Autodesk, EULAs and Games, Oh Boy

September 20, 2010 -

You may have recently heard of a court decision out of the Ninth Circuit involving horror stories about EULAs banning the right to resell games. There has been a lot of misinformation and fearmongering surrounding the case, with people shouting how it is the end of the world. It really isn't, and I'd like to take the opportunity to go over the actual decision, as well as the existing law behind it, to explain why this will have minimal, if any, effect on gamers.

Background on First Sale

The case deals with two major fields of law: contracts and copyright. Put simply, a properly-written EULA is a legally enforceable contract. As long as there is nothing flawed in the drafting of the EULA (for instance, if it contains clauses that the court has deemed "unconscionable" because they violate public policy) and nothing flawed in the act of agreement (your consenting to the EULA, typically when you scroll down through all the legalese and click "I Agree" on the license while installing the game) it will be held to be enforceable.   What the EULA ends up doing for most software is saying "These are the rules under which you can use this program."  This argument has been shown to hold up in courts: Blizzard successfully used it to sue a bot manufacturer in World of Warcraft.

However there is a catch. Copyright has a doctrine called "First Sale", which acts as a limitation on the power of copyright holders to limit your ability to resell a work. The doctrine which has been around for over 100 years in common law (well before computers existed -- keep that in mind), and was made part of federal statutory law in the current version of the Copyright Act, says that if you are the owner of a copy, you are entitled to sell it if you choose.  The key phrase here is owner. In order for the doctrine to apply, you must have lawfully received it through a sale -- not a license. In a license, you are not the owner; you merely have permission to use the software.

So what happens when you have something that looks like a sale, but is being called a license? Well, the courts have traditionally held that "if it looks like a sale, it's a sale; if it looks like a license, it's a license." It was a very vague and relatively simple test, but one that's been around since before computers existed and has long been accepted as the legal standard.  The courts would say "It doesn't really matter what you call it. We're going to determine whether it is a sale based on what the agreement looks like."

Until the late 2000's, that's where we were. The world wasn't ending, software licensing proceeded as normal and case law developed around it, but the test remained that same vague "looks-like-a-duck" test.

The Facts Leading Up To Vernor

Autodesk, most famous for making "AutoCAD" and perhaps more famously in the games industry, making the modeling program Maya, has a big problem with piracy. Most of the products they make are very expensive (typically in the hundreds to thousands of dollars per copy), and are typically sold on a "per-seat" license basis to large companies, who then use the software to make games.

Tim Vernor ran an eBay store, where he sold a used copy of AutoCAD.  Autodesk, claiming this was in violation of the license agreement which required that the software not be resold, sent a number of DMCA takedown demands, and eventually Vernor sued them. Vernor claimed that he never agreed to the EULA because he never opened the box or installed the software. Autodesk countered that it didn't matter; the person who sold it to Vernor had no right to sell it, and therefore Vernor had no right to use it. Now, a note for everyone who just flipped out and said "BUT HE PAID FOR IT." Under Autodesk's argument, Vernor basically got scammed; he would have the right to get his money back or sue the person who sold it. Courts aren't always fair, to put it bluntly. In any event, the case came before the District Court in Washington.

The Vernor Decisions

The District Court ruled squarely in favor of Vernor, who had backing from the coalition of NPOs that represent free software interests: the EFF, the ALA, Public Knowledge, etc.  The court examined the law and determined that there were two conflicting sets of cases. Out of the four major cases on point, three were in favor of Autodesk, and one (the earliest case) was in favor of Vernor. However, the earliest case in support of Autodesk's argument (called MAI v. Peak) had a major point overruled by Congress, and the other two cases relied heavily on that argument. The court concluded that the most solid rule to follow was the one in favor of Vernor, and ruled that he had made a sale, and was entitled to the protection of the first-sale doctrine.

Autodesk appealed, and the Ninth Circuit heard the case. Instead of saying that the four cases conflicted, however, the Ninth Circuit found a way to tie all four cases together and said "No, in fact, they outline a set of scenarios that act as a test for whether there is a license." The Ninth Circuit held that there was a three-pronged test: 1) does the copyright owner call it a license? 2) does the copyright owner restrict the end user's ability to transfer the software? 3) Does the copyright owner impose use restrictions? Under this test, the Ninth Circuit reversed the lower decision, and found that there was in fact a license.  Autodesk sold the software as a "nontransferable license", required written consent to transfer or lease the software, imposed global use restrictions and restrictions against "modifying, translating, or reverse-engineering the software, removing any proprietary marks from the software or documentation, or defeating any copy protection device", and provided that the license would terminate if these restrictions were violated.

