The first sale doctrine has protected buyers for over a century. Here's why software-wrapped EULAs on Cisco, Juniper, and HPE gear don't change that.
As part of my research for my last article Is the Cisco Secondary Market Legal, Safe, and Reliable?, one of the most interesting pieces I read was from a law professor at UC Berkeley. Brian Carver published "Why License Agreements Do Not Control Copy Ownership: First Sales and Essential Copies" in the Berkeley Technology Law Journal. A 68-page meticulous legal analysis of copy ownership under copyright law. His conclusions have direct implications for anyone buying or reselling network equipment today.
STOP...
THE...
FUD!!
Everyone has heard the licensing argument by now. It's Cisco's latest cog in the FUD wheel. They claim to sell hardware with an End User License Agreement (EULA) attached, and the EULA says software is licensed, not sold. Well, the courts continue to deny that Cisco software embedded on a switch that is inherent for the device to run, is licensable.
Why? Because it's not a license!
As personal computers and software became accessible to homes in the late 80s, the concern that 1 package of boxed (aka shrink-wrapped) software might be installed on more than 1 host arose as a legitimate concern. The solution the industry came up with was to call every transaction of boxed software a license rather than a sale. A license would protect both the copyright owners and consumers. Software companies could place restrictions on number of users, unauthorized reproduction, prevent resale. and even terminate usage if terms were violated. License holders (consumers) were guaranteed product support, improvements, and access should they lose the physical copy.
So, in relation to the First-Sale Doctrine, which fundamentally protects personal property rights and the ability of U.S. owners to resell property they've lawfully purchased, a theory was established that if the software was never "sold," first-sale protections aren't triggered. And since then, the courts have been arguing over whether that theory holds up. What Carver has done in this piece is carefully document conflicting conclusions from the different courts and judges.
Licensed or Sold?
Carver's core point is that the word "license" in a contract can mean several different things, and the software industry has been strategically sloppy about which meaning is used.
A license in the traditional legal sense was access to do something you otherwise couldn't. A real property license let's you legally access someone's land. A copyright license lets you reproduce, distribute, or display copyrighted work. Neither of these licenses are transferring ownership of a tangible product. They simply grant rights.
What software distributors call a "license" is something in the middle, but fundamentally different. It is a transfer of copyrighted work, but with restrictions. No other area of commercial law works this way. When you buy automobiles, toasters, phones, anything electronic containing software, the seller doesn't retain some ownership or control by attaching a contract that uses the word license."
The recognized distinction between a bailment and a sale is that when the identical article is to be returned in the same or some altered form, the contract is one of bailment. On the other hand, when there is no obligation to return the specific article, the transaction is a sale. — U.S. Supreme Court, Sturm v. Boker (1893)
It's amazing how precedent set in 1893 continues to impact and shape our world today in 2026, but its very important. A Cisco switch and the software required to make it function as a switch are a single unit in the courts view. If the courts even suggested Cisco could legally enforce their version of a license, as a license, the world of all electronics would go into a frenzy as every manufacturer on the planet would try to charge fees for reusing software. It simply will not happen.
Carver works through the various tests used to distinguish a sale from a license, and determines the best test is assess the economic reality.
If the answers are yes, yes, no, and no, that is 100% a sale regardless of what a EULA says.
Embedded Firmware vs Boxed Software
Shrink-wrapped, box, or downloadable software are designed to run on any compatible host, and exists independently from a particular piece of hardware. Firmware embedded in a network switch is not that kind of software. IOS from a Catalyst switch can't be separated from the chassis it runs on and installed on another host. IOS only works on a Cisco switch, and a Cisco switch only works with IOS. IOS software is what allows a Cisco switch to function as a switch.
The one-to-one relationship between the firmware and the device it controls makes the economic reality of the transaction even clearer: you're buying a switch, and the software is part of what makes it a switch.
DSC Communications Corp. v. Pulse Communications, Inc. literally dealt with this exact scenario involving embeded software in telecom equipment. The federal Circuit's conclusion was that purchasing the equipment made teh buyer an owner of the embedded software for purposes of the Copyright Act. The distinction between owning a copy and owning a copyright are not the same thing.
Why this matters more than it might seem
You might be asking: If this legal framework is so clear and has been around for so long, why does the licensing argument still exist?
Trust me. I know it's frustrating. But part of the answer is that case law is genuinely still unsettled in some circuits, which Carver's paper documents. Different courts have reached different conclusions using different analytical frameworks. Until a definitive Supreme Court ruling on embedded software is delivered, OEM legal teams are sophisticated enough to exploit it.
Carver's framework gives buyers a resellers a structured legal theory supported by statue, Supreme Court precedent, and Federal Circuit case law for why embedded software in network hardware has, and always will be, treated as sales, not licenses.
Onward:
The secondary market for lawfully acquired enterprise network hardware is legally defensible, operationally sound, and growing precisely because the economics are too compelling to ignore. Carver's work is only one reason why the legal foundation for the secondary market is stronger than the OEM narrative wants you to believe.
If you want to walk through a specific purchase, a refresh lifecycle, or what secondary market sourcing looks like for your access layer, we're here for that conversation!
Thank you for reading!