CopyOwner

Morning of November 5, 2008, I reluctantly crawl out of bed, extend checkout time long enough to get breakfast, and contemplate the 3-hour drive back from Hampton, Virginia to my home in Maryland. I emerge from the Holiday Inn elevator to receive the well trained – and rote – greeting from the 5 hotel staff chatting in my path. “Good morning, indeed!” I responded with a big, tired, happy grin, as I flashed the front page of the newspaper. They dropped all pretense of professional politeness, and had a quickie Obama victory celebration with me – honest, open, and human-to-human. Rather than just point me to the restaurant, one of them insisted on escorting me there, where the waitress pampered me as if she was my grandmother. Never had I thought Virginians would be so happy to have a guy from Maryland come down to mess with their politics for a few days.

The rain is letting up as the sun to works its way through to light up the fall colors lining Interstate 64 as I drove back home, Obama paraphernalia strewn around the car, but no longer demanding my attention. The strong wind, instead, rains colorful leaves over me like confetti in my parade down the road. The dramatic picture of a changing season – change I can believe in – mirrors the political change I and my family, like millions of other Americans, had just helped usher in. Maggie was the first to go. An Obama supporter from the day he announced, she went to work in Minneapolis right after graduating from college. James was next. He got his law degree, took the bar exam, and took off to Ohio. Betty and did a bit of weekend canvassing, but had to do more. Betty began calling, eventually up to 3 hours each evening, beginning with swing states on the East Coast, and on to others as the time zones changed. I cleared my schedule, told the campaign I’d go wherever they needed me most, and drove down to “the North Carolina side of Virginia,” not knowing exactly where I would end up until I got the confirmation call about an hour from my eventual destination. We were on a mission.

The night before, I had witnessed the returns on the large screen; alone among strangers packed into a huge ballroom of the hotel. I didn’t know a soul among the celebrating Hampton area democrats, but knew I was welcome, with my “voter protection” button and a shared joy serving as the only ticket to entry. Cheers, shouts and applause broke out as CNN announced one swing state result after another. Upon hearing Minnesota and Ohio were announced, and I could contain myself no longer. Leaning over to the most convenient set of ears, a woman just in front of me, I blurted out with parental pride, “My son has been working full time for Obama in Ohio, and my daughter is a field organizer in Minnesota!” When Obama’s victory was declared and the hugs started flying, this African-American woman in blue-state Virginia turned around to me, the white guy from red sate Maryland, flung her arms around me tight, and whispered in my ear an emotional, “Thank you! Thank you!” I knew she was not thanking me, personally, but rather as the proxy for millions of Americans from all walks of life, including my wife and children, who took time out from personal endeavors to make a collective contribution to the rebirth of a nation. Virginia needed help, not because it was helpless, but because the national fate rested with wresting it from predictable politics of the past. A big tear rolled down my right cheek as I was finally free to feel the impact of my experiences over the last few days.

I had been prepared to protect the vote on Election Day, but that day gave me little to do. Our legal team at Precinct 108 in Newport News was prepared for the worst, and experienced the best. There were over 350 people in line when the polls opened at 6:00 AM, and though the wait in the dark and the rain would be over an hour long, no matter where I went in the line to ask how people were doing and whether there were any questions, I was greeted with happy smiles, no complaints, and no problems. The precinct was in Obama territory, but still, about a quarter of those in line would be voting for McCain. All were united, seemingly aware that on this day, no Obama supporter would blame a McCain supporter for the vicious verbal attacks of the last several days, and every McCain supporter understood that they, too, were part of an historic moment. The lone McCain legal worker sought shelter and camaraderie under the Obama campaign tent. He asked us for information and we gladly gave it. I and my protect-the-vote legal team members spent more time holding open the door and warning voters to “watch your step” as they exited, because the most significant incident was that people tripped on their way out, distracted while affixing the “I voted” sticker to their lapel and not noticing the tricky half-step drop out the door.

The stereotypes I had harbored were dashed. One young lady was denied the vote, and I stepped into legal advocacy gear, scouring the law to push back on every reason they gave for not allowing her to vote. We would not take “no” for an answer. Someone had registered her, so she thought, but she was not on the rolls, apparently duped by some group that had conspired to deny her the vote. Despite being told by the Obama legal team experts stationed in Richmond that, unfortunately, this was one of those cases where even a provisional ballot was sure to be tossed out, I persuaded the election officials to let her cast one anyway, with full disclosure that it was certainly for naught. “This young lady, about to give birth, wants to vote for the very first time in an historic election. Don’t take that away from her.” Sherman, an old hand at this, understood, and went to the extra effort to make sure the provisional ballot was in order even though she could not check off any of the boxes needed to make it count. I helped her fill out the incident report, and in the blank for her to say whom she wanted to vote for, she wrote in “McCain”. I was floored. By all statistical indications – young, African-American, woman – it should not have been McCain. The Obama legal team runner came by to check on reports and I had to ask this young lady whether she was comfortable with me submitting her incident report to the Obama legal team. No problem. Strange day. Prepared to protect every Obama voter, and the only incident report I made was on behalf of a McCain supporter. This is American democracy at work.

