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30 Jurimetrics J. 157 (1989-1990)
Licensing the Use of Computer Program Copies and the Copyright Act First Sale Doctrine

handle is hein.journals/juraba30 and id is 173 raw text is: LICENSING THE USE OF COMPUTER PROGRAM COPIES AND THE COPYRIGHT ACT FIRST SALE DOCTRINE David A. Rice* ABSTRACT Software distributors license the use rather than sell copies of computer programs. Retaining title to and merely licensing use of copies is a means for restricting program rental and reverse engineering of program code, conduct which the Copyright Act per- mits if one becomes the owner of a program copy. This article examines in detail whether use licensing effectively circumvents the copyright law first sale doctrine and its conse- quences. It first demonstrates, by exploring the critical distinction between the copy- right owner's intangible rights in the creation itself and the purchaser's rights in the copy, that claimed support from motion picture licensing and other analogues does not exist. Then examining computer program licensing on its own terms, the article con- cludes that transfer under use licenses is the equivalent of a sale in the case of both mass market and limited commercial market program copy distribution. Software marketing purports to license the use of, rather than to sell, com- puter program copies. Copy use licensing seeks to maximize the economic value of computer program copyright and trade secret protection. Specific to copyright, the claim is that licensing the use of individual copies escapes opera- tion of the copyright law first sale doctrine. That doctrine operates as a limit on statutory copyright by vesting copy owners with the privilege to freely trans- fer sold copies or to use them in some ways that otherwise might constitute infringement of purchased copies. Avoiding operation of the first sale doctrine by retaining title to copies and merely licensing their use lays a foundation for contractual restrictions which expressly prohibit what copy owner privileges permit. In particular, mass market and most commercial program copy use li- *Professor of Law and Herbert J. Hannoch Scholar, Rutgers Law School, Newark. WINTER 1990 I ARTICLES I

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