Oracle is on a legal losing streak. First, it lost to Google in its attack on Android. And, now the Court of Justice of the European Union (CJEU), the EU's equivalent of the U.S. Supreme Court, has ruled against Oracle in a software copyright case. Specifcally, the CJEU ruled that "Where the copyright holder makes available to his customer a copy—tangible or intangible—and at the same time concludes, in return [for] payment of a fee, a license agreement granting the customer the right to use that copy for an unlimited period, that rightholder sells the copy to the customer and thus exhausts his exclusive distribution right.” In short, you can and buy sell downloaded used software in the EU... and that suggests that you might be able to resell used e-books, digital music, and video as well.
As Benoît Keane, a solicitor in England and Wales and a specialist in EU law put it in a recent blog post, “The rationale of this judgment could have major implications for other digitally available products, such as e-books and music, which are increasingly purchased through internet sites rather than in tangible formats.” The Recording Industry Association of America (RIAA) considers any attempt to resell digital music as willful copyright infringement (PDF Link). We can be certain that the Motion Picture Association of America (MPAA) would take a similarly dim view at attempts to resell used TV episodes and movies.
Some people also argue that there is no such thing as used software, but that argument doesn't hold much water in the US or the EU.
One law school professor told me “It's just the doctrine which under US copyright law is called the right of first sale. The European court gets the usual US answer by a slightly different route. The point is that you can resell your licensed copy, that is, stop using it yourself and transfer it to someone else. Like a book. Oracle tried to argue that this would be the rule if you were first sold the software in a physical form: a CD or DVD, but not if it was always just pure bits. That was a silly argument even under European law, and it was predictably rejected.”
But, could, in the EU anyway, people actually get a legal right to sell their “used” e-books or videos as well as their software?
It's up in the air for now. Someone will have to try it, wait for the lawsuit, and then take it from there.
Andrew 'Andy' Updegrove, a founding partner of Gesmer Updegrove, a top technology intellectual property law firm said, “If you think about it, the entire concept of a "license" for software, as compared to a sale, is very unusual to begin with. A modern car, for example, includes far more types, and far more discrete examples, of intellectual property than a piece of software, when you add everything up. And it would be ridiculous for (say) General Motors to try and tell you that you couldn't resell it - or loan it - rent it - or remove parts
from it and install them in another car. So why has software been permitted to be treated so differently?”
Updegrove continued, “Even if you were to say that copyright law should apply to a car, you could still loan it, or rent it, or sell it - you just couldn't 'copy' it. So why do we allow one set of rules to apply in the case of a creative work that is intangible but restrict protection to other expressions of innovation to patent protection, to the extent available?”
So while “copyright law is based upon an original concept that was very clear and concise: you can't make an exact replica of something and sell it without compensating the owner. I think that's still plenty of protection for an author, artist, etc.” Therefore, “I personally think that ebooks (for example) should have no greater protection physical books. And this European court would appear to agree.”
Of course, software companies, publishers, and media companies do have another trick up their sleeves. Rich Santalesa, senior counsel at Information Law Group commented, “I think all software companies may need to do is not utilize a 'perpetual' license... simply state a 99 years or some other long period that doesn't, depending on the applicable country law, violate the rule of perpetuities or whatever analog exists to stretch this metaphor into the real property transfer arena. By the time that date rolls around we'll all be dead, the software obsolete, what have you, but for legal purposes there's not been a license for an 'unlimited period.'"
That's a worry for another day. For now, though, in Europe at least, you can legally sell used software and there's a crack in the door for legal sales of used ebooks, music and video.
The knock on effect of the EU decision on reselling software
Oracle cannot block the resale of its software in Europe
It's the end of books as you knew them: E-books out-sell hardbound for the 1st time