If Selling Used Software is Legal Then Why Not Used eBooks?

The one thing that publishers like most about ebooks is that you cannot resell them. This precludes the used book market (aka the bane of publisher's existence), but if a recent court ruling in Europe means what I think it does then that's about to change.Zeit is reporting that Oracle has just lost a case in Luxembourg. According to the European Court of Justice (ECJ), software publishers have no right to claim copyright infringement when someone resells a software license. In the US we would say that the court affirmed the "first sale" doctrine; Europe has a similar legal principle.

This particular case involved a Munich-based company, UsedSoft. They specialized in buying and reselling used software licenses (which the original buyers are no longer needed). While that in and of itself is not a shocking activity, a close reading of the license doc itself showed that Oracle forbids resale (they all do, pretty much). According to this new ruling, that clause isn't enforceable in Europe.

That is of particular interest to anyone who reads ebooks. You see, most every ebook is sold under a license that includes a similar - and now unenforceable in Europe - clause. Here's what Amazon says:

Unless specifically indicated otherwise, you may not sell, rent, lease, distribute, broadcast, sublicense, or otherwise assign any rights to the Digital Content or any portion of it to any third party, and you may not remove or modify any proprietary notices or labels on the Digital Content.

Sorry, Amazon, but according to the ECJ at least one of those clauses isn't valid anymore (though it will likely take a lawsuit to get Amazon to admit it).

Now, some might argue that this also invalidates the DRM on the ebooks, but I'm not so sure. This ruling only covers transferring the content to a new owner; DRM currently prevents it but that's a technical issue, not legal.

And do you know what? I think Amazon will love this ruling (once they calm down). Amazon is currently a great place to find used paper books, and I bet they'd love the chance to take a commission when people sell used Kindle ebooks to one another.

Note that this would involve 3rd party sales, just like the current used book market on Amazon. All Amazon would have to provide is a mechanism to remove an ebook from one account and authorize it to another. That's a technical issue, and best of all (from Amazon's viewpoint) they don't have to unlock the DRM.

That sound you hear right now is a thousand publishers saying "oh, crap". Their greatest enemy is positioned to build another secondary market which the publisher can't touch. I bet you hadn't thought of that one, had you?

image by upyernoz

About Nate Hoffelder (11593 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

12 Comments on If Selling Used Software is Legal Then Why Not Used eBooks?

  1. We still have to see if publishers can successfully argue that tarted-up text files — ePub/Mobi — are just that: files, not “software,” first.

    Great point, tho, about Amazon cashing in on used eBooks sales too. KA-CHING!

  2. I don’t see this ruling applying to eBooks. Software and eBooks, while both digital, are different animals.

    The problem with selling used eBooks is that it’s possible for the same person to sell an eBook over and over again. You can’t do that with a print book. Software licenses are different because you would transfer the licence to the buyer (whether it be a code, login info, whatever). The seller would no longer be able to use or sell the software.

    You’re also assuming that only reputable bookstores like Amazon would sell used eBooks, but that wouldn’t be the case.

    • “The problem with selling used eBooks is that it’s possible for the same person to sell an eBook over and over again.”

      Yes, but that’s a technical issue, and not an insurmountable one.

      And you’re right about disreputable ebookstores selling used ebooks; that already exists and it is called piracy. But the real reason i focused on reputable ebookstores is that I don’t see a way to sell used ebooks without some guarantee that the seller loses access. That requires DRM.

      • Agreed about requiring DRM, so all the DRM-free eBooks already published would have to be exempt from any ruling.

        If digital books eventually have to be read while connected to some service (like Steam for games), then maybe a viable system can be developed, but you’ll soon have people screaming that they want the ability to read their books while offline (like Steam has an offline mode).

        I just don’t see this happening any time soon because of the potential for copyright infringement on a large scale. There’s just no way to guarantee that the seller would no longer have access to a copy of the eBook, which he or she could sell again and again and again and again.

  3. As far as I’m concerned, the principle is simple. It doesn’t matter if you’re talking paper books, ebooks, t-shirts, DVD’s or paintings.
    If you produce two where before there was only one and you have no right to do so, ie you don’t own the copyright and publishing, production rights whatever – you are a pirate.
    The only exception I can think of is to produce more than one copy of an ebook for your own use – for instance, I back mine up to my main computer. But nobody else gets them. The only reason it hasn’t happened more often with paper books is that the process is trickier, although people have got into trouble for it before.
    Simple? No, there’ll be people who will argue that black is white, that according to subclause e paragraph c of European Directive 359, 1985, that it’s okay.
    It’s not.

  4. I haven’t a clue about Europe, but in the US the first sale doctrine applies to the physical object containing the copyrighted material (17 USC 109). So ignoring licenses, you could resell a CD or DVD that contained software under first sale, but you can’t resell software that you downloaded because you didn’t buy a physical object.

    It comes down to this: when you resell the CD or DVD you’re not making a copy, you’re selling your copy. When you resell downloaded software, you’re necessarily making a copy for the buyer.

