significant chunk of change for a license, especially one that is non-transferrable, and presumably your friend could buy a competing, new-and-improved product some 3 years later for less than that.

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