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Contract Enforcement On "third Parties"

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Hal
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Another person calling for a boycott of Potter books is Richard Stallman (of GNU fame), famous for wanting all software to be free. He thinks the publisher should not have the right to stop its books from being distributed before midnight today. According to him, assuming that they have such a right infringes upon the right of people to read stuff. 

Written by ???? Blankout.

To be fair, the 'you cant read it' ruling is disgusting. I can understand why the publishers are annoyed but they certainly dont have the right to do what they are doing here. It's stuff like this that actually makes Stallman's general positions seem slightly less loony.

Edited by softwareNerd
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I can understand why the publishers are annoyed but they certainly dont have the right to do what they are doing here.
What action by the publishers are you referring to when you say they "don't have the right to do what they are doing"? As far as I know, the only thing they have done is get books returned which have been sold in violation of their contract with booksellers; and they have had some similar injunctions served. They're completely within their rights in that. Are you referring to something else?
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What action by the publishers are you referring to when you say they "don't have the right to do what they are doing"? As far as I know, the only thing they have done is get books returned which have been sold in violation of their contract with booksellers; and they have had some similar injunctions served. They're completely within their rights in that. Are you referring to something else?

The publishers sought an injunction to make it illegal for people to read the books, or to display them in public. It's absurd that someone reading a book in public could be jailed.

At most, the booksellers could be punished for violating a contract. However the people who bought the books have done nothing wrong and there is no justification for not allowing them full use of the books they now own.

Edited by Hal
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However the people who bought the books have done nothing wrong and there is no justification for not allowing them full use of the books they now own.
The first part of the statement is true; the second is not. I refer you to the thread where transfer of title was discussed. Title was not properly transferred, regardless of the innocence of the buyer, because the book was sold in violation of the sellers contract. The seller had no right to sell the book.
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because the book was sold in violation of the sellers contract. The seller had no right to sell the book.

Indeed. Which is why the seller should be punished. However the buyer still has the right to own the book - it isnt stolen property and there is no reason to punish him for reading it.

Edited by Hal
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Whether the buyer knew it or not, he's a party in a crime, and as such must abide by the court's rulling. What you're saying is, for example, if someone sells me a stolen copy of the Declaration of Independence, that I have the right to do with it as I wish, since I purchased it in goodwill and had no idea it was stolen. Rather than "disgusting," I'd say this is justice.

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Well, these books werent stolen so the analogy fails. The buyer never signed a contract stating he wouldnt display the books in public, hence he has no obligations (the seller did however sign a contract and is hence presumably liable for breaching it).

On a sidenote, I wonder if the law would have punished people even if they never knew the books were being sold before the agreed time and didnt notice the announcements/injuction. Buy a book, take it home, read it, give it to a friend, then go to court. Good job with the freedom thing there Canada!

Edited by Hal
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No, the books were not stolen. Legally, the key question is this: is the buyer's title in the property defective?

It is possible that the buyer and the seller both acted innocently. That, in itself, does not make for a good title to property.

Take an example where I buy a condo which comes with a restriction that it will not be used as a retail space, or some other such restriction. Maybe I do not read the contract and do not know about it. Suppose I tell someone that they can come and use the condo as a shop. If they innocently do so, should the law uphold this as their right?

Just recently, there was a news-story of a grocery retailer that closed a store in a strip mall. The retailer vacated the store and was paid a certain amount of money by the landlord. However, when vacating, part of the agreement was that the landlord would not lease the space out as a grocery store. Some legislators (I think this was Illinois, but I could be mistaken) is now trying to pass a law saying that such covenants will not be enforcable. One of them was quoted as saying that people in that neighbourhood needed a grocery store.

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Legally, the key question is this: is the buyer's title in the property defective?

It is possible that the buyer and the seller both acted innocently. That, in itself, does not make for a good title to property.

Take an example where I buy a condo which comes with a restriction that it will not be used as a retail space, or some other such restriction....

