CopyOwner

I’ve often heard it said, most often by lawyers, that “you can’t copyright a recipe.” That has never really been true, but the myth persists. The Copyright Office’s own website seeks to dispel it, noting that while “mere” listings of ingredients and instructions without any creative expression are not copyrightable, a recipe that meets the creative expression requirements all works of authorship must meet (which is a very low threshold) are, in fact copyrightable. See, for example, FL-122 (”Copyright law does not protect recipes that are mere listings of ingredients.”) But is does protect recipes that are not mere listings of ingredients.

But the myth persisted. Back in 2007, I wrote “Copyrighted Recipe for Scrambled Eggs,” just to make a point on a listserv discussion. Although, by law, it was copyrighted from the moment I wrote it, the naysayers might not take my word for it. So, on a whim, I took the next step of applying for copyright registration. This month, the Copyright Office agreed that it is copyrightable, and issued me Registration No. TX0007357813.

You may reproduce a copy of John T. Mitchell, Copyrighted Recipe for Scrambled Eggs, 2007, from the hyperlink.

Enjoy!

In a case we had been watching for some time (UMG v. Augusto), the Ninth Circuit finally upheld the district court’s holding that self-serving restrictions placed on so-called “promotional” CDs could not limit the right of the owner of the CD to sell it without permission.

This was refreshing news, given that the Ninth Circuit seems to be somewhat tone-deaf when it comes to the first sale doctrine. Here, although the panel deciding the case followed the ill-conceived test for determining whether a copy is “licensed or sold” (as used in Vernor v. Autodesk), thereby creating a false dichotomy and demonstrating a fundamental failure to understand the difference between “copies” and “copyrights”, this panel at least got it right in the result.

California ban of violent video games must go, headlines the piece by Activision Blizzard’s George Rose in the San Francisco Chronicle. While Rose is correct that California’s censorship law is unconstitutional and the Supreme Court should bury it so deep no other states keep trying to get away with such a travesty, one portion of his remarks disappointed me the New Year’s Eve because they underscore the government’s bullying that results in self-censorship. Rose remarked:

“Schwarzenegger vs. EMA properly raised the same First Amendment issues regarding freedom of expression that successfully struck down similar restrictions in other states. But it also underscored that this law and similar ones are hopelessly out of date now that industry pledges to Congress are fulfilled to work with retailers to enact strict ratings systems. So for the underage kid whose parents don’t approve of a mature-rated game, buying on the sly at a major retailer is virtually impossible.

“It makes no sense for California to put in place a costly state bureaucracy to replace a privately funded system that is working. The industry’s ratings partnership has been thoroughly tested and praised by the Federal Trade Commission as thorough and effective.”

So what is this about “industry pledges to Congress” and pride that “the industry’s ratings partnership has been thoroughly tested and praised by the Federal Trade Commission”? Congress (and individual lawmakers like Sen. Joe Lieberman) has no business badgering the industry to self-censor in ways that Congress cannot do directly. The FTC has no business “testing” the industry’s ratings of its own speech.

When faced with a constitutional prohibition against censoring speech, Joe Lieberman is one of the first to use threats of doing just that as a means of arm-twisting his targets into themselves doing what no law could force them to do. Like “nuisance lawsuits” in which someone files suit on a baseless claim, with the expectation that it will be cheaper for the defendant to settle than litigate, Senator Lieberman and the FTC skirt their obligation to uphold the law, knowing it is cheaper for video game publishers to agree to censor themselves rather than have to engage in costly litigation to overturn such excesses.

It is high time our elected officials and government agencies took to heart their obligations to uphold the Constitution. Certainly, their flippant contempt for the Constitution does more harm than any violent video game ever could.

Honest polling may or may not be interesting. Interesting polling may or may not be honest. Rasmussen pulled off the latter in a poll containing disinformation in the questions, and trumpeted baseless findings.

A recent Rasmussen Reportclaims that “only 21% of the respondents want the FCC to regulate the Internet.” Utter hogwash. It’s polling was disingenuous, at best. The key question has no factual basis, and is completely unrelated to the network neutrality question it purports to illuminate.

