A Deeper Bond: A ‘Mad Men’ Insight On Revaluing Music — ReValue Music takes a cue from the scene from the first season of AMC’s Mad Men to ask how artists can help change the perceived value of music. “It is largely up to you, as the independent artist, to establish the way your audience determines the value of your work. Music is not a download. It is not a gadget or a widget. It is not a temporary utility that will only serve a limited purpose and then be disposed of. As an artist, you are not selling your latest track or album; you are selling something amazing, almost magical. You are selling a transcendent tapestry of sound that somehow facilitates the deepest of connections to one’s self and to others.”

Let the vinyl spin: my journey into record collecting — Along those same lines, Cameron Schaefer, of Vinyl + Cocktails, discusses how “dying of musical thirst in an ocean of MP3s,” led him to embrace reconnecting with music in the analog medium. Not that everyone need become vinyl purists, but well worth the read.

Lessons in Stealing Like an Artist — The Copyright Alliance’s Sandra Aistars points to a recent NY Times piece on fair use and creativity, highlighting poet Austin Kleon’s book Steal Like an Artist. Says Aistars, “The key according to Kleon, however, is not to copy or to imitate, but to transform what you steal so that you make it your own, and then send it back out into the world for others to embrace and react to.”

How Much do Google and Facebook Profit From Your Data? — Ars Technica reports on PrivacyFix, a new add-on for Firefox and Chrome, that calculates how much value your browsing behavior benefits the two tech giants. I haven’t personally tried it yet, but it sounds helpful, especially since it also lets you know which websites are tracking your behavior and feeding it back to the sites. PrivacyFix also apparently offers tips and techniques to help you adjust your privacy settings on Google and Facebook.

YouTube to serve niche tastes by adding channels — Google is spending $200 million this year promoting original programming on YouTube (as well as an undisclosed amount for production). Cat videos don’t pay the bills.

Sherman helps RIAA lighten up — An entertaining profile of RIAA CEO Cary Sherman over at Variety.

A Lesson from Steve — Chris Castle offers a few words to mark the one year anniversary of Jobs’ passing. “Not surprisingly, Steve’s choice to embrace the copyright of others has led to enormous financial reward for his company and his employees.  He took an already great company and made it greater–ultimate vindication for the ‘Newton,’ if you ask me–and he also put a lot of money into the hands of artists.”

WhoSampled Wins EMI Innovation ChallengeWhoSampled, an incredibly comprehensive database of songs that have been sampled and songs that have used samples, beat out other music apps to win EMI’s Innovation Challenge in London earlier this week.

On October 29th the Supreme Court will hear oral arguments in Kirtsaeng v John Wiley and Sons, Inc. The case concerns the US Copyright Act’s importation provisions in 17 USC § 602 and the first sale doctrine. Since it’s a copyright case, that means it’s never too early to start overreacting. Jennifer Waters of MarketWatch leads the pack with her article, Your right to resell your own stuff is in peril, appearing last week. Waters writes, “Tucked into the U.S. Supreme Court’s busy agenda this fall is a little-known case that could upend your ability to resell everything from your grandmother’s antique furniture to your iPhone 4.”

Could it? Let’s take a look at Kirtsaeng in more detail.

First Sale and § 602

Among the rights given to copyright owners is the exclusive right “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”1 This right is limited by the “first sale doctrine”, first recognized by the Supreme Court in 19082 and then codified in the Copyright Act of 1909. Since the Copyright Act of 1976, the first sale doctrine has resided in 17 USC § 109(a), which reads:

Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Put another way, a copyright owner’s exclusive right to distribute a particular copy of a work (but not her right to reproduce, display, perform, etc. it) ends at the first sale.

The Copyright Act of 1976 also included provisions that made unauthorized importation of copyrighted works an infringement of the distribution right, codified at 17 USC § 602(a)(1):

Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.

While the provision that follows this prohibits the importation of copies “the making of which either constituted an infringement of copyright, or which would have constituted an infringement of copyright if this title had been applicable,”3 § 602(a)(1) applies to both “piratical” and “nonpiratical” copies; so long as they have been “acquired outside the United States”, only the copyright owner of the work can import or authorize their importation.

The motive behind § 602 was to give copyright owners more protection against the “grey market.” Like most other businesses and industries, copyright owners engage in market segmentation to decrease risk and maximize revenues. Many copyright holders practice geographic market segmentation, contracting with distributors in local markets who provide works adapted to the particular needs of that market. Prior to the 1976 Copyright Act, US copyright law only prohibited the importation of piratical goods, with the understanding that copyright owners could still segment markets through exclusive contracts with their foreign distributors. But this was seen as inadequate, as it didn’t prevent third parties from acquiring works in other countries and importing them into the US, since there would be no privity between these third parties and the original copyright owner. So, Congress expanded the importation provisions to also include nonpiratical works.

The first sale doctrine and § 602 are fine in isolation, but put together and things get tricky. If a copy is sold in a foreign country and then imported to the US without the copyright owner’s permission, does the first sale doctrine apply, effectively rendering § 602 superfluous?

Grey Market Case Law

Since the enactment of the 1976 Copyright Act, courts have wrestled with this interplay between § 602 and the first sale doctrine. The results have actually been very consistent.

The first line of cases, of which Kirtsaeng would fall under, involves copies manufactured outside the US under the authority of the copyright owner, but imported into the US without authorization.

One of the first cases to raise this issue and reach the appellate level came just a few years after the Copyright Act of 1976 went into effect. In Columbia Broadcasting v Scorpio Music Distributors, Scorpio had bought approximately 6,000 copies of recordings copyrighted by Columbia from an importer who had acquired them from a company in the Philippines acting as the exclusive manufacturer and distributor of the recordings in that country.4 Scorpio argued that it was protected by the first sale doctrine because, even though the recordings were manufactured outside the US, they had already been sold, thus exhausting the copyright owner’s exclusive right to distribution, including the § 602 bar on importation.

The District Court disagreed with Scorpio, holding that the first sale doctrine only “grants first sale protection to the third party buyer of copies which have been legally manufactured and sold within the United States and not to purchasers of imports such as are involved here.” The Third Circuit affirmed the court’s decision on appeal, without opinion.5

The Ninth Circuit has consistently held the same through a series of cases. First, in 1991, in BMG Music v Perez, the court held that “the words ‘lawfully made under this title’ in § 109(a) grant first sale protection only to copies legally made and sold in the United States.”6 Three years later, the Circuit declined to overturn or distinguish BMG Music in Parfums Givenchy v Drug Emporium.7 Then again in Denbicare USA v Toys ‘R’ Us, the court reiterated that the first sale doctrine “applies to copies made abroad only if the copies have been sold in the United States by the copyright owner or with its authority.”8

A number of district courts have also held that the first sale doctrine is not a defense for unauthorized importation when copies are made lawfully outside the US.9

In 1998, the Supreme Court resolved a different line of cases dealing with the interplay between § 602(a) and the first sale doctrine in Quality King Distributors v L’anza Research.10 There, the question was whether § 602(a) barred the importation of goods that had originally been manufactured in the US — making a “round trip” journey. The Court held, in a unanimous decision, that it did not, overturning the Ninth Circuit’s earlier decision, but consistent with other courts that had faced the issue.11

However, in dicta, the Court said, “§ 602(a) applies to a category of copies that are neither piratical nor ‘lawfully made under this title.’ That category encompasses copies that were ‘lawfully made’ not under the United States Copyright Act, but instead, under the law of some other country.” In addition, Justice Ginsburg concurred, adding, “we do not today resolve cases in which the allegedly infringing imports were manufactured abroad.”

The Ninth Circuit revisited the situation where copyrighted works are first manufactured abroad in 2008, in Omega v Costco.12 Costco, which had sold Omega watches originally obtained from overseas distributors, argued that the Quality King decision overturned the 9th Circuit’s precedent regarding the first sale doctrine’s application to § 602(a) when the goods are not manufactured in the US. The court disagreed.

The case was appealed, and the Supreme Court granted cert. But rather than weigh in, the Court, with Justice Kagan recused, came to a tie, affirming the Ninth Circuit’s decision by default without issuing an opinion.13 Many had expressed concerns that Omega was benefiting from the Copyright Act’s importation provisions by affixing a tiny copyrighted logo on the back of ordinarily uncopyrightable watches. It should be noted that Omega eventually lost on this point; after the case returned from the Supreme Court to the District Court, the court granted Costco’s motion for summary judgment, saying, “Omega misused its copyright of the Omega Globe Design by leveraging its limited monopoly in being able to control the importation of that design to control the importation of its Seamaster watches.”

In short, considering the above and the Second Circuit’s decision in Kirtsaeng, every court that has interpreted § 602(a) since it was enacted over 30 years ago has come to the same conclusion: the first sale doctrine does not extinguish the exclusive right to import copyrighted works that have been manufactured in foreign countries.14

Kirtsaeng

Let’s turn now to Kirtsaeng. Supap Kirtsaeng, originally from Thailand, attended college and graduate school in the US beginning in 1997. To help defray the costs of his education, he engaged his family back home to purchase Thai versions of English language textbooks, which were cheaper than US versions, and ship them to him, where he resold them on eBay.15 Kirtsaeng later would testify that this venture netted him approximately $900,000 in revenue.

Among the books Kirtsaeng resold were several published by John Wiley & Sons. Wiley sued Kirtsaeng in 2008, claiming, among other things, infringement of its distribution right. The case went to trial, and a jury found Kirtsaeng liable for willful copyright infringement, awarding statutory damages of $600,000 to Wiley. Kirtsaeng appealed.

