"If the commercial only clause is illegal, its removal from the EULA will not really change anything. To begin with you are still going to have to purchase this pack from Morris and comply with the rest of her copyright terms if you want to create Freebees from this Merchant Resource. Downloaders of those Freebees will not be able to legally redistribute any part of Morriss package." Read the above carefully Spiritbro77 then you might understand why to redistribute commercially or redistribute the pack as a freebee you have to buy it from Morris in the first place. and as to: "Morris Wrote: The freebie in question, had very little alteration done to the head, and the body was not altered at all. Therefore any one of the 700 people that downloaded it, in theory, could turn around and sell it in the marketPlace without paying a cent for the kit itself. While all those merchants that bought it, get screwed because if they had just waited for it to go into free stuff, well then they would not have had to pay good money for the kit. Now the damage has been done and there are over 700 people basically in possession of a texture kit that they didn't have to pay for, while all the other merchants that paid hard earned money and respected the extra clause I added to the pack, kinda get the raw end of the deal. I actually feel very bad for my customers who purchased the kit ;-(" The problem lies with the vague readme included by Morris in her pack: "Take some pieces here and there add them to your own textures to add detail. Or use these textures as a base and add new photos over them, to create something uniquely new and uniquely your own style! . You may not distribute these original files as is, they must be altered to add your own style ;-). Morriss readme is unclear as to exactly what percentage of the package can be redistributed (with the exception of total redistribution) she is allowing and encouraging the redistribution of elements of it for further product. I feel for her plight but this is totally the result of non-legal people trying to write legal EULA's. Welcome to the real world of commerce.

Keihan please read

3.4 Framework for evaluating licensing restraints

"In the vast majority of cases, restraints in intellectual property licensing arrangements are evaluated under the rule of reason."

No problem but further down it says:

In some cases, however, the courts conclude that a restraint's "nature and necessary effect are so plainly anticompetitive" that it should be treated as unlawful per se, without an elaborate inquiry into the restraint's likely competitive effect. Federal Trade Commission v. Superior Court Trial Lawyers Association, 493 U.S. 411, 433 (1990); National Society of Professional Engineers v. United States, 435 U.S. 679, 692 (1978). Among the restraints that have been held per se unlawful are naked price-fixing, output restraints, and market division among horizontal competitors, as well as certain group boycotts and resale price maintenance.

Seems to me they are saying that resale price maintenance is per se unlawful. That is generally the case elsewhere. If it were not per se illegal manufacturers would be able to stop retailers from having sales and selling at discounted prices. Or indeed stop consumers from reselling their cars and houses into the second hand/used market

Message edited on: 04/22/2005 08:42

Jon I have purchased 13 products made by Morris at Renderosity alone. I too happen to believe that, besides a talented artist, she's is also a respectful merchant and a generous person. This issue is not about Morris, it is about a business practice which some of us believe is illegal i.e. the inclusion of a "commercial only" clause in the Readme. I am questioning this because I believe it is legal timebomb which, if it goes off, will be seriously damaging to Morris and all the other Merchants using it and to Renderosity itself.

Keihan wrote post #154
Since Morris's License promotes competition in it's scope, Antitrust laws do not apply. The limitation she has put in place, in fact, is lawful in that it promotes the commercialisation of the product in derivative form which goes even well beyond what she has to allow for her intellectual property. In the end, she could, instead, make everyone pay royalties, but she doesn't. I find this more than fair.

Post #155
Anyone who wishes to read everything on intellectual property and antitrust can follow the above link.
It is very lengthy and I see no reason "why" this discussion should go any further.

First of all I want to thank keihan for this extremely useful link to the US Dept of Justice and its intellectual property rights section.

I believe, however, that the Dept of Justice makes it clear that the EULA limitation to Commercial only redistribution of Morriss product is illegal.

If you scroll back to my post #96 you will see I cited very similar Australian law and made the point that Note above particularly: price fixing and resale price maintenance, and placing limitations on resellers.
In post #124 I found out that US law tends to mirror world-wide law in this context and made the point Note particularly "Resale price maintenance is also per se unlawful.