Now take a step back, and look at the Vernor three-prong test, compared to the prior test. The Ninth Circuit in their decision said "this looks like a license, and we're going to call it a license." That's the exact same thing it was before.  The only difference is now, post-Vernor, we have a clearer set of rules as to what "looks like a license".  In other words, the test is still "does it look like a duck", but now we have a written description of what a duck looks like, to compare with.

There's a common misconception in this case that stems from the Ninth Circuit's holding. A disturbingly large number of media outlets have been saying that the court was "required to follow precedent” or "had no choice" on this case. This is in fact, misstating the words in this decision. What the court actually said was that they were "bound to reconcile precedent." What this means is that when the District Court saw two competing sets of case-law they said "Oh Shi-....we better throw out one of these, because both can't be right." The Ninth Circuit, on the other hand, said "WAAAAAITT a minute. You have to try and make the sets work together. You don't just walk out because you had an argument with your spouse -- you try and find a way to reconcile the differences."

The other major misconception is from irresponsible media outlets claiming that this decision means that the so-called "magic words" that something is a license will make it so under Vernor. As stated above, that's not the case. Calling it a license is only one of the three parts. You still need to have some actual facts behind it that shows that there are enough restrictions to justify it actually BEING a license.  So that's Vernor in a nutshell.

And here we are today.

Applicability To Games

So now we are in this post-Vernor world. Cue the mass hysteria of "OH GOD I WILL NEVER BE ABLE TO SELL A GAME AGAIN, THAT'S IT I'M MOVING TO MEXICO" nonsense. But as I said earlier, there really is no major change. The test still largely hinges upon whether the EULA is really just a sale in disguise.  If it was never remotely a sale to begin with, the outcome would have been a license whether you looked before or after Vernor.

The Ninth Circuit noted that there are some serious policy questions in play here, and that Congress has the opportunity to simply pass legislation making its views on the topic clear (as it did when it amended the Copyright Act to include first-sale, and it did when it overruled MAI v. Peak). For instance, if the court had ruled in favor of Vernor, that would have been a major blow to things like educational pricing. Think about it: If you buy a copy of Microsoft Windows on an educational discount for $99, and can then freely resell it to whoever you want, why would anyone buy the non-educational version at $500?  And regardless of this case, it is very likely that the issue will at least be brought before Congress for clarification, as both sides have very powerful advocates behind them.

The first obvious difference between the software from the case, and games, is that games generally don't cost hundreds of dollars. AutoCAD and other similar programs cost ridiculous amounts per license, and often are sold in enterprise versions, where you buy a single copy of the program, and a certain number of "seats" that it can be installed on at once; or a single copy comes with multiple CD keys. That's not standard practice in the games industry.  Games are generally sold on a one-to-one basis, which tends to weight towards being a sale, not a license.

Second, there are very few applicable restrictions on use that a copyright owner can impose on how you play a single-player, offline game. When you play say, Super Mario World, there is no online component, there is no legal restriction from Nintendo on what you can or can't do, and to the extent that they tried to put any in place, it would be laughed out of court as unenforceable. Single-player games and offline games simply weigh more towards being a sale than a license.

MMOGs, however, are a different story, and are unclear.  In MMOGs, there is a very real interest to the copyright owners in determining how precisely you use their game. Sure, you can buy and install the software but if you break their terms of service you'll be banned and your license to play revoked. Similarly, you only get the game for a limited amount of time -- as I found out painfully with Tabula Rasa, you only get to use it until their servers shut down. You install them on a CD-Key basis which is tied to a paying account and can be activated only once, and most limit the way you can transfer items or accounts to other people. MMOGs, therefore, have a lot of similarities to a license.

Post-Vernor, nothing about MMOG's changed. They still have a lot of similarities to a license, and those similarities are nearly identical to the characteristics outlined by Vernor -- it's called a license, it imposes notable restrictions on use, and it significantly restricts the user's ability to transfer.  In other words, they would have been a license before Vernor, and they're a license after Vernor. So really, nothing much changed for MMOGs.

But what Vernor DID do is helped to exclude other forms of software that don't have those kinds of restrictions. In fact, I'd argue that now it is more clear than ever that single-player games and offline games are clearly intended to be sales protected by the first-sale doctrine, simply because they don't past the Vernor test. Before, you'd have to go through a series of arguments on each side, and the judge would have to weigh each one, and different judges could come to different conclusions. Now, the uncertainty is gone. Prong one, prong two, prong three. Bang bang bang. It either has these restrictions, or it doesn't, and the restrictions are either "notable" (i.e. significant and enforceable) or they aren't.

