Shrinkwrap, Software, EULAs and Reverse Engineering

February 10, 2003 11:52 AM

Another way around sneaky agreements: A Californian is suing (PDF) Microsoft and Symantec over shrink-wrapped agreements and EULAs that are only readable when you first install the software, making a return or refund absolutely impossible. Many courts have upheld shrinkwrap licenses. Conversely, reverse engineering has been determined to constitute fair use. If this case sets a precedent, could we see abridged legalese on the side of future boxes or a rethinking of software licensing trends? Or will the cluttered tower of consumer rights, protection for software companies and code evolution and innovation topple over?
posted by ed (21 comments total)

i need to think of something to sue someone for
posted by prescribed life at 12:39 PM on February 10, 2003

PL: Tried one of our delicious bagels lately?
posted by slater at 1:06 PM on February 10, 2003

suing McDonalds seem to be quite the trend
posted by prescribed life at 1:43 PM on February 10, 2003

This seems like a perfectly legitimate suit - how is it comparable in any way to suing McDonalds?
posted by majcher at 1:56 PM on February 10, 2003

The case is weak. As the complain admits, a well-drafted EULA or shrink-wrap will always permit one to reject the license and gain a full refund. If it fails to include that clause, its enforceability becomes questionable.

Although Office Depot (or whatever reseller) might refuse to pay the refund on the grounds that the software has been opened, the manufacturer will be willing to do so. You might be the only person to request to do it all year, but they will do it.

The refusal of retailers to accept open-box returns is commercial reasonable. The purpose of the whole software licensing scheme is to enable the cheapest possible legally secure distribution. Some inconvenience of the trivial number of people who reject EULAs should not be a tool to impose signficantly higher distribution costs on everyone else.

Now that many software developers are using on-line activation keys, this will become less problematic. Since you don't get the activation key until you accept the EULA, and you can't complete the install until you get the activation key, it is a fairly simple matter to verify that the software has not been accepted. The manufacturers should be able to have a database cross-referencing product serial numbers with activiation key status. If no activation key has been issued for a particular serial number, the refund should be automatic and the serial number thereafter canceled -- meaning that no one can install from the corresponding CDs until they repay the retail price on-line and reactivate the serial number.
posted by MattD at 2:04 PM on February 10, 2003

psst!...Prescribed life! I'll get a job at McDonalds and serve you a milkshake which is waaaay too cold, then you sue for a million dollars and we split the cash! It's fiendishly clever, heh heh heh...
posted by ac at 2:34 PM on February 10, 2003

sorry for derail im tired
posted by ac at 2:34 PM on February 10, 2003

MattD:

I know that with Microsoft activation-key products, the serial number itself is never submitted to Microsoft, only the activation key is (which is found on the product packaging).

Your point is still completely valid, though, because Microsoft can still verify whether the Activation Key has or hasn't yet been used and they could cancel the validity of that Key server-side if someone decides to reject the terms of the EULA and return the product to MS.
posted by quasistoic at 2:35 PM on February 10, 2003

MattD: You place a lot of faith in the software reseller. This lawsuit is more focused on EULAs, not activation keys. Indeed, it's the EULA where the capitulation to Microsoft begins. The XP Professional EULA specifically forbids the consumer to obtain a refund once she has used the product. This is food for thought, given that, if Microsoft delivers a defective product (for example, the many gaping security holes that Microsoft constantly patches up in Service Packs), the user is essentially screwed, the $299 thrown down the toilet, particularly if Windows is already installed on a prebuilt Dell system.

The other question is whether a neophyte customer is even aware of this severe consequence in the EULA. Even if this is in the first paragraph, the setup windows may pop up so fast that a beginning user may not understand that she is signing her life away to Microsoft. Unable to return Windows XP to the retailer (because of an open box), unable to get a refund from a Dell system because Windows XP is already installed, and, even more astonishingly, unable to read a EULA unless the box is opened, the user is left with her hands tied. Microsoft gets the cash and laughs its way to the bank. The consumer gets screwed.

Meanwhile, if you order a chicken salad and the chicken is bad, you can return the salad to the waiter and get a replacement or refund. If you purchase a lawn mower, you can open the box up, check out the warranty coverage and purchase it, if desired. You can also return it if it has a defective blade.

Why should Microsoft and Symantec be held to different refund standards?
posted by ed at 2:43 PM on February 10, 2003

Why should Microsoft and Symantec be held to different refund standards?
Because you can't take a lawnmower out of the box, make a copy of it and then take it back for a refund, that's why.
posted by dg at 3:14 PM on February 10, 2003

Because you can't take a lawnmower out of the box, make a copy of it and then take it back for a refund, that's why.

