Article Title: Look Before You Click
Article Byline: Do you really know what's in your EULA?
Article Body: Written by: Bruce Rolston

Have you ever put a Rainbow Six screenshot on your website? Can't do that. Have you ever paid to play Half-Life in a cyber-cafe? Can't do that. Have you ever relied on Age of Kings to land jet planes at a major airport? Don't do that. Please don't do that.

All these, and more odd little activities are prevented by one of the most annoying, and misunderstood aspects of purchasing computer games: the EULA (End-user license agreement). Almost everyone who has bought a computer game is guilty of taking the EULA that comes with it lightly at one time or other: either throwing out the piece of paper in the retail box, or skipping through the EULA page at the beginning of most install processes. "Read carefully before agreeing," the installers tell us. "Uh, huh," we say, scanning for the "I agree" button.

Many people feel EULAs are a joke, or just oppose them on principle. They believe they're not enforceable legally, because they see it as somehow wrong to have to buy a disk, unwrap it, and start installing it before you get to read the fine print. But in fact, courts haven't ruled against a EULA in over half-a-decade. To the law, clicking "I agree" is no different than buying a toaster even if you wait to flip through the warranty papers back in your easy chair at home: you've still bought that toaster. (The difference has been that most appliance stores would take your toaster back if it turned out you disliked the warranty for some reason: computer retailers have often been less understanding.) Other critics complain EULAs are serving to protect the industry's low standards of workmanship behind a smokescreen of legalese, or put restrictions on consumers (such as not burning extra copies of game CDs for LAN parties) that no one really honors. In this column and the one to follow, we examine the debate over EULAs: are they here to stay? And are they growing stronger?

License agreements are famously full of legalese and complex grammar. Some people wonder if even game companies read them in full. The makers of Quake3: Arena were hard-pressed to explain why the EULA on their free 1.17 patch, released last spring, appeared to prohibit the making of new maps and levels for the game... this a company that had always been an industry leader in making their games user-modifiable. "I can see where people might get confused, so I'll think about changing that in the future for the sake of clarification," said Id Software CEO Todd Hollenshead at the time.

Massively multiplayer games, which charge the player both for the CD with the product, and a monthly fee for play in their virtual worlds, often have the most complex licensing agreements of all games. Last April, the popular online game EverQuest rolled out its Ruins of Kunark expansion. Verant Interactive president John Smedley, whose company designed and runs the massively multiplayer game, also announced the company would be altering the game's EULA, which the game player assents to every time they enter the EverQuest virtual world. They would do this, Smedley said, to stamp out two problems that had arisen: the sale of virtual EverQuest goods and characters on eBay, and the use of hacks to give players an in-game play advantage. From now on, players could not sell their stuff, and Verant would probe their computers to make sure they were not using some kind of cheat program: "You also grant us permission to access, extract and upload (i) Game-related data as part of the patching process and (ii) data relating to any program that we, in our reasonable discretion,determine interferes with the proper operation of EverQuest," the new EULA said.

It may have been legal... but an outcry by a vocal minority of EverQuest players (Smedley estimated 17 per cent of users objected) led to a flip-flop by Smedley the next day. "We have decided that it's the wrong thing to do," he wrote in a letter to players. (The clause prohibiting eBay sales stayed in.) While Verant was generally applauded for adapting to customer concerns, many people wondered along with games columnist Jessica Mulligan: "why anyone at Verant thought it was a good idea in the first place."

You may rightly wonder why companies insist on EULAs at all. Why go through this elaborate procedure of retaining ownership of the software at all, only licensing it out to the users? (Make no mistake: legally speaking, you may own your computer, and the game CD you bought. But the software on that CD has only been licensed to you... final ownership rests with the producer.) The main reason given is to prevent people from hacking into or altering the program's source code: commonly known as reverse engineering, or hacking games, this can be done either to borrow another's intellectual property for one's own game, or just to gain an advantage in play. It would be much harder legally prevent someone breaking down and analyzing the software if ownership was transferred to them, any more than I could prevent you ripping pages out of a book I bought you.

In an 1996 paper on EULAs in a major computer law journal, Microsoft lawyers Robert Gomulkiewicz and Mary Williamson outlined the software industry's rationale for EULAs. They argued that most people have no interest in looking under the hood of their software. But a software publishers who sold their product outright would have to assume that some people would, and raise the price for everyone accordingly in order to be confident of recouping their investment. Under a licensing arrangement, on the other hand, publishers can charge markedly different rates to someone who wants to get full rights to the game "engine" (such as the games who license one of the Quake family of engines), and someone who just wants to play the game. "The most important point [in defense of EULAs] is that most end users would not be willing to spend additional money for the right to reverse engineer. The law should not force mass market software publishers to burden the price of their software by requiring publishers to offer rights which most users are not interested in acquiring."

