Legal Query About Software Licenses and Restriction of Use

[Una_Persson]

Here is my query in a nutshell - is there any precedent for creating a software license that absolutely forbids use by a certain country, legal entity or corporation, or an individual or group of individuals?

Hypothetical Scenario 1: I write a piece of “Freeware” that I put on the Net. But I do not want any residents of Tasmania to use it - ever. (Those bastards! ) Is there precedent or do I have the ability to write in the license:

This program is free for all use, personal or business, except for or by residents of Tasmania. Possession, usage, or distribution by or to residents of Tasmania is in violation of the license agreement of this software product.

Hypothetical Scenario 2: I write a piece of “Freeware” that I put on the Net, but I do not want any Microsoft Employees (Those bastards! ) to ever use it. Can I do the following, and have any legal grounds?

This program is free for all use, personal or business, except for or by employees of the Microsoft Corporation, regardless of the country of incorporation. Possession, usage, or distribution by or to employees or owners of the Microsoft Corporation is in violation of the license agreement of this software product.

Hypothetical Scenario 3: I write a piece of “Freeware” that I put on the Net, but I do not want my neighbor Billy Joe Bob Baxter (That bastard! ) to ever use it. Can I do the following, and have any legal grounds?

This program is free for all use, personal or business, except by Billy Joe Bob Baxter. Possession, usage, or distribution by or to Billy Joe Bob Baxter is in violation of the license agreement of this software product.

Side-question 1: If I can’t prohibit usage, can I legally restrict usage by making a two-tiered license fee? Such as:

This program is free for all use, personal or business, except by Billy Joe Bob Baxter. Mr. Billy Joe Bob Baxter may use the program, provided that he is a valid holder of a Full Professional License to the software. A Full Professional License may be obtained for $250,000, payable to Barclay’s Bank, Jersey and Channel Islands…any other use or possession of this program by Mr. Billy Joe Bob Baxter is in violation of the license agreement of this software product.

Side-question 2: If an agreement is legal, and I’m a vindictive bitch who has money to burn dragging people into court, can I actually get a judgement of $250,000 against Mr. Billy Joe Bob Baxter, should he somehow use the program?

Mind you, the text I use in my quotes is not legal and sound - I would get a lawyer to write it. But what I want to know is if I even begin to have a leg to stand on in pursuing this?

[black_rabbit]

Fanzines have been doing this for years, except it was with advertising, not software, and “major labels,” not Antipodeans, Mikrozoft, or your neighbor.

Flipside (RIP) used to have a two tiered rate structure: reasonable rates for indies, and something ridiculous for the majors or their affiliates. MaximumRockN’Roll doesn’t accept any major label advertising at all.

It’s kind of a similar concept. Well, maybe.

IANAL, &c.

[Max_Torque]

I am, like, totally not a lawyer. As best I can do without going and actually looking things up (which means, of course, that this isn’t legal advice you’re getting, so don’t take it as such), here’s my answer:

Hypo 1: Probably not valid, because in this case you’re discriminating against persons of a particular national origin, which is, shall we say, frowned upon. “Not for export”, though, is A-OK.

Hypo 2: Sort of. Similar schemes have been used in the past. Recall that, until IE came on the scene, Netscape was free to education and government users, but private industry had to purchase it, according to the terms of the license. It’s not at all uncommon, so I hear, to make a consumer-level product for the masses but to state in the license that it may not be used for commercial purposes, and that commercial users must buy the “Business Edition”.

BUT, your stated scheme differs from the above in that you want to flatly deny a group of persons access to your software. I would say that you can charge them a higher price, definitely, but I’m not sure what a court would do with a “these persons may not use any form of this software”-type restriction. I’m inclined to say that it would be enforceable, but I’d have to do actual research to be sure.

Hypo 3: I don’t know of any cases on something like this, but as long as your discrimination isn’t based on his membership in one of those special classes (you know, race, religion, blah blah blah), you should be okay here.