Conclusion

So there you have it folks.  There's really not a whole lot that has changed, but I hope you can see through some of the fearmongering and misinformation that have unfortunately been spread about this case. Hopefully the first-sale doctrine is now a bit more clear to you, and you'll think a little bit more about what you're agreeing to when you scroll past that legalese on your game installations.  For another really good take on the Vernor decision, I'd suggest you read Copyright and Technology Blog's take -- they're an excellent source of information written by some very talented legal analysts. There's also one bright spot in all of this for Vernor -- in overturning the District Court, the Ninth Circuit allowed him to have his claim of "misuse of copyright" be heard, which if successful would basically prevent Autodesk from enforcing the infringement claim against him.


Dan Rosenthal is lawyer and analyst for the video games industry


Comments

Re: Autodesk, EULAs and Games, Oh Boy

Ok, I finally had a chance to sit down and read the decision.  Not sure if anyone is still following this thread, but posting anyway ^_^

I strongly disagree with the OP's stance that this will not effect games, and to a degree I wonder how much pressure from the industry played into the case. 

I agree that the judge had to reconcile two different pieces of precedent, but the 3 prong approach is a disastrous way to do it.  The requirements set forward would make it trivial for a company to write their EULA in a way that passes that 3rd prong.  In fact, pretty much all of those criteria are already in most EULAs, including the regional restriction.

The irony is that they had a good test in their decision...  destructibility.   One thing that makes a liscence different then a sale is the upstream party's ability to terminate the usage.  In fact this is what happened in the case.... Autodesk offered a low cost upgrade, where the lisence to run the software transfered to the newer version under the condition that copies (which no longer had lisence) were destroyed.  The company taht sold the disks/keys to Vernor broken that agreement,... the liscence to run them had already been destroyed.

So why did they not go this simplier route?  In the document they state that the industry claims it would be too expensive or complicated to handle returns or destructability on consumer stuff, thus they want a way to turn it into a 'lisence' without one of the core things that makes lisenced software functionally differnt from sold software.

Unfortunatly, I do agree with the judges that this was a case of lisencing, thus Vernor needed to loose.. but they used the case as an oppurtunity to vastly simply the process of making what is really a sale, legally a 'lisence' instead.   This is bad.....

Re: Autodesk, EULAs and Games, Oh Boy

Dan Rosenthal is lawyer and analyst for the video games industry"

Need I say more. Content industries also promised not to abuse the DMCA, hows that working out.

Re: Autodesk, EULAs and Games, Oh Boy

Not to attack Dan on a personal level, but I once spent the better half of a day trying to pin down the site's editorial staff as to whether Mr. Rosenthal was a lawyer and analyst for the video game industry or of the video game industry. I'm not sure they ever got the importance of the difference between the two and the respective implications thereof. But, assuming it's "for" and not "of," then the interest has been disclosed and you're free to use that information in any way you see fit when evaluating what Dan has to say.  

Re: Autodesk, EULAs and Games, Oh Boy

Of, not for. -- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

Thanks for the clarification, Dan. It makes a world of difference. Like that of night and day.

Re: Autodesk, EULAs and Games, Oh Boy

I have a question regarding EULAs. Some of the prior comments made mention that EULAs are a "take-it-or-leave-it" kind of deal. My question is with regards to the second half of that situation. Now, keep in mind that not all software is downloaded from the internet and that there are still boxed software sales being made. The scenario I want to ask on is this:

A consumer buys a boxed software and pays for it at the counter. The consumer goes home and loads the software on his computer. The consumer then proceeds to read through the EULA (however remarkable that may be) but decides that it is not agreeable to him.

What now?

Since the EULA is only visible within the installer disk and the consumer is required to already have the installer disk in possession in order to see the EULA, the consumer has already paid money before he is allowed to inspect the contents of the EULA. If the consumer so chooses not to agree to the EULA, what actions are available to the consumer then? What happens to the money that was paid prior to disagreeing with the EULA?

Re: Autodesk, EULAs and Games, Oh Boy

That, I suspect, is the conundrum described by Adrian Lopez when he poses the question: "Can't you see how ridiculous it is to demand that consumers abide by terms they don't get to see until after they've completed what looks like a sale transaction?"