Let’s break it down.
First question: “How closely have you followed stories about Internet neutrality issues?”
Second question: “Should the Federal Communications Commission regulate the Internet like it does radio and television?”

The core problem is that the second question is a red herring having nothing to do with the first. Neither the FCC nor Congress is suggesting that the FCC “regulate the Internet like it does radio and television” in relation to the net neutrality debate. The way the FCC regulates radio and television is completely unrelated to Internet neutrality, and there is absolutely no basis for the FCC to regulate the Internet that way. Even if the respondents were unanimous in favor or against, the responses would not inform the debate one whit. Rasmussen’s poll is the intellectual equivalent of asking, (1) Have you been following stories about drunk drivers? (2) Do you think the National Highway Safety Administration should regulate drunk driving the way it regulates automobile safety? It is dishonest to suggest that there is any connection between how the FCC regulates radio and television and the question of Internet neutrality.

The FCC regulates radio and television in two primary ways. First, the FCC regulates radio and television by licensing broadcasters, regulating who can broadcast using which part of the airwaves so that the signal of one broadcaster does not interfere with that of another. But no one has to be licensed to communicate over the Internet. The TCP/IP protocol used for the Internet is not dependent on spectrum segregation. Packets from myriad voices can travel to myriad destinations without co-mingling. This page you are reading does not contain text or images from other web pages that may have been accessed around the same time or near the same location. No one has ever had to get the FCC’s permission before posting something on Facebook, sending e-mail, or setting up a web page. Rasmussen did not need FCC’s permission to post its specious report. No one is suggesting that the FCC should have any role whatever in determining who can communicate to the public using the Internet.

Second, the FCC regulates content by, for example, prohibiting certain “indecent” speech over the airwaves. This is in part because the airwaves belong to the public, and are a scarce resource when it comes to discrete broadcast spectrum. But the FCC has absolutely no authority to regulate indecent speech over the Internet, and no one is advocating that it be given such authority. You can be as raunchy as you like. If it is bad enough, you may get prosecuted for transmitting child pornography or obscene material, but you will be facing federal or local prosecutors, and never the FCC. No one is suggesting that the FCC should have any role whatever in regulating the content of Internet communications the way it regulates the content of radio and television broadcasts.

In fact, no one is asking the FCC to regulate “the Internet” at all, but rather, to regulate those who wish to regulate it. Let me put it more bluntly: Powerful Internet Service Providers (ISPs) manage the flow of information to and from their subscribers. Instead of just competing to provide the fastest, cheapest service to their subscribers with the least downtime, they want to regulate that flow of information as well. Let me repeat that: Some ISPs, not the FCC, want to regulate the Internet. The FCC is being asked to prevent them from doing so. Those who lobby against government regulation of the Internet are in effect lobbying against anyone stopping them from privately regulating the Internet. It’s like the contractor who builds a highway and wants to install a few tollbooths along the way, collecting fees to direct favored traffic to the express lanes it built, and leaving bumper-to-bumper headaches for those unable or unwilling to pay. The more powerful ones might let UPS trucks travel faster than FedEx trucks because UPS paid more. If similarly minded contractors vociferously decry “government regulation of the highways” when they are threatened with an order prohibiting them from managing the traffic that way, we would ridicule them. Those who oppose Internet neutrality should be subject to similar ridicule. ISPs should be delivering Internet traffic as dumb pipes, not getting involved in the content of our end-to-end communications or the identities of whom we are communicating with. It’s great for, say Amazon, Netflix and others to compete for which can deliver the best movie streaming service. It is insane to allow my ISP to deliver one service faster than the other just because it got money under the table.

A more honest question than asking “Should the Federal Communications Commission regulate the Internet like it does radio and television?” would have been to ask, “Should your Internet Service Provider be permitted to regulate the Internet the way the Mafia regulates how much ‘protection’ money a business in your neighborhood must pay to not get ransacked?”

