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When paying for software, the EULA often contains the clause "This software is licensed, not sold." I'm confused on what this clause actually means regarding one's ownership of the software. I have heard two possible interpretations of this clause:

  1. You own the copy of software that you paid for but you don't own the copyright to it. This is the same kind of ownership you have over a book you buy at the book store. Among other things, the first sale doctrine would apply to your copy of the software. However, you can't produce new copies and sell them as you don't own the copyright. This is the interpretation expressed at 10:30 into this video.

  2. You don't even own the copy of software you paid for. You are being granted limited, controlled permission to use this software. As you don't have ownership rights over it, among other things, the first sale doctrine would not apply. This interpretation is expressed in this post on the site.

Which interpretation is valid?

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Choice 2 is what the writers of the license have in mind. You own the physical media on which the copy is delivered, such as a DVD or floppy disk (if there was physical media). But you do not own the copy of the software, you merely have purchased a license to use it, which may be revocable under specified circumstances.

This is different from the law in the case of a book. Why you buy a book, you own a copy of the book, although you do not own the copyright to the book, and may not make additional copies.

The license model was adopted by commercial software distributors for several reasons, but largely to avoid the "first sale doctrine". When you buy a copy of a copyrighted work, you have the right (under US law at least) to lend, rent, sell, or give-away that copy. You do not need the permission of the copyright holder to do any of these. Those in the commercial software business did not want customers to be able to do those things legally. By making the software subject to a license, which is a contract, they could write that license to restrict or prohibit those rights.

Sellers also wanted to prohibit reverse engineering of the software, and to restrict use of the software. (For example, to limit the user to installing it on a single computer.)

There was at first much dispute over the enforcability of such license agreements. But most US courts now accept them as valid and enforceable, and copyright law has been modified to take account of them. Specifically, 17 USC 109 (2)(b)(1)(A) seems to include a legislative acceptance of this rule.

  • "You own the physical media on which the copy is delivered, such as a DVD or floppy disk (if there was physical media). But you do not own the copy of the software" - This statement is at odds with the very definition of a "copy" under the copyright act, which is, “Copies” are material objects, other than phonorecords, in which a work is fixed. The physical media is the copy, that much is certain. The definition leaves no room for any other interpretation. – Dan Moulding May 26 '19 at 4:31
  • @Dan Moulding That makes some sense. But it is not the way US courts have interpreted the law, including the Supreme Court. If you are right, every count in the country is wrong. And here on law.se, we explain what the law is, including how courts have construed it, not what it perhaps should be. – David Siegel May 26 '19 at 14:43
  • Yes, I understand. And I didn’t mean to imply that there is any problem with your answer to the question. Merely trying to add nuance to a complicated issue. I wonder what rules of construction allow the court to redefine the term “copy” when the definition as legislated seems rather unambiguous though. – Dan Moulding May 27 '19 at 15:21
  • @Dan M 17 USC 109 (2)(b)(1)(A) seems to include a legislative acceptance of this rule. Note that it is clear that phonorecords (recorded music) are not legally "copies". Note also that compute programs on disk are "copies" they are just not owned by the owner of the disc. Courts held that a program sold with a license that denies ownership of a copy will have the terms of that license enforced. The distinction may go back to the 1908 decision that player piano rolls are not legally copies of the music recorded on them. – David Siegel May 27 '19 at 15:52

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