I think these different rulings haven't been fully appreciated yet. For example, if you buy Apple's Final Cut X for $299, you should be allowed to resell that software if you live in the EU, but there is currently no way to transfer licenses between users, preventing users from reselling it. It seems to me that by preventing users from reselling their software, Apple (and the Google Play Store) are probably violating EU law on this matter.
Note that the issue is rulemaking, not enforcement. The Single Market is a statement of principle, not a legally-applicable regulation, and needs specific rules to be made to put it into effect in different markets.
Well historically individual states had their own regulations regarding weights/measures and product names, and that authority was transferred to the new market when it was created. These types of regulations ensure a level playing field between buyers and sellers, and are an important function of any regulated market. You know what you're getting when you buy a 750 mL bottle of Chateauneuf.
It doesn't necessarily follow that the maker of the Chateauneuf ought to be required to distribute it in a particular geographic territory.
True, but the maker of Chateauneuf cannot prohibit a reseller from exporting its products to that territory either. That content-providers have been able to prohibit this, is only because of copyright. And since copyright is a government-granted monopoly, it does follow that the EU can use its monopoly grant to enforce that same single-market principle for digital content.
Exactly. There are some awesome products that I can't buy in the UK, because no-one imports and sells them, that are available in France etc., and vice versa. Of course I'm free to go and buy them myself and bring them back without duty (for the next couple of years at least, after that, on vera).
That's the sticky point from a legal point of view, which needs European legislation and cooperation from all involved parties (investors, producers, distributors, streamers etc) to be resolved. Since the industry benefits from market segmentation though, they are dragging their feet. For example, it's usually better to sell the same film to a different distributor in each country, rather than a single one serving all markets - 28 smaller paydays will often tally up to levels that one single Euro-wide agreement is unlikely to reach; and some films will do well only in certain countries, so might be penalized at EU level.
Or, actually the status quo: if you're a Polish company organising a music festival in Italy you follow Italian law.
That principle won't change just because it's a streaming service, for the obvious reason that anything else would lead to content distributers shopping around for the cheapest jurisdiction.
Regarding the distributers' wish for market segmentation: That's a perfectly understandable reason, and it will become illegal rather soonish. Sure, you can chose you customers. But you won't be able to make their nationality part of the equation much longer.
The public will profit rather obviously. Personally, I don't even care about any changes in pricing. Most annoying are companies segmenting the market along borders, and then never actually signing a local distributor. Or somehow only selling the translated movie etc.
One caveat for practical reasons will be sports rights. It's just not possible to set a single price for, say, the British Premier League games that works everywhere: either it's but a fraction of today's prices, or nobody outside the UK would consider buying a subscription*
* UK example for demonstration purposes only. Will not be implemented. Search for better examples underway.
That's a good example, and that too is a complete mess in the EU at the moment (google vatmess)... Copyright legislation has even more burdensome vagaries to deal with, like identifying authors, owners and distributors (in some countries rights can be alienated, in others they can't, etc etc) and get approval from all parties. This is why streaming services are so slow to expand in the European market.
> market segmentation: [...] will become illegal rather soonish.
That's a very optimistic view. Creators have very powerful lobbies, even the most heart-hardened bureaucrat will melt at the prospect of spending a few hours with Charlize Theron or Mick Jagger.
I'm not confident at all they'll be able to completely ban geoblocking in one go. Hopeful they will at least poke some holes in it this round. Most parts of the single market needed a couple of revisions of a directive (quite a few years removed) before liberalizing a particular market fully..
It certainly has lowered my blood pressure–he's now in a much more important position. But that means that people will actually stop him if he continues to embarrass himself in the way he previously did.
There'll be exceptions for sports broadcasts, and maybe other content where there is a reason legitimising a difference in prices. For example: a french 24h news channel may be worth 20 Euro in France, but is more of an "yeah, all right, why not" buy for someone in Austria trying to freshen up his language skills.
Are French newspapers also suddenly a lot cheaper when sold in Austria? Of course not. They're more expensive in fact, because of transport and the cost of stocking a relatively unpopular item.
Now, these two costs don't matter for digital/streaming media. So imagine that they are negligible for French newspapers, too. Would they be sold in Austria for super-cheap, with just a slim margin on the price of paper they're printed on? I kind of expect the price to be roughly the same, actually.
The only reason that digital/streaming media get to pretend to be "different" is because they started out with the technological means to enforce market segmentation before regulation got wind of it. And that ability is incredibly profitable, to the detriment of the consumer. Which is why we regulate it. And now they don't want to give back something they really didn't have any right to in the first place.
Note that I'm not claiming either side of whether these streaming media should be the expensive local price everywhere, or the cheap everywhere-else price. Just that the fact that the market value of something differs extremely between regions, is an argument for regulation of market segmentation, not against.
I do hope the EU gets on top of Content Owners soon. In my time at Netflix, we often worked hard to negotiate global content deals; however, it's far more lucrative for the content owners to sell for each market individually. I suspect that the other players in this space feel the same way; all of them are held hostage by the content owners.
It will be unreasonably difficult and just not worth it to track down and negotiate with all the various the owners for each territory for most older titles.
Annoyingly I can't find the link, but IIRC the BBC originally looked into making everything it had ever made in its giant archives available to stream. Even for the content the BBC produced and owned internally, which is a huge amount, they determined it simply wasn't possible to offer the full BBC back catalog all the time on their service - tracking down the various rights holders, actors, and other parties to the content to renegotiate for streaming was an impossible undertaking. A real shame - a readily accessible public database of all of the BBC's content would have been incredible, especially when so much of it was paid for by UK tax payers.
The last Labour government in 2010 was looking at options to legislate to absolve the BBC of these responsiblities, but sadly it didn't go anywhere. This is absolutely a problem that will need legal changes to fix for old content, realistically.
It is a weird idea to steal art from people and force them to sell it to others.
And considering that companies don't have any moral rights, you need to proof that affording them such power positively affects actual people.
I'd go so far as to say I don't think EULAs should be considered a valid legal instrument.
