SOFTWARE COPYRIGHT’S ORACLE FROM THE CLOUD

By: Lothar Determann & David Nimmer

ABSTRACT

Clouds are on the horizon for software copyrights. The open source movement is
actively trying to turn copyright into “copyleft.” Courts around the world are reshaping the
first sale doctrine, notably the European Court of Justice in UsedSoft v. Oracle not to mention
the United States Court of Appeals for the Ninth Circuit in Autodesk v. Vernor. Software
manufacturers are fleeing from distribution models toward service models—into the cloud.
A perfect storm for software copyrights is brewing. The cloud promises to enable software
publishers to place their code outside both the framework of copyright exhaustion under the
first sale doctrine and the “distribution trigger” in open source code license terms. Users’
inability, in the cloud context, to directly access the underlying software threatens to exert
various side effects, notably affecting software interoperability. New kids on the block lose
the ability to reverse engineer hosted software. Established platform providers gain the
ability to prevent interoperability, based on laws prohibiting interference with computers and
technical protection measures. These developments risk upsetting the delicate balance
between exclusive rights for copyright owners and access privileges for the public—a
balance that courts and legislatures have carefully established over the years—in order to
foster creativity and innovation. With unprecedented pressure on traditional distribution
models, how will copyright law cope? In our Article, we attempt to illuminate the immediate
path ahead, discuss possible answers, and pose more questions.

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