Introduction: What exactly is a Fair EULA?
Before venturing down the path of drafting a Fair End User License Agreement, let us understand what exactly an EULA is. Ed Foster has established the idea of a ``fair'' EULA, aiming to provide industry with an EULA example that was accessible, had the right amount of legal weight, and that treated both the company and the software user fairly.[1][2]
The FEULA is definitely a step forward in license construction, without the problems of capital letter readability, and with significantly less legal jargon. It outlines the rights and responsibilities of the user and company in a way that is easily accessible, but it could be argued that the lack of specificity that is common in other, more mainstream EULAs could mean that there are more loopholes to be exploited by companies and users alike, and thus that the FEULA would fail in its purpose to protect the interests of the company and user. A company could easily change the agreement to suit their own local laws, but this does not empower the user to understand their local rights and responsibilities, thus putting more onus on the consumer to investigate the laws that apply to them. The FEULA also has a clause that disclaims warranties of merchantability or fitness for a particular purpose, which once again greatly and unfairly benefits the company rather than the consumer. Many jurisdictions include laws requiring products to meet merchantable quality standards. To disclaim warranty of this in a general EULA could imply that software malfunctions would not be the responsibility of the company who wrote the program, which would be deceptive under law, making users of the software think they cannot make a claim if such damages arose from unmerchantable quality software. The reference of the EULAs to “statutory rights” is something that Belgrove finds to be very vague[3] to be useful for the average user.
Despite its flaws, the FEULA is on the right track to balance out the fairness for users and companies. It could easily start to suffer from length concerns if it becomes tailored to an individual company's needs, but something like the FEULA could be used as the template for license agreements, given adequate supporting infrastructure. The conditions in the FEULA also highlight the problem of localisation, in that there needs to be either an easy localisation option for users to understand their local laws, or there needs to be a concerted education campaign to empower users with more knowledge of their rights and responsibilities. The clauses allowing for users to transfer their copy and license of the software to someone else are good, because they allow for greater freedom of use of the software, as are the clauses which state in clear language that the company will request specific permission before updating itself or taking personal information.
This section has discussed in detail the problems associated with End User License Agreements. It has shown the predominant method for gaining informed consent has inherent flaws in its design, requiring companies to simply disclose terms and conditions, and allowing consumers to accept these without any sorts of testing of understanding or competence, or mechanisms for feedback and questions about the agreement. The fact that the major operating system companies have included these sorts of EULAs as examples or templates within their development environments helps to further solidify the practice amongst software developers. In many cases we see a particularly bad example of the problems that can be effectively ``hidden'' within the EULA due to the difficulty and imposing nature of the length and legal language used, and the use of hard-to-process capital letters to make the agreement even harder for everyday users to comprehend. The Fair EULA could be the start of a template for a set of standard license agreements, but even it has its flaws. As it is, this section shows how the effective consent and duty of disclosure models do not work effectively when disclosure is made the focus of the agreement and informed consent is considered the goal rather than an enabler (and thus falls into the problems of Brownsword's ``cult of consent''[4]). This section also shows the difficulty of determining what would be considered sufficient in the case of autonomous actions. Both sufficient understanding and sufficiently autonomous actions are hard to set thresholds for here because of the huge range of potential users, the lack of being able to adequately test users, and the culture of minimal concern for user rights and maximal concern for limitation of legal liability. The next section will show how these same problems affect areas of privacy in computing as well.
FAIR END USER LICENSE AGREEMENT
Clause |
Explanation/Analysis |
1. We grant you one license to install and use this
software on a single computer. You may create backups to the software but do
not circulate/distribute them in public. If you do not agree to the following
terms of this license, please uninstall and remove all copies and return the
product to the place that you purchased it from within 30 days of your
purchase for a proportionate refund. |
Firstly, this clause is worded in simple English which makes It very convenient for the user to understand it.
Now, the license has been provided to the user to run the software on only one computer – this clause was worded this way so that the right balance between the user and publisher could be established. By letting the user make backups to it (and not setting a specified allowed number) the user is given freedom to safeguard his ‘investment’ and interests so that he might not have to pay for it again.
By adding the clause of not circulating it in
public, it ensures that due to the presence of this clause, users do not
indulge in piracy.
|
2. You may install and use the software on another computer, but the software may not be in use on more than one computer at a time unless you purchase additional licenses. You may make back-up copies of the software for archival purposes. You may permanently transfer your license to use the software to another party who will be bound by this agreement, provided you do not retain any copies of the software. You had to inform the licenser about the license transfer. |
This clause does not limit the consumer’s usage of the software by allowing him to use it on another computer apart from the device it was originally bought for. However, by allowing him to not use it on two computers simultaneously, it ensures that it safeguards corporate interests as well so that they do not lose revenue from sales due to a person making innumerable installations of the same software on different computers.