Now I want to draw your attention to section 5.2 on Keihins Dept of Justice link: http://www.usdoj.gov/atr/public/guidelines/ipguide.htm

If you scroll down to section 5.2 you will see:

5.2 Resale price maintenance
Resale price maintenance is illegal when "commodities have passed into the channels of trade and are owned by dealers." Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373, 408 (1911). It has been held per se illegal for a licensor of an intellectual property right in a product to fix a licensee's resale price of that product. United States v. Univis Lens Co., 316 U.S. 241 (1942); Ethyl Gasoline Corp. v. United States, 309 U.S. 436 (1940).(34) Consistent with the principles set forth in section 3.4, the Agencies will enforce the per se rule against resale price maintenance in the intellectual property context.

And in case people think that IP property is any different in law to any other property see 2.1

2.1 The Agencies apply the same general antitrust principles to conduct involving intellectual property that they apply to conduct involving any other form of tangible or intangible property. That is not to say that intellectual property is in all respects the same as any other form of property. Intellectual property has important characteristics, such as ease of misappropriation, that distinguish it from many other forms of property. These characteristics can be taken into account by standard antitrust analysis, however, and do not require the application of fundamentally different principles.

Now lets examine this in the context of what happened with Morriss Merchant resource pack and what happened when Digital Dreamers posted a freebee texture kit based on this pack and 3 other Merchant Resource kits.

First of all Digital Dreamers was a licensed owner of the Merchant Pack having bought it in the RMP. That licence entitled DD to redistribute in part that pack as part of creations made by DD so long as DD abided by the following copyright restrictions:
Take some pieces here and there add them to your own textures to add detail. Or use these textures as a base and add new photos over them, to create something uniquely new and uniquely your own style! . You may not distribute these original files as is, they must be altered to add your own style ;-).

While Morriss readme is unclear as to exactly what percentage of the package can be redistributed (with the exception of total redistribution) she is allowing and encouraging the redistribution of elements of it for further product. Morris then placed a further stipulation on the product saying, You may not use these files to create textures for free.

This is the bit that has us where we are and it seems from section 5.2 Resale price maintenance that this practice is not legal under US and world-wide law. It has been held per se illegal for a licensor of an intellectual property right in a product to fix a licensee's resale price of that product.

And if anyone thinks to nit-pick what a price is go look at Dazs Victoria 3 base figure (http://www.daz3d.com/shop.php?op=itemdetails&item=1098) where you will see:
Was: $39.95 On Sale: FREE! Save: $39.95 (100%).

Price can be $0.00 which is Free. Price does not have to be money it can be the price for this product is that you sign my guestbook, or say out loud twice John Doe is a great guy or anything else you want to think of.

Nor can one make any real distinction between RMP providers and Freebee providers. They are all manufacturers supplying to the Poser consumer market. Some produce 100% original items and others produce items that are partially based on licensed redistributable products from fellow producers in the RMP and elsewhere. Some produce goods for Free and others charge. Some produce both Free and Retail goods.

In limiting products that could be redistributed to Commercial only or non-Free Morris fixes the licensees resale price of that product to anything but FREE or anything but $0.00. And that is illegal under section 5.2.

Now to all the doom and gloom prophets:
This is not a bad thing for Merchants or the RMP. It is far better that this matter is thrashed out and clarified before somebody decides to take the issue to a lawyer and to a court and possibly expose Renderosity and its Merchants to hefty legal costs. It is far better that People are aware of what the law says and act within it to protect themselves more that anything else. This is not about bashing Merchants or restricting commercial activity or in any way getting at them or limiting their activity.

If the commercial only clause is illegal, its removal from the EULA will not really change anything. To begin with you are still going to have to purchase this pack from Morris and comply with the rest of her copyright terms if you want to create Freebees from this Merchant Resource. Downloaders of those Freebees will not be able to legally redistribute any part of Morriss package. So what in Gods name is the big problem for Merchant Pack producers in all of this?

STORM - who is now cutting the grass ;0)

Spanki wrote:
"There you go again. Why do you insist on labelling this as a 'redistributable' product? You're picking words out of the context they were used in."

A commercial product sold in the RMP falls into 2 categories

1. No redistribution of any part of the product (most products here).
   2.Redistibution in some form or other (merchant resource packs).

"There you go again. Why do you insist on labelling this as a 'redistributable' product? You're picking words out of the context they were used in."