Agreed. The EULA is not even mentioned at the point of sale. Most notably, the company that sold the software often has no idea who has entered into such an (alleged) agreement with them. I thought acknowledgement was a critical part of contract law, but somehow clicking a virtual button in private is claimed to qualify.
I think the more interesting angle of attack is by calling this a contract of adhesion, i.e. saying that the vendor is using their superior market position to force a long and disadvantageous contract on customers.
At the point where EULA was being invoked for many or most buyers, you could probably file a class action claiming the product was falsely advertised (i.e. it costs not $9.99 but $9.99 plus 100 hours of legal fees).
The uniform code of commerce is very concerned about terms hidden in long contracts, which is the reason some parts of long EULAs are in caps.
Lets suppose a techo-archeologist in 2100 finds an old PC and some MS windows install disks. Wow! he says, I've found a major artifact from a hundred years ago in the heyday of the internet! He gets it to power up and loads the disks in. He finds the EULA and takes pictures and uses OCR software to document his findings and then says "Huh, I wonder how anyone would ever read all that or agree to it, I sure don't agree with it, but I've got my research to do." And he clicks "I agree". Did he just enter into a contract? With whom? Suppose Microsoft went under completely in 2075. How does this clicking a button equate to him entering a contract? It seems incredibly absurd to me.
Or what if I dance around in a circle reciting green eggs & ham whenever I sign anything?
Let me know when you find the court that is willing to hear these questions.
Unfortunately the 'had my fingers crossed' test from SCOTUS US v every 5 year-old was recently struck down.
We can quibble over whether EULAs are enforceable contracts due to one reason or another, but you can't just say, "Well I don't agree with the meaning of the EULA, therefore I'm not bound by the agreement".
Imagine if you bought something and then learned that you have to pay again to be able to use the item.
A contract should be beneficial for both parties. But EULA only limits consumer's rights without giving everything in exchange.
I agree that the fact that you only see them after the sale is a problem, though one that would be "solved" to some degree if every vendor could be reliably relied on to honor the terms that say "if you don't agree, return it to the vendor for a refund".
There are bunches of problems around EULAs, but the general concept of an agreement you must adhere to in order to legally use the product doesn't seem especially legally shady to me. Or at least not in the ways referred to by the commenter I was replying to.
Half the software I use has EULAs that were "agreed to" by some other third party.
The execution of the EULA as a thing you don't get to see up front introduces problems, for sure. But I don't see anything blatantly illegal about an agreement that says, "you must adhere to these terms to use this software".
>But I don't see anything blatantly illegal about an agreement that says, "you must adhere to these terms to use this software".
That is not an agreement. I often cannot agree to those terms, because I do not know what they are. And I will use the software regardless, because "use" means nothing specific unless we have an agreement on what that means as well.
EULAs are "agreements" that do not require agreement, that often bind someone to do something they cannot reasonably do.
Law is generally meant to be "reasonable" and much depends on the particular facts.
If EULA contains mandatory binding arbitration and a no class action clause, both your ideas are dead in the water.
Per the SCOTUS contract law supersedes class action. Your idea for a class action is dead. Mandatory binding arbitration is not required to follow any law but the AAA. The arbiter may ignore the UCC. The UCC concerns are now dead as well.
Even the _legality_ of a contract itself probably does not stop mandatory binding arbitration: http://www.law.com/sites/davidmgersten/2014/08/01/arbitratio...
My theory of the case is that if the goods delivered were known to be unfit by the vendor, consideration was not met and the contract wasn't formed.
Some of these contracts waive the implied warrant of merchantibility. Not sure which jurisdictions allow that. Not sure if the warrant of merchantibility is still 'implied' if a specific use is advertised and the product isn't fit for that use.
I suspect the unconscionability test in contract law is stronger in contracts of adhesion.
Misleading the consumer in any way about that can even end in fines.
Sure, advertise "get license to use Wandows for a limited period, further restrictions on use apply" but if you say "get Wandows for $100" then you sold it and no EULA or other additional restrictions can apply; and no, small-print doesn't count.
Unfortunately law isn't what got written into statute or precedent yesterday. Law is what happens to you in court today.
The validity of the contract may be ignored.
Under "BUCKEYE CHECK CASHING, INC. v. JOHN CARDEGNA, ET AL." and "Rent-A-Center West v. Jackson" mandatory binding arbitration overrides a challenge to the validity of the contract. The arbiter will decide if the contract is valid.
Under "Hall Street Associates, L.L.C. v. Mattel, Inc." the arbiters "manifest disregard of the law" is not enough to overturn an arbitration award against you.
So, no, a valid contract is not required, so long as an otherwise invalid contract contains an mandatory arbitration provision, the "contract" will be decoded by mandatory binding arbitration. If you are a human vs a corporation, your win rate is 0.2% in the national arbitration forum.
A purchase is not required to be locked into a mandatory binding arbitration agreement, because a whether you'd made a purchase would be part of the validity of the contract.
Knutson v. Sirius XM Radio Inc.
The EULA almost certainly contains a provision [..]
> There are two types of validity challenges under § 2: "One type challenges specifically the validity of the agreement to arbitrate," and "[t]he other challenges the contract as a whole, either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract's provisions renders the whole contract invalid." Buckeye, 546 U.S., at 444, 126 S.Ct. 1204. In a line of cases neither party has asked us to overrule, we held that only the first type of challenge is relevant to a court's determination whether the arbitration agreement at issue is enforceable. [...] But that agreements to arbitrate are severable does not mean that they are unassailable. If a party challenges the validity under § 2 of the precise agreement to arbitrate at issue, the federal court must consider the challenge before ordering compliance with that agreement under § 4.
Could one not attack the agreement to arbitrate on the grounds that no binding agreement could ever have been reached in the circumstances? Even severing the arbitration clause from the remaining of the contract, it seems it could be argued that there was no agreement to arbitration, as there was never any intention to enter into an agreement of any kind (I'm assuming the claimant would argue that they knew the EULA was not valid as a contract and thus ignored the terms). This seems especially so as the FAA specifies "[a] written provision in [...] a contract" - there was never any intention to create a contract by at least one of the parties.
Even if the argument does not hold, framing in such a way would require the courts to consider it (the validity of the agreement to arbitrate) rather than it just passing it directly to the arbitrator.
