Legal Research

First Sale and Shrink Wrap/Click Wrap Licencing

By scott

According to mLex , the German Supreme Court has referred a case between Oracle and UsedSoft to the European Court of Justice (ECJ) concerning the first sale doctrine and whether when you buy software, do you ‘own’ it and can you then resell it or do provisions such as ‘licences’ prevent you from doing so. The German court want the ECJ to determine whether under EU law a second hand buyer of software can be classed as a lawful owner of the software.

The case will rest on the interpretation of Directive 2009/24/EC on the legal protection of computer programs. Article 4 of that states:

Restricted acts
1. Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder within the meaning of Article 2 shall include the right to do or to authorise:
(a) the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole; in so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder; (b) the translation, adaptation, arrangement and any other alteration of a computer program and the reproduction of the results thereof, without prejudice to the rights of the person who alters the program; (c) any form of distribution to the public, including the rental, of the original computer program or of copies thereof.

2. The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.

However the German court seems more interested in Article 5(1) Exceptions to the restricted acts which states:

In the absence of specific contractual provisions, the acts referred to in points (a) and (b) of Article 4(1) shall not require authorisation by the rightholder where they are necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.

The question then is can a second hand purchaser be a lawful acquirer?

This is similar to a group of cases that the 9th U.S. Circuit Court of Appeals has been dealing with recently. It heard three first sale cases and has already ruled on two. In Autodesk v. Vernor the court overturned the District Court to find that Autodesk licensed rather than sold its software, saying that if a company licensed its software, its customers do not qualify as ?owners? of the software, and that a user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user?s ability to transfer the software; and (3) imposes notable use restrictions ? which in this case the court ruled Autodesk had. Therefore a third party could not ’sell’ on their software to a new ‘owner’.

In MDY v. Blizzard the court held that purchasers of the game World of Warcraft (WoW) did not own their copy but were mere licensees of the game, and are required to adhere to the End User License Agreement and the Terms of Use set by Blizzard. The Court overturned a finding of secondary copyright infringement against MDY, but held it was liable under the Digital Millennium Copyright Act finding that circumvention of a measure that restricts access to a work can lead to liability under that act regardless of whether there is any underlying copyright infringement.

The final related case, the Court has yet to publish its opinion on is UMG v. Augusto, which concerns whether the resale of promotional CDs on eBay infringing a recording company’s copyright on the material. The judgment in UMG v. Augusto is expected in the next couple of months.

Full post as published by Information Overload on February 03, 2011 (boomark / email).