Cancer free 12 hours from now! That’s the plan, at least. Like so many serious illnesses, prostate cancer is spoken about in whispers, but from all I’ve read recently, perhaps more lives could be saved if we just talked more openly, thereby increasing awareness, prevention, and earlier diagnosis.

A friend came up to me as if to share a secret. “Betty told me about your … ‘procedure’,” she said, and before she could offer her sympathy and support, I corrected her: “It’s called prostate cancer. Just say it.” (The funny thing is, she is a nurse.)

Yep. I have prostate cancer. I say it. And I also say I’m one of the lucky ones. There are two types of lucky ones. Some get it so late in life that they can practically ignore it, confident they will die with it but not of it. The other lucky ones are in my category; young enough that I can’t ignore it, I’m otherwise pretty healthy and we caught it early. It appears to be localized to the prostate and, if so, when Dr. Frazier finishes his highly skilled work starting at 10:00 AM tomorrow, I will never have to worry about prostate cancer again.

Well, I will worry about it, actually, but it won’t be my prostate cancer I’ll worry about. I will worry about loved ones who are male, or who are in love with a male. Any men over 40 should do themselves and their loved ones a big favor, and begin regular screening for it. Get that baseline PSA set. If it rises too fast, your doctor will send you to a urologist. If, as in my case, there is a history of it in your family, you will almost surely get a biopsy. Getting cancer is not the bad part. The bad part is getting it and not finding out until it is too late to choose what would have been the best option, which is to get it out.

I expect I’ll be off line for a while, taking a nap grateful that my doctors and their teams chose medical careers.

In An International Comparison of Cell Phone Plans and Prices, New America Foundation’s Open Technology Initiative (OTI) found that cell phone carriers in the United States are engaged in widespread price discrimination adversely affecting women and racial minorities. The results of their international survey show that in several other countries, women and minorities are treated equally, but in the United States, they are charged substantially higher prices.

Well, the OTI’s report did not quite put it that way, but it might as well have said so. You see, the primary price discrimination was between prepaid and post-paid cell phone plans. You know what I mean by prepaid plans – they are the ones used by those who cannot afford post-paid plans, or who cannot get them approved because of their income or lack of a steady home address. In countries like India, South Korea, Sweden and Taiwan, prepaid voice plans cost the same as postpaid plans. In the United States, in contrast, prepaid voice plans cost 39% more. For text messages, prepaid plans cost the same as postpaid plans in Denmark, Hong Kong and Sweden, whereas in the United States, those who prepay for texting pay 400% more per message. But if making the poor pay 4 times more than the wealthy pay for texting doesn’t shock you, consider plain old data. In India, everyone pays the same amount for each megabyte of data – namely zero – whether prepaid or postpaid. But in the United States, a prepaid megabyte of data costs a staggering 12,800% more, according to the OTI’s survey. The wealthy can who can afford (and qualify for) post-paid plans pay 8 cents per megabyte, while the poor pay $10.24.

Clearly, then, price discrimination between prepaying for these services and post-paying is pretty dramatic, but where does discrimination against women and minorities come in? Simple: Those who cannot afford to pay for (or don’t qualify for) a monthly postpaid plan under a typical 2-year contract, and who are therefore forced to prepay for the use they want to make, end up paying more. And who are those most likely to pay 12,800% more per megabyte of data? Women, African Americans, Hispanics, and the elderly.

The affluent are not the ones to purchase prepaid plans (except in the case of unique circumstances, such as the extra phone for a child not trusted to keep a lid on use, or the throw-away un-traceable phone for nefarious communications). The poor, on the other hand, have little choice. If they do not have the credit-worthiness for the postpaid plans, or simply lack the means to be locked into the minimum level of postpaid service, they have no choice but to use the prepaid plans. The kicker? Women and minorities are disproportionately more likely to be among the poor – that is, among the prepaid users. Women, on average, earn less than men. African Americans and minorities and the elderly.

