The Licensing Corner

• Jurisdiction: United States,Federal
• Author: Sean Hogle
• Publication year: 2021
• Citation: Vol. 46 No. 3

THE LICENSING CORNER

Sean Hogle

Rooney Nimmo PC

THE FIRST SOFTWARE LICENSE AGREEMENT IN HISTORY

In the mid-1960s, software began its separation from hardware in its development and exploitation. Stand-alone software programs became valuable. The nation's first copyright registrations for software as independent literary works were starting to gain acceptance by the US Copyright Office.

In 1969, IBM's legal department posited that copyright law most likely applied to protect software. History proved IBM correct with subsequent caselaw and, ultimately, the passage of amendments to the US Copyright Act adding computer programs to the definition of works protectable by copyright.

During this time, however, the legal landscape was far from certain. The lawyers at IBM decided that the best way to monetize software apart from hardware was to avoid a "first sale" loss of copyright protection. The first sale doctrine creates an exception to the copyright owner's exclusive reproduction right; once a tangible copy of the work is sold, the copyright owner's rights are exhausted as to that copy, and the owner of that copy can resell or dispose of it at will.

By licensing, and not selling, the software pursuant to a written license agreement, this exhaustion of copyright can be avoided—or so IBM's lawyers believed. Hence, the 1969 License Agreement for IBM Program Products was born.¹ This became known as history's first software license.² This article explores its more notable features.

The agreement itself is four pages, with an exhibit that described in greater detail the software and materials that were the subject of the license. It called for the application of New York law, but did not specify a forum for dispute resolution. The agreement applied to the software disclosed in the exhibit, as well as any programs the licensee ordered going forward.

Under the license, IBM granted to the licensee a non-exclusive and non-transferable license to use the software in machine-readable form, on designated (by serial number) CPUs, and in printed form. Notably, IBM defined "use" in terms of the reproduction right conferred by copyright law: "[U]se is defined as copying any portion of the licensed programs'...instructions or data from storage units or media into the CPU for processing."

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The license granted no rights of distribution, performance, or display—only this right of "use." That this right of use is expressed via the exclusive right of reproduction, at the processor level, is emblematic of IBM's philosophy of tracking the contours of copyright law in the terms of the...