ECJ upholds first sale doctrine for software

Little noticed on a busy newsweek the Court of Justice of the European Union (CJEU) (also known as the European Court of Justice, ECJ), on Tuesday, emphatically upheld the first sale doctrine for software in the EU. So when you purchase software in the EU, regardless of what the small print in the licence says, you are purchasing something which you can sell on second hand, without the copyright owner's permission or interference. The original copyright owner's exclusive right of reproduction, however, is not exhausted by the first sale. In other words, software companies still control the copyright just not the right to resell copies of the software they have already sold.

Oracle had sued a German company, UsedSoft which has been selling second hand copies of its software. And cheekily, some might believe, some UsedSoft's customers have been getting their copy of the Oracle software from Oracle's own website and are entitled to have any updates and bug fixes the original user had.

The case will now go back to the German Federal Court of Justice for a final decision.

The 2009 directive on the legal protection of computer programs theoretically implements a first sale doctrine for software in the EU - first sale in the EU of a copy of a computer program exhausts the right of distribution of that copy in the EU. The bottom line theoretically is that when you purchase software in the EU you are not just licensing the use of the software as every commercial software licence says, you have bought a copy which you're entitled to sell on.

Oracle thought they could bypass the directive through get out clauses in their licences, as is standard practice in the software industry. So it's nice to see the ECJ stand by the letter and spirit of the directive.

Contract pretty much trumps everything in the US courts so this will have been a surprise to Oracle but not necessarily totally unexpected, since the ECJ Advocate General, Yves Bot, issued his advisory opinion along the same lines in April.

The Court issued a very accessible 2 page statement on the decision on Tuesday.

"An author of software cannot oppose the resale of his ‘used’ licences allowing the use of his programs downloaded from the internet

The exclusive right of distribution of a copy of a computer program covered by such a licence is exhausted on its first sale

UsedSoft is a German undertaking which markets licences acquired from customers of Oracle. Customers of UsedSoft who are not yet in possession of the software download it directly from Oracle’s website after acquiring a ‘used’ licence. Customers who already have that software can purchase a further licence or part of a licence for additional users...

Oracle brought proceedings against UsedSoft in the German courts, seeking an order for it to cease those practices. The Bundesgerichtshof (Federal Court of Justice, Germany) ... made a reference to the Court of Justice for it to interpret, in this context, the directive on the legal protection of computer programs.1.

Under that directive, the first sale in the EU of a copy of a computer program by the copyright holder or with his consent exhausts the right of distribution of that copy in the EU.

By its judgment delivered today, the Court explains that the principle of exhaustion of the distribution right applies not only where the copyright holder markets copies of his software on a material medium (CD-ROM or DVD) but also where he distributes them by means of downloads from his website.

Where the copyright holder makes available to his customer a copy – tangible or intangible – and at the same time concludes, in return form payment of a fee, a licence 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. Such a transaction involves a transfer of the right of ownership of the copy. Therefore, even if the licence agreement prohibits a further transfer, the rightholder can no longer oppose the resale of that copy.

The Court observes in particular that limiting the application of the principle of the exhaustion of the distribution right solely to copies of computer programs that are sold on a material medium would allow the copyright holder to control the resale of copies downloaded from the internet and to demand further remuneration on the occasion of each new sale, even though the first sale of the copy had already enabled the rightholder to obtain appropriate remuneration...

Moreover, the exhaustion of the distribution right extends to the copy of the computer program sold as corrected and updated by the copyright holder...

The Court points out, however, that if the licence acquired by the first acquirer relates to a greater number of users than he needs, that acquirer is not authorised by the effect of the exhaustion of the distribution right to divide the licence and resell only part of it.

Furthermore, the Court states that an original acquirer of a tangible or intangible copy of a computer program for which the copyright holder’s right of distribution is exhausted must make the copy downloaded onto his own computer unusable at the time of resale. If he continued to use it, he would infringe the copyright holder’s exclusive right of reproduction of his computer program. In contrast to the exclusive right of distribution, the exclusive right of reproduction is not exhausted by the first sale. However, the directive authorises any reproduction that is necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose. Such reproduction may not be prohibited by contract.

 In this context, the Court’s answer is that any subsequent acquirer of a copy for which the copyright holder’s distribution right is exhausted constitutes such a lawful acquirer. He can therefore download onto his computer the copy sold to him by the first acquirer. Such a download must be regarded as a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose.

Therefore the new acquirer of the user licence, such as a customer of UsedSoft, may, as a lawful acquirer of the corrected and updated copy of the computer program concerned, download that copy from the copyright holder’s website."

I find it interesting that the UsedSoft v Oracle decision protects the ability of UsedSoft's customers to get their 'used' copy of the software from Oracle's website.  I can't see that that protection would have been upheld by any US court.

