Why You May Not Own the Products You Buy [e183]

April 29, 2015

Nasir and Matt talk about John Deere’s recent filings with the Copyright Office and how them and others are trying to protect their products through the argument of implied licenses.

Full Podcast Transcript

NASIR: All right. Welcome to our podcast where we cover business in the news and add our legal twist. My name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: So, what are we doing today, Matt? Should we continue with our podcast today?

MATT: I was thinking about writing a “Dear John” letter.

NASIR: Wow. That’s a really great transition.

MATT: It’s not even a pun or even clever.

NASIR: It’s not even a pun. You just took John Deere and just made it Dear John.

MATT: I know you don’t watch the NBA playoffs – or at least I don’t think you do.

NASIR: I hear about it.

MATT: One of my favorite NBA players of all time, Reggie Miller, he’s long retired but he does the play-by-play for games and he said something, it was some game, I think, last Thursday or Friday, and he said something about, “They’re doing blah blah blah with, like, Steph Curry not on the floor.” He’s like, “No pun intended,” and he said that statement and I was just sitting there and I was like, “That makes no sense. What you said was not a pun at all.” I was like, “I can’t be the only one who picked up on that,” and, the next day, I looked on this site and the title was like, “Reggie Miller has no idea how puns work.” It’s basically you would just make a statement and then he said, “No pun intended.” There was no connection at all. It was just a sentence.

NASIR: That reminds me of Michael Scott’s use of the phrase “Catch 22” in The Office. Catch 22. He also does not know what that means.

MATT: Well, circling back to the Dear John thing, this is a John Deere theme story, the tractor company.

NASIR: Also big in Indiana, right?

MATT: Yeah, probably. I would assume, I guess, yeah. I’m sure there’s other companies but I know I worked at a place that had lots of John Deere stuff. But, yeah, this is a pretty interesting issue and it’s not just John Deere. I know GM has been big on this as well. We’re talking about ownership. What John Deere is saying is it’s filed something in…

NASIR: Yeah, US Copyright.

MATT: US Copyright Office, yeah, saying that, you know, people shouldn’t be allowed to modify the tractors. What they’re saying is, “We have our equipment that we sell to customers and it’s protected by copyrights.” I think the key part for this situation is the tractor has a chip with some code in it, this software, and so you don’t actually own the tractor. It’s an implied license for the life of the vehicle or the life of the tractor to operate that. It’s a pretty interesting subject because, you know, you go out and buy something, it’s not just tractors, too. I mean, the majority of the population is not going out and buying these big machines because where would you park it? What’s another good example? Like, iTunes music or something like that. Or GM, like I said, so cars, if there’s some sort of software in it. So, you go out and buy a product, you know, you think you own it but some of these companies are saying, “Well, you don’t actually own it. It’s just an implied license because we have the copyright protection on this software.”

NASIR: I would say this is pretty complex. I mean, it’s a very sophisticated argument and kind of goes very closely to John Deere’s approach on protecting its intellectual property. It might be a myth; I don’t know if people think that or not but a lot of people think that John Deere owns the color green and no one can use it. It is true that the colors – the green background with the yellow logo and writing – is part of their trademark, but they don’t necessarily own it. But, at the same time, you know, there are other machines that can have that color. The exact same color? I don’t know. That shade of green with the yellow and so forth? Probably not; that would be more close to the trademark infringement. My point is that John Deere is finding ways to even more restrict use of its intellectual property. And so, what Matt’s discussing regarding the ability to modify your tractor software, it does sound kind of weird now but, really, it’s not too strange in the last four or five years with the passing of the Digital Millennium Copyright Act where, you know, you guys may be more familiar with the restrictions that you may have, for example, in downloaded movies or music or even being able to unlock your iPhone or your iPad, and these kinds of restrictions are all through copyright law – believe it or not – and John Deere is saying, “Look, we have software that is protected under DMCA and copyright law as well and so, therefore, it should have the same kind of protections.”

MATT: It’s a weird thing to kind of wrap your head around. There’s some other articles that were posted saying, you know, “We need to stop this because this is destroying the idea of ownership,” things like that, but I don’t think they necessarily understand or have fully thought out the reasoning behind it. It’s not like these companies are selling a product to consumers and, you know, claiming that it’s more of a rental or whatever they want to call it. You know, they’re calling it “implied license.” But these companies are wanting to prevent any sort of alterations or modifications to the product by going into the code or going into the software and changing it that way. I mean, what’s a classic example? A classic example would be jailbreaking an iPhone, is that the right?

NASIR: Yeah, unlocking, jailbreaking, yeah.

MATT: Yeah, something like that. And so, why are these companies so concerned about these sort of things happening? Like John Deere, why does it care if someone buys a tractor and they make modifications to it and they change it? Is it safety concerns? Is it branding? Or they just really have a strong hold on ownership? Is it like a chef where you go to a restaurant and you order something and there’s no modifications to the menu because this is the way that it needs to be? I mean, that’s a weird analogy but…

NASIR: Yeah, I understand. There has been a general pushback in these kinds of restrictions because, you know, when you buy something, there is this understanding that you own it. Going back to jailbreaking and unlocking your phones and being able to modify, you know, for example, when you buy a vehicle and a car, you can repair it, modify it however you want. But, now, because it has certain technology that’s not physical, that is in software form, now you can’t modify that. What’s interesting about the DMCA is that, even if you’re not doing it for non-pirating purposes, okay? Technically, the DMCA makes it illegal to circumvent these restrictions – I think they call it “digital rights management” – and that’s the software, the protection, the security protocols that are used so that you can’t copy that, but even circumventing that in order to jailbreak your phone or whatever is enough to violate that. Now, all of a sudden, you know, those that are in their cars, I’m sure would want to be able to take off the software governor that restricts the maximum speed because they want to race their car or mess with the timings of their engine and so forth. But, now, because of this DMCA or copyright law, you can’t do that and that’s basically what John Deere and other vehicle manufacturers are also starting to argue, by the way.

