selling what's not for resale
bat
a beta tester receives a copy of the software he tested and helped to
release. The copy has limitation "not for resale". Still, the tester sells
the copy on eBay (all parties are in USA). Does the company have a merit to
sue? what for?
Regards
bat
the company that makes the software. For example, beta tester of Windows 7
has received the copy of Windows 7 from Microsoft.
slide
If such a suit had merit would depend upon the contract between the
tester and the company. Frex, if the company, in exchange for testing,
agreed to furnish a not for sale copy of the software and the tester
fulfilled his end of the bargain, then there has been a breach committed
by the tester.
The next question is one of damages. Here, in all probability, the
damages are at most, that the company lost a sale so the damages would
equal the net proceeds to the company.
Robert Bonomi
and then, in article <hfpfsg$l7n$1...@aioe.org>, bat <b...@bats.com> continued:
>
> Clarification to the prev. post: the tester has received the software from
> the company that makes the software. For example, beta tester of Windows 7
> has received the copy of Windows 7 from Microsoft.
>
Sue? Sure. AND, probably, file criminal charges for theft, in point of fact.
They provided an item with 'restricted rights' attached. His actions
exceeded the 'rights' to which he was legally entitled.
MS provided a "non-transferable right-to-use license' to the software in
question. the attempt to 'transfer' the license to someone else is a
breach of the contract to which the tester _agreed_ (in order to receive
the 'beta' version). It's a slam dunk breach-of-contract verdict -- about
the -only- question to be resolved 'in court' is the amount of the damages
awarded.
Barry Gold
It depends on the terms of the contract between the software producer
and the beta tester.
Simply putting "not for resale" on the CD/DVD/other medium is probably
not enough. The "First Sale" doctrine would apply: once you have
legally bought a copy of a copyrighted work, you can do what you want
with _that copy_: read it, use it, throw it in the trash, give it
away, lend it to a friend, rent it out (that is, charge for lending
it), or sell it.
Note that "beta testing" a product in return for getting a copy _is_ a
form of buying it: your labor (instead of $$) in return for the copy
you get.
OTOH, most S/W producers require the beta tester to sign a contract
that specifies the terms on which the S/W is provided. This will
usually be under some sort of "Trade Secret" or "Non-disclosure"
agreement. That is, the tester agrees, in return for whatever
considerations(*) he receives, to _not disclose_ the software or
whatever he finds out about the S/W until some time expires.
*But* even an NDA needs to be limited. In particular, it can't apply
after the "secret" is no longer a secret. Once the software has been
published, the NDA will (usually) no longer apply. Then, once again,
the beta tester is free to sell (or give away or rent or whatever) his
copy of the software.
One exception that occurs to me: if the software is either never
released, or the final released version of the S/W is substantially
different from the beta version. In that case, it would be reasonable
for that beta version to stay a secret, and the NDA would continue to
apply.
(*) Possibly payment for his labors, possibly just an early (and
otherwise free) copy of the S/W.
--
Barry Gold, webmaster:
Conchord: http://www.conchord.org
Los Angeles Science Fantasy Society, Inc.: http://www.lasfsinc.org
Mike Jacobs
Without knowing more - and in fact the answer is always "it depends"
especially because we _don't_ know all the facts and the possible
defenses - ISTM that sale (by the tester) of a beta copy that was
clearly marked "not for resale" is prima facie a violation of the
limited license given to the tester to install and use that software
on one computer only, for testing purposes only, and could subject the
copyright violators (who may include the selling tester, and possibly
others) to various kinds of enforcement actions by the copyright
owner.
--
This posting is for discussion purposes, not professional advice.
Anything you post on this Newsgroup is public information.
I am not your lawyer, and you are not my client in any specific legal
matter.
For confidential professional advice, consult your own lawyer in a
private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
(tel) 410-740-5685 (fax) 410-740-4300
bat
RB> in question. the attempt to 'transfer' the license to someone else is
RB> a breach of the contract to which the tester _agreed_ (in order to
RB> receive the 'beta' version). It's a slam dunk breach-of-contract
RB> verdict -- about the -only- question to be resolved 'in court' is the
RB> amount of the damages awarded.
