Subject: RE: [FYI] Microsoft license spurns open source
From: "Ravicher, Daniel B." <DRavicher@brobeck.com>
Date: Wed, 27 Jun 2001 19:49:10 -0700

> -----Original Message-----
> From: Greg Broiles [mailto:gbroiles@netbox.com]
> 
> Doesn't 17 USC 117(a) grant that right, assuming ownership (not mere 
> possession) of a copy of the software?
 
Of course you are correct, if we assume that one "owns" a copy.  I'll
address this in a minute along with a recent court's long discussion of
"ownership" below.  However, before I bore you and others [and I do
apologize to those who find this a bore] with that, I just want to remind
you that I was responding to the following comment.  

> -----Original Message-----
> From: Seth David Schoen [mailto:schoen@loyalty.org]
> Sent: Monday, June 25, 2001 2:42 PM
> 
> 
> Without accepting the GPL, there _is_ something that "grants you
> permission" (or, from another angle, there is nothing that prohibits
> you) to make ordinary uses of the software, including running it,
> patching it, reverse engineering, disassembling, decompiling, 
> publishing benchmarks, and so on.

Again, my response was that if one doesn't accept a license and does not
make a fair use, there is nothing that allows them to do all these things.
And, you have proven me incorrect in so much as 117 does indeed allow an
"owner" to make "essential step" and "archival" copies.  So, we can put on
the list of things Microsoft can do with a copy of Linux they "own" the
following two things: (a) make a copy which "is created as an essential step
in the utilization of the computer program in conjunction with a machine and
that is used in no other manner" and (b) make a copy "for archival purposes
only."  

But, because I'm a stubborn lawyer, I'm not going to concede even those two
things just yet because I'm not 100% certain Microsoft would be an "owner"
of a copy due to what the Federal Circuit Court of Appeals had to say in
March 1999 (the case is DSC Communs. Corp. v. Pulse Communs., Inc., 170 F.3d
1354, cert denied, if you want to check it out).  Note that they disagree
with the 9th Circuit.  I can also refer you to a Tenth Circuit case which
refuses to adopt either the Fed Circuit or the 9th Circuit rules and an
Eleventh Circuit case which distinguishes the Fed Circuit while also
avoiding the issue.  And just to make it that much more clear, a "renowned"
copyright expert (Nimmer) comes down completely different than any of the
above.  [Talk about disagreement!]

"Unfortunately, ownership is an imprecise concept, and the Copyright Act
does not define the term. Nor is there much useful guidance to be obtained
from either the legislative history of the statute or the cases that have
construed it. The National Commission on New Technological Uses of
Copyrighted Works ("CONTU") was created by Congress to recommend changes in
the Copyright Act to accommodate advances in computer technology. In its
final report, CONTU proposed a version of section 117 that is identical to
the one that was ultimately enacted, except for a single change. The
proposed CONTU version provided that "it is not an infringement for the
rightful possessor of a copy of a computer program to make or authorize the
making of another copy or adaptation of that program . . . ." Final Report
of the National Commission on New Technological Uses of Copyrighted Works,
U.S. Dept. of Commerce, PB-282141, at 30 (July 31, 1978) (emphasis added).
Congress, however, substituted the words "owner of a copy" in place of the
words "rightful possessor of a copy." See Pub. L. No. 96-517, 96th Cong., 2d
Sess. (1980). The legislative history does not explain the reason for the
change, see H.R. Rep. No. 96-1307, 96th Cong., 2d Sess., pt. 1, at 23
(1980), but it is clear from the fact of the substitution of the term
"owner" for "rightful possessor" that Congress must have meant to require
more than "rightful possession" to trigger the section 117 defense. 

In the leading case on section 117 ownership, the Ninth Circuit considered
an agreement in which MAI, the owner of a software copyright, transferred
copies of the copyrighted software to Peak under an agreement that imposed
severe restrictions on Peak's rights with respect to those copies. See MAI
Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 26 U.S.P.Q.2D (BNA) 1458,
1462 (9th Cir. 1995). The court held that Peak was not an "owner" of the
copies of the software for purposes of section 117 and thus did not enjoy
the right to copy conferred on owners by that statute. The Ninth Circuit
stated that it reached the conclusion that Peak was not an owner because
Peak had licensed the software from MAI. See id. at 518 n.5. That
explanation of the court's decision has been criticized for failing to
recognize the distinction between ownership of a copyright, which can be
licensed, and ownership of copies of the copyrighted software. See, e.g., 2
Melville B. Nimmer, Nimmer on Copyright P 8.08[B][1], at 8-119 to 1-121 (3d
ed. 1997). Plainly, a party who purchases copies of software from the
copyright owner can hold a license under a copyright while still being an
"owner" of a copy of the copyrighted software for purposes of section 117.
We therefore do not adopt the Ninth Circuit's characterization of all
licensees as non-owners. Nonetheless, the MAI case is instructive, because
the agreement between MAI and Peak, like the agreements at issue in this
case, imposed more severe restrictions on Peak's rights with respect to the
software than would be imposed on a party who owned copies of software
subject only to the rights of the copyright holder under the Copyright Act.
And for that reason, it was proper to hold that Peak was not an "owner" of
copies of the copyrighted software for purposes of section 117. See also
Advanced Computer Servs. of Mich. v. MAI Sys. Corp., 845 F. Supp. 356, 367,
30 U.S.P.Q.2D (BNA) 1443, 1452 (E.D. Va. 1994) ("MAI customers are not
'owners' of the copyrighted software; they possess only the limited rights
set forth in their licensing agreements"). We therefore turn to the
agreements between [the parties in this case] to determine whether those
agreements establish that the defendant is a section 117 "owner" of copies
of the copyrighted software. ...

One commentator has argued that when a copy of a software program is
transferred for a single payment and for an unlimited term, the transferee
should be considered an "owner" of the copy of the software program
regardless of other restrictions on his use of the software. See Raymond T.
Nimmer, The Law of Computer Technology P 1.24[1], at 1-143 to 1-144 (3d ed.
1997). That view has not been accepted by other courts, however, and we
think it overly simplistic. The concept of ownership of a copy entails a
variety of rights and interests. The fact that the right of possession is
perpetual, or that the possessor's rights were obtained through a single
payment, is certainly relevant to whether the possessor is an owner, but
those factors are not necessarily dispositive if the possessor's right to
use the software is heavily encumbered by other restrictions that are
inconsistent with the status of owner. "

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