DRMs and EULA: Protecting Apps and Software

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Software and web applications are commonly protected in two ways: digital rights management (DRM) systems, and end-user license agreements (EULAs)

DRMs

Initially DRM technologies were created solely for software, but since the late 1990s they have been used in conjunction with creative works such as  music, books, databases, and movies. DRMs are implemented at the discretion of the copyright owner. Cracking, reproducing, or tampering with DRM technologies has resulted in several lawsuits, usually brought under the Digital Millennium Copyright Act (which prohibits such activities). For example, the DRM system used on DVDs known as Content Scrambling System (CSS) was the subject of considerable litigation, as was the DRM system used to limit copying of Adobe e-Books. Despite claims made by their creators, no DRM has yet proven uncrackable.

The DMCA

The Digital Millennium Copyright Act (DMCA) addresses a number of copyright issues created by the Internet. What has made the DMCA controversial—and why some critics have labelled it as a para-copyright law—is that it outlaws attempts to get around processes, methods, or devices that limit copying of copyrighted works. For example, if a copyright owner installs a DRM system that limits copying of a motion picture, and a user circumvents the system (even without copying the underlying movie), a violation of the DMCA has occurred. In short, the DMCA has made it possible for a person to violate copyright law without infringing a copyright.

The act has numerous exceptions allowing for override of DRMs, including:

  • works exempted by the Copyright Office, under rules to be issued in the future
  • nonprofit libraries, archives, and educational institutions who need to decide whether to add the protected work to their collections
  • reverse engineering for the purpose of determining interoperability (the ability of computer programs to exchange information, and of such programs mutually to use the information which has been exchanged)
  • legitimate encryption research
  • legitimate security testing
  • law enforcement and intelligence activities, and
  • legitimate consumer privacy needs (the need to disable the protective device in order to prevent the unwanted acquisition of personal information or the tracking of activities on the Internet).

The DMCA also prohibits the production, marketing, or sales of a product or service designed to circumvent these technological protections. For example, the movie industry was able to use the DMCA to prohibit circumvention of DVD technology when it stopped a programmer from distributing a software code designed to decode DVDs and permit their copying. (Universal City Studios Inc. v. Corley, 273 F.3d 429 (2d Cir. 2001).)

End-User License Agreements

Copyright owners, particularly software and website publishers, often want to limit how purchasers use their products and services. For example, a soft-ware maker may insist that customers use its program only for personal, not commercial, purposes. To impose these restrictions, most publishers employ a contract known as an end-user license agreement (EULA).

Some EULAs are known as “shrinkwrap licenses” because—at least in the early days of software production—the user would consent to the EULA (visible on the back of the package) by breaking the box’s shrinkwrap. A user who proceeds to use the program is deemed to accept the terms. A user who doesn’t want to accept the terms can return the program to the manufacturer for a refund.

Another type of EULA is known as a “clickwrap agreement,” since the user must click to accept the conditions before accessing a website or using software.

Initially, there was doubt as to whether EULAs could be enforced in court, especially if the provisions were inconsistent with the Copyright Act. The reason for doubt is because the typical EULA isn’t negotiated between seller and purchaser at the time of sale, and so the purchaser shouldn’t be held to its terms, especially if the user must waive rights under the Copyright Act. For example, some licenses may prohibit the user from copying the software, even though the Copyright Act permits the purchaser to make an archival copy.

Shrinkwraps and Clickwraps

In 1996, a federal Court of Appeal ruled that shrinkwrap licenses are valid as long as a user who disagrees with the terms can return the product for a refund. The court also ruled that a license restricting rights that a purchaser would have otherwise had under the Copyright Act is legal. (ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996).)

The same is true for clickwrap agreements: “clickwrap license agreements are an appropriate way to form contracts.” (i.Lan Systems Inc. v. Netscout Service Level Corp., 183 F.Supp.2d 328 (D. Mass. 2002).) In a case involving America Online, a court upheld a clickwrap agreement between AOL and a Massachusetts man requiring that legal disputes with AOL be settled in Virginia. (Hughes v. AOL, 2002 U.S. Dist. LEXIS 9569 (D. Mass 2002).)

A EULA was not effective in a case involving the Adobe Software company. In 2001, a federal court ruled that, despite the language of an Adobe license agreement, the purchaser of a bundle of Adobe software programs could resell the individual components (separate programs on CDs). (Softman Products Co. LLC v. Adobe Systems Inc., 171 F.Supp.2d 1075 (C.D. Cal. 2001).) The district court in that case determined that Adobe had sold, rather than licensed, its products to distributors, permitting the resale of the components under the first sale doctrine.

In 2000, federal legislation—the Electronic Signatures in Global and International Commerce Act—was enacted, which helped remove some of the uncertainty that previously plagued e-contracts and prevented a contract from being challenged simply because it was created electronically. 

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