I assume the purchaser needs to take the product back to the place of purchase and demand refund or credit. It's been my experience that if you act like you're a shell-shocked Vietnam veteran likely to have a flashback at any moment and go off on a violent rampage, the chances of actually getting a refund or credit will improve dramatically. If you're not as long in tooth as I am, shell-shocked Iraq or Afghanistan veteran will probably work just as well. 

Re: Autodesk, EULAs and Games, Oh Boy

I don't understand why GP doesn't think this will affect games.

Publishers and developers HATE the used game market and want it gone. Now that the Vernor case has made it clearer to developers and publishers what the EULA must say in order to clearly define the difference between a sale and a license, wouldn't they all just modify future EULAs to clearly make them a license rather than a sale? They hate the used game market so much, I'm sure at least some of them are looking at Vernor and drooling (lookin at you Bobby Kotick!). their current strategies to kill used games are worse than trying to change a measly EULA after all.

I'm staying scared -it's kept me safe this long ;)

Re: Autodesk, EULAs and Games, Oh Boy

I think part of what this case makes clear is that there is no EULA only change that they can make which would conver it to a 'lisence', there must be functional differnces in how the software company and software user interact with the product.  Though ultimatly it will probably come down to exactly what that 3rd prong really means.

Re: Autodesk, EULAs and Games, Oh Boy

I disagree with some of the conclusions that the author draws. For one, the concept that nothing has changed with whether something is a sale or a license. Previously, it had to do with common sense, whether it looked like a license or a sale. Now, it takes that and give all the "prongs" of the new test firmly in the copyright holder's grasp.

I see the argument that this doesn't change MMO's or SMB's as a strawman. Rather then giving two examples of what it won't change, why don't we look at a wider range of games? Things that seemed like a sale, like purchasing Halo: Reach, could very easily be switched over to a non-transferable license with just a few changes, none of them in the actual game. You think Microsoft, or EA, wouldn't love to just be able to change their EULA and say that the games aren't resellable? Then turn around an sue GameStop? Let's see what happens within a year.

Rather then decrying everyone as Chicken Little, take a look at what actually happened in the case and how it will possibly change things. Let's look at two examples... GTAIV for PC and GTAIV for XBox360. How different are they? One requires it to be authorized to play, one doesn't. Other then that, are they really different? But, you say that is one of the prongs that differentiate the sale from the license. And I say "What stops them from requiring the XBox version from being authorized?" But... but... not every XBox is online! They couldn't! It would eat away at the installation! Well, they have phone activation for people who don't have their PC's on the internet.

tldr: Basically, what this descision did is put the question of whether a transaction is a license or a sale firmly in the copyright holders hands. As such, expect those same people who have been attacking used game sales to attepmt to utilize this descision in order to further their own goals.

Re: Autodesk, EULAs and Games, Oh Boy

Turning that around, if that was all that it takes to let the publishers be evil overlords of your gaming, why haven't they written their contracts as such? Why haven't they enforced them and requested injunctions against used game dealerships? Why is it that the relevant provisions of EULAs we're seeing in the industry are functionally unchanged for over two decades?  If the sky was going to fall, it would have. But flipping your argument around, show me an instance where a game manufacturer has been successful in essentially negating first-sale, when no other industry has been able to do so in 100 years of existing, relatively static law?

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

"Turning that around, if that was all that it takes to let the publishers be evil overlords of your gaming, why haven't they written their contracts as such?"

Perhaps because they didn't think they could get away with it? Publishers would love to slap down retailers that sell used games without giving them a cut of the profits, and the 9th circuit's decision might provide them with the means to do just that.

If the 9th Circuit's precedent holds, what is there to stop game publishers from adopting the same types of EULAs used by the likes of Autodesk? That's not a rhetorical question: I want to know what, exactly, there is to stop them from doing that.

Re: Autodesk, EULAs and Games, Oh Boy

1) The market won't support it. 2) They're not as easily enforceable (in a practical, not a legal sense) the way Autodesk's are. They simply won't make the money back in infringement cases that they will lose in boycotted sales. 3) Because as mentioned in my article, if you bothered to read it, simply including the "magic words" is not enough. You have to be able to reasonably enforce your restrictions. 4) The content industry won't allow it. There is a stable equilibrium that they are accustomed to. Inviting a lawsuit by abusive EULAs would jeopardize the entire content industry -- Books, CDs, everything that the first-sale doctrine could potentially apply to. 5) Congress is very likely to legislate on the copyright side of the topic anyway, making it an entirely moot point. 6) Contract law is a state law issue. The publishers are still in a situation where they have to make their contracts valid in all 50 states, and overseas. You can't just write a EULA for each one, so you have to go to the least common denominator -- in this case, the most consumer-friendly state. 7) Autodesk is a per-seat license for a highly expensive commercial product that is significantly distinguishable from games. 8) Publishers do not want to invite a circuit split which would make it very likely the Supreme Court would muddy up the decision (and they would, on an issue like this).

