	Eric's Home Page
Menu: Home UP EDITORIALS Another Linux Laptop More Scumbags Join the EFF Java woes Linux Laptop Die, threads! Welfare Whores I bought it, it's mine. MS Trial Verdict Linux Desktop Letter to Bob Robb MS Myths 1-3 Windows? No, KDE! Benchmarketing 101 Benchmarks Galore! Mindcraft Reality Check Open Source Economics FUD 101 Commoditization Markets & Microsoft Don't Cry for Bill Links Contact Info My Resume My Public Key EMAIL Eric BadTux Portal[et]	When You Don't Own What You Buy [Editor's note: My apologies for the width. Unfortunately, the image included cannot be read if it is any smaller.] When I was a child, I must have torn apart dozens of clocks, radios, and other such items. I still remember the day that the Honda 100cc dirt bike that my brother and I owned blew a hole in its piston and seized up. Talk about techie heaven for a 12 year old! After I split the case on the engine I never got it back together, but I learned much about how motorcycle transmissions work, etc. (I already knew how engines worked in general, of course). But what if somebody had sent lawyers after me and said no, I don't own that Honda motorcycle? What if they'd said "No, you never signed a lease agreement, and you never paid rent on the motorcycle, but it's a lease anyhow, and the lease says you can't open the case"? That is the situation that we're in as far as commercial software goes nowdays, where you can be arrested for prying open the hood and looking inside. Today, software companies are everywhere infringing on people's property rights, and buying laws that allow them to do so. Traditional contract law First, an aside. Let's talk about contract ("tort") law for a moment. Traditionally, contract law required that there be a "meeting of the minds", where two people got together and agreed to something. One person could not make an agreement in somebody else's name and have it binding or valid. Thus traditionally, contracts have been required to be signed by representatives of both parties. Contract law also required "an exchange of consideration". If there was not such an exchange, it was a gift, and gifts could be withdrawn (though it would be rude to do so, of course). Thus when my mother "gave" me some of her land in Castor, we signed a deed of sale before a notary public and she actually sold the land to me for $1. (No, this was not done to defraud the local school district, I still pay property taxes on the full market value of the land). Leasing or renting land, housing, or transportation follows similar rules. The two parties must meet, they must both sign the agreement (a "meeting of the minds"), and there must be consideration exchanged for the duration of the lease or rental. Leases and rentals must have a given duration, otherwise most states consider it to be a sale and subject to all sales taxes etc. accordingly. Upon the expiration of the lease, most leases contain a renewal clause that says that, if you pay $X amount of dollars in consideration, this same lease agreement will be extended for Y period of time unless one party notifies the other otherwise. Payment of the additional consideration (rent) and acceptance of said rent by the other party is considered to be adequate proof of a "meeting of the minds" in this case. Finally, there was an implied contract of sale in certain situations. If I walked to a roadside stand, paid $5 for an alarm clock, and the vendor handed me an alarm clock, this was considered to be a sale. There was no mention of a limited time span, no contract signed, but money was offered and an item given in exchange. This exchange of consideration was considered to be equivalent to a contract of sale. Courts generally applied a "smell test" to such transactions -- i.e., "if it looks like a sale and acts like a sale, it is a sale." Pretending that you are selling an item when you were actually leasing the item was treated as criminal fraud in most jurisdictions, and the perpetrator often sent to jail (many auto dealers, in particular). That's how things stood before IBM invented software leasing. Even after IBM invented software leasing, it was explicit that the software was being leased, not sold, and a contract was signed by the two parties signifying as much. But now it appears that various "shrink wrap" software vendors, and some hardware vendors, are saying that centuries of civil contract law do not apply to their products. They are saying that no, we the consumer did not buy the product, we only leased ("licensed") it. They are saying that what we bought and paid for is not ours, and that we have no right to do anything with our property except what they munificently decide to let us do. Copyright Law vs. Contract Law First of all, contract law is not needed in order to have a viable software industry. Copyright law has been set up to protect publishers' and author's rights. The Constitution of the United States says in article I section 8 clause 8: Congress shall have the power [...] to promote the progress of science and useful arts, by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries; It is arguable that current copyright law goes beyond the Constitutional boundaries (one pundit called one revision of the copyright law, which retroactively extended copyrights to 50 years after the death of the author, "The Walt Disney Corporation Protection Act" because it was needed in order to protect Walt Disney Corporation from losing the rights to its works after Walt Disney died). However, that is a subject for another essay, not this one. In any event, it is clear that current copyright law fully protects authors and publishers. Current copyright law, in Title 17 Chapter I section 117, grants authors the following rights to their works. No other person can do these except with the author's permission: to reproduce the copyrighted work in copies or phonorecords; to prepare derivative works based upon the copyrighted work; to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. Clearly the above rights adequately protect authors from having their works copied and given to other people. It is clear, then, that the purpose of software manufacturers attempting to say you don't own your copy of Microsoft Word is not in order to protect them from illegal copying. Rather, it is clear that the purpose is to protect them from the consequences of providing shoddy, poorly written, overly bloated, and defective software by saying that you, the owner of a particular copy of the defective software, have no right to open the hood and find the defective part or, indeed, the right to call the software "defective" in the first place. The Smell Test and UCITA If I walk into a store, pick up a box of something, walk to the checkout counter, and pay money for it, that box of stuff is mine. At least, traditionally so. It did not matter whether it was a box of detergent, a box of tissue, or a boxed set of books, I could then dispose of it in any way I wished. Patent and copyright law might restrict whether I can make a copy of it or not, but I can certainly sell that same box of detergent to someone else without worrying about the detergent manufacturer having me arrested for "violating their intellectual property" (i.e., the patent they have on the detergent formula). I can even take that detergent to my chemistry lab and analyze its chemical composition if I wish, though I can't use the knowledge thus gained to create my own detergent with a similar composition (that would be a patent violation). So I walk into Fry's, pick up a box of stuff, and check out. I get it home, open the box, and -- what's this?! A slip of paper that says I did NOT buy this item, I'm merely leasing it from the manufacturer? Sounds like bait-and-switch to me, and to about half the state courts that have heard cases on the subject. They apply the traditional "smell test" to the sale -- it looked like a retail sale, it was accounted for by the store as a retail sale (i.e., sales tax and etc.), the "lease" (license) was not agreed to at the time that the consideration (money & item) was exchanged, thus it is a sale. Thus in these states you and I have the same rights that we have if we buy a box of detergent -- we can analyze it, give it to the United Way, sell it on the streetcorner, use it under a Windows emulator on a Macintosh, whatever, as long as we don't make a copy of it. But there is a change coming here called UCITA, a set of laws pushed by software manufacturers that will force courts to disregard hundreds of years of case law in favor of a massive violation of our property rights as purchasers of software. UCITA says that the shrink wrap licenses inside software packages are valid. Here is an example license, reprinted without permission: Note that this particular license is quite mild. It is not unusual to see license terms that say that you can only run the product under a certain operating system (e.g. most Microsoft software says it can only be run under Windows), or that you can only sell the product if you are selling it with a new computer (full OEM copies of Windows 98 sell for about $80-$90 to system builders, as vs. the full retail copies that are bit-for-bit identical but sell for $189 and up). It is clear, in this latter case, that the goal is not to protect the software manufacturer from piracy. Rather, the goal is to maximise the number of suckers that can be coerced into paying the full price of the software. UCITA, in other words, will cause massive consumer harm by: Allowing software manufacturers to engage in monopolistic bundling of their products by saying that one product is not allowed to run under a competitor's operating system, By allowing software manufacturers to engage in predatory pricing amongst different classes of customers, selling higher to one class of customer than to another -- and not allowing the free market to resolve the problem via sale of software on the open market, Preventing not-for-profit organizations from recieving donated computers and reselling them. Microsoft has already threatened to sue many non-profits for licensing violations if they do not wipe Windows and MS Office off of the drive before reselling a donated computer. Allowing developers of software development tools to say that their tools cannot be used to develop competing products, in defiance of hundreds of years of precedent that says that once you own a tool, you can use it to build anything you wish. Reducing competition by disallowing reverse engineering, thus resulting in higher prices for consumers. Allowing companies to put "time bombs" into their software that can be detonated remotely, thus allowing criminal hackers everywhere to disable your software (once they reverse-engineer the software -- they are criminals, after all, why do they care about reverse-engineering clauses in license?). Disclaiming warranties, in blatant disregard of hundreds of years of precedent that say that if somebody sells you a defective product, you have the right to demand a refund or recompense for the damages done by the product. It's as if you brought home a can of green beans from the store, opened it up, and found printed there a statement that this can of green beans was not warranted in any way, that you agreed by opening the can that you would not sue if these green beans gave you food poisoning... any court of law in the U.S. would laugh the green bean company out of court if they argued you'd agreed not to sue them for food poisoning. Why should software be any different? That's just the tip of the iceberg. It's as if you brought home a box of detergent, opened it up, and found inside the box that you did not own this detergent, you were merely leasing it, and oh by the way you owe us your first-born child if you wish to use our detergent. There is no limit on what you might find yourself agreeing to by clicking the "I Agree", once the software manufacturers establish that you don't own the property that you bought and paid for. Why UCITA? The question is this: If UCITA is so bad, why have the legislatures of Virginia and Maryland already adopted it as the law of the land in their states? The answer is pretty clear: legislatures are being bribed with the offer of call centers and manufacturing plants if they pass UCITA. They are being bribed with the promise that if they pass UCITA, software manufacturers will flock to their states in order to gain protection under UCITA. This was enough to get Virginia and Maryland to pass the law, but may not be enough to get your own state to pass the law. If you are in a state with a strong tradition of consumer advocacy, I suggest that you talk to your local attorney general's consumer advocacy office and suggest that you would like them to argue against the law in the legislature. It would also be good to contact your legislators and say that you don't want a law that allows makers of defective products to avoid responsibility for fixing their defective products. If you are in a state that has a strong tradition of property rights, I suggest that you talk to your legislators. I don't like the notion of somebody saying that I don't own something I damn well bought and paid for, and I don't like the notion of someone saying I can't do what I damn well please with the property I own (well, within the limits of copyright law, of course). Finally, you may wish to investigate Linux. Linux has one of those annoying license agreements attached to it too, the Free Software Foundation's General Public License (GPL). Unlike the commercial software vendors' licenses, though, you don't have to accept the terms of the GPL in order to use the software. If you don't accept the terms you must abide by the restrictions in copyright law (cannot copy the software, cannot redistribute the software, cannot create derivative works based on the software), but otherwise have all the rights as a consumer that you could ever have. If you do accept the terms of the GPL you gain relief from the restrictions of copyright law -- you can now distribute the software, alter the software, etc. -- as long as you agree to distribute the source code. Whether you agree with the ideals of the Free Software Foundation or not, you must agree that this benign licensing agreement does not restrict my property rights. The FSF isn't saying that I don't own this software. The FSF is just saying that if I want to redistribute this software or make derivative works based on this software (both of which are covered by the Constitutionally-authorized copyright law), I have to agree to a few benign terms. For anything else, I can do what I damn well please with this software -- reverse-engineer it (though with source code that's a no-brainer), use it to write competing software, fix defects in the software, whatever. It's mine, and I can do what I want with it (within the restrictions of copyright law). And isn't that what private property is all about?

