For those who speak german, there is a quite long article about that subject on german wiki: http://de.wikipedia.org/wiki/Original_Equipment_Manufacturer

They also mention a decision of the German Federal Court (link at the bottom), that said in 2000 that selling an OEM OS even without a new computer is NOT illegal.

It was a lawsuite between Microsoft and a Berlin computer shop, that sold the OEM version of DOS 6.22 & Windows 3.11 without hardware. Microsoft won at the first two instances, but finally the supreme court annuled the former judgements. The text of the judgement is very complex, but basically it says that those license limitations ("only with new hardware") microsoft invented, ended when they sold the OEM software to their first (licensed) reseller. If this reseller would have sold the software to an enduser without hardware, they would have been right. But this reseller resold the software to another reseller and... well I don't know how many stages there were in between, but it finally ended up in this PC store.

Don't know how this conflicts with international law. Yet I believe that it could not be illegal to buy a used OEM version. Maybe it's illegal to install it. But you can allways nail it on the wall - as part of your Ancient Operating Systems Collection.

Silent Loon wrote:

The text of the judgement is very complex, but basically it says that those license limitations ("only with new hardware") microsoft invented, ended when they sold the OEM software to their first (licensed) reseller. If this reseller would have sold the software to an enduser without hardware, they would have been right. But this reseller resold the software to another reseller and...

I'm not a law expert, so I'm not sure if OEM license also falls to the territory of first sale doctrine, but I'm nonetheless happy with the court's decision. 😀

If it was the opposite, that OEM license (or any EULA, for that matter) supersede first sale doctrine or other copyright limitations, frankly it is very hard for me to logically accept it. Not only hardware vendors already comply by selling the software with hardware, but Microsoft already receives money from their first sale. The software has been paid.

Again, it seems to me that such EULA is made to protect the software vendor from inter-product competition instead of protecting intellectual property. If that's the case, then I believe the law should not put such EULA above first sale doctrine or other copyright limitations, because IMO, the law should ensure free and fair trade instead of protecting corporate welfare. OEM price is a form of discount; if I buy clothes at outrageously discounted price (say, 70%), why should the law stop me from reselling the clothes at higher price? Nobody forces the clothing retailer to put such outrageous discount at the first place; they do it by their own free will, so why should they deserve extra protection that violates consumer's right? Same should go for software.

That's why I never comfortable with software EULAs. Heck, DVD rentals are perfectly legal, and so is reselling your used books or CD. Why should software deserve special treatment?

Because it is licensed (that's the claim), not sold?

MiniMax wrote:

Because it is licensed (that's the claim), not sold?

Of course it is; the question is whether it is conscionable or not. Fortunately, court rules seem to side with the consumers. SoftMan vs Adobe is an example where first sale doctrine supersedes EULA, and the German Federal Court decision mentioned by SilentLoon above ruled that selling OEM OS without software is not illegal. And IIRC in Microsoft vs Zamos, Microsoft dropped the suit and offered settlement after Zamos countersued Microsoft for violating Clayton Act; that should say something about the conscionability of such EULA. It seems that copyright holders are trying to enforce terms beyond the scope of copyright by calling it a "license". Now what's the purpose behind such thing? Price fixing? Protecting new software from inter-competition with used software? Doesn't sound like free market to me.

Nonetheless, purchasers of CDs, movies, and books have all the rights to resell their purchased items; EULA aside, why should computer software be exempted from first sale doctrine? Is there any moral reasons for that? The law seems to side with consumer's rights until now, but the law may change (worse, the law can apparently be bought 😠 ). If somehow in the future, the law is changed to enable unconscionable EULAs to go rampart, I wonder if what's the rationality behind that.

Note: my interest in this particular topic is not actually driven by OEM software, but used games. I'm an old game hunter, and the last thing I want to see is ebay prohibiting the sale of used games. 😵

For the record: I am for the sale of used items, whether it be physical items that is hard to duplicate, or digital items that is exceptionally easy to duplicate.

But I can also see the problem from the publishers side in trying to find some method to prevent pirates from ripping them off by selling copies as originals.

Wrt. OEM versions of Windows, the person/company that bought it from Microsoft in the first place got it at a discounted price in return for some restrictions on how the software could be re-sold.

That is not much different from when a farmer in Denmark can buy cheap petrol (mixed with some strong colouring agent) for his farm machinery. The condition is that it is only used for farming purposes, and not put into his private car (where the colouring agent is almost impossible to remove from the system). Misuse of the cheap petrol carries a very high fine.