The seller did not agree to anything, in regards to the copy. The software
he was using during the testing is another story. But this is about the
released product, given to the tester by the company as a free gift for his
efforts once the testing is over. It was not promised at the time of his
sign-up for the testing, either.
Note also that this is not a license only. This is a boxed copy, and even
more, it's special commemorative edition (the box says so). So it might have
even a collector's value, without even being installed.
Robert Bonomi
>bat <b...@bats.com> wrote:
>>a beta tester receives a copy of the software he tested and helped to
>>release. The copy has limitation "not for resale". Still, the tester sells
>>the copy on eBay (all parties are in USA). Does the company have a merit to
>>sue? what for?
>
>It depends on the terms of the contract between the software producer
>and the beta tester.
>
>Simply putting "not for resale" on the CD/DVD/other medium is probably
>not enough. The "First Sale" doctrine would apply: once you have
>legally bought a copy of a copyrighted work, you can do what you want
>with _that copy_: read it, use it, throw it in the trash, give it
>away, lend it to a friend, rent it out (that is, charge for lending
>it), or sell it.
Sorry, but the situation is a _whole_ lot more complicated than that.
"First sale" _does_ apply to the physical media. The software contained
on the media is an entirely different kettle of fish. It is 'licensed',
not sold. Entirely different rules apply. Including non-transferrability,
if so specified in the license agreement.
bat
MJ> especially because we _don't_ know all the facts and the possible
MJ> defenses - ISTM that sale (by the tester) of a beta copy that was
MJ> clearly marked "not for resale" is prima facie a violation of the
MJ> limited license given to the tester to install and use that software
MJ> on one computer only, for testing purposes only,
No, he does not sell what he is testing. He sells boxed copy of the released
software that he received form the company as free gift once the tresting is
over and the product has been released. Besides, the boxed copy is marked
"commemorative edition" and thus can even have separate collector's value -
maybe even more than the license (and thus, it would be never even opened
and installed).
bat
BG> Simply putting "not for resale" on the CD/DVD/other medium is probably
BG> not enough. The "First Sale" doctrine would apply: once you have
BG> legally bought a copy of a copyrighted work, you can do what you want
BG> with _that copy_: read it, use it, throw it in the trash, give it
BG> away, lend it to a friend, rent it out (that is, charge for lending
BG> it), or sell it.
BG> Note that "beta testing" a product in return for getting a copy _is_ a
BG> form of buying it: your labor (instead of $$) in return for the copy
BG> you get.
What is there was no prior agreement? The tester voluntarily signed up for
testing, without any promises of any compensation; in the end, the company
awarded him with the copy of the released software, as free gift. (This is
how it actually always works with beta testing, usually with all software
companies).
BG> OTOH, most S/W producers require the beta tester to sign a contract
BG> that specifies the terms on which the S/W is provided. This will
BG> usually be under some sort of "Trade Secret" or "Non-disclosure"
BG> agreement. That is, the tester agrees, in return for whatever
BG> considerations(*) he receives, to _not disclose_ the software or
BG> whatever he finds out about the S/W until some time expires.
True, but that applies to the beta code. Giving that one out would be
violation of non-disclosure agreement. But this is about the publicly
released copy.
Regards
Barry Gold
[quoting me]
> BG> OTOH, most S/W producers require the beta tester to sign a contract
> BG> that specifies the terms on which the S/W is provided. This will
> BG> usually be under some sort of "Trade Secret" or "Non-disclosure"
> BG> agreement. That is, the tester agrees, in return for whatever
> BG> considerations(*) he receives, to _not disclose_ the software or
> BG> whatever he finds out about the S/W until some time expires.
>
>True, but that applies to the beta code. Giving that one out would be
>violation of non-disclosure agreement. But this is about the publicly
>released copy.
In that case, there can be no valid reason for an NDA, and I think the
beta tester would be allowed to sell, give away, etc. his copy,
pursuant to "first sale".
Barry Gold
>>Simply putting "not for resale" on the CD/DVD/other medium is probably
>>not enough. The "First Sale" doctrine would apply: once you have
>>legally bought a copy of a copyrighted work, you can do what you want
>>with _that copy_: read it, use it, throw it in the trash, give it
>>away, lend it to a friend, rent it out (that is, charge for lending
>>it), or sell it.