It also gives consumers the freedom to sell the software onto a third party – thereby effectively removing the conventionally followed “non transferrable, non resaleable” license that EULAs tend to govern nowadays. What this does is again cater to interests of both the consumer and the corporate – by making it a rule for the consumer to communicate such a sale to the corporation.
|
3. The software is protected by the copyright laws of the U.S. and other countries, and we retain all intellectual property rights in the software. You may not separately publish, sell, market, distribute, lend, lease, rent, or sublicense the software code including the license key. However, this license is not to be construed as prohibiting or limiting any fair use sanctioned by copyright law, such as permitted library and classroom usage or reverse engineering. |
This clause might seem company-centric to a lot of people but in reality it is not. It merely aims to protect intellectual property rights. Intellectual property rights are extremely important in today’s world and Intellectual property protection is critical to fostering innovation. Without protection of ideas, businesses and individuals would not reap the full benefits of their inventions and would focus less on research and development. Similarly, artists would not be fully compensated for their creations and cultural vitality would suffer as a result.
It also aims to control and oppose piracy as it imposes restrictions and does not allow the consumer to separately publish, sell, market, distribute, lend, lease, rent, or sublicense the software code – including the software key, which in isolation too could lead to exploitation by those promoting piracy. Piracy is not just an important issue for corporations, but also for consumers and distributors as well, therefore to call this a “company centric” clause would be unfair since ‘Piracy is not just a concern for software publishers; it also affects consumers and the economy as a whole. Both the Software and Information Industry Association (SIIA) and the Business Software Alliance (BSA) estimate that up to 40 percent of installed business software worldwide, and 23 percent in the U.S., is illegally copied. Software theft and its related effects -- including lost jobs, wages and tax revenues -- totaled an estimated $8.7 billion in the U.S. in 2002.’[5]
Also, the clause expressly allows fair use that is allowed by copyright law – usage in classrooms and libraries, and even reverse engineering of the software (which as of now is illegal for most softwares)
|
LIMITED WARRANTY
|
This clause is a really important one, since the company promises that the performance of the software will be equal to what has been specified on the website (and in the product documentation). This is important because in today’s times a lot of companies resort to making claims (and even puffery) and more often than not their products do not deliver upto their promises. However, due to clauses in the EULA, consumers cannot get their money back, return their product or cannot say that the product underperformed – because the clause rids the company of all warranties. |
5. We have taken reasonable steps to keep the software free of viruses, spyware, "back door" entrances, or any other harmful code. We will not track or collect any information about you, your data, or your use of the software except as you specifically authorize. The software will not download or install patches, upgrades, or any third party software without getting your permission. We will not intentionally deprive you of your ability to use any features of the software or access to your data.
|
This clause is a direct opposite of the current “you will be monitored” clause which legally entitles (after you accept the EULA of course) the company that created the software to collect data and store information about you and use it “to improve your usage of the service”
Clearly, this will help in reducing the monitoring that companies usually do, of consumers that are unaware (since they do not really read the license agreement), and this can help protect cyber privacy.
Also, the license agreement states that the software will not download or install any third party software – which ensures that the consumer will always be aware of what is being installed and downloaded by the program, and whether he wants to download the said third party software or not.
The license agreement also states that the consumer will not be deprived of his ability to use any features. |
6. We do not warrant that the software or your ability to use it will be uninterrupted or error-free. To the extent permitted by applicable law, we disclaim any implied warranty of merchantability or fitness for a particular purpose.
|
This clause does not guarantee the fact that the software will be uninterrupted and/or error free – since it is only possible to detect and eradicate some bugs/deformities and not all of them – as it is often the case that as softwares are used more and more, the deficiencies come out with time.
If this clause was not to be included, then the consumers could sue the company over and over and economically, such litigation and legal expenses would not be bearable. |
LIMITATIONS ON LIABILITY 7. Your exclusive remedy under the above limited warranty shall be, at our option, either a full refund of the purchase price or correction of the defective software or media. To the fullest extent permitted by applicable law, we disclaim all liability for indirect or consequential damages that arise under this license agreement. Nothing in this agreement limits our liability to you in the event of death or personal injury resulting from gross negligence, fraud, or knowing misrepresentation on our part.
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The license agreement has allowed the consumers a remedy under the ‘limited warranty’ clause (Clause No. 5), and now the users can get a refund or have the software corrected/changed.
The license agreement also makes sure that the company is not sued for damages that are remote or do not have a direct causal connection with the software.
However, the clause does not limit the company’s liability to the consumer in a case where it resulted from gross negligence, personal injury, fraud or knowing misrepresentation on the company’s part – which ensures that the consumer is not at a disadvantage.
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GENERAL PROVISIONS
8. If any part of this agreement is found to be invalid or unenforceable, the remaining terms will stay in effect. This agreement does not prejudice the statutory rights of any party dealing as a consumer.
|
This clause has been put into the license agreement to ensure that the license agreement does not become invalid due to one clause being against statutory law – and so that the license agreement can be completely legal.
This is the same as the clause that is found in contemporary EULAs and there is not much of a difference here. |
10. This agreement does not supersede any express warranties we made to you. Any modification to this agreement must be agreed to in writing by both parties.
|
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11. This agreement will apply from the date of the installation of the software.
|
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An analysis of the case of Vernor v. Autodesk[6]:
The US Court of Appeals for the Ninth Circuit ruled on a long-standing
case involving used software on eBay, and it came to an important decision: if
a company says you don't have the right to resell a program, you don't have
that right. Could this mean the end of the resale market for all digital
content? Yup. But the court says it had no choice.