That's barely scratching the barrel in terms of reasons why publishers won't make outrageous EULAs. There's lots of reasons why. Nobody has yet been able to show that this "EULA = END OF THE WORLD" argument has any foundation.

 

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

Thanks Dan; very informative and well-explained.

I'm with the other posters in wondering about the adhesion issue, which the courts don't seem to be supporting much in recent cases.  I'm also curious what your thoughts are on single-player offline games that are downloaded rather than physically purchased -- those would presumably be considered licenses, right?  Even though they pass the "single-player, offline" test and are effectively identical to the boxed disc versions.

Thanks again; appreciate the insight and look forward to hearing more.

Re: Autodesk, EULAs and Games, Oh Boy

I think that they're a complex set of scenarios without an real guiding law on them yet, and no real industry standard for operation -- for instance, is the EULA different for downloadable games? Or is there a separate EULA just for the transfer and the standard one for the game?  It'd probably be easier to look at a specific game with a specific license and make predictions than make blanket predictions for everything as a whole.

 

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

Downloadable games are often tied down with DRM that restricts the user's ability to transfer them to other users and to other computer or console systems. That passes both prong 2 and prong 3 of the test that the Nineth Circuit outlined, and beyond that most publishers are quick to pull out the erasers and write "license" in big letters with a fat Sharpie all over the thing just to seal the deal. Games like this include Assassin's Creed 2, with the "always connected" DRM.

However, it's still a good question, particularly for games and other media downloaded free of DRM, such as Amazon MP3s, iTunes and GOG.com (RIP ): ). In those cases, the mere fact that it's downloaded doesn't make it a license, just changing the delivery system. Once it's done, they don't care what you do with it.

Of course, GOG was a bit different, allowing users to continue downloading the games they purchased, still free of DRM. That technically is a license, but one they've chosen to make as open and non-imposing as possible, which isn't a bad thing at all.

Re: Autodesk, EULAs and Games, Oh Boy

I have it on some inside authority that GOG is not actually dead, that it's a hoax to get attention. That's the rumor circulating in journo circles anyway.

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

Sorry, but the 9th Circuit's decision is bullshit.

EULAs are adhesion contracts, meaning they are neither negotiated nor negotiable. Far from being true agreements, EULAs are more correctly described as unilateral impositions of terms. Given the fact that the customer has no bargaining power beyond "take it or leave it", courts should be extremely careful when giving legal weight to the terms in an EULA. An EULA that gives additional rights to a user on a conditional basis is OK, but an EULA that takes away existing rights is not.

If restricting people's ability to resell games hinges solely on (1) calling it a license, (2) restricting the end-user's ability to transfer the software, and (3) imposing restrictions on use, what exactly is there to stop makers of console games from attaching a license that does exactly that?

The legality of an EULA shouldn't depend solely on the contents of the EULA, but also on the nature of the transaction at the time that money changes hands. As far as I'm concerned, if it looks like a sale, then it is a sale.

Re: Autodesk, EULAs and Games, Oh Boy

Phone posting here but not all EULAs are contracts of adhesion and even if one is it doesn't necessarily mean it is unconscionable and even if it were that doesn't necessarily mean that the entire Eula is invalidated. Eulas are binding and courts are quite settled on that point. So long as that remains the case the primary issue will be the test related above which applies regardless of the eulas contract of adhesion status because the conscionability of a contract is irrelevant to the first sale doctrine.
-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

"Eulas are binding and courts are quite settled on that point."

The way you speak makes me think you are somehow invested in the notion that EULAs should be binding. If the courts were "quite settled" on the binding nature of EULAs, the case in question would not have made it all the way to the 9th Circuit. Everything you've written so far strikes me as an apologist's explanation for why the 9th circuit's view is correct.

Can't you see how ridiculous it is to demand that consumers abide by terms they don't get to see until after they've completed what looks like a sale transaction? Aside from cases where EULAs grant new rights on a conditional basis (like Open Source licenses), EULAs amount to an instrument of private legislation with no legal footing aside from the EULA itself. Doing X is forbidden not because the publisher has any statutory right to forbid X, but because the EULA says X is forbidden.