Robert Bonomi <bon...@host122.r-bonomi.com> wrote:
>Sorry, but the situation is a _whole_ lot more complicated than that.
>
>"First sale" _does_ apply to the physical media. The software contained
>on the media is an entirely different kettle of fish. It is 'licensed',
>not sold. Entirely different rules apply. Including non-transferrability,
>if so specified in the license agreement.
I disagree. So do the courts in about half the circuits. The basic
rule, first laid out in Bobbs-Merrill Co. v. Straus, is that calling a
sale a "license" does not change the nature of the transaction. The
basic transaction -- that you get to keep and use this physical medium
_and the information contained on it_ -- is a sale.
I suppose that if S/W makers could get consumers to agree to a
limited-term license -- you get to use this for 1 year, then you have
to buy a new license to continue using it -- then _that_ would be a
license rather than a sale, and subject to all the restrictions of a
license.
Specific cases include:
Timothy S. Vernor v. Autodesk Inc.: The court followed United States
v. Wise, in which films distributed by a studio that were not
expected to be returned were deemed sold, and ruled that
Autodesk software was sold, and thus eligible for the first-sale
doctrine.
Softman v. Adobe (2001): The court ruled that the transaction was a
sale and subject to the First Sale doctrine. Adobe's attempt to
apply a "no resale" EULA was invalid.
Novell, Inc. v. CPU Distrib., Inc.: The court held that these
transactions constituted sales and not a license, and therefore
that the first sale doctrine applied. 2000 U.S. Dist. Lexis 9975
at *18.
http://cryptome.org/softman-v-adobe.htm
Nonetheless, as I pointed out there can still be a restriction on
resale if there is a _valid_ NDA. That is, if there actually is a
trade secret to protect, and not simply a low-priced (maybe free) sale
of software disguised as a "license".
A side note, illustrating that other considerations than just the law
can come into play. About 10 years ago, I was working for Sun
Microsystems, supporting the drivers and associated s/w for ATA (EIA)
disks. While testing a bug fix, I needed a copy of Partition Magic.
I went to a local store and bought one. When I went to install it, I
discovered that it came with a very restrictive "shrink wrap" license:
you could only use it on _one_ computer. You were not allowed to
uninstall it from one computer and use it on another.
My analysis above shows why this was probably invalid. In addition,
there's the problem of it _being_ a shrink-wrap license: that is, you
don't find out about the license terms until after you've bought the
product. This type of license is highly questionable; there are two
conflicting cases:
ProCD v. Zeidenberg
http://en.wikipedia.org/wiki/ProCD_v._Zeidenberg
Specht v. Netscape Communications Corp.
http://en.wikipedia.org/wiki/Specht_v._Netscape_Communications_Corp.
Zeidenberg held them enforceable, but Specht held them not
enforceable.
But! As a good little software drone, I consulted Sun's legal
department. Their answer: treat the license as valid. Why? Because
Sun was also in the software business, and it was to their interest
that licenses be enforced.
References:
http://en.wikipedia.org/wiki/Bobbs-Merrill_Co._v._Straus
http://en.wikipedia.org/wiki/First_sale
Cy Pres
<dryads...@xxxxyahoo.com> wrote:
>If such a suit had merit would depend upon the contract between the
>tester and the company. Frex, if the company, in exchange for testing,
>agreed to furnish a not for sale copy of the software and the tester
>fulfilled his end of the bargain, then there has been a breach committed
>by the tester.
>The next question is one of damages. Here, in all probability, the
>damages are at most, that the company lost a sale so the damages would
>equal the net proceeds to the company.
Suppose the only reason the software is sellable is that it is the
very first edition of some particularly famous (or infamous) software
package, such that it has collector's value to the relevant geek
population. Think the very first MS-DOS or, on the infamous side,
Microsoft Bob, or one of the original Infocom games, like Zork.
The company would never have been entitled to these profits as a
collector's item, because the sole reason this particular item *is* a
collector's item is that it is a particularly rare item only received
by a select few people.
It's economically efficient for items with value to be sold for what
they're worth and for market participants to be able to buy, sell,
trade, or otherwise dispose of things they own. One also wonders how
long this kind of agreement (never to sell) can exist. Does it bind
future generations? Does it bind the descendants of the original
recipient into the future forever? If we upheld these kinds of
agreements all the time, wouldn't each family end up eventually with
accumulations of bling that could neither be bought nor sold, but only
destroyed or thrown away, even if it had economic value?