Side-question 1 kinda got answered in Hypo 2 up there, so I’ll skip that one. Side question 2, I can’t answer without looking things up, but my gut reaction is yes, Billy Bob knew about the license restriction (or, at least, the law will treat him as though he knew about it), he chose to ignore it, he’s gotta pay the piper. Somehow I suspect, however, that you wouldn’t get $250,000 out of it unless you could show that you were damaged to the tune of 250 grand, even though you specified that amount in your license agreement; the amount isn’t very reasonable or fair.

Now, for a big general statement: according to my copyright/internet prof, some of the craziest software licenses you’ve ever heard of are just peachy in the eyes of the law. A provision that only one person may use the software, ever? Just fine. A provision that the software belongs to them, and you only purchased the disks it comes on? Just fine. A provision that even the disks themselves still belong to MegaCorp, and if you copy the software onto other disks, those disks become the property of MegaCorp as well? Still okay. A software license is basically a contract that you accept by performing a specific act (installing it/opening the pouch/whatever). If you don’t accept the terms (assuming the terms set are legal in the first place), you must not use the software, or you’re in the wrong.

And there are some capital-C Crazy licensing agreements out there. One that really astounded me recently involved a software package that included some adware/spyware. The licensing stated that by installing the software, the user agreed not to use any ad-blocking software (such as AdAware), and if any was discovered during installation, the program would erase it. Somehow I really doubt that a license empowering the company to remove other software that the user legally installed is acceptable.

Anyway, no doubt some actual lawyer-type will come strutting along now and correct me, so I’ll cut myself off here and say this: if this is something you’re thinking about doing on some software, you can get away with quite a lot in a license agreement, but you gotta talk to a real lawyer-person to be sure.

[KellyM]

Just a point: you cannot prohibit possession of copies of a software product by a license agreement, as possession of a physical copy does not fall within the scope of the exclusive rights of the copyright owner. Keep in mind that there is a prejudice in law against restrictions on alienation.

There are a good number of freeware products that prohibit the use of the product for “military” purposes in one way or another. The efficacy of these licenses is probably nil, and as far as I know none of them has ever been tried.

I would say that the license would be enforceable if and only if your lobbyist weighs more than your opponent’s. Copyright law lately has not had much connection to anything other than who can throw the most money at Congress to get their way.

[ratatoskK]

Oracle has the following restrictions on their download site. You have to check off each item individually before you can download. Presumably all these restrictions are legal.

I am not a citizen, national or resident of, and am not under the control of, the government of: Cuba, Iran, Sudan, Iraq, Libya, North Korea, Syria, nor any other country to which the United States has prohibited export.

I will not download or otherwise export or re-export the Programs, directly or indirectly, to the above mentioned countries nor to citizens, nationals or residents of those countries.

I am not listed on the United States Department of Treasury lists of Specially Designated Nationals, Specially Designated Terrorists, and Specially Designated Narcotic Traffickers, nor am I listed on the United States Department of Commerce Table of Denial Orders.

I will not download or otherwise export or re-export the Programs, directly or indirectly, to persons on the above mentioned lists.

I will not use the Programs for, and will not allow the Programs to be used for, any purposes prohibited by United States law, including, without limitation, for the development, design, manufacture or production of nuclear, chemical or biological weapons of mass destruction.

[Una_Persson]

That is some great information so far everybody, thank you!

And it looks like I might be able to do what I want to do…
[sub]…those residents of Tasmania…think they’re so smart…I’ll show them…grumble…mutter…twitch…[/sub]

[JeffB]

I immediately thought of the Oracle restrictions, too. I wonder, though, whether these are government imposed restrictions rather than the company’s. I’d be curious to hear whether a company can do this on their own.

[KellyM]

The Oracle restrictions are imposed by the government because Oracle is, in fact, a weapon. More specifically, it incorporates advanced encryption technology, which is classified as a weapon and is thus subject to restricted export. I had to go through the same thing in order to obtain a (free) DES license from Cisco for our firewall.

