"Magic words" have popped up twice recently, once in a software licensing case in the Ninth Circuit, and once in a dispute over campaign financing. In one case, the matter turned on knowing when to include the words, and in the other, it turned on knowing when not to say them.
In Vernor v. Autodesk, Inc., the plaintiff bought a copy of the defendant's software from one of the defendant's customers, subsequently made copies of that software and sold the copies. He wanted a judicial determination that the sales made his customers owners of the copies rather than licensees. But the Ninth Circuit determined that, because of Vernor's relationship as a subsequent purchaser of the software and the wording of Autodesk's agreement, Vernor could not get the result he wanted. Because he was not the first owner (but rather a purchaser from the first owner), he could not qualify under the "first sale" doctrine. Says Kendra Rosenberg in an October 13, 2010 Law, Technology & Arts, Blogpost, the “magic words” of a three-part test [that appear] in the software use agreement" defeat Mr. Vernor. Here's the test.
We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user's ability to transfer the software; and (3) imposes notable use restrictions. Applying our holding to Autodesk's SLA, we conclude that CTA was a licensee rather than an owner of copies of Release 14 and thus was not entitled to invoke the first sale doctrine or the essential step defense.
Next, the Berkley (Michigan) School District asked for a multi-million dollar bond issue in February, 2010. It also apparently advocated actively for passage of the bond issue, in a way that upset many voters, but the Michigan Secretary of State found no violation of law after an investigation. The reason? The School District did not cross the line in its wording on flyers it gave students to take home. Notes the Mackinac Center for Public Policy in a January 5, 2011 newsletter, "The Secretary of State uses an “express advocacy” standard when ruling on potential violations. Bob LaBrant, the Michigan Chamber of Commerce’s senior vice president for political action, refers to it as “the magic words.” It means that as long as a school district doesn’t say “vote yes” or “support this bond,” the Secretary of State will often not find a violation."