Is Price Discrimination in the Software Industry legal in the US? (Sneakers resale software case) There is a software manufacturer that advertises their product for $599 on their website. Conveniently, the software is always out of stock, while the manufacturer “backdoors” some licenses to a selective group of users, at a price of $6,500. Then, they raffle a few licenses at the advertised price among thousands of users. I feel like this is a clear and blatant violation to fair competition but I am by no means an expert. What strikes me immediately, though, is that the Robinson-Patman Act deems illegal the “price differences in the sell of identical goods that cannot be justified on the basis of cost savings or meeting a competitor’s price.” As software licenses are identical, I believe the act is violated. I have two questions: what other regulations this practice might be violating? is this something I can report to the FTC or other authority? do I need a lawyer to do it? Edit: It seems the post has been popular and there are additional questions as for why manufacturers do this. There is a whole secondary market for this type of software. Users buy and sell licenses at way-above-retail prices. For the software in turn, Nyte Software, retail is $599 and resell price has reached $7K at some point, in secondary markets. Manufacturers sell the copies at resale value to a select group of users, under strict rules imposed to the users on the prices they can resell the software at, all while the software is labeled as &quot;out of stock&quot; in their webpage (why keep the advertising of $599 in their webpage, right?). In this way, manufacturers control the market prices, while they cash through increasing the supply. Additional competition questions that arise are about price manipulation through social media (manufacturers often intensively advertise the success of the software in social media to drive prices up, before selling), unfair product sale (cherry-pick buyers) and price control (strict resale rules). In this blog post, there is an example that shows the different things these software manufacturers do, relating to their software distribution and market practices. In fact, even when they sell de-facto at a price of $6500, they might send different invoices with the same description. This part also seems against fair competition.
The US federal Robinson-Patman Act applies only to a sale of tangible goods to different retailers at different prices in interstate commerce. See &quot;Robinson-Patman Act&quot; at investopedia. What is described in the question is not a sale of tangible goods, nor is it a sale to different retailers at different prices. Bait-and-switch selling schemes are prohibited by laws in most US states, and by US FTC regulations. But the fact pattern described in the question does not seem to exactly fit the usual definition of a bait-and-switch selling scheme. Knowingly advertising a product with no intention of selling it at the advertised price might well constitute false advertising, at least in some jurisdictions. It is not clear, at least to me, from the question why the company acts as it does. What benefit does it hope to gain from advertising the lower price? Intention is often important in bait-and-switch and false advertising cases.
"There's no ... contract" - wrong! The emails are the contract, see What is a contract and what is required for them to be valid? If you didn't agree on which laws will apply then that is a matter for the court to determine. In general, they will tend to look at where the bulk of the work was done - since you are being charged I assume the work was done in the UK so probably UK law applies, noting that the UK is actually 3 different jurisdictions (England &amp; Wales, Scotland and Northern Ireland). That said, many jurisdictions have non-excludable laws around contracts, particularly consumer contracts that apply irrespective of the substantial law applying to the contract. It is therefore possible that you apply English contract law subject to, for example, Australian Consumer Law. Usually any consumer protection law in the vendor's jurisdiction will also apply. General contract law dictates that where a price was not agreed a reasonable price must be paid. If its reasonable that the editing should have been included in the original price charged then you don't have to pay more but if it isn't then you have to pay a reasonable amount for it. There is generally no requirement for estimates or any other method of determining the price - you just have to do what's reasonable. However, consumer protection law generally imposes more obligations on a business than general contract law. It is likely that your contract is ambiguous - courts will endeavor to fill in any ambiguities to make the contract work. techniques include read in implied terms to give "business efficiency", from custom or business usage (e.g. if particular industries typically deal with particular issues in particular ways), from previous dealings (i.e. what the parties have done in the past), from statutes, whatever works to resolve uncertain, meaningless or ambiguous terms, from the express words used or from the nature of the contract or from the common intention of the parties (i.e. the court might ask you what you meant). "Breach of contract" is a very broad term - it simply means that one of the parties hasn't done what they were required to do and allows the other party to sue for damages.