Perhaps that's just a hopeful reading of the case; it just seems absurd to me as an English lawyer (degree, non-practising) that the arbitration clause can be plucked out and enforced when the contract itself is a farce.
There was an attempt in Germany to sue Steam to allow users to resell their entire Steam account(1). However, that effort failed. I think they should have pursued a case that focused on allowing Steam users to resell individual games. There may still be a court case that could be won that focuses on reselling the individual games keys between users.
I think in the EU though there could be some debate about whether games are considered "software". Only software is covered by Oracle v UsedSoft as I recall.
Oracle sued alleging copyright violation. The ECJ ruled that what UsedSoft was doing was not a copyright violation.
Applying that to Steam, it would imply that if I sold someone my Steam key for a game I had purchased I would not be violating copyright. It does not necessarily imply that Steam has to make or allow the key to work for the buyer. That's out of scope for copyright law.
"On 3 July 2012, the ECJ handed down its landmark decision in UsedSoft GmbH v Oracle International Corp (C-128/11), ruling that the owner of copyright in software cannot prevent a perpetual licensee who has downloaded the software from the internet from selling his ‘used’ licence. This decision has significant implications for the software and other digital industries." 
For example many countries started to require that mobile phone numbers should be transferable between carriers and mandated the carriers to build an infrastructure for this.
What about if I use them to buy virtual non-consumable items (like permanent character upgrades)?
I assume the law wouldn't apply to consumable items (like spending 50 gold coins to speed up the construction of a building) because it doesn't result in any in-game item I own.
As far as reselling unused in-game currency like gold coins that speed up construction of a building, I personally think it would be cool to see a secondary market pop up. However, I don't know if that would be covered by UsedSoft v Oracle.
The big question is whether individual Steam games should be able to be resold in the EU due to Oracle vs UsedSoft. If so, that's a potential multi-billion dollar secondary market that doesn't exist yet.
Edit: Sidenote, I actually started an auction site based on the idea of reselling Steam games (and ios games) several years ago based on the UsedSoft v Oracle ruling but due to these companies not allowing users to transfer licenses between each other, my startup was not workable.
I wonder if the contracts are the same here or if processors just don't want to know because they still make money twice from any of those sales.
Software was never truly a "product" in the same way that physical goods are -- it was always a service thanks to the maintenance and continued investment required. It may have been better for the consumer in the short term to "buy" software, but a subscription model allows for more predictable cash flows to the developer of the software (which keeps software vendors in business -- and their software supported).
Consider as a counter point, I can still pull up cartridge based games on my old consoles and they work. Rather well, actually.
Now, that does speak only to the "health" of the software I run. It also ignores the implications of this world we are in where everything is fully connected to the internet.
To your point of healthier for the developers. Do you have numbers to back that up? Certainly gave companies a more reliable cash flow that are licensing software. But... conversely, this gave consumers a burden in the form of constant cash flow out.
It's scary to contemplate a world where the software you rely on every day can change out from under you without your control or even knowledge. See the animosity aimed at Windows 10 updates.
Not for people who don't want software to change out from under them. This includes a large number of people and cuts across just about all industries.
Not for people who want portability. "Cloud" services have a horrid habit of holding your data hostage. There's usually lip-service to portability, but for any moderately complex application, there's nothing available to load the data in to.
Not for people who are not connected 24/7. Sure, this number shrinks all the time, but there will always be times when we're offline.
Not for people who consider their data sensitive. Windows 10 should probably be considered malware by anyone who has a nondisclosure agreement with teeth and works on sensitive documents.
It is absolutely better for businesses creating commercial software. Revenue is so much easier to handle.
Citizens revolted when it was learned they may need to obtain a license from the government to collect rainwater from their roofs.
The loss of perpetual right to use is a devastating and nasty impact on the industry to customers. I've been involved in big hairy nasty disputes from massive vendors of cloud services -- they have you over a barrel in the way the IBM did in the bad old days.
Here's the ruling: http://curia.europa.eu/juris/document/document.jsf?docid=124...
If you do resell your "copy" of the software, does the EU law make the company accept new-user registrations/activations? Does it require them to also send out new updates to the non-original owner?
It's been awhile since I read that Oracle v UsedSoft ruling, but I think that the new owner is entitled to whatever updates are offered. If they were paid updates, (like upgrading from v7 to v8 for $20) the new owner would still have to pay the upgrade fee, of course. But if they were free updates, then they would be free to new owner just as they would be to the original owner.
From a software seller's perspective, I don't see the issue with this. If you sell one license of your software to a user, you have accepted that one user will consume one license of your software. If that license gets transferred to a different user then the original user has relinquished their license, which has resulted, still, in only one license getting consumed by one user. When you sold the software you committed to updating that one license of software that you sold, what does it matter who is using and getting the update for that single license? (Of course you don't have to give free updates to any users whether they bought your software on the secondary market or directly from the software developer.)
If you look at ProTools, they actually let user transfer licenses between each other. The licenses are stored on an iLok and users can transfer keys between one another. It's great because users can sell used audio plugins for protools or the actual protools software itself to each other. https://www.ilok.com/#!home
Like if you buy an iPad with your name engraved on it, then when you sell it, the buyer will be stuck with your name still on it - Apple isn't obliged to re-engrave it with the new owner's name.
This is very different from the old system of buying something like Word (or FCP 7) in a box, getting a few minor updates to fix bugs, and when the new major version came out, you had to pay at least an upgrade fee, if not full price.
This applies to every software product in their store (and Google's Play Store) that is bought for a one-time fee in exchange for a lifetime license in the EU.
In the Oracle vs UsedSoft case, the EU court was taking on this question of what does it mean to "own" a digital product vs "licensing" a digital product. That court came to the conclusion that if you paid a one-time fee for a lifetime license of a digital product then you own that product (no matter what the EULA says) and the first sale doctrine applies, which gives you the right to resell it. On the other hand, if you were paying a fee that only gives you access for a set amount of time (a subscription), then you would just be renting (or "licensing") that product for a certain amount of time and thus wouldn't own it, which means you can't resell that product because it isn't covered by the first sale doctrine.