Another key element was the Court's decision to specifically neutralise the relative distribution channels as a material factor. Software is software whether you get it on a physical medium or through the Net.

I wish I could share the prevailing optimism on the wider impact of the decision but I suspect the software and games cos. et al will continue to use restrictive licences and make it difficult through drm etc to pass on second hand games through sales, borrowings or donations. Though the legal departments of those same companies will even now be working on a form of words to insert in the licences to address the 'problems' thrown up by the ECJ.

The real breakthrough on end user licence agreements (or EULAs) will come when there's a successful challenge in a supreme court on the basis of unfair contract terms.

Notes
1. Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (OJ 2009 L 111, p. 16).

EU Parliament reject ACTA; Commission say NO!

Well I missed watching it live because I forgot that Brussels is an hour ahead of us here in the UK but the EU Parliament has declined the opportunity to postpone their vote on ACTA today. The European People’s Party, as they promised, called for a postponement of the vote. This was rejected by 420 MEPs. 255 voted to postpone and there were 9 abstentions.

The Parliament then decided to reject the ACTA agreement itself (478 votes to 39, with 165 abstentions) based on ACTA rapporteur, David Martin's recommendations.

"on the draft Council decision on the conclusion of the Anti-Counterfeiting Trade Agreement between the European Union and its Member States, Australia, Canada, Japan, the Republic of Korea, the United Mexican States, the Kingdom of Morocco, New Zealand, the Republic of Singapore, the Swiss Confederation and the United States of America

(12195/2011 – C7-0027/2012 – 2011/0167(NLE))

(Consent)

The European Parliament,

–   having regard to the draft Council decision (12195/2011),

–   having regard to the draft Anti-Counterfeiting Trade Agreement between the European Union and its Member States, Australia, Canada, Japan, the Republic of Korea, the United Mexican States, the Kingdom of Morocco, New Zealand, the Republic of Singapore, the Swiss Confederation and the United States of America (12196/2011),

–   having regard to the request for consent submitted by the Council in accordance with Article 207(4) and Article 218(6), second subparagraph, point (a) (v), of the Treaty on the Functioning of the European Union (C7-0027/2012),

–   having regard to Rules 81 and 90(7) of its Rules of Procedure,

–   having regard to the recommendation of the Committee on International Trade and the opinions of the Committee on Development, the Committee on Industry, Research and Energy, the Committee on Legal Affairs and the Committee on Civil Liberties, Justice and Home Affairs(A7-0204/2012),

1.  Declines to consent to conclusion of the agreement;

2.  Instructs its President to notify the Council that the agreement cannot be concluded;

3.  Instructs its President to forward its position to the Council, the Commission and the governments and parliaments of the Member States and of Australia, Canada, Japan, the Republic of Korea, the United Mexican States, the Kingdom of Morocco, New Zealand, the Republic of Singapore, the Swiss Confederation and the United States of America."

The BBC and ZDNet have short reports as do lots of other outlets now, including the Parliament press office.

The voting process itself was remarkable and courtesy of modern technology you can see it for yourself in glorious technicolour via the EU Parliament website. The ACTA discussion starts at 12.51.30 local time but it's worth watching the run up to it if only for the incredible speed at which votes get done on important agricultural issues. The ACTA bit takes only 6 and half minutes in total.  Honestly if you were to blink you'd miss a vote.  Or if you lost concentration you could find yourself voting for one thing thinking it was something else.

On ACTA Christofer Fjellner of the EPP opens proceedings at 12.51.46. To applause in the chamber he asked for a postponement of the ACTA vote since the European Court of Justice was scheduled to consider the agreement.  This was supported by Klaus-Heiner Lehne, again to a spattering of applause, rounding off with the old classic "I don't think that people on the internet should be making up our minds for us." (In fairness to Mr Lehne that was a translation of what he said rather than a precise quote from his native tongue).

The vice president in the chair, Alejo Vidal-Quadras, then asked for any speakers against the motion to postpone the vote.  David Martin indicated his readiness and Mr Vidal-Quadras invited him to speak. Mr Martin, to laughter and applause, in his lilting Scottish brogue, said:

"ACTA has been rejected by 5 parliamentary commitees.  It has been killed off so many times that it now only exists thanks to the EPP life support machine. No emergency surgery, no transplant, no large period of recuperation is going to save ACTA.

It's time to give it its last rites.  Time to allow its friends to mourn and for the rest of us to get on with our lives.  Thank you Mr President."

The vice president then moved to the vote on the motion to postpone. 255 in favour, 420 against, 9 abstentions. He quickly moved then to the substantive vote on ACTA making clear that those who wanted to reject ACTA should vote against it. The vote went 478 to 39 to reject.

There was immediately huge applause in approval of the decision and a demonstration from multiple MEPs, standing up with posters reading "Hello Democracy Goodbye ACTA".

