New technology is eroding your right to tinker with things you own

By N.V.

CONSUMERS across America can thank a recent ruling by the Supreme Court for granting them the right to do whatever they want with gizmos and gadgets they own. Eh? Surely, one might think, ownership automatically confers such a right. In an increasing number of cases, sadly, it does nothing of the sort. If people cannot repair a product when it breaks, alter it to suit their needs, sell it or give it away when done with it, then they do not “own” it in the traditional sense. Even when they pay good money for something, restrictions buried in the small print can limit what they may, or may not, do with it. The Supreme Court ruling is a small, but significant, victory for consumers at a time when the whole notion of ownership is being rapidly eroded by digital technology.

Until recently, jail-breaking (unlocking) a mobile phone, even one that had been bought outright rather than merely leased from the carrier, was punishable in America by a fine of up to $500,000 and/or five years in jail. Likewise, anyone who tried to fix a duff device of his own—whether a video recorder, washing machine, motor car or agricultural tractor—could land themselves in serious trouble if the product contained a digital controller board, as practically all do these days. Under such circumstances, the only way to avoid running foul of the catch-all Digital Millennium Copyright Act (DMCA) of 1998 has been to let an authorised service technician do the repair.

The decision handed down by the Supreme Court on May 30th had little to do with copyright, being concerned primarily with Patent Law. The ruling reversed a lower court finding that granted manufacturers the power to sue customers who bought patented goods and then used them in ways the patent-holder objected to.

The case in question, Impression Products v Lexmark International, involved the right of individuals to refill used printer cartridges of their own, or buy cheaper ones from third-party suppliers, instead of using only new ones sold by the original manufacturer. Fearing the legal consequences, or brainwashed into believing cheap refills would clog their printers, most users simply paid the manufacturer’s agreed price.

Long ago, printer-makers adopted the practice pioneered by the razor-blade business: sell the razors (printers) for a loss and make wads of money on the hundreds of blades (ink cartridges) bought over the product’s life. Lexmark, a Chinese-owned printer-maker based in Kentucky, won an appeal in a lower court that agreed the company had the right to demand customers accept its “no-reuse” rules. Lexmark sold its toner cartridges under a shrink-wrap licence that offered customers a 20% discount if they agreed not to resell or reuse the product. Opening the shrink-wrapping meant the customer accepted the agreement.

Because some jurisdictions come down hard on sellers who impose restrictions on the sale of goods, Lexmark added a further wrinkle. It argued that the patents on its toner cartridges remained in force even after their initial sale. Thus, by insisting customers comply with its no-reuse licence agreement, the company argued it was simply protecting its intellectual property. By that reckoning, a third-party supplier like Impression Products—a small West Virginian company that buys spent cartridges, refills them and sells them at a knock-down price—had violated Lexmark’s property rights. The printer-maker had successfully sued other aftermarket suppliers for doing the same. Unfortunately for Lexmark, Impression refused to settle, and fought the case all the way to the Supreme Court.

Lexmark’s gambit foundered on two established principles. One is a principle of Common Law known as “restraint on alienation” that dates back to the 13th century. Though originally concerned with conveyance of property, this voids attempts by an owner to prohibit a recipient from reselling or transferring its interest in a property—on the grounds that a present owner should not be able to tie the hands of future generations. The inference is that a manufacturer cannot impose restrictions on customers that forbid them from doing whatever they like with the goods they have bought.

The other doctrine concerns “exhaustion”. Once a patent-owner chooses to sell an item, “that product is no longer within the limits of the monopoly [bestowed by the government for the duration of the patent] and instead becomes the private individual property of the purchaser, with the rights and benefits that come along with ownership,” the justices determined. In short, no contract or licensing agreement can ride roughshod over the reality of patent exhaustion. The no-reuse restrictions in Lexmark’s shrink-wrap agreement may have been enforceable under Contract Law. “But they do not entitle Lexmark to retain patent rights in an item it has elected to sell,” wrote the Supreme Court’s chief justice, John Roberts Jr.

Although the ruling prevents manufacturers from using patents to restrain how consumers use their products, it does nothing to rein in the use of copyright to achieve similar ends. As analogue components have given way to digital ones, software now runs at the heart of practically every consumer product on the market. That has made components cheaper and more functional, though rarely more reliable. The big catch is that, because software is covered mainly by Copyright Law, anyone in America who tinkers with a digital device can run into the draconian restrictions of the DCMA.

The problem is that fixing a digital device that has ceased to work means first decrypting its Digital Rights Management (DRM) firmware—a simple software lock designed decades ago to thwart pirates from copying DVDs. Section 1201 of the DCMA makes cracking such locks illegal. Though it is trivially easy to do so and presents no obstacle for software pirates and others, manufacturers have worked out that they can use DMCA to force customers to buy all their supplies and maintenance from them alone. Before Section 1201 came into force, people had the right to tinker with gadgets they had bought in any way they wanted. They could record television shows on hard-drives and remix songs on tape recorders to their heart’s delight. DMCA’s prohibition on busting DRM locks rendered such tinkering illegal.

Thanks to lobbying efforts by the Electronic Frontier Foundation (EFF) and other consumer advocates, a few of Section 1201’s anti-competitive practices have since been rolled back. Motorists now have the legal right to fix their own cars, farmers their tractors, and people can unlock their mobile phones and tablets without fear of prosecution. But exemptions from DMCA’s overly broad and widely abused copyright restrictions have been only on a case-by-case basis, and resisted tooth and nail by manufacturers.

The task now is to get the courts to recognise that people who buy digital (as opposed to physical) products are owners of those goods and not mere licencees, says Kit Walsh, an attorney at the EFF. A particular bane is the End User Licence Agreement (EULA) employed extensively by the software industry, under which buyers are sold only a licence to use the product, and have no claim on ownership.

Changing that will be an uphill battle. In their book “The End of Ownership: Personal Property in the Digital Age”, Aaron Perzanowski and Jason Schultz describe how technological innovations are eroding people’s rights to do whatever they please with things they own. Apart from DMCA being interpreted as covering items it was never intended for, the authors worry about the way digital services generally are shifting wholesale to the cloud. Tangible media like music albums, video discs, even software packages are fast disappearing from the stores, as customers find themselves having to pay monthly subscriptions to streaming services instead.

Thus people are trading ownership for access. The consequences are considerable: bookshops disappear, record companies fail, video stores close. As licensing, renting and subscription methods replace ownership, important decisions about how society functions are then made by companies for their own private ends, rather than through the deliberations of law courts and legislatures on behalf of the public generally.

Will personal ownership of digital goods ever be possible? The book’s authors hold out some hope. The first step, they suggest, would be to reform copyright exhaustion, by embracing aspects of the “fair-use” doctrine. The latter seeks to balance the interests of copyright-holders with the interests of the public, by allowing certain usages that might otherwise be considered an infringement. Implementing such a reform, however, would very probably require something as improbable as a feisty small firm fighting an injustice all the way to the Supreme Court. Good luck with that.