I find that unacceptable.

Re: Autodesk, EULAs and Games, Oh Boy

Courts have upheld EULAs for 30+ years in software. Sorry if you don't want to accept that. This case has literally nothing to do with the binding nature of a EULA or not.

"Instruments of private legislation"? It's a contract. If two parties contract that doing X is forbidden, then if you do X, it's a breach of the contract. 

I realize that some people on GP and the forums have some irrational hatred of EULAs, but it kinda helps to know what they actually are before you hate them.

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

The EULA you described in your article (of the either click the "I accept" button or don't purchase the product at all sort) is most certainly a contract of adhesion. There's no negotiating the seller's terms. The buyer either takes the seller's terms as presented or walks away from the deal. How is that not a contract of adhesion?

And as you yourself point out in your article, the terms of a EULA are enforeable only to the extent that they are not unconscionable. If they are unconscionable, they are unenforceable. 

Re: Autodesk, EULAs and Games, Oh Boy

I think that is one of the differnces between a sale and lisence... liscenes are much more likely to be haggled on and are less likely to depend on click-through, esp when you are dealing with seat-restricted sigh lisences.

Re: Autodesk, EULAs and Games, Oh Boy

Because a "take-it-or-leave-it" basis is only half the question. There also has to be an inequality of bargaining terms, and a well-crafted EULA is written so that the publisher is not so overwhelmingly in a position of superiority as to give rise to scrutiny. (Note: even the preeminent contract scholars and legal encyclopedias disagree on what precisely makes something a contract of adhesion -- For instance, CJS defines it primarily based on an inequality of bargaining position, whereas Farnsworth considers it based on negotiability of terms.)

All that being said, it's an irrelevant question. Contracts of Adhesion go to enforceability (or lack thereof) based on fairness. First-sale doctrine does not consider enforceability based on fairness, it considers the characterization of the transfer as a whole. Consider it this way: If you had a perfectly valid, negotiated license on one piece of software, and a contract of adhesion on another identical piece of software, with identical terms and transferred under identical conditions, the first-sale analysis would be identical, because the analysis depends on the presentation of the terms, not on their validity. 

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

It's not an inequality of "bargaining terms" which determines whether or not an adhesion contract is afoot. It's an inequality of bargaining power vis-a-vis the contracting parties. One party has all or most all of the power to dictate the terms and the other party has no or next to no power to dictate the terms. And inherent in each and every transaction offered on a "take-it-or-leave-it" basis is that inequality of bargaining power. The party being told to take it or leave it has no power to negotiate the offered terms.  That makes it a contract of adhesion whether defined by bargaining power or negotiability of terms. Take your pick. Same outcome either way.  

Re: Autodesk, EULAs and Games, Oh Boy

Correct, I said terms the first time, but meant position (which I used the second time). However, I disagree with you that negotiability and inequality of bargaining power are the same thing, and anyway, it's a collateral issue.

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

To say that the terms of a contract are not negotiable is to say that one of the parties does not have the power to negotiate the terms. CJS and Farnsworth aren't offering differing standards. They're just expressing the same standard differently.

Re: Autodesk, EULAs and Games, Oh Boy

It works in one direction but not the other. A lack of negotiability on one side is a kind of unequal bargaining power. But not all unequal bargaining power involves negotiability.-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

I'm not so sure the two are as equatable as you make them out to be. Non-negotiability of the take-it-or-leave-it terms isn't as much the same or akin to an inequality in bargaining power as it is the product of that inequality of bargaining power. The former is the inescapable effect. The latter is its cause. Where the former is found, so too must the latter. That's why either will work just as handily as the other as a means of determining if there's an adhesion contract. Find either one of them and you've found a contract of adhesion.

Re: Autodesk, EULAs and Games, Oh Boy

I think we're saying the same thing. I'm agreeing with you that a non-negotiable license is symbolic of an inequality of bargaining power. However, I'm of the opinion that the two are not interchangeable because there are other kinds of inequalities of bargaining power based on the relative positions of the parties, that have nothing to do with negotiability. In Venn diagram terms, I'm saying inequality of bargaining power is the big circle, which wholly contains the non-negotiability little circle, but also wholly contains other little circles that don't touch non-negotiability.