Their revelry brought disapproval from the vice president, who like a teacher reprimanding a naughty child, told them to sit down and put their posters away. There was then a sting in the tail for the celebrating MEPs. Mr Vidal-Quadras said "The agreement has not been accepted by parliament and so I shall give the floor to the Commission.  You have the floor Commissioner."

Maroš Šefčovič, Vice President of the Commission and Commissioner for Inter-Institutional Relations and Administration (bet you didn't know we had one of those!), stood up to make a brief statement.  He referred to what had been said by Commissioner De Gucht earlier in the plenary (ACTA was coming whether they liked it or not) to "underline the importance of ACTA for creativity, innovation and the economic potential inthe EU. How important the agreement is for the external competitiveness of the EU economy." He was, therefore, "informing the honorable members that the Commission will maintain its request to the European Court of Justice for an opinion on whether ACTA is compatible with the treaties and in particular with the Charter of the fundamental rights of the European Union."

He was loudly heckled at this point and the camera cut to David Martin shaking his head. There was also some applause.  He went on to state that they would study the opinion of the Court and discuss it with the other signatories of ACTA and with the EU Parliament and "would then consider further steps to take."

I caught the last few minutes of David Martin's press conference after the vote.  Surprisingly, given the furore surrounding ACTA, it only lasted a little under 17 minutes (possibly because it is a busy news day elsewhere?). Mr Martin emphasised his concerns that ACTA is too vague, open to misinterpretation and could endanger fundamental freedoms. He spoke of the need for a wide ranging debate about the Internet and appropriate methods for rewarding creators whilst protecting fundamental freedoms.  He believes we have spent 20 years dealing with the internet as if it was a physical world which it is not.

To be pedantic, the Net has a very substantive physical layer. However, I absolutely agree with the underlying point that regulators should make an effort to understand the technology they are trying to regulate.

He was asked a question about the other countries that have signed ACTA.  Mr Martin responded that the agreement has 11 signatories.  To come into force it needs 6 of those to ratify.  But his considered view is that ACTA is dead, not just in the EU but elsewhere. He has information to suggest Australia will follow the EU lead and reject ACTA in parliament next week.  It is not clear now if Canada will ratify the agreement and he thinks it will now struggle to get the 6 ratifications it needs.

In a none-too-oblique retort to Commissioners De Gucht and Šefčovič that ACTA was alive and kicking whatever the EU Parliament said, Mr Martin also said that he believed that the agreement could not be put before the Parliament again. There might be some legal or procedural loopholes that he was not aware of but as far as he understood ACTA has now been permanently killed off in the EU.

The post vote explanations, from the few MEPs who were prepared to hang around, of their stance in Parliament covered all the old ground -

• IP rights have to be respected
• We need a debate and effective protection for rights holders
• ACTA was a step too far
• The EU would now have to look seriously at how to protect IP
• ACTA disproportionate 
• 3 strikes disproportionate
• Criminal sanctions were draconian 
• Copyright infringement was inappropriately conflated with counterfeiting medicines
• Undermined privacy, democracy, freedom of speech and human rights
• Negotiation process lacked transparency
• Coated in secrecy
• ISPs would be inappropriately turned into network police

Irish MEP Seán Kelly had apparently asked why India and China were not signed up for ACTA and the response was ACTA was a "coalition of the willing".  More like "a coalition of the innocent" thought Mr Kelly since most of the IP infringement came from China and India in his opinion.

And the final speaker was rather amusing too, if unintentionally. Eija-Riitta Korhola from Finland launched into an angry rant about how we must protect intellectual property, how "we've made ourselves laughable", how MEPs had let themselves be misled on ACTA by false information from the media, that ACTA was fair and the Parliament should have waited for the ECJ decision which would have been evidence based before deciding whether ACTA was a good thing or not. ACTA seems to have been an emotional issue for her.

So where does this all leave us with ACTA?  Well the EU Parliament has now firmly rejected the agreement by a large majority.  The Commission, however, Ian Paisley style, says NO! They're not having tin pot democratic institutions like the EU Parliament getting in the way of them ACTAing (sorry, couldn't help it) in the economic interests of the EU by implementing ACTA, so they're promising it will be back, like the Terminator.

ACTA may be temporarily on ice but I don't share David Martin's confidence that it is dead.  It will return again once the ECJ has considered it and its provisions are likely to re-surface in any case as part of the EU's ongoing discussions on IPR enforcement. But for now those opposed to the agreement can give themselves a pat on the back for winning one significant battle.

Update: IPWatch, KEI and Michael Geist are worth reading.

7th Gikii 2012 - call for papers

Lilian Edwards and Daithí Mac Síthigh tell me that the 7th Gikii workshop is scheduled 16 & 17 September at UEA London. 

