RE: Commentary on your article: Microsoft Risks Copyright Impotence

Mr. Mitchell,=20

Thanks for the reply. One quick point, my last name is Petersen, not

Peterson. Not a big deal but I thought I would point it out nonetheless.

With respect to my critique of your article, it had nothing to do with

the fact that you cited only one case. Rather, I took issue with the

fact that the facts of that case are easily distinguishable from the

facts at hand. Further, in the one MS case that attempted to apply

Lasercomb to a MS EULA, MS won the substantive issues in that case.=20

As I see it, your argument is that MS is misusing its copyright because

it seeks to expand the reach of the copyright beyond what Congress

intended. Specifically, your contention is that MS is violating the

boundaries between public and private use. This begs the following

questions:

1. What differentiates between public and private use?

2. In the facts at hand, do we have a public or private use?

3. Once classified, do the facts at hand constitute mis-use of

I am going to take a few days to research the SCOTUS jurisprudence you

have cited, but at the outset, I want to share a few comments. As far

as the law is concerned, I question how much on-point case law is

available. Copyright/Anti-Trust law and the case law in my opinion, has

lagged behind the technology curve for far too long. This is one of the

reasons I decided to go to law school.=20

I don't consider people that work in the commercial sector, deploying

applications (consultants) to be working in the private arena or to be

private actors. On the other hand, if I wanted to conduct research in

private and not for financial gain, I would indeed agree that this would

constitute a "private performance".=20

A good example is a DVD - which would enjoy the protections of

myself in case the original gets damaged or in the case of protecting

the original. Here, I am acting completely in private. However, if I

started making multiple copies and handed them out to my friends, I

think you and I, and everyone else would agree that this would be a

violation of copyright. Further, consider the case of me inviting 10

friends over to watch a DVD. Again, I am a private actor here and it is

none of the copyright owner's business what I am doing. On the other

hand, charging admission at the door to allow people to watch the movie

could be a problem. On the other hand, if I rented the DVD at

Blockbuster and wanted folks to chip in (assuming I was really cheap!!)

- I could do that. Further, if it were a pay-per-view event and a group

of us wanted to split the costs, we could do that. Ultimately, it is a

mixed bag and the law needs to catch up to the digital age.

Comparing to this context, if I want to tinker around to see if I can

get the royalty free distributables to work in Linux, I don't see the

harm in that. I am in the private context and MS should not care.

Well...MS may care but I don't think there is much that could be done

about it. On the other hand, If I want to enter the stream of commerce

and start selling that solution, then that is another matter altogether.

No longer am I acting privately. Here Mr. Mitchell is where I see your

private vs. pubic argument falling apart.

I do agree that there are affirmative limits on how far software vendors

can reach in their EULA's. For example, placing anti-competitive

language that would run afoul of anti-trust laws would be impermissible.

This is essentially what the holding of the Lasercomb Case stands for. I

also agree that EULA's have played fast and loose at times with the

first amendment (the absence of the State Action Doctrine

notwithstanding). Like any contract, EULA's have to be fair, not against

the law, and further, not against public policy. My disagreement with

your position is that what MS seeks to do here is not against the law,

is fair, and does not offend public policy. This was the essntial

holding in Lasercomb - non-analogous scnenario nothwithstanding.

I believe there are some important facts here that you are not aware of.