The days before, I had been going door-to-door in the vicinity of Emporia, VA, a small town with more than its fair share of poverty. In one rural area, as I approached a dilapidated small house, I was called off by a couple of white guys with a pick-up truck, who told me no one lived there – the occupant had moved to the state prison. In this Bible belt, these Hollywood stereotype rednecks confessed to drinking beer on a Sunday morning (the stash was hidden under junk in the truck bed), and inquired what I was up to. I braced myself as I told them the truth – that I drove down from Maryland to get out the vote for Obama. Just us three white guys, two of them meeting the profile the pundits said were die-hard McCain supporters, and I ended up listening to a rant, “I’m a trucker, and my buddies are all saying they won’t vote for a black man, and I keep tellin’ ‘em, ‘Give the man a chance;’ ‘Give, the man, a chance!’” He rounds it out with frustration that McCain simply has nothing to offer him, mimics a typical McCain stump speech line about lowering taxes, and comes back around to Obama’s message of real change. Even as he showed his support for Obama, he seemed to be using me as a sounding board – a reality check from an out-of-state fellow white guy – to confirm that it was OK for him to feel that way. As we part, I’m warned not to stop and talk to anyone driving a pickup down this particular road.

The Emporia area has more than its fair share of trailer parks, too, and the ones I visited appeared to have been there for at least fifty years. I made my way carefully up rotting steps to one that seemed abandoned. I said “hello” to the dark image I could make out near the torn screen door. I got no response other than a non-verbal indication that I could keep talking. The African America woman, in her eighties, sitting in the wheelchair, was apprehensive but attentive. “I just came by to remind you to vote tomorrow. Can we expect you to vote for Obama tomorrow?” I told her story in an online discussion on whether only the well informed should vote – those “educated” beyond the TV punditry. The discussion had been initiated by a well-educated affluent republican who posited his theory with the implicit belief that if Obama supporters did their homework, they would vote for McCain. I responded, “I have spent the last three days in southern small town Virginia ‘getting out the vote,’ and have been humbled. In the uneducated – in the sense of unschooled – very poor, very ill, very old, very young, and on and on, I encountered informed wisdom. That 80-something woman in a wheelchair who could not open the door to her dilapidated trailer yet invited me near, assured me with pride, wisdom, self-assurance and barely a word, that she would vote Tuesday, rain or shine.” That woman had been waiting all her life for this vote.

As I seek to do my part to continue this change we can believe in, I will be guided by that look in her eyes as she contemplated the next day’s vote – she was looking off in the distance, but I knew what she was seeing, and clearer than her old eyes had seen in a while. She was looking right at the Promised Land, and she was going to vote it in.

John T. Mitchell
November 5, 2008

For a long time now, owners of lawfully made copies of software have been subjected to baseless claims that software is “licensed, not sold,” and therefore the right the Copyright Act gives to owners of lawfully made copies to sell them is trumped by the license. A seller of lawfully made copies of AutoCAD software, fed up with use of bogus copyright claims to suppress his competition authorized by the Copyright Act, sought a declaratory judgment that his sales are just fine. AutoCAD sought to have his claim dismissed, and lost. In Vernor v. AutoCAD, Judge Richard Jones, of the U.S. District Court for the Western District of Washington, did the sensible thing, ruling that even if Vernor breached some duty imposed by license, such breach would, at best, violate a contractual agreement, and could not be the basis for a claim of infringement where Congress authorized the very activity complained of.

The court correctly focused on whether the indicia of ownership were present rather than whether the copyright owner called it a license. This is the very course I argue the court in UMG v. Augusto should follow, where a record company tried to trump an Act of Congress by stamping “not for resale” on the copy Congress authorized to be resold.

If we are lucky, one of these days a judge is going to ask the question, “When you say licensed, not sold, what, exactly, are you licensing?” The answer tends to be some vague notion of “use”, or sometimes “use by students,” and some such nonsense. To be cognizable under the Copyright Act, a license must be related to the specific rights of the copyright owner. There is no general exclusive right to “use” in the Copyright Act. The ordinary use of a book is to read it, of a movie is to watch it, of a song is to play it, and of a computer program, to run it. All of these uses, unless done publicly, are considered private performances, and nowhere do private performances fall under the control of the copyright owner.