And again, whether a contract is adhesive or not is a collateral issue; it unconscionability that is the real concern, not adhesiveness. Remember, it's a two (and a half) step process. You need the contract to be a contract of adhesion, THEN you need it to be unconscionable. And then potentially (depending on jurisdiction and whether opposing counsel can convince the judge it is a good test), you need the half-step from Bragg v. Linden, in that there can be no reasonable market alternatives. It is a completely unsettled question in the game industry what constitutes a reasonable market alternative.

Speaking purely from a legal realism standpoint, courts don't like to find unconscionability in EULAs, and to the extent that they do, they like to reform the contract by only striking the unconscionable provisions so far as necessary to rectify the inequity without harming the intent of the contract.

Actually JDKJ, do I have your email? I'd be interested in doing a joint point-counterpoint instructional piece on contracts of adhesion and how they apply to games, aimed at non-legal professionals.

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

Show up in most any state court in California seeking to enforce a clause in your click-through agreement that provides for binding arbitration in a pre-selected forum of the seller's choice (which many click-throughs do) and I'll bet a dollar to a donut you'll get your ass handed to you because that clause'll be found unconscionable. Makes sense. When the $50 game I bought from you goes belly up on me, you, as a California seller, can't in good conscience attempt to force me, as a buyer in Florida, to drag my ass all the way across the continent to commence arbitration with you on your home turf. I, like most reasonable buyers, will do the cost-benefit analysis and conclude that ain't worth my time and money - not for no $50. Which is probably the exact outcome contemplated by the seller when they proposed the terms. Don't sleep on California. Its state courts are notoriously pro-consumer.

If you hit me up with a PM in the back pages, I'll gladly give an email address. Caveat emptor: I know a lil' sum-sum about contract law and contracts of adhesion in the brick-and mortar commercial world but next to nothing as they may relate to e-commerce and the videogame industry. Don't say I didn't warn you. 

Re: Autodesk, EULAs and Games, Oh Boy

And when your binding arbitration clause is struck down a la Linden, it will not affect the rest of your EULA, because any attorney with an IQ over 50 will have included a severability clause, and even if they didn't courts prefer to reform rather than defeat contracts. So....it really doesn't matter.

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

The point was made to correct your assertion that "courts don't like to find unconscionability in EULAs." That's simply not the case in California state courts. By and large those courts are more than willing to find that click-through or shrink-wrap contracts are adhesion contracts and on the slightest whiff that those contracts proposed terms intended to fuck the consumer, they'll tear that shit up right in front in your face. No ifs, ands, or buts.

And I wouldn't say that voiding the arbitration clause of an adhesion contract has no effect on the other terms. If nothing else, it means that buyer can now forum shop and sue seller where they think they stand the greatest chance of prevailing. That alone's a pretty significant landscape change. 

Re: Autodesk, EULAs and Games, Oh Boy

California is an exception to a lot of law. The vast majority of courts take a strict view of unconscionability, and even in California, when you consider how many contract provisions are invalidated vs how many are not, it's still overwhelmingly in favor of not finding it.

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

If you're talking provisions negotiated at arm's length, then I'd agree that there's much greater likelihood of not finding unconscionability. However, if you're talking provisons found in adhesion contracts, particularly if the contract's between big corporation and little consumer, I'd disagree and say that in California, the mere fact that the contract is found to be adhesive in nature is often enough to start tipping the scales towards a finding of unconscionability if it contains one-sided terms favoring big corporation. It's California, not Delaware. It's also not Rhode Island. If you can make a true statement with respect to the California state court system, you're talking about a significant chunk of the entire state court system in America.

There's a fair amount of precedent in California that says, in effect, "we think that adhesion contracts are sheisty by their very nature and we will scrutinize them carefully to ensure that they aren't unconscionable."        

Re: Autodesk, EULAs and Games, Oh Boy

Yes, but California is only 1/50 of the Union, despite what they might like to think, and there are very heavy games industry hubs in Washington (software industry friendly), Maryland (typically consumer friendly, not so much on unconscionability), Texas (industry friendly), New York (Industry friendly), etc.

It's stretching credibility to say that when you talk about california state courts, you're talking about a large chunk of all state courts. California state law is often significantly different from the rest of the nation -- one of the reasons CA won't grant reciprocity to anyone at the state bar. I'd say it's on par with Louisiana in terms of mirroring the rest of the nation.

Also, I'm not from Rhode Island :)

 

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

That's some fuzzy math, Dan. What you really need to be counting is California's percentage of all litigation brought nationwide. Dollar to a donut it's a whole Hell of a lot more than 2%.

