Software Licensing, DRM, and Consumer Rights

Posted by Cyberbear on November 26, 2013 in Computer Software, Copyright Law, Intellectual Property |

Posted by:  Jonathon Sanchez


DVD            When you bought a copy of Microsoft’s Windows operating system, you probably thought you did just that. However, Microsoft does not believe it sells you a copy of its software; instead, it emphatically believes that it is merely selling you a license to use a copy of its software as a look into its End User Licensing Agreement indicates. To the average consumer, this may be legal semantics they wish not think about when they have to click on “agree to terms” on a plethora of software and electronic purchases. Unbeknownst to the average consumer, this is a radical shift in the legal theory — upon which their purchases are predicated — and has impact on the consumers’ legal rights.

Microsoft’s legal theory originated back to the time where computer purchasers were large corporations that needed a mainframe and the software may have been unique to the mainframe and the contract was negotiated at arm’s length. After the 1980’s revolution that brought computers into the home, the legal theory behind software did not change. Other consumer products—for example books—you buy the actual book and you may resale the book if you wish. The Supreme Court nearly a century ago confirmed this in a case called Bobbs-Merrill v. Strauss. In Bobbs-Merrill, the Supreme Court explicitly ruled that a manufacturer could not enlarge copyright protections vis-à-vis licensing/contract law, which is exactly what the software distributors do. The software companies use a licensing limiter on a product that is protected by copyright law. Most view this practice as sui generis to the software industry; as software becomes more integrated with a larger array of consumer products—some call this the “Internet of Things”— this legal semantic will make a difference in consumers’ legal rights.

That future of property rights actually is the present. For example, the Renault car manufacturer is trying to utilize the software protection for its hardware. In its new car, the battery in its electric car— the Zoe—will not be owned by the consumer that purchases the vehicle. Instead, the battery is merely leased. If a consumer stops paying the rent on the battery, then Renault will use its remote control over the software embedded in the battery to stop it from taking a charge. Or, if the car manufacturer goes out of business or is bought out and the new company does not want to provide long-term support, it is unclear what the legal recourse for consumers would be. This tactic is not really that new: Cellphone providers use its unique software to leverage the DMCA to prevent consumers from unlocking their cellphones. Now, if you want to “root” your phone to put apps on it, you have to ask your network provider for permission. With the rise of the “Internet of Things”, manufacturers could achieve this same lock-in by using its embedded software for many consumer products from refrigerators to televisions to downloaded media such as e-books. The biggest irony is that the publisher may do with its e-book what the print publisher may not do because of the holding of the Bobbs-Merill case.

This issue will only become more pressing as technology advances and more transactions occur on the internet and as more consumer products have embedded computer programs on them. The next wave of the future will be the rise of 3-D printing and individual manufacturing. Future blue-prints for different products that a user may manufacture with a 3-D printer may come with DRM protection to try to fight the future of piracy.  Though, the growth of the internet has transformed the “You Wouldn’t Download a Car” anti-piracy campaign from silly satire to a real concern in less than half a decade. Someone already did download a car.

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