A copyright owner can no more escape the application of Section 109 of the Copyright Act by selling a copy subject to a “license to never re-sell it” than can an employer escape the application of minimum wage, workplace safety and anti-discrimination laws by hiring only “subject to the employee’s waiver of the application of employment and labor laws.” It’s high time our federal courts got over the initial mystery associated with computers and everything “digital,” and begin, as Judge Jones does, to apply these very basic, longstanding copyright principles as they were written, and without paying attention to the lawyers’ efforts to suggest that the same rules don’t apply when copies are made with “bits” on discs instead of ink on paper, grooves on vinyl, or magnetic impressions on tape.

Excellent observations by Professor William Patry, in The Patry Copyright Blog: The recent making available cases commenting on the three recent cases ruling in one way or another on the “making available” theory of liability for infringement of the exclusive right of distribution without actually making a physical distribution. I have long advocated the plain reading of the Copyright Act: (1) Downloading may infringe the exclusive right of reproduction, (2) transferring possession of a CD containing an illegally downloaded work will infringe the exclusive right or distribution, and (3) assisting in either act of infringement may give rise to liability for contributory infringement, but (4) assisting someone in making an infringing reproduction does not infringe the exclusive right of distribution.

While folks in the copyright industries often speak of “distribution” in a broad sense to encompass any form of “dissemination” (e.g., leasing of 16 mm films with a license to perform the work publicly in a theater, reproduction and distribution of “hard copies” such as CDs or DVDs, and licensing for public performance over broadcast and cable television), the “distribution right” in the Copyright Act is very specific, and cannot possibly exist without the transfer of the tangible medium in which the work is embedded – the quintessential “copy or phonorecord” to which the distribution right applies. That is, there is no right of distribution that can be infringed apart from the transfer of possession of tangible “copies and phonorecords.”

The person who makes available the original copy from which an infringer makes an infringing reproduction by downloading may, of course, be guilty of contributory infringement if the copy (regardless whether it is itself infringing) is placed in a shared folder in order to facilitate the infringing reproductions. But it is pretty well settled law that to be guilty of contributory infringement there must be a primary infringement. To hold otherwise would mean I could be guilty of this amorphous “making available” right if I place my old newspapers in the trash or the recycle bin and we learn that people in the trash collection or recycling business are making infringing copies of articles published within.

I wonder what Professor Patry’s take is on the interplay between the Section 106(3) distribution right of the copyright owner and the Section 109(a) re-distribution right of the owner of a lawfully made copy – the entitlement to re-distribute the copy or phonorecord without the consent of the copyright owner. While I firmly believe that the Section 109(a) re-distribution right applies only to a physical transfer of the tangible medium of expression, just as does the Section 106(3) distribution right, it strikes me that if copyright owners persuade the courts that a physical transfer if not required for a Section 106(3) violation, it would be hard to argue that the owner of a lawfully made copy, e.g. the owner of the licensed download onto a hard drive, does not have the absolute right to re-distribute that copy to the same expansive degree as the copyright owner enjoys under Section 106(3). That is, if making a copy available for others to reproduce infringes the distribution right, then wouldn’t the owner of a “lawfully made” copy be entitled, without the consent of the copyright owner, to make it available for others to reproduce?

Because of the logic above, it concerns me that those attorneys who are advancing the “making available” argument with the short-term goal of avoiding the effort of having to prove primary infringement of the reproduction right are doing their clients (and the legitimate retailers and other distributors and reproduction right licensees who compete with infringers) a great disservice if the end result would be that those downloading unlicensed reproductions from a licensed copy in someone else’s shared folder enjoy the Section 109(a) entitlement to do so without the copyright owner’s permission.

A more straightforward theory of distribution right liability might arguably be that the act of assisting others in making infringing reproductions impairs the distribution right, not because it is itself a distribution, but because the reproduction by downloading to the end-user’s tangible medium accomplishes the same thing as a reproduction to one’s own tangible medium that is subsequently distributed to others. That is, a reproduction by downloading so that an infringing copy is placed in my home (albeit on my hard drive) is, at the end of the day, lessens my demand for a distributed reproduction to make its way to my home in the form of a CD or DVD. But for some reason (perhaps because it also requires proof of an actual reproduction by the downloader), that argument has not been advanced.

