A federal appeals court said Friday that software makers can use shrink-wrap and click-wrap licenses to forbid the transfer or resale of their wares, an apparent gutting of the so-called first-sale doctrine.
The first-sale doctrine is an affirmative defense to copyright infringement that allows legitimate owners of copies of copyrighted works to resell those copies. That defense, the court said, is “unavailable to those who are only licensed to use their copies of copyrighted works.” (.pdf)
The 3-0 decision by the 9th U.S. Circuit Court of Appeal, if it stands, means copyright owners may prohibit the resale of their wares by inserting clauses in their sales agreements.
For over a century it’s been considered settled law that one you have bought a copy of a copyrighted work, you own that copy and can resell it, give it away, or lend it. The Copyright Act of 1976 explicitly allows this. This allows libraries and used bookstores to thrive, and allows a much wider access to books, music, and other creative works.
But content creators have been trying for years to find ways to block such resales, forcing every person to buy their own copy: software and downloadable music routinely requires user to check off a click-through agreement or “shrink-wrap license” in order to use the item they bought. But the legal status of such agreements has been murky.
The defendant in question was an eBay vendor who bought brand-new, shrink-wrapped software at garage sales and resold it on his eBay storefront. Since the software hadn’t been opened, there’s no way to argue that he agreed to the shrink-wrap agreement, which usually has verbiage like “by breaking this seal, you agree to…”. The appeals court ruled that the licensing agreement applied in this case anyway.
This is more than a little scary. How long before books routinely come with a notice on their back cover saying you’re not actually buying the book, but buying a license to read its contents, and can’t resell it without permission from the publisher? Same with sheet music, CDs, DVDs, and all other intellectual property. If this ruling is upheld on appeal (and it likely will be, considering the current makeup of the Supreme Court), used bookstores will probably be out of business within a few years.
If you’re planning to clear out your old music library, better hurry up.