CopyOwner

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.

This entry was posted on Monday, January 29th, 2007 at 2:55 pm and is filed under Copyright. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.