In section 8.1, I showed that copyright licenses and other contractual arrangements are used to avoid some of the market failures that can be generated by the combination of copyright and trade secret. However, copyright licenses could also be used to create new market failures. Indeed, the general conclusions of this paper about the appropriateness of protecting software interfaces through copyright and trade secret would have little or no empirical relevance if it were possible for copyright holders to use standard software licenses “contracting out” the possibility of accessing or using interoperability information. That is the case, because – in order to obtain access to interoperability specifications – one should usually become a licensee of the original software (at least as a final user) and accept the associated licenses. Hence, the licensor may impose
263 See, in particular, REICHMAN, Legal Hybrids, pp. 2545—2546 and also f.n. 22 for additional references.
264 Eben Moglen (law professor at the Columbia University, and one of the main authors of the GNU GPL license, which is the
most common open source copyleft license) frequently recalls in his speeches that the more copyright is reinforced, the stronger copyleft becomes. This is true both from a dialectic point of view (in the sense that an “oppressive copyright” may reinforce the support for copyleft and the perception that an alternative is needed) and from a legal point of view, in the sense that licenses such as the GPL become easier to enforce in a legal system granting broader powers to rightholders.
on the licensee standard licenses (in particular “shrink wrap” and “click wrap” licenses),265 which could be
used to contractually limit the freedom to reverse engineer, create competing or complementary products, replicate interface specifications and so on.
9.1.1. Licenses and copyright misuse
Standard license may disrupt the careful balance of interest devised by what I labelled “technology copyright”. Opportunely, there are several ways to prevent these limitations from being legally bounding and enforceable: I will not discuss those based on general contract law266 or antitrust law267 (or consumer law, if
applicable).268 Instead, I will concentrate on an “interne antibody” of intellectual property law: copyright
misuse269 (or equivalent civil law approaches, if existent at all).270
In the Atari case271 the court of appeals recognized that several other courts had previously discussed a
defense of copyright misuse, in analogy to the well-established patent misuse defense, and even recognized that “[a]lthough it has yet to apply the copyright misuse defense, the United States Supreme Court has given at least tacit approval of the defense”. However, the court concluded that “[i]n absence of any statutory entitlement to copyright misuse defense, defense is solely equitable doctrine” and “[a]ny party seeking equitable relief must come to court with ‘clean hands’”. Unfortunately, this was not the case of Atari (that had falsely stated to the Copyright Office that it needed the copyrighted program it wanted to analyze for use in a litigation), so that the court did not further discuss the issue. Another relevant case for copyright misuse is Sega.272 As observed by McManis:273
“while discussing the fourth fair use factor, the court of appeals in Sega remarked that an attempt to monopolize the market by making it impossible for others to compete runs counter to the statutory purpose of promoting creative expression and cannot constitute a strong equitable basis for resisting the invocation of the fair use doctrine. This remark offers support for the conclusion that, not only was the purpose and character of Accolade’s use a fair one, but Sega’s use of the lockout device constituted a misuse of its copyright.”
Any of the interpretations of copyright misuse reviewed by K. Judge274 could be used to consider illegitimate
this kind of licensing conditions, at least in non individually negotiated contracts (for which it is more reasonable to defer to the contractual autonomy of the parties, unless there is some clear disparity in
265 Shrink-wrap licenses are software licenses which are considered accepted just because the user opens the plastic film
enveloping a software package. The “virtual” equivalent is a click-wrap license, being accepted simply clicking on an “I accept” button displayed while downloading or installing a piece of software. See CHARLES R.MCMANIS, The Privatization (or "Shrink-
Wrapping") of American Copyright Law, 87 California Law Review, 173--190 (1999).
266 To discuss this issue from the point of view of contract law, the first (problematic and) preliminary issue would concern the
definition of software licenses as “contracts”.
267 Antitrust “remedies” to this possibility may be relevant, but they presuppose the existence of a dominant position (in order
to be qualified as abusive) and or must be equivalent to a cartel (in order to be considered equivalent to a cartel, which is probably a less likely possibility, but still worth mentioning).
268 Consumer law is usually applicable only to final customers. And final customers do not usually have any interest in
performing reverse engineering or similar activities, unless they are actually software producers: the open source model of software development make actually quite reasonable to contemporaneous nature of consumer and software producer in the very same licensee, but this issue exceeds the boundaries of the paper at hand.
269 See K.JUDGE, Rethinking Copyright Misuse, 57 Stanford Law Review, 901--952 (2004). See also, for a much more synthetic
review of the doctrine, JACQUELINE LIPTON, The Law of Unintended Consequences: The Digital Millennium Copyright Act and
Interoperability, 62 Washington and Lee Law Review, 487 (2005), 540—543. The latter work appreciably relates the copyright misuse
doctrine and the anti-circumvention measures of the DMCA.
270 The possibility of finding, in civil law, a doctrine reproducing the effect of the common law (actually US) doctrine of
copyright misuse is likely very low. Fortunately, the Software Directive explicitly pre-empts contracts forbidding reverse engineering and – in order not to empty this provision of any meaning – also general provisions (maybe in click-wrap contracts) forbidding the development of interoperable pieces of software should be considered void. See below and the second paper of this dissertation for more details.
271 Atari Games Corp. v. Nintendo of America Inc., 975 F.2d 832.
272 Sega Enterprises Ltd v. Accolade Inc., 977 F.2d 1510. In fact, a certain “key” was needed to unlock the code of Sega’s
console and it consisted “merely of 20 bytes of initialization code plus the letters S-E-G-A”, which also triggered the display of Sega’s trademark on the TV screen connected to Sega’s console.