Income-based and wealth-based discrimination is quite simply – and quite blatantly – becoming the new proxy for illegal discrimination against people on the basis of gender, race and age. Is this intentional? It doesn’t matter – the injury is the same. It is time for Congress and state legislatures to put an end to income-based and wealth-based discrimination. Any price break given to the well to do is just the flip-side of a discriminatory price hike to those who can pay less, and surrogate price discrimination against women, racial minorities, and old people.

This morning, the White House released the Administration’s First Joint Strategic Plan to Combat intellectual Property Theft by Intellectual Property Enforcement Coordinator, Victoria Espinel. It falls so far short of the mark that the best news of all is that it is called the “First” such Plan.

The “Second” Plan would do well to cover three major flaws. First, the “IP” catch-all does a disservice to everyone. Vice President Joe Biden’s statement melded very different “intellectual property” disciplines into a single sentence. Copyrights are entirely different from trademarks. Counterfeit goods are entirely different from patent infringement. While it may make good theater to speak of the evils of counterfeit drugs that only pretend to be what they claim to be, and pose a health risk for those who buy them, in the same breath as copyright infringement by selling an infringing copy of a movie in China before it is released theatrically in the United States, those two illegal actions are entirely different, and warrant entirely different approaches. Victoria Espinel should assume some responsibility for intellectual precision in the face of inside-the-beltway political jargon. The American public deserves no less than an honest treatment of each distinct form of “IP” — copyright, trademark, patent, or trade secret — on its own merits.

Second, the entire Plan protects only one set of interests. In the case of copyrights, for example, the Administration has based the entire Plan on the needs of copyright owners who seek to commercially exploit their works. There is not the slightest hint of concern for the far greater number of U.S. copyright holders who have no interest in commercial exploitation. Let’s face it: Pretty much any child is a copyright holder by the time they enter kindergarten, given that a work is copyrighted from the moment of creation. Billions of e-mail messages, blog posts, Internet comments, YouTube videos, and tweets have been published by millions of Americans. Many of these have been “re-tweeted,” forwarded, or replied to while copying the original message. I dare say that the vast majority have no intention of suing someone for copyright infringement for replying to or forwarding an e-mail message, or for re-tweeting. Yet, the Plan makes no provision at all for protecting the First Amendment right of such copyright holders to have their material reproduced without fear of breaking the law. The law presumes that every copyright owner (which is to say, certainly, anyone over two years old) is a copyright maximalist, claiming “all rights reserved,” even when reserving our rights is the last thing we want to do. The Copyright Office has a nice database of works for which the copyright was registered, but, sadly, has never bothered to add even one additional field to let a copyright holder insert an ending date prior to the “life plus 70 years” maximum protection, much less insert notices of pre-licensing of certain uses, such as non-commercial copying. For a country that prides itself in the First Amendment’s protection of freedom of speech, those who do speak have their speech needlessly suppressed out of fear that repeating it may result in a lawsuit for $150,000 in statutory damages.

Third, the Plan is entirely one-sided. The Copyright Act, in granting the specific exclusive rights that are protected (in section 106), begins by making them “subject to sections 107 through 122.” In other words, the Copyright Act makes clear that the exclusive rights granted in section 106 do not include a whole litany of non-infringing uses outlined in those sections, such as the right to re-distribute lawfully made copies, the right to make fair use of works, the right to make copies for the vision impaired, and so on. Absolutely nothing in the Plan suggests any interest at all by the Administration in halting the infringement of non-exclusive rights set out in sections 107 through 122. Similarly, the Supreme Court has made clear that any right not granted is reserved non-exclusively to the public. For example, there is the exclusive right to perform a work publicly, but the right to perform a work non-publicly (or privately) is not in that grant. Thus, private performances of a work remain as a constitutional right protected by the First Amendment. But, once again, the Plan says nothing to suggest any interest on the part of this Administration in protecting such non-exclusive rights from infringement, even as some copyright owners use technology to prevent such non-exclusive uses of their works, thereby becoming the infringers of non-exclusive rights.