On appeal, the Second Circuit was tasked with the question of “whether the first sale doctrine, 17 U.S.C. § 109(a), applies to copies of copyrighted works produced outside of the United States but imported and resold in the United States.” Noting the tension between the first sale doctrine and § 602(a)(1), the court relied on the text of §109(a), the structure of the Copyright Act, and the Supreme Court’s opinion in Quality King.

The court found no help from the statute’s text, calling it “utterly ambiguous.” The Copyright Act’s structure and Quality King, however, convinced the court to hold that “the phrase ‘lawfully made under this Title’ in § 109(a) refers specifically and exclusively to copies that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works.” It rejected Kirtsaeng’s alternative interpretations of the phrase, noting that § 602(a)(1) would be virtually meaningless “in the vast majority of cases if the first sale doctrine was interpreted to apply to every copy manufactured abroad that was either made ‘subject to protection under Title 17,’ or ‘consistent with the requirements of Title 17 had Title 17 been applicable.'” Since the books imported by Kirtsaeng had been manufactured outside the US, the Second Circuit upheld the district court’s decision that the first sale doctrine did not provide Kirtsaeng with a defense to his unauthorized importation.

Judge Garvan Murtha dissented from the Second Circuit’s decision, disagreeing with the court’s analysis. After engaging in his own analysis of the Copyright Act, as well as looking at the policy behind the first sale doctrine, he found that “Nothing in § 109(a) or the history, purposes, and policies of the first sale doctrine limits it to copies of a work manufactured in the United States,” concluding that the doctrine does apply to foreign manufactured copies.”

Now that the case is at the Supreme Court, one of the major issues is how to interpret the phrase “lawfully made under this title” in the first sale doctrine. Kirtsaeng argues that it means a copy had been made in accordance with the Copyright Act, meaning a sale in a foreign country counts as a “first sale”, exhausting the copyright owners authority to prohibit importation. Wiley argues that it instead means a copy has been made in the United States, since the Copyright Act does not apply extraterritorially.

I’ll refrain from predicting the outcome of the case so early on, but let’s take a look at some of the factors that favor each party.

Factors favoring John Wiley & Sons

Case law. As noted above, every court that has considered this question, including two other Circuit Courts, has reached the same result as Wiley seeks. In addition, the Supreme Court has indicated in dicta that it would agree with the result the Second Circuit reached.

Legislative history. The House Report on the Copyright Act of 1976, HR 94-1476, seems clear in its support of the interpretation embraced by the Second Circuit:

Section 602, which has nothing to do with the manufacturing requirements of section 601, deals with two separate situations: importation of “piratical” articles (that is, copies or phonorecords made without any authorization of the copyright owner), and unauthorized importation of copies or phonorecords that were lawfully made. The general approach of section 602 is to make unauthorized importation an act of infringement in both cases, but to permit the United States Customs Service to prohibit importation only of “piratical” articles.

The Copyright Office also agreed that this was the purpose of § 602 during its drafting, as the US points out in its brief:

The Copyright Office ultimately endorsed legislation that would expand the importation restrictions to encompass “foreign copies that were made under proper authority.” The Register explained that the provision would bar importation if, “for example, … the copyright owner had authorized the making of copies in a foreign country for distribution only in that country.”

Treatises. Legal treatises are given much weight by courts, and all the major copyright treatises today interpret the Copyright Act the same way as Wiley. Nimmer writes that the Act should be “interpreted to bar the importation of gray market goods that have been manufactured abroad.”16 Patry states that the Act prohibits the importation of copies that “were not ‘lawfully made under this title,’ i.e., were not made in the United States.”17 Goldstein says, “the first sale defense is unavailable to importers who acquire ownership of gray market goods made abroad.”18

Factors favoring Kirtsaeng

Costco‘s 4-4 split. Though the Supreme Court did not issue an opinion in Costco, there was something that four of the Justices disagreed with in the Ninth Circuit’s opinion. That’s good news for Kirtsaeng, but whether that area of disagreement ultimately favors him remains to be seen. Oral arguments may shed some light on this.

Growing judicial discomfort? A review of the case law suggests, at least in some courts, increased skepticism with the accepted interpretation of § 602 and concern over its effect on the first sale doctrine (though the latter point has yet to be tested in court, as explained below). The most recent example is Judge Murtha’s dissent in this very case at the Second Circuit. In Pearson Education v Liu, the Southern District Court of New York flat out rejected the accepted interpretation, saying, “the Court provisionally is of the view that nothing in § 109(a) or the history, purposes, and policies of the first-sale doctrine, limits the doctrine to copies of a work manufactured in the United States.” But it deferred to the Supreme Court’s dicta in Quality Kings, saying, “While this Court would not limit the doctrine to copies manufactured in the United States, the case for this interpretation of § 109(a) is not so overwhelming as to justify disregarding the Supreme Court’s views.”

When does the first sale doctrine kick in?

What has attracted the most attention to this case, it seems, is the question of what happens, under the currently accepted interpretation of § 602, to “downstream” owners of copies manufactured abroad but imported without authorization. If the first sale doctrine only applies to works manufactured in the US, does that mean that copyright owners retain exclusive distribution rights over any goods manufactured abroad? Kirtsaeng, in fact, presents this question as the issue in front of the Supreme Court.

Warns Kirtsaeng:

“For goods made anywhere else, the panel majority granted copyright owners eternal control over all further sales, rentals, or gifts, all the way down the stream of commerce. This rule means that Random House could block resales of books and close down public libraries and flea markets and Paramount Pictures and Sony Records could prohibit resales of DVDs and CDs and shut down rental businesses like Netflix—so long as these manufacturers concentrate production abroad.

The ramifications extend far beyond publishers and other content providers. This rule applies with equal force to any product with a copyrightable component—a household product with a label, apparel with a fabric design, a watch with an insignia, a camera or microwave with software on the inside or packaging on the outside, a car with an on-board computer, and so on. Any producer who sends jobs overseas will be rewarded with the manufacturer’s Holy Grail—the power to lock up, extract exorbitant rents from, or discriminate in any secondary market, from multibillion dollar retailers of new products (like Costco and Target) to large dealers in used goods (like used car dealers, Goodwill, and the Salvation Army) to flea markets and garage sales and their modern-day online analogs (such as eBay).

Kirtsaeng paints a powerful picture, but it ignores the fact that the Second Circuit’s decision is not novel, but consistent with every other court decision in the past 30 years, and none of the hypothetical horribles presented has occurred since the enactment of § 602 in 1978. Essentially the argument is: affirming three decades of practice and precedent will result in sudden and dramatic changes.

Nevertheless, courts have yet to resolve the issue of downstream distribution. Both Wiley and the United States, appearing as amicus, address the issue in their defense of the accepted interpretation of § 602.

In its brief, Wiley first points out that:

Kirtsaeng’s strategy appears designed to deflect attention away from his own conduct—the unauthorized importation of copies made abroad for distribution only in foreign countries—and instead onto a hypothetical scenario where the copyright owner makes the copy abroad but authorizes its sale in the United States. The experience of the last 30 years would seem to foreclose Kirtsaeng’s argument: Even though it has long been settled that Section 109(a) generally does not apply to foreign copies, Kirtsaeng has not identified a single manufacturer that has ever attempted to move its facilities abroad to avoid the first-sale doctrine.

Turning to the question of how the first sale doctrine applies to goods manufactured abroad, Wiley stops short of arguing that the Supreme Court needs to resolve that issue here. But it does admit that it could be a factor and seems open to the idea that once a copyrighted work is lawfully imported, the first sale doctrine applies to subsequent sales:

To be sure, the Ninth Circuit, in response to hypotheticals similar to those raised by Kirtsaeng, concluded that even foreign-made copies can be subject to Section 109(a) if the copyright holder has authorized their sale in the United States. It is unclear why the court needed to adopt this exception to Section 109(a): If the copyright owner authorizes a U.S. sale of a foreign-made copy, principles of implied license or estoppel would preclude it from asserting control over subsequent sales. But in any event, this Court can leave open whether (as one of Kirtsaeng’s own amici argues) “lawfully made under this title” could be read to include foreign-made copies that are subject to an authorized sale in the United States. The critical word is “made.” The right to “reproduce” a “cop[y]” is one of the exclusive rights granted to copyright owners under Section 106 of the Copyright Act. If Congress had intended “made” in Section 109(a) to mean “produced,” it could simply have said so; the words “produce” and “reproduce” appear throughout the Copyright Act. One reading of Section 109, therefore, is that to make a copy means not only to exercise the right to “produce” that copy, but also to exercise the right “to distribute copies . . . to the public.” “‘Lawfully made under this title’ would then mean either lawfully manufactured (caused to exist) or placed in commerce (caused to occur or appear) in the United States.” On that reading, a copy is “made under [Title 17]” when either the U.S. “produc[tion]” right is exercised—by making the copy in the United States—or the U.S. “distribut[ion]” right is exercised—by distributing the copy in the United States.

The United States, in its brief, also rejects the idea that barring the importation of nonpiratical works without authorization would result in the negation of the first sale doctrine for any copies made outside the US. Like Wiley, the US first notes that Kirtsaeng “identifies no instance in which a copyright owner has actually sought to exercise such control.” It then argues:

when a copyright holder has authorized goods to be imported into the United States and/or sold within this country, applying a “first sale” or “exhaustion” principle as an implicit limitation on the copyright holder’s exclusive right to “distribute” would be consistent with the current text of the Copyright Act and faithful to the doctrine’s historical underpinnings. By contrast, Congress enacted Section 602(a)(1) to ensure that an authorized sale outside the United States does not exhaust the copyright holder’s right to control subsequent importation.

