Advanced Copyright Issues on the Internet - Fenwick & West LLP

(2) abrogate or restrict the limitations on exclusive rights specified insections 107 through 114 and sections 117 and 118 of this title.Clause (1) was apparently intended to establish an affirmative principle that subjectmatter which is not protected by copyright under Section 102(b) of the copyright statute (whichincludes “any idea, procedure, process, system, method of operation, concept, principle, ordiscovery”) cannot be the subject of contractual prohibitions on reproduction, adaptation,distribution, performance or display in a license having non-negotiable terms (such as ashrinkwrap or clickwrap agreement). Although this provision is founded on a philosophicalnotion that subject matter which the copyright law deems free for the public to use should not bewithdrawn from use, at least by virtue of a non-negotiable license, it might have had unintendedconsequences with respect to confidentiality clauses that protect trade secret material.Specifically, many shrinkwrap or clickwrap agreements contain confidentiality clausesthat prohibit the disclosure, use and reproduction of trade secret subject matter embodied insoftware that will typically fall within the enumerated subject matter of Section 102(b) of thecopyright statute. Clause (1) could have been read to preempt these confidentiality clauses. Thisseems like a somewhat strange result in view of the Supreme Court’s ruling that copyright lawdoes not preempt state trade secret law. 1068 The authors of H.R. 3048 apparently saw a morepernicious effect from such clauses simply because they are contained in a non-negotiablelicense, although it is not clear why.Clause (2) would have preempted clauses in a shrinkwrap or clickwrap agreement thathave the effect of restricting the limitations on copyright rights enumerated in Sections 107through 114, 117, and 118 of the copyright statute. This provision would have affected manyshrinkwrap and clickwrap agreements in at least two ways. First, because many courts haveruled that disassembly of computer programs to extract ideas from them is a fair use undercertain circumstances, 1069 the clauses which flatly prohibit disassembly or reverse engineering ofsoftware that are common in shrinkwrap and clickwrap agreements might have been preempted.Second, clauses which prohibit transfer of a copy of a computer program by the licensee to athird party (a right that would otherwise be available if the first sale doctrine of Section 109 ofthe copyright statute is deemed applicable by treating a shrinkwrap license transaction as a sale)might have been preempted.It is unknown whether there will be efforts to reintroduce this provision in anothersession of Congress.1068 Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470 (1974).1069 See Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993); Atari Games Corp. v. Nintendo ofAmerica, Inc., 975 F.2d 832 (Fed. Cir. 1992); DSC Communications Corp. v. DGI Technologies Inc., 898 F.Supp. 1183 (N.D. Tex. 1995).- 245 -