[SC.LUG] Fwd: [Upd-discuss] The Long Arm of the EULA

[Richard Smedley]

It appears that Americans really don't own their software.
Note that EU and UK law is slightly different...

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Subject: [Upd-discuss] The Long Arm of the EULA
Date: Tuesday 08 August 2006 22:10
From: Seth Johnson <seth.johnson at realmeasures.dyndns.org>
To: ecommerce at lists.essential.org, a2k at lists.essential.org,
upd-discuss at lists.essential.org, commons-law at sarai.net

> http://weblog.infoworld.com/foster/2006/08/07_a434.html

THE GRIPE LINE WEBLOG  by Ed Foster


The Long Arm of the EULA

Monday, August 07, 2006


Do software customers have any rights at all under the law, or
does the industry's claim that its products are Licensed, Not
Sold (http://radio.weblogs.com/0123585/2004/10/26.html#a172) give
software companies carte blanche? That is the real question
raised by the case of Wall Data vs. the L.A. County Sheriff's
Department.

Over the last week I've been telling the story of how the
sheriffs came to be found guilty of copyright infringement over
their use of Wall Data's Rumba terminal emulation program in
county jail facilities. It's a tale filled with ghostly images
and broken trust, so if you haven't been following it you might
want to catch up with the first
(http://www.gripe2ed.com/scoop/story/2006/8/1/02429/48278) and
second (http://www.gripe2ed.com/scoop/story/2006/8/4/83852/73914)
episodes before continuing with this narrative.

Wall Data based its case on the indisputable fact that the
sheriffs had made more copies of Rumba than it had licenses for.
But the sheriffs argued that, since those extra copies were
unusable under their network security system, the copies were
legal under the fair use and essential step principles of
copyright law. Had that defense gotten a true hearing, this case
might have provided some landmark clarification of the rules, no
matter which side won. Unfortunately, that's not what happened.

Instead, the real focus of the original trial was the EULA. Since
the Rumba CDs were supposed to come with a shrinkwrap end user
license agreement (although it's not clear if the EULA was
actually there), the plaintiffs argued that the sheriffs were
prohibited by the EULA from making the extra copies. Ironically,
the Wall Data EULA was actually rather ambiguous on this point,
since its basic license grant allowed use of the software "on a
single Designated Computer for which the software has been
activated," and the sheriffs argued that the unused copies
obviously were not activated. But the plaintiffs' overall
interpretation of the EULA prevailed. Even if, as the defense
contended, Wall Data employees had given oral permission to make
the extra copies, the plaintiffs said it made no difference
because the EULA "specifically provides that any statements by
employees are not to be relied upon."

In the end, though, the most important thing about the EULA was
simply its existence. Because Rumba had a license agreement, the
plaintiffs argued, the sheriffs had purchased "licenses" of the
software, not "copies." This may not seem like all that important
a distinction to you, but it was central to the courts deciding
that the sheriffs did not have the rights under copyright law
that they were claiming.

As I discussed last week
(http://www.gripe2ed.com/scoop/story/2006/7/31/071/42629), the
Ninth Circuit, in which jurisdiction this case fell, is home to
the discredited MAI vs. Peak decision. In that case the court
stated baldly that if software is licensed, the customer is not
the "owner of a copy" and therefore not entitled to the
protections of Section 117 of the Copyright Act.

In reviewing the Wall Data case, not only did the Ninth Circuit
affirm this principle, it added the rather perverse doctrine that
the more severe the restrictions imposed by the license, the more
clearly the customer does not qualify to be the owner of a copy.
Well, as maybe the foremost expert around on nasty license terms,
let me just assure the court that they are unlikely to find any
commercial software with less severe terms than the rather mild
EULA Wall Data used. So far all intents and purposes, it would
seem like the court's ruling makes Section 117 a dead letter.
Talk about judicial activism, where are the far-right fanatics
when we need them?

But, in my not-so humble opinion, there's something even stranger
about this case. If the license agreement is all that matters,
why is it a copyright infringement case at all? At heart, this
case is really a contract dispute, so why isn't this a breach of
contract lawsuit instead? Well, that would have allowed the
defense to bring in a lot of evidence - including LA. County's
master vendor agreement with the re-seller who actually sold them
Rumba - that the original judge excluded because it might
"confuse the jury" to hear that side of the story. Pretty
amazing. But just what kind of legal system are we living in --
at least here in Ninth Circuit territory -- where software
customers don't have the right to fight a charge of copyright
infringement with the rights Congress explicitly gave them in the
copyright statutes?

So that's my take on the case of Wall Data v the Los Angeles
County Sheriffs. Now, finally, you get to be the judge. Post your
comments on my website or write me directly at
Foster at gripe2ed.com.

Read and post comments about this story here
(http://www.gripe2ed.com/scoop/story/2006/8/7/04640/75966).

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