This question will likely play a big role during oral arguments, but it remains to be seen whether the Supreme Court ultimately rules on it. It’s certainly a tough question, and the Court can’t rewrite the law to make it easier. I agree that a ruling from the Court that the first sale doctrine should apply once a copy has been lawfully imported would be beneficial, if only to confirm what has been the practice for the past three decades, but actually stating that in a way that gives effect to all the relevant provisions of the Copyright Act is something that would require a bit more thinking.

Footnotes

  1. 17 USC § 106(3). []
  2. Bobbs-Merrill Co v Straus, 210 US 339. []
  3. 17 USC § 602(a)(2). []
  4. 569 F.Supp. 47 (ED Pa, 1983). []
  5. 738 F.2d 421 (1984). []
  6. 952 F.2d 318 (9th Cir. 1991). The court also rejected a First Amendment defense raised by Perez. []
  7. 38 F.3d 477 (9th Cir. 1994). []
  8. 84 F.3d 1143 (9th Cir. 1996). []
  9. Pearson Education v Liu, 656 F.Supp. 2d 407 (SDNY 2009); Microsoft v Big Boy Distribution, 589 F.Supp.2d 1308 (SD Fla. 2008); Swatch SA v New City, 454 F.Supp.2d 1245 (SD Fla 2006); TB Harms v Jem Records, 655 F.Supp. 1575 (D.NJ 1987); Hearst Corp. v Stark, 639 F.Supp. 970 (ND. Cali 1986) (the court also rejected defendant’s argument that § 602 violated the First Amendment). []
  10. 523 US 135 (1998). []
  11. See, for example, Sebastian Intern. v Consumer Contacts (PTY), 847 F.2d 1093 (3rd. Cir. 1988; Summit Technology v High-Line Medical Instruments, 922 F.Supp. 299, 312 (CD Cali 1996). []
  12. 541 F.3d 982 (9th Cir. 2008). []
  13. 131 S.Ct. 565 (2010). []
  14. I’ve been unable to find a case holding otherwise. See also Summit Technology v High-Line Medical Instruments, 922 F.Supp. 299, 312 (CD Cali 1996): “Reviewing the case law, the courts appear to be in agreement in one respect: ‘sales abroad of foreign manufactured United States copyrighted materials do not terminate the United States copyright holder’s exclusive distribution rights in the United States under §§ 106 and 602(a).'” []
  15. According to the Second Circuit, Kirtsaeng had “consulted ‘Google Answers’ … to ensure that he could legally resell the foreign editions in the United States.” []
  16. 2 Nimmer on Copyright § 8.12[B][6][c] at 8-134.34 to 8-134.35. []
  17. 4 William F. Patry, Patry on Copyright § 13:44, at 13-98 (2012). []
  18. 2 Paul Goldstein, Goldstein on Copyright § 7.6.1, at 7:144 (3d ed. Supp. 2012). []

Currently, the four major US broadcasters are involved in litigation with satellite service provider Dish Networks. Judging by some of the stories online, you might think that the broadcasters are claiming that the Dish features in question infringe copyright solely because they allow viewers to skip commercials.1

But that’s not what’s happening here. Though these lawsuits are still in their early stages, I thought it would be worth taking a closer look at them.

The Broadcaster Business Model

TV broadcasters generally earn revenues from a number of ways. First, broadcasters sell advertising on over-the-air broadcasts of programs, which are viewed for free by viewers. They also receive fees from cable systems, satellite services, and other multichannel video programming distributors, each of whom retransmit broadcast programming to their own customers.

Additional revenues are made in secondary markets. For example, broadcasters may license programming to cable and satellite systems to be provided for video-on-demand (VOD) services, they may distribute programming to websites like Hulu, and they may rent or sell “ultra-premium” (commercial-free) programs through sites like iTunes, Amazon, and Netflix.

Dish Network’s Service

In March 2012, Dish Networks began offering its new “Hopper” DVR to subscribers for a monthly fee. Like traditional DVR’s, the set top device allows subscribers to record television programs for later viewing. But Dish added two new features.

The first, PrimeTime Anytime (“PTAT”), according to Dish, “automatically records all the shows on the four major networks in HD (ABC, CBS, NBC and FOX) Monday through Saturday from 8-11 p.m. and Sundays from 7-11:00 p.m. EST when enabled.” These recordings are available for eight days after broadcast and don’t take up any space on the viewer’s personal DVR.

The second, Auto Hop, automatically removes commercials from the PTAT recorded shows. As Dish explains, “When you are ready to watch your recorded PrimeTime Anytime content, simply open the PrimeTime Anytime or DVR menu screen. You will see a small Hopper (red kangaroo) icon beside each show that you may watch commercial-free. When you select a show with the Hopper icon, a pop-up message will appear on screen that asks whether you want to enable Auto Hop. Choose ‘yes,’ and simply sit back and watch your show commercial-free. Choose ‘no,’ and watch your show with the commercials intact.”

The Litigation

On May 24, 2012, Fox sued Dish Network in the Central District of California (Los Angeles) for breach of contract and copyright infringement. NBC and CBS filed similar copyright claims later that day in the same court.2 Only twenty-nine minutes before Fox filed its lawsuit against Dish in Los Angeles, Dish Network filed a declaratory relief action against Fox, CBS, NBC, and ABC in the Southern District of New York seeking a declaration that Dish was not infringing the networks’ copyrights.

What followed was a bit of judicial juggling. On July 9, the New York court ruled that the lawsuit filed by Dish in New York was an improper anticipatory filing and dismissed all the claims that were already pending in Los Angeles against Dish — that would be Fox’s copyright and contract claims as well as CBS’s and NBC’s copyright claims.

In September, the Los Angeles court transferred CBS’s copyright claim to New York where Dish’s declaratory relief contract claim against CBS is still pending.3

After the July 9 order, NBC amended its Los Angeles complaint to include contract claims. NBC and Dish currently have cross-motions pending in Los Angeles and New York as they continue to fight over the venue of NBC’s copyright and contract claims.

ABC has answered Dish’s complaint in New York and counterclaimed alleging copyright and contractual claims similar to the ones alleged by the other broadcasters in Los Angeles.

Fox’s Preliminary Injunction

While there are similar issues involved in each case, the first substantive ruling in these various lawsuits is likely to come from the litigation involving Fox. In late August, Fox moved for a preliminary injunction against Dish. The court heard arguments from both sides on September 21st, and a decision is likely to come soon.

Fox and Dish entered into a Retransmission Consent Agreement (“RTC”) in 2002. The Agreement allows Dish to retransmit Fox programming to its subscribers, subject to certain limitations. Fox alleges that Dish’s PTAT service and Autohop feature violates these limitations. These violations give rise to its breach of contract claim against Dish, but they also give rise to its copyright infringement claim, since a licensee who acts outside the scope of his license can be liable for copyright infringement.4

In addition, Fox argues that Dish violates its exclusive right to reproduction by making unauthorized copies, through both PTAT and Autohop, and its exclusive right to distribution by distributing these works to its subscribers.5

In other words, Fox is not arguing that “skipping commercials is copyright infringement”; it is alleging that Dish made and distributed copies of its works without permission — the heart of copyright infringement — and also that its services exceeded the scope of the existing agreement between the two companies.

Dish’s Response: We’re Just Like Cablevision

In response, Dish raises a host of arguments to rebut Fox’s claims. Primarily, it seeks to characterize PTAT and Autohop as indistinguishable from a DVR system; it is the customer, and not Dish, making any copies, thus freeing Dish from any liability for breaching its contract or infringing copyright. Dish characterizes Fox’s arguments as variations on the theme that the “sky is falling.”6

Perhaps part of the reason Dish was so keen in having these cases adjudicated in New York was to take advantage of the Second Circuit’s precedent in Cartoon Networks v CSC Holdings (the “Cablevision” case).

I’ve written about Cablevision before, but to recap the salient points — Cablevision was sued after rolling out a remote DVR feature (“RS-DVR”) for its subscribers. The Second Circuit rejected the broadcasters’ claim of direct infringement for the reproductions of their works made through the RS-DVR system, holding that the copies are “made” by Cablevision’s customers, not Cablevision itself. The court did so by reasoning that “volitional conduct” is “an important element of direct liability.”

Note, however, that in Cablevision, the court did not create a blanket rule; it explicitly noted that it “need not decide today whether one’s contribution to the creation of an infringing copy may be so great that it warrants holding that party directly liable for the infringement, even though another party has actually made the copy.” The court also did not consider whether Cablevision could face secondary liability for its RS-DVR system, as that theory of liability was “expressly disavowed by plaintiffs.”

Nevertheless, Dish is banking on a favorable comparison between its PTAT service and Cablevision’s RS-DVR. In its opposition to Fox’s motion for a preliminary injunction, Dish argues that, as in Cablevision, Dish’s customers are making copies, not Dish. This argument is obviously bolstered if it is made in a court where Cablevision is binding precedent. In response, Fox notes that Dish determines what programs are recorded, when they are recorded, and how they are accessed; the only act of “volition” by the customer is a “trivial ‘flip of the switch'” to activate the service.

Dish’s Response: We’re Just Like Sony

Moving past the direct infringement and contract claims, Dish relies on the Supreme Court’s decision in Sony v Universal City Studios to rebut secondary liability claims.

