Source: http://blog.internetcases.com/tag/software/
Timestamp: 2019-04-21 05:13:07+00:00

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Company could be liable for modifications made to its software that provided abbreviated third-party warnings for prescription drugs.
Cases dealing with the Communications Decency Act often involve websites. See, for example, the recent decision from the Sixth Circuit involving thedirty.com, and earlier cases about Roommates.com and Amazon. But this case considered a sort of unique suggested application of Section 230 immunity. The question was whether a provider of software that facilitated the delivery of prescription monographs (including warning information) could claim immunity. It’s unusual for Section 230 to show up in a products liability/personal injury action, but that is how it happened here.
Plaintiff suffered blindness and other injuries allegedly from taking medication she says she would not have taken had it been accompanied with certain warnings. She sued several defendants, including a software company that provided the technology whereby warnings drafted by third parties were provided to pharmacy retailers.
Defendant software company moved to dismiss on several grounds, including immunity under the Communications Decency Act, 47 U.S.C. 230. The trial court denied the motion to dismiss and defendant sought review. On appeal, the court affirmed the denial of the motion to dismiss, holding that Section 230 immunity did not apply.
At the request of the retailer that sold plaintiff her medicine, defendant software company modified its software to provide only abbreviated product warnings. Plaintiff’s claims against defendant arose from that modification.
Defendant argued that Section 230 immunity should protect it because defendant did not play any role in the decisions of the product warning. Instead, defendant was an independent provider of software that distributed drug information to pharmacy customers. Its software enabled pharmacies to access a third party’s database of product warnings. Defendant did not author the warnings but instead, provided the information under an authorization in a data license agreement. Defendant thus functioned as a pass through entity to distribute warnings that were prepared by third parties to retailers selling prescription drugs, and were printed and distributed to the individual customer when a prescription was filled.
It held that plaintiff’s claim against defendant did not arise from defendant’s role as the software or service provider that enabled the retailer to access the third-party drafted warnings. Instead, the court found that plaintiff’s claim arose from defendant’s modification of its software to allow the retailer to distribute abbreviated drug monographs that automatically omitted warnings of serious risks. The appellate court agreed with the trial court which found, “this is not a case in which a defendant merely distributed information from a third party author or publisher.” Instead, in the court’s view, defendant’s conduct in modifying the software so that only abbreviated warnings would appear, it participated in creating or modifying the content.
This entry was posted in Section 230 and tagged Section 230, software on June 23, 2014 by Evan Brown (@internetcases).
Vernor v. Autodesk: does it matter in an age of cloud computing?
Today the Ninth Circuit issued an opinion in the case of Vernor v. Autodesk [PDF], making an important ruling about copyright, software and the first sale doctrine. At a fundamental level, however, one could wonder whether the case is all that big a deal, since the first sale doctrine concerns rights that the owner of a physical copy of a work has. For software — especially these days when an increasing amount of software is either distributed over the internet or provided in the cloud — questions about the rights associated with physical copies are becoming increasingly irrelevant.
The trial court found in Vernor’s favor. Autodesk sought review with the Ninth Circuit. On appeal, the court reversed, holding that Vernor could not rightly assert that his conduct was protected under copyright law’s first sale doctrine, and that Vernor’s customers’ installation of the software was not protected by the essential step defense.
These defenses failed because the court found that Vernor (and his customers) were merely licensees of the software, not owners.
When Autodesk sold the software to CTA (the company from whom Vernor bought the discs before trying to sell them on eBay), it included a shrinkwrap license agreement, as well as a screen containing the same terms that appeared during the installation agreement.
The agreement provided, among other things, that the software was being provided under a limited license and that Autodesk retained ownership of the copyright in the software. It also placed onerous restrictions on the use and transfer of the software, e.g., the user could not rent, lease or transfer it to other users, or transfer it out of the Western Hemisphere, either physically or electronically.
In general, the owner of a copyright in a work has the exclusive right to determine how copies of the work are distributed. The century-old first sale doctrine, however, is an exception to this general rule.
Under Section 109 of the Copyright Act (17 USC 109), the “owner of a particular copy” of a work may sell or dispose of his or her copy without the copyright owner’s authorization. Selling the copy of a painting you by at an art auction, for example, should not subject you to copyright infringement.
The Copyright Act also provides that the owner of the copyright in a work has the exclusive right to make copies of the work. But there’s an exception to that exclusivity when it comes to software — the RAM copy made when the software is being used, according to Section 117 of the Copyright Act, cannot give rise to an infringement if that copying is being done by the “owner of a copy” of the software as an “essential step” in using the program.