There are already a number of instances in which major copyright holders are infringing these non-exclusive rights, and attempting to nullify entitlements such as the first sale doctrine, for the sole purpose of … what did Joe Biden call it? … Oh, yes, “theft,” pure and simple. Selling copies that are laced with technologies or “licensing” terms to prevent the owners from engaging in secondary sales, just to drive up U.S. prices by preventing Americans from enjoying the bargain of used, gift or traded copies. Technology is used to destroy legally made copies after a period of time, just to prevent people from enjoying non-exclusive private performances - unless they pay more. Even as I write, the Supreme Court is considering the question of whether it is just fine and dandy for a copyright holder to circumvent the rights of owners of lawfully made copies to sell, lend, rent or give them away without the copyright owners permission, merely by making the copies abroad. The Plan speaks of U.S. jobs. What about the jobs being outsourced just so a copyright owner can engage in price discrimination against the U.S. consumer? Just so the copyright owner can eliminate price competition form cheap rentals or used copies? Just so a copyright owner can destroy the secondary sales and rentals markets?

Ms. Espinel: For your second Plan, please take off the blinders. Copyrights and other so-called “intellectual property” laws were not created for major corporations to funnel dividends to their investors. They have limited objectives, and are intended, ultimately, to serve the public good. It does the public no good at all to, on the one hand, fight piracy in illegal reproduction of copyrighted works, while on the other, (1) maintaining a copyright scheme that burdens the free speech of those who do not want copyright protection and (2) allowing copyright owners to suppress legitimate retail competition in the sale or rental of legally made copies — legal secondary sales and rentals may, after all, be one of the very best antidotes to piracy.

The best solution for copyright infringement is a vibrant, competitive and creative retail sector selling non-infringing copies, and a vibrant, competitive and creative non-commercial sector in which millions of Americans are free to dedicate their creative works to the public domain.

Normally, when you die, your heirs can receive your books, magazines, iPods, laptops, CDs, DVDs, photographs, sketches, automobiles, home appliances, power tools, Omega watches, shampoo bottles, paper, canvas, and any other articles in which a copyrighted work as been lawfully reproduced. Several courts, however, led by an aberration in the Ninth Circuit precedent and a misinterpretation of Supreme Court dicta have concluded that none of those things can pass to your heirs unless they were “made in the U.S.A.”

As a result of this misguided “law gone wild,” two courts have held that it is OK for textbook publishers to price-gouge U.S. students by preventing price competition from copies of the same books that they make outside of the U.S., courts have held that software publishers can extend their control over redistribution of legal copies of their computer programs (and, by implication, control whether you can even sell your laptop or let a friend borrow your car or power tool) if the computer program was reproduced onto the disc, laptop, car or power tool while it was physically outside of the United States. And, in California, the Ninth Circuit said it was just fine and dandy for Omega to sue Costco for copyright infringement for selling Omega watches – perfectly legal Omega watches that Omega made and sold – just because they had a little copyrighted logo on them and were made outside of the United States.

Section 202 of the Copyright Act makes clear that the rights in the “copyright” and the rights in the “copy” of a copyrighted work are two entirely different things. Section 106 makes clear that the right to sell copies is limited (made “subject to”) section 109 of the Copyright Act, and Section 109(a) states that if you own a “lawfully made” copy of a copyrighted work, you can sell it, lend it, give it away or throw it in the trash without the consent of the copyright holder. So, why did the Supreme Court even need to bother? Because this 150-year-old right was being re-interpreted by nefarious copyright owners to circumvent the restrictions copyright law placed on their rights.

The old common law did not care where the copies were made. The old statutory law (since 1909) was not contingent on where the copies were made. But, in 1976, to clarify that the right (called the first sale doctrine) to re-distribute copies that the copyright owner no longer owned did not apply to copies that were stolen or belonged to someone else (the old law simply gave the right to redistribute to anyone in possession), Congress limited the principle to copies “lawfully made under this title,” and “this title” referred to the Copyright Act.