A subscription expires and would need to be renewed. Your license for FCPX never expires. Since you paid a one-time fee for a license of FCPX that never expires (a lifetime license) your copy of FCPX would be covered Oracle vs UsedSoft in the EU and you could resell it. Paying a one-time fee for something is not a subscription.
If you buy a car with cash, you own that car. You can own/use that car for the rest of your life or you can resell that car. If you lease a car you have a subscription that you must renew to keep using that car and you do not have the right to resell that car. That is basically how the Oracle vs UsedSoft sees software products in the EU.
No actually; the law says it's _allowed_ to resell software, but it doesn't say companies are _required_ to make software transferable. If they did make it mandatory, it'd be the end for digital-only software like the app stores, Steam, etc.
> On 3 July 2012, the ECJ handed down its landmark decision in UsedSoft GmbH v Oracle International Corp (C-128/11), ruling that the owner of copyright in software cannot prevent a perpetual licensee who has downloaded the software from the internet from selling his ‘used’ licence. This decision has significant implications for the software and other digital industries.
I'm assuming this is almost similar to attempts to use copyright law to stop the sale of products on the grey market. http://www.bipc.com/court-rebuffs-attempt-to-use-copyright-l...
I do wonder though, if they changed the underlying software on the cartridges they would get into trouble. I do not see this stopping John Deere's practice of locking up their hardware through copyright laws. https://www.wired.com/2015/02/new-high-tech-farm-equipment-n...
That and it effectively divides up lobbying power against the DMCA. It doesn't matter if the analog loophole effectively dooms all forms of DRM on music, video, and books or that video game DRM is always hacked within a few months. What matters is that snake-oil salesmen have convinced Hollywood that it's a good idea and they have a very effective lobbying group.
I bought a Omage Aquaterra, with the big white dial for $1400 years ago. This watch was going for $3500 in the authorized retail stores.
Swatch took Costco to court, and lost.
There's no factory warranty, but most of these new high end watches will keep perfect time for 10 plus years. Oh yea, Costco does have some watchmaker that supposedly repairs watches. I can repair, so I don't trust anyone anymore.
It's too bad companies continually screw Americans on price, on so many products--the medication cost difference really bothers me.
some people also like sophisticated physical mechanics (likely including GP, since he can repair watches), but i believe that's typically secondary.
If you just want something that keeps time, the $20 Casio is fine. In fact, most people I know just look at their phones. However, there's elegance and sophistication present in a luxury watch that you don't get with a simple digital watch.
> As Lord Coke put it in the 17th century, if an owner restricts the resale or use of an item after selling it, that restriction “is voide, because . . . it is against Trade and Traffique, and bargaining and contracting betweene man and man.” 1 E. Coke, Institutes of the Laws of England §360, p. 223 (1628)
Perhaps I've caught a time-traveler? If so, to Coke: I'm having some friends over for dinner tonight, and you're welcome... email's in my profile if you need directions ;)
> First up are the Return Program cartridges that Lexmark sold in the United States.
I often find the decision to be more readable (if much longer) than the syllabus.
>The other option is to buy a cartridge at a discount through Lexmark’s “Return Program.” In exchange for the lower price, customers who buy through the Return Program must sign a contract agreeing to use the cartridge only once and to refrain from transferring the cartridge to anyone but Lexmark.
>As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell.
There are two issues at play here, right? One is Lexmark's patent rights, and the other is the contract between Lexmark and the consumer. The Supreme Court held that Lexmark can't use patent rights to prevent refilling the cartridges, but what of the contract? Is that enforceable?
"If the patentee negotiates a contract restricting the purchaser’s right to use or resell the item, it may be able to enforce that restriction as a matter of contract law, but may not do so through a patent infringement lawsuit."
Although, this brings up an interesting idea, which may be the logical conclusion to all of this. The patentable parts at play here are in the cartridge, and it was the sale of that that exhausted their patent rights. Now if Lexmark decided that it was only going to sell you the toner, but maintained ownership of the cartridge, then they'd be able to sue any re-manufacturer, regardless of their source (domestic vs abroad end users). Because (a) it would be patent infringement and (b) it would be selling stolen goods.
Shouldn't they be able to structure their lease agreement as a 1 time payment and 100 year term or something?
If I lease a car, someone else can't repaint it and sell it legally.
If a customer chooses not to have a cartridge refilled but would rather buy a new one, the customer just returns the cartridge to a recycling point.
Sort of like beer bottles in the UK half a century ago. The bottles and crate remained the property of the brewery and you returned them to claim your deposit back.
Usually, there is a clause in the agreement with the brewery that owns the keg that you will not refill it. However, that's a contract with the customer, not the competing brewery and as far as I know, it is not illegal for the second brewery to refill them (but the customer can be sued).
Let's say the original brewery has a patent on the keg in question. Normally you would not be able to use the keg because you do not have a license to the patent. I think the interesting point here is that if the original brewery retains ownership of the keg, then the second brewery can not refill the keg without infringing on the patent. However, if the brewery sells the keg to the customer, then the customer sells the keg to the second brewery -- the patent is exhausted (in the opinion of given in the link). So the brewery can fill the keg because they own it.
To be honest, while I think a sane law would work this way, I'll bet this is trickier than it seems. Let's say you have a special filling mechanism on the keg that is patented. You can sell the keg to the user. The user can use the keg for it's intended purpose (to dispense beer). The user can then sell the keg (either full or empty) for its intended purpose (to dispense beer). However, they can explicitly say, "We do not transfer the patent rights for filling this keg using our patented filling system". The user signs an agreement stating that they understand that the keg can not be refilled and that they have not bought the rights to the filling system.
In that case, when they resell the keg, how can the patent rights be exhausted? The customer never bought them in the first place.
So I expect SCOTUS will rule against this (unfortunately).
Its not quite analogous
And one could make an argument that, since printer cartridges are more fungible, the difference matters for cars but not for printer cartridges. IANAL, so I don't know if it makes any legal difference.
> even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law
> and whatever rights Lexmark retained are a matter of the contracts with its purchasers, not the patent law
The contract was between Lexmark and the consumer. If the consumer violates that contract and sells to a re-manufacturer, then the re-manufacturer may refill the cartridges, as the re-manufacturer never entered in to a contract with Lexmark.