So consumers rights should be stripped away because of what someone might do? I feel the same way about copy protection on Music CDs as I do about activation of software... it's an extra step that hinders my ability to use the product. If I buy a piece of software, I have a license. I should be able to install it on as many machines as I would like. As long as I only use one machine at a time, I am only using one instance of the software.

As for EULAs, I think they are overly intrusive and attempt to garner rights that are prohibited by law. (Example: You can only review this software if you notify the company first. Example: You may not reverse engineer this software.) The EULA for software should say "You bought this software. First, Thank you!! You may use this software for your use as long as there is only one copy of the software being run at one time. Don't give a copy to your parents or co-workers or Benjamin Curtis (but that's only because he'll sell it for pot money, and we hate those commercials as much as you do). Have fun."
posted by benjh at 4:08 PM on February 10, 2003

Because you can't take a lawnmower out of the box, make a copy of it and then take it back for a refund, that's why.

Lawnmower makers also have to shell out cash to manufacture each unit, whereas per-unit costs for software, not counting development, approach zero. Obviously there are significant development costs associated with software, this is not an argument that all software should be free, but the potential losses due to easy copying not possible with lawnmowers are somewhat offset by a unit manufacturing cost advantage also not possible with lawnmowers. That in mind, I don't see a requirement for special protection for software vendors at the cost of important consumer rights.
posted by Nothing at 4:49 PM on February 10, 2003

Ed raises a valid point. When I bought the blue-screen box of doom that is my Dell, I specifically asked them to *NOT* install any operating system, or any of their other crappy 3rd party products...unless they could install Linux. Because they can't/won't install and support Linux on end user boxes, I was told that I had no choice but to accept a default Windows configuration.

"Well, damn!" I thought. "I'll just buy a box from someone else then!"

Nope. MS has the PC market locked down and nobody (at the time) was shipping boxes with anything but Windows installed. So, despite the fact that I didn't want Windows, I didn't see any reason to buy Windows, especially since the version shipping was *shudder* Windows ME, I still got soaked for a $300.00 Windows installation.

I couldn't fdisk the machine and get my money back. I never agreed to the EULA, some dweeb in the Dell factory accepted it for me. Why would I be bound by it? Better yet, why should I be bound by it? I did my level best to avoid having that code on the machine in the first place. Same goes for the Symantec BS installed, or the myriad of other crappy code that box makers stuff into their hard drives because the software companies offer them incentives.

I believe the lawsuit has merit, and I wish I could take part in it, if only to recover the $300.00 OS cost for software I never used, but was forced to buy.
posted by dejah420 at 5:54 PM on February 10, 2003

consumers rights should be stripped away because of what someone might do?
I am not defending the practices of software vendors necessarily, but you are kidding yourself if you think that huge numbers of people would not copy software and return the original for a refund if they could. This is not an issue of copy protection at all and software activation is a response to the large numbers of users who copy software and pass it around as it is.

Lawnmower makers also have to shell out cash to manufacture each unit, whereas per-unit costs for software, not counting development, approach zero
That is a valid point, but the technical hurdles to copying a lawnmower are substantially higher than copying a CD also, which balances this out significantly - the cost of copying a lawnmower would be higher than the cost of buying it, but the cost of copying a CD at home also approaches zero.

dejah420, I find it hard to believe that you could not find a manufacturer anywhere who would sell you a box without software. I can only assume that you were restricting yourself to "brand-name" equipment and ignoring the hundreds of small manufacturers who are more than happy to sell you a good quality box to your personal specs.
posted by dg at 6:15 PM on February 10, 2003

but you are kidding yourself if you think that huge numbers of people would not copy software and return the original for a refund if they could.

I have yet to see any actual research that shows that pirated copies actually result in lost sales. The RIAA has had trouble proving it with regard to CDs/MP3s and they've really been trying. The software industry hasn't even bothered to try, but I get to keep up with lots of little stickers and slips of paper and manuals with activation keys on them in the name of vendor convenience for software that I bought and use.

Worse yet, software vendors often hinge upgrade installations on previously installed software which if I'm installing on a new machine with a new OS might not even work well enough to install. Software vendors need to seriously look toward alternative ways to protect their interests since professional users are drowning under keys and serial numbers.

End users (read home) don't care because they just use what came preinstalled anyhow. If they steal a copy of office, they are unlikely to have bought one. Seriously, would Joe Sixpack or his Mom use MS-Word if they had to pay the $450 for Office? Home users won't pay as much as their $400 emachine for software, so sure they'll steal. But since they don't even utilize the features of the software they steal does it matter on the balance sheet at Microsoft? No, because they wouldn't have bought anyhow.
posted by shagoth at 6:43 PM on February 10, 2003

So it is OK to steal something only if you are not planning to buy it? Really? You have no problem with people buying a copy of Office or PhotoShop, copying the CD and then returning the package to the retailer for a refund? Really? Why does anyone need to prove that piracy results in lost sales? If someone owns the copyright on anything, whether it is software, music or a book, they have the right to expect that people will not steal it. Whether the software companies are choosing the best and/or fairest way to ensure that that does not happen is another story...