    Since e-books are pretty much universally sold by download, the first sale doctrine doesn’t apply (in the US). A few e-books do appear on CDs, usually bundled with print books, and those would be covered under first sale. Unless the CDs were produced outside of the US, in which case they’re not covered by first sale in the states of New York, Connecticut, and Vermont (John Wiley v. Kirtsaeng).

    Licensing forbidding resale has been upheld as binding in the states of California, Oregon, Washington, Arizona, Nevada, Idaho, Montana, Alaska, and Hawaii (Vernor v. Autodesk). So that’s the opposite of the European decision.

    • The ruling was about and specifically applies to downloaded/downloadable online purchases. The court explicitly states that it must not make any difference whether you resell a CD, a DVD, or a “non-physical” copy from the internet. However there are number of restrictions. This is only valid as long as the license grants a permanent right of use.

      The court’s decision is available on http://curia.europa.eu/juris/document/document.jsf?text=&docid=124564&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=2562339

      It also mentions a few more rights of the copyright holder regarding the resale. For example it “is entitled […] to ensure by all technical means at his disposal that the copy [still on the sellers system] is made unusable.” So basically the copyright holder is allowed to use DRM to prevent abuse.

      A number of the articles covering this ruling specifically mention the possibility that this may oben a market for used mp3 files or ebooks. Since used books are (at least in Germany) exempt from the fixed price law, this might for now be also become a way to undercut fixed prices.
      Amazon Germany already has a trade-in program for used (physical) books. Customers using this program do not get money but Amazon vouchers. The books are then sold through the Amazon Warehouse Deals. Extending this to ebooks looks like an even better deal. Amazon can avoid shipping costs, might be able keep out any competitors for used kindle books, and ties customers even closer to its eco system (by offering a market for used ebooks and forcing them to spend their vouchers at Amazon).

  5. Of course, this stands in stark contrast to last year’s ruling in the US in which the Supreme Court declined to hear an appeal in the matter of Vernor vs. Autodesk, an American used software vendor who bought up unopened copies of Autodesk at an office sale and resold them, contrary to the terms of the license by which they were sold to the original owners. This let the lower court ruling forbidding such sales stand. (Though to be fair, the original court ruling there was in favor of the used software vendor, too.)

  6. This is never going to happen. If it was, we would be seeing used MP3s or used Apple Itunes by now since the music is the advance gun on all of it.

  7. Sooner or later the US is going to have trouble with the continuing artificial legal separation between physical and digital material. A physical locked file cabinet cannot be opened without a warrant, but an encrypted folder containing the exact same information can be forcibly decrypted without court intervention. Physical books can be resold, but the exact same book in digital form cannot. Intercepting E-mail is allowed, but physical mail is protected. It’s all hugely inconsistent, and based completely on the exact phrasing (and sometimes even the exact intent) used decades ago when the various laws were written, most before the Apple II.

    Unfortunately unlike in Europe, the entirety of the US government apparatus is run by people born long before computers. Even worse, if you compare our governments, we are almost exclusively run by lawyers (even those who have degrees in something else also have law degrees). This means that whereas in Europe where young, multi-field governments (look at the number of engineers) are already getting their acts together on technology, we have no choice (barring major government reform, which if it wasn’t going to happen after the huge financial meltdown is unlikely to happen) but to wait for the system to ‘age out’ these old, technologically illiterate lawmakers. In other words, the US will catch up to 1990s technology legally speaking in about 2020.

  8. Thanks for covering this. Just a point of clarification on this judgment: The Court takes care (more care than the AG) to highlight that the ruling applies specifically to software licences. In para 56, it recalls that Directive 2009/24 on the legal protection of computer programs is lex specialis to Directive 2001/29 (the Infosoc Directive). This means that 2009/24 applies over and above the provisions of the Infosoc Directive. By saying this, it distinguishes the legal situation of computer programs from other things mentioned here, like ebook or music distribution, which are still digital services under EU law and thereby not capable of being exhausted. The judgment doesn’t affect these areas, or does so very little, unfortunately. For a tipple of disatisfaction about this see AG Kokott in Football Associations at point 175.

    However, happily, the Court does mention the principle of conform interpretation. I wouldn’t be surprised if some time soon we see non-software related cases arising that cause the Court, and more generally the EU legislature, to rethink their stance on the legal diviion between digital services and the sale of goods in situations where the content concerned is the same. Perhaps it’s too soon to prejudge on this, but something like ReDigi in the US could just about tip this off… (see http://bookseller-association.blogspot.it/2012/07/digital-files-arent-just-for-christmas.html )

  9. Services means the provision of files that are for reading only, and not for dwnloading. i.e. where ownership does not pass from provider. When you download a ebook or mp3 you become the permanent owner and the licence confirms this. I think ebooks would be covered by the ruling but it will likely need a test case unless the EU issues an updated Directive covering legitimate downloads.

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