Software Licensing: A Case For Reform

I want to consider software licensing practices in general, but with the specific facts and history in the Vernor vs. Autodesk lawsuit as a backdrop.

In the Vernor case, Tim Vernor purchased several boxes of AutoCAD software, and never even read, let alone agreed to, the terms of the license agreement inside the box. When Vernor listed the AutoCAD software for sale on Ebay, Autodesk sent Ebay a notice that claimed Vernor’s auction violated Autodesk’s copyright. In order to benefit from the safe harbor provisions of the Digital Millennium Copyright Act (DMCA), Ebay was obligated to remove the auctions. Vernor responded by filing a lawsuit accusing Autodesk of making false copyright violation claims.

Additional facts have since come to light. For one, we’ve learned that the AutoCAD software that Vernor purchased had been previously upgraded to a newer version. Vernor did not know this when he purchased the software; and in any case, it’s not clear that this fact has any bearing on the outcome of the suit.

Given this set of facts, let’s analyze the Vernor case not from a purely legal perspective, but from a more abstract “moral” perspective. After all, society is the ultimate arbitrator of what is wrong and what is right with respect to our laws. We ultimately determine whether laws are fair by whether we follow them willingly (and whether we put pressure on our legislatures to change them).

Steve Johnson opines that Autodesk is morally right in the Vernor case, because the software Vernor purchased was “tainted” due to having been upgraded by the original owner. In Steve’s view… [see Steve’s comment below where he chides me for ascribing this view to him – O.W.] Presumably, one who holds this view sees Vernor’s original purchase as akin to someone purchasing stolen goods. With stolen goods, the law (and hopefully our moral compass) recognizes that the purchaser of the stolen goods has no legal right to them.

Autodesk offered the original owner a discounted price for a newer version of AutoCAD in exchange for a promise to destroy the older version. The original owner reneged on its promise to destroy the old version, and sold it to an unwitting buyer instead.

It follows that both Autodesk and Tim Vernor were treated unfairly by the company that sold the AutoCAD software to Vernor. Despite the company’s history of using pirated software, Autodesk gave them the benefit of the doubt when selling them a discounted upgrade. Vernor, by all accounts, had no idea and no way of knowing that the software he purchased had been previously upgraded. This is a recipe for disaster.

Unfortunately, this sort of disaster is all too common. In many cases, software users simply don’t read license agreements. If they do read license agreements, they don’t understand them. After all, most of us are not lawyers, and we can’t reasonably be expected to hire a lawyer to evaluate the license agreements of every software product we use. How then can we be expected to follow them exactly and without fail?

Consider that it’s entirely possible that the company from which Vernor bought his AutoCAD software had no idea that they had agreed to destroy the upgraded AutoCAD software. At least from a moral perspective, we can have some sympathy for the company if they honestly had no idea they were violating any agreements when they sold the software to Vernor.

Could Autodesk have required the upgraded AutoCAD software to be returned, or required certification by an independent “software recycler” that it had been destroyed? Sure they could have. In fact, such requirements did exist in the early days of software license agreements. Had Autodesk done so, the Vernor court would probably have concluded that AutoCAD was licensed, not sold.

Why even require the old version to be destroyed when upgrading? If we stop using the old version, why shouldn’t we be allowed to sell it at market value? Doesn’t recycling old software make just as much sense as recycling old tires? We have been conditioned to believe that discounted upgrades are good for us, but are they really?

Would we accept a legal regime under which tire manufacturers could force us to destroy our old tires as part of the new tire purchase agreement? Oh, you say, that comparison isn’t valid because tires eventually wear out of their own accord, whereas old software continues working forever! First of all, old software doesn’t continue working forever. How many people still use VisiCalc? Furthermore, what would this line of reasoning conclude about potential tires of the future that last forever? We’d have to start licensing tires instead of purchasing them!

What would happen if software vendors could not legally prevent “used” software from being resold on the open market, no matter how it was purchased or upgraded? For one, it would increase competition, because new versions of software would be competing not only against software from other vendors, but also against older versions of itself. In a world where software is priced based on what the market will bear, the net effect would be lower prices and higher quality (not to mention less frequent “upgrades”) for all software.

I think the Vernor case is just one example illustrating how the current software licensing system has sprung a leak, and is in need of repair. Can it be patched, or does it need to be replaced? Can the bleeding be stopped at the ankle, or should it be stopped it at the neck? This is a classical case of the Petcock Problem.

Software industry advocates like the Business Software Alliance (BSA) proclaim that the solution is educating consumers. Education may be important, but I think that “educating consumers” should not be left to an industry alliance.

I have some ideas about how the system can be reformed, but I think we have to start by recognizing that there’s a problem.

