	Introduction

Moving beyond its traditional place in personal computers and corporate servers, software today may be integrated in everyday consumer goods such as televisions, refrigerators, thermostats, coffee makers, garage door openers, automobiles, vacuums, and printers, as well as personal medical devices (for example, glucose meters, asthma inhalers, and blood pressure monitors ). Software enables modern consumer products' operations or provides users with convenient features such as automation, Wi-Fi connectivity, and remote control via laptops, smartwatches, and smartphones. When consumers purchase these "software-enabled" products from retailers, they become the owner of the hardware components of the device or machine. In contrast, however, they may only acquire a license (a form of legal permission) to use any embedded software during the time of their product ownership. For example, manufacturers have installed DRM in gourmet coffee makers and printers to prevent the use of third-party, unlicensed coffee pods and toner cartridges that are often cheaper and possibly easier to acquire than brand-name, manufacturer-authorized accessories. DRM also may be used to prevent consumers from modifying the software in their cell phones in order to connect the devices to different wireless carriers. The inclusion of licensed software and DRM in consumer products and devices has raised concerns about the ability of consumers to repair, modify, or resell their personal property because engaging in such activities may potentially violate provisions of the Copyright Act (or the Act). This report examines copyright law issues raised by software-enabled consumer goods. Advanced Copyright Law Concepts

Because software embedded in many modern consumer products may be subject to copyright protection, this section of the report will describe several advanced copyright topics, including fair use, first sale, and digital rights management, that may impact consumers' ability to repair, modify, or sell their electronic devices. However, the Copyright Act requires a federal court to consider and evaluate, on a "case-by-case" basis, several statutory factors in determining whether any particular conduct constitutes a "fair use":
the purpose and character of the use including whether such use is of a commercial nature or is for nonprofit educational purposes; the nature of the copyrighted work; the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and the effect of the use upon the potential market for or value of the copyrighted work. Analysis: Copyright Law and Software-Enabled Consumer Electronic Products

End user license agreements that apply to copyrighted software may prohibit the owner of an electronic device from reselling the product, or from modifying or repairing the installed software, unless such activities are performed by a service provider that has been authorized by the equipment manufacturer to do so. Resale of Devices

In many instances, the original equipment manufacturer may not develop the software programs embedded within consumer products; instead, the product manufacturer may enter into contracts with third-party software developers to produce customized software. After their initial service contract expires, consumers may wish to modify their cellphones, or have them "unlocked," in order to use them on a different service provider's network. Legislation

Legislation has been proposed, but not passed into law, at both the federal and state levels, that would modify the rights of consumers with respect to software-embedded consumer electronic devices and products. The Unlocking Technology Act of 2015 ( H.R. In addition, the courts have not yet directly considered how fair use, the first sale doctrine, or the DMCA applies to consumers owning software-embedded products.
Modern consumer electronic devices and products often contain software programs that facilitate their operations or provide automation, Wi-Fi and smartphone connectivity, remote control, and other sophisticated functions. Equipment manufacturers have integrated software in televisions, refrigerators, thermostats, coffee makers, garage door openers, automobiles, vacuums, printers, and medical devices. When consumers buy these "software-enabled" products from retailers, they acquire ownership of the physical hardware, but may only receive a limited license (a form of legal permission) to use the embedded software. However, the software license's terms and conditions may restrain certain consumer behavior after purchasing the product. Some consumer rights organizations and civil liberties groups have raised concerns that software licensing, in restricting the unauthorized resale of a product or prohibiting certain product modifications or repairs, unnecessarily limits how consumers can use software-enabled products.
In addition, some products may include "digital rights management" (DRM) technologies that prevent consumers from altering the installed software or control the types of accessories that may be used with them. For example, manufacturers have installed DRM in gourmet coffee makers and printers to prevent consumers from using generic, unlicensed coffee pods and toner cartridges, respectively, that are usually cheaper and easier to acquire than brand-name, manufacturer-authorized parts. Wireless carriers have also used DRM in smartphones to prevent the devices from connecting to, and operating on, unauthorized cellular networks. Thus, consumers with such "locked" cellphones cannot use them on a different service provider's network once their contract has expired with their original mobile carrier.
It may seem unusual that copyright law has any application or relevance to consumer electronic products. After all, such products do not, by themselves, fall within the traditional categories of copyrightable subject matter: literary, musical, dramatic, and pictorial works; motion pictures; and sound recordings. Yet the software embedded in many consumer electronic products may be subject to copyright protection; thus, these devices contain copyrighted content. As a result, copyright law may impact the rights of consumers to repair, modify, or sell their personal property that contains copyrighted software, to the extent that such activities involve making changes to the software or transferring ownership of the product with the original software still running on it. Consumers or businesses that engage in such actions with respect to software-enabled electronic products, without the authorization of the software developer or original equipment manufacturer, may be in violation of the federal Copyright Act.
This report provides a discussion and analysis of copyright law issues that may be implicated by the repair, modification, or resale of software-enabled consumer electronic devices. These issues include software licensing, fair use, the first sale doctrine, and the anti-circumvention provisions of the Digital Millennium Copyright Act (DMCA). It also examines state and federal legislation that has been offered related to this issue, including the You Own Devices Act (H.R. 862), Breaking Down Barriers to Innovation Act of 2015 (S. 990), and the Unlocking Technology Act of 2015 (H.R. 1587).