The case is Vernor v. Autodesk, in which Timothy Vernor made his living
from selling items (including software) on eBay. Vernor had picked up some old
copies of AutoCAD from an architect's office sale, complete with their serial
numbers, and he put them up on eBay noting that they were not currently
installed on any computer. Sounds legal, right?
But there's a catch. Autodesk, the software's developer, forced all users to
accept an agreement before using AutoCAD. This agreement made clear that
AutoCAD was merely licensed, never sold, and that one's license was
non-transferable. Further, a licensee could not rent, lease, or sell the
software to anyone else; you couldn't even physically transfer the discs out of
the Western Hemisphere (!). Finally, if you upgraded to a new version, the old
version had to be destroyed.
The copies Vernor picked up at the architect's sale were old copies that had
not been destroyed as required. Vernor believed he was in the clear to resell
them, as he had not agreed to any license. But after putting them on eBay,
Autodesk repeatedly tried to shut down his sales. Vernor, on the verge of
getting banned from eBay, sued Autodesk[7] and
asked the court to declare his sales legal.
A federal court did so in 2008[8],
but Autodesk appealed, and today the appeals court reversed that earlier
decision. In its view, US "first sale" protections don't apply to
Vernor, because he didn't buy the software from a legitimate "owner."
That, in turn, is because the architecture firm had only "licensed"
the software, and that license could indeed allow a software company to prevent
resale, lending, and even removal from the Western Hemisphere.
So how does one know when it's a "license" or a "sale"? (In
other cases, courts have ruled that simply calling something a
"license" doesn't make it so.) In today's ruling, the judges laid out
a test:
"We hold today that a software user is a licensee rather than an owner of
a copy where the copyright owner (1) specifies that the user is granted a
license; (2) significantly restricts the user’s ability to transfer the
software; and (3) imposes notable use restrictions."
Major implications for digital mediaThis ruling has tremendous implications for
most digital media, which is licensed rather than sold. For instance, music
from Amazon's MP3 music store comes with these license terms[9]: "You
agree that you will not redistribute, transmit, assign, sell, broadcast, rent,
share, lend, modify, adapt, edit, license or otherwise transfer or use the
Digital Content. You are not granted any synchronization, public performance,
promotional use, commercial sale, resale, reproduction or distribution rights
for the Digital Content." Used music stores? Out of business in the
digital age (a result we've worried about for some time)[10].
Software is likewise at risk. Most is governed by some form of End User License
Agreement (EULA);Electronic Arts's version[11] goes
out its way to note, "This Software is licensed to you, not sold"
(though it covers on sublicensing and rental and says nothing explicit about
resale).
Similar licenses govern most digital media, and it's therefore no surprise that
the American Library Association would be so concerned about the case.
Publishers can simply forbid rental or lending in their licenses unless
libraries agree to more expensive licenses (something already seen for
journals, though not generally for books). And those old software packages your
library may loan out? (Mine does.) Forget about them, unless publishers
approve.
The ALA filed an amicus brief in the case, which the judges showed some
sympathy for. Ultimately, though, they concluded that they had to follow
precedent, not rule based on desired outcome.
The ALA contends that the first sale doctrine facilitates the availability of
copyrighted works after their commercial lifespan, by inter alia enabling the
existence of libraries, used bookstores, and hand-to-hand exchanges of
copyrighted materials. The ALA further contends that judicial enforcement of
software license agreements, which are often contracts of adhesion, could
eliminate the software resale market, require used computer sellers to delete
legitimate software prior to sale, and increase prices for consumers by
reducing price competition for software vendors. It contends that Autodesk’s
position undermines 17 U.S.C. § 109(b)(2), which permits non-profit libraries
to lend software for non-commercial purposes, and (2) would hamper efforts by
non-profits to collect and preserve out-of-print software. The ALA fears that
the software industry’s licensing practices could be adopted by other copyright
owners, including book publishers, record labels, and movie studios.
These are serious contentions on both sides, but they do not alter our
conclusion that our precedent... requires the result we reach. The US Congress
(or related legislature in different countries – considering the fact that the
laws applicable to the EULA would be of said country) is free, of course, to
modify the first sale doctrine and the essential step defense if it deems these
or other policy considerations to require a different approach.
So, to recap: EULAs are binding, they can control just about everything you
might dream up, and only the US Congress can change the situation.
[1] Ed Foster, Looking for a Good International EULA
[2] Ed Foster, FEULA
[3] Carl Belgrove, Whose License Is It Anyway?
[4] Roger Brownsword, The Cult of Consent: Fixation and Fallacy
[5] Read More: http://about.intuit.com/piracy/
[6] Read full text of judgement here: http://cdn.ca9.uscourts.gov/datastore/opinions/2010/09/10/09-35969.pdf
[7] http://arstechnica.com/information-technology/2007/09/autodesk-sued-for-10-million-after-invoking-dmca-to-stop-ebay-resales/