There's something special about real estate covenants, that they are written down, public knowledge, and are essentially statutory restrictions, which puts them outside the purview of contracts. The buyer knows of the restriction, and either choses to accept it or not (and therefore does not buy the property). It is normal to consider whether there are covenants, when you buy real estate (even if covenants are themselves not common), and there may be a form that you have to sign to indicate acceptance of such restrictions.

In the case of the book buyers, we're dealing with Canada, so all bets are off when it comes to capitalist concepts. But otherwise, privity of contract should hold, meaning that the buyer has no obligation to the manufacturer, whom the buyer has no dealings with. Books are sold outright, and ownership is absolutely and unconditionally transferred to the buyer. There is not a single reason that the buyer should think that he does not own the book, and no serious question that the buyers actually own the book, once it is paid for. And, there is no evidence that the buyers accepted an obligation of their own (which might have been imposed by the owner at the time, the bookstore) to not read or discuss.

The actual details of that particular bookstore might be otherwise, but the bookstore owns those copies of the book, even though they have an obligation to not sell them until a certain time; so a failure on their part to uphold a particular contractual condition doesn't mean that they do not own the books, it just means that, well, I dunno what -- it might be something open-ended like "they must pay actual damages, as determined in a court of law, to the publisher". It's something that would have to be determined in civil court, if the publisher opts to sue the bookseller for a violation of the contract. Violation or not, the buyers do unconditionally own the books, and they have no contractual obligation to the publisher, or to the bookstore for anything beyond actually paying for the book. Of course, Canadian courts have the power to restrict a persons property rights.

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I think you're saying that the key legal distinction with real-estate is that the encumberances are known or readily knowable to the third-party buyer. So, in real-estate, the court assumes the third -party buyer could have the knowledge, and is therefore not "innocent/ignorant".

Does it follow that if one could prove that the buyers of the book knew about the restriction on its sale, then they should return it?

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I think ownership, and thus the right to sell and profit from sales, of the books is contingent on fulfillment of the terms of agreement. That is, the publisher sells the bookstore the books with the condition that the bookstore will sell them after said date, not prior. I don't think the bookstore owns the books with full rights until and unless they fulfill the terms of agreement.

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Does it follow that if one could prove that the buyers of the book knew about the restriction on its sale, then they should return it?
That's a good question, and it's not clear to me, but I tend towards saying "no". Legally speaking, the answer is straight up "no", because of privity of contract. Real estate covenants might be enforced extra-contractually, but then it's an improper use of state power to restrict free exchange of goods -- the central question is whether the buyer has agreed to the restriction. There's probably a line on the sale contract that explicitly accepts any covenants, at least on the standard contract in Washington, which puts this in the realm of contract law and not statutory stipulation. The contract does not state what the restrictions are but refers to "any covenants and restrictions", the referent of which is determined extracontractually. It's via the sales contract that you acquire the obligation, and it should be stated explicitly that any existing covenants "go with" the property.

I may know of some contractual obligation between a manufacturer and a seller, and presume that there is contractual consequence to the seller for not fulfilling that obligation. That's really not my problem: it may be that the seller has to pay a fee, or the contract might thereby be terminated, or the seller might get demoted to a "dispreferred customer" list. The point is that the seller might decide that he would rather opt for the contractual penalty, for the sake of whatever benefit he would get from the sale contra terms of contract. If I knew that the arrangement between the manufacturer and seller were such that the seller was acting as an agent of the manufacturer and that the seller did not own the goods, then I would have an obligation to not "buy" the goods, since I would know that I was not buying from the owner and that the owner did not consent to the sale.

There is the separate question of how right it is to encourage contract-breaking in any form. Apart from the legal issues, there is a basic cultural issue about a man's word counting for something. I would not want to deal with cheaters and dishonest people, so if I knew that in advance, I would go elsewhere.

