Copyright 1992 by S. Kitterman Jr. and the Las Vegas PC Users Group, 
316 Bridger Avenue, Suite 240; Las Vegas, NV 89101. All rights reserved.  
This file was originally printed in the March 1992 issue of The Bytes of 
Las Vegas, a publication of the Las Vegas PC Users Group, and may be 
reprinted only by nonprofit organizations.  
Please give proper credit to the author and The Bytes of Las Vegas.
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Copyrights and Computer Software: Part V

by Sam Kitterman, Jr., LVPCUG 

          [The purpose of these articles is to give general
          information regarding copyrights and how they pertain to
          protection of software.  It is not intended to constitute
          legal advice nor should it be relief upon to address a
          particular situation since the tone of these articles is
          general in nature.]

     When you buy software, what rights do you have?  Generally
speaking, a determination of those rights involve not only the
Copyright Act but also contract and licensing law.  

     When one purchases software, be it commercial "shrinkwrap" or
shareware, one usually finds a "License Agreement" enclosed with
the software.  Indeed, many commercial manufacturers of software
enclose the software in a sealed pouch upon which the Licensing
Agreement is printed, i.e., preventing the purchaser from claiming
lack of knowledge of the agreement since he or she should have read
the license before opening the pouch.  That licensing agreement
determine a number of your rights to use of the software.
                                             
     What rights you may have under the licensing agreement will be
dependent upon the language of that agreement.  However, most
licensing agreements follow certain "boilerplate" provisions such
as:
          most agreements follow the general trend of allowing you,
          the "licensee" of that software, to install that software
          on one PC, and to allow you to make an archived
          copy/back-up of the software; and, 

          most agreements also follow the general trend of denying
          you any right to install/use that software on more than
          one machine or to allow others use of that software,
          including making a copy of that software for their own
          use, e.g., the crime of pirating software.

     Again, the Copyright Act itself has put further limitations
upon these rights.   

     Under the doctrine of "first sale", a buyer of software
previously had the right to rent, lease, or resell that software to
others so long as he had first acquired possession of the software
by purchasing it him/herself.  

     Embodied in Section 109(a) of the Copyright Act, the "first
sale" doctrine is as follows:

          Notwithstanding [other provisions of the Copyright Act],
          the owner of a particular copy...lawfully made under this
          title, or any person authorized by such owner, is
          entitled, without the authority of the copyright owner,
          to sell, or otherwise dispose of the possession of that
          copy....

Indeed, this doctrine was the basis for allowing software stores,
such as Omni Video here in Las Vegas, to purchase software and rent
it to the public for a fee.

     Needless to say, copyright owners of commercial software
became quite concerned at this apparent loophole in the law.  Not
only were they unable to collect any revenue from those rentals but
furthermore, they became concerned that members of the public
renting software would make unauthorized copies thereof and in
doing so, would "rob" the owners of revenues they should have
received when commercial software was purchased.

     Those concerns became so great that the commercial software
industry lobbied Congress for an amendment to the Copyright Act, an
amendment limiting the effect of this doctrine of "first sale". 
Needless to say, they succeeded.

     As of December 1, 1990, a new law went into effect.  Known as
the Computer Software Rental Amendments Act of 1990, that amendment
changed section 109 of the Copyright Act to prohibit

          any person in possession of a particular copy of a
          computer program (including any tape, disk, or other
          medium embodying such program [from disposing of or
          authorizing the disposing of that computer program]
          by rental, lease, or lending, or by any other act
          or practice in the nature of rental, lease or lending.

Please note: this law only applies to software purchased on or
after December 1, 1990.  Software purchased prior to that date is
still governed by the "first sale" doctrine.

     Although this is a new law effecting the use of computer
programs, it is actually tailored upon an earlier law, one known as
the Record Rental Amendment of 1984.  Enacted in 1984, that law
applied similar controls to the renting, leasing or lending of
authorized phonorecords.

There are several exceptions to this Act. 
     First, a purchaser of software may continue to dispose of such
software by renting, leasing, or lending it where he has the
authorization of the copyright owner for that program.  Needless to
say, whether obtaining such authorization is possible is highly
questionable.

     Second, disposing of such software may be done where it is NOT
for a commercial advantage, direct or indirect.  For example,
nonprofit educational institutions may continue to rent, lend or
lease software to "faculty, staff or students".  

     Nonprofit libraries may also continue to lend computer
programs where such is done for a nonprofit purpose and where the
library ensures that "each copy of a computer program...lent by
such library has" the copyright notice affixed to the program's
packaging.

     Third, computer programs embodied in certain "machines" may
still be rented, leased or lent without violating this new law. 
More specifically, the law will be inapplicable to two types of
computer programs: 

          (1) computer programs embodied in machines or
          products "which cannot be copied during the ordinary
          operation or use of the machine", e.g., calculators,
          automobile electronic systems, etc.; and,

          (2) computer programs embodied or used "in conjunction
          with a limited purpose computer that is designed for
          playing video games"[e.g., Nintendo, Sega], including
          limited purpose computers that "may be designed for other
          purposes".  However, if that limited purpose computer can
          be used for copying of computer programs, then such a
          system will not fall under this exemption.

     However, there is an interesting endnote to this particular
law.  It has what is called a "Sunset" provision, i.e., this law
will self-terminate on October 1, 1997.  Any rentals, leasings, or
lendings of software after that date will not be in violation of
this Act.  It would seem that this provision was added so that this
Act would coincide with the Record Rental Amendment Act of 1984's
Sunset provision. 

     In summary, if you purchase computer software since December
1, 1990 and you rent, lease, or lend it to others for commercial
gain, you will be in violation of the law.  Needless to say, this
is a law that is being vigorously enforced by the industry, usually
by the Software Protection Association.  

     Needless to say, the moral of this lesson is: If you want to
use commercial software, be legal or face the risks.  Copyright
infringement not only is prosecutable by civil lawsuit but also by
criminal action brought against the infringer by the U.S.
Attorney's Office.

----------------------------------
Copyright 1992--S. Kitterman Jr.

[Sam Kitterman, a member of the Las Vegas PC Users Group is an attorney 
with the firm of Quirk, Tratos & Rothel; he specializes in issues 
related to computer software. This is the fifth of a series 
of articles Sam is writing for The Bytes of Las Vegas.
It was originally published in the March 1992 issue of The Bytes of Las 
Vegas, the official newsletter of the Las Vegas PC Users Group.]