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When will consumers strike back?

Software piracy is a big issue nowadays, and as a result we are now in age where DRM techniques like product activation are a reality. For some categories of software – most of Microsoft’s high-end software line, as well as most big-ticket programs – product activation is an accepted, necessary evil, and has been the status quo for some time. What was the most recent version of Photoshop, for example, to not feature some sort of activation? 6?

In other markets, customers aren’t as used to such heavy-handed DRM. Look at the videogame industry: the PC versions of BioShock, Mass Effect, and most recently Spore, raised quite a stir over their well-known use of DRM. In some cases, consumer outrage resulted in a lawsuit; in others, ill-fated calls for a boycott.

With the biggest barrier to consumer product activation – customers’ fluctuating levels of internet connectivity – effectively solved, software publishers now seem apt to make product activation as commonplace today as the CD-key and disc check of yesterday.

But while publishers’ biggest headaches are solved, consumers’ individual problems are not: Once activated, a program is generally tied to the customer, usually by identifying something that makes the customer unique. (Products like Windows XP and Vista, and games like BioShock and Red Alert 3, link product activations to the customer’s computer, and usually allow installation on a handful of machines. Other publishers, like Valve and their Steam platform, tie activations to a given customer account and may or may not have a more liberal policy on individual installations and ownership transfers.)

There are problems with both of these approaches, however, and they are associated with the fact that publishers – not their customers – control when and how their software is used. In many ways, these problems are reflective of the problems with DRM in general.

What happens if we want to exercise our fair-use rights to make personal copies? What if, ten years from now, we need to apply a hack to get the game running again? What happens if the publisher goes out of business or decides to shut off their DRM servers? Some  companies have contingency plans – but many do not.

Another one: what happens when activated software is resold and the new owner can’t activate it?

As product activation trickles down from expensive software suites to comparatively cheap products like videogames, this question will arise more often. Legally, it’s a no-man’s land: while U.S. courts generally interpret the purchase of the software license to carry the same rights as the purchase of a CD or book – regardless of what the EULA says – the U.S. federal court system can’t seem to make up its collective mind.

The main legal concept governing this is what is called the doctrine of First Sale, which states that copyright owners (software publishers, in this case) have no right to control the distribution of their works beyond the initial purchase, or “first sale”. Some cases, like Data Systems, Inc v. Wyse Technology, found that publishers design EULAs to preempt that first-sale right, by forcing consumers to call the software purchase a “license agreement,” or permit to use the software without granting ownership. There are opposing (and confusing) decisions, however, that contradict these rulings – like Blizzard Entertainment v. BNETDwhich affirm an EULA’s strength to stop reverse-engineering (frequently prohibited by the EULA), especially when used in conjunction with the DMCA.

I’m no lawyer, and it doesn’t take a legal genius to see that we’re headed down a collision course. Now that the EULAs we blindly agree to sport teeth – via DRM – it’s only a matter of time before fed-up consumers push back. To that end, I have a personal story to tell – which, unfortunately, will have to wait to some other time in the interest of space – and I am sure that many of you do too.

With the advent of digital distribution, consumers will run into EULAs’ limits more often. Then, they’ll ask why – they purchased the program; who do publishers think they are to tell them they can’t sell it?

These questions need to be answered, and soon. We live in a resale society: thrift shops and pawn shops are everywhere. We are accustomed to posting our unused stuff on eBay, hawking it in swap meets, and displaying it in garage sales. Other industries have no choice but to accept the fact that their products will be resold; indeed, many industries have embraced this. Do IP holders really think they are an exception to the rule?





"Nowadays, security guys break the Mac every single day. Every single day, they come out with a total exploit, your machine can be taken over totally. I dare anybody to do that once a month on the Windows machine." -- Bill Gates










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