Does fair use apply?

If I loan a book to a friend to read, am I committing an act of piracy? The day is fast approaching when at least some people will answer that question in the affirmative.

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Amid the sound and fury generated by our recent discussions of TurboTax product activation, an important point had to take a backseat to the more immediate concerns readers were expressing about Intuit’s move to restrict use of pass-along CDs. Now that the smoke has cleared at least a little, I’d like to get back to it.

Several readers were somewhat taken aback by my earlier comments comparing a copy of TurboTax to a book or video. “I don’t like the analogy,” wrote one reader. “It’s too easy to make an illegal copy of software, for one thing. Even if you pass along the CD without retaining the program on your hard drive, you’re depriving Intuit of a possible sale to the person you pass it on to. That’s piracy as far as I’m concerned.”

Of course, passing along the CD while keeping a copy of the program for yourself would be piracy. If that had been Intuit’s primary concern, however, it would not have needed to upset users with a complex product-activation scheme. The type of copy protection used by many game software publishers, requiring the CD to be present for the program to run, would have sufficed.

But does passing on the CD without keeping an illegal copy still constitute piracy? After all, tax software vendors would seem to be particularly vulnerable to such pass-alongs because, after filing their own taxes, the original customers would not likely have further need for the program until the next tax season.

But that’s exactly why I think the analogy between TurboTax and a book is actually quite appropriate, even more so than for other types of software. A book is also a product you use once and then might never use again. But if you pass a book along to a friend or even sell it to a used bookstore, aren't you potentially depriving the book publisher of possible sales as much as a TurboTax customer passing along the CD?

So why don’t we feel like pirates when we loan someone a book? Or, for that matter, when we give away a video, music CD, or DVD? Books may not be as subject to casual copying as software programs, but the music and motion picture industries are crying piracy even louder than the software industry. And even the worst of the anti-fair-use laws their lobbyists are pushing Congress to pass wouldn’t block resale of a legal copy.

In fact, just one relevant difference exists between that TurboTax CD and a book when it comes to defining what is and isn’t piracy. The software comes with a sneakwrap license agreement that restricts use of the product to the computer on which it was originally installed. It makes you wonder if book publishers are just too stupid to live. Why don’t they put their own license agreement on the inside cover to prohibit transfer of the product?

As I’ve mentioned before, this idea has occurred to book publishers -- many times, in fact. They thought of it at least as early as the 1800s, which is why we have more than 100 years of court decisions affirming the “first sale” doctrine of copyright law. Once the publisher has sold a copy of a book or other copyrighted work, first sale says purchasers may do whatever they please with their copy except make a copy of it. Time and again, courts have ruled that notices printed in a book prohibiting its resale; mandating the price it can be sold for; or limiting where, when, or to whom it can be sold are not binding on the purchaser.

Let’s pause here to address a few readers' objection to the software-book comparison. They understood and agreed that a pure consumer product such as TurboTax ought to be treated the same as books or other copyrighted products, but they worried about software licensing in business-to-business transactions. For example, what about when one software company licenses technology to another? Am I saying that the licensing company can put no contractual restrictions on how its technology is used or to whom it might be sold?

No, of course not. But the very fact that the question comes up shows the absurdity of treating consumer software purchases as a form of licensing when they are as ordinary as a book purchase. A real license involves a real contractual relationship with terms and limitations both parties understand up front, not a hidden list of restrictions you can’t even see until you've made the purchase. Book publishers also used to claim their products were “licensed, not sold,” but that didn’t make it so. And Intuit's not wanting TurboTax customers to pass along their CDs also doesn’t make doing so piracy.

The software business and the book business are very different, and the same can be said for the movie, music, TV, radio, and computer magazine businesses. Yet can anyone doubt that, one way or another, digital technology is going to change how we do business with our customers? Sooner or later, a common set of rules will exist. Maybe those rules will include the fair use and first sale principles we’ve taken for granted for so long, or maybe the rules will be hidden away in sneakwrap licenses and enforced by digital rights management technology. We have a choice. What’s at stake is how free we are to share information, which means what’s at stake is how free our society really is.