Eric's Home Page

When You Don't Own What You Buy

[Editor's note: My apologies for the width. Unfortunately, the image included cannot be read if it is any smaller.]

When I was a child, I must have torn apart dozens of clocks, radios, and other such items. I still remember the day that the Honda 100cc dirt bike that my brother and I owned blew a hole in its piston and seized up. Talk about techie heaven for a 12 year old! After I split the case on the engine I never got it back together, but I learned much about how motorcycle transmissions work, etc. (I already knew how engines worked in general, of course).

But what if somebody had sent lawyers after me and said no, I don't own that Honda motorcycle? What if they'd said "No, you never signed a lease agreement, and you never paid rent on the motorcycle, but it's a lease anyhow, and the lease says you can't open the case"? That is the situation that we're in as far as commercial software goes nowdays, where you can be arrested for prying open the hood and looking inside. Today, software companies are everywhere infringing on people's property rights, and buying laws that allow them to do so.

Traditional contract law

First, an aside. Let's talk about contract ("tort") law for a moment. Traditionally, contract law required that there be a "meeting of the minds", where two people got together and agreed to something. One person could not make an agreement in somebody else's name and have it binding or valid. Thus traditionally, contracts have been required to be signed by representatives of both parties. Contract law also required "an exchange of consideration". If there was not such an exchange, it was a gift, and gifts could be withdrawn (though it would be rude to do so, of course). Thus when my mother "gave" me some of her land in Castor, we signed a deed of sale before a notary public and she actually sold the land to me for $1. (No, this was not done to defraud the local school district, I still pay property taxes on the full market value of the land).

Leasing or renting land, housing, or transportation follows similar rules. The two parties must meet, they must both sign the agreement (a "meeting of the minds"), and there must be consideration exchanged for the duration of the lease or rental. Leases and rentals must have a given duration, otherwise most states consider it to be a sale and subject to all sales taxes etc. accordingly. Upon the expiration of the lease, most leases contain a renewal clause that says that, if you pay $X amount of dollars in consideration, this same lease agreement will be extended for Y period of time unless one party notifies the other otherwise. Payment of the additional consideration (rent) and acceptance of said rent by the other party is considered to be adequate proof of a "meeting of the minds" in this case.

