Gene Goldmintz argues that the first-sale doctrine should apply to digital goods. These digital goods are typically sold in single lump sum payments determined by the quantity of the good, as opposed to a licensing fee determined by usage over time. The result is that these transactions are more similar to purchases rather than licenses. The first-sale doctrine should apply despite the naming conventions utilized in the End-User License Agreements accompanying these digital goods and the form-over-substance analysis favored by courts. Even if courts refuse to recognize these transactions as purchases, § 365(f) of the Bankruptcy Code permits the assignment of these licenses as executory contracts. Through assignment, the trustee could sell off the licenses to third parties during the liquidation of the bankruptcy estate's property in chapter 7. In doing so, the bankruptcy policy of promoting the free assignability of assets and contracts would be respected.
CTRL+ALT+DELETE: Does the Bankruptcy Code Need a Reboot? The Eligibility of Consumer Digital Goods for Liquidation,
Emory Bankr. Devs. J.
Available at: https://scholarlycommons.law.emory.edu/ebdj/vol31/iss1/7