EULAs are also important, the same authors argue, because they encourage people to understand the terms of use of something before they actually use it. "Most of these customers have probably never heard of the doctrine of first sale, the doctrine of fair use, or section 117 of the Copyright Act... For example, most software purchasers could not differentiate between an impermissible public and a permissible private performance or display, or distinguish a 'fair use' from an infringing use. Many end users do not know whether they may rent the software that they have acquired.

"Moreover, EULAs play an important role in curbing software piracy. Despite the attempts of software industry groups to teach the public that copying a software program onto a second computer is equivalent to stealing a second copy of the program, many people still confuse the ease with which one can copy with a right to copy. EULAs inform end users that making extra copies is not permitted (except for backup purposes) and that the software publisher is serious enough about enforcing this point to provide a written notice."

Useful or not, opponents of software licensing have raised serious objections to the use of EULAs. The biggest problem is that the analogy to other goods tends to fall down when it comes to software: retailers are notably chary about offering full refunds for opened goods, even recently opened ones. It's understandable: the appliance salesman doesn't have to worry about people taking a toaster home, making themselves an exact duplicate and then returning the toaster for a full refund. A game store owner does. But the upshot for consumers is that you may only see the EULA once the shrinkwrap's off and the disk is installing, and not be able to get the full refund (the buyer's right to say "No" to the agreement, in effect) that the law underlying these license agreements assumes.

"I don't believe that the honest gamer should have to go home and try to install a product, then have to return it because he didn't agree with the EULA," says game designer Derek Smart, developer of the Battlecruiser series. "This unlock code method is just a deterrent and a hassle.

"Have you ever had to take time off work to take your car to the garage, do the same to go pick it up, then only to find that you have to take it back a few days later because the problem wasn't fixed? That's how a gamer who takes time out to buy a game feels when he has to return it."

If it can't be dispensed with altogether, Smart says, the license agreement should at least be accessible before you put money down. "A product's EULA, or at least the most important excerpts, should be printed on the box or included as an insert in the box packaging. This way, while you are browsing the software, you can read it before taking it home."

What's in a EULA?

Never had time to read your own game EULAs before? Feeling a little uncertain about your rights and responsibilities? Here's a quick summary of what you may have agreed to:

At its simplest, a computer program EULA consists of three statements you're expected to agree to -- promises that while sometimes annoying, are generally understandable. First, there is always an assertion of the company's copyright, and ultimate ownership of the intellectual property represented by and associated with the game, meaning the buyer cannot use the game in any way for commercial gain without company consent. Second, there is always a promise that the game (or its associated documentation) will not be copied or shared. With disk burners seemingly everywhere, everyone knows it's a promise more honoured in the breach than the observance, but you can hardly blame computer game makers for trying. "The program you've purchase was produced through the efforts of many people who earn their livelihood from its lawful use," the Unreal EULA says, rather pleadingly. Some companies' copying policies are more liberal than others': Microsoft, for instance allows the EULA to cover one copy each on your desktop and laptop computers, plus a back-up copy. Most, however, are strictly one copy only, plus the one already on the disk itself.

The third promise every game obtains from the user is that they will not try to reverse engineer or modify the product in any way, using the program they've received. Keeping this protection is at the core of what differentiates owning the software from licensing it... if software companies ever had to transfer ownership of their work when they sell it, it would be impossible to prevent people from taking it apart and figuring out how it ticks. But because these are license agreements, and intellectual property ownership continues in the law to reside with the company, game companies can prevent rivals from stealing their software innovations for their own purposes.

This gets a little more complex for games that have encouraged the development of their own mod-making community, allowing users to develop add-ons for the game on their own. Half-Life, Unreal and Quake, among others, have language that allows mods along permitted lines, so long as they're not sold for profit, and do not compete in any way with the company's own product.

For some companies, that's all there is to it. Firms such as Interplay (Planescape:Torment, Starfleet Command), often have only these three basic conditions -- copyright protection, no copying, no reverse engineering -- in their EULAs. But those EULAs are not the ones most people object to.