I'd hope that courts would be reluctant to enforce agreements like
this, as being against public policy, but I can think of some such
agreements that are sometimes enforced, such as agreements by book
distributers with publishers not to sell outside of a certain
geographic area, so the bookseller can distort the market by selling
books at higher prices in some geographic areas and lower prices in
others, while attempting to prohibit people from normalizing the
market by establishing their own prices for subsequent resales.
While eliminating the fringe market for bling received by employees is
probably not going to distort the economy much, such restrictions on
buying and selling items is really alien to the whole idea of what
property is, and I'd hope that courts would interpret such contracts
in the most narrow way possible, or even outright refuse to uphold
them at all.
Barry Gold
[Concerning a copy of software provided to a beta tester and marked
"not for resale"]
>The seller did not agree to anything, in regards to the copy. The software
>he was using during the testing is another story. But this is about the
>released product, given to the tester by the company as a free gift for his
>efforts once the testing is over. It was not promised at the time of his
>sign-up for the testing, either.
If it was not a contractual payment for beta testing the software,
then it might be a "gift". That might make the legal analysis a
little more complicated. The "first sale" doctrine seems to assume
that the copyrighted work is provided in return for some consideration
-- a "sale".
But if this is a "gift", then it might not be a "sale". I can't say
what would happen if the tester then resold the copy. My *guess* is
that he's within his legal rights, but I can't be sure on that set of
facts.
Also note that the law might not regard it as a gift. Since it was
given in return for services rendered, it might be more in the nature
of a "tip" or "bonus", which is compensation (and taxable), and, more
to the point, as "sale" as I defined it in my analysis concerning
"First Sale".
Mike Jacobs
> A side note, illustrating that other considerations than just the law
> can come into play. �About 10 years ago, I was working for Sun
> Microsystems, supporting the drivers and associated s/w for ATA (EIA)
> disks.
Doni't use those kind of HDs anymore, huh? Shows you what I know.
Now what am I supposed to do with this perfectly good AT 286 computer
when I need a new hard disk? (just kidding) 8*)
> �While testing a bug fix, I needed a copy of Partition Magic.
> I went to a local store and bought one. �When I went to install it, I
> discovered that it came with a very restrictive "shrink wrap" license:
> you could only use it on _one_ computer. �You were not allowed to
> uninstall it from one computer and use it on another.
It actually said that? I would normally assume that the "one
computer" restriction in a license means you can only use it on one
computer _at_a_time_. If you uninstall it from that one, you would
then be free to install it on a different one - so long as you only
had one copy installed at a time.
And, how did this license define "computer?" If you changed out a
crashed HD for a new one, is it still the "same" computer? If you
plugged a new, more powerful CPU into the same socket on your
motherboard, is _that_ a "new computer?" Do you need to change _both_
the CPU and the HD before you would be in violation? What if you
take the HD it's installed on, and plug _that_ into an (otherwise)
completely new computer box, with new power unit, motherboard, CPU,
memory, monitor, keyboard etc. - IOW, you change everything _but_ the
HD? How about other peripherals - if you add enough of them, does
the original computer become in effect a different one, even with the
same motherboard, CPU and HD as it originally had? IIRC Microsoft
went thru a lot of contortions about that when they started putting
copy-proofing "features" into Windows XP.
> But! �As a good little software drone, I consulted Sun's legal
> department. �Their answer: treat the license as valid. �Why? Because
> Sun was also in the software business, and it was to their interest
> that licenses be enforced.
This is the basic principle behind a great deal of international law
as well as more micro-scale relations between businesses - don't take
a position on one legal issue that would mean you're shooting yourself
in the foot on other legal issues (or that would force your employer
to take inconsistent positions and thus lose credibility in the
market).
Seth
>What is there was no prior agreement? The tester voluntarily signed up for
>testing, without any promises of any compensation; in the end, the company
>awarded him with the copy of the released software, as free gift.
I thought that was the case.
So the free copy of the released software comes stamped "not for
sale", and he sells it anyway.
The First Sale Doctrine apparently does apply to gifts. (Consider the
number of review copies of books sold; the government is aware of
that, and has made rulings about the Income Tax due by the reviewer.