Finally, there was an implied contract of sale in certain situations. If I walked to a roadside stand, paid $5 for an alarm clock, and the vendor handed me an alarm clock, this was considered to be a sale. There was no mention of a limited time span, no contract signed, but money was offered and an item given in exchange. This exchange of consideration was considered to be equivalent to a contract of sale. Courts generally applied a "smell test" to such transactions -- i.e., "if it looks like a sale and acts like a sale, it is a sale." Pretending that you are selling an item when you were actually leasing the item was treated as criminal fraud in most jurisdictions, and the perpetrator often sent to jail (many auto dealers, in particular).

That's how things stood before IBM invented software leasing. Even after IBM invented software leasing, it was explicit that the software was being leased, not sold, and a contract was signed by the two parties signifying as much. But now it appears that various "shrink wrap" software vendors, and some hardware vendors, are saying that centuries of civil contract law do not apply to their products. They are saying that no, we the consumer did not buy the product, we only leased ("licensed") it. They are saying that what we bought and paid for is not ours, and that we have no right to do anything with our property except what they munificently decide to let us do.

Copyright Law vs. Contract Law

First of all, contract law is not needed in order to have a viable software industry. Copyright law has been set up to protect publishers' and author's rights. The Constitution of the United States says in article I section 8 clause 8:

Congress shall have the power [...] to promote the progress of science and useful arts, by securing, for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries;

It is arguable that current copyright law goes beyond the Constitutional boundaries (one pundit called one revision of the copyright law, which retroactively extended copyrights to 50 years after the death of the author, "The Walt Disney Corporation Protection Act" because it was needed in order to protect Walt Disney Corporation from losing the rights to its works after Walt Disney died). However, that is a subject for another essay, not this one. In any event, it is clear that current copyright law fully protects authors and publishers. Current copyright law, in Title 17 Chapter I section 117, grants authors the following rights to their works. No other person can do these except with the author's permission:

to reproduce the copyrighted work in copies or phonorecords;
to prepare derivative works based upon the copyrighted work;
to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;
in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;
in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and
in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Clearly the above rights adequately protect authors from having their works copied and given to other people. It is clear, then, that the purpose of software manufacturers attempting to say you don't own your copy of Microsoft Word is not in order to protect them from illegal copying. Rather, it is clear that the purpose is to protect them from the consequences of providing shoddy, poorly written, overly bloated, and defective software by saying that you, the owner of a particular copy of the defective software, have no right to open the hood and find the defective part or, indeed, the right to call the software "defective" in the first place.

The Smell Test and UCITA

If I walk into a store, pick up a box of something, walk to the checkout counter, and pay money for it, that box of stuff is mine. At least, traditionally so. It did not matter whether it was a box of detergent, a box of tissue, or a boxed set of books, I could then dispose of it in any way I wished. Patent and copyright law might restrict whether I can make a copy of it or not, but I can certainly sell that same box of detergent to someone else without worrying about the detergent manufacturer having me arrested for "violating their intellectual property" (i.e., the patent they have on the detergent formula). I can even take that detergent to my chemistry lab and analyze its chemical composition if I wish, though I can't use the knowledge thus gained to create my own detergent with a similar composition (that would be a patent violation).

So I walk into Fry's, pick up a box of stuff, and check out. I get it home, open the box, and -- what's this?! A slip of paper that says I did NOT buy this item, I'm merely leasing it from the manufacturer? Sounds like bait-and-switch to me, and to about half the state courts that have heard cases on the subject. They apply the traditional "smell test" to the sale -- it looked like a retail sale, it was accounted for by the store as a retail sale (i.e., sales tax and etc.), the "lease" (license) was not agreed to at the time that the consideration (money & item) was exchanged, thus it is a sale. Thus in these states you and I have the same rights that we have if we buy a box of detergent -- we can analyze it, give it to the United Way, sell it on the streetcorner, use it under a Windows emulator on a Macintosh, whatever, as long as we don't make a copy of it.

But there is a change coming here called UCITA, a set of laws pushed by software manufacturers that will force courts to disregard hundreds of years of case law in favor of a massive violation of our property rights as purchasers of software. UCITA says that the shrink wrap licenses inside software packages are valid. Here is an example license, reprinted without permission:

Note that this particular license is quite mild. It is not unusual to see license terms that say that you can only run the product under a certain operating system (e.g. most Microsoft software says it can only be run under Windows), or that you can only sell the product if you are selling it with a new computer (full OEM copies of Windows 98 sell for about $80-$90 to system builders, as vs. the full retail copies that are bit-for-bit identical but sell for $189 and up). It is clear, in this latter case, that the goal is not to protect the software manufacturer from piracy. Rather, the goal is to maximise the number of suckers that can be coerced into paying the full price of the software.