In these facts, there are two components. First, there is the Visual

FoxPro development environment. Every developer is allowed to install it

on one and only one machine. If MS were to limit this aspect of the EULA

to only Windows - I would agree that this would be impermissible. Many

people are running Office under Linux today and MS apparently does not

have a problem with that. MS rang the register with the sale of the box

- so that should be the end of the story. With Visual FoxPro and for

that matter, with .NET and MSDE, OLE-DB, etc. there is royalty free

distribution. To date, I have only read the VFP and .NET EULA's. And, as

far as the royalty-free distributable is concerned, those can only be

run on the Windows platform. It is important to note that MS is under no

obligation to offer royalty free distribution in the first place and

could end support for that tomorrow. As I see it, Windows subsidizes

this effort. And, if that subsidy is not present, MS has the right to

require payment in the form of a royalty fee. Others have attempted to

make a product tying argument here. That analogy does not apply since

the end user has alternatives. As has been stated before, people wishing

to purchase the full development version of Visual FoxPro and run that

on Linux may do so and in turn, would be in compliance with the EULA.=20

A company that spends $5 BILLION annually on Research and Development

and that employs over 100K people world wide is entitled to realize a

return on the fruits of it labor. I agree that how a company goes about

realizing that return must do so within the boundaries of the law

(copyright, anti-trust, etc.). It is good for the company, the

employees, the stockholders, and perhaps most importantly, it is good

for our country and the economy.=20

For what its worth, I believe that if the DCMA had been in effect in

1980, the software industry would not be where or what it is today.

However, it is not 1980 anymore and given the investment dollars at

stake, clearly the rules have to be different. A lot of parralels can be

drawn between the software industry and other technologies when they

were in the early stages of their life-cycles. I don't agree with

everything software vendors try to do, but for the most part, I am in

their camp.=20

Best regards - and lastly, I do appreciate the opportunity to discuss

and debate the issue with a lawyer...

I'll be in touch...

< JVP >

-----Original Message-----

From: John T. Mitchell [mailto:John@InteractionLaw.com]=20

Sent: Monday, May 05, 2003 12:51 AM

To: profox@leafe.com

Cc: 'John V. Petersen'

Subject: RE: Commentary on your article: Microsoft Risks Copyright

Impotence

On May 2, John Peterson took issue with my article at

http://interactionlaw.com/interactionlaw/id12.html (Microsoft Risks

unimpressed by the fact that I cited only one case in support of my

position. On Sunday, Mr. Peterson sent a terse e-mail chiding my

failure to respond. I do so now, with apologies to non-lawyers for the

length and the legalese.

Mr. Peterson seeks to re-frame the question as =93Does requiring

difference licenses for different operating systems constitute misuse of

Microsoft purports to license a particular use, it must be a use it has

a right to license. In this case, Microsoft is attempting to license

the private performance of its works, but that=92s like me licensing

people to use the sidewalk in front of my house. I may find people

willing to pay, but that does not mean I have the right to license such

use, nor that anyone who walks along the sidewalk without paying me is

doing anything illegal. The law doesn=92t change just because I happen =

be Microsoft and say =93you can only use my software if you promise to =

not

walk on the sidewalk in front of Bill gates=92 house.=94=20

Of crucial importance here is the fact that no one =96 not even a thief =

a pirate =96 can infringe upon any of the exclusive rights of a =

owner by making a non-public performance of a work. Copyright owners

enjoy an exclusive right to perform a work publicly, but have no right

to exclude anyone from performing a work privately. Twentieth Century

Music Corp. v. Aiken, 422 U.S. 151, 155 (1975). A few years earlier,

the Supreme Court had explained: =93The Copyright Act does not give a

[Section 106] of the Act enumerates several =91rights=92 that are made

=91exclusive=92 to the holder of the copyright. If a person, without

authorization from the copyright holder, puts a copyrighted work to a

use within the scope of one of these =91exclusive rights,=92 he =

infringes

the copyright. If he puts the work to a use not enumerated in [Section

106], he does not infringe.=94 Fortnightly Corp. v. United Artists

Television, Inc., 392 U.S. 390, 393-95 (1968) (footnotes omitted). =20

In his dissent in the Betamax case (where the videocassette recorder

survived a legal challenge), Justice Blackmun explained: =93Section

106(4) grants a copyright owner the exclusive right to perform the work

=91publicly,=92 but does not afford the owner protection with respect to

private performances by others. A motion picture is =91performed=92

whenever its images are shown or its sounds are made audible. =A7 101.

