We have twice written about the unfortunate – or, depending on your viewpoint, nefarious – Mr. Timothy S. Vernor, who was found guilty of copyright infringement when he purchased and resold a number of used copies of Autodesk computer software (see A Bargain and We’re Number One Again). Well, Tim is now petitioning to have the case heard by the United States Supreme Court. In support of this petition, an amici curiae (Latin for “newly-found friends with their own agendas”) brief has been filed by, among others, the Consumer Federation of America, the Electronic Frontier Foundation, Public Knowledge, and U.S. PIRG (Public Interest Research Group), all of which are nonprofit organizations which purport to represent “civil liberties,” “consumer interests,” “free expression of ideas,” “public interest,” etc.
We recently read a copy of this brief and all we can say is that it is way over the top. The brief’s authors framed the issue being presented as, “will the first sale doctrine remain viable in an age when an increasing number of products are nominally licensed rather than sold?” Overbroad to say the least!
In the Table of Cited Authorities, the authors cite only 9 prior legal decisions, but 18 “Other Authorities” which are, generally speaking, articles written by someone or some group with an ax to grind. This observation leads to our first point, namely that the brief is short on legal precedent and long on self-serving opinion.
Passing on, we come to the arguments raised in support of the authors’ belief that the previous appellate decision in the Vernor matter “raises questions of extraordinary importance.”
First, the authors assert that “close attention to economic realities is particularly important where the purported license is a contract of adhesion.” While we believe that courts should always pay close attention to economic realities, we find no support for the characterization of the license as “purported.” The document in question was entitled a license and the Court of Appeals For the Ninth Circuit held it was a license. If the authors of the brief dispute that the document is, in fact, a license, they should provide some basis for their belief. Lay off the innuendo.
Next, the authors argue that “encouraging software vendors to use contracts…to curtail traditional expectations and rights of ownership…undermines critical economic and democratic values.” This is where they really start going overboard.
What is the “economic value” that allegedly is being “undermined”? According to the authors, it is the reduction in support for the “vibrant secondary markets that lower prices for consumers.” The authors of the brief are asserting that it is in the interest of the consuming public to have the right to resell copyrighted computer software. Really? What would happen if the public suddenly got this right? True, used units would become available on the “vibrant secondary market” at prices below the price of the original (unused) units. This, however, would cannibalize the sale of new units, causing a corresponding decrease in sales. In response, the copyright owners, following the iron law of economics, would simply increase the sale price of the new units so as to maintain their net profits. This, in turn, would drive back up the cost of used units. Since the increased cost of new units would tend to limit sales, the new effect would be reduced availability and a higher cost to everyone.
Having presented their idealistic – not realistic – economic argument, the authors next tried simple scare tactics. “[G]iven the ubiquity of software in nearly every manufactured good, we may see such efforts in every category from baby toys to cars to refrigerators.” Do they really believe auto manufacturers could sell a car that couldn’t be resold or traded in?
Are these rational reasons to overturn the Vernor decision and call the enforceability of existing contracts into question? Do we really expect that baby toys will be licensed, rather than sold? We think not! The realities of the marketplace would prevent any such nonsense from gaining a foothold.
The Lesson To Be Learned – lawyers should argue the law, economists should argue economics, and (at least some) self-proclaimed consumer and public interest advocates should go back to school before they argue either law or economics.