united-states licensing consumer-protection ownership
Are loose in-box licensing agreements binding?
<p>I just purchased a vacuum cleaner and upon opening the box, there was a loose sheet of paper with a licensing agreement. The agreement said that using the product constituted acceptance of the agreement and that if I did not accept the agreement, I had to return or destroy the product. No explicit, active action was required to accept the agreement in order to use the product. My primary question is whether an agreement presented in this format is binding in the United States.</p>

<p>I have a secondary question regarding this agreement. It placed restrictions on how the product could be used and on transferring the product to another party. Does the United States allow such restrictions on physical products such as vacuum cleaners or do purchasers automatically have the right to freely use and transfer products in accordance with the law?</p>

<p>I can't speak for the US but in Australia this would not be binding.</p>

<p>You entered a contract for the vacuum cleaner the terms of conditions of which were made known to you at the time of purchase &ndash; the ticketed price, any store or website displayed terms and whatever was written on the <em>outside</em> of the box. Any alleged terms that were not made known when you entered the contract e.g. because they are <em>inside</em> the box are just that: alleged.</p>

<p>In addition, the manufacturer would have committed an offence under Australian Consumer Law by misleading you that such terms were binding.  This could lead to a fine in the multiple millions of dollars if the breach is widespread and egregious enough.</p>

<p>The wedge for this is the presence of copyrighted material such as a design on a label. If I sell you a banana, it is your banana and I cannot attach conditions to what you do with it -- you can't license a banana. But add a registered copyright-registered designer label and now I can invoke copyright protection on your banana, which is the basis for a license agreement. See for example <a href="https://www.law.cornell.edu/supct/html/96-1470.ZO.html" rel="nofollow">Quality King v. L'anza</a> (shampoo, not bananas) or <a href="https://www.supremecourt.gov/opinions/10pdf/08-1423.pdf" rel="nofollow">Costco v. Omega</a> (watches). The general rule ("<a href="https://www.justice.gov/usam/criminal-resource-manual-1854-copyright-infringement-first-sale-doctrine" rel="nofollow">first sale doctrine</a>") has been that if you legally buy a legal copy of a copyrighted good, it is yours to re-sell (so a license cannot restrict resale of the object), but there has been some question of whether that holds for items made outside the US. <a href="https://supreme.justia.com/cases/federal/us/568/11-697/case.pdf" rel="nofollow">Kirtsaeng v. Wiley</a> ended that discussion: the first sale doctrine applies to legal copies made outside the US as well. When there is no issue of copyright protection (produce, nails) then the idea of "licensing" goods makes no sense at all. It is only when you add something copyright-protected that there is any hope of controlling the item. But even then, because of Kirtsaeng, there is no hope for controlling a physical thing that has been sold.</p>

<p>This freedom to use and re-sell assumes that you did actually purchase the object, i.e. did not lease it. </p>