If they steal a copy of office, they are unlikely to have bought one
If there were not pirated copies of Office around, then yes, they would buy one. They would have no choice, would they, because they most likely do not know how to use anything else.
posted by dg at 8:29 PM on February 10, 2003

>Why does anyone need to prove that piracy results in lost sales? If someone owns the copyright on anything, whether it is software, music or a book, they have the right to expect that people will not steal it.

Well, you see, there's the little fact that piracy isn't stealing. And that's why more proof than "normal" must be given. Because if it were stolen (as in fraud, whereby another company makes fony copies and passes them off as real) there are provable losses (the purchased fony copies). Whereas with piracy, losses are unprovable, and you can't sue for something you can't prove.

>If there were not pirated copies of Office around, then yes, they would buy one. They would have no choice, would they, because they most likely do not know how to use anything else.

Ummm, no. They'd have bugged me to pirate it for them (I hate how many people do that) and I would have pointed them to openoffice.org. And since they aren't interacting with businesses, it more than fits the bill (I've never heard a single complaint about it from my mom, anyways).

As far as not knowing how to use anything else, trust me, for the cost of office, users will figure out something else. All users can learn anything I know, it's just that they need more motivation than me. And the cost of office is motivation enough for anyone but BG to put the effort in.

So, I know when we're talking $1300 CDN (the cost of boxed professional office XP in Canada) that home users would look elsewhere, or would just use wordpad, or DOS edit. I've never seen a home user that's spent more on their software than on their hardware. Ever.

Besides, I've found less-inclined users are more apt to prefer WordPerfect suite, anyways, for some reason.

The other option, which they'd go for if openoffice didn't exist, is that they'd buy used copies of older versions of the software instead. Like office 95, for example. I bet I could buy that for $10. And that would be the best option, because then M$ would have to start supporting their old crapware, and they'd be in deeper hell than they've ever experienced.
posted by shepd at 8:57 PM on February 10, 2003

I have never understood how a EULA can be binding. Are there not legal definitions of what constitutes a signature, and doesn't a contract have to be signed? I've installed shareware and such with 'joke' EULAs and such &mdash "By installing this software you agree to turn over your first-born child," etc. Are those binding? If I put a splash page on my site saying "You hereby agree to give me $1,000 for use of this site," and track down some IP addresses, can I hold those people liable?
posted by IshmaelGraves at 9:46 PM on February 10, 2003

*regretting that he even got into this, but never mind*

there's the little fact that piracy isn't stealing
So, could you ask the various governments around the world to give back the fines that have been levied against people for stealing software please? I am sure they will agree with your unique assessment of the law.

users can learn anything
My experience is that most users have problems learning one package, never mind one for work and another for home. I think you underestimate the unwillingness of users to learn something new. I agree that, as a rule, users will not shell out for office XP Pro - they will buy a copy of Word if they have to buy anything at all, which is a hell of a lot cheaper. Using extremes does not help your argument, BTW. I guess if Open Office is OK with your mother, that should be good enough for the rest of us too (even though only nerds have ever heard of it), but I have never even met anyone who has used WordPerfect with anything resembling satisfaction since the demise of WP5.1

Older versions of the software would indeed be the ideal solution for most home users and there are probably lots of businesses who could offload their old software this way. Don't hold your breath for MS (or anyone else) to support it though. If the truth be known, almost all home users could get by perfectly well with WordPad, but that can't be any good can it? After all, it is free ;-)yes, I know, you pay for it in the bloated, scummy OS price, blah, blah, blah ....
posted by dg at 10:04 PM on February 10, 2003

>So, could you ask the various governments around the world to give back the fines that have been levied against people for stealing software please?

No, those were fines for copyright violation. I'm sure you'll say I'm splitting hairs, but the difference between piracy and stealing is the difference between manslaughter and murder. Both are wrong, but they are wrong in different ways and, while the crimes are similar, the level of wrongdoing is clearly less when one pirates rather than shoplifting/defrauding.

What always struck me as strange, though, is that if I walk into Staples and swipe a DVD and was caught, I might get a month of community service. However, if I were caught pirating the same DVD, they'd want me in jail for 5 years and a fine of $250 big ones. Which is very much backward to the thinking of the common man, but what are you going to do about it? ;-)

>I am sure they will agree with your unique assessment of the law.

Read the Berne Convention (the foundation of modern copyright law). Not a single reference to theft or stealing. Not one. You would think that if Copyright Violation and stealing were identical they'd have mentioned it in there, no?
posted by shepd at 10:41 PM on February 10, 2003

*kicks dead horse one more time and walks away*
posted by dg at 11:36 PM on February 10, 2003