This story appeared on Network World at

This story appeared on Network World at
http://www.networkworld.com/columnists/2008/052708-bradner.html

Maybe you did buy that software after all

Recent court decision may change legal landscape in software business

'Net Insider By Scott Bradner , Network World , 05/27/2008

In case you did not know, if you have Windows XP installed on your personal computer you do not own it, at least according to Microsoft.

The same is true for Microsoft Vista and Apple OSX (although it’s Apple that says you do not own OSX). This is the case even if you went to the store, picked up a box containing a set of CDs, or a DVD, of the software and paid the person at the checkout counter the amount listed on the box, plus tax.

But a recent court decision just might change this and, if it does, lots of restrictions that Microsoft, Apple and many other vendors put on software users may change dramatically.

Microsoft does not sell you Windows XP. Rather, it sells a license – with lots of restrictions -- to use XP. Not only do you, as a purchaser of the license, have to obey these restrictions, but so does anyone you might want to sell the license to (for example, if you sell your computer). Apple’s end-user license is even clearer: "The software (including Boot ROM code), documentation and any fonts accompanying this License whether preinstalled on Apple-labeled hardware, on disk, in read only memory, on any other media or in any other form (collectively the "Apple Software") are licensed, not sold, to you by Apple Inc."

Microsoft and Apple are far from alone in using this approach to not selling software. Many, if not most, application vendors, including Autodesk, do the same. But this approach may be on its way out the door.

On May 20, Judge Richard Jones of the U.S. District Court in Seattle ruled in a case between Autodesk and one Timothy Vernor that, while Autodesk claimed to only license, not sell, its software, the specifics of the transaction made it clear that in fact Autodesk was selling the software and attempting to put restrictions on what the user could do with the software bought. There appear to be few differences between the way Autodesk sold its software and the way that Microsoft or Apple do. So the same conclusion could be drawn for that and most other software.

Judge Jones invoked the First Sale Doctrine in ruling that at least some of the restrictions Autodesk had in its end-user license could not be enforced, at least in some situations. In the United States, the First Sale Doctrine goes back to a Supreme Court decision in 1908 and was more recently (in 1976) specifically codified in law. The doctrine basically says that once you have purchased a copyrighted work, a book for example, you can loan it or sell it to others. Thus, if software is sold, then the First Sale Doctrine holds and the software vendor cannot restrict your ability to resell the software to others. (Of course, you cannot keep a copy for yourself when you sell the original.)

It’s an open question as to what other license restrictions might be overridden by the First Sale Doctrine. For example, reverse engineering, which is fair use under normal copyright law, is restricted in many end-user licenses. Some licenses even try to restrict criticism of a product, and the Apple license says you cannot use OSX to violate copyrights.

It is also an open question of whether Judge Jones’s decision will be upheld on appeal since there are conflicting prior rulings in the area (well covered in the ruling). It is also possible for software vendors to change their selling process to get around the judge’s ruling.

But the software world could change significantly, and in my view, much for the better, if software were just another product that is bought and sold.

Disclaimer: A Harvard education does not come with an end-user license agreement, thus the university’s main business is not concerned with this concept, and the above semi-legal review is my own.