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Is it Price Fixing?


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7 hours ago, Lada Charlton said:

Neither of your points make sense. There has been a lot of existing case law on these topics shared above. You're both missing the fact that these are software licensing agreements, not traditional goods or services. 

Yes, there has been. And California law clearly states you can not dictate a resale price. 

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7 hours ago, Lada Charlton said:

Neither of your points make sense. There has been a lot of existing case law on these topics shared above. You're both missing the fact that these are software licensing agreements, not traditional goods or services. 

That's why it's such an interesting topic. The laws have both upheld and tossed out portions of software agreements before, and it clearly says you can't dictate resale price, but doesn't specify software. Gotta wonder if that's a useful loophole or not. 

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No, I'm saying they don't make sense in that you have not considered any of the evidence that already exists on this topic. Not that your point is part of a "gray" area. 

Drake, you're still not correctly reading any of the data and insight previously shared in this thread, let alone parsing the grammar and intent in my last post. You will find the root of the discussion of your "argument" in the posts by others above. I am not arguing that there is *not* case law, which I already mentioned about the United States and China last week, I am arguing that you have clearly not read any of it if you are repeating the same questions. 

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12 minutes ago, Lada Charlton said:

No, I'm saying they don't make sense in that you have not considered any of the evidence that already exists on this topic. Not that your point is part of a "gray" area. 

Drake, you're still not correctly reading any of the data and insight previously shared in this thread, let alone parsing the grammar and intent in my last post. You will find the root of the discussion of your "argument" in the posts by others above. I am not arguing that there is *not* case law, which I already mentioned about the United States and China last week, I am arguing that you have clearly not read any of it if you are repeating the same questions. 

Which thread are you reading? So far, the only evidence in the thread is FTC guidelines and a California case that says it's illegal.

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5 hours ago, Gadget Portal said:

Which thread are you reading? So far, the only evidence in the thread is FTC guidelines and a California case that says it's illegal.

Explain to us why a written contract between two parties to set the resale price of physical objects is the same as a license to reproduce and distribute intellectual property when the property rights owner has no way of accepting or rejecting any given prospective licenseholder.

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On 9/18/2017 at 6:42 AM, Drake1 Nightfire said:

Ok, here's the deal. The term you are looking for is "vertical price-fixing" not just price fixing, which is when competitors agree to inflate or deflate prices to mess with the market in their favor. Vertical price fixing is when a supplier sets a resale price for a distributor or reseller. In most states this is illegal, however, Federal law does not ban this practice. Now, seeing as we all agreed to follow US law and specifically California law, where vertical price fixing is illegal, I would say that dictating a minimum resale price would be illegal in SL and if it went to court the creator would lose said case. I will call my family lawyer later to see what he says. 

It doesn't have to be in your language. And you really should care about US laws, you agreed to follow them when you joined SL. 

The TOS doesn't say that we "have to follow US law", it says that our agreement between ourselves and Linden Lab is subject to the law as interpreted by the courts in San Francisco, California.

11.5 The applicable law and venue is in San Francisco, California.

You agree that this Agreement and the relationship between you and Linden Lab shall be governed by the laws of the State of California without regard to conflict of law principles or the United Nations Convention on the International Sale of Goods. Further, you and Linden Lab agree to submit to the exclusive personal jurisdiction and venue of the courts located in the City and County of San Francisco, California, except as provided in Section 10 regarding arbitration.

It can't make California law apply anywhere it doesn't legally apply (i.e. California.) If it did you'd need to turn your wheels to the curb when your car was parked while you were on Second Life even if your car was sitting in Kansas.

Edited by Theresa Tennyson
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1 hour ago, Theresa Tennyson said:

Explain to us why a written contract between two parties to set the resale price of physical objects is the same as a license to reproduce and distribute intellectual property when the property rights owner has no way of accepting or rejecting any given prospective licenseholder.

While I'm not sure what that has to do with my request to cite sources, and I haven't said those two things are the same,  I can absolutely play devil's advocate here.

A software license can tell you how you can and can't use that property; For example, when I buy digital assets to make a game, I see things in the agreement like that I can't resell it directly, can't use it in games that gives the end user direct access to it, can't use it on Second Life (it's funny how often I actually see that one), but never "you have to sell your finished game for at least 60 USD."- and I suspect it's because of state laws like that California one I cited.

As for not having a way to reject someone, I'd call that a flaw in the system. Or a risk you take selling it on this kind of marketplace. Or both.

 

48 minutes ago, Theresa Tennyson said:

The TOS doesn't say that we "have to follow US law", it says that our agreement between ourselves and Linden Lab is subject to the law as interpreted by the courts in San Francisco, California.

11.5 The applicable law and venue is in San Francisco, California.

You agree that this Agreement and the relationship between you and Linden Lab shall be governed by the laws of the State of California without regard to conflict of law principles or the United Nations Convention on the International Sale of Goods. Further, you and Linden Lab agree to submit to the exclusive personal jurisdiction and venue of the courts located in the City and County of San Francisco, California, except as provided in Section 10 regarding arbitration.

It can't make California law apply anywhere it doesn't legally apply (i.e. California.) If it did you'd need to turn your wheels to the curb when your car was parked while you were on Second Life even if your car was sitting in Kansas.

On this I agree with you, but it's sort of the point I was trying to make.

Your local laws apply to you.

So if your local laws say, like that California one, that suppliers can't dictate a retailer's price, I suspect you wouldn't have to obey that part of an agreement in SL.

That said, I'd love to see a cited law or case law that says that it's different for digital goods than physical goods. I don't buy stuff with agreements that I don't like so I don't really have a dog in this fight. I just thought it'd be a good topic to throw up for debate.

