With some good reasons on both sides, software companies and software customers don't always trust each other a whole lot. But the more I delve into this Wall Data vs. the LA County Sheriff case, the more I'm struck by the fact that one side pays most of the price for this mutual mistrust.
As I described in Tuesday's story, in 2002 NetManage sued the Los Angeles County Sheriff's Department (LASD) for copyright infringement. The ghost copies, even if unused, of its subsidiary Wall Data's Rumba application that had been created by LASD's drive imaging software deployment were illegal copies, said the plaintiff. The defense argued that LASD's use of the software was legal under fair use and Section 117 "essential step" provisions of copyright law.
Wall Data vs. the LA County Sheriff went to jury in 2003 and Wall Data won, as NetManage trumpeted at the time. The LASD appealed, and in May of this year the U.S. Court of Appeals for the Ninth Circuit issued its decision affirming the lower court in all respects.
A mail list to which I subscribe had a brief note about this case, and I was intrigued enough to go read the court's opinion. At first I was disappointed, because as described the case sounded like it had little to do with fair use. In particular, the court's emphasis that the LASD's setup meant that "those users who needed to use Rumba could access the software at whatever computer they were assigned" made it sound like the sheriffs were actually using the licenses in concurrent fashion. In other words, no more than the 3,663 licenses the LASD would be in use at any one moment in time, but Rumba could be used on all 6,007 computers. If that was the case, NetManage/Wall Data would certainly be justified in wanting at least a little more money, since most software publishers -- if they offer concurrent licenses at all -- charge more for them.
But then I noticed a footnote in the court's opinion that briefly mentioned the LASD's "logical units" (LU) system that I described in Tuesday's story. That sure didn't sound like concurrent usage, and, along with a few other things, it seemed to contradict the court's basic argument for finding LASD gained commercially from the ghost copies of Rumba. It was obvious I was going to have to dig a little deeper if I was to find out anything about the reality behind this case.
So I have now talked to the lead attorneys for both parties and read the arguments they've filed with the Ninth Circuit (including brief and counter brief in a defense petition for an "en banc" re-hearing that is now before the court). As you would expect, the two sides don't sound like they're describing the same universe, much less the same case. But I think we can boil the basic points of dispute down to some discussable issues.
First off, both sides do agree that the LASD was not using its licenses as concurrent ones. The LASD claims that its LU system for restricting access to the mainframe guaranteed that none of the ghost copies of Rumba were used. Wall Data's attorney concedes that might be true, but it doesn't matter because the creation of the extra copies left it to the Sheriffs' discretion whether to use them or not. "The power to use what they call the ghost copies was in their hands," says Tod L. Gamlen of Baker & McKenzie. "Getting an LU assigned to any workstation at one of their facilities would just take a few quick steps. The LU system wasn't set up to restrict Rumba licensing - it was set up for their own reasons. How are we going to know if they're actually using 2,000 licenses, 4,000 licenses or what?"
In other words, even the police can't be trusted to police themselves when it comes to software licensing. And it's important to note, for any IT manager or small businessperson who might not be aware of it, that is exactly the philosophy of the software industry when it comes to licensing enforcement. Should the BSA ever show up on your doorstep with a court order to audit your computers, it won't matter to them if a copy of a program is unused. Heck, an old copy of Word on a corrupt hard drive thrown in the dumpster will count against you.
Speaking of trust, I also put in a call to NetManage, Wall Data's parent, to see if they'd care to comment about their decision to sue a customer over unused copies of software. "It's pretty standard in the industry to license on an installed basis, not a use basis," said Mike Peckham, senior VP of finance for NetManage. "My analogy is that it's as if you bought a desk and chair for a worker you didn't wind up hiring - would you expect your money back on the desk and chair because you didn't use them? From our standpoint, if a customer agrees to license and then chooses to go outside the terms of that license without anything in writing, the court is just saying they can't do so."
Well, there's no doubt that is the standard thinking within the software industry about how licensing should work. But should it? And what about fair use and other principles of copyright law that are supposed to provide a little balance? While I promise I'm not going to keep writing about this case forever, we are not quite yet ready to bring this story to an end. But if you haven't yet figured out yet who the real culprit is, let me give you a clue: the EULA done it.
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