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Clouds are on the horizon for software copyrights. The open source movement is actively trying to turn copyright into “copyleft.” Courts around the world are reshaping the first sale doctrine, notably the European Court of Justice in UsedSoft v. Oracle not to mention the United States Court of Appeals for the Ninth Circuit in Autodesk v. Vernor. Software manufacturers are fleeing from distribution models toward service models—into the cloud. A perfect storm for software copyrights is brewing. The cloud promises to enable software publishers to place their code outside both the framework of copyright exhaustion under the first sale doctrine and the “distribution trigger” in open source code license terms. Users’ inability, in the cloud context, to directly access the underlying software threatens to exert various side effects, notably affecting software interoperability. New kids on the block lose the ability to reverse engineer hosted software. Established platform providers gain the ability to prevent interoperability, based on laws prohibiting interference with computers and technical protection measures. These developments risk upsetting the delicate balance between exclusive rights for copyright owners and access privileges for the public—a balance that courts and legislatures have carefully established over the years—in order to foster creativity and innovation. With unprecedented pressure on traditional distribution models, how will copyright law cope? In our Article, we attempt to illuminate the immediate path ahead, discuss possible answers, and pose more questions.

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