Dish argues that, “In short, home video recording equipment is legal” under Sony. This is not a new argument, as many have argued since Sony that the decision created a broad “safe harbor” against secondary liability.7

But I would argue that Sony’s holding is far narrower. The doctrine of contributory infringement places liability on a third party who materially contributes to infringement and has knowledge of the infringing activity.8 Sony held that impute the necessary knowledge to a device manufacturer based solely on the design of the device, so long as the device is capable of substantial noninfringing uses.

This is precisely how the Supreme Court later interpreted Sony in its 2005 decision in MGM v Grokster:

Sony‘s rule limits imputing culpable intent as a matter of law from the characteristics or uses of a distributed product. But nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law.

Indeed, the Court there went on to hold that evidence that Grokster induced infringement satisfied the knowledge prong of contributory infringement. And Sony itself noted that in cases where there is an ongoing relationship between a device’s manufacturer or distributor, as opposed to a relationship that ends at the point of sale, the rule does not apply.9

Sony also does not apply to vicarious liability, where a third party can be held liable for infringement if he receives a direct financial benefit attributed to infringement and has the right and ability to supervise the direct infringers.10

These last two points are relevant here since the broadcasters have each alleged claims of inducement and vicarious liability against Dish. But setting these aside, is Dish even protected from liability for contributory infringement under Sony?

The Sony court, after all, held that the Betamax at issue was capable of substantial noninfringing uses for two reasons: first, it held that some broadcasters — ones who had not sued Sony — tacitly allow time-shifting of their programming, and, second, the plaintiffs “failed to demonstrate that time-shifting would cause any likelihood of nonminimal harm to the potential market for, or the value of, their copyrighted works” — leading to the Court’s conclusion that, on these facts, such time-shifting would be fair use.

Dish certainly cannot show the first — its PTAT service only copies programming from the four broadcasters who have sued here. And I’m not persuaded that Dish can show that any time-shifting enabled by its service, if the court accepts Dish’s characterization of its service as enabling time-shifting, doesn’t cause nonminimal harm to the potential market for Fox’s works. Its service directly competes with Fox’s licensed VOD options and guts its ad-based broadcasting model.

What’s next

Both Fox and Dish supply other arguments, and the other broadcasters have yet to weigh in on pretrial motions; it remains to be seen what issues will emerge as predominant.

But the bottom line is that none of the broadcasters are asserting that skipping commercials by itself amounts to direct copyright infringement. Fox notes repeatedly in its reply brief that it is not arguing that skipping commercials is infringement, nor is it seeking to overturn Sony’s decision on personal time-shifting or restrict the use of DVR’s. It is Dish’s alleged copying, in conjunction with automated removal of advertising, that gives rise to the contract and copyright claims. I’ll have more on these cases as they continue to develop.

Footnotes

  1. See, for example, Fox sues Dish over commercial skipping, claims copyright infringement, where Cory Doctorow, as is typical, makes one erroneous claim after the other; TV Networks Say You’re Breaking The Law When You Skip Commercials; Why Fox thinks that skipping commercials is like robbing a bank. []
  2. The Fox plaintiffs include Fox Broadcasting Company, Fox Television Holdings Inc and Twentieth Century Fox Film Corporation. The NBC plaintiffs include NBC Studios LLC, NBCUniversal Media LLC, Open 4 Business Productions LLC and Universal Network Television LLC. The CBS plaintiffs include CBS Broadcasting Inc, CBS Studios Inc and Survivor Productions LLC. The ABC defendants/counterclaimants include ABC, Inc, American Broadcasting Companies, Inc, and Disney Enterprises, Inc. For simplicity’s sake, I’ll refer to the plaintiffs by their marquee names. []
  3. The CBS-Dish contract had a forum selection clause designating New York. []
  4. Sun Microsystems v Microsoft, 188 F.3d 1115, 1121 (9th Cir. 1998). []
  5. Fox also argues that, in the alternative, Dish is liable as a secondary infringer under the doctrines of inducement, vicarious liability, and contributory infringement. []
  6. This phrase is mentioned no less than three times in Dish’s Opposition to the Motion for Preliminary Injunction, perhaps not surprisingly, since one of Dish’s attorneys is Mark Lemley, who wrote an entire paper built around the phrase. []
  7. See, for example, Brett M. Frischmann, Peer-to-Peer Technology as Infrastructure: an Economic Argument for Retaining Sony’s Safe Harbor for Technologies Capable of Substantial Noninfringing Uses, 2005 Journal of the Copyright Society of the USA 329 (2005), characterizing Sony as creating a rule “which precludes secondary liability in situations where a technology is “capable of substantial noninfringing uses”; Pamela Samuelson, Three Reactions to MGM v. Grokster, 13 Mich. Telecomm. & Tech. L.Rev. 177 (2006), referring to “Sony safe harbor”; Randal Picker, Rewinding Sony: The Evolving Product, Phoning Home, and the Duty of Ongoing Design, U Chicago Law & Economics, Olin Working Paper No. 241 (2005), “The great virtue of Sony’s substantial noninfringing use test is that it creates an innovation safe harbor”; A&M Records v Napster, 114 F.Supp.2d 896, 915-16 (ND Cali. 2000), affirmed 239 F.3d 1004, 1019 (9th Cir. 2001), court rejects Napster’s argument that it is protected under Sony precedent; []
  8. Gershwin Publishing v Columbia Artists Management, 443 F.2d 1159, 1162 (2nd Cir. 1971). []
  9. Sony at 437-38. []
  10. MGM v Grokster, 380 F.3d 1154, 1164 (9th Cir. 2004). []

YouTube revamps content ID, defaults to DMCA in case of unresolved disputes — Leading the news this week is Google’s decision to add some flexibility to its Content ID appeals process. According to Google, “When the user files an appeal, a content owner has two options: release the claim or file a formal DMCA notification.” It remains to be seen what the effect of this move will be, but, just for the record, Jonathan Bailey called it.

New paper on ISP liability: how to reconcile US and EU approaches? — The 1709 Blog points to an informative new paper comparing the US’s DMCA and the EU’s E-commerce Directive, both of which set up rules controlling liability for online service providers.

The Internet: Now just another special interest — Behind the shiny new Internet Association is the same old lobbying, as Lydia DePillis of The New Republic reports.

Internet Astroturf 3.0 — Scott Cleland offers a who’s who of groups “united in the common belief that users and groups of any kind should not have to pay, or ask for permission, to use others’ intellectual property online, because permission and payment to use intellectual property limits the sharing, creativity and innovation of others.”

Amanda Palmer’s Accidental Experiment with Real Communism — The New Yorker’s perspective on recent events involving Palmer. “Ideally, you don’t even know you are working at all. You think you are keeping up with friends, or networking, or saving the world. Or jamming with the band. And you are. But you are also laboring for someone else’s benefit without getting paid. And this, it turns out, was exactly Amanda Palmer’s hustle.”

HSI seizes 686 websites selling counterfeit medicine to unsuspecting consumers — The US ICE’s Homeland Security Investigations announced this week the seizure of nearly seven hundred domain names connected with the online illicit sale of fake drugs. The seizures are part of a larger global effort which so far has resulted in 79 arrests, the seizure of 3.7 million doses of counterfeit drugs, and the takedown of approximately 18,000 websites. No word yet on how much this will break the internet.

Protecting Creative and Intellectual Property on the Internet — Independent filmmaker Adam Lipsius recounts his experience with online piracy and the challenges it poses to similar creators. He ends by noting, “it is respect for all craftsmen and conjurers and job creators — and the expectation that society will protect their ability to profit legitimately from their work — that’s at stake when setting the balance on copyright protection in our digital era.”

NYC 2012 Conference: Keynote Speaker; Registration Open! — Bill Rosenblatt announces some of the panels and speakers who have been confirmed for the December 5th conference in NYC, and the event sounds promising. Registration is now open and discounted before November 1.

 

Like many couples, Brian Edwards and Thomas Privitere of New York celebrated their engagement by taking engagement photos. They hired photographer Kristina Hill in March 2010 and shared the photos on a blog that documented their upcoming wedding for friends and family.

This past summer, the now-married couple learned that an anti-gay organization known as “Public Advocate of the United States” (“PAUS”) had misappropriated one of the photos, showing the two kissing, to use as the background for, in the words of the Denver Post, “ugly campaign fliers” in Colorado, advocating against a candidate who had supported civil unions in that state. A second mailing, directed at another candidate, was also mailed out by the group.

Last week, Hill, Edwards, and Privitere filed a lawsuit against PAUS, alleging copyright infringement and appropriation of personality and likeness. The photograph, they argued, was not only exploited without permission, it was done to advocate for a position they are diametrically opposed to.

Mike Masnick recently wrote about the case — Why it’s tempting, but troubling, to use copyright as a stand in for moral rights — admitting that the use is likely infringing, but like with any enforcement of creator’s rights, found reason to criticize the lawsuit. Said Masnick:

 I’m worried about the implications here. Copyright in the US is an economic right, not a moral one. Other countries may have “moral rights” or “droit moral” on photographs, but we don’t in the US. And it is clear that the copyright complaint is really entirely about the moral rights issue as it relates to copyright. There is no economic impact at issue here, because there is no economic interest in this image. There does not appear to be any plan or intent to license the image or exploit it economically in any way.

And, so, I worry when we start using moral rights arguments to defend a copyright claim, no matter how strongly I support the moral argument being advanced by the plaintiff.

This is reminiscent of his reaction decrying the Ninth Circuit’s decision in Monge v. Maya Magazines a few weeks ago, where the court held that fair use didn’t protect a tabloid that had published, without permission, private wedding photos that had been stolen from a couple.