Common sense suggests that “lawfully made under this title” simply means “non-infringing” under U.S. law, but leave it to creative lawyering to argue that since the U.S. Copyright Act does not apply abroad, nothing made abroad can ever be “lawfully made under this title.”

On its face, that position is rather silly, since the Copyright Act itself grants the copyright owner the exclusive right to reproduce the work into copies – or to authorize others to do so – and does not restrict that right to making copies in the U.S. Indeed, I can’t imagine any copyright owner arguing that their copyright does not give it the exclusive right to authorize someone to make a copy outside of the United States, because that would mean that anyone – anyone at all – who is in the United States could authorize anyone – anyone at all – to make copies outside of the United States, without infringing the copyright. That would, in effect, allow any U.S.-based enterprise to set up a global piracy operation, facilitating the reproduction of major motion pictures all over the world before they have opened in U.S. theaters, so long as the copies were being made abroad.

A lot of people have lost their businesses, paid settlements, or gone bankrupt because of copyright owner abuses based on this misguided theory. Having granted certiorari, the Supreme Court has the opportunity to restore U.S. law to its 150-year-old history that says, quite simply, that if the copy is not infringing, the copyright owner’s right to control distribution ends when it no longer owns the copy. They can’t have their cake and eat it too.

Costco Wholesale Corp. v. Omega S.A., No. 08-1423.

If you lend me your car they can sue you for copyright infringement!

This sounds crazy, and it is. Crazy but true. Copyright law is being distorted in the craziest ways, and today, the U.S. Supreme Court is scheduled to decide whether to hear an appeal from one of the crazy rulings.

Back in 1998, shampoo makers used copyright to go after people who sold their shampoo cheaper than the price at which they wanted to gouge the U.S. consumer. They claimed that the longstanding first sale doctrine, now codified in 17 U.S.C. § 109, did not apply at all to imported shampoo.

Well, to be clear, it wasn’t the imported shampoo that gave them the right to prohibit people from lending their shampoo to someone else – or from reselling bottles the makers had sold cheaply overseas, and well below the price they hoped to extract from us. Rather, it was the copyrighted label on the shampoo bottle that did it. Because the copyrighted work appeared on a bottle of shampoo, the shampoo bottle was a “copy” of a “work” protected by U.S. copyright law. But in that case, the Supreme Court said “no way”. The Court concluded that the right to prohibit imports of copies was just a part of the exclusive right to distribute copies, and that right is expressly limited by the first sale doctrine: Once someone else owns the shampoo (I mean, copy), the copyright owner cannot generally control any further transfer of possession.

The Supreme Court’s reading served us well, and upheld a policy recognized by the courts for 150 years, and codified by Congress in 1909. Now, in the centennial year of that codification, price gougers are trying to rip off U.S. consumers with two major attacks on the first sale doctrine. The first price-gouger is Omega – the watch company – upset that Costco was able to sell perfectly legal Omega watches in the U.S. at much less than what they thought they could extract from U.S. consumers’ pockets, even as Omega sold the same watches at much lower prices in countries with lower per capita incomes.

The other price-gougers are major publishers of college textbooks. Ever wonder why college textbooks cost so much? Several reasons are available, but one stands out today, and was brought to the Supreme Court’s attention: Some of the largest textbook publishers appear to be engaged in a concerted campaign to limit access to cheaper copies of their textbooks, be they used textbooks or copies they made and sold overseas in, you guessed it, markets where there are millions of students who either do not enjoy the U.S. per capita level of income or do not enjoy access to U.S.-style financial aid or low-interest loans with which to pay $333 per semester for textbooks.

How do these attacks come? By attacking copyright law itself. The first sale doctrine, as codified in Section 109(a) of the Copyright Act, states in relevant part:

“Notwithstanding the provisions of [the distribution right in] section 106 (3), the owner of a particular copy … 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”.