7 thoughts on “Software Licensing: A Case For Reform”

  1. Software vendors have been using the ‘software is licensed, not sold’ argument as a foundation for consumer fraud.

    No other industry that is subject to competition is able to sell grossly-defective products to consumers, without forcing them to enter into an agreement in which the ‘licensee’ must agree to accept the software with all defects, both known or unknown, and with no assurance the software vendor has revealed everything it knows about defects.

    The fact is that our current laws provide the means for software vendors to engage in what amonts to a high-tech shell game with consumers, and get away with it.

    If one has their doubts about that, consider the fact that one of every three dollars spent on IT is lost, primarly as a result of defective software.

    Also consider how much money the BSA and other industry consortiums spend lobbying our legislators to protect their interests, giving themselves the means to engage in what is for all intents and purposes, consumer fraud.

  2. “In Steve’s view, Vernor’s original purchase is akin to someone purchasing stolen goods.”

    Can you point out where I’ve made such a statement? I have been careful to avoid any accusations of theft, receiving stolen goods or other illegal activity, or any implications that Vernor’s actions are akin to such activity.

    I have made the statement that I think Vernor’s actions are morally wrong, and I stand by that. I have never accused him of being a fence, or anything akin to it.

    Please be more careful when paraphrasing the views of others.

  3. Steve, I’ve changed the wording to more accurately reflect what I intended to convey. Do I understand correctly that you deny claiming any justification for your conclusion? Or only the one I ascribed to you?

  4. Thanks for changing the wording. It’s great being part of a company like CADLock where it’s OK to chide your boss in public. I can’t imagine any Autodesk blogger chiding Carl Bass, can you?

    No, I don’t deny claiming any justification for my conclusion. I just deny claiming that Vernor is akin to a crook!

    My main justifications for considering Vernor’s actions morally wrong are:

    1. He sold something that I believe the average fair-minded person in the street would say he has no right to sell: the remnants of software that has been upgraded.

    2. He sold something that it is quite likely the buyer would believe to be considered by Autodesk a legitimate piece of software. In other words, it’s probable that the buyer, on learning that the software he bought is considered non-existent by Autodesk, will think he has been ripped off.

    3. It seems that Vernor took a “don’t ask, don’t tell” position about the legitimacy of the software. I think a buyer/seller of software has a duty to carefully check its legitimacy.

    My last point against Vernor is, ironically, damaged by Autodesk’s removal of the ability to transfer licenses, and the accompanying non-availability of an Autodesk mechanism to check that the software is kosher. However, any one of these three points is enough for me to still feel comfortable with my opinion that Vernor selling this upgraded software is morally wrong.

    I intend to express my views on this subject at more length when you’ve finished your series of posts and I’ve had chance to give them some careful thought. I’m hoping to see a description of how you would expect this brave new world to operate.

  5. Regarding Autodeskers chiding Carl Bass in public: very true, but then again I can’t exactly fire you on a whim like I imagine Carl could his antagonist.

    Fair enough on your justification. I think I view the situation pretty much the same way you do, except with more shades of gray and less black and white.

    In my post I intended to distill this viewpoint down into something easier to grasp, like “akin to stolen goods”, which I don’t see as much different at all.

    My main point of contention with your reasoning is that you apply “caveat emptor” to Vernor, but not to his customer. This may have been a reasonable expectation before the Ebay era, but things have changed.

    My next post on the topic of software licensing will be about where we go from here, but don’t hold your breath.

  6. There’s no inconsistency in my attitude towards Vernor and his customer. If his customer sold the software to somebody else, I would consider that to be morally wrong, too.

    The caveat emptor principle applies to both buying parties, but it’s the selling that concerns me much more than the buying.

    If you buy something that’s effectively worthless (e.g. a printer for which ink is no longer available), that’s just harm you’ve inflicted on yourself through lack of care. It is its own punishment, if you like.

    The same doesn’t apply to the seller. If you sell that same thing to some other sucker, you’re not punishing yourself, you’re inflicting harm on somebody else. Even if it’s through carelessness rather than vindictiveness or greed, it’s still wrong, in my view.

  7. Owen and Steve,
    I have watched you two guys discuss this issues with some interest; Vernon’s personal ‘morality’ aside, if you are looking for a ‘solution’ to licencing how about you look at what I have done and promote that as a way forward.

    There are easily recognized solutions embodied in what I have done requiring no changes to laws, addition of new laws and or court cases; just professional behaviour by both vendor(s) and customer(s) excersized within the laws already in existance.

    All that is required is for software users to understand what I have done then do the professional thing and exercise the rights already enshrined and awaiting their use.

    Software licencing is a bluff: Vendors are prepared to put (your) money behind their abuse of terms and conditions; but cannot sustain the bluff if their customers were not so lazy and stopped ‘sitting on the fence’ arguing, not acting!

    What actually needs ‘reform’? Let’s get this debate going; maybe you could start by telling me why ALL/other software users could not, should not or will not simply follow my lead. What I have done is in place and working right now.

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