The customer will own exactly what is stated in the contract. As the contractor, who wants to be able to reuse code (which is in everybody’s best interest) you want to keep the copyright, with the client having the license to use the code any way they want. If the customer wants the copyright with the contractor losing all rights, that will be in the contract, and it will cost. If the contractor produced an application that use lots of domain knowledge supplied by the client, that will often not give the client copyright, if the contractor is the one producing the actual expression of that knowledge by translating knowledge into code. If the client provides knowledge that is actually a trade secret, then an NDA should be signed. And again, it’s contracts. The client can put into the contract that their domain knowledge must not be reused. That is quite reasonable. The client might add to the contract that the contractor will not write software for any competitor. That is legal if it is in the contract, but it will cost.
You'll want to read the actual licenses yourself and understand what is required. If you don't understand, then you'll want to consult an attorney. But neither of these licenses are all that complex in my opinion. MIT: Permission is hereby granted, free of charge, to any person obtaining a copy of this software and associated documentation files (the &quot;Software&quot;), to deal in the Software without restriction, including without limitation the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the Software, and to permit persons to whom the Software is furnished to do so, subject to the following conditions: The above copyright notice and this permission notice shall be included in all copies or substantial portions of the Software. Apache 2.0: Redistribution. You may reproduce and distribute copies of the Work or Derivative Works thereof in any medium, with or without modifications, and in Source or Object form, provided that You meet the following conditions: (a) You must give any other recipients of the Work or Derivative Works a copy of this License; and (b) You must cause any modified files to carry prominent notices stating that You changed the files; and (c) You must retain, in the Source form of any Derivative Works that You distribute, all copyright, patent, trademark, and attribution notices from the Source form of the Work, excluding those notices that do not pertain to any part of the Derivative Works; and (d) If the Work includes a &quot;NOTICE&quot; text file as part of its distribution, then any Derivative Works that You distribute must include a readable copy of the attribution notices contained within such NOTICE file, excluding those notices that do not pertain to any part of the Derivative Works, in at least one of the following places: within a NOTICE text file distributed as part of the Derivative Works; within the Source form or documentation, if provided along with the Derivative Works; or, within a display generated by the Derivative Works, if and wherever such third-party notices normally appear. The contents of the NOTICE file are for informational purposes only and do not modify the License. You may add Your own attribution notices within Derivative Works that You distribute, alongside or as an addendum to the NOTICE text from the Work, provided that such additional attribution notices cannot be construed as modifying the License. Nowhere does either license require you to publish your application's source code, even if your application is directly based on the original code.
The contract between you and the company is for the supply of the goods. How they get them to you is irrelevant; they may have them in stock, or they may order them and ship them on, or they may send an order to the factory to ship them directly to you. There is nothing saying that they have to be in stock anywhere. The law you refer to says that they must ship within 30 days unless they provide a specific date. In effect "shipped within 30 days" is an implicit term in the contract. If after 30 days they have not shipped the goods then you are entitled to rescind the contract (i.e. get your money back). Where things get interesting is if they took your money knowing that they would not be able to ship within 30 days, or at least being reckless (i.e. not caring) about it. It does rather sound like this may be the case. If so then it may rise to the level of fraud, and the FTC or state authorities may take action. Try writing to the FTC. A single event won't get any action, but if they get lots of complaints then they might.