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25 minutes ago, Gadget Portal said:

A software license can tell you how you can and can't use that property; For example, when I buy digital assets to make a game, I see things in the agreement like that I can't resell it directly, can't use it in games that gives the end user direct access to it, can't use it on Second Life (it's funny how often I actually see that one), but never "you have to sell your finished game for at least 60 USD."- and I suspect it's because of state laws like that California one I cited.

 

When an "item" in Second Life is "sold" for "Lindens", what changes hands?

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3 hours ago, Theresa Tennyson said:

It can't make California law apply anywhere it doesn't legally apply (i.e. California.)

That's right but I think the laws against vertical price fixing for physical goods are fairly universal and for very good reasons. In EU a supplier isn't actually allowed to even recommend a resell price.

What is not clear, however, is whether those laws apply to digital, reproducable goods and that is a quite interesting question.

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Generally, I think people in SL are reasonable. Of course you get some who aren't, but it's the minority.

I didn't always have a minimum price, until people were using my items as freebies, or selling at L10 to attract customers to their store. These high quality, dirt cheap items would naturally move to the top of its category, so anyone doing a search would find it first -  good quality at dirt cheap prices. Any other reseller or even the original creator does not stand a chance. The item becomes common trash. This has happened to me. Items that were once popular hardly ever sold anymore. Price fixing solved it.

The difference between buying a set number of physical items and selling them cheap or even giving them away, compared to buying one digital item and then selling it dirt cheap or giving it away an infinite number of times for years (or as long as SL exists) - I think the difference is quite obvious, as well as the damage.

I don't know about the laws, but one thing I do know is that SL residents are generally reasonable people when it comes to something that should be obvious. Or else you would find very very few people willing to take the risk in selling full perm.

On 18/09/2017 at 1:37 PM, Gadget Portal said:

As for this one, I can just say that I personally don't buy from people that have bad agreements, 'cause their products are probably bad too.

From what I've seen, I would say most of the best full perm sellers are setting minimum prices.

Edited by Reid Parkin
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Greetings all!

I am enjoying the conversation and am pleased to see that the forums are providing a great place for these types of discussions.

I found an article regarding Price Fixing and Minimum Resale Pricing structures that might contribute to the discussion.

https://gbr.pepperdine.edu/2010/08/price-fixing-and-minimum-resale-price-restrictions-are-two-different-animals/

Cheers~

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3 hours ago, Dakota Linden said:

I found an article regarding Price Fixing and Minimum Resale Pricing structures that might contribute to the discussion.

https://gbr.pepperdine.edu/2010/08/price-fixing-and-minimum-resale-price-restrictions-are-two-different-animals/

Interesting article but maybe a bit old. Here's a more recent (and Californian) case:

Quote

People of California v. Bioelements, Inc., No. 10011659 (Cal. Sup. Ct. Jan. 11, 2011)

On January 14, 2011, California’s Attorney General announced that it settled a dispute with a Colorado cosmetics company that prohibited retailers from selling its products over the Internet at a discount. California alleged that since 2009, Bioelements contracted with dozens of resellers requiring them to sell Bioelements products online for at least the manufacturer’s suggested retail price. Under its settlement with California, Bioelements must pay $51,000 in civil penalties and attorney fees as well as refrain from fixing resale prices and inform its distributors the contracts at issue are void

(Source: http://www.pepperlaw.com/publications/the-latest-on-leegin-and-resale-price-maintenance-should-manufacturers-rest-easy-after-the-tempur-pedic-decision-2011-04-29/ - that article also has a lot more info about the topic)

 

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9 hours ago, Theresa Tennyson said:

When an "item" in Second Life is "sold" for "Lindens", what changes hands?

Neither Lindens nor any "objects" that are "bought" with them have any value or use outside of Second Life. Any agreements having to do with "virtual goods" and "Lindens" don't involve "reselling" anything.

The outside world does recognize intellectual property and licensing thereof, though. And I know of no laws forbidding an IP license to be written in terms of requiring the licensee to charge a minimum number of non-negotiable game tokens for a sub-license.

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4 hours ago, Theresa Tennyson said:

Neither Lindens nor any "objects" that are "bought" with them have any value or use outside of Second Life. Any agreements having to do with "virtual goods" and "Lindens" don't involve "reselling" anything.

The outside world does recognize intellectual property and licensing thereof, though. And I know of no laws forbidding an IP license to be written in terms of requiring the licensee to charge a minimum number of non-negotiable game tokens for a sub-license.

I gotta be intentionally obtuse on this one.

You're making the "only the laws we like apply in SL" argument. Ask LL's lawyers how that worked for them when they tried it.

Or are you saying all of these purchase agreements are null regardless, since nothing is actually being purchased?

Dakota's linked article is a good read.

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7 hours ago, Gadget Portal said:

I gotta be intentionally obtuse on this one.

You're making the "only the laws we like apply in SL" argument. Ask LL's lawyers how that worked for them when they tried it.

Or are you saying all of these purchase agreements are null regardless, since nothing is actually being purchased?

Dakota's linked article is a good read.

And you're arguing that we need drivers' licenses to drive Second Life cars.

The things that are being "purchased" are rights to use intellectual property. The laws you are citing are meant for physical goods, not IP rights.

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19 hours ago, ChinRey said:

That's right but I think the laws against vertical price fixing for physical goods are fairly universal and for very good reasons. In EU a supplier isn't actually allowed to even recommend a resell price.

What is not clear, however, is whether those laws apply to digital, reproducable goods and that is a quite interesting question.

As an EU "merchant", you have been doing your full VAT accounting for all the "items" you've sold to other European "customers", haven't you?

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