Like =91[singing] a copyrighted lyric in the shower,=92 Twentieth =

Century

Music Corp. v. Aiken, 422 U.S. 151, 155 (1975), watching television at

home with one's family and friends is now considered a performance. Home

television viewing nevertheless does not infringe any copyright =96 but

only because =A7 106(4) contains the word =91publicly.=92=94 (Sony =

Corp. of

America v. Universal City Studios, Inc., 464 U.S. 417, 468-69 (1984),

Blackmun, J., dissenting (footnotes and citations omitted).) And you

can watch those programs on the television of your own choosing! =20

The private performance of a lawfully reproduced copy of Microsoft

software is not an infringement of any of the exclusive rights of the

control over the public=92s rights. =93A copyright owner may not =

enforce

its copyright to . . . use it in any manner violative of the public

policy embodied in the grant of a copyright.=94 Tricom, Inc. v. =

Electronic

Data Systems Corp., 902 F. Supp. 741 (E.D. Mich. 1995) (citations

omitted). Leveraging copyright power to control behavior which Congress

intended remain outside of the copyright owner=92s control is the type =

conduct condemned in United States v. Paramount Pictures, Inc., 334 U.S.

131 (1948); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942);

Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502

(1917), and Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970 (4th Cir.

1990).

The public policy granting copyrights =93excludes from it all that is =

not

embraced=94 in the original copyrighted work, and =93equally forbids the =

use

of the copyright to secure an exclusive right or limited monopoly=94

beyond the scope of the Copyright Act and which is =93contrary to public

policy to grant.=94 (Lasercomb America, Inc. v. Reynolds, 911 F.2d 970,

977 (4th Cir. 1990) (quoting with revisions from Morton Salt, 314 U.S.

at 492) (brackets omitted).) Mr. Peterson has suggested that this

Fourth Circuit decision is not good enough, so I have relied more on

Supreme Court cases. Let=92s see a little more of where the Supreme =

Court

stands. =20

In 1917, the Supreme Court took on the issue of private enlargement of

owner of an intellectual property monopoly =96 in that case a patented

motion picture film projector =96 could not lawfully use a =

=93licensing=94

mechanism like Microsoft is using to obligate purchasers of the machine

to use it solely with motion pictures containing another patent which

the company also owned. (Motion Picture Patents Co. v. Universal Film

Mfg Co., 243 U.S. 502.) On page 519, the court stated: =93A =

restriction

which would give to the plaintiff such a potential power for evil over

an industry which must be recognized as an important element in the

amusement life of the nation . . . is plainly void, because wholly

without the scope and purpose of our patent laws, and because, if

sustained, it would be gravely injurious to that public interest, which

we have seen is more a favorite of the law than is the promotion of

private fortunes.=94 This position was followed in Carbice Corp. of Am.

v. Am. Patents Dev. Corp., 283 U.S. 27 (1931) (owner of a patented

package that used solid carbon dioxide could not obligate licensees to

use its own solid carbon dioxide).

The relevance of the Supreme Court=92s analysis in Motion Picture =

Patents

Co. is inescapable. If it is unlawful to extend the statutory monopoly

by limiting the use of a patented motion picture projector to films

containing other intellectual property owned by the licensor, then it

stands to reason that it is equally unlawful to license only on

condition that it not be used in conjunction with an operating system of

choice.

In Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942), the

Supreme Court examined the use of the patent monopoly in a machine for

depositing salt tablets to force licensees to use only salt tablets

manufactured by the patent holder. The court said: =93The public policy

which includes inventions within the granted monopoly excludes from it

all that is not embraced in the invention. It equally forbids the use

of the patent to secure an exclusive right or limited monopoly not

granted by the Patent Office and which it is contrary to public policy

to grant. (Id. at 492.)

And this line of reasoning is not limited to patent and trademark law.

Morton Salt itself noted with approval the application of this doctrine

to copyrights. (Id. at 494.) In United States v. Paramount Pictures,

Inc., 334 U.S. 131 (1948), the Supreme Court further explained the

limitations on copyright power in the context of =93block booking=94 =96 =

=93the

practice of licensing, or offering for license, one feature or group of

features on condition that the exhibitor will also license another

feature or group of features released by the distributors during a given

period.=94 (Id. at 156.) Like patent law, the exclusive right granted

under the Copyright Act does not include any privilege to =93add to the

monopoly of the copyright in violation of the principle of the patent

cases involving tying clauses.=94 (Id. at 158.)