Masnick is correct insofar as US Copyright law doesn’t protect “moral rights.” In copyright law, “moral rights” is a term of art, with a specific meaning. Also referred to as “droits moraux”, the term encompasses certain noneconomic rights, such as the right to attribution and a right of integrity.1 Generally speaking, these rights are not recognized in the US.2

But in a broader context, Masnick is incorrect. Copyright does recognize noneconomic interests — and the economic interests it recognizes go beyond a simple economic interest in commercial exploitation. Copyright, after all, gives creators the right to control a work, or “the right to say no“, and this right can often serve as a proxy to broader moral rights. In a sense, moral rights are “baked into” US copyright law.

We can turn to the courts to see what I mean.

The Copyright Act gives copyright owners the exclusive right “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”3 This right of distribution, among other things, gives authors the right of first publication.

The right of first publication, long an absolute in the common law (though that has been tempered in recent decades), is anything but an economic right. Rather, as the Supreme Court noted in Harper & Row v Nation Enterprises, “The right of first publication implicates a threshold decision by the author whether and in what form to release his work.”4 The Court noted earlier that “Publication of an author’s expression before he has authorized its dissemination seriously infringes the author’s right to decide when and whether it will be made public.”

This example shows that author’s right to control her work through copyright is just as vital as her right to remuneration. This right extends beyond just first publication. The Second Circuit wrote in Castle Rock Entertainment v Carol Publishing Group:

Although Castle Rock has evidenced little if any interest in exploiting this market for derivative works … the copyright law must respect that creative and economic choice. “It would … not serve the ends of the Copyright Act — i.e., to advance the arts — if artists were denied their monopoly over derivative versions of their creative works merely because they made the artistic decision not to saturate those markets with variations of their original.”5

Courts have also been clear that this right to control only applies as protection against commercial exploitation. In Sony Corp v Universal City Studios (the “Betamax” case), the Supreme Court stated, “Even copying for noncommercial purposes may impair the copyright holder’s ability to obtain the rewards that Congress intended him to have.”6 It goes on to point out that these rewards are not limited to monetary payments:

The copyright law does not require a copyright owner to charge a fee for the use of his works, and as this record clearly demonstrates, the owner of a copyright may well have economic or noneconomic reasons for permitting certain kinds of copying to occur without receiving direct compensation from the copier. It is not the role of the courts to tell copyright holders the best way for them to exploit their copyrights.

Other courts have endorsed this characterization of the rewards due authors.

In a 2000 case, the Ninth Circuit noted that the defendant’s distribution or an unauthorized version of plaintiff’s work harmed plaintiff’s “goodwill by diverting potential members and contributions.” It disagreed with defendant’s argument that plaintiff’s failure to exploit the work showed that the work had no economic value that unauthorized dissemination would adversely affect. Said the court, “Even an author who had disavowed any intention to publish his work during his lifetime was entitled to protection of his copyright, first, because the relevant consideration was the ‘potential market’ and, second, because he has the right to change his mind.”7

This is obviously a very brief survey of how copyright law is not limited to purely economic rights. It isn’t “troubling”, as Masnick puts it, nor is it in any way novel, to use copyright to protect an image even though there is no “plan or intent to license the image or exploit it economically in any way.” What’s more troubling, in my opinion, is to strip the law of its humanity, place a dollar sign on everything, and view harm through the lens of a financial ledger. Copyright is more than just a right to remuneration; it “is deeply rooted in our conception of ourselves as individuals with at least a modest grade of singularity, some degree of personality.”8 “It is also a source of human liberties.”9

Footnotes

  1. The Berne Convention, for example, provides for protection of moral rights in Article 6bis: “Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation.” []
  2. The Visual Artists Rights Act of 1990 (VARA), codified under 17 USC § 106A, grants some moral rights to visual artists under certain circumstances; see also Gilliam v American Broadcasting Companies, 538 F.2d 14 (2nd Cir. 1976). []
  3. 17 USC § 106(3). []
  4. 471 US 539, 553 (1985). []
  5. 150 F.3d 132, 145-46 (2nd Cir. 1998). []
  6. 464 US 417, 450 (1984). []
  7. Worldwide Church of God v Philadelphia Church of God, 227 F.3d 1110, 1119 (9th Cir. 2000). []
  8. Mark Rose, Authors and Owners: The Invention of Copyright,  pg. 142 (Harvard University Press 1993). []
  9. Ralph Oman, Going Back to First Principles: the Exclusive Rights of Authors Reborn, 8 J. HIGH TECH. L. 169, 182 (2008). []

Today’s guest post comes from Copyhype contributor Devlin Hartline.

One topic of debate in copyright is over whether simply “making available” a file on a peer-to-peer network is itself a violation of the distribution right.1 The courts have been split on the issue.2 Professor Peter S. Menell explains the controversy:

Interpreting “distribute” narrowly, some courts have held that copyright owners must prove that a sound recording placed in a share folder was actually downloaded to establish violation of the distribution right. Other courts held that merely making a sound recording available violates the distribution right. The ramifications for copyright enforcement in the Internet age are substantial. Under the narrow interpretation, the relative anonymity of Internet transmissions in combination with privacy concerns make enforcement costly and difficult. A broad interpretation exposes millions of file-sharers to potentially crushing statutory damages.3

The popular copyright treatise Nimmer on Copyright has played an important role in the debate. The treatise was first published in 1963 by the late Professor Melville Nimmer. Since 1985, his son Professor David Nimmer (“Nimmer”) has taken over the task of editing and updating it. It’s hard to exaggerate how influential Nimmer on Copyright has been in shaping copyright jurisprudence. A quick, informal search on Westlaw turns up 3,301 state and federal cases that have cited it. That is compared to 1,444 cites for Goldstein on Copyright and 236 cites for Patry on Copyright, two other leading copyright treatises.

Several courts have consulted Nimmer on Copyright when analyzing whether “making available” constitutes distribution. As recently as 2011, the treatise took the position that infringement of the distribution right requires actual dissemination of copies of a work to the public.4 But in the latest edition, Nimmer has changed his tune—the treatise now states that “making available” is distribution simpliciter. After a detailed examination of the legislative history of the current Copyright Act, Nimmer now concludes that “the distribution right was formulated precisely so that it would extend to making copyrighted works available, rather than mandating proof of actual activities of distribution.”5

Thomas-Rasset and “Making Available”

The “making available” issue took center stage in the famous Jammie Thomas-Rasset case. In 2006, certain recording companies sued Thomas-Rasset for willful copyright infringement. One of the claims was that she had violated the distribution right by merely “making available” twenty-four copyrighted song files on the KaZaA peer-to-peer network. An investigator working for the plaintiffs found that the song files were available in a KaZaA share folder for others to download, but it could not be determined whether other users had in fact downloaded the files.

The district court instructed the jury that the “act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners’ exclusive right of distribution, regardless of whether actual distribution has been shown.”6 The jury found Thomas-Rasset liable for willful copyright infringement, awarding the plaintiffs statutory damages of $9,250 per song, for a total of $222,000. The next day, the court entered judgment on the jury’s verdict.

Thomas-Rasset then moved for new trial, or in the alternative, for remittitur. Months later, the district court sua sponte asked the parties to submit briefs on the issue of whether its jury instruction on “making available” was a manifest error of law. Several amici, including the EFF, Public Knowledge, and the MPAA, were permitted to file briefs as well. The plaintiffs and their supporters argued that the jury instruction on “making available” was proper, while Thomas-Rasset and her supporters argued that “making available” is not distribution. After thorough analysis, the district court sided with Thomas-Rasset.

The district court noted that while the Eighth Circuit had not addressed the “making available” issue in the peer-to-peer context, the court of appeals had nonetheless considered and rejected the “making available” argument in a different context in National Car.7 In that case, the appellate court grappled with the issue of whether a state law claim for breach of contract was preempted by the Copyright Act. The district court below had held that a licensee’s unauthorized use of licensed software to process third-party data was equivalent to distribution of copies of that software.

The Eighth Circuit rejected the notion that use of a software program for the benefit of third parties constituted distribution of the software. The court of appeals turned to Nimmer’s treatise for the proposition that the distribution right “grants the copyright owner the exclusive right publicly to sell, give away, rent or lend any material embodiment of his work.”8 It concluded that “even with respect to computer software, the distribution right is only the right to distribute copies of the work. As Professor Nimmer has stated, infringement of the distribution right requires an actual dissemination of either copies or phonorecords.”9

Finding that the Eighth Circuit’s opinion in National Car was binding precedent, the district court in the Thomas-Rasset case held that liability “for violation of the exclusive distribution right . . . requires actual dissemination.”10 The district court then granted Thomas-Rasset’s motion for a new trial on the ground that the jury instruction on the “making available” issue was legal error that substantially prejudiced her rights. The new trial was of no help to Thomas-Rasset. Even without the “making available” instruction, the jury again found her liable for willful copyright infringement of the twenty-four song files.

The Thomas-Rasset story demonstrates nicely the influence that Nimmer on Copyright has had in the “making available” debate. The Eighth Circuit in National Car relied on the treatise in finding that violation of the distribution right requires actual dissemination of copies of a work to the public. In turn, the district court in the Thomas-Rasset case followed suit in concluding that merely “making available” a work on a peer-to-peer network does not violate the distribution right. But what’s to be made of the fact that Nimmer has now changed his tune on the “making available” issue?