To the degree that the contract is enforceable, then it is with individual consumers. No individual consumers were parties to the case, so the validity of the contract wasn't ruled upon.
The reason it matters is that Lexmark has to sue its customers --the ones who signed the contract--in order to enforce a contract right. In the case that the Supreme Court just decided, Lexmark sued its competitors, the cartridge remanufacturers.
For Lexmark to sue its customers would be administratively difficult and is also generally not very good PR. So my guess would be Lexmark will never file that lawsuit.
The case is limited to the question of whether Lexmark has the right under patent law to prevent resale, refurbishment, and refilling of its cartridges. The Court ruled that it does not.
The risk of being barred from enforcing their patents probably encourages Lexmark to not even attempt to bring such a suit.
Edit: HN seems to strip the trailing "." from the URL
In the case, Lexmark relinquished its rights to the physical product in question when they sold it. Then on the basis of patent law (the idea that they own the rights to the "idea" of the toner), they tried to say that you may not sell it to anyone else. What SCOTUS is pointing out is that Lexmark's patent does not grant them control of a product they made and sold.
To be clear here, the patent prohibit others from making (and subsequently selling) these toners, but if Lexmark made the toner, all bets are off.
SCOTUS is saying that they can't use patents to say you may not sell to anyone else. You can instead use contracts to say these things, but those contracts are with the initial customers only, and don't "flow through the market" with the item.
Of course suing your customers is a PR disaster even if you would win. Suing resellers is a bad idea as they will never carry anything you make again which means you might win one round but you can declare bankruptcy. Even if sue OfficeMax with a promise to not sue Walmart, expect that walmart drop you anyway as they cannot afford that risk.
I'm not opposed to the deal, I just better get really incredible terms.
>But an illustration never hurts. Take a shop that restores and sells used cars. The business works because the shop can rest assured that, so long as those bringing in the cars own them, the shop is free to repair and resell those vehicles. That smooth flow of commerce would sputter if companies that make the thousands of parts that go into a vehicle could keep their patent rights after the first sale. Those companies might, for instance, restrict resale rights and sue the shop owner for patent infringement. And even if they refrained from imposing such restrictions, the very threat of patent liability would force the shop to invest in efforts to protect itself from hidden lawsuits. Either way, extending the patent rights beyond the first sale would clog the channels of commerce, with little benefit from the extra control that the patentees retain. And advances in technology, along with increasingly complex supply chains, magnify the problem. See Brief for Costco Wholesale Corp. et al. as Amici Curiae 7–9; Brief for Intel Corp. et al. as Amici Curiae 17, n. 5 (“A generic smartphone assembled from various high-tech components could practice an estimated 250,000 patents”).
P.S. This also means that expensive professional software like Autodesk's, or anything with such an EULA, cannot be considered an asset since it has no dollar value after purchase.
What stops me from founding a company through which I get paid, leveraging that company to purchase 100% of my "assets", then instituting a EULA and selling (at no cost) a lifetime license to use anything I want to myself? As per your logic (as I understand it), I could then declare myself utterly destitute and owning $0 worth of assets. My company could also claim $0 worth of assets.
At that point, could I not play any number of games to increase eligibility for government assistance programs or reduce tax burden?
(This is a quick thought, so if there's any glaring flaws in this idea please do point them out.)
You need a place to live. You have the company purchase it, "license" it to you under a EULA. The company now owns property worth some amount of money (it can sell this property and turn it into cash.) Thus, the company has at least a single asset. And you own the company. You have an asset.
Oh, you want the company to rent a place to license to you? Fine, now no one has assets, but the leasing company might not actually be willing to sign the lease with a company who's going to effectively sublease.
Just a few of the absolute most basic questions:
What does it mean to possess something?
Is physical possession all that matters?
Is it the right to use something?
If you possess something, but someone prevents you from using it, have you lost property?
And then if you start mixing in taxes... whoa boy. Take a look at http://digitalcommons.law.utulsa.edu/cgi/viewcontent.cgi?art...
The net of all of it that the law, both formal and common, has evolved to deal with this topic. But there are constant new frontiers, like this SCOTUS decision.
If the company buys assets and sells or transfer's them to you, the fact they are not assets to you doesn't really change the facts for the company do they?
However, if your company buys stuff with a EULA that prohibits resale then those purchases are an immediate 100% loss. If the company must liquidate the following day those purchases will not contribute to recovering any investment value.
Look at visual effects and post production companies in M&E, a large part of Autodesk's addressable market. These companies are constantly going out of business, and the unrecoverable costs of very expensive software contributes to this volatility.
I do know our commercial software at work on about every platform is by license only. we don't own any of it. didn't microsoft do this with Office, give you a "low" monthly rate instead of selling out right?
Perhaps the plan is, buy it for 299 or license it for 9.99 a month or 99 a year? so this would skirt the issues presented with physical items?
One could argue a subscription is different than a purchase (of anything license or otherwise), but if you subscribe to a magazine you can legally resell any issues you receive. I see no reason you shouldn't be able to re-sell your Office 360 subscription.
The law as decided in the Autodesk case seems to indicate that you can restrict the sale even of physical items if you assert that the items contains 'licensed' software, and state the terms of the license do not allow resale. The owner of the product could sell the physical item, but only if they could remove the 'licensed' software.
Glad to see it extended to patent law as well.
Real property is not chattel. There's an exacting legal distinction between real property and chattel.
In the US, real property deeds carry what in the real estate field is sometimes called a "bundle of rights" which are by default included together but can be separable. One is the occupation and use of the land. One is the right to dispose of it to another buyer. One is the mineral rights to what's below the surface. One is inheritability. One is the freedom to put the land to particular uses. It's possible for example to negotiate a contract in which a person, party A, has nearly full ownership of land for a lifetime but it then goes to another party, and party A is not free to sell to someone else in the meantime. It's possible that you own a home under which you own no oil or gold rights. It's possible even (at least in some places) to grant a deed with lease-like restrictions such as giving your ne'er-do-well child a house and land that he actually owns, but only so long as he completes rehab and no drugs are ever found there.