My point is, that the original buyer agreed to some restrictions in return for a cheaper price. Ignoring such restrictions is wrong IMO and the next buyer should be aware that the items are sold in breach of the original contract.

Should the next buyer be held responsible to the original terms? I think so.

If someone offers you a very good deal on genuine DVD's, and it later is revealed that the seller had stolen the DVD's, should you be obliged to return the DVD's? In most countries you not only have to return the DVD's, you would also be fined buying stolen goods.

Technically the sale of any copyright material is just the sale of a "license" period. If you go buy a book, then you have a "license" to own and read that copy of the author's work. Same thing with a DVD (or for the fogies out there, VHS Tape,) CD, Record, Cassette, etc... This is why the "license" arguments companies try to use doesn't make sense to me.

I've already been informed (back when I had an argument with Verant,) that if an EULA violates any rights given to a license holder then it becomes void. So it would seem to me, that if Microsoft's EULA on its OEM licenses violated any of the actual copyright laws, then it becomes void.

Now, here is where OEM rules actually do apply. Companies (like Dell, where I used to work,) purchase bulk licenses at greatly discount price. In the case of Dell at least, bulk really means bulk, I'm talking thousands of licenses at a time. In many cases, this purchase comes with a digital copy only of the software (Windows in this case,) which the company then presses to their own CD's and such. What Dell did when I was there, was to put the image in a special partition of the HDD that had the entire system re-install on it. You could then covert this to CD/DVD with a burner if you had that option, or to floppies (a LOT of floppies usually,) or finally, you could special order the image on a CD/DVD to be sent by Dell. This discount was not only because the purchase was in bulk. It also stipulated that the first buyer (Dell,) would be responsible for technical support and not Microsoft.

As for the 3rd (or 4th etc..) party reselling that OEM license. As long as they cease using the software after selling the license, Microsoft cannot legally do anything to stop them from doing so (which is where Verant got into trouble.) The only iffy item here is the hardware requirement. Personally, I feel that after the first level distribution (Dell sells it with a new laptop,) they should not, legally, be able to limit the resale of the license. From my reading of my (admittedly old,) copyright text book, that's what the law says too. But, it is possible that there is a small amendment or note somewhere in the actual law that isn't in my book. This could allow such a restriction. I usually just say, better safe than sorry, and throw in a cheap audio cable or part and pad it into my shipping charges. Though, I've only sold an OEM title once as far as I can remember.

MiniMax wrote:

Wrt. OEM versions of Windows, the person/company that bought it from Microsoft in the first place got it at a discounted price in return for some restrictions on how the software could be re-sold.

That is not much different from when a farmer in Denmark can buy cheap petrol (mixed with some strong colouring agent) for his farm machinery. The condition is that it is only used for farming purposes, and not put into his private car (where the colouring agent is almost impossible to remove from the system). Misuse of the cheap petrol carries a very high fine.

Well from morality standpoint, I have no objections with subsidized gas for farmers (with restriction that it is only used for farming purposes), and I have no objections with GPL either (with restriction that derived works are to be available under the same copyleft), because in both examples, the reasons behind such restrictions are (at least supposed) for public benefits.

EULA's restrictions, on the other hand, only serve to maximize vendor's profit instead of public benefits. Not that I have problems with maximizing profit in itself. However, IMO the law should ensure the conscionability of such buyer-seller agrement regardless of whether both parties agree or not (for instance, in the past it is possible for a person to indirectly agree to become slave (usually by being debtor), but such agreement is unconscionable), especially since such EULA can be utilized to sneakily implement unfair business practices like eliminating secondary market (anti-competitive) or violating copyright limitations.

Furthermore, most software license agreements are not made available before the transaction is made (shrink wrap license). At least DVD rental shops are honest about the nature of their business.

This is a side discussion anyway, but IMO, I think there should be law that enforces software license agreements to be made available before the transaction is made, with clear, explicit disctinction whether the transaction is considered actual sale or merely rental. Not only it is fairer for the buyers, but it may encourage more competition, because now vendors can compete on license terms; vendors who offer actual software sale (without fair use-eroding limitations) may be more attractive to the buyer than vendors who merely "rent" the software.

Thoughts?

PS: believe it or not, in other discussion (not on Vogons) I have been called commie for my thoughts above. 🤣

When you buy something it's yours to keep, to sell, re-sell, give away or toss to a trash bin. If youre allowed to do that you didnt buy it, you rented it. These EULAs are for not other reason than to secure big profits for microsoft and the likes at the expense of people's rights.