Where these agreements start getting controversial is when they are seen to put limits on consumers and their right to complain about unsatisfactory merchandise. Computer games aren't any more likely to offer unlimited warranties than any other consumer good, although theirs are often much more limited guarantees than those you'd find attached to a car, say, or home appliance. Some only limit in the amount of time they'll wait, or effort they'll put in: Id, Microsoft, Sierra and Red Storm are among the companies that have offered a 90-day return policy for unsatisfactory merchandise, sometimes along with limited offers of customer support. ("support engineers will make commercially reasonable efforts to solve any problem issues," the promise found in many Microsoft games, is an example of a more liberal policy in this vein.) The license for Half-Life, unique in many ways (see below), breaks the mold here, too, promising a 90-day return, with a catch: "The Only Catch: You've got to tell us why you don't like the Program. Otherwise, we'll never get any better. Send the Program back to us within 90 days of your purchase, postage prepaid, along with your original, dated sales receipt and we promise we'll make things right." (So much for license agreements being abstruse and legalistic... )

GT Interactive/Epic's Unreal is typical of another, harsher policy, allowing 90-day returns only if the compact disk itself is damaged. It makes no promises for the software. Other companies, like Talonsoft and the now defunct Looking Glass Studios, could be even harsher: both last year's Rising Sun and Thief: Gold would not let you install unless you promised that regardless of how messed up the software might turn out to be, you wouldn't blame the company. (Says TalonSoft, somewhat heartlessly: "TalonSoft, its suppliers, dealers or distributors make no warranty with respect to the performance, quality, merchantability or fitness for any purpose of the software.")

In addition to limiting the reasons for complaining, many companies ask for your consent on a limit to damages, should the use of their product cause harm to you or your computer. The standard language says the company bears no financial responsibility should the game somehow trash your hard-drive or drive up your therapists' bill... and if by chance a court rules it does, you also consent to a limit on damages no higher than the cost of the game you purchased. Presumably the lawyers can catch you coming or going this way. It should be noted, however, this, too, is fairly common practice for retail warranties of all kinds, especially for systems as complex as a home computer.

An interesting spin on this is the Half-Life agreement, which specifically says the consumers' liability if their actions cause (or even just threaten to cause) damage to Sierra, the penalty is basically whatever the company asks for. "Sierra... and/or Sierra's licensors shall be entitled, without bond, other security, or proof of damages, to appropriate equitable remedies (including injunctive relief to prohibit a breach of this License Agreement) with respect to threatened or actual breaches of this License Agreement."

Many EULAs also contain reference to export restrictions (which are really only legally required if the software uses some form of advanced encryption, but are sometimes just thrown in anyway).

Some people like to collect cute laws from obscure districts: it being illegal to tricycle on an Sunday in Nantucket, or send cheese through the mail in Oregon, stuff like that. You, too, can do the same thing with game license agreements. In addition to the standard protections, outlined above, some EULAs bear the true stamp of originality. Everyone should probably read the EULA for a game they purchase, if only so they don't miss some specific little gems such as these:

While these kinds of lines can be very amusing, it's the reverse engineering clause that is the heart of the EULA, and the reason behind the whole scheme of licensing. Take that away, and you really could sell games just like toasters, with a full transfer of ownership, and a warranty card in the box. Many companies with very short and sensible EULAs, are actually close to doing this now, with only the copyright-related info in their EULAs, and everything else, such as limitations on warranty and liability, contained in a separate warranty statement.

Much of the rest of the license (the no-copying provision, and the assertion of copyright) are essentially just repeating what has recently been extended to software under American copyright law. (The basic text of EULAs predates the extension of copyright protection to software.) Today, those copyright lines in the EULA give the software company no real extra legal protection against the pirates or disk burners they're meant to target. If it weren't for the reverse engineering protection, there would even be reason to scrap EULAs: there's a constant threat of a financial penalty for using license agreements instead of sales, in the form of increased property and income taxes. (A state could conceivably rule that if the company, and not the customer, still owns the game, argument, then they should have to pay taxes on this "intangible property) It's only the anti-hacking paragraph gives the company a new legal right it wouldn't already have: most of the rest is either misplaced or redundant.

There's one more thing a majority of EULAs include: an identification of the venue for any license or warranty-related litigation, often the state or province the company calls home. Any person who agrees is supposedly consenting to have any civil action they launch tried in that jurisdiction. This obviously has advantages for the lawyers on the computing company's side, in terms of familiarity with the applicable laws, or just commuting time... but it may have even greater ramifications in coming years, if the act known as UCITA is adopted by more American states. In the second part of this feature, we'll look at the debate over this new EULA-related legislation, the "shrinkwrap" court battles that prompted it and federal regulators' renewed interest in the subject, and what it all means for the game consumer.

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