I nearly fell out of my chair when I read CRM News: Strategy: Is Your Supply Chain Going Gray? Frustrated that the Supreme Court has made is so that “Copyright lawyers won’t save you” because the Copyright Act makes it clear that copyrights do not extend to control over re-distribution of lawfully made copies owned by others, the authors suggest other creative ways to limit folks from exercising the entitlement to re-distribute those copies.

This is nothing new. Copyright owners (including the owners of the “works” embodied in the copyrighted labels on common non-copyrighted goods) like to discriminate in pricing by creating artificial markets so that discounts in one market won’t be resold at a lower price in over-priced markets. The thinking goes, “Why let U.S. consumers get the benefit of prices that are affordable to people in developing countries when we know we can get more out of the U.S. consumer’s pocket?”

The “first sale doctrine,” now codified as Section 109 of the Copyright Act, makes clear that the copyright owner’s right of distribution is subject to the copy owner’s right to sell it to anyone, anywhere, at any price. And that’s great policy. Entrepreneurs who see too big a gap between the prices charged U.S. consumers and the prices charged consumers elsewhere for identical copies can buy the cheaper product and sell it at a profit, while still giving the U.S. consumer a better bargain.

But that’s not why I nearly fell out of my chair. I was used to these anti-competitive price discriminators ranting about perfectly lawful gray market goods. What this story does is label these perfectly legal importers as pirates. That’s right. Despite quoting the Supreme Court in Quality King Distributors v. L’anza Research International, that “once the copyright owner places a copyrighted item in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution,” a ruling that suggests that the evildoers are those who try to circumvent the law by preventing gray market imports, they go on to call the importers “pirates”:

“Part of the reason gray market piracy exists is the complexity of the operating environment. Global supply chains often have complex pricing, distribution, control and cross-functional coordination challenges. If not managed well, these open the door to a number of opportunities that pirates can leverage.”

Copyright owners have enough trouble with real pirates. Infringement is a huge problem. It should not be made light of by suggesting that any law-abiding merchant who uses skill and opportunity to bring U.S. consumers a cheaper, non-infringing copy, is a “pirate” just because the copyright owner does not like the law.

Gray market imports of lawfully made copies of copyrighted movies, software, video games, music, books, and product labels may not be authorized by the copyright owner, but they are certainly authorized by law.

The article by Shannon P. Duffy appeasing in Law.com’s
3rd Circuit Upholds FCC’s Deregulation of High-Speed Internet Access succumbs to the regulation/de-regulation doublespeak pressed by the Internet regulators. I would have hoped a law rag would have been sharp enough to avoid such gullibility.

This is not at all a ruling in favor of deregulation. To the contrary, it is a ruling authorizing private regulation of the Internet. Moreover, private regulation in this space is much more dangerous than government regulation because it works. The government can’t do much at all to regulate the Internet, thanks in large measure to the First Amendment and thanks in no small measure to the fact that the government does not have any physical control over the transport layer. But the major ISPs do have such control, and are not bound by the First Amendment. In short, this ruling says, in plain English, “Whereas the government may not and cannot regulate communications over the Internet that are protected from suppression by the First Amendment, we hereby free those of you who have the power to suppress freedom of speech to go ahead and do so.”

My jaw dropped open when I read the press release of the Parents Television Council, PTC Applauds Gov. Schwarzenegger for Appealing Violent Video Game Ruling, in which the PTC President suggests, by implication, that parents need not be involved in their children’s decisions to purchase video games, so long as they are not rated M or AO. (“’Parents should be involved in any decision to purchase a violent or sexually explicit video game rated M or AO,’” said Tim Winter, president of the PTC.” Why not all games?)

To make matters worse, the press release was actually applauding the California governor’s decision to appeal the latest of a string of rulings holding various state efforts to turn parenting over to game publishers and retailers (at least when it comes to video games) unconstitutional.

It is heartbreaking that a self-described parents group would label “overzealous” the judges who have been unanimous in applying our good old-fashioned Bill of Rights exactly the way we were taught in law school. When the Constitution says that governments shall make “no law” abridging the freedom of speech, no exception is made for censorship “in the aid of lazy or disinterested parents.” This is truly an odd parent advocacy group, as it advocates contempt for the law and seems bent on asking the government to relieve parents of responsibility for guiding their children’s choices in entertainment products, preferring that video game publishers and retailers took on that role.

When my children were in preschool and elementary school, I signed them up at our local video store and instructed the store to impose no restrictions on what they could rent. They are now adults, but in all those years, I never had a problem with their movie and video game selections, and was proud that they learned to distinguish between trash and treasure. No matter how much trust I may have in my local video store, I can’t imagine turning over to it responsibility for guiding my children, much less the joy of exploring new media and engaging in movie and video game critiques with them.

