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Bar News - June 17, 2015

Intellectual Property Law: YODA: Device of Yours, Own It You May Not


Earlier this year, the You Own Devices Act (YODA) was reintroduced to the US House as House Bill 862. Although there is little chance that YODA will pass the House and the Senate this year as written, it does warrant some discussion.

Section 109 of the Copyright Act, also referred to as the first sale doctrine, states that once a copyright owner sells a copy of a copyright-protected work (e.g. a painting, a book, etc.), the copyright owner may not retain control over any downstream purchasers of that particular copy. In other words, a person can sell a book to someone without the author having any control over the new owner’s use of the book. Although there is some protection for certain paintings, sculptures, drawings, prints, and still photographs produced for exhibition under the Visual Artists Rights Act of 1990, these are limited.

Currently, there is an exception to the first sale doctrine in the US for software. YODA seeks to amend the Copyright Act so that the first sale doctrine will apply to any computer program that enables a machine or other product to operate. YODA states, in part, that the owner of a machine or other product, which incorporates an enabling computer program, is entitled to transfer an authorized copy of the computer program when they sell, lease, or otherwise transfer the machine or other product to another person.”

YODA also makes clear that the proposed “right to transfer” may not be waived by any agreement. In other words, YODA would create a statutory bypass to the ubiquitous End User License Agreement (EULA). EULAs are commonplace and are often found in click-through or shrink-wrap licenses. The Internet of Things (IoT) has made the licenses even more common, as EULAs are now associated with everything from toasters to cars.

The idea that we don’t actually own, but merely license, many of the items we “purchase” (e.g., software, e-books, songs) is generally accepted in the US. However, applying this framework more broadly across several market segments raises important questions about ownership, privacy, and a host of other issues.

Recently, in a separate Notice of Proposed Rulemaking, the Copyright Office proposed exemptions to the prohibition against circumventing Technology Protection Measures (TPMs). The proposed exemptions were for multiple classes of goods including cellphones, tablets and vehicles. In response, John Deere and Chevrolet have pushed back by claiming they have a need to retain ownership over any embedded software long after they sell a vehicle.

The IoT is here. Whether consumers like it or not, software is already incorporated into a wide range of goods. This functionality is incredibly powerful, but it is being adopted with little thought to how it does or should affect pricing, ownership, privacy, and the like. While we may understand and accept that we are not free to transfer a copy of QuickBooks or Microsoft Office when we sell a desktop computer, it gets more complicated when we wish to sell or transfer a tablet or a phone. These devices are nothing without their operating systems and applications. It is unclear what we are buying when we purchase one of these devices. Furthermore, as more and more “smart” goods are sold, these issues will become even more pronounced.

The IoT provides a challenge for all of us as consumers and as business advisors. Downstream control is only one issue. What should be done to protect the personal data collected by these machines? Should certain classes of goods be treated differently? Do certain forms of innovation warrant different levels of downstream control by the creator?

To some degree, technology has already surpassed the law that governs it. Many aspects of US copyright law are outdated. Although copyright law may not be the only mechanism to address these issues, it may be the best mechanism to address the author’s ownership rights in software when it is embedded in a consumer good. It will be exciting to see how these and other proposed changes to US copyright law address technology that is already here.

Kim Peaslee practices at Upton & Hatfield in Concord, NH. Her practice focuses on all forms of intellectual property protection, monetization, and enforcement. She can be reached by email.

Supreme Court Rule 42(9) requires all NH admitted attorneys to notify the Bar Association of any address change, home or office.

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