In general, using content provided by another who incorrectly posted it under a permissive license, such as a CC license, does not grant a valid license from the real copyright holder. That is, if A writes some code (or a song, or creates an image, or whatever else), it is protected by copyright. If B then posts it to the web, with a statement that it is released under a particular license, without having obtained permission from A, then B's &quot;release&quot; is of no value, because B had no rights to grant. If C downloads and uses this content, relying on B's license, then A could take legal action against C. C would probably be considered (in the US) an &quot;innocent infringer&quot; which reduces the minimum statutory damage amount, but does not otherwise change C's legal position. A could, if it chose, bring suit and possibly obtain a judgement including some damages. But to return to the practical case of code posted on one of the SE sites. Given the comparatively short code sections usually posted, and that they do not usually form a complete working program, and given further the stated educational purpose of SE, it is likely that in US law such a posting would constitute fair use, and in the law of other countries fall under one or another exception to copyright. That is a general conclusion, the details would matter. I have not heard of a case similar to that suggested in the question. I find it unlikely that an SE poster would post copyright-protected code without permission, that is valuable enough to be worth an infringement suit, and substantial enough and having enough effect on th market for the original to be outside the protection of fair use. Such a situatiion is, of course, possible, even if unlikely. Note that a cease-and-desist letter is not a court order, and is really only a threat of court action. its only legal effect is to put the recipient on notice, so that continued infringement is not without awareness of the copyright claim. To have legal effect the claimant must actually bring an infringement suit, which is not without cost.
Fair use is always a fact-driven issue, and the details matter. That said, copying a single ad in order to criticism the ad, or comment on it, is very likely to be found to be fair use. If only a section of the ad were shown, to illuminate the point being made, that would make a fair use holding more likely. Or if the entire ad was shown in low resolution's for context, and a detail shown in higher resolution, that would also help. Such an ad is largely factual, not creative in the way that a work of fiction or fine art is, which leans toward fair use. Such a reproduction of the ad will not serve as a replacement, nor harm the market for the ad, which leans toward fair use. The use seems to be transformative, which leans significantly toward fair use. If the whole ad is shown that leans somewhat against fair use, but that does not prevent the use being held to be fair use. As for trademark protection, that is not likely to be an issue. Trademarks are protected against being used in trade (also known as &quot;in commerce&quot;) without permission. This means using the mark to label, identify, or advertise a product or service of the same general type as the product the mark is properly associated with. Using the mark, or a similar mark, in such a way that people are likely to be confused into thinking that a product or service came from the same source as the mark, or approved, endorsed or sponsored by the mark owner, is usually infringement. Using the mark to discuss the product or service, and in particular using it as the name of the product or service, is nominative use. Nominative use is not infringement. Using an ad that includes trademarks to discuss the associated product is a form of nominative use.
Sources of Liability Liability can come from: Statute law Contract law Common law Statute Law There may be (almost certainly are) laws in the jurisdiction where Joes Cheap Carnival are operating relating to Work Health and Safety. In general, these laws will impose a non-delegable duty (i.e. one you cant get out of) to comply with certain minimum standards. If operating your software as instructed with reasonable assumptions gives results that lead to an unsafe design then you would be liable in both cases. Contract Law If you are selling this software then you can limit your liability in any way you like providing that the limitation is not unlawful. For example, under Australian Consumer Law (which covers B2B transactions up to AUD$40,000 - how much are you selling for?) you have a non-excludable warranty that the software is fit-for-purpose; so, again, if operating your software as instructed with reasonable assumptions gives results that lead to an unsafe design then you would be liable in both cases. Common Law Only parties to a contract can take action under a contract; anyone you owe a duty of care to can sue your for negligence. A person injured by a machine your software helped design need to demonstrate: You had a duty of care; it would be hard to argue you didn't, You breached that duty; the software was not "fit-for-purpose", There was a factual cause in a "cause and effect" sense; 'but for' your software there would have been no loss, There was a legal (proximate) cause; you may be able to raise something here, if your software was used incorrectly by an engineer, your breach may be too distant Harm; the person must suffer real loss. The only plausible advantage of making your software open source is that you are showing a greater amount of care by allowing your algorithms to be sort-of peer reviewed. This is not a legal shield I would really like to depend on. TL;DR Nothing can stop someone suing you - if they want to sue you they can sue you. Your best defence to a lawsuit is to demonstrate that you did everything a reasonable person could do without the benefit of hindsight Do you really think publishing your code is "everything a reasonable person could do"? You would be far better off: Taking out professional indemnity insurance Validating you algorithms thoroughly Engaging an independent third-party to validate your algorithms Developing proper and thorough testing procedure for your software Testing it in-house Engaging an independent third-party to test it Thoroughly documenting your software including all the assumptions along with the domains where they are valid and invalid.