Universal Music Group (UMG) has taken steps calculated to exercise control over copies (”phonorecords”) it may not own. In one case, Universal Republic is said to be threatening music retailers selling imported copies of the album it plans to release this fall. The basis for the threat is not clear to me, given that press reports suggest that it may not own any copyright in the imports but is merely protecting its exclusive right to distribute in the U.S. under license from the copyright owner. Moreover, I have grown increasingly doubtful that the import right should be permitted to trump first sale rights when applied to copies lawfully made abroad in a country that is a signatory to and in substantial compliance with the applicable copyright treaties. (The Supreme Court has held that the first sale doctrine applies to copies lawfully made in the United State, exported, and subsequently imported, but expressly left open the question whether the first sale doctrine applies to copies lawfully made abroad and imported, one Justice suggesting that “lawfully made under this title” (the Copyright Act) must mean “lawfully made in the United States America. I disagree, but I leave that to another day.

The case that I bring to your attention today is UMG v. Augusto, Case No. 2:07-cv-3106 SJO (AJWx) in the U.S. District Court for the Central District of California, Western Division. In that case, it is attempting to suppress the sale on eBay of “Promo CDs”.

The Complaint alleges that the first sale doctrine (codified in Section 109 of the Copyright Act) does not apply because “‘Promo CDs’ are never sold, only licensed.” UMG points to the language printed on the CDs stating:

“This CD is the property of the record company and is licensed for the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws.”

The Answer and Counterclaim was filed yesterday, and denies any contractual obligation, resting on the first sale doctrine. Augusto claims to be the true owner of the copies at issue, having acquired them from previous owners other than UMG. The case may, therefore, turn on the question of who owns a CD labeled as a “Promo CD” with the above language. But the court should take care to distinguish between product labeling and the substance of the transaction. Surely, no copyright owner should be permitted to nullify legal limitations Congress imposed on the distribution right by merely applying a self-serving label. On the other hand, if the court were to determine that UMG does indeed still own the copies in question, the first sale doctrine would not apply.

Hopefully, the court will conclude that merely labeling a CD as a “Promo CD” or “Not for Sale” does not impair the right of the owner of a lawfully made copy to sell it. Rather than look at the label, the court should look to the substance of the transaction (for which the label is but one bit of evidence to be weighed). First, there is no dispute that the CDs in issue are “lawfully made.” These are not infringing reproductions. Second, there is no question that UMG voluntarily parted with possession. UMG must part with possession to realize the promotional value of them. The only remaining issue, then, is whether UMG parted with title, for once title passes, so does the right of the new owner to sell them over UMG’s objection, regardless of the “not for sale” warning. That is, UMG’s distribution right over lawfully made CDs exists only so long as it remains the owner.

If I were advising a copyright owner on how to preserve title, I would insist that the transfer of possession itself make clear that only possession, and not title, is passed. For example, ideally, a promotional CD sent to a music critic should include a self addressed postage prepaid envelope and a request that the reviewer return it after reviewing it. The disc should go beyond mere self-serving declarations that try to re-characterize the transaction. The wording should say something like “This disc is the property of UMG. It is being distributed by lending for promotional purposes. Please return it to UMG at the address below as soon as your promotional use has ended. If you are unwilling or unable to return it, please destroy it and notify UMG that you have done so by calling [toll free number] or sending an e-mail to ‘promoCD@umg.com’. UMG reserves the right to demand the return of this CD at any time.” (Better yet, UMG should require that the party in possession insure it against loss, but that is pushing a bit too far!)

But my experience suggests that most promotional discs are in fact given away. If possession is transferred with no indication that UMG intends to exercise any right to obtain its return, or to obtain reimbursement in the case of loss, the substance of the transaction is more likely to be determined to be a gift, whereby ownership is transferred and the new owner has every right to sell it. The defendant may well be able to show that the “Promo CD” label is intended more to avoid paying a royalty for the reproduction and distribution (where contracts exclude such royalties for reproduction and distribution of promotional copies) than to assert any continued ownership control over the disc.

Examining UMG’s label, above, there are some pesky terms that may undermine the claim of ownership. First, there is the total lack of any provision for its return to UMG. Courts have determined that the lack of any obligation to return it to the alleged owner is evidence that the transaction passed title, not just possession. Second, the UMG label contains meaningless fluff, in copyright terms. There is no basis in copyright law to claim that something is “licensed for the intended recipient for personal use only.” That is because the copyright grant of exclusive rights to the author does not include the right to exclude “personal use” and, therefore, there is no more basis for UMG licensing “personal use” than to license the retailer the right to breath fresh air. Finally, UMG may be haunted by the prohibition against “resale” because, quite simply, there can be no “re” sale without a “first” sale. The argument would be that UMG implicitly recognized that it had “sold” it (even if for nothing).