Deed restrictions are agreed to by a number of nearby landholders and depending on jurisdiction may count as a contract or may actually be more fundamental to the ownership of the property, which further may depend on how the property was conveyed to the buyer. In many states or counites / parishes in those states, deed restrictions are on file with a government office and apply only for a certain number of years. A certain number of landholders must agree to new restrictions. A certain lower percentage of them must agree to keep enforcing existing restrictions. Depending on the type of restriction, the nature of the organization enforcing, how equally they've been enforced in the past, the jurisdiction, and potentially other factors they may carry no weight at all or may result in civil actions up to fines, liens, and specific performance rulings to correct deviations.
In Houston, or maybe it was Harris County (most of Houston is in Harris County and much of the county's land is in the city, so it's easy to forget when not using the information that often) HOAs were told that the bylaws must be on record, must be provided to property holders, must be enforced 100% the same across all restricted plots, must be mentioned at regularly held meetings, and a few other conditions must be met or they were completely null and void. I live in a community with a reasonable HOA, and I'm glad it's neither a free-for-all (there's little to no zoning at the city level) nor one of those HOAs that charges hundreds of dollars a month to come and measure the grass and use a spectrometer on the exterior paint.
Real estate is almost exclusively state law, so it moves faster and is different among states :)
Federal law moves slower.
From flawed memory, the trailer sales business offered the Warn product line at prices well below those of other Warn dealers and below the suggested retail prices from Warn. He was sued by the manufacturer in an attempt to get him to raise the prices and he prevailed I think based on first sale doctrine since the court ruled that Warn had already been paid for the product and that ownership and control of the winches passed to the trailer manufacturer who was thus free to advertise and sell them at any price he desired even if it meant he took a loss on each one sold. They belonged to him and he could do as he pleased with them. He had been using them as a kind of loss leader where one of the incentives of buying a trailer allowed you to purchase a winch at a large discount.
EDIT: The case was not Warn winches, it was Ramsey winches and the ruling was:
Briefly - I have a bad memory. The case was a lot more involved since Ramsey tried to terminate the distributor agreement and was thus sued by Pierce Sales. Pierce was a high-volume winch dealer and due to the high volume of sales he was able to buy the winches from Ramsey at the lowest price available to dealers. He then used that buying power to advertise the lowest prices for the winches and even offered other dealers the opportunity to buy hard-to-find winches directly from his stock at prices lower than they could buy directly from Ramsey if that particular winch was even available from Ramsey stock. Pierce alleged price-fixing by Ramsey and ultimately won the case.
I remembered the court case but almost none of the pertinent details.
1) People who sell re-filled cartridges, and offer to refill your existing cartridges will no longer suffer malicious lawsuits from HP & Lexmark.
2) That will increase the supply and create a price competition between re-fillers. Making it possible to easily find ink cartridges at 1/2 to 1/3 the price that the printer manufacturer sells it for.
3) The manufacturers will reduce prices on their ink cartridges in order to support their revenue stream.
I also expect more counter measures like ink cartridge chips that 'self destruct' when the cartridge is exhausted to prevent refilling. And aggressive prosecuting under the DMCA people who reverse engineer cartridge chips to create work alike versions.
If you are looking for printers where you can get ink at cost in exchange for paying a bit more up front, that's available now: https://epson.com/ecotank-super-tank-printers
Kodak also did this ~10 years ago  but I cannot figure out if they still use this business model.
What I always hope for, and never expect, is people competing and using engineering quality as a competitive discriminator. I want the ink jet printer that German engineers designed to show they could do a better job than the Swiss engineers. The one that prints repeatably color and registration accurate prints as the building it is in burns down around it. I had a Mannesmann-Tally printer that I swear would stop bullets while it continued to chug away on your printouts. I remember those days fondly :-).
I'll settle for paying a 50% gross margin on a printer that is supported by all my systems, doesn't use a proprietary paper, ink, or other part that insures I can continue to use and service it for 10 years.
The fact that such a product doesn't exist tells me that either there aren't enough consumers like you out there to make a market at an acceptable price, or that consumers like you are willing to defect and buy a cheaper product, if it's cheaper by a large enough margin.
Again, not doubting your desires, but the market is giving you its answer to your offer ...
I have always hoped that we might some day get a market maker for quality, imagine something like EBay but instead of matching up yard sale customers with swap meet vendors you matched up customers with the means and willingness to both recognize and pay for quality. Still waiting on that :-)
We might want quality and be willing to pay for it, but still buy the cheap junk because we can't reliably identify quality in the marketplace. Paying more for a product could get more quality, but it might just be paying more.
It's a variation of the cherries and lemons in the used-car market.
4) if HP & Lexmark are unable to use the DMCA to stop cartridge refillers, then the price of printers will go up, as the printer manufacturers won't be able to make any profit on cartridge sales. They'll instead have to make all their profit on the initial sale of the printer.
 Before you count the Ink costs of course.
But to reiterate, yes it would be good if we all knew how much cartridges would cost up-front. I've even heard of some printer companies (Samsung, if memory serves) selling printers with half-full toner cartridges, to make the up-front cost even lower. This gives consumers the (false) impression that toner will be cheaper than it is, on the thinking that "I just bought printer + toner for $80, therefore toner obviously costs much less than this". Unfortunately, this isn't true when it's a half-full toner cartridge.
But I think in practice when you see this used in consumer goods sales, it's likely because the manufacturer is exploiting psychology in which unsophisticated consumers do not accurately predict their costs. For example: https://academic.oup.com/qje/article/121/2/505/1884013/Shrou...
The entire reasoning for bringing a patent lawsuit is that it allows them to sue the refillers/resellers, instead of having to sue millions of individual customers who might have violated a shrink-wrap contract with Lexmark. Going into a cartridge rental business, besides adding a ton of overhead, wouldn't really change that -- they'd still need to go after the renters one at a time.
Product price is $180. Rebate is $40. Applying for and getting the rebate necessitates signing of a 'contract' which prohibits certain action. 
 May not hold up in advanced legal cases but enough of a leg to stand on to get the ball rolling.