Vernor won at the lower court level because the court held that he was the “owner” of the copies of software he had bought, and therefore was protected by the first sale doctrine. His customers, also as owners, would be protected by the essential step defense.
The court of appeals held otherwise, namely, that Vernor (as well as the company from whom he had bought the copies, and his customers) were merely licensees and not owners of the software. Only “owners” can claim protection under the first sale doctrine and the essential step defense.
The court looked to the circumstances surrounding the transfer of the software, and formulated the following test to determine that a software user is merely a licensee when the copyright owner: (1) specifies that the user is granted a license, (2) significantly restricts the user’s ability to transfer the software, and (3) imposes notable use restrictions.
In this case, all these criteria were met. Since neither Vernor nor the company he bought the software from were “owners,” these defenses were not available.
The decision is subject to criticism in a number of ways. First, it might go against the sensibilities of many ordinary folks who think, quite naturally, that when you buy something (like a CD containing software), you own it. This case confirms that that is not always the case.
A second possible criticism is how the case makes possible some strange situations not involving software. What’s to stop hard copy book publishers from entering into shrinkwrap agreements with people who buy the books, purporting to retain ownership and calling the arrangement a license, while placing restrictions on use and transfer? Under the test in this case, it could be an infringement to lend or sell or otherwise distribute that book. Seems like a dangerous way to lock up information. But I guess it’s better than including curses as DRM.
Finally, the case lends itself to criticism in the way it gives great power to the software companies to really tie up tangible media to the detriment of consumers. Once an application has been sold once, where’s the harm to the software company if it’s transferred to someone else? The company has already been paid once, why must it insist on getting paid again? This grabbiness is really no surprise, though, especially when one sees that the likes of the Business Software Alliance joined as amici on the side of Autodesk.
In any event, tangible media for software is becoming a thing of the past. To the extent this case allows some negative consequences, the move to the cloud will mitigate that negativity.
This entry was posted in Uncategorized and tagged autocad, autodesk, Copyright, first sale doctrine, software, vernor on September 10, 2010 by Evan Brown (@internetcases).
The federal Computer Fraud and Abuse Act (CFAA), 18 U.S.C. §1030 et seq. creates civil liability for anyone who “knowingly causes the transmissions of a program, information, code, or command, and as a result of such conduct intentionally causes damage without authorization, to a protected computer.” Does this mean that the defendant has to intend to cause harm, or does it simply mean that the defendant merely intended to cause the transmission? The U.S. District Court for the District of New Jersey chose the former in the recent case of Kalow & Springnut, LLP v. Commence Corporation, 2008 WL 2557506 (D.N.J. June 23, 2008).
Plaintiff Kalow got hooked on the defendant’s software, which converted and stored plaintiff’s data in a proprietary format. In March 2006 the software stopped working because of a purported “time bomb” that defendant included in the application. To get the program working again, Kalow had to upgrade at a cost of over $15,000.
Kalow sued, and claimed, among other things, violation of the Computer Fraud and Abuse Act. The defendant moved to dismiss, and the court granted the motion with leave to amend.
In its complaint, Kalow had alleged that the defendant “intentionally transmitted a software code” to Kalow’s computer system and that the “software code [that defendant] intentionally transmitted to these computer systems caused damage to them.” The court found that these allegations were insufficient, as Kalow had not actually averred that defendant intended to cause harm.
The court rejected Kalow’s reliance on the case of Shaw v. Toshiba America Information Systems, Inc., 91 F.Supp.2d 926 (E.D.Tex.1999), concluding that the plaintiffs therein not only pled that the defendants knowingly had transmitted code, but that the defendants “knew [it] would cause the loss and corruption of data….” The court similarly rejected Kalow’s reliance on North Texas Preventive Imaging, LLC v. Eisenberg, No. 96-0071, 1996 U.S. Dist. LEXIS 19990, observing that the 1994 amendments to the CFAA embodied Congress’s aim to emphasize harmful intent and resultant harm rather than just unauthorized access.
This entry was posted in Computer Crime and tagged cfaa, computer fraud and abuse act, software, time bomb, upagrade on July 17, 2008 by Evan Brown (@internetcases).
The Software Freedom Law Center, one of the leading influencers in the free and open source software movement, has released what appears to be a helpful guide on understanding the legal issues associated with the use and development of open source software. As anyone involved with open source (whether on the legal side or the technical side) knows, these kinds of issues are erudite at best, and incomprehensible at worst. Having a comprehensive review in one place provides a helpful tool. Thanks to my friend Alex Newson for pointing out this publication.
This entry was posted in Uncategorized and tagged Copyright, foss, license, open source, open source software, oss, software on February 15, 2008 by Evan Brown (@internetcases).

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