273 MCMANIS, IP Protection and Reverse Engineering.
274 Three main approaches are discussed in the paper: “the anticompetitive approach”, “the formalistic and abuse of process
contracting power, which means that other tools – including contract and antitrust law – may be available to intervene).
I already mentioned that fair use could be used to allow literal copying in cases in which the implementation dictates the reproduction of a certain part of the specification. For instance, this is the case if a certain group of lines of code (or, for what matters, even a poem or another text) is used as a lockout code or the like. Here, I actually suggest doing more, in analogy with the following example: if you are a lock producer, your could make keys to open your locks containing your three-dimensional trademark (in the sense, that the trademark is part of the design of a “compatible” key for your lock). However, using trademark law to prevent independent technicians from copying your keys for end-users would risk being considered as a trademark-misuse (because you use your trademark to have a patent-like monopoly on the production of certain objects). In the same way, I suggest that there is (or, at least, should be) a finding of copyright-misuse275 if you devised a copyrightable lockout code (like a “poem” used as “compatibility
password”) and then tried to use copyright law to prevent someone from realising a compatible program reproducing your lockout code.276
Finally, where an undertaking is dominant, competition law could be used – alternatively or complementarily to copyright misuse – to prevent it from using its intellectual property rights in ways similar to the ones I described. However, the advantage of an intellectual property doctrine like copyright misuse is that it would not require a finding of dominant position.277
9.1.2. Copyright and patent preemption of restrictions on reverse engineering
In the European Union, article 9 of the Software Directive explicitly forbids any contractual limitation to software reverse engineering for interoperability purposes, so that “[a]ny contractual provisions contrary to article 6 […] shall be null and void.” The scope of this provision clearly looks very broad, encompassing not only consumers’ contracts (and click-wrap and shrink-wrap licenses), but also individually contracted agreements (which is a policy choice that could be discussed and probably criticized).
In the US, the situation is far from clear. Prof. McManis,278 for instance, is (moderately) favourable to a
reading of US law accommodating for a Copyright pre-emption of anti-reverse-engineering clauses. His reasoning starts from Section 301(a) of the US Copuright Act, stating that all “rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 […] are governed exclusively by this title.” According to the author, “The legislative history makes clear that the primary purpose of § 301 was to preempt the common-law copyright protection for unpublished works”, but also to prevent from protecting works that failed to achieve Federal statutory copyright protection. McManis continues analogizing click-wrap and shrink-wrap licenses to an ad hoc level of protection for a given work, which is not create by state law, but which is almost equivalent to it, so that “§ 301(a) itself might preempt any effort to provide contractual protection against reverse engineering of a publicly distributed computer program, where the program would fail to achieve federal copyright protection against such reverse engineering because of the fair use provisions of § 107.” In this way, the author concludes that while it is debatable whether individually negotiated contracts may or not restrict the possibility of performing reverse engineering (and I think that there may be several unintended consequences in forbidding this freedom of contract), shrink-wrap and click-wrap licenses – which are equivalent to copyright law for the licensed work – should not be able to restrict fair uses and reverse engineering (and even less to prevent the creation of interoperable works, since this would be precisely contrary to the main policy goal of the Copyright Act and probably constitute copyright misuse).
The analogy between shrink- and click-wrap licenses and state law is discussed also by other authors, with similar conclusions:
“The reason that these contractual derogations carry such ‘erga omnes effect’ - resembling an alternative legislation under control of a private party - is that such licenses are unilaterally drawn by the copyright
275 See § 9.1.1. Licenses and copyright misuse.
276 Lexmark International, Inc. v. Static Control Components, Inc., 387 F.3d 522 case could provide useful arguments in this
field.
277 See the third paper for a discussion of the concept of dominant position and for a competition policy based analysis of
interoperability issues in general.
owner and their diffusion leads, in certain markets, to a situation where anybody who wants to access a certain type of content must enter into a contractual relationship with that party.
Some commentators argue that certain types of contractual derogation to copyright law should be always void, while others ask for a case by case judgment. Robert Merges, concerned that they are not negotiated and particularly widespread in a certain market, has suggested that these derogations should be void when they resemble a kind of private legislation: ‘[s]tandard form software licensing contracts by virtue of their very uniformity and the immutability - in other words, non-negotiability - of their provisions, have the same generality of scope as the state legislation that is often the target of federal preemption.’”279
These conclusions are made even sounder by the fact that it is today possible to condition the working of a given piece of software to the acceptation of various kinds of conditions, possibly forcing the user to be connected to the Internet to scroll down a contract. Hence, it is difficult to argue that “third parties” could escape the license, thanks to the first-sale doctrine or similar principles.
Moreover, not only copyright, but also patent law could prevent some anti-reverse engineering provisions280. In the Bonito Boats281 case, the Supreme Court also found that a Florida statute, prohibiting the
use of a molding process to duplicate (unpatendent) boat hulls, conflicted with federal patent law and was thus invalid under the “Supremacy Clause.” The Court stated:
“In essence, the Florida law prohibits the entire public from engaging in a form of reverse engineering of a product in the public domain. This is clearly one of the rights vested in the federal patent holder, but has never been a part of state protection under the law of unfair competition or trade secrets.”
Of course (and once again), click-wrap licenses are not state law; hence, it is debatable that they could be preempted as a Florida law. However, their practical effect is almost as generalised as that of the state law, hence I do share the point of view of Prof. McManis, according to which an application of patent preemption would be sensible. That is coherent with other decisions (as found by McManis), like Brullotte v. Thys Company (concerning the obligation to pay royalties beyond the expiry date of a patent). According to the author, “these cases stood for the proposition that contracts which attempt to provide protection unavailable under federal patent law are preempted.”