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Owner’s Rights, Copyrights, and Licensing

October 29th, 2012

I’ve been on my high horse about licensing for some time, and, from recent events, I think more and more that such a concern is justified. There are cases going before the courts now about reselling textbooks from overseas.

Students at U.S. colleges hurt from outrageous prices and resale-avoidance schemes related to textbooks; any college student knows the frustration of hundred-dollar books, rip-off college bookstores, dodgy buy-back setups, and textbook “editions” obviously designed not to improve the book but to make used book sales impractical.

Now the publishers are fighting back against students who found a loophole: publishers sell identical textbooks cheaper in other countries, so why not import? Well, because publishers don’t like loopholes, so they used licensing to shut it tight.

The problem: licensing is basically a way of saying, “you don’t own what you just bought.” Intended to protect intellectual property, it is now being used to protect physical property in a way that could have serious implications on ownership.

Seven years ago, I expressed it like this:

Think about it. Plug in any other kind of product into that equation. What if a store that sold you oranges tried to sue a company that made juicers on the grounds that they had rights and controlled what you did with an orange after you bought it? That the orange seller deserved a cut of any sales having to do with changing the form or consumption of the oranges after the sale? That you would have to pay extra if you wanted to do anything with the orange except peel it and eat it straight? That turning it into juice would require an extra fee to the orange grower, or that using the rind in baking confectionaries would be prohibited?

Ridiculous, right? But maybe not so much.

Take, for example, a guy who bought several original boxes of software, with install disks and serial numbers; the software was not being used on any computer. He tried to resell the software on eBay, but the software maker shut him down, and won the case. The license agreement said you could not re-sell the product.

The case is important because the sale was not of the intellectual property per se, but of the physical set in which it was obtained. The critical point is that copyright laws were intended to keep people from copying and reproducing intellectual property. For example, I take Microsoft’s latest software, slap a new name on it, and sell it as my own software—that’s a copyright infringement. Copyright law was not intended to keep people who had bought physical originals from reselling them. But that’s where it is right now.

Have you ever bought a used book? You may not be able to in the future. It’s intellectual property, after all. Selling the physical container of that, apparently, is not OK—according to the recent textbook case. It could mean that publishers could slap a license on any book that says you cannot resell it (this already applies to all ebooks, after all), and presto, no used book stores.

It could even mean libraries are under threat. Even if borrowing is allowed, it might carry an extra price. Anything is possible under licensing. I have little doubt that librarians will have to carefully read the license agreement of books they want to add in the future.

But hey, it stops there, right? Well, not really. A few years back, Costco tried to import and resell Omega watches sold for substantially less overseas. Omega sued, and tried a trick: stamp an image on each watch, copyright the image, license it, and use copyright law to keep others from buying and reselling. The case tied in the Supreme Court, allowing Omega victory at a lower court to stand, albeit in a limited way (and Obama appointee Kagan, who recused herself as she had represented Omega in this case, could well have sealed it at the Supreme Court level had she ruled).

Now, apply that to the oranges. Let’s say somebody who makes oranges stamps the peel with their logo, which is copyrighted. Boom. It’s intellectual property, terms can be dictated by license, and suddenly you don’t own the orange you just bought.

I know, you’re still not buying it. Pun intended—you won’t be “buying” much of anything in the future if this comes to pass. You’ll be renting it. And that’s my point. One rule about businesses: if they can find a way to raise prices and exert more control, no matter how ridiculous, they will do it. That is the nature of business: to go to any extent to make money.

And recent court cases are opening doors that fly in the face of what we used to believe was the fundamental basis of property ownership: you bought it, you own it. Business is trying to rewrite that: you didn’t buy that, you only signed a license agreement to temporarily consume it.

Still not a believer? Wait and see. The problem is, by the time you’re convinced, it’ll probably be too late to do much about it.

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