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I think ownership, and thus the right to sell and profit from sales, of the books is contingent on fulfillment of the terms of agreement.  That is, the publisher sells the bookstore the books with the condition that the bookstore will sell them after said date, not prior.  I don't think the bookstore owns the books with full rights until and unless they fulfill the terms of agreement.
Here's a problem with that POV. You can't sell something that you don't own. If ownership is only defined contingent on some future act, then you don't actually own the goods, and therefore you have no right at all to sell the goods. Ever. You may have the right to act as an agent for the publisher. The agent would not own the book, and would be more like an employee of the publisher. But that's clearly not the case in this instance. It might turn out that the specific sales contract actually does confer "agent" status on the bookstore, and not "owner" status, but that would be very strange. The question is, very simply, what the contract says. If the publisher did not sell the books to the bookstore, then that's another matter, but that has to be determined by reference to the actual agreement. Ownership is not necessarily contingent on satisfying all conditions in a contract: remedies for contract violation do not automatically include invalidation of the sale (no rational person would knowingly sign such an agreement).
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I don't think it follows that if ownership is contingent on a particular term in the contract, whereby the buyer commits to some future act, that the buyer never, ever, actually owns the goods. Perhaps you can explain how this follows. In my view, if the publisher says, "until the said date, you do not have full rights (thus don't have ownership) of these books, but after said date, you attain full rights (thus full ownership)," then this is perfectly fine and you do eventually achieve ownership. For example, I don't see anything wrong with the publisher stipulating that ownership is contingent on a specific act at a specific point in time.

As for whether or not ownership of a product is contingent on satisfying all conditions in a contract, I never meant to say it was, nor that remedies for contract violating automatically include invalidation of sale. Let me be clearer. What I did mean to say is that perhaps the contract between the publisher and the bookstore stipulated that ownership was contingent on placing the sale on and not prior to said date. Not knowing the specific terms of the contract, I'm only making a reasoned guess, however considering the value the Potter people place on secrecy and such, I don't think it a highly unreasonable guess.

Oh, and I don't think "no rational person would knowingly sign such an agreement" consists of an argument. I can see someone in, say, desperate times, accepting such a contract. For extreme kinds of contracts which perhaps "no rational person would agree to," have a look at Nat Taggart's agreement to give his wife's honor over to a rival who loaned him some money. In terms of the Potter situation, perhaps booksellers know the profit is so great that they'd agree to terms such as "ownership is contingent on fulfillment of all terms."

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You can't sell something that you don't own. If ownership is only defined contingent on some future act, then you don't actually own the goods, and therefore you have no right at all to sell the goods. Ever.

Perhaps the contract stated that transfer of ownership was to be effective at the time of official release.

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Perhaps the contract stated that transfer of ownership was to be effective at the time of official release.
Perhaps: if we had the agreement to inspect, we could remove this from the realm of conjecture. Actually, my sister-in-law is in the trade, so I'll see if I can extract specific details from her.

[Ed: this was also intended to address Felipe's point -- it is logically possible that such a condition was included in the agreement, and if such a condition were included, then you're right that the bookstore did not own the books. Which still leaves the buyers free of obligation, and moves them more into the realm of innocent recipients of stolen goods]

Edited by DavidOdden
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There is one issue here that you guys are completely ignoring which unravels this question: intellectual property is not the same as physical property.

When you buy a book the part of it that becomes your property is the actual physical paper, ink, glue, cardboard. The ideas contained within the book NEVER become your property; you are allowed to partake of them because this is how the author makes her money, but they are not your ideas.

In the realm of philosophy blanket descriptions such as "property" to deal with the matter of rights are perfectly sufficient, however in the realm of actual legality the specifics of that type of property are extremely important and may lead to quite severe differences in legeslation between the types of property.

So, if the court had told the early buyers that they couldn't touch, throw, stack, or burn in effigy the books, the court would be infringing on the rights of those buyers to their property. However, in ordering that they couldn't READ them, i.e. they couldn't partake of ideas to which they had no right, it was acting legitimately to protect the nature of intellectual property.

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So, if the court had told the early buyers that they couldn't touch, throw, stack, or burn in effigy the books, the court would be infringing on the rights of those buyers to their property.  However, in ordering that they couldn't READ them, i.e. they couldn't partake of ideas to which they had no right, it was acting legitimately to protect the nature of intellectual property.