This specific language has been in place since 1976, but only recently has it occurred to anyone that they should go about policing their discriminatory pricing (price gouging) by using the Copyright Act as a bludgeon. To get around the Supreme Court’s ruling in the shampoo case, the underscored language above is being used to argue that (1) “this title” means “the U.S. Copyright Act,” (2) the U.S. Copyright Act does not apply in Switzerland or China, and (3) therefore, copies made in Switzerland or China, even if lawfully made by or with the permission of the company claiming U.S. Copyright Act protection, were not lawfully made “in the U.S.A.” and, therefore, Section 109 does not apply because if not made in the U.S.A. it could not have been “under this title”.

The publishers just won an important ruling. They were going after a number of small online retailers, generally shutting them down either with a settlement agreement or a default judgment, because it’s pretty hard for a small online retailer to go up against textbook publishing giants when a negative outcome most likely means bankruptcy. One of the sellers stood up to them. Linda Liu, who knew exactly how much cheaper these publishers were selling their copies of the same textbooks in China, had been helping U.S. students obtain the same benefits their Chinese counterparts were enjoying. She could sell new copies for a fraction of the cost that new copies of the same works were being sold for in the U.S., and still make a modest profit even after paying for shipping from China and fees to the websites hosting her service. For her, this supplemented household income. For the publishing giants who were spending a lot of time and money persuading the U.S. Congress and several state legislatures that the high price of textbooks was none of their concern, Ms. Liu is a threat. Price competition is a threat. She had read the law, and she interpreted it the way it had been interpreted for 150 years: The publishers made and sold the books wherever they chose at whatever price they chose, she bought some, and now she was free to sell the copies she owned wherever she chose at whatever price she chose. This is the same law that encourages used book stores, video rental stores, CD trade-in shops, library lending, and yard sales and bequests conveying works of art, books and any number of lawful copies of copyrighted works.

The judge in her case, Pearson Education v. Liu, issued a ruling last Friday in which he basically agreed with Ms. Liu’s interpretation of the plain meaning of the law, legislative history and purpose of the Copyright Act, all pointing to the notion that she should be free to keep selling these legal copies, bringing downward price pressure on price-gouging textbook publishers. In a very thorough and thoughtful legal analysis, he laid waste to these silly arguments that the first sale doctrine only applies to manufacturers dumb enough (my words, not his) to keep their manufacturing jobs here at home. Showing the utmost respect for the U.S. Supreme Court, however, he was troubled by a short passage in the old 1989 shampoo case, wherein the court gave an illustration that suggested that foreign-made products were not covered. In an admittedly close call, Judge Holwell concluded that Liu’s motion to dismiss the claims should be denied, giving deference, instead, to this rather loose language (my words, not his) by the Supreme Court.

Personally, I would take issue with that interpretation because I think the Supreme Court did not mean for its illustration to stand for the proposition that offshore manufacturing is the copyright owner’s secret sauce to perpetual control. But this is not the time or place to make that argument. This is a blog for the general public focusing on the national public policy more so than parsing the illustration the Supreme Court’s used to bolster its interpretation of the statute.

Is a watch a “copy of a work protected by copyright”? Yes, if there is any copyrighted work embedded in it, is the implicit response, and that’s why Omega, unable to stop cheaper and perfectly legal parallel imports of “watches” created a “work of authorship” (a logo), registered it as a copyrighted work with the U.S. Copyright Office, and then began embedding it on the back of its watches. Presto! Common everyday “watches” are suddenly turned into “copies” of copyrighted works, enjoying the protection of U.S. copyright law with a twist – U.S. copyright law works best for would-be price-gougers and price-discriminators who want to eliminate price competition from secondary sales by simply moving the U.S. manufacturing jobs offshore.

The implications of this are mind-boggling. Is Ford upset that competition from used cars is placing downward price pressure on new car prices? You bet. They loved “cash for clunkers,” that took a lot of used cars out of circulation. If you are an automaker, just make sure that you install a copyrighted logo or copyrighted software (you know, those smart chips living in and around our engines and safety features) and make the car (or the part with the software) anywhere other than in the United States. Suddenly, “Fords” become “copies” of works of authorship protected by U.S. copyright law and, if lawfully made outside of the U.S., Ford gets to sue the pants off of anyone who dares sell them, lease them, trade them, drop them off at valet parking, or even lend them to a family member for a quick errand, unless they first obtain Ford’s permission.

