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The "Party" here refers to a political entity; a Party to the agreement among states.

This is a rule which basically says that governments cannot impose laws that say "thou shalt not sell closed-source mass-market software in this country".

It doesn't translate to "thou shalt sell nothing but closed-source software, and may do so even if it is derived from a copyrighted work whose holders forbid that".

It's a good rule because it reduces government interference in business by a modicum.

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