First Sale Principle and the OS

Initially, M$ charged about the same price per unit for its OS licence everywhere. When GNU/Linux became an issue, M$ responded in the most price-sensitive regions by offering a very low price, even competing with illegal copies. They could do that because courts allowed copyright holders to licence works so that they could not cross borders. That practice may come to an end with a case coming before the US Supreme Court. A business is being sued for selling imported goods without a special licence.

If the court decides that a person or business should be able to sell its property unencumbered and copyright holders have no power to limit sales after the first one (not copying but selling a legal copy obtained overseas), M$ may be forced to choose either giving up its monopoly in emerging markets by not selling in those regions or giving up its cash-cow in established markets where some people willingly pay several times the cost of production for the privilege of using M$’s software. It would be sweet if the SCOTUS killed the monopoly without even trying.

Needless to say, quitting selling licences in emerging markets would be an extreme stimulus to GNU/Linux which could easily fill the void. Giving up the cash-cow in established markets would be extremely hard on the bottom line. M$ might try to hold things together for a while by lowering prices in established markets and raising them modestly in emerging markets.

This could have important consequences for emerging economies which could become trans-shipment hubs for Wintel boxes. Major OEMs would not like competing with their own products and might have to disperse their operations globally to produce more PCs in emerging markets. It’s all good. OEMs would have one more reason to ship GNU/Linux; GNU/Linux would not compete with their products so directly.

see If You've Ever Sold a Used iPod, You May Have Violated Copyright Law – The Atlantic.

- Robert Pogson

11 Responses to “First Sale Principle and the OS”


  1. 1 oldman Jun 14th, 2012 at 3:35 pm

    “It would be sweet if the SCOTUS killed the monopoly without even trying.”

    But they wont Pog, so you can dream on .

  2. 2 Robert Pogson Jun 14th, 2012 at 4:25 pm

    oldman wrote, “they wont Pog, so you can dream on .”

    Is it your opinion the Supremes will shoot down the “first sale principle”? How can the monopoly survive without large price differentials from Malaysia to New York? What would stop Malaysians from shipping Wintel PCs to New York at 1/3 the regular price paid to M$?

  3. 3 Clarence Moon Jun 14th, 2012 at 4:56 pm

    What would stop Malaysians from shipping Wintel PCs to New York at 1/3 the regular price paid to M$

    Most likely, the fact that Malasian Windows displays in Maylay:

    بهاس ملايو

    Would you want this on your command line?

  4. 4 dougman Jun 14th, 2012 at 7:15 pm

    Silly Clarence,

    Just because a computer originates from another country, he thinks that it stays that language.

    If that were the case, all phones, tablet’s and computers would be a mixture of Hindi, Mandarin, Thai, Vietnamese or some other third world language, now we all know that’s not the case here now is it.

  5. 5 Viktor Jun 14th, 2012 at 10:19 pm

    Just because a computer originates from another country, he thinks that it stays that language.

    Yes, it does. Because Windows is not multi-lingual except for the Ultimate Edition (which is beyond stupid). Of course, you can get untouched Windows ISOs in the language you want from Microsoft’s/Digital River’s official servers. But it’s still a stupid hoop you have to jump through.

  6. 6 iLia Jun 15th, 2012 at 3:39 am

    Needless to say, quitting selling licences in emerging markets would be an extreme stimulus to GNU/Linux which could easily fill the void.

    No it will be an extreme stimulus to piracy. Because when Microsoft quits selling licenses somewhere they will stop fighting piracy. And who will need some crappy hobbyist free software when there is proprietary software for free?

  7. 7 Robert Pogson Jun 15th, 2012 at 5:05 am

    iLia, neglecting that governments enforce copyright, wrote, “who will need some crappy hobbyist free software when there is proprietary software for free?”