7th Gikii 2012 - call for papers!!
Call for Papers: 7th Gikii Workshop, 17-18 September 2012
UEA London
102 Middlesex Street
London
E1 7EZ UK

It’s harder than it used to be to write a Call for Papers for GikII, the so-cool-it-hurts blue skies workshop for papers exploring the interstices between law, technology and popular culture. Back in the day,  you could dazzle the noobs just by mentioning past glories like the first paper on Facebook and privacy, Harry Potter and the Surveillance of Doom, regulation of autonomous agents according to the Roman law of slavery, edible technologies and copyright in Dalek knitting patterns. But nowadays we live in a world where we routinely encounter unmanned surveillance drones used to deliver tacos or made out of cats ,  commercial asteroid mining with Richard Branson, 3d printers used to create human organs and the fact that Jeremy Hunt still has a job. 

Still, if any of these or the other many phenomena of the digital age in desperate need of legal attention are digging a tunnel out of your brain, then send us an abstract for the 7^th Gikii workshop!  Maybe this year it will be your paper which contributes the seminal GikII meme following in the honoured footsteps of LOLcats, flying penises, and knitted Daleks.

Gikii has run since 2006 in venues such as Edinburgh, Oxford, London, Amsterdam and Gothenberg with attendees coming from Europe, the US, Canada, Australia, Japan, India and Latin America. There is no conference fee, but attendees may be asked to contribute to the conference dinner on 17^th September. If desired, we can suggest London accommodation ranging from cheap to more expensive.  This year’s Gikii is run with the kind assistance of the Law School, University of East Anglia at their London centre, and will commence at lunchtime Sep 17^th running through to end September 18th.  These dates also offer an opportunity to combine GikII with the 7^th SCL Policy Forum (details at http://www.scl.org/site.aspx?i=ev25696 ) in what has been termed the “week of geek”.

Abstracts of no longer than 500 words should be sent to lilian.edwards@strath.ac.uk and "Karen Mc Cullagh (LAW)" K.Mccullagh@uea.ac.uk  by August 13^th 2012. Acceptances will be announced shortly thereafter. A limited number of places will be available for participants not giving papers, and preference will be given for these to scholars (including postgraduate students) who have not previously attended GikII. Registration for these places will open at gikii.com when acceptance of abstracts is notified.

Gikii is one of my favorite conferences. Always thought provoking, friendly and enjoyable. And you get to talk about anything -  my own (fairly staid by Gikii standards!) back catalogue includes Maxwell's demon and the internet, the battle of the book, airborne minefields and Fighter Command's information system, a Wilson-Boyle plan to save the public domain, teaching algebra with tiddlywinks, going OER without permission.

Other much more interesting stuff from Gikii:

Chris Lever, "Netizen Kane"
Daithi Macsithigh, "What We Talk About When We Talk About Google"
Dinusha Mendis, "If Music be the food of Twitter - then tweet on, tweet on"
Judith Rauhofer, "The Rainbow Connection - of geeks, trolls and muppets"
Martin Jones, "Human! We used to be exactly like them"
Miranda Mowbray, "What the Moai know about Cloud Computing: Stone-age Polynesian technology and the hottest trend in computing today"
Nicola Osborne, "Dammit! I'm a Tech (the "Services" or "Site") Punter (the "User" or "Member") not a Lawyer!"
Trevor Callghan, "GOOGLE WANT FREND!"
Andres Guadamuz. "Luddism 2.0"
Bernt Hugenholz, The Googlification of Copyright. The GBS and its Consequences for Europe
Burkhard Schafer, ZombAIs and family law: technology beyond the grave
F.E. Guerra-Pujol,  Blade Runner, Time Scarcity and the Optimal Lifespan of Robots and Clones'

Judith Rauhofer,  “Get out of my head, bloodsucker! Notions of surveillance in the vampire mind” 

Lillian Edwards, Death 2.0

TJ McIntyre, Won't somebody please think of the children!?

Alana Maurushat, Proxy and the Enchanted Shield:  Copyright and Computer Security

Miranda Mowbray,  The Fog over the Grimpen Mire: Cloud Computing Services and the Law

Peter Yu,  Legal Transplants in the Digital Age

Lilian Edwards, Ian Brown, Chris Marsden, "Cybersalking 2.0"

Andrea Matwyshwn, Black Collar Crime Daithi Mac Sithigh, "I’m in ur tube blocking ur internets: The Politics, Perception and Parody of Network Neutrality Legislation" Burkhard Shafer Wiebke Abel, and Gerald Schaefer, "An Officer and a Gentleman: Teaching Autonomous Agents the Laws of Armed Warfare"

I could go on but it's time to tune into ACTA vote at the European Parliament. On Gikii 7 - make it if you can!