UMG also claims that resale may violate state laws. If UMG were resting on copyright alone, state laws would not apply. For state laws to be applicable, UMG would have to be resting on the validity of the purported license rather than on copyright. But the license provision suffers from two flaws. First, it may be construed as a license under state law in derogation of federal copyright law, and therefore preempted by federal copyright law. (And, to the degree that it attempts to limit rights of owners granted by Congress under the Copyright Act, it may be void and unenforceable as against public policy.) Second, there is a serious question whether UMG could obligate a party to “accept” the terms of its agreement by mere acceptance of the CD. Even if the first “intended recipient” could be bound by those terms, downstream owners who had no direct dealings with UMG may not be.

If the case resolves itself solely on the basis of proof whether, as a substantive matter, UMG retained ownership of the CD following transfer of possession, this would be consistent with the first sale doctrine. If, on the other hand, the court were to allow the form of UMG’s claim of continued ownership (”This CD is the property of the record company”) to trump the substantive gift transaction, or were to allow the purported “license” language to extend the copyright reach beyond the limits established by Congress, such a ruling would set an awful precedent for all retailers of lawfully made copies of books, magazines, CDs, DVDs, video games and any other copyrighted works. Copyright owners would be tempted to place all sorts of supra-copyright restrictions upon the retailers, who are the best line of defense against pirates.

It has long been established that the owner of a lawfully made copy of a copyrighted work has the absolute right, even over the strong objection of the copyright owner, to re-distribute that copy by any means, including sale, gift, lending or rental. This principle was developed by the courts in what has become known as the “first sale doctrine,” and codified nearly 100 years ago by Congress in what is now Section 109 of the Copyright Act.

But Section 109 contains two exceptions to the “rental” part. Troubled by the notion that the rental of easily copied works that people would want to enjoy for a longer time than just the rental term (such as music), would lead to widespread copying of rental copies, Congress created exceptions for sound recordings (or certain types of sound recordings, which is the point in issue) and for certain types of computer programs. The “record rental exception” in Section 109(b)(1)(A) gave rise to the question whether audio books could be rented — whether the record rental amendments excluded rental of all sound recordings or just sound recordings containing musical works

Over the years advising retailers on this question, I had concluded that the record rental exception must be interpreted to apply only to sound recordings of “musical works,” and not to sound recordings of literary works. I thought the law was clear enough on its face, and was bolstered by the legislative history and the Bill of Rights. Nevertheless, the law was sufficiently ambiguous to cause a healthy debate among copyright professionals and scholars, and to cause a couple of audio book publishers to claim a right to prohibit rental of audio books. One of them was bold enough to take its position to court and, fortunately, the United States Court of Appeals for the Sixth Circuit reached the correct conclusion. In a well-reasoned opinion, the majority held that only sound recordings of musical works were subject to the exception, and that the owners of lawful copies of sound recordings of literary works are free to rent them without permission from the copyright owner.

The case, Brilliance Audio, Inc. v. Haights Cross Communications, Inc., No. 05-1209 (6th Cir. January 26, 2007), missed an opportunity to base the ruling in part on the First Amendment, given that unrestricted rental of audio books is more in keeping with freedom of speech. I believe it could also have reached the same conclusion from the plain meaning of the statute, and the court alluded to such a basis as well.

The court did, however, leave for trial the companion question whether the copyright owner could suppress rental under a trademark infringement theory. Well, that was not the question, but it may as well have been. The question was whether the copyright owner who packaged some copies for a “sale” market and other for library lending could sue for infringement when a retailer altered the packaging on sale copies to make them look like “library” copies. The danger here is that copyright owners might become creative in using trademarks to circumvent the limitations imposed by copyright law. While the Court may have been technically correct on the “pure” question of trademark infringement, in my view it is wholly inappropriate – and a misuse of trademark – to label a product differently for rental than for sale, and then use trademark law to void copyright law restrictions imposed by Congress. The “product” being packaged is the same, and the only difference is in the label created by the copyright owner to create two separate markets where, by law, only one market exists — the market for copies “sold” by the copyright owner, vesting in the owner of those copies a statutory entitlement to decide whether to sell, lend or rent them.