UCITA, in other words, will cause massive consumer harm by:

Allowing software manufacturers to engage in monopolistic bundling of their products by saying that one product is not allowed to run under a competitor's operating system,
By allowing software manufacturers to engage in predatory pricing amongst different classes of customers, selling higher to one class of customer than to another -- and not allowing the free market to resolve the problem via sale of software on the open market,
Preventing not-for-profit organizations from recieving donated computers and reselling them. Microsoft has already threatened to sue many non-profits for licensing violations if they do not wipe Windows and MS Office off of the drive before reselling a donated computer.
Allowing developers of software development tools to say that their tools cannot be used to develop competing products, in defiance of hundreds of years of precedent that says that once you own a tool, you can use it to build anything you wish.
Reducing competition by disallowing reverse engineering, thus resulting in higher prices for consumers.
Allowing companies to put "time bombs" into their software that can be detonated remotely, thus allowing criminal hackers everywhere to disable your software (once they reverse-engineer the software -- they are criminals, after all, why do they care about reverse-engineering clauses in license?).
Disclaiming warranties, in blatant disregard of hundreds of years of precedent that say that if somebody sells you a defective product, you have the right to demand a refund or recompense for the damages done by the product. It's as if you brought home a can of green beans from the store, opened it up, and found printed there a statement that this can of green beans was not warranted in any way, that you agreed by opening the can that you would not sue if these green beans gave you food poisoning... any court of law in the U.S. would laugh the green bean company out of court if they argued you'd agreed not to sue them for food poisoning. Why should software be any different?

That's just the tip of the iceberg. It's as if you brought home a box of detergent, opened it up, and found inside the box that you did not own this detergent, you were merely leasing it, and oh by the way you owe us your first-born child if you wish to use our detergent. There is no limit on what you might find yourself agreeing to by clicking the "I Agree", once the software manufacturers establish that you don't own the property that you bought and paid for.

Why UCITA?

The question is this: If UCITA is so bad, why have the legislatures of Virginia and Maryland already adopted it as the law of the land in their states? The answer is pretty clear: legislatures are being bribed with the offer of call centers and manufacturing plants if they pass UCITA. They are being bribed with the promise that if they pass UCITA, software manufacturers will flock to their states in order to gain protection under UCITA. This was enough to get Virginia and Maryland to pass the law, but may not be enough to get your own state to pass the law.

If you are in a state with a strong tradition of consumer advocacy, I suggest that you talk to your local attorney general's consumer advocacy office and suggest that you would like them to argue against the law in the legislature. It would also be good to contact your legislators and say that you don't want a law that allows makers of defective products to avoid responsibility for fixing their defective products.

If you are in a state that has a strong tradition of property rights, I suggest that you talk to your legislators. I don't like the notion of somebody saying that I don't own something I damn well bought and paid for, and I don't like the notion of someone saying I can't do what I damn well please with the property I own (well, within the limits of copyright law, of course).

Finally, you may wish to investigate Linux. Linux has one of those annoying license agreements attached to it too, the Free Software Foundation's General Public License (GPL). Unlike the commercial software vendors' licenses, though, you don't have to accept the terms of the GPL in order to use the software. If you don't accept the terms you must abide by the restrictions in copyright law (cannot copy the software, cannot redistribute the software, cannot create derivative works based on the software), but otherwise have all the rights as a consumer that you could ever have. If you do accept the terms of the GPL you gain relief from the restrictions of copyright law -- you can now distribute the software, alter the software, etc. -- as long as you agree to distribute the source code.

Whether you agree with the ideals of the Free Software Foundation or not, you must agree that this benign licensing agreement does not restrict my property rights. The FSF isn't saying that I don't own this software. The FSF is just saying that if I want to redistribute this software or make derivative works based on this software (both of which are covered by the Constitutionally-authorized copyright law), I have to agree to a few benign terms. For anything else, I can do what I damn well please with this software -- reverse-engineer it (though with source code that's a no-brainer), use it to write competing software, fix defects in the software, whatever. It's mine, and I can do what I want with it (within the restrictions of copyright law). And isn't that what private property is all about?

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When You Don't Own What You Buy

Traditional contract law

Copyright Law vs. Contract Law

The Smell Test and UCITA

Why UCITA?