From shrink wrap licences to the Nakatomi Plaza – is our data really ours?

In our last update we discussed the issues surrounding re-selling digital licences and the effect that this will have on both software suppliers and licensees.  We focused on the recent case of UsedSoft GmbH v Oracle International Corp (C-128/11), in which it was decided that second hand software distributors may lawfully re-sell digital licences without infringing a developer’s copyright. The key points to be taken from this case are as follows:

  • Even where a licence agreement prohibits a transfer of a licence, the licensor cannot prevent its subsequent re-sale as long as the licence is not divided and the program is only being used once at any time.
  • Software developers should employ technical measures to ensure that the program is only being used once.

The logic behind this decision is that a licence lasts forever and is essentially a sale of that software.  A customer pays a set price for the software, for an unlimited period of time which is in effect a sale.  Given that the customer is then the owner of the software, they should have the right to re-sell the software if they wish. Ways of preventing onward sale could include replacing a one-off fee with a subscription model and providing access to the software more as a software as a service (SaaS) model.

Are digital works Expendable?

When we Die Hard it is widely accepted that our children/relatives will inherit our, usually rather eclectic, collection of books and CD’s, but what will happen to our vast libraries of digital books, films and music?

With the current trend to be sporting a kindle, iPad, iPod or MP3 player on the way to work, it is likely that most of us will have a library of music and books worth a substantial amount of money.  When we download items from companies such as Apple and Amazon and happily click “I agree” to the Terms and Conditions we are granted a “non-transferable licence” and do not actually acquire any ownership rights in the software.  We have all accepted these terms but how many of us understand the implications of this? As discussed earlier, the decision in the UsedSoft case potentially allows software to be re-sold but could this be extended to our digital libraries?

This debate has been given increased publicity by Bruce Willis who is supposedly considering legal action against Apple to ensure that his vast iTunes music collection can be handed down to his three daughters.  Although his wife has now suggested this story is a load of Pulp Fiction it has highlighted this issue and started a movement towards increasing rights to legal downloaders.

Apple and Amazon have refused to comment on how this may impact their business but we have a Sixth Sense there is likely to be change in how downloads are licenced to customers.  There are a number of ways this could be done such as licensing the downloads for a specific length of time or changing the way the content is provided. A cloud based system could be adopted whereby the user has access to the downloads through the cloud for a certain amount of time rather than buying a licence for the actual song, film or book (cf. Spotify premium where upon ceasing to pay the subscription fee, your content fades away).

Is this Armageddon?

In practice, whether it is Bruce Willis or another budding John McClane that continues with this debate it will need to be addressed in the near future.  However, if the Court were to declare these types of terms unenforceable the floodgates would open and it would have far wider consequences than just being able to hand down our download collections.

The debate on who owns our digital data is ongoing and is not an easy one to answer.  Until further guidance is given by the Court it is vital that you protect your licences and technology with suppliers and consider what effect the termination of a contract will have on these arrangements. Always consider your exit strategy and consider how mobile your data library will be and what format(s) it may be transferable in (and whether the chosen format is compatible with a new supplier or system). There a number of issues to consider and don’t forget there may be a fourth or even a Fifth Element to any transition plan.