>From these foundations, the doctrine of copyright misuse has developed

both as a violation of antitrust law and as an affirmative defense

against copyright infringement when the copyright holder, by means of an

over-reaching license or other method of control, tries =93to secure an

exclusive right or limited monopoly not granted by the [Copyright]

Office and which it is contrary to public policy to grant.=94 =

(Lasercomb

Am., Inc. v. Reynolds, 911 F.2d 970, 976 (4th Cir. 1990), quoting from

Morton Salt, 314 U.S. at 491.) Moreover, copyright misuse is such a

violation of public policy that some courts will not require that the

person against whom the misuse is directed be a party to the litigation.

=93[T]he fact that appellants here were not parties to one of =

Lasercomb=92s

standard license agreements is inapposite to their copyright misuse

defense.=94 Lasercomb, 911 F.2d at 979.)

United States courts have a long history of recognizing that licensing

terms which have the purpose and effect of voiding the boundary around

the exclusive rights of the copyright holder, thereby enlarging the

copyrights

and should be void as against public policy. The same should be true

where EULAs are used to the same end. =93Sound policy rationales =

support

the analysis of those courts that have found shrinkwrap licenses to be

unenforceable. A system of =91licensing=92 which grants software =

publishers

this degree of unchecked power to control the market deserves to be the

object of careful scrutiny.=94 (Softman Prods. Co. v. Adobe Sys., Inc.,

171 F. Supp. 2d 1075, 1091 (C.D. Cal. 2001).) The Softman court was

quite critical of Adobe=92s efforts to compel third-parties to =

relinquish

the rights they enjoy under the Copyright Act through use of an end-user

license agreement =96 in that case, a =93license=94 that purported to =

make the

third party waive its rights under Section 109 to resell lawfully made

copies without Adobe=92s consent. =93The Court finds that the =

provisions

contained in Adobe=92s EULA purport to diminish the rights of customers =

use the software in ways ordinarily enjoyed by customers under copyright

law. Therefore, these restrictions appear to be inconsistent with the

balance of rights set forth in intellectual property law.=94 (Id. at =

1090

(footnote omitted).)=20

Indeed, a contrary result would be untenable, for it would manage =93to

transform a contractual term that software purveyors unilaterally

include in their contracts into a binding provision on the world =96 =

even

on parties who are not in privity of contract =96 and one that, =

moreover,

undoes the dictates of Congress by undermining an essential feature of

the Copyright Act!=94 2 M. Nimmer & D. Nimmer, NIMMER ON COPYRIGHT =A7

8.12[B][1][d][i] (2002) (exclamation point in original).=20

The United States is not alone in this. In the United Kingdom, the

Commission on Intellectual Property Rights recently concluded that

=93Where suppliers of digital information or software attempt to =

restrict

=91fair use=92 rights by contract provisions associated with the

distribution of digital material, the relevant contract provisions may

be treated as void.=94 (Commission on Intellectual Property Rights,

Integrating Intellectual property Rights and Development Policy:

Executive Summary, September 2002, at 22.)

In Australia, the Copyright Law Review Committee recommends that the

Australian Copyright Act =93be amended to provide that an agreement, or =

provision of an agreement, that excludes or modifies, or has the effect

of excluding or modifying, the operation of [certain limitations upon

the rights of copyright holders] has no effect.=94 (Recommendation =

7.49,

Australia 2002.) =20

It is not my custom to go into this much detail when I=92m not =93on the

meter,=94 but I feel deeply that it is not just developers who may lose

out if these bogus licenses are allowed to prevail. It is also the

public, that stands to gain from the innovative new works and uses

created by the developers, who would suffer as well. But one

disclaimer: Mr. Peterson will likely soon be licensed to practice law,

and he obviously has an opinion different from mine, so don=92t take =

this

as legal advice =96 check with a lawyer whose judgment you trust before

thumbing your nose at an offensive EULA.

John

__________________

John T. Mitchell

http://interactionlaw.com

-----Original Message-----

From: John V. Petersen [mailto:John.V.Petersen@comcast.net]=20

Sent: Friday, May 02, 2003 8:15 AM

To: John@interactionlaw.com

Cc: profox@leafe.com

Subject: Commentary on your article: Microsoft Risks Copyright Impotence

<snip>