From Morris's own readme:
"You may not distribute these original files as is, they must be altered to add your own style ;-)"

That allows "redistribution" of the files in an altered state. Why don't YOU get into context and try and understand the arguments before labelling everyone else's arguments as "out of context."

"Back to the subject at hand, I think we've all already agreed (many messages ago) that as far as the legality of the subject can be argued either way (depending on what or who you care to believe) and would not, could not ultimately be answered until a case like this was brought to trial. If you care to keep arguing that point, knock yerself out ;)."

No, we have not agreed that, we are still exploring and trying to hone down what the law says, then we will move to case law to see if any further light can be shed on this matter and then, if the area is still grey, we will agree that it is open to dispute in a court. Lots of legal opinion might change that. Unfortunately, living in Ireland, I do not have access to US legal opinion, but I am working on that. ;0)

"What I'm personally more interested in are people's principles/morals/positions on the subject. I find it facinating some of the positions I've seen here in regards to fairness and what rights they think they have to do with other people's IP... quite baffling, actually ~shrug~."

Pretend you are a customer or consumer asking questions about what the law says about the way commercial markets should and must operate. It might then become clear to you why we are continuing to chew on this issue.

Anyway, time for my bed.
'night

"You can't pick and choose which parts of the license 'seems fair to you'."

Neither can a retailer pick and chose which market a customer - who purchases a redistributable product (or one containing redistributable elements)- sells into or for what price (if any) he/she resells or redistibutes that element of the product that he /she is licenced to do so. Attempting to do so (and make that part of a licence) is a restrictive practice and illegal most places on the planet. It applies to consumer goods sold and not to stuff given away freely.

Arcadia said it for me Spanki. The whole world changes when you start to charge money for products. That fact immediately subjects you to a whole raft of law designed to protect the free market and the consumer. It does not matter how big or how small a producer you are.

Keihan, I would love to hear what your Professor in Criminal law who specialises in Copyright, Trademark and Business Law at the Purdue University has to say on the subject. Perhaps you can give us his name and we can contact him directly?
BTW I live in Ireland so, forgive my ignorance, I have not heard of the Purdue University, which state is it in?

" The courts would laugh at this case if anyone tried to take this into a courtroom. The court would most certainly rule on the side of Morris because she is not a powerful corporation, but an artist trying to make a living out of what she does best"

There I think you totally misunderstand the law and often why cases are taken. A case often depends on the determination of an individaul to take it in order to get to court. In addition, many cases are taken to test law and how it might be interpreted and implemented because those cases contain elements that might have far reaching consequences, even if the issues at hand are minor.

Secondly, in a case before a court, the court does not rule on the basis of weather you are a big corporation or an individual, or a nice person or an unlovable person, the courts rule on matters of law. Weather you are powerful or not has nothing to do with the legal ruling. That fact may have some part to play in the penalties being handed down. i.e. if you are a big powerful corporation like Enron doing wrong, you are going to get a big powerful penalty.

You have not made a case to rest keihan. Go back to post #124 and see ""Resale price maintenance is also per se unlawful" and that is just the start. As for price fixing let me see what I can dig up. ;0)

I have no real experience of US law but I think you should read this keihan:

"5. General Prohibitions

Sherman Act 1 states that "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is declared to be illegal." Sherman Act 2 makes it unlawful to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations." The Federal Trade Commission Act 5 prohibits "unfair methods of competition in or affecting commerce." #

If it only applies to Corporations whay are they penalties for individuals. I will continue to dig to see how Sherman has been interpreted in the various states.

keihan wrote:
"I can't believe that some would bring Morris down like this. I am appalled by this behavior. You all are digging for dirt because you are so hell-bent on drama I guess.

Before you all go off starting to intrepret laws to your own satisfaction (or to hear your own voices) perhaps you should talk to a bonafide attorney before demonizing someone or their intent. Ridiculous... is how some of you come across. "

Why are you personalising a discussion on law into an attack on Morris. How many times do you have to hear that this has nothing to do with her, but is a discussion on legal business practice. BTW I have also bought items from you keihan and I have no complaints about them.