The implication is that there's nothing illegal involved.)
Seth
Art S
"Robert Bonomi" <bon...@host122.r-bonomi.com> wrote in message
news:dsSdnfRb9uZaPr_W...@posted.nuvoxcommunications...
I have a simpler situation: I periodically buy used records. Often, the records were
used by radio DJs, and are stamped 'not for resale' - presumably the record company
provided them for on the air use, and were not sold.
Does the record company have the right to claim those?
grendal
> What is there was no prior agreement? The tester voluntarily signed up for
> testing, without any promises of any compensation; in the end, the company
> awarded him with the copy of the released software, as free gift. (This is
> how it actually always works with beta testing, usually with all software
> companies).
>
This is totally different.
What you are now saying is that the person was given a gift of a
commemorative edition of the software that was for resale.
I don't think that the company could stop him/her from selling it on e-
bay, however the company would not be responsible to honor any
warranty due to the resale. Or that the purchaser would be entitled to
any upgrades or anything.
Imagine if someone was retiring from a watch factory and they gave him
a gold watch that was stamped, 'not for resale'.
What would stop him from pawning the watch?
I agree that if this were a beta copy of the software, then the NDA
and prior licensing agreements that one would sign would prohibit the
resale of that code.
But IANAL, and IMHO if you got a commemorative box for testing the
software, you'd be better off keeping it than reselling it.
Barry Gold
Mike Jacobs <mjaco...@gmail.com> wrote:
>On Dec 12, 10:50�am, bg...@nyx.net (Barry Gold) wrote:
>> A side note, illustrating that other considerations than just the law
>> can come into play. �About 10 years ago, I was working for Sun
>> Microsystems, supporting the drivers and associated s/w for ATA (EIA)
>> disks.
>
>Doni't use those kind of HDs anymore, huh? Shows you what I know.
>Now what am I supposed to do with this perfectly good AT 286 computer
>when I need a new hard disk? (just kidding) 8*)
Actually, the chances are it will work! The ATA committee has done an
amazing job of maintaining backward compatibility. You can take an
ancient ATA-1 (EIA) disk and plug it into most modern machines, and
the driver will recognize it and use it. It'll be slow by today's
standards -- and too small to hold any modern OS -- but it will work
and you can read the contents. And if it has a DOS FAT filesystem,
your OS can probably retrieve the files.
Or the other way around: plug an ATA-5 or ATA-6 disk into your 286
system. The problem there is, your drivers won't understand a lot
about the disk. SO they'll just treat it as the biggest disk they
know about, probably around 64MB. And the data transfer will be 16
bits at a time, under program control, about 1/10 the speed of modern
disks. But you'll be able to write on it -- and read the data up to
the limit of however many blocks the old driver recognizes -- if not
make sense of the filesystem.
>
>> �While testing a bug fix, I needed a copy of Partition Magic.
>> I went to a local store and bought one. �When I went to install it, I
>> discovered that it came with a very restrictive "shrink wrap" license:
>> you could only use it on _one_ computer. �You were not allowed to
>> uninstall it from one computer and use it on another.
>
>It actually said that? I would normally assume that the "one
>computer" restriction in a license means you can only use it on one
>computer _at_a_time_. If you uninstall it from that one, you would
>then be free to install it on a different one - so long as you only
>had one copy installed at a time.
No, it was very explicit. You were allowed to install it on only one
computer, _ever_. As I said, a _very_ restrictive EULA. Almost
certainly unenforcable. If I'd been planning to use it on my home
computer for hobby purposes, I would have ignored that. But working
for Sun I had to buy a second copy so I could test it on a different
machine.
>And, how did this license define "computer?"
An interesting question. I don't really remember, and I suspect you
_could_ serially replace the whole computer. But remember, my time
was costing Sun somewhere around $75/hour (figuring in benefits,
overhead, support staff, etc.). So it would be cheaper to just buy
another copy of the software than to go through all those
shenanigans.
>> But! �As a good little software drone, I consulted Sun's legal
>> department. �Their answer: treat the license as valid. �Why? Because
>> Sun was also in the software business, and it was to their interest
>> that licenses be enforced.
