Re: Consideration in a Shrinkwrap Contract

At 4:00 PM -0400 10/5/00, Peter D. Junger wrote:

>I wasn't claiming anything, I was asking questions. But I am willing
>to claim that every transfer of a _copy_ of a copyrighted work that is
>made for valuable considertion and does not create a bailment a sale
>of goods (unless, of course, the copy is realty). ...

Dear Mr. Speilberg: I would like to offer you this opportunity to consider purchasing the film rights to my forthcoming novel. I hereby offer to send you a COPY of my novel upon the condition that only you may read it to decide whether you would like to make the film. By accepting this offer, you agree that 1) you will not let anyone else read it: 2) that you will not describe its plot to anyone regardless of whether the description might qualify as a fair use; and 3) that you will dispose of it only by destroying it regardless of whatever rights you might otherwise have under the first sale doctrine.

Are you saying that deal is uneforceable?

>
>: Of course books and CDRoms are goods. You don't enter a copyright license
>: when you buy a book because it isn't offered under license. There are lots
>: of cases to which the first sale doctrine applies, including software sales
>: where the license does not purport to restrict resale of the "good" on
>: which the program is fixed.
>
>If I go into CompUSA and buy a modem, a book on Java, and a copy of RedHat
>7.0 software, where is the license for any of those transactions? I plunk
>down the three different articles and sign the credit cart receipt? What
>is there any license?

I'm not sure what you're asking -- the modem and book are unlicensed, the software is licensed.

>
>(Now of course, some of the software---most of the software---in the RedHat
>distribution does come with a license that allows me to make and distribute
>copies of that software as long as I also supply the source code, but that
>license enables me, rather than limits me, so it is not what you are
>talking about.

Well, it is what I'm talking about. I don't understand why it is possible for the buyer to contract for more rights but not fewer rights. How is it that only the seller is permitted to surrender rights by contract? I understand that the enforceabililty of a shrinkwrap license might well turn on whether the rights are surrendered by the author of the contract. But as I understand it, you are arguing more generally that an author can surrender rights by license but the buyer of a copy can not, without regard to whether the contract is negotiated at arms length.

: You can have an IP transaction that is a license, or that is a sale of
>: goods, or that is a sale of goods subject to a license
>
>what's that?

Shrinkwrapped software is what we were talking about. Copy sold -- use by license. But I can imagine other examples. I'll sell you a horse, upon the condition that you not turn it into dog food. I think the US government actually does that in a program that sells wild horses to individuals.

>
>, or even a bailment,
>: a gift, a conditional gift, a loan, a pledge, or a hypothecation
>
>I think that it could be a hypothecation only in Puerto Rico or some other
>civil law jurisdiction

A hypothecation is simply a pledge, as to secure a promise, but without delivery of the collateral. Your everyday recordable security interest is a form of hypothecation. It may have been appropriated in civil statutes, but it's a common law term.

>
>: ferchrisakes -- the law is more accomodating than you allow. Neither the
>: Copyright Act, nor certainly the UCC, prohibits the grant or enforcement of
>: a copyright license. The only questions are 1) whether the shrinkwrap
>: satisfies the contract formalities required to give rise to an enforceable
>: license; and 2) whether certain license provisions which can be
>: characterized as enlarging the copyright owner's statutory rights (e.g.
>: surrendering fair use) are always, in any event, unenforceable.
>
>I thought you were arguing the transfer was not a sale of goods and not
>subject to the UCC. Are you now admitting that it is a sale of goods?
>

I don't know how you got that from what I said. My point was only that if there is a law that renders a copyright license *generally* unenforceable, it is not the Copyright Act or the UCC, which are the laws that have been pointed to as authority for the proposition that shrinkwrap licenses are unenforceable. You suggest, below, common law doctrine re restraints on alienation -- that's an interesting direction, but I wonder whether it gets you all the way to where you want to go. Will that thread from the common law really invalidate a contract in which the parties explicitly agree that A will provide B a copy of X in return for B's promise that he will use it only for certain purpose and will not convey it to anyone else for any purpose. Again, I'm trying to understand whether you simply believe that a shrinkwrap is unenforceable, or whether I correctly understand that your position is that you cannot ever condition the transfer of ownership of a copy to restrict its use and disposition.

>Now if it is a sale of goods, then isn't any contractual provision in
>what you call a license that purports to keep the buyer from transferring
>the goods void as an unreasonable restraint on alienation---an issue that
>has nothing to do with copyright law?

I guess that's the issue -- let's assume it doesn't violate the rule against perpetuities. What's left of the law regarding restraints on alienation that would disallow a transfer prohibition that expired upon the death of the last living descendant of Jos. Kennedy plus 21 years, or whatever the rule requires. Which raises a whole 'nother possibility -- could software be transferred "in trust"?

>And can't any condition that
>the buyer not use the goods in certain ways be attacked as being repugnant
>to the grant as a matter of common law? And if there was a shrinkwrap
>license inside the box that was not brought to the buyer's attention by
>the vendor---and that is enforceable---then doesn't the buyer have a
>cause of action not only for failure of consideration but also of fraud
>against the vendor.

You're back to the enforceability of the shrinkwrap, but I'm more interested in your insistence that a transfer of a copy for consideration is either a bailment or it's unconditional, even if negotiated at arms length. But maybe I've misunderstood.

John Noble Received on Mon Oct 09 2000 - 06:58:39 GMT