What to Know When Using or Sharing Software

If you've ever purchased a software program, you may have wondered if you can sell the CDs or burn a copy of the program for a buyer or a friend. Unfortunately, sharing software is often forbidden and manufacturers have a legal right not only to forbid the transfer, but to dictate other terms of use for the software. So why are software programs subject to such restrictions?

Software programs are protected by U.S. copyright law … but that's not all

Software programs are creative, copyrighted works—the law recognizes them as “literary works” for purposes of copyright protection. As such, they are intellectual property protected by the Copyright Act, which grants authors exclusive rights to reproduce and distribute the copyrighted works.

However, for nearly a century, consumers have enjoyed the benefits of the “first sale doctrine,” which grants the purchaser of a copyrighted work the right to transfer (buy, sell, trade) that work to someone else without infringing on the author's copyright. In other words: if you bought it, you own it—the physical copy, that is (you obviously don't buy the copyright to a novel by buying one copy)—and if you own it, you can sell it.

Software programs are not sold, they are licensed for use

So you've just paid $399 for a software suite, and you're done using it. You've removed the programs from your computer, and you want to sell the discs to recoup some of your costs. Don't even think about it. Why not? Why are software programs exempt from the protections of the “first sale doctrine?” Because when a consumer pays for software, a sale of the work has not occurred; rather, the consumer has purchased only a license to use the software. Licenses can be limited in any way the licensor (Microsoft, Adobe, etc.) chooses—the company can literally put any restrictions on your use of its product once it determines that your “purchase” is merely a license.

The idea that a license to use a product was purchased, rather than the product itself, is counter-intuitive to most consumers who are accustomed to a world where it is perfectly legal for the owners of used books, CDs, DVDs and other copyrighted works to sell them. Unsurprisingly, this issue has been litigated by and against consumers who have attempted to sell used software CDs. The takeaway: Don't. You're violating the terms of your license, and breaking the law.

The terms of a license are contained in the End User License Agreement (EULA) that comes with the software

A consumer's right to transfer software is contained in the software's EULA. For example, a EULA may state:

“SCOPE OF LICENSE. The software is licensed, not sold. This agreement gives you only limited rights to use the software. COMPANY X reserves all other rights. You may not transfer the software or this agreement to any third party.”

So that's that. In exchange for the right to use the software, the user is deemed to having acceded to this agreement and is therefore bound by its terms.

What about other restrictions on use of the software program?

Other restrictions on use, including the number of computers onto which you may download the program may also exist, and some are implemented automatically. For example, some software programs have a built-in means of detecting how many times the program has been downloaded and it will forbid download after a specified number has occurred. In one online gaming program, the EULA forbids a user from downloading the game onto more than one computer and requires a one-month waiting period before switching computers, even when the purchaser owns both.

Read the license agreement

To avoid the surprise of restricted use, it's a good idea to read the EULA for software programs before you purchase. Consumers have complained (and litigated) over the inability to review the EULA until the moment of download, and manufacturers have responded by posting EULAs online. Salespeople can also be a good resource, as they are often familiar with key use restrictions on software. Whether known in advance or after installation of software, consumers are nevertheless bound by the terms of the EULA.