Two different lawsuits are currently underway that attempt to support the notion that users should be able to do what they want with the particular instantiation of intellectual property that they buy, a principle that is under attack through the use of “licenses” at the point of of a product’s sale.
In patent law the principle is called exhaustion, and it says that the patent is “exhausted” upon the first sale of a product; the consumer is free to use, repair or resell the particular product they bought, although they can not manufacture copies or new inventions that incorporate or imitate the product. Dissatisfied with this rule, many manufactures are trying to place various labels on their products to control uses of the product in the hands of consumers. In “Quanta v. LG Electronics,” a manufacturer’s use of a label claiming the product is “not for resale” is being challenged. The Electronic Frontier Foundation is supporting that challenge, and more information can be found here on their website “Deeplinks” blog.
As the EFF points out, these challenges to unfettered consumer use have had growing success recently. Lexmark has been able to “condition” its sale of printer cartridges with a “single use only” label that could make a consumer who refills the cartridge liable for breach of contract. This, and the “not for resale” label on software CDs at issue in the LG case, turn patent law upside down, and cost consumers money. Numerous “friends of the court” are asking the Supreme Court to revive the doctrine of patent exhaustion.
In copyright, a similar fight is going on to preserve the right of consumers to use the copy of a copyrighted work that they buy as they wish. In this arena the principle is called the First Sale doctrine, but its definition is exactly the same – the distribution and display rights in copyrighted material are exhausted after the first sale of the book, artwork, etc. In “Vernor v. Autodisk, Inc.,” a purchaser is claiming that a software distributor should not be allowed to prevent an eBay sale of the particular copy of the software he bought by using that same “license” provision that forbids resale. The issue is whether a manufacturer can convert a transaction that looks exactly like a sale – the exchange of money for a product that the consumer carries away – into a licensing transaction merely by shrink-wrapping a license agreement into the box. Courts have largely upheld these unilateral licenses, but there has been a split of opinion, as William Patry explains in a blog post here. Public Citizen, representing Mr. Vernor, argues that the first sale doctrine should preempt this provision of the so-called license.
These parallel cases in copyright and patent law show a concerted attempt to control how consumers can use the specific copies of intellectual property they purchase legally. This is not about defending themselves from unauthorized copying, since the law already does that; it is an attempt to choke off a secondary market that has been allowed for centuries. I called this a copyright coup in an earlier post, and I can only hope the courts will not allow it.