When I was in the publishing business, I received an amazing amount of software from companies that wanted me to write about their stuff in IYM Software Review. The pile got huge; it literally lined the walls of a small room in my home, stacked five boxes high all the way around the room.

A time came when I needed to get rid of all those boxes, and I approached a local library about them taking the software off my hands. My idea was that they could create an archive of software development, and be one of the few places in the world where people could come to research that topic.

Cool, right?

If I was having that conversation today, I might be trying to do something illegal.

The 9th U.S. Circuit Court of Appeal has ruled that if the license that comes with a piece of software prohibits re-sale, then you as the licensee are bound by that license term, just like any other term in the license. Presumably this also applies to re-assignment without money changing hands.

As I’ve said a number of times, I’m not an attorney. This article should not be viewed a source of legal information on this ruling or otherwise. I write about business and business change, and if upheld this ruling is huge in that arena.

Almost a year ago I wrote about how companies cyber-bully you with the terms of software licenses. It truly is reprehensible; the documents are hundreds or thousands of words long, written in dense legalese, and you must agree to them before you can use a piece of software. That issue itself has been kicking around the court system for years; is it even legal to force you to agree to a license in this way before you can use a piece of software?

Generally, the tenet of law that’s been applied to the issue of software licensing has been the First-Sale Doctrine. Now 102 years old, it basically says that you can re-sell something you buy, and it’s the reason you can sell used books legally.

But what you own is the physical paper on which the words in that book are printed. The words themselves remain the property of the copyright holder for as long as the copyright lasts.

Assume for the moment that software is subject to the same law. You have no right to transfer the software, although you do have the right to transfer the floppy disk, CD, hard drive, or other device on which you obtain the software.

If the 9th Court’s ruling stands, that right could go away. In fact, it looks like book publishers (for example) could make it illegal for you to sell a used book simply by including a notice that specifies the terms of your license as prohibiting you from doing so!

And now it gets REALLY complicated.

In issuing this ruling, the 9th Court has actually used words that state that although they might be interpreting the original law incorrectly, the recourse is to petition Congress to write a new, more specific law.

Wonder why I sometimes say nasty things about attorneys?

Intellectual Property is an incredibly complex issue. The reason we consult on that issue and suggest that you should speak with us before you hire attorneys in I.P. matters is because they ultimately have no idea what they’re up against. Imagine being the guy who was involved in the lawsuit that the 9th Court had ruled on, spending a whole bunch of money getting to this point, and being told that you should go to Congress and get a new law passed.

Now imagine that the poor guy who brought this action could have diffused the whole thing ahead of time by selling the disks the software came on, rather than “selling the software”.

Of course, he would likely have found himself in the same position if he tried that tactic. But he could have gotten there a lost faster and less expensively.

On the other hand, then we wouldn’t have had the chance to see just how difficult it is to navigate business change in an environment where courts taunt litigants with their “right to petition Congress”.

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