Nimmer’s New Tune

In his recent journal article, Professor Peter S. Menell (“Menell”) surveys the voluminous legislative history leading up the passage of the 1976 Copyright Act, and he shows that Congress did in fact intend to establish that “making available” is distribution. Menell examines the significant errors in interpreting the scope of the distribution right made in the treatises, scholarship, and court decisions. And then in a footnote, he mentions that he was able convince Nimmer to change his tune:

The discussion that follows is based upon the version of Nimmer on Copyright that was available to jurists and practitioners through August 2011. After reading this article, Professor Nimmer asked me to co-author a complete revision of the sections of Nimmer on Copyright relating to the scope of the distribution right and the definition of “publication.”11

The latest edition of Nimmer’s treatise does indeed adopt Menell’s findings on the “making available” issue. (Relatedly, Menell and Nimmer have created two multimedia presentations of their discoveries that I highly recommend: Part I: In Search of the Lost Ark and Part II: The Elephant in the Room.) Nimmer on Copyright now notes that the courts that have looked at the “making available” puzzle have all failed to consider the relevant evidence of Congress’s intent:

The point of commonality among these opinions is that none of them went back to examine the rich trove of legislative materials from the early to mid 1960s and early 1970s explicating Congress’s intent in shifting terminology from the 1909 rights to publish and vend to the 1976 Act’s right to “distribute,” and at the same time expanding the definition “publication” to include offers to distribute.12

Under the 1909 Copyright Act, there was no right to distribute. Instead, copyright owners had the rights to publish and to vend. The right to publish was universally understood to encompass all public offerings of a work, i.e., “making available” copies of a work to the public. Nimmer observes that no court “recognized a requirement to prove actual distribution of copies, and even gratuitous offers of a work to the public fell within the right to publish.”13 That “making available” copies of a work to the public constituted publication was well-settled at the time the revisions for the modern Copyright Act were considered.

Determination of what constituted publication under the 1909 Act was of critical importance because a work was deemed to have lost its common law copyright protection the moment it was published. Moreover, if a work was published without the obligatory copyright notice, that work fell into the public domain and received no statutory copyright protection. Since the penalty for publishing a work without copyright notice was so harsh, judges advanced some questionable distinctions into the jurisprudence. The drafters of the 1976 Act introduced the right to distribute in an attempt to shed these dubious vestiges.

Nimmer explains:

The drafters of the current Act wished to avoid the tremendous accumulation of common law interpretation that had thus arisen over how to define “publication.” For that reason, they chose a new term, “distribution,” as an omnibus term that would encompass all acts then qualifying as “publication,” without the technical exceptions that had accreted through the common law process of various rulings.14

Thus, the introduction of the right to distribute in the 1976 Act was intended not only to incorporate the preexisting publication right, which included “making available” copies of a work to the public, but it was also intended to broaden the publication right by eliminating the problematic exceptions that had been introduced into the doctrine by the judiciary.

As Nimmer summarizes:

The distribution right accorded by Section 106(3) is to be interpreted broadly, consonant with the intention expressed by its drafters. It extends to the offer to the general public to make a work available for distribution without permission of the copyright owner. No consummated act of actual distribution need be demonstrated in order to implicate the copyright owner’s distribution right.15

So under Nimmer’s contemporary analysis, the district court in the Thomas-Rasset case had it wrong when it concluded that nowhere in the legislative history does “Congress state that distribution should be given the same broad meaning as publication.”16 Not only did Congress intend that distributions should encompass all publications, the new distribution right was specifically created to be broader than the antecedent publication right. Similarly, the district court in the Thomas-Rasset case had it backwards when it held that “all distributions to the public are publications, but not all publications are distributions to the public.”17

Given the widespread influence of his treatise, it seems inevitable that others will follow Nimmer in his conclusion that “the act of making available sound recordings for downloading by the public through file-sharing networks suffices to show actionable copyright infringement.”18 But only time will tell how many others change their tunes as well.

Follow me on Twitter: @devlinhartline

Footnotes

  1. 17 U.S.C.S. § 106(3) (Lexis 2012) (“the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: *** (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending”). []
  2. See, e.g., Atl. Recording Corp. v. Howell, 554 F.Supp.2d 976 (D. Ariz. 2008); London-Sire Records, Inc. v. Doe 1, 542 F.Supp.2d 153 (D. Mass. 2008); Motown Record Co., LP v. DePietro, No. 04-cv-2246, 2007 WL 576284 (E.D. Pa. Feb. 16, 2007); Warner Bros. Records, Inc. v. Payne, No. 06-ca-051, 2006 WL 2844415 (W.D. Tex. July 17, 2006); Atl. Recording Corp. v. Anderson, No. 06-cv-3578, 2008 WL 2316551 (S.D. Tex. Mar. 12, 2008); Universal City Studios Productions LLLP v. Bigwood, 441 F.Supp.2d 185 (D. Me. 2006); UMG Recordings, Inc. v. Alburger, 2009 U.S. Dist. LEXIS 91585 (E.D. Pa. Sept. 29, 2009). []
  3. Peter S. Menell, In Search of Copyright’s Lost Ark: Interpreting the Right to Distribute in the Internet Age, 59 J. Copyright Soc’y U.S.A. 1 (2011). []
  4. Nimmer on Copyright § 8.11[A], at 8-149 (2007) (“Infringement of [the distribution right] requires an actual dissemination of either copies or phonorecords.”). []
  5. 2-8 Nimmer on Copyright § 8.11[D][4][c]. []
  6. Capitol Records, Inc. v. Thomas, 579 F.Supp.2d 1210, 1213 (D. Minn. 2008) (internal quotations omitted). []
  7. National Car Rental Sys. v. Computer Assocs. Int’l, 991 F.2d 426 (8th Cir. 1993). []
  8. Id. at 430 (quoting 2 Nimmer on Copyright § 8.11[A], at 8-123) (emphasis in original; internal quotations omitted). []
  9. Id. at 434 (quoting 2 Nimmer on Copyright § 8.11[A], at 8-124.1) (emphasis in original; internal quotations and brackets omitted). []
  10. Thomas, 579 F.Supp.2d at 1226. []
  11. Menell, 59 J. Copyright Soc’y U.S.A. at 20 n.90. []
  12. 2-8 Nimmer on Copyright § 8.11[D][1]. []
  13. 2-8 Nimmer on Copyright § 8.11[B][4][d] (emphasis in original). []
  14. 2-8 Nimmer on Copyright § 8.11[A]. []
  15. 2-8 Nimmer on Copyright § 8.11[B][4][d]. []
  16. Thomas, 579 F.Supp.2d at 1219. []
  17. Id. at 1220. []
  18. 2-8 Nimmer on Copyright § 8.11[D][4][c]. []

The subject of copyright, or the protection of literary property is one of great importance to the whole world. Every human being, great and small, high and low, gentle and simple, male and female, is interested in this matter. Legislators have treated it as a question of conflicting interest between authors and publishers on the one hand, and the public or the consumers of books on the other; authors, particularly when young, too frequently look upon it as a question of conflicting interest between themselves and the publishers; and consumers through their representative legislators, have endeavoured to secure to themselves the blessing of cheapness, by injurious enactments.

How times have changed!

… One other word to those who fear to do justice, lest monopoly should ensue: it is admitted that a person shall have a perpetual property in the work of his hands, a labour which gives him healthy days, cheerful evenings, and quiet nights; he builds a house for his own benefit; he lives and dies in it, and transmits it to his heirs or assigns forever; and you do not call this monopoly, and you are right: another person devotes himself to literature, and writes books for the benefit of his fellow mortals, (for if they give neither pleasure nor profit, they will not sell;) he labours day and night with his head and pen, a work that gives neither healthy days, nor cheerful evenings, nor quiet nights; his spirit is forced to grapple daily in desperate struggle with the inertia of its earthy tabernacle, in order to gain the mountain height of severe thought; and thus with wear and tear of mind and body, he produces, not a house useful only to himself, but a moral, or religious, or imaginative, or scientific book, that may increase the happiness of thousands yet unborn; and yet this honest labourer is not to have a complete property in his labour’s product, for fear of monopoly!

His case is precisely the same as that of the maker of houses, who cannot get a monopoly rent, because other men make more houses, as soon as he demands too much. So, when an author who has produced a book for which the demand is great, is unwise enough to ask too high a price, another author, (perhaps greater than he,) will write another book on the same subject, and thus demolish his ideal monopoly.

Philip H. Nicklin, Remarks on Literary Property (Phila. 1838).

Is it time to repair the DMCA? — That’s the question posed by Jonathan Bailey, who notes, as does a recent Trichordist piece, how far from the original intent of the 1998 law we’ve come. Bailey suggests five ways to repair the DMCA: 1) Improve transparency, 2) Reward sites that are proactive, 3) Punish sites that do less, 4) Get more serious about bad takedown notices, and 5) Streamline the sending and processing of notices.

Digitalmusic.org launches music API directory — Digitalmusic.org, the digital wing of the National Association of Recording Merchandisers, recently launched an API directory as part of its suite of developer services that “was created to help address the issue of connecting developers with the quality content providers and services that can be the building blocks of their business.” The organization has been hard at work helping aspiring entrepreneurs build successful digital music-related services; this October it is also hosting an Entertainment Startup Academy in Washington, D.C

How much do artists make on YouTube — Over at Vox Indie, Ellen Seidler, points to a recent NPR story examining how much the video site compensates musicians. Notes Seidler, “Bottom line, musicians and filmmakers whose work is routinely uploaded to YouTube without permission can make some money from it. Time for Google to tell us exactly how much they are making. Anything less than full transparency is unacceptable.”