Now, “that’s silly,” you might say. Why would Ford want to prevent your use of valet parking or letting a family member drive it? It wouldn’t. But you would still, legally, need Ford’s permission, which it might helpfully include in the owner’s manual. But as for Hertz car rental or used car sales, that’s a whole different matter. If Ford’s analysts ran the numbers, they might think they are leaving money on the table by letting people make money renting their cars or selling them used without giving Ford a cut. They could be nice, and make it simple: “You may sell it used, provided you give us 10% of the sales price.” Later, if used car prices and rentals were still deemed too competitive an option, they just jack up the fee. (Of course, there could be competition from GM, which might offer a lower “resale fee” with the purchase of a new vehicle.)

This whole issue has come to a head today, as the Supreme Court is scheduled to scheduled to consider Costco’s petition
to appeal the Ninth Circuit’s conclusion that it is fine and dandy for a Swiss watch maker to discriminate against U.S. consumers by using the Copyright Act – well, they didn’t really say “fine and dandy”. They actually moaned about how bad an idea it was, and how they did not like this weird interpretation of the law that seems to make no sense and leads to untenable results, and then concluded that their wringing hands were tied by their own precedent. That’s why Costco is seeking Supreme Court review. Adding a more “traditional” copyrighted work – books – to the mix, Ms. Liu’s motion to dismiss was decided just in time for Costco’s counsel to bring it to the attention of the Supreme Court as just one more example of why the time is so ripe for the Supreme Court to step in and restore order.

None of us want our heirs to have to pay the copyright holder for permission for our estate to transfer to them our artwork, photographs, postcards, sound recordings or foreign films made abroad. Nor do we want copyright owners to be in a position to skim off profits from our charitable donations of such things, under threat of suing us for statutory damages. Much less do we want permission to have to be obtained for such transfers once shampoo makers, watch makers, car makers, and makers of copyrighted labels to be affixed to all manner of consumer goods catch on to this windfall being handed to them by these legal loopholes. If the Supreme Court will not close the loophole by clarifying and correcting the proper and historic interpretation of the first sale doctrine, Congress must.

About 20 years ago, Judy Krug changed my attitude toward librarians. Raised in a childhood environment in which librarians were viewed as disciplinarians, my adult exposure to librarians as resourceful facilitators of my access to knowledge hardly shook that early childhood impression — until I met Judy.

I had been in the trenches of the defense of First Amendment freedoms against government censorship. Video retailers were still the new kids on the block, and state and federal lawmakers pandering to prudes saw a ripe opportunity to gain re-election points by pressing laws to suppress every American’s freedom to choose which movie to watch from the family couch. I grew used to having to explain American values like freedom of speech to lawmakers who had sworn to uphold the First Amendment even as they trashed it, saying “I’ll leave it to the court’s to decide” the constitutionality. I felt alone in an uphill battle.

Then I met Judy. Judith Krug was the head of the American Library Association’s Office for Intellectual Freedom. She had been in the trenches long before me, had more battle scars, and let me know that I was preaching to the choir – no, I should shut up for a moment and listen to her preach. Her positions on First Amendment freedoms were well developed, and she proved to be a terrific ally in coalition efforts to keep our choice of reading, viewing and listening material free, as the First Amendment to our Constitution intended.

I had lost touch with her, and saddened to learn of her untimely death. Her life touched millions in a way they will never know. When you walk into a library and reach for a book of your own choosing, when you pick the movie you want to watch without restraint, when you listen to the music of your choice, you can thank Judy. There have been countless low-life lawmakers intent on suppressing your freedom in exchange for a few votes. Judy was there to point their colleagues to the high road. Though she will be missed, the fruit of her labor will be enjoyed for years to come.