Reps Farenthold and Polis today reintroduced the You Own Devices Act (‘YODA’) that I discussed in September 2014. The provision attempts a statutory end run against end-user-license-agreements (EULA) for computer software. The current and growing market approach to software to license rather than sell software. That approach cuts-out the first-sale (exhaustion) doctrine and allows the copyright holder to limit resale of the software by the original purchaser and to impose substantial use restrictions. That approach is in tension with the common law tradition of refusing to enforce use or transfer restrictions. However, a number of judges have bought into the idea that existence of an underlying copyright somehow requires the favoring of “freedom of contract” over the traditional unreasonable-restraint-of-trade doctrines.
YODA addresses this issue in a limited way – focusing on transfer rights – and would provide someone transferring title to a computer with the right to also transfer an ‘authorized copy’ of software used on the computer (or transfer the right to obtain such copy). That right would be absolute – and “may not be waived by any agreement.” Even without the proposed law, courts and the FTC should be doing a better job of policing this behavior that strays far from our usual pro-market orientation. However, the provision would make the result clear cut.
In some ways, I think of this provision as akin to the fixture rules in real property — once personal property (such as a brick) is fixed to the land (by being built into a house), the brick becomes part of the land and can be sold with the land. In the same way, a computer would come with rights to use all (legitimate) software therein.
To be clear, YODA would not allow transfer of pirated software, but would allow transfer in cases where the owner has a legitimate copy but is seemingly subject to a contractual transfer restriction.
Farenthold is a Texas Republican and a member of the IP Subcommittee of the Judiciary Committee. On Twitter, Farenthold quipped: “Luke didn’t have to re-license Anakin’s lightsaber, so why should you?”