And as I said, California's notoriously pro-consumer. That's why it's favored by all the nutjobs with the frivolous lawsuits that'd get summarily tossed anywhere else. I'm not saying this is a good thing or a bad thing. But it is most certainly a thing. 

And who other than the District of Columbia will let you waive in to the jurisdiction on nothing more than a pretty please? What, like maybe three other jurisdictions? And aren't they jurisdictions where don't nobody wanna practice anyway? Like Idaho and Nebraska? 

Re: Autodesk, EULAs and Games, Oh Boy

And with that, I leave my last comment. I'll be more than happy to discuss further on the ECA forums though. Thanks for reading the article!

-- Dan Rosenthal

-- Dan Rosenthal

Re: Autodesk, EULAs and Games, Oh Boy

Thanks again, Dan.  I've got lots more questions, so maybe I'll see you over there.

Re: Autodesk, EULAs and Games, Oh Boy

Agreed. And contracts of adhesion are often found unconscionable for those very reasons: the near absolute bargaining power of one party results in gross unfairness to the other party.

 
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Matthew Wilsonfirst, that crap is wrong. second, isnt this the 3rd time he has quit?08/22/2014 - 12:11pm
Zenhttp://levelsave.com/phil-fish-polytron-doxxed-phil-fish-quits-gaming-sells-fez-polytron/ , https://pbs.twimg.com/media/Bvnhvz5IIAAAVc5.png:large08/22/2014 - 12:03pm
ZenHere are some links to the story and images. http://playeressence.com/polytron-and-phil-fish-hacked-tons-of-personal-info-leaked/ , https://pbs.twimg.com/media/Bvnx8sQCIAAwumB.jpg:large , https://pbs.twimg.com/media/Bvnj_zmCUAAlYWm.jpg:large08/22/2014 - 12:02pm
ZenSo...Phil Fish was apparently hacked on both his Twitter and the Polytron site along with all of his personal information has been given out in a zip file. He has since closed his Twitter and stated that Polytron and the Fez IP are for sale. He wants out.08/22/2014 - 12:01pm
Papa MidnightThe Verge says the sequel to Flappy Bird is nearly impossible. http://www.theverge.com/2014/8/21/6053297/swing-copters-flappy-bird-sequel08/21/2014 - 12:22pm
SleakerPC-Gamer wrote an article on what's going on with the Minecraft stuff: http://www.pcgamer.com/2014/08/21/minecraft-bukkit-team-lead-tries-to-end-development-but-mojang-steps-in/08/21/2014 - 11:55am
SleakerEVE had a high-profile ban today: http://massively.joystiq.com/2014/08/20/eve-online-lottery-site-somer-blink-shutting-down/#continued08/21/2014 - 10:26am
SleakerBut where have all the Ethics gone?08/21/2014 - 9:08am
Sleaker@EZK - one of the bigger things is that since Mojang has owned Bukkit for 2 years now, people contributing to the project have basically been doing work for them pro-bono. On top of never formalizing support. They hid the fact probably to prevent support08/21/2014 - 9:07am
SleakerIf you've played on a server with mods/plugins, you've almost for sure played on a Bukkit-based server.08/21/2014 - 8:56am
SleakerHere's Bukkit's explanation attempt at shutting down due to EULA changes: http://forums.bukkit.org/threads/bukkit-its-time-to-say.305106/08/21/2014 - 8:55am
SleakerEZK - it's the largest server mod for MC, in actuality without it minecraft for sure would not have been as popular (#1 game now).08/21/2014 - 8:54am
SleakerTo the point that it seems they have completely lost what it means to be for-community, and having transparency. Along with dumping restrictive EULA's onto people.08/21/2014 - 8:53am
E. Zachary KnightWhat is Bukkit and why should I care?08/21/2014 - 8:53am
SleakerMinecraft community exploded again today. Apparently Mojang owns all of Bukkit, and never put out a statement saying as such 2 years ago when they acquired them. I have to say, their transition from indie has been rough.08/21/2014 - 8:52am
james_fudgeThere aren't many left in America08/21/2014 - 1:50am
MechaTama31I sure have. Dorky's barcade in Tacoma, WA.08/20/2014 - 5:56pm
Matthew WilsonI have not been to a arcade in years. I know arcades are still big in japan.08/20/2014 - 5:38pm
Sleaker@AE - Ah no it's called GroundKontrol - I was just referring to it as a Bar-Arcade.08/20/2014 - 4:39pm
Andrew EisenStill looking for confirmation that High Moon Studios (dev behind the PS3/360 versions) isn't working on it.08/20/2014 - 4:38pm
 

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