MATT: I don’t know if it’s necessarily – it’s obviously a protection issue but it’s not really preventing competitors from coming in and looking into things. I mean, there’s a difference between somebody buying something and modifying it through the software as opposed to somebody buying it and then just copying what they did to produce their own separate thing. Like, there’s going to be infringement on that. I get where they’re coming from but I still think this is a pretty weird idea and I don’t know if a lot of consumers necessarily even know about this or know how a lot of these things work. I think it’s one of those things where people buy something and they just assume that they own it, full and outright. If they really knew the details behind this, they’d probably get upset about it. But, at the end of the day, what’s the alternative? You don’t have to buy it. You can buy something else. Maybe not a John Deere tractor but, you know… if all the car companies are doing this, that’s one thing; but, if only one or two, then there’s alternatives.

NASIR: You know, copyright law, trademark law, and these kinds of things actually encourage competition to the extent that people aren’t penalized for innovating and so forth – or actually rewarded for innovating – but it seems to me this kind of slow creep of big corporate product control doesn’t really go towards the protection of innovation but rather it’s starting to push back the other way. I think, rightfully so, there is a lot of backlash from these kinds of claims and I’m kind of glad this kind of claim by John Deere is making the attention that it is.

MATT: I was trying to see when they submitted this proposal or whatever they submitted to the Copyright Office just to see because we’re going to get some sort of decision on this in the near future, I believe.

NASIR: The aspect that they alleged that it’s an implied license is interesting because what they mean is that, when someone bought a tractor, there wasn’t in there specific expressed license that you can use this and it’s only for temporary purposes. And so, what they’re saying is that, because we didn’t assign you the license or the ownership to this intellectual property, just because you bought the hardware doesn’t mean that you own it. I wonder if, in the future, they’re going to start, like other software developers say, “Okay, we’re going to sell you this tractor but sell you with it a license agreement for the software that restricts your use for modification.”

MATT: Yeah.

NASIR: Everyone’s pretty much accepted that, if you buy a book from the bookstore, you’re free to sell that at a garage sell. But, if you go to amazon.com and download an ebook and print it out, you can’t sell that. It’s kind of a cultural acceptance but, not only that, it’s much easier for Amazon to put in its terms and conditions that, “Hey, you can’t sell this ebook.” So, they could do the same thing with the tractor and have a cultural shift. But I would find it strange that farmers and other users of tractors alike would be too tolerant with that kind of shift, you know?

MATT: Yeah, I bet we’ll see them go that route as well. What’s one other thing that someone’s going to sign to buy something? They might not even notice.

NASIR: It’s going to slowly creep into more corporate control of this stuff.

MATT: They’d buy this big tractor and it comes with a CD or a disc that they have to put in their computer to accept a license agreement.

NASIR: Press ACCEPT or whatever.

MATT: Well, that’s a crazy thing too and I think GM – I don’t know if they did this or they just threatened to do this – they’ve even talked about locking people out the car because they have the power to do that which is crazy. I mean, I think that’s going a step too far but they really want to protect what they have.

NASIR: Well, for example, Tesla, the car actually gets updates from corporate and that’s where things are headed. Your hardware that you’re using has very little hardware. It’s mostly software that’s actually running the actual brains of it. It’s not as simple as it was. I think everyone can relate and understand to the concept but it’s just like, “Are we there yet? Do we want to stretch it that far?”

MATT: Yeah. So, we’ll have to keep an eye on this with these claims that are filed because I think this will be a pretty big thing that’ll affect a lot of different companies and products and consumers as a whole. It should be pretty interesting

NASIR: Very good. So, I think that’s our episode. I want to make sure everyone is aware of our iTunes channel to be able to leave a five-star review. That helps us out quite a bit.

MATT: You won’t own it.

NASIR: Yeah, you don’t own this podcast either; you just have an implied license to listen to it.

MATT: One last thing, you mentioned the thing about the colors of John Deere, I mean, wasn’t that the exact same colors as that, remember that New Jersey pizza place?

NASIR: Yeah, it was.

MATT: With the turnpike logo or whatever? It was like the exact same colors, right?

NASIR: It was, and, if they were using it in the similar industry, then I think there would be a definite likelihood of confusion there.

MATT: Yeah.

NASIR: Even though there was already a likelihood of confusion. Actually, I think what ended up happening with that case is it was dismissed, but not on substantive grounds, right? It was because of the location of when it was filed or something. I can’t remember.

MATT: Yeah, I don’t recall either. I should have never brought it up.

NASIR: Yeah, most people don’t even know what we’re referring to. You have to go back to a very early episode.

MATT: Yeah, it was a while ago.

NASIR: Yeah. Okay! All right. Thanks for joining us, everyone.

MATT: Yeah, keep it sound and keep it smart!


The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to info@legallysoundsmartbusiness.com.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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