Re: Psystar's legal reply brief in response to Apple

[Alexander Terekhov]

[... copyright exhaustion/first sale ...]

http://www.lexology.com/library/detail.aspx?g=5ff0c2e0-de5d-4f38-ba77-30b73ba39318
(Register of copyrights says "who knows?" on ownership of computer
program copies)

Jeffrey D Neuburger
Partner
Technology, Media & Communications 
Intellectual Property 
Copyright / Digital Life 
Privacy & Data Security 
Entertainment 
Infrastructure 
New York t:  212.969.3075
         f:  212.969.2900 

------
Neuburger 

USA 

August 5 2010 

Who owns the firmware on a smartphone, the device manufacturer or the
purchaser? Ownership of copies of computer programs is a thorny issue
with which the federal courts have grappled in numerous cases. The issue
arose during the most recent round of triennial rulemaking that resulted
in the promulgation of a new set of exceptions to 17 U.S.C. § 1201(a),
which prohibits the circumvention of technological measures deployed to
limit access to copyrighted works.    

Among other things, the new rules modify an existing exception for
unlocking mobile phones, and, perhaps most notably, add a new exception
for "jailbreaking" smartphones, i.e., circumventing software locks in
order to install an unapproved program on the device. Although the
exception is written generically, as a practical matter it currently
applies almost exclusively to the jailbreaking of Apple's iPhone
smartphones for the purpose of running applications obtained from
sources other than Apple's own iTunes App Store. The firmware that
controls the iPhone operating system and controls its operation employs
software locks that prevent the installation of any software on the
phone that it cannot validate as approved for distribution through the
App Store.

The rulemaking is conducted by the Register of Copyrights, who proposes
the exceptions to the Librarian of Congress pursuant to the Digital
Millennium Copyright Act. The issue of ownership arose in the context of
the Register's evaluation of whether the smartphone software locks
constitute an anticircumvention technology that diminishes the ability
of individuals "to use works in lawful, noninfringing ways" (emphasis
added). Thus, if the installation of unapproved software results in
access to the copyrighted firmware on the device in a manner that is
infringing, the proposed exception could not be recommended. The
Electronic Frontier Foundation, proponent of the exception, argued that
to the extent that the user has to copy or modify the firmware in order
to run an unapproved program, that activity is noninfringing pursuant to
17 U.S.C. § 117(a), which provides:

[I]t is not an infringement for the owner of a copy of a computer
program to make or authorize the making of another copy or adaptation of
that computer program provided ...that such a new copy or adaptation is
created as an essential step in the utilization of the computer program
in conjunction with a machine and that it is used in no other manner.

The EFF took the position that the purchaser of an iPhone smartphone is
the "owner of a copy" of the firmware, based on language in the Apple
license agreement, and the characteristics of the transaction:

The iPhone Software License Agreement expressly acknowledges that while
Apple retains ownership ofthe copyrights to the software that
accompanies the iPhone, "[y]ou own the media on which the iPhone
Software is recorded.... " Every iPhone owner obtains the firmware
pursuant to a one-time payment, is entitled to keep the firmware
forever, has the freedom to transfer the firmware when transferring the
iPhone, and is free to discard or destroy all copies at any time.

In addition to numerous other arguments concerning the applicability of
17 U.S.C. § 117(a), Apple responded that the purchaser of an iPhone
smartphone is a licensee, not an owner, of the computer program copies
on the device. Apple's submission acknowledges the disagreement in
federal courts over the test for determining ownership of a copy of a
computer program, but argued that given the disagreement, the EFF had
not satisfied the "high burden of proof to show that the activities that
would be permitted by the exemption are noninfringing under current
law."

In her recommendations to the Librarian of Congress, the Register of
Copyrights declined to resolve the question of ownership, stating that
the law on ownership of computer programs is "in a state of flux," and
"unclear" and that as a result, she was unable to determine whether
owners of smartphones are also the owners of the copies of computer
programs on the devices. The Register also declined to determine whether
jailbreaking is authorized under the contracts between Apple and iPhone
purchasers. The proposed exception was approved nevertheless, not on the
ground that the smartphone purchasers are owners of a copy, but on the
ground that jailbreaking a smartphone in order to run unapproved copies
constitues fair use.

It should be noted well that, as the Register pointed out, the exemption
does not validate jailbreaking for the purpose of making unauthorized
copies of copyrighted content on the device. Neither does the exemption
invalidate contractual provisions that may apply to the use of the
device, such as provisions voiding a device warranty in the case of
jailbreaking.

Ownership of a copy of a computer program is an issue also being
considered by the U.S. Court of Appeals for the Ninth Circuit in a group
of cases argued in June. The rulings on appeal are Vernor v. Autodesk
(W.D. Wash. 2009) and MDY Industries, LLC v. Blizzard Entertainment,
Inc. (D. Ariz. 2008). The issue in Vernor v. Autodesk is whether a
transaction involving a transfer of packaged software is a license or a
sale, and thus whether the purchaser is the owner of a copy for purposes
of the copyright first sale doctrine. The issues in MDY v. Blizzard
include whether a purchaser of a copy of a videogame is the owner of the
copy under 17 U.S.C. § 117(a). Also argued before the same panel was an
appeal from the ruling in Universal Music Group v. Augusto (C.D. Cal.
2008), concerning ownership of a copy of a music recording on a
promotional CD.

Links to the briefs on the merits and several amicus briefs in Vernor v.
Autodesk are available on the Electronic Frontier Foundation Web site,
as are the merits and amicus briefs in Universal Music Group v. Augusto.
The amicus brief filed by Public Knowledge in MDY v. Blizzard is
available here. Audio recordings of the oral arguments in Vernor, MDY
and UMG v. Augusto are available on the Ninth Circuit’s Web site here,
here and here, respectively.  
 
Jeff Neuburger 
------

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.)