Justin Timberlake, Myspace owners discuss new relaunch — The internet was abuzz earlier this week after Myspace teased a completely new look and site in a video. Here, the site’s owners, including investor Timberlake, discuss the reboot of the once popular social networking site. While many are wondering whether a new UI and features will save the site, it should be noted that Myspace has already been quietly rebuilding; back in February, it announced that it was adding around 40,000 new users a day

The Tech World Gets a New Trade Association, Or “How to Read a DC Press Release” — With the official launch of the Internet Association this week, Bytegeist’s Jane Hamsher takes a closer look at the official announcement. Hamsher notes, “Nobody asked the rather obvious question: why an industry that spent $129 million on lobbying in 2011 needs yet another lobbing shop, especially when the Net Coalition already exists.”

Kickstarter Will Not Save Artists From the Entertainment Industry’s Shackles — A provocative article from Evgeny Morozov that looks at a recent academic study about the effect the fundraising site has had on the culture industry, particularly documentary filmmaking. According to the study’s author, campaign and issue-driven films are more likely to find success through this method of funding than other types of films, while films that involve significant legal risks (“an undercover investigation of the oil industry”, to use Morozov’s example) are less likely to be made through crowdfunding.

Maybe the Internet only wants one of everything — “How many search engines are there? For most of us, there’s only one — and it makes major news headlines even for putting a cute design on its logo.  How many general-purpose social networks do you use? Probably just one — or maybe you use them both, because technically, they actually do different things. Where do you crowdfund something? Duh. Where do you buy physical and now many digital objects? Mostly from here.”

.

Launched in February 2012, Aereo is a service that retransmits broadcast TV over the internet, for a monthly fee, and without permission from copyright holders. It was quickly sued by several broadcasters, who sought to enjoin the service during court proceedings. However, the district court denied the injunction, noting that the broadcasters had not sufficiently distinguished Aereo from the Second Circuit’s 2008 “Cablevision” decision.1 The court strongly suggested that, but for Cablevision, the preliminary injunction would have been granted. The broadcasters appealed this decision.

The broadcasters’ appellate brief has recently been filed, as well as the amici briefs in support of plaintiff (opposing briefs are due later this year). William Ruiz at the Copyright Alliance has a roundup and links to several of these briefs, which include briefs filed by ASCAP and other copyright member organizations, professional sports organizations, former US Register of Copyrights Ralph Oman, and, somewhat surprisingly, Cablevision itself.

But despite the complex and confusing issues at play here, I believe the question on appeal is actually easily answered. To see why, let’s take a closer look at public performances, the Cablevision case, the Aereo system, and, finally, the “missing link” that distinguishes Aereo from Cablevision.

Public Performance

The US Copyright Act gives copyright owners the exclusive right “to perform the copyrighted work publicly.”2 The nature of this right is admittedly confusing.

It helps to visualize a performance as a chain, with each link in the chain a separate and discrete performance. When a television station broadcasts a show, it is performing the work. When a cable provider retransmits that broadcast to subscribers, it is also performing the work. And when a viewer turns on her TV to watch the show, she is also performing the work. The relevant question, for copyright purposes, is whether a particular performance is public — the right to privately perform a work is not exclusive to the copyright holder.

The Copyright Act defines public in this context not only in the traditional sense of a place open to the general public but also as a transmission “by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” This means that a performance by a television or radio station is public even if every single reception of that broadcast takes place in the privacy of the viewers’ homes. And by extension, as the Second Circuit held in National Football League v PrimeTime 24 Joint Venture,3 “each step in the process by which a protected work wends its way to its audience” — each link in this specific performance chain that results in a public performance — is itself a public performance.

So in our example, the broadcaster’s initial performance is a public one, and the cable service’s retransmission of the performance is a separate public performance. The television viewer’s performance, however, is a private one, since that particular performance has already wended its way to the public and is now occurring in a private setting.

Cablevision and the VCR Analogy

Cablevision involved a new service from cable provider Cablevision that allowed remote DVR functions (“RS-DVR”) for subscribers. Like a set-top DVR, viewers could program the recording of shows for later viewing, except in this case, the DVR’s were housed remotely at Cablevision’s own facilities. Broadcasters and TV and film producers sued Cablevision, claiming that Cablevision infringed their copyrights twice, by first copying their works onto the RS-DVR and then publicly performing the work when a subscriber played the recorded show from the RS-DVR.

The Second Circuit disagreed. As far as Cablevision’s liability for copying, the court analogized the RS-DVR to an ordinary VCR. Just as Cablevision wouldn’t be directly liable if a viewer decided to record a show at home, it wouldn’t be liable if the viewer recorded a show on a remote device. Even though the remote device is housed within Cablevision’s system, said the court, it is still the viewer’s “volitional conduct” that causes the reproduction.4

The court also held that Cablevision was not separately liable for the performance that results when a show is played from the RS-DVR by a viewer. Plaintiffs argued that Cablevision’s transmission of shows from the RS-DVR was indistinguishable from its transmission of live shows to subscribers. Since the latter is a public performance, so too is the former. Things get tricky here, but ultimately, the decision relied on a distinction between the transmission of a particular performance of a work and the transmission of the underlying work to draw the line between a public and a private performance.

The district court, in deciding whether the RS-DVR playback of a program to a particular customer is “to the public,” apparently considered all of Cablevision’s customers who subscribe to the channel airing that program and all of Cablevision’s RS-DVR subscribers who request a copy of that program. Thus, it concluded that the RS-DVR playbacks constituted public performances because “Cablevision would transmit the same program to members of the public, who may receive the performance at different times, depending on whether they view the program in real time or at a later time as an RS-DVR playback.” In essence, the district court suggested that, in considering whether a transmission is “to the public,” we consider not the potential audience of a particular transmission, but the potential audience of the underlying work (i.e., “the program”) whose content is being transmitted.

We cannot reconcile the district court’s approach with the language of the transmit clause. That clause speaks of people capable of receiving a particular “transmission” or “performance,” and not of the potential audience of a particular “work.” Indeed, such an approach would render the “to the public” language surplusage. Doubtless the potential audience for every copyrighted audiovisual work is the general public. As a result, any transmission of the content of a copyrighted work would constitute a public performance under the district court’s interpretation. But the transmit clause obviously contemplates the existence of non-public transmissions; if it did not, Congress would have stopped drafting that clause after “performance.”

Aereo’s Service

Aereo argued in front of the lower court that its service is similar to Cablevision’s. The individual copies of broadcast signals are made at the volition of users, so Aereo is not directly liable for reproduction. And since the performance that results when a user watches the video originates from a unique copy, it is not a public performance. The district court held that since plaintiffs could not distinguish Aereo from Cablevision, they had not demonstrated a likelihood of success on the merits.

A note on Aereo’s thousands of tiny antennas. Both Aereo and the district court emphasized the fact that Aereo used thousands of tiny antennas instead of one big antenna to capture television signals, but I don’t believe this is ultimately important. As explained above, Cablevision distinguished between a particular transmission and a particular work. It didn’t distinguish between a transmission of a particular work and a particular transmission of a particular work. In other words, it was silent on whether a public performance can become a private performance if you manage to “divide” one transmission of a particular work into separate, unique transmissions of that particular work, as Aereo claims its thousands of tiny antennas does.

I don’t think you can; the language of the Copyright Act doesn’t contemplate this view and there is no case law that supports it. Whether Aereo uses one big antenna or thousands of tiny antennas, it is still retransmitting the same transmission of a particular work — the particular transmission of a work that originates from the broadcasting station. A transmission is indivisible. The same logic used by Aereo and the district court would seem to support the view that a restaurant which is engaged in a public performance by playing music for its patrons could escape liability by adding speakers until there is a 1:1 ratio of speakers to patrons, thereby “dividing” the transmission into multiple private performances. Clearly, this is not the case.

So we’re left with the distinction between Aereo and Cablevision.

The Missing Link

That distinction relies on what I’ll call the “missing link” in the performance chain.

The Cablevision court didn’t address this “missing link”, nor did the district court in Aereo. The “missing link” is the transmission of a program by Cablevision to its RS-DVR service, which is itself a separate public performance. It does not matter that this particular performance was to a bunch of recording devices. What does matter is that Cablevision is licensed to retransmit this performance, by virtue of its license to retransmit broadcasts to its subscribers in general — think of the DVR’s as simply additional subscribers. Aereo is not licensed to retransmit the broadcasters’ performance to its devices that make copies for its users — regardless of whether, as in Cablevision, a court determines that those copies themselves are made by Aereo’s users rather than Aereo.

To go back to the VCR analogy, a cable service is publicly performing a work and needs a license to retransmit the broadcast to its customers. The cable service is not liable if a TV viewer records an on-air program to her VCR. And if the user later plays back that recording, she — not the cable service — is “performing” the work, which, in her own home, would be a private performance. Aereo is like the cable service here. Even if the service is in all other respects similar to this VCR analogy, Aereo would still need a license to publicly perform the work that users copy and privately perform. And, as explained above, thousands of tiny antennas does not negate the need for that license.

The plaintiffs here do call attention to this “missing link” in their brief:

The direct capture of a broadcast by Aereo’s antennas and the retransmissions of the signal from those antennas to servers that make multiple subscriber-associated copies is itself an infringing performance to the public. That Aereo then sends the broadcast programming along to its subscribers by routing it through subscriber-associated digital copies does not transform those retransmissions into a private performance. That last step is simply another link in the chain of steps by which Appellants’ copyrighted programs are retransmitted to the public.

In my opinion, this is the key argument. Aereo does not have a license to retransmit the broadcasters’ performance in the first instance, so it is irrelevant what it does afterwards with that unauthorized public performance or how closely its system resembles Cablevision’s. This makes it a straightforward legal question that easily supports a preliminary injunction. The district court erred when it held otherwise, and the Second Circuit should reverse.

