Thursday, November 1, 2007

Why "Sold, Not Licensed" Matters

Some people may be wondering, "What's the big deal? Why does it matter if software is licensed instead of sold?" The main reason it makes a difference is because of some of the technical details of copyright law. In order to use a computer program, you necessarily must make one or more copies of the software. Some examples: copies are made on the hard drive, copies are made in RAM, and copies may be temporarily made in caches and other places. Normally, copyright law would supposedly prohibit you from making these additional copies. Only the copyright owner, in this case the software publisher, is allowed to make copies.

At some point, Congress decided that copyright law needed to make an explicit exception for computer software. So section 117 was added to U.S. copyright law. This section recognizes the fact that computers can't make use of software without making these incidental copies. As such, the section permits these copies to be made as long as the copies are necessary in order for the software to work on a computer.

But there's a catch. According to section 117, only the "owner" of a particular copy of software is permitted to make these incidental copies. In other words only the owner of a copy of software is allowed to actually use the software on a computer. This is where "licensed, not sold" comes from.

If we subscribe to the view that software is licensed, not sold, then the software publisher is still the owner of any copies of the software. End-users do not own any copies, even those copies that the end-users may have in their possession. So, under copyright law -- even with section 117 -- end-users have no right to actually use copies of software on computers. Instead, the software publisher gives end-users permission to use the software and to make certain copies. The EULA is the agreement that grants this permission. In order to accept the permission given to use the software, the end-user must accept all other terms laid out in the EULA, many of which typically restrict the users' rights far beyond what copyright law would otherwise allow.

If, on the other hand, we subscribe to the view that software is sold, not licensed, then the end-user takes ownership of any copies of software that they buy. As such, end-users are then free to use the software without the publisher's permission. Section 117 allows the end-user, as the owner of the copy, to make any copies necessary in order to allow the software to be used on a computer. Hence the end-user does not need permission from the software publisher to use the software and there is no need for the end-user to agree to an EULA. When software is sold, end-users are afforded all the rights that copyright law provides.

This brings me to one of the most bothersome consequences of the practice of "licensing" software instead of selling it. The use of EULAs has become so widespread, so ubiquitous, that virtually all commercial computer software produced today is supposedly bound by an EULA. If we accept the assertion that EULAs are valid and that the software is indeed licensed and not sold, then section 117 of U.S. copyright law has been rendered meaningless. There would be virtually not a single copy of software that would be affected by section 117 because virtually all copies of software would be owned by their respective copyright owners. Section 117 only has meaning when there are copies of software that are owned by people other than the copyright owners. In other words, software publishers are attempting to unilaterally reverse a law that Congress created for the express purpose of allowing end-users to use software created by others. And that just makes me angry. It should make the courts and Congress angry too.


Anonymous said...

So, is it illegal to sell a link of a "licensed software"? Eg. Micromash to which I have the right to use for a few more months.

Dan said...

I am not a lawyer, and I won't give any advice that applies to any specific situations.

I assume that you're asking a hypothetical question for academic purposes. I think it is doubtful that in the case of something like MicroMash, that there is a good, or product, that has been sold. That being the case, there's the whole question of who owns the MicroMash "software". I don't think the customer, who has the link to the software, owns it. At least that's not what it sounds like. So in a case like this, the customer really does need the publisher's permission in order to use the software.

If the customer sells a link to the software (or username and password), I don't think the person who buys the link has permission to use the software. So even though they may know the link (or password), thye may not use the software because they haven't actually been granted permission.

Again, I'm not a lawyer so I could be wrong and it definitely also depends on the specifics of any agreements that were entered into before the publisher granted permission to access the MicroMash software.

Curious said...

I guess is like when you rent a car: only drivers who are granted permission in the contract can drive the rental car, even if you are paying for the use and possession of the car for a certain period of time…
Here, it makes sense b/c there are certain risks involved in the case of driver's responsibility.

Please note that I am not asking for legal advice. This subject you are analysis is very interesting and I just like to understant and discuss controversial issues.

Thank you for your reply!