Given that the copyright owner has absolutely no right, under copyright, to suppress or control rental activities involving audio books, the use of trademarks as a means of gaining such control should be condemned as a misuse of the trademark – and the trademark itself should be denied registration to the degree that its purpose is not to identify the publisher as the source of the goods but, instead, to identify the illicit intention of the publisher. Let’s hope that the District Court, which got it right the first time, will see the light on remand, hear out the trademark owner’s arguments, and give the publisher a judicial thrashing in the spirit of Shelley v. Kramer, which stands for the proposition that courts will not lend their aid to private efforts to deny rights to others.

When Warner Brothers backed Wal-Mart’s plan to offer movie downloads along with a DVD, the L.A. Times’ Jon Healy called it a not so super development. The gist of his disdain was that if you can rip a CD for free, why should you be charged extra for a DVD with a license to download a second copy? The Electronic Frontier Foundation’s Fred von Lohmann piled on, accusing Hollywood of stealing fair use and selling it back to you. I have the utmost respect for both gentlemen, but on this one I have a different point of view.

There is a popular misconception that anything you can legally do with music on your CDs, you are also entitled to do with movies on your DVDs. The argument is that if ripping songs to your portable player is fair use, then ripping movies is fair use as well. I’ve never been convinced.

First, the legitimacy of most copying of CD music to portable players has nothing to do with fair use. The non-commercial ripping of CDs to portable players enjoys specific protection under Section 1008 of the Copyright Act (which provides that copyright owners cannot sue for certain “non-commercial” infringement of the reproduction right in sound recordings). This legal structure compensates copyright owners (even if imperfectly) for the resulting proliferation of uncompensated copies by charging the manufacturers of blank media and recording devices a royalty, which is then passed on to copyright owners. No such protection from prosecution or system of compensation exists for books, movies, video games or anything else, other than music.

Second, the fair use analysis applied to ripping CDs does not square with economics of ripping DVDs. One who purchases a CD typically wants to listen to it more than once, and wants to listen to it in multiple locations. The practice of ripping began when people wanted to listen to their vinyl LP on their cassette player in the car. Copying to the playback medium in the car was the only practical solution, but the owner of the LP typically kept it for playback on the turntable at home. I have a number of CDs that I regularly listen to at home or in the car equipped with a CD player, but I also rip them to my laptop to listen to in my office, and to my portable player to listen to while working out or in my car that has no CD player. Though I make copies to expand my freedom to listen to music wherever I like, I place no additional copies into commercial circulation.

The typical movie, in contrast, is watched once. If I buy a DVD, I may sell it, lend it or give it away after watching it unless I want to keep it in my library to enjoy a few months or years down the road. DVD rental is an option not available for CDs, and the over $6 billion per year consumers spend renting movies suggests that they are happy to obtain possession of the DVD just long enough to watch it, and then return it to the owner so someone else can rent it. If I rent a DVD for a day and make a copy to keep forever before returning it, I am interfering with the economics of gaining temporary possession of, but not owning, a single DVD. A video retailer may rent me a DVD for $3 or sell it to me for $18. As a consumer, I have a choice: I can own it for $18 (and then keep it, sell, it, rent it, lend it or give it away), or for only $3 I can possess it for a short period of time, treat it as I would property that does not belong to me, and then return it to its owner within the agreed time. Ripping the DVD before passing it on is more likely to impact sales and rentals.

Third, this is not so-called “space-shifting”. The original space-shifting bill introduced by Congressman Rick Boucher several years ago would have authorized the simultaneous deletion of the first copy once the work was transferred to another medium. Copyright case law in the United State and Canada has long recognized that taking the copyrighted work off of one medium and placing it on another does not infringe the reproduction right of the author because, at the end of the process, no additional copies exist. That is true “shifting” of the work from one space to another. But indiscriminate ripping shifts nothing. Instead, a second copy is made on a new medium, leaving the original copy intact.

While there may well be situations in which copying a DVD might constitute fair use, routine ripping just to own more copies in more formats does not. There is no legal mechanism to protect me from infringement lawsuits, there is no compensation system for the copyright owner’s loss of control over such copying, and I can’t argue with a straight face that I just want to be able to watch my DVD of An Inconvenient Truth over and over, from my portable player while jogging, in my car while driving, from my computer while working, and then flip on my DVD player to watch it again while I’m cooking dinner. Pretty much the only reason I would have for ripping a DVD would be to avoid late fees on a rental of a movie I have not yet watched, or to gain the benefits of selling or giving away my DVD while not paying the “cost” of giving up my copy.

