468 relates to the deactivation
or alteration of embedded software in a digital device
as a response to third party repairs
So, this bill is very short, but there are a lot of very complex questions
that we're going to be weighing in on here
The impetus behind this bill is because of a business practice
that is hostile to consumers
but a business practice that is currently conducted because of a lot of uncertainty in legal precedent
both at the state and federal levels
So, the business practice in question is
whether an original equipment manufacturer can deactivate the software
that is built into a digital device because they don't like who you picked to repair it
This business practice is aimed at punishing consumers
for making what the manufacturer deems to be an incorrect choice
with the device that a consumer has already purchased
And this is used as a way to enforce an artificial monopoly
on repair
This is used to destroy competition from smaller businesses
which offer third party electronic repair
for devices
So, this happens in a variety of devices - I mean we all know that software
is coming up in more and more different types of devices
as the years go on, but it's primarily happening with cell phones
So someone will buy a cell phone for $800 - that cell phone will break
and I think most people intuitively understand that once you've bought something
you have the choice of where you get that repaired if it breaks
But unfortunately, the device manufacturers - many of them are asserting
that although you bought the $800 phone, you don't own the software
that makes it more than an $800 paperweight
And the reason they're able to assert this is because of a question of whether or not
the doctrine of 'first sale' applies to software
The doctrine of first sale is a very old legal precedent
dating back to I believe 1908
that says once you've purchased something, you are the one who has the choice
of what to do with that item
So this is the legal doctrine that allows libraries to operate
Because once the library has purchased the book, they can decide to lend it out
This is the doctrine that allows you to destroy something that you've bought
So going back to that same book
You know, if you decide that you really don't like the words in that book
you can set it on fire
But, the printer of that book does not have the right
to come into your house and set that book on fire
because they've decided that they don't like what you're doing with the book
That's because of the doctrine of first sale
The doctrine of first sale applies to literally everything sold in this country
up to digital devices
The question of whether or not it applies to digital devices
has not really been settled by the federal government
it's not really been settled by the state governments
it's not really been settled by the courts
and the question of whether or not it applies to digital devices
comes down to whether or not there is a physical transfer
of the software
when you purchase it
So, with embedded software, the manufacturer is making a copy of that software
and embedding it into the device, and you're purchasing the device
and the software along with it
There's a physical transfer
The manufacturer's ownership relationship to that software
in my opinion, ends when they sell it to you
and yours begins
But it's the position of the manufacturers
that they're licensing that use of the software
that they've not made a physical copy and transfer
to you, and that they therefore have the right
to punish you for making decisions that they don't like
by deactivating the phone that's in your pocket
So this is, like I said
it's a very short bill
it is aimed at one business practice in particular
but I am asking this committee, and I'm asking the body as a whole
to decide what Virginia's position will be
on this very complex, long running legal question
that is very much in the air
and that is whether or not the doctrine of first sale
applies to software that is built into a device
Thank you Madam Chair
The legal precedent around end user license agreements
you know, the first time you turn on a phone
there's that big screen full of text, that frankly nobody reads
that says what the manufacturer
asserts are the conditions on that sale
but, this has been
decided by courts throughout the country, that when you have a click through
or a package opening condition on agreement to the end user license agreement
that in many, many cases, those license agreements
are not enforceable
because the person does not have an option to weigh in on the terms
of the license agreement, until after they've already purchased the device
So, this question comes up with software that you buy on physical media
it comes up with the operating systems
that are built into computers that you buy from Best Buy
or Amazon, or what have you
And it's been decided by many courts that
if you have an option to weigh in on the license agreement
before your purchase, then that is certainly the case
but if you don't get access to that license agreement
until after the purchase, then it's not enforceable
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