CopyOwner

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.

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.