This brings us to the Warner/Wal-Mart deal. In proper perspective, it is terrific. Like buying one pizza at regular price and getting a second one at half price, you can eat the second pizza right away, place it in your freezer, or invite someone else to have the second one if all you personally needed was one pizza. No one has a “fair use” right to buy or rent a DVD and rip a copy to keep forever while returning the original DVD to the video store, giving it away or selling it on eBay. Sure, you can legally give away or sell a used DVD, but the copy you kept is the infringing one.

I once asked Tower Records why, back when consumers were ripping CDs to cassettes for their cars, they didn’t think to offer a CD/cassette bundle at a fraction of the cost of buying them separately. “We wanted to,” I was told, “but the labels would not give us the price break we needed. They were afraid people would buy the package and give one to a friend instead of keeping them both.” Warner is to be applauded for its courage to offer such a price break that allows retailers – hopefully any retailer who wants to – to pass such an offer on to consumers, thereby expanding the number of value propositions through which to choose non-infringing copies. Sure, there may be consumers out there who will watch the download and sell the DVD on eBay or give it to a friend, but when my pizza parlor offers the second pie at one half off, it is also persuading me to order pizza instead of Chinese food. It is adding value to the purchase of the first pizza. The Warner/Wal-Mart offer allows you to get two perfectly legal copies for less than the price of buying the two separately and, as a result, you may just walk out of the store with a movie instead of the unbroken $20 bill with which you walked in.

In testimony before the House Committee on International Relations’ Subcommittee on International Terrorism and Nonproliferation, Frank C. Urbancic, Principal Deputy Coordinator for Counterterrorism U.S. Department of State, declared: “Hizballah supporters and sympathizers are also involved in a number of illegal activities, including smuggling, drug and arms trafficking, money laundering, fraud, intellectual property piracy, and other transnational crime.” (Full testimony of Frank Urbancic here.) That’s right. Terrorism and copyright infringement, together again. It’s not the first time the two appear in the same sentence in the halls of congress. Urbancic was reaching for an angle for showing Hezbollah influence in Latin America, no less, admitting that there was no credible evidence of Hezbollah cells in Latin America, but there was copyright infringement and money laundering and such going on there, and Hezbollah sympathizers making illegal copies and such, and, implicitly, that was good enough.

Come again? There are plenty of GOP supporters and sympathizers engaged in copyright infringement, too. And, yes, Democrats and independents, too, are sometimes caught infringing — or at least their sympathizers are. I’ll bet there are sympathizers of both major U.S. political parties in Latin America, no doubt, and of the Green Party too. I’m sure there must be copyright infringement going on among KKK members or sympathizers, and NAACP members and sympathizers too. And let’s not leave out Baptists or Catholics or any other religious groups – I’ve personally met Baptists and Catholics in Latin America, and I have direct evidence of a Baptist (who was a Catholic sympathizer) engaged in copyright infringement in Chile, back as early as 1969. Perhaps the State Department should follow up.

Seriously, it cheapens responsible law enforcement efforts to take garden-variety crimes like copyright infringement and make sweeping allegations that because members or sympathizers of an organization are engaged in it, there is evidence of illegal activity of a much more serious nature by that organization or its sympathizers. I’m sure that with the right interrogation techniques, we could find that pedophiles regularly infringe copyrights, plus, they drive over the speed limit. It proves nothing about pedophiles, the organizations they may belong to or sympathize with, or whether children are at risk of being sexually molested by speedsters or copyright infringers.

Copyright infringement is a problem to be dealt with on its own merits. So are driving over the speed limit, money laundering, smuggling, and any other illegal activity you can think of. When policymakers too often try to tie them together, borrowing from the pervasiveness of some offenses (like copyright infringement) to establish guilt of the “members and sympathizers” of an organization (like “terrorists”), or conversely, by trying to make some offenses (like copyright infringement) sound worse by claiming that a disfavored group (like “terrorists”) engage in it. Neither tactic serves the interests of law and order.

Sound anti-terrorism policy requires that we examine carefully what it takes to be branded a “terrorist” — whether we include those who carried out the Boston Tea Party, for example, and if not, where we draw the line — and that we examine how best to deal with the identified problem of terrorism. Sound copyright policy requires that we carefully examine what should and should not constitute copyright infringement, and that we find the best solutions to dealing with the problem of copyright infringement, once identified. But to try to tie disparate offenses together by the mere fact that there may be some overlap between terrorists, Hezbollah membership, and copyright infringement is at best foolish.

We would scoff if the State Department were to shout: “The copyright infringers are coming! Terrorists are among their ranks! Run for your lives!” Testimony suggesting that copyright infringers in Latin America include Hezbollah sympathizers who may use money earned from selling bootleg copies of software to finance establishment of a terrorist cell in Latin America is just as far-fetched.