    Voluminous copyright violation is a criminal offence severely punished in many major countries in the emerging markets:

    • China:“Chinese law says those involved in IP crime can be convicted of
      three types of crime.
      • Infringing IP rights under Articles 2-220 – maximum 7 years
      in prison
      • Production and marketing of fake or substandard goods
      under Articles 0-0; also the production and sales of fake
      medicines and producing and selling poisonous or harmful
      foods – maximum lifetime in prison (this can also be punishable
      by the death penalty).
      • Operating an illegal business – maximum 15 years in prison.”
    • India – the BSA acts in India whether or not M$ cares about that market.
    • Brazil:“During the first 11 months of 2011, more pirate DVDs were seized by the authorities in Brazil than in any other country in the world: almost 23 million units. Another statistic reported by MPAA may be even more encouraging: the number of piracy convictions obtained rose from 501 in 2010 to 704 in 2011 (through the end of November). Enforcement efforts were more focused on the larger and more important pirate channels (e.g., production labs and warehouses), and while this strategic shift led to somewhat fewer raids, it may have been more effective than the more scatter-shot efforts of the past. In the entertainment software sector, ABES reported similarly encouraging results: 680 raids were carried out, resulting in seizure of nearly 3.2 million units of pirate product, an 81% increase. “
    • Russia has moved their school system to GNU/Linux and government office will soon move to GNU/Linux partly in response to incidents of illegal copying of software.
  8. 8 dougman Jun 15th, 2012 at 5:50 am

    Windows is not multi-lingual, but Linux is and has every language that I can think of which is nice.

    Its a stupid hoop to jump through, Linux does not require one to jump through hoops. Just open up ‘Control Center’ and install the language package you want, then select it in the ‘Language Support’ settings icon.

    Re: Licenses. Third world countries will pirate regardless and this bring up to salient quotes.

    “Today Gates openly concedes that tolerating piracy turned out to be Microsoft’s best long-term strategy. That’s why Windows is used on an estimated 90% of China’s 120 million PCs. “It’s easier for our software to compete with Linux when there’s piracy than when there’s not,” Gates says.”

    “Although about 3 million computers get sold every year in China, people don’t pay for the software. Someday they will, though,” Gates told an audience at the University of Washington. “And as long as they’re going to steal it, we want them to steal ours. They’ll get sort of addicted, and then we’ll somehow figure out how to collect sometime in the next decade.”

    So Billy conquered China by giving it away and allowing them to steal it.

  9. 9 Robert Pogson Jun 15th, 2012 at 6:29 am

    dougman wrote, “Billy conquered China”.

    Not so fast. The government of China is promoting GNU/Linux and facilitating use of FLOSS from manufacturing to education. While M$ has huge share of units in use, there is a huge rate of growth for FLOSS in China. For example, Dell gives retail shelf-space to GNU/Linux there. When people have a choice they will choose FLOSS.

  10. 10 dougman Jun 15th, 2012 at 8:22 am

    Understood, I was speaking about the past.

    India and China are making great strides with FLOSS these days.

  11. 11 Clarence Moon Jun 15th, 2012 at 4:05 pm

    Silly Clarence…

    Well, Mr. Doughman (Is that your real name? One gets a Seinfeld character sort of image from that!), my comment was in regard to the $3 or so copy of a local Windows edition that Microsoft was at one time selling as an alternative to local pirating of Windows. I do not know for sure if they are even doing that much today.

    Computers made in foreign lands by Dell, HP, and others that are destined for the US Market pay the contracted price, certainly. Mr. Pogson’s hypothetical was in regard to some shenanigan being pulled to send the low price version to the USA, using the first sale principle (Which I do endorse myself.) to thwart Microsoft’s presumed efforts to collect higher fees. I would also comment on the fact that nothing in these suits relates to any actions by Microsoft and they are essentially hardware related.

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My observations and opinions about IT are based on 40 years of use in science and technology and lately, in education. I like IT that is fast, cost-effective and reliable. I do not care whether my solution is the same as yours. I like to think for myself.

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