Re: Shrink-Wrap Lic. uphelo by courts. From Edupage, 4 July 1996

[Brian LaMacchia <bal@peradam.cs.colorado.edu>]

   Date: Fri, 05 Jul 1996 20:09:49 -0400
   From: Hallam-Baker <hallam@ai.mit.edu>
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   Deranged Mutant wrote:
   > 
   >The latest
   > ruling found this suggestion to be an onerous burden, but did say the box
   > must have a notice saying there's a licensing agreement inside, and that
   > buyers should be able to return the software if they don't agree to the
   > license once they read it.  (Investor's Business Daily 3 Jul 96 A5)

   Perhaps Prof Froomkin could provide an opinion. It sounds to me however
   as if the defendants were simply ripping off the copyright of the plaintif
   and attempting to get arround it by claiming to have "bought" rights to
   resell along with the software by wrangling over the shrink wrap agreement.

Actually, defendant was exercising his right to copy uncopyrightable
material as per _Feist_.  Plaintiff sued, claiming inter alia that the
shrinkwrap license on the box prohibited the defendant from such
copying.  (I'm simplifying here; read the cases for the gory details.)
The case is ProCD v. Zeidenberg.  The district court decision (ruling in
favor of Zeidenberg) may be found at 908 F.Supp. 640.  The ruling of the
7th Circuit Court of Appeals (in favor of ProCD) may be found at 1996
U.S. App. LEXIS 14951.

What was at issue, if I recall correctly, was telephone book data for
six states surrounding Wisconsin.  ProCD took the phone books for that
area, copied the data (name, address, phone numbers) out of them and
published CD-ROMs with the resulting database.  Zeidenberg purchased
copies of the ProCD CD-ROMs, along with similar CDs from other
publishers, and put the intersection of the data up on the Web for
free.  

Now, neither ProCD nor Zeidenberg needed permission of the previous
publisher of the data, *from the perspective of copyright*, in order to
reuse it.  This is because the Supreme Court ruled in Feist
Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340,113
L. Ed. 2d 358, 111 S. Ct. 1282 (1991), that telephone book listings
lacked the originality required to qualify as copyrightable subject
matter under 17 USC 102.  So ProCD couldn't claim copyright infringement
because their *data* was uncopyrightable.  (ProCD also had some
searching software on the CD, but that software wasn't copied or
distributed by Zeidenberg and thus there were no copyright infringement
issues.)  They thus resorted to claims based on the shrink-wrap license
on the box.

   I suspect that the claims the plaintifs were making lay very definitely
   within the range of what people in the trade would usually expect to be
   the licensing terms for software purchased off the shelf. Just as there 
   is an expectation when purchasing a book that one has purchased an instance
   and not the rights to the copyright. Consider the analogy with purchasing a
   book that is wrapped in shrink wrap film and that consequently one was
   unable to read the "all rights reserved" legend.

When I purchase a copy of a book in the bookstore, I gain rights to that
particular copy.  This is what's known as "first sale doctrine."  No, I
can't make copies of my copy, and I can't distribute my copy to the
public, but I can resell my copy.  Furthermore, if the copy of the book
I purchase contains uncopyrightable material, I can do what I want with
that material (again, from a copyright point of view).  When I buy
software off-the-shelf, I gain certain rights to that copy of the
software, including the right to make copies for archival purposes (17
USC 117).  

What concerns me about the 7th Circuit's decision is that they appear to
be giving publishers a way to "extent" copyright protection to
uncopyrightable subject matter, which is supposed to be pre-empted by 17
USC 301.  But I'm not a copyright attorney (I'm not even an attorney at
all), so I will defer to those more knowledgeable than I.

					--bal