"The other is to buy a cartridge at roughly 20-percent off through Lexmark’s “Return Program.” A customer who buys through the Return Program still owns the cartridge but, in exchange for the lower price, signs a contract agreeing to use it only once and to refrain from transferring the empty cartridge to anyone but Lexmark."
Note that because the contract is with the purchaser, and not with the refiller/reseller, Lexmark can only use the original purchaser. Which is why they turned to patent law in order to try to and stop the refiller/reseller.
Fortunately sanity on basic notion of property rights remains within the SCOTUS.
> A Lexmark refill toner cartridge costs about $130. It's not cheap. So there are businesses that have sprung up that take empty Lexmark printer cartridges, refill them and then resell them for a lot cheaper.
Edit: moved long commentary from FOSS blog to separate thread:
Apple licenses proprietary Qualcomm technology from Qualcomm. Apple uses the technology, but builds its own chips.
Qualcomm apparently filed an amicus brief in support of Lexmark in this case:
It was an 8-0 decision, with a minor dissent from Ginsburg on what happens when a product is sold in a foreign territory.
But I see also that she wrote the majority opinion in Eldred v. Ashcroft, saying that the 28-year extension to copyright terms was constitutional.
What's the right way to understand her legal thinking here?
Is she known as an IP maximalist? Or are there other principles she's using to reach these conclusions? (I don't completely follow her logic that, because US patent law doesn't provide any protection in other countries, US patent rights are preserved across a sale in some other country.)
Some people have wondered if she's been influenced by her daughter's views on IP, since Jane Ginsburg (a colleague of Eben Moglen's at Columbia!) is one of the most influential copyright law professors and has taken a maximalist view in many copyright controversies.
> (at least in my bubble) being "liberal" is associated with wanting less strong IP protection
And that's also much less true in regions with major media industries, like New York and Los Angeles.
This is what it means in Europe. It took me a good long time after moving to start hearing it with its international meaning, but now I find the Americanized form absurd in its conflation.
In other words, liberals--in the international sense of the word--absolutely 100% endorse IP maximalization and indeed all forms of corporate ownership, rent, and public infrastructure transfer.
Her dissent is brief and only partial; and so I think she's only calling attention to a minor point that nonetheless has legal ramifications. Remember that the court's can also be to clarify the laws, and in this case, it seems to me that she took the opportunity to point out a gray area that might come up in the future. I see this "dissent" (if it can really be called that) as a footnote of sorts. "Watch out for these situations here", she's saying. It's not a political stance, but rather pointing out a technicality.
> Applying patent exhaustion to foreign sales is just as straightforward. Patent exhaustion, too, has its roots in the antipathy toward restraints on alienation, and nothing in the Patent Act shows that Congress intended to confine that principle to domestic sales.
I may not agree with her opinion but I am happy about anybody who goes against the expected behavior because they are "liberal/conservative". It's time that the people in power think for themselves instead of going by party/ideology line.
I don't know much about IPO law but this seems to be a good thing for consumers and also the "market". I honestly thought that this court would just decide in whatever way corporations want them to deice.
IP laws are a government restriction on citizens. Conservatives generally want strict limits on government regulations and liberals want more government regulations.
Hollywood is pretty well known for being liberal.
Lexmark: "For $20 you can lease one of our fine cartridges for an indeterminate period of time. Just need your signature on page 2, 5, and 6 of this contract."
Canon, Panasonic, HP, Xerox: "You give me $20; I give you cartridge."
2) I pay $3 a month for HP's Instant Ink program. It allows me to print up to 50 full-color pages a month with my inkjet printer, and when one of the cartridges is running low, it automatically sends a replacement. It's not significantly more expensive, in my case (low-volume usage), than buying the ink cartridges directly, but it's a lot more convenient. I'm not quite sure if it technically counts as a leasing program, but it follows a similar ethos. So I wouldn't so easily dismiss the idea that a leasing program would lead to a consumer backlash.
They tell the company "I threw it away".
People throwing used printer cartridges away would probably happen a lot, anyway, right?
Technically it would break the contract but the issue is that it would be very difficult to enforce.
2. I have to think it's pretty hard to establish that a consumable is subject to a lease. What is returned at the end of the lease?
Surely the Supreme Court shouldn't disqualify the patent holder's right to fair compensation for the invention in sales outside of the US?
I just bought a £99 printer that will cost more than £99 in printer cartridge costs after just a few months of casual use and I did not spot any alternatives.
To answer your question, though, the profits for fairly low margin printing hardware business need to come from somewhere. Sure, you can cut the margins on ink. Now you're paying $500 for the printer whether you use it heavily or just now and then.
I'm curious how close to that price point inkjets will get if they have to turn a profit without proceeds from ink cartridge sales. We might be moving toward a point where it makes less and less sense to buy an inkjet at all.
That's how it ought to be, if a printer is USD 500 perhaps quality will rise. I hate replacing equipment every other year because product quality for home use is that abysmal.
If toner/ink were sold at cost, then all of the profit would have to be made in the printer sale. This would cause printer manufacturers to choose the profit-maximizing price, which would be much higher than the current price. At this high price, many light-usage customers would choose not to purchase the printer, and very heavy-usage customers would enjoy a greater consumer surplus (because they would have been willing to pay much more for their high-volume printing).
So it's not that there's anything broken about the current business model — it's just the way that manufacturers can reach as many potential customers as possible. The reason that lawsuits like this one crop up is that third-party cartridge refillers are trying to undercut the printer manufacture on the cost of refills. This makes sense, and eventually we'll find an equilibrium price where third party refills cost somewhat less than "official" refills (which will instead carry more of a guarantee of effectiveness/warranty).
This all begs the question how did this ham handed attempt to abuse patent rights even end up in court and then how did it get appealed to the Supreme Court and moreover why did the Supremes bother to hear it? Because it seems obvious at least to this NL and obvious stuff usually isn't on their docket.
Can it stop smartphone makers from being able to blacklist devices that are resold, for instance?
What is that blacklist?
