Re: Utterly imbecile pinky communist Ninth Circuit 'judges' (Vernor scandalous ruling)

[Alexander Terekhov]

Nice article:

http://ipduck.blogspot.com/2011/01/from-ninth-circuit-giving-cds-away-for.html

"From the Ninth Circuit: Giving CDs Away for Free Is a "Sale," But
Selling Software for Money Isn't a "Sale" 

While the title of this post perhaps gives away the answer, I thought
I'd start the post with this quiz.  Which of the following is a "sale"
of the goods involved?

A.  A record company gives promotional CDs away for free, with no right
to get the CDs back once the recipient is done with them.  
B.  A software company sells software for money, with no right to get
the software back once the buyer is done with the software. 

If you thought that "B" was a sale and "A" was not a sale, you're not
alone (based on the unscientific home survey I did last night).  But
based on two cases from the Ninth Circuit, you have it completely
backwards.

The first case, decided in September 2010, was Vernor v. Autodesk.  The
case involved Autodesk's sale of computer software; the Ninth Circuit
opinion was the inspiration for my starting this blog.  My post on
Autodesk was entitled, "The Ninth Circuit on first sale: "'If it looks
like a duck, and quacks like a duck, and flies like a duck . . . it's a
CHICKEN!'" Read that post for the background of the "first sale"
doctrine, which in summary says that once a copyright owner sells a
physical copy of a work, the buyer can resell the physical copy without
implicating the copyright laws.  In Autodesk, the Ninth Circuit held
that certain restrictions in Autodesk's end user agreements meant that
even though its customers bought copies of the software for a one time
fee and got permanent possession of the software (that is, Autodesk had
no right to regain possession of the copies), the transaction was a
license, not a sale, and the "first sale" doctrine didn't apply.  I
commented that putting a "license" label on the transaction, which
Autodesk did, didn't make the economic realities of the transaction a
license instead of a sale, any more than calling a duck a "chicken"
makes it a chicken.

Two other cases were argued before the Ninth Circuit the same day as
Autodesk.  One of them, MDY v. Blizzard, was decided in December and
only peripherally involves the first sale doctrine.  The other one, UMG
v. Augusto, was decided yesterday.

Augusto involved UMG's distribution of promotional CD's.  UMG would give
the CD's to disc jockeys and the like for marketing purposes.  UMG did
not charge money for the CD's and gave them away unsolicited.  UMG
marked the discs either "Promotional Use Only--Not for Sale" or with a
promotional statement saying that the transaction was a license. 
Augusto obtained copies of the CD's and tried to sell them on eBay; the
lawsuit ensued.

Well, if the transaction in Autodesk wasn't a sale because Autodesk sold
its software under a "license" agreement, then surely UMG's giving CD's
away for free under a license agreement can't be a "sale" either,
right?  In other words, the UMG CD's are even more of a "chicken" than
the Autodesk software.

Not according to the Ninth Circuit, which ruled in favor of Augusto
under the first sale doctrine (and also a Postal Act statute on
unordered merchandise).  The Court stated:

We conclude that, under all the circumstances of the CDs’ distribution,
the recipients were entitled to use or dispose of them in any manner
they saw fit, and UMG did not enter a license agreement for the CDs with
the recipients. Accordingly, UMG transferred title to the articular
copies of its promotional CDs and cannot maintain an infringement action
against Augusto for his subsequent sale of those copies.
. . .
It is one thing to say, as the [promotional] statement does, that
“acceptance” of the CD constitutes an agreement to a license and its
restrictions, but it is quite another to maintain that “acceptance” may
be assumed when the recipient makes no response at all. This record
reflects no responses. Even when the evidence is viewed in the light
most favorable to UMG, it does not show that any recipients agreed to
enter into a license agreement with UMG when they received the CDs. 
Because the record here is devoid of any indication that the recipients
agreed to a license, there is no evidence to support a conclusion that
licenses were established under the terms of the promotional statement.

It's hard to disagree with any of this.  Except, of course, that most of
the above applies equally to the software sales in Autodesk.  About the
only difference is that buyers of mass-marketed software find when they
open a shrink-wrapped package that there is a "license" agreement
inside.  But otherwise, software buyers can dispose of the software as
they see fit, and don't make a "response" to a shrink-wrapped license.

The Ninth Circuit says that software is different, though, to explain
the different result in the two cases.  Its Augusto opinion says that
its Autodesk "formulation, however, applies in terms to software users,"
and not to UMG's customers.  At least one problem with this is that the
first sale statute itself makes no distinction between software and
other works of authorship. 

Perhaps the Ninth Circuit will rehear Autodesk en banc, or perhaps the
Supreme Court will review one of these cases.  In the meantime, it's
hard to tell the ducks apart from the chickens in that Circuit."

regards,
alexander.

-- 
http://gng.z505.com/index.htm 
(GNG is a derecursive recursive derecursion which pwns GNU since it can 
be infinitely looped as GNGNGNGNG...NGNGNG... and can be said backwards 
too, whereas GNU cannot.)