Even if the property they purchased was stolen or attained or put on sale by fraud?

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Felipe, you're still ignoring the point. The part of the book that is important to this discussion is the ideas inside it, and THAT is the part that was obtained fraudulently.

However, since you can't reach into other people's minds and prevent them from comprehending words on a page for a certain duration, a "hierarchy" of rights has to be developed by the court.

Sure, the buyer has rights to the physical parts of the book, however recognizing intellectual property means recognizing the fact that what makes a book valuable is not the physical parts of the book, but the ideas. The primary right here, the one that most needs to be defended, is the right of the author to determine the terms of use of what remains, even when conveyed to someone else, her property. So, in order to protect that property the court may do such things as order the books impounded until their intended release date. That being done, the court must ALSO protect the right of the buyers to the physical portions of the books, by making sure that the books are kept safe and returned in good order.

This is similar to how police investigating a crime scene can order even the owners temporarily off the property; justice MUST be served, and sometimes rights which apparently conflict must be carefully considered in order to preserve the ability to carry out said justice.

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I'm completely in agreement with you, and wasn't ignoring your point with regard to Potter.

My question was a broad one, where, say, the stolen goods weren't intellectual property. Suppose the stolen goods were bars of gold. Would the owners still then have the full rights to do as they wished with the gold?

I completely understand that the thing of value is the ideas contained within the book, and since burning it, flushing it, heck pissing on it does not involve transfer of the ideas in the book, then it's not necessary for the court to rule against such things. So what they did was ban acts which involve transfer of the ideas, like reading the book.

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When you buy a book the part of it that becomes your property is the actual physical paper, ink, glue, cardboard.  The ideas contained within the book NEVER become your property; you are allowed to partake of them because this is how the author makes her money, but they are not your ideas...

So, if the court had told the early buyers that they couldn't touch, throw, stack, or burn in effigy the books, the court would be infringing on the rights of those buyers to their property.  However, in ordering that they couldn't READ them, i.e. they couldn't partake of ideas to which they had no right, it was acting legitimately to protect the nature of intellectual property.

Howzzat? When you buy a book, you own the physical object and you may do anything with that object, including partaking of the ideas (to use your very words) by reading them. IP law prohibits you from reproducing these ideas or doing other things that require you to own the idea, but it does not prohibit you from grasping the ideas. Consider the fact that as long as the copyright is valid, in order to copy the ideas (see the DVD piracy thread of this morning), you must have the permission of the owner. You don't need any special contract -- this is just how IP law works. But if reading a book required permission of the copyright owner, then we would all be criminals because I'm danged sure that nobody here has actually gotten the permission of the Estate of Ayn Rand to read ITOE or CUI or any of her other works. You cannot sue a person for copyright infringement because someone read a book without permission. Although it's a clever argument, one which I hope nobody ever tries to press in court.

[ed: Oh, wait. You must have just made a typo. You must have meant to say "you are notallowed to partake of them", otherwise the statement doesn't make any sense. But my point that copyright protection does not constitute a ban on reading still stands]

Edited by DavidOdden
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I did not make a typo, and the statement does make sense; when you buy a book you are basically paying the author (through an intermediary) for permission to read her ideas; that's why a book with writing in it costs so much more than a blank one, just as when you pay for software you are allowed to use it.

In the case here, J.K. Rowling and her publisher had not given ANYONE permission to read her work yet; they were not yet accepting that exchange of value yet. So the court did act correctly to protect her right to permit/not permit people to read her book.

If we were to apply this privity of contract thing to intellectual property, no one would be able to sell books, software, music, or what have you retail, because the end buyer would be immune to the conditions of intellectual property. Sure, the SELLER agreed that the price for each copy of MS Office would be $249 dollars, and that sum of money would only allow you to install it on one machine, but the BUYER never agreed to that . . . (In fact, this has kind of been the case, which is why we have these obnoxious license agreements any more).

