August 22, 2005 | By corynne mcsherry

You Can't Resell This Software Even if it Sucks

When seamstress Laura Flores first heard about a software product called Dress Shop that would help her make and print dress patterns, she was thrilled. At last, she could customize classic dress designs on her computer -- and, according to the ads, it would be "fast, fun and easy." At $400, Dress Shop wasn't cheap -- but it would be money well spent if the software lived up to the hype.

It didn't. Printing out the patterns in typing paper-sized sections and piecing them together was more trouble than it was worth. Fed up, Flores decided to cut her losses and put her copy of Dress Shop up for sale on eBay, including the key codes that allow the user to print out the patterns. She figured it would be easy enough, since she saw that someone else had already auctioned off their copy.

Little did she know that her troubles were just beginning. Not long after she put the software up on eBay, Flores started getting anonymous messages informing her that the End User License Agreement (EULA) she clicked through when she installed Dress Shop prohibited re-sale. Intimidated and unsure of her rights, Flores took it down -- though not before firing off a response to the anonymous poster stating that she was selling the software because it "sucks." She then contacted the person who had managed to auction off a copy, asking if they had a different EULA.

Nope. The other auctioneer had simply asked permission from Livingsoft, the maker of Dress Shop, and the company had granted it. Heartened, Flores contacted Livingsoft and asked for more information about the permissions policy. The president of the company, Robert Clardy, promptly responded with the information she requested -- and a sharp rebuke. He told her that she was free to sell her Dress Shop CD, but not the codes that would allow the user to print out the patterns. In other words, she couldn't sell what potential buyers would want the most.

Then Clardy told her Livingsoft does sometimes grant permission to re-sell the software with the codes, but only if the seller has a physical or financial necessity (e.g., an injury or family financial crisis) and asks permission "courteously" in advance, "acknowledging that they are requesting a favor rather than demanding a right." He told Flores that she hadn't demonstrated any "compelling need" and had already admitted that she was selling the software because it "sucks." (Yep, turns out the anonymous poster was Clardy himself.) In other words, Livingsoft lets customers resell software if they like it -- but if they dislike it, they must keep it forever.

Unfortunately, this isn't an isolated incident. It's yet another example of companies using EULAs in arbitrary ways to undermine consumer rights. In this case, Livingsoft isn't only enforcing its EULA capriciously, it's also trying to overwrite federal copyright law.

By forbidding re-sale, the Dress Shop EULA flies in the face of the longstanding, consumer-friendly exemption to copyright law called the "right of first sale doctrine," which says, in part, that "the owner of a particular copy lawfully made...is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy." 17 U.S.C. 109(1). There's nothing in there about having to ask "courteously" to resell a copy.

Livingsoft shouldn't be permitted to undermine its customers' rights with this EULA -- especially since the company seems to be using the agreement to punish customers who think its software sucks.

Update: For more, see Ed Foster's piece, Last Stand for First Sale


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