ARCs and the Law

I discovered today that there's been a debate on the Insider mailing list hosted at Bookfinder.com on the legality of selling ARCs (a topic I recently covered here). One Insider wondered when will "publishers wake up to the possibility of including a EULA (End User License Agreement) on everything published."

A EULA is the agreement that comes with most software prohibiting it from being installed on more than one or two computers. When you "buy" software, you don't own it, you license it from the developer. This is how software companies try to get around the First Sale doctrine, which basically says that the first person who buys a copyrighted work can then resell it in its original form.

Books can be resold under the First Use doctrine. Twenty years ago, the Supreme Court extended the doctrine to cover gifts - the Walt Disney Company tried to prevent the resale of animation cels it had given to employees arguing that it owned the copyright and since no sale had taken place, the First Sale doctrine didn't apply. The court didn't agree and said the First Sale doctrine applied to gifts.

So far, no one has litigated the EULA idea to the Supreme Court, so their validity remains uncertain (some appeals courts have ruled they are valid contracts; some have said they violate copyright law). Some legal experts think the agreements are on shaky ground. It would sort of like a book publisher saying only the original buyer is allowed to read the book.

However, the practice of publishers attempting to prevent the sale of ARCs does have a legal champion, in the form of the Electronic Frontier Foundation, which is representing Troy Augustino, an eBay seller who likes to auction off promotional copies of CDs (the music industry equivalent of ARCs). Augustino's auctions were shut down by a zealous music industry attorney who claimed his company owned all promotional CDs (they were "leased" to the recipients, s/he said).

The key here is that 99% of all ARCs (and promo CDs) are sent to reviewers without being requested. Under US law, such unsolicited shipments are defined as gifts. The Electronic Frontier Foundation will likely argue that the First Sale doctrine applies and that attempts to prevent the sale of promotional items is illegal. The Ars Technica blog has a good summary the Augustino case, the First Sale doctrine, and EULAs.