If the creator of the intellectual property wants to dictate who can obtain and use it and what for, that's their right.

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In the case here, J.K. Rowling and her publisher had not given ANYONE permission to read her work yet; they were not yet accepting that exchange of value yet.  So the court did act correctly to protect her right to permit/not permit people to read her book.
As I pointed out, no permission is required. Do you have your permission slip from the estate of AR, or any other author, to read the books that you own? Of course not: permission to read is implicit in ownership of a book.
If we were to apply this privity of contract thing to intellectual property, no one would be able to sell books, software, music, or what have you retail, because the end buyer would be immune to the conditions of intellectual property.
That's more or less correct if there were no such thing as copyright law, which is why IP law cannot be replaced with contract law (much as I used to hope it could be). Even without any contract at all, you are legally (and morally) bound to respect the specifics of copyright law, which prohibit stealing the idea by unauthorized copying. This is totally independent of the manufactured object that contains the IP. Separately, there is law regarding the physical object, e.g. you can't steal the book, and you must do whatever is stated in a contract that pertains to your gaining possession of the book. Copyright law provides no basis for prohibiting a person from reading a book or looking at a painting (regardless of whether they own it). Criminal law does not provide any basis for such a prohibition. A contract might, but the contract is only between the publisher and the seller.
Sure, the SELLER agreed that the price for each copy of MS Office would be $249 dollars, and that sum of money would only allow you to install it on one machine, but the BUYER never agreed to that . . . (In fact, this has kind of been the case, which is why we have these obnoxious license agreements any more).
Because to install it on more that one machine is to make an unpermitted copy, and this is what is covered by copyright law. To reiterate, you may read the book, you just may not copy it. That is what copyright law is about (that's actually why it's called "copyright").

(I will set aside the fact that software is usually different, because you do not buy a copy of the software, you license it, which is why these programs come with these tiny-print contracts, since they do impose contractual conditions on the buyer that are above and beyond what's covered by copyright law. I think it would be pointless hairsplitting to delve too deeply into the quirks of software licences, if our interest is ordinary book-buying).

If the creator of the intellectual property wants to dictate who can obtain and use it and what for, that's their right.
Such a condition on the buyer's use of his property has to be mediated by contract, and the conditions bind only the offeror and offeree. Only via statutory restrictions (copyright law) can you impose an obligation on a third party. You cannot impose a condition "this book may only be read by men" via copyright law.
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Just because you were sold a book before its release date, that shouldn't make you a criminal. It doesn't even make the bookstore a criminal.

I worked for a Borders bookstore. If it's proven that your store sold a book before its release date, your store at most may have to, by contract, pay a fine to the publisher, at worst you'll be placed low, low on the priority list of stores to receive in the future what's called "laydown" copies of bestsellers--books that you must keep in unopened boxes in your storeroom until the release date.

If bookstores could be criminally prosecuted for early sales of laydown titles, I don't think you'd see very many major bookstores accept shipment of such titles. Can you imagine a Borders manager being held criminally responsible for his staff selling a Harry Potter book before the release date? I don't think so. I even doubt whether shipper's would agree to ship them before the release date. Depending on the severity of the punishment, those books might sit in the publisher's warehouse until UPS agreed to pick them up on the release date--for fear of criminal prosecution.

Supposing a book is sold before its release date, I don't think that the buyer has the right to keep the book, because the book was sold to that person in violation of the agreement between the store and the publisher. The publisher has the right to demand the book back.

However, I don't think the publisher has the right to legally prevent you from reading that book, unless they print on the book somewhere that you can't read it until a certain date--which would be ridiculous. It is unreasonable to expect a buyer to not read his book. And it is also unreasonable to expect a buyer to check the nightly news for information about a business contract between a publisher and a bookstore. So the buyer might be completely ignorant of when the actual release date was. It is reasonable to believe that when a bookstore sells you something, that bookstore has permission to do so from the publisher. In fact, most people don't even think about things like that.

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