Perhaps instead your reaction to these questions might be seen as the merchants ganging up on customers that question certain business practices among merchants and their EULAs? Morris herself said in post #24 "I added the clause to not allow my texture kit into free stuff, by the way I am NOT the only merchant to do this,"

As for asking a lawyer, that was already done way back in post #41 by randym77 who apparently confirmed our views. But that was not good enough, so I at least am going looking for the law on this matter.

It also looks like being based in the US may not be a defense if you are selling into the EU like the RMP and other Poser outlets.(I am just flinging this stuff out as I find it in no particular order)

It may well be possible that an EU customer of the RMP could have his local enforcement officer get his American counterpart to take such a case in the States on the basis of a complaint from that customer.

From http://europa.eu.int/comm/competition/annual_reports/1998/en/_007_013.pdf

Bilateral cooperation with the United States and Canada

The European Union has in recent years been actively advancing bilateral cooperation in the field of competition with its main trading partners. The best example of such cooperation is provided by the agreements concluded with the USA, the first of which was concluded in 1991 and entered into force in 1995.When this first agreement was conceived, the EU and the USA were witnessing a rapid growth in the number and importance of transatlantic commercial transactions and, at the same time, coming to recognise the dangers posed by the emergence of cross-border anticompetitive practices. There was consequently a common recognition of the importance of avoiding conflicting decisions, and of coordinating enforcement activities to the extent that this would be mutually beneficial.

In substance, the agreement was designed to facilitate logistical cooperation between the Commission, on the one hand, and the US Department of Justice or Federal Trade Commission, on the other. It provides for: the reciprocal notification of cases under investigation by either authority, where those cases may affect the important interests of the other party; the exchange of non-confidential information between the authorities; the possibility of coordination by the two authorities of their enforcement activities, and of rendering assistance to each other; and, finally, the possibility for one authority to request the other to take enforcement action (positive comity), and for one authority to take into account the important interests of the other party in the course of its enforcement activities (traditional comity).

This amounts to a commitment by the EU and the USA to cooperate with respect to antitrust enforcement, and not to act unilaterally and extraterritorially unless the avenues provided by comity have been exhausted. This commitment has been strengthened by the positive comity agreement concluded with the US in 1998, which further reinforced the provisions contained in the 1991 accord. The new agreement provides that each party's respective authority will normally defer or suspend its enforcement activities in respect of anticompetitive practices which occur principally in, and are directed principally towards, the other party's territory, where that other party is prepared to deal with the matter.

And if people don't think this is a serious issue for all concerned read this from the same link above:

"11. Systems for administrative and/or legal sanctions (including possible civil damages)

Criminal penalties: criminal violations of the Sherman Act are punishable by fines of up to $10 million for corporate defendants and $350,000 for other defendants. Fines may also be set at double the gross amount gained from violation of the law or lost by the victim. Criminal violations of the Sherman Act are also punishable by up to three years' imprisonment."

And there is more. This is for real people and not some academic talking point.

Spiritbro77 wrote.
"How is trade being restricted? Buy another damn pack if you don't like her terms.To tell the truth, I hope she pulls the kits. Then all of you will have won. The horrid pack will be off the market and the terrible EULA will haunt you no more."

You are still misunderstanding me.
I am not interested in this pack.
I am not a merchant and I have no interest in producing freebees from this pack.
I am not interested in purchasing other Merchant Resource packs.
I have purchased many of Morris's products and I am very happy with them.
She is a fine merchant and a fine artist. I have no axe to grind with her or any other merchant.
I am not seeking to have her product removed from the marketplace.
I am not trying to damage the RMP. So, leave "me" as an issue out of the debate.

I entered this whole debate because of the first few posts in this thread, because I perceived there what I believe to be a Restrictive Practice under Business Law regarding the "Commercial only" clause in this particular EULA. If I am correct, this is illegal. And it is in the interests of the Merchant, the RMP and consumers that this clause is removed if it is illegal. Nothing more, nothing less.

If the clause is illegal, it does not matter if it is the only commercial item or one of thousands that is utilising it. It has nothing to do with weather alternatives that do not have this clause exist in the marketplace. It has to do with business practices and weather they are legal or not. Simple as that. And that is, for the final time, my only interest in this whole issue.

