Entered the House, YODA has

On Sept. 19, Rep. Blake Farenthold (R-Texas) introduced the You Own Devices Act (YODA) that could impact almost every American. It concerns embedded software that is increasingly prevalent in telecommunications and technology, from e-books to automobiles, from iPhones to refrigerators. YODA would prevent copyrighted software from limiting an owner’s ability to resell, configure or repair a specific device in which it is embedded.

Manufacturers claim the software is “owned” by them or by the device, not by the purchaser. The buyer is often unaware of the restrictions because the manufacturer is the licensee and few buyers read paperwork in advance, if at all. Sometimes hardware is shipped with the software already embedded and no limitations are evident.

{mosads}The core of YODA states, “the owner of the machine or other product is entitled to transfer an authorized copy of the computer program [that enables the device to work], or the right to obtain such copy, when the owner sells, leases, or otherwise transfers the machine.” A new owner would also be entitled to receive critical updates and security patches on the device. Many manufacturers currently require second owners to buy new licenses before they can receive such information.

The intellectual property lobby will stiffly resist. It has realized ever more restrictive copyright law over the last two decades. And the fight has been waged against both businesses and individual purchasers.

Business: In 2006, the telecom giant Avaya sued the service company Continuant for illegally repairing products manufactured by Avaya. The suit alleged violation of copyright and trademark; Continuant alleged antitrust violation. Eight years later, the suit continued. On Sept. 11, 2014, Continuant was awarded $2.6 million in prejudgment interest on a $20 million jury verdict, which the court trebled to $60 million.

Individuals: Amazon has become notorious for remotely deleting books purchased by Kindle owners. Security expert Bruce Schneier commented, “It illustrates how few rights you have when you buy an e-book from Amazon. As a Kindle owner, I’m frustrated. I can’t lend people books and I can’t sell books that I’ve already read, and now it turns out that I can’t even count on still having my books tomorrow.”

If YODA succeeds, Kindle owners will be able to lend or sell their e-books in the same manner as they do printed ones. (This is “the first sale doctrine” which legally permits an owner to sell a copyrighted work.) PlayStation owners will be able to remove the licensed software and replace it with a preferred version, such as Linux. A device could be repaired by anyone, not just an authorized agent of the manufacturer.

YODA will inspire an intense tug-of-war between copyright and consumer advocates. A glimpse into past dynamics renders a sense of what to expect and the stakes.

In January 2013, it became illegal to “unlock” a cellphone; this is a common practice that allows consumers to continue using a device when they change carriers. Depending on circumstances, a first-time offender could be fined up to $500,000 and imprisoned for five years, or both. Repeat offenders could be fined up to $1 million and imprisoned for 10 years, or both. The criminalization was based on Section 1201 of the Digital Millennium Copyright Act (DMCA) of 1998, known as the anti-circumvention provisions.

In July 2014, Congress passed the Unlocking Consumer Choice and Wireless Competition Act (UCCWCA), which temporarily permitted unlocking phones in order to access a new carrier. The ultimate word will come in 2015 when the Librarian of Congress either renews or denies the permission.

On Sept. 17, before a congressional hearing, the intellectual property director of the Electronic Frontier Foundation (EFF) testified in opposition to renewing the anti-circumvention provisions. An EFF press release stressed, “Today — as in the other ongoing copyright reform hearings — Congress members continually stressed a need to reduce piracy.”

YODA faces the same arguments. Manufacturers will be especially intransigent because of the act’s provision stating “The right to transfer provided under this subsection may not be waived by any agreement.” Although the language can be viewed as doing nothing more than reinforcing the first sale doctrine, it applies directly to the software that manufacturers use as leverage. The leverage could be very profitable. For example, many cars are controlled by software; if the license is tied to a specific buyer, then resale may require another fee to the manufacturer. Or resale may become so difficult that the market for new cars flourishes.

Nevertheless, YODA has powerful supporters. On signing the UCCWCA into law, President Obama called the legislation “commonsense” and lauded it. But it remains to be seen whether the public statements of politicians can withstand powerful behind-the-scenes lobbying.

McElroy is a research fellow at the Independent Institute.