[Max_Torque]

Minor nitpick: not a “weapon” exactly, but a “munition”. Munitions are materials of war; usually we think of this as guns and ammunition, but the government has decided that powerful encryption technology belongs under the “munitions” umbrella as well.

Oh, how I remember trying and failing to download the latest version of PGP, because the server couldn’t verify that the IP supplied by my ISP was in the United States…

[zev_steinhardt]

*Originally posted by KellyM *
**The Oracle restrictions are imposed by the government because Oracle is, in fact, a weapon. **

So, if I have a laptop with Oracle installed on it and I carry it around in a carrying case in NYC, can I be charged with carrying a concealed weapon?

Zev Steinhardt

[ratatoskK]

Yeah, watch out or I’ll kill you with my ERP database!

[micco]

*Originally posted by Max Torque *
**Minor nitpick: not a “weapon” exactly, but a “munition”. Munitions are materials of war; usually we think of this as guns and ammunition, but the government has decided that powerful encryption technology belongs under the “munitions” umbrella as well. **

This is no longer true. Encryption technologies used to be considered a munition and were covered by US State Dept. regulations for export purposes because they were considered important for national security. Very strong export controls were put on strong encryption. However, encryption is now regulated by the Bureau of Export Admin. (BXA) in the Dept. of Commerce (since 1996). Strong encryption is still subject to export controls, but it’s no longer on the munitions list maintained by State. IIRC, strong encryption still requires a review and license process, but it is possible to export strong encryption under these rules.

More OT, I think most of the clauses Anthracite wants to use could be enforced. It is typical to insert a limitation on the US Government’s use of software in a standard license. This is done not because you don’t want them to use it, but because the Government has a default tendency to own anything it pays for and you have to specifically limit its rights to own your product. See the “U.S. GOVERNMENT RESTRICTED RIGHTS” clause in many software licenses.

In addition, the software license is just a contract, so I think you can enforce any condition that is not expressly illegal. IANAL, but I don’t see why you couldn’t refuse to enter into that contract with a certain individual, employees of a certain company or any other group as long as you’re not excluding any “protected” group based on race, religion, etc. However, restricting citizens of Tasmania may be problematic because you’re no longer dealing with a contract enforced in a US jurisdiction. You’d have to know contract law in Tasmania.

Also, you should consider the mechanism by which you allow the user to accept/reject the software license. I believe pure shrinkwrap licenses have not held up in court (e.g. don’t open the package if you don’t agree). Click-through licenses may be more enforcable, particularly if you require personal information to register the software rather than just an “I agree” button. However, even this has loopholes: If a child clicks through your agreement, you certainly can’t bind him to your contract and you may not be able to bind his parents. Again, you’d need a contract law specialist since this is an evolving field with new precedents being set. I don’t have any cites, but I’ve seen several recent stories about lawsuits involving click-through license issues.

[femtosecond]

Originally posted by micco
However, restricting citizens of Tasmania may be problematic because you’re no longer dealing with a contract enforced in a US jurisdiction. You’d have to know contract law in Tasmania.

Right, some countries have strict cosumer protection laws. I don’t know about Tasmania, but if you export (sell for money) a product to Germany, some of the restriction clauses of your license would be null and void. IIRC and IANAL: For instance, if you buy a product here (non-personal contract), you are allowed to sell it again. Together with its license, whatever it says in there. This includes OEM software, and Microsoft (those bastards :D) learned it the hard way. Legal contract elsewhere or not.

[Max_Torque]

Yeah, looks like things have changed lately and I haven’t been keeping up. I did, however, just find this nifty page about current U.S. policy regarding the export of encryption technologies. Looks like there are no longer export controls on encryption products with a key of 64 bits or fewer, and things have loosened up quite a bit for encryption products with more than 64 bit keys.

Anyway, if y’all want to know more, go to that page.