Footnotes

  1. Cartoon Network LP v. CSC Holdings, 536 F.3d 121 (2nd Cir. 2008). []
  2. 17 USC § 106(4). []
  3. 211 F.3d 10 (2000). []
  4. The court did note that Cablevision might face secondary liability in this situation, but this theory was “expressly disavowed by plaintiffs” in this particular case.” Cartoon Network at 130. []

Is it possible to sell used mp3s?

That’s one of the questions raised by a legal dispute currently headed toward trial between Capitol Records and ReDigi.

ReDigi is an online service founded in October 2011 that claims to provide a marketplace for secondhand digital music files. The site has since raised over $1 million in venture financing and announced plans to expand its service to used e-books.

The biggest obstacle to re-selling digital works online is that they are independent of any material object. Unlike with physical objects, any transfer of a digital work would seem to necessarily require that the work is copied, since transmission doesn’t result in actual physical transfer of bits over a network. And the exclusive right to copy a work is, after all, one of the core rights of copyright.

ReDigi believes it has found a way to overcome this obstacle. The company has built a “forward-and-delete” mechanism into its service that is designed to ensure that any file uploaded for resale is deleted from the user’s computer. Whether or not this is enough remains in the hands of the Southern District Court of New York.

The First Sale Doctrine and Digital Works

The first sale doctrine was first recognized in 1908 by the Supreme Court in Bobbs-Merrill v Straus.1 There, a book publisher had printed the following notice in its books: “The price of this book at retail is one dollar net. No dealer is licensed to sell it at a less price, and a sale at a less price will be treated as an infringement of the copyright.” The publisher brought suit against a wholesale dealer who was selling copies of the book for 89 cents. The Court rejected the publisher’s copyright claim, stating:

In our view the copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice, such as is disclosed in this case, a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.

The US Copyright Act of 1909 incorporated this first sale doctrine into statute, and it has remained a permanent fixture of copyright law since.2 It has, however, become subject to several limitations. The Record Rental Amendment of 1984 prohibits for-profit rental, lease, or lending of phonorecords,3 while the Computer Software Rental Amendments Act of 1990 did the same for computer software (though the limitation doesn’t apply to console games).4 A 1983 bill to create a similar exception for videotapes failed to pass after opposition from the video rental industry and consumer groups.5 These limitations were added because of concerns over the ease of making near-perfect duplicates.6

Digital goods raise particular challenges to the scope of the first sale doctrine, as explained by the National Information Infrastructure’s Working Group on Intellectual Property Rights:

If the owner of a particular copy transmits a copy to another person without authorization (either from the copyright owner or the law), such a transmission would involve an unlawful reproduction of a work, and the first sale doctrine would not shield the transmitter from liability for the reproduction nor for the distribution. Under the first sale doctrine, the owner of a particular copy of a copyrighted work may distribute it, but may not reproduce it. Therefore, the transmission would constitute infringement of the copyright owner’s reproduction right. If the reproduction is unlawful, further distribution of the unlawful reproduction would not be allowed under the first sale doctrine because the copy distributed would not be one “lawfully made” under the Copyright Act, as required by the statute.

Congress has at times considered the application of the first sale doctrine to digital goods. In 2001, the US Copyright Office recommended against expanding the doctrine to explicitly include works in digital form:

Proponents of expansion of the scope of section 109 to include the transmission and deletion of a digital file argue that this activity is essentially identical to the transfer of a physical copy and that the similarities outweigh the differences. While it is true that there are similarities, we find the analogy to the physical world to be flawed and unconvincing.

Physical copies degrade with time and use; digital information does not. Works in digital format can be reproduced flawlessly, and disseminated to nearly any point on the globe instantly and at negligible cost. Digital transmissions can adversely effect the market for the original to a much greater degree than transfers of physical copies. Additionally, unless a “forward-and-delete” technology is employed to automatically delete the sender’s copy, the deletion of a work requires an additional affirmative act on the part of the sender subsequent to the transmission. This act is difficult to prove or disprove, as is a person’s claim to have transmitted only a single copy, thereby raising complex evidentiary concerns. There were conflicting views on whether effective forward and delete technologies exist today. Even if they do, it is not clear that the market will bear the cost of an expensive technological measure.

The underlying policy of the first sale doctrine as adopted by the courts was to give effect to the common law rule against restraints on the alienation of tangible property. The tangible nature of a copy is a defining element of the first sale doctrine and critical to its rationale. The digital transmission of a work does not implicate the alienability of a physical artifact. When a work is transmitted, the sender is exercising control over the intangible work through its reproduction rather than common law dominion over an item of tangible personal property. Unlike the physical distribution of digital works on a tangible medium, such as a floppy disk, the transmission of works interferes with the copyright owner’s control over the intangible work and the exclusive right of reproduction. The benefits to further expansion simply do not outweigh the likelihood of increased harm.

Digital communications technology enables authors and publishers to develop new business models, with a more flexible array of products that can be tailored and priced to meet the needs of different consumers. We are concerned that these proposals for a digital first sale doctrine endeavor to fit the exploitation of works online into a distribution model – the sale of copies – that was developed within the confines of pre-digital technology. If the sale model is to continue as the dominant method of distribution, it should be the choice of the market, not due to legislative fiat.7

Preliminary Injunction Denied

Capitol Records filed suit against ReDigi on January 6, 2012. It alleged copyright infringement, inducement of infringement, contributory copyright infringement, vicarious infringement, and common law copyright infringement of Capitol’s reproduction and distribution rights.8 Capitol sought a preliminary injunction shortly afterward.9

The district court denied the motion on February 6th. It noted that the balance of equities was “kind of a push”; both parties had a near-equal interest in the outcome of the motion. The public interest was similarly a tie, as there is both a legitimate interest in seeing copyright enforced and in secondary markets. Notably, the court did find that Capitol had shown a likelihood of success on the merits. What doomed the motion was, in the court’s opinion, a lack of irreparable harm — it concluded that money damages would be adequate for Capitol if it ultimately wins.

Both parties have moved for summary judgment.

The Arguments

In its opening legal brief, ReDigi primarily makes two arguments: first, that, although its system makes a copy, this is not a “reproduction” within the meaning of the US Copyright Act; and second, the first sale doctrine protects its service to the extent that there is any distribution of copyrighted works.

As far as the first argument goes, ReDigi claims that “to the extent any discrete acts by users on the ReDigi system even implicate any of Capitol’s exclusive rights, those acts are not infringements by virtue of statutory and/or equitable, policy based limitations on Capitol’s exclusive rights.” It argues that its process does not result in a reproduction by definition, saying “the mere fact that a copyrighted ‘copy’ or ‘phonorecord’ existed in one place and later existed in another does not constitute proof of a ‘reproduction’ or duplication.”

As to the second argument, ReDigi looks to the language of the Copyright Act and points out that both §106, which codifies the distribution right, and §109, where the first sale doctrine is located, refer to “phonorecords”. ReDigi argues that this requires both sections to be read consistently: either a digital song file is not a “phonorecord,” so ReDigi is not violating Capitol’s exclusive distribution right through its service, or it is a “phonorecord”, in which case, reading the Copyright Act consistently, the first sale doctrine applies.

In response, Capitol argues that ReDigi’s view of “reproduction” is novel and unsupported by any case or precedent. It specifically notes that ReDigi’s process involves deletion of music files from a user’s computer after they are uploaded to its servers. Capitol states that “this act of deletion presupposes the creation of a different copy on the ReDigi server; otherwise, there would be nothing to delete in the first place.”

Capitol also disputes ReDigi’s reading of the first sale doctrine. It agrees that both the distribution right and the first sale doctrine, as codified in the Copyright Act, refer to “phonorecords”, but it points to a critical distinction in the language. “While section 106(3) reserves to the copyright owner the exclusive right to ‘distribute … phonorecords of the copyrighted work,’ section 109(a) only provides a defense when the owner of a ‘particular … phonorecord lawfully made … dispose[s] of the possession of that … phonorecord.'”

In its reply, ReDigi adds that, relying on the Second Circuit’s Cartoon Network opinion, if there is any copying that occurs through its system, it is a result of the user’s volitional conduct, not ReDigi’s.

Oral arguments for the summary judgment motions are scheduled for October 5th. Although the issue of the first sale doctrine is a novel one, the court has ample opportunity to resolve this case without broaching that issue.

Footnotes

  1. 210 US 339. []
  2. Currently codified in 17 USC § 109(a). []
  3. Pub. L. No. 98-450, 98 Stat. 1727 (Oct. 4, 1984), amending 17 U.S.C. §§109, 115. []
  4. Tit. VIII of the Judicial Improvements Act of 1990, Pub. L. No. 101-650, 104 Stat. 5089, 5134 (Dec. 1, 1990), codified at 17 U.S.C. §109. []
  5. Consumer Video Sales-Rental Amendment, H.R. 1029, 98th Cong. (1983). []
  6. Report of the Working Group on Intellectual Property Rights, National Information Infrastructure (1995). []
  7. Statement of Marybeth Peters, The Register of Copyrights, before the Subcommittee on Courts, the Internet, and Intellectual Property, Committee on the Judiciary, United States House of Representatives, 107th Congress, 1st Session, December 12-13, 2001. []
  8. Capitol also alleges violation of its public performance rights since ReDigi allows a user to stream tracks from her Cloud Locker and violation of its public display rights for presenting associated artwork of songs through its service. []
  9. Google sought to intervene as amicus, but was denied by the court. []
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