STORM

I am digging in the USA and what I am finding so far looks like the USA has similar legislation to the rest of the world.

here we go:

http://www.apeccp.org.tw/doc/USA/Policy/uspol1.htm

"COMPETITION POLICY United States of America.

1. Legal Framework

The three principle federal antitrust laws are the Sherman Act, 15 U.S.C. 1-7; the Clayton Act, 15 U.S.C. 12-27; and the Federal Trade Commission Act, 15 U.S.C. 41-51. Numerous other federal statutes, however, govern the antitrust treatment of particular sectors of the economy. Finally, 49 states have enacted antitrust laws, which are similar to the federal laws.

1. Prohibited Behavior, including Definitions

The broad terms of the Sherman Act, which have been read into section 5 of the FTC Act, prohibit agreements or understandings, express or implied, between two or more persons or firms that unreasonably restrain trade in any product or service. To determine whether an agreement unreasonably restrains competition, courts have applied one of two methods of analysis, depending on the type of agreement at issue. Certain agreements (called "per se" offenses") are deemed to be so inherently anticompetitive that they are always illegal, regardless of the intent of the parties or the actual effect of the agreements on competition. These agreements include agreements between competitors to fix prices or the terms and conditions of credit and sales, to allocate customers or territories, not to deal with any person or persons ("group boycotts"), and, in certain circumstances, to sell one product conditioned on an agreement by the buyer to purchase a second, distinct product ("tying"). Resale price maintenance is also per se unlawful.
The offense of unlawful monopolization has two elements: possession of market power in the relevant market, and the willful acquisition or maintenance of that power, as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident. Market power has been defined as the power to control prices or exclude competition, and market share is the most important factor in measuring market power, with shares exceeding 70 percent usually considered sufficient for a finding of market power, and shares of less than 40 percent generally insufficient. For the second element, courts have required a showing of anticompetitive or predatory conduct -- efforts to exclude rivals on some basis other than efficiency. Examples of such conduct include below cost-pricing, filing of baseless litigation against competitors, or denial of access to an essential facility.

The offense of attempted monopolization has three elements: specific intent to control prices or destroy competition, predatory or anticompetitive conduct directed at the unlawful objective, and a "dangerous probability of success" in achieving a monopoly in the relevant market.

1. Exceptions to Prohibited Practices

Potentially anticompetitive practices which do not fall into the per se category (exclusive dealing or requirements contracts and other non-price vertical restraints, cooperative marketing activities, etc.) are analyzed under a "rule of reason" standard, which requires an in-depth analysis of the effect on competition in the relevant market. In rule of reason analysis, competitive intent and effect are weighed along with the business justification of the challenged activities to determine their legality. It should be noted that a rule of reason analysis does not "exempt" prohibited conduct, but rather determines whether conduct which is not "per se" prohibited should fall within the prohibitions of the antitrust laws. "

""""Note particularly "Resale price maintenance is also per se unlawful.""""""""

This mirrors the Australian law quoted earlier.
I have just started to dig

If anyone else wants to try just type in "restrictive market practices usa" and see what comes up.

Spiritbro77 wrote: "So Storm, according to you, any restriction on terms of use concerning merchant resource packs is a restriction of trade? I could take the Morris pack, relable it and sell it as my own? If not, that would be restricting trade right?" Why do you persist in misunderstanding what I wrote and twisting what I have clearly explained. 1 If someone abides WITHIN the COPYRIGHT Restrictions of the redistibutable package (Merchant Resource), whatever that limit is in percentage terms set by the seller, they can redistribute the package within the copyright restrictions. If there is a 100% restriction they can not. 2 "Commercial only redistribution" is not a copyright restriction or cannot be seen as an enforcable copyright restriction because it conflicts with Business Law on Restrictive Prectices. The artist has already given redistributive rights to a particular percentage of the artwork to whoever buys it. Attempting to restict into which market segment that "legally redistributable" ammount is distributed is illegal under Business Law. Copyright does not enter into the argument.

"My best guess is that when Copyright and Contract areas overlap and/or conflict like this, only a legion of lawyers has a hope in Hades of ever sorting the two out."

From what I understand the business law overides all contracts when it comes to such issues. Copyright law is not involved unless the restriction is exceeded

Message edited on: 04/21/2005 12:20