When I gave my developer edition Galaxy S3 to a friend, having bought it unlocked and used it on Sprint, I had a dickens of a time trying to help them use it on Verizon. Eventually, the answer I got was not that it was different from the version they were selling, nor was it incompatible at the radio level or otherwise wouldn't work on their network, nor did they think it was stolen or otherwise blacklisted, but that the IMEI wasn't prefilled in Verizon's database and they wouldn't add it because we didn't buy it there.
Verizon lost a customer that day. Since then, between myself and my friend and our families, we've probably paid in $6,000 to other carriers in the last 36 months.
FWIW, This filter applies at the point of activating a SIM card, not moving a SIM from a phone they would activate to one that "doesn't work" on their network.
This Lexmark case seems to undermine the Monsanto case. I don't understand this inconsistency between the two cases.
Anybody able to clarify why these are different?
I wish I could hand the SC justices 10 seeds each, with each 10 seed packet comprised by 5 GMO seeds and 5 non-GMO seeds. If the justices could visually sort the GMO and non-GMO seeds correctly, their ruling is actually "followable". If the product in question appears on the surface to be a natural object without patentability, extending patent protections to something that is indistinguishable from a non-patented object and self replicates seems incredibly academic.
(I realize none of those things self-replicate like your seeds... but I think my point still holds.)
Then companies willfully break the contract and send their cartridges to a 3rd party. Lexmark sues the third party and courts throw out the suit.
Lexmark can either tighten enforcement and restrictions on their own customers as well as sue them, or stop the program all together. I assume they will just stop the program and only sell the more expensive new cartridges going forward.
Is there anyone selling a reverse-engineered, refillable pod for the coffee machines that only accept pre-filled proprietary ones?
Do these coffee machine vendors seek to use patents to protect their sales of coffee?
Edit: I know Keurig and Nespresso are the well-publicised examples, but I was thinking of the others. I assume with reasonable confidence there are others still using non-refillable proprietary pods.
A couple years ago this was a debate in France, Nespresso lost but it was because of anti-competitive behavior. There's apparently plenty of 3rd party nespresso pods : around 50 brands worldwide.
Does anyone know why this is?
If this ever happens it will probably be a 4-4 decision where the other justices - knowing they are tied - ask for a tie breaker. Expect there to be a lot of publicity: they will want to make it clear to everything that everything is being done right. This probably includes redoing the oral hearings for the benefit of the new member.
The Canon MG2520 (I think there's a newer version now) is a printer/scanner/copier combo that often retails for $20. (And comes with ink.)
Price of ink would fall in exchange, since they have to compete with the off-brand folks.
The new version is the MG2522, which is currently $25 at Micro Center, and a wireless model, the MG3620, is $40.
Edit: Wikipedia describes this at https://en.wikipedia.org/wiki/Exhaustion_of_intellectual_pro... and in a lot more detail at https://en.wikipedia.org/wiki/Exhaustion_doctrine_under_U.S....
Wikipedia has some articles about it:
If I'm reading the decision right, the question is not whether patent rights "exhaust" in the common case when you sell things (everyone agrees that they do). The question is whether Lexmark, by putting conditions on the sale, can prevent their rights from exhausting. The federal circuit's interpretation was, yes, the rights would exhaust, except that when Lexmark put conditions on the sale that the toner-cartridge purchaser agreed to, Lexmark retained its rights because that's a legal and valid contract between the buyer and seller. SCOTUS said, no, it doesn't work that way, the rights were definitely exhausted:
"Lexmark exhausted its patent rights in the Return Program cartridges that it sold in the United States. A patentee’s decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose. As a result, even if the restrictions in Lexmark’s contracts with its customers were clear and enforceable under contract law, they do not entitle Lexmark to retain patent rights in an item that it has elected to sell."
"The problem with the Federal Circuit's logic is that the exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is a limit on the scope of the patentee's rights. The Patent Act gives patentees a limited exclusionary power, and exhaustion extinguishes that power. A purchaser has the right to use, sell or import an item because those are the rights that come along with ownership, not because it purchased authority to engage in those practices from the patentee."
Then recaps FTC v Qualcomm:
Presumably, some people in another Washington DC building are now reading the Supreme Court decision: the lawyers working on the FTC's case against Qualcomm. The FTC argued in its January complaint, under a headline that describes Qualcomm's "no license-no chips" policy as "anomalous among component suppliers," that "when one of Qualcomm's competitors sells a baseband processor to an OEM, the OEM can use or resell the processor without obtaining a separate patent license from the competitor—just as a consumer buying a smartphone does not have to obtain a separate patent license from the seller of the smartphone." The FTC went on to explain that "Qualcomm is unique in requiring an OEM, as a condition of sale, to secure a separate patent license requiring royalty payments for handsets that use a competitor's components." For example, this would apply to a situation in which a device maker is a customer of Qualcomm and, say, Intel or Samsung's component business.
And Apple v Qualcomm including relevance of overseas sales portion of today's decision:
Count XXIII of Apple's antitrust complaint against Qualcomm is a request for judicial "declaration of unenforceability [of Qualcomm's patents in certain contexts] due to exhaustion." Apple alleged in its January complaint that "Qualcomm has sought, and continues to seek, separate patent license fees from Apple's [contract manufacturers] for patents embodied in the chipsets Qualcomm sells to Apple's CMs, a practice that is prohibited under the patent exhaustion doctrine." ... Apple's complaint already anticipated that Qualcomm would point to its corporate structure: "Qualcomm has attempted to evade the patent exhaustion doctrine by selling baseband processor chipsets to Apple's [contract manufacturers] through QTC, which is operated by QTI, which is in turn a wholly owned subsidiary of Qualcomm." Apple then points to Qualcomm's 2012 restructuring, which I already blogged about back then with a focus on open-source licensing issues. The Supreme Court's broad and inclusive approach to exhaustion simply doesn't allow any kind of end-run around the exhaustion doctrine through a first sale outside the United States as in one of the two issues relevant in the Lexmark case.
 Yes it's FM but his analysis here seems better than it did 6+ years ago. I don't remember him saying things like this in the oracle case: "The good news is that the Supreme Court has once again overruled the Federal Circuit in a way that strengthens those defending themselves against attempts to gain excessive leverage and extract overcompensation from patents."