>
>This is the basic principle behind a great deal of international law
>as well as more micro-scale relations between businesses - don't take
>a position on one legal issue that would mean you're shooting yourself
>in the foot on other legal issues (or that would force your employer
>to take inconsistent positions and thus lose credibility in the
>market).
Excellent point. In general, you want to avoid shooting yourself in
the foot. A point we made repeatedly to Hilary. One of my friends
has a gesture he uses when he thinks somebody is about to do something
stupid:
(Sitting in a chair) He sticks his right foot out in front of him.
He then sights down an imaginary handgun in his right hand and waves
his hand around as if taking aim...
we had a somewhat similar gesture at a place I worked at in the 70s.
You hold out your hand, the wrist loose, and shake the hand as if
shaking off hot liquid. The meaning: you're going to get burned if
you do that (or, more simply, "burny, burny...")
Some of the suggestions I've seen here remind me of that for some
reason...
Doug McCrary
"Art S" <TheDab...@att.net> wrote in message
news:4YgVm.141255$Td3.1...@en-nntp-01.dc1.easynews.com...
>
<snip>
> I have a simpler situation: I periodically buy used records. Often, the
> records were
> used by radio DJs, and are stamped 'not for resale' - presumably the
> record company
> provided them for on the air use, and were not sold.
>
> Does the record company have the right to claim those?
As someone who actually got some of those records, I'd say yes.
But as a practical matter, would they care? Probably not (enough).
bat
g> software, you'd be better off keeping it than reselling it.
I do, but I was curious about how substatinated are other testers being in
awful rage about these violators, reporting them to Microsoft Piracy, and
voicing their hope that Microsoft goes after the "violators". The main
concern being Microsoft losing the profits by lost sales. All this was in
full seriousness.
I'm pretty sure by the way that the only reason Microsoft has put this on
the box has much more to do with protecting themselves from potential
anti-competitive lawsuit (giving out free product) than with the copyright
or sales issues. Which probably does even make sense given that their beta
program is much more PR campaign than real quality control effort.
regards
grendal
> g> But IANAL, and IMHO if you got a commemorative box for testing the
> g> software, you'd be better off keeping it than reselling it.
>
> I do, but I was curious about how substatinated are other testers being in
> awful rage about these violators, reporting them to Microsoft Piracy, and
> voicing their hope that Microsoft goes after the "violators". The main
> concern being Microsoft losing the profits by lost sales. All this was in
> full seriousness.
>
I think that you have another issue. Expectations of support.
Even if the box was never opened, in the resale of software, can you
transfer the license or rights to support?
Unless Microsoft gave out a million commemorative boxes of software, I
serious doubt that they're really going to lose money or revenue from
the sale of a single box.
At most, Microsoft could retaliate against the seller by blocking them
from participating in future events, partnerships, etc...
But here's the $64,000.00 question: If you've wasted this much time
worrying about what might happen, or could happen, is it really worth
selling?
bat
g> worrying about what might happen, or could happen, is it really worth
g> selling?
For me, the question has purely theoretical interest. It's not me who is
going to sell, and it's not me who is outraged. I was just curious about how
substatinated the outrage was, plus the degree of the "violation" itself.
Seth
Mike Jacobs <mjaco...@gmail.com> wrote:
>> �While testing a bug fix, I needed a copy of Partition Magic.
>> I went to a local store and bought one. �When I went to install it, I
>> discovered that it came with a very restrictive "shrink wrap" license:
>> you could only use it on _one_ computer. �You were not allowed to
>> uninstall it from one computer and use it on another.
>
>It actually said that? I would normally assume that the "one
>computer" restriction in a license means you can only use it on one
>computer _at_a_time_.
Partitioning is the sort of thing that's typically done to a disk
once, at the beginning of usage. (Sure, some people do it multiple
times, to install new operating systems dual-boot, etc.; but most
people don't.) The disk stays partitioned even if the partitioning
software is removed.
Of course, these days, install it on one computer and use it on as
many disks (attached by USB) as you want.
>And, how did this license define "computer?"
"I know it when I see it." Just like the canonical axe.
> IIRC Microsoft went thru a lot of contortions about that when they
>started putting copy-proofing "features" into Windows XP.
And they got it wrong often enough that something like 5 installs were
allowed without question, and more took only a phone call.
Seth