The American Law Institute (ALI), an independent organization of legal experts founded in 1923, is scheduled to consider portions of its copyright Restatement project at its annual meeting June 8, 2021. This will be the first time any part of the project will be considered by the full ALI membership since it began in late 2015. In those years, the project has attracted criticism from members of Congress, the US Copyright Office, the American Bar Association IP Law Section, the New York City Bar Association Copyright & Literary Property Committee, and numerous other groups and individuals.
Many of these critics have pointed out that copyright is governed by a comprehensive and detailed federal statute, making it ill-suited to the approach traditionally employed by ALI’s Restatement projects. Restatements have historically addressed common law areas of the law such as contract and tort, adopting the perspective of a common law court to determine the best rules for legal issues and express them as “black letter” law—presenting a “codification” of the law to guide other courts. But a court engaged in interpreting an area of law governed by statute must necessarily take a different approach. Courts start with black letter law—the text of the statute itself—and then rely on a panoply of interpretive methodologies and authoritative sources, such as legislative history, to determine the meaning of the law.
In Restatements of Statutory Law: The Curious Case of the Restatement of Copyright, law professors Shyamkrishna Balganesh and Peter S. Menell describe the attempt to use the Restatement approach on an area of statutory law a “fatal mismatch,” and worry it threatens not only the legitimacy of the copyright Restatement project, but the credibility of the ALI itself. Above all, they say, Restatements of statutory subjects such as copyright law “need to first address the distinctiveness of statutory interpretation as a judicial function.” Different courts use different methods of interpreting statutes. A Restatement that simply adopts the view of a common law court, as Restatements have historically done, “masks the crucial choice of methodological framework.” And a Restatement that does not explain the interpretive approach it is employing and applies different approaches to different provisions, as Balganesh and Menell argue the copyright Restatement does, leads to further confusion rather than the clarification ALI seeks.
ALI Director Richard L. Revesz has acknowledged that Restatements have traditionally “dealt with areas of state common law,” but brushes aside concerns by saying that “in the last few decades,” Restatements have “undertaken significant efforts” in areas covered by statutory law. Though Revesz also acknowledges that the copyright Restatement differs from even those projects—“because the Copyright Act covers many of the subjects on which the Restatement will focus”—he argues that the conceptual issues remain the same, and the ALI will continue to “provide guidance to the courts in instances in which judges are called on to exercise their discretion.”
In other words, the ALI argues that it does not need to change the traditional methodology of Restatement projects if it just focuses on those areas of a legal topic that remain squarely the province of the courts. But even if that leaves us with a worthwhile project to pursue, it still doesn’t answer a threshold question. How do we know when a complex, detailed statute like the Copyright Act leaves an issue to the discretion of a court? Sometimes the statute is clear on this point, but oftentimes it’s not. Sometimes a statute incorporates the common law of an issue that has developed in courts, other times it alters or overrules that common law, either expressly or implicitly. This threshold question is frequently disputed. So you can’t say you don’t need a statutory interpretation methodology by sticking to the common law areas of a statute, because the very identification of those issues itself requires statutory interpretation.
One example that demonstrates the challenges in identifying areas of statutory law amenable to the traditional Restatment approach is copyright’s first sale doctrine. Revesz identifies this as one of the areas “that have clear common-law origins, where there is significant scope for judicial discretion.” Yet a recent Second Circuit decision reveals a contentious dispute over the scope of judicial discretion, one that could have been determinative of the outcome.
The first sale doctrine, codified in 17 USC § 109, is premised on the fundamental distinction between ownership of a copyrighted work and ownership of a physical object that contains that work. Among the exclusive rights protected under the Copyright Act, a copyright owner has the exclusive right “to distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” But the right to distribute one particular copy of that work is exhausted after the copyright owner has transferred ownership of that copy (i.e., after the “first sale” of the copy). Hence, copyright does not prevent someone who has bought, say, a paperback book from reselling or lending it to others.
In Capitol Records v. ReDigi, the Second Circuit confronted the issue of how first sale applies to digital files, where copies of works are transmitted via the internet rather than conveyed in physical objects. In such cases, a single copy of the digital file is not being transported from a “seller” to a “buyer”; rather, data is being transmitted from the device containing the original file to a new device, resulting in a copy of the file existing on both devices. The court determined that the statute was clear on this question: § 109 only limits the exclusive right of distribution; transmission of a digital file results in the creation of a new copy of a work, which implicates a copyright owner’s exclusive right of reproduction; thus, the first sale doctrine does not permit resale of works embodied in digital files via internet transmission.
In reaching that conclusion, the court heard from a group of intellectual law professors who argued that Congress intended the first sale doctrine to apply broadly, permitting the conduct at issue in Redigi. In codifying first sale, they argued, Congress embraced “a long line of common law exhaustion cases . . . without limitation or reservation.” The professors highlighted legislative history suggesting an intent to “restate and confirm” the scope of first sale at common law to support this assertion, along with “the rule of law principle that counsels courts not to interpret statutes granting exclusive rights in a way that modifies common law principles or restricts common law rights in the absence of irresistibly clear legislative intent to do so.” Thus, the professors concluded, the statute leaves courts with the discretion to interpret the first sale doctrine broadly enough to permit reproductions that are necessary to effectuate the transfer of “ownership” of digital files via the internet.
The court considered these arguments but unequivocally rejected them, saying,
Furthermore, as to the argument that we should read § 109(a) to accommodate digital resales because the first sale doctrine protects a fundamental entitlement, without regard to the terms of § 109(a) (and incorporated definitions), we think such a ruling would exceed the proper exercise of the court’s authority. The copyright statute is a patchwork, sometimes varying from clause to clause, as between provisions for which Congress has taken control, dictating both policy and the details of its execution, and provisions in which Congress approximatively summarized common law developments, implicitly leaving further such development to the courts.
As the Second Circuit correctly observes, the dispute over the scope of judicial discretion to apply a provision of law is not limited to the first sale doctrine. The scope of discretion among all Copyright Act provisions varies significantly. Is there value in distilling and clarifying those doctrines that are left largely to the courts? Absolutely. But statutory interpretation is needed to identify those doctrines in the first instance. Without articulating a clear and transparent methodology of statutory interpretation, such efforts will only result in more confusion than clarity. That is, you can’t use the traditional Restatement approach to determine what areas of a complex statute to restate.