Copyright includes numerous limitations that preserve specific rights of the public. For example, U.S. law has fair use, first sale, and some specific rights to make backups and the like (17 USC 107–122), as a matter of public policy. Publishers of non-free software introduced a boilerplate shrink wrap contract called the end user license agreement as a way of attempting to force users to give up these statutory rights that the legislature has granted. This article explores various challenges to the validity of EULAs.
MAI Systems v. Peak Computer
In MAI Systems Corp. v. Peak Computer, 991 F.2d 511 (9th Cir. 1993), the Ninth Circuit held that a licensor of software could forbid unauthorized repairs to a computer containing licensed software. It was based on a technicality: under the original drafting of 17 USC 117, only the owner of a copy had the right to make a copy in RAM to run it. Because MAI's deals were apparently not structured as a sale, licensees had no rights under section 117; thus when repair staff flipped the switch to boot the machine, copyright infringement was committed. In 1998, Congress decided that this was still against public policy and added a rider to the DMCA amending section 117 explicitly extending the privilege to copy software into RAM to repair staff.
Vernor v. Autodesk
The Ninth Circuit held in Vernor v. Autodesk, 555 F. Supp. 2d 1164 that an end user is a mere licensee and not "the owner of a copy" when the sale includes conditions that substantially restrict the transfer of copies to a third party. Such transfer restrictions might be difficult to word given the cultural expectation of the right to give a copy of a computer program as a gift to friends or relatives during Commercialized Christmas.
Blizzard has successfully sued the publishers of bnetd and Glider, software intended for interacting with Blizzard's computer networks. Software capable of interacting with more than one publisher's software may be safer in this respect if the author can show a substantial noninfringing use.
Ordinarily, conditions to a contract added after a sale is completed are null and void. Until 1998, there was a possibility that this might be used to nullify click-through EULA. But since then, Congress enacted the DMCA, banning decryption of a copyrighted work without the copyright owner's consent. This appears to allow for the following deal structure: The program on the disc is shipped compressed and encrypted. The installer offers authorization to decrypt in exchange for assent to the EULA, including waiver of rights under sections 109 and 117.
Possible defenses to this deal structure include the implied warranty of fitness, in which a product that has been paid for at retail is expected to be useful out of the box for the uses advertised on the box. But each EULA has wording to the effect: "If you do not agree with these conditions, return the software to the point of purchase for a full refund." But numerous retailers do not take returns of software whose package was opened and license agreement was declined. This appears to be a matter for small claims court to decide.
One way to get around the opened software problem is to print the Uniform Resource Locator (URL) of the version, so that the end user can take the box to a web terminal in the store and enter the URL before taking it to the checkout lane.
Failing that, software publishers could require retailers that carry their products to require the
buyer licensee to sign for the copy, just as one has to sign for decongestant medication containing pseudoephedrine in the United States since Congress enacted Combat Methamphetamine Epidemic Act of 2005 as a rider to a USA PATRIOT renewal measure.
Some have raised issues of a defense of lack of privity: a contract signed in the checkout lane is between the retailer and the buyer, not between the publisher and the buyer licensee.
A software publisher may be able to recapture privity by structuring the deal with the retailer not as a sale but as a consignment.