Class 11 Copyright, Spring, 2008 Distribution and First-Sale Doctrine Randal C. Picker Leffmann...

Class 11Copyright, Spring, 2008

Distribution and First-Sale Doctrine

Randal C. PickerLeffmann Professor of Commercial Law

The Law School

The University of Chicago

106. Exclusive rights in copyrighted works

Subject to sections 107 through 121, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: … (3) to distribute copies or phonorecords of

the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

The First-Sale Doctrine

109(a) Notwithstanding the provisions of section

106(3), the owner of a particular copy or phonorecord 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 or phonorecord.

Bobbs-Merrill v. Straus

210 U.S. 339 (1908)

1870 Copyright Act: 2nd General Revision

That any citizen of the United States, or resident therein, who shall be the author, inventor, designer, or proprietor of any book, map, chart, dramatic or musical composition, engraving, cut, print, or photographs or negative thereof, or of a painting, drawing, chromo, statue, statuary, and of models or designs intended to be perfected as works of the fine arts, and his executors, administrators, or assigns,

1870 Copyright Act

shall, upon complying with the provisions of this act, have the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing, and vending the same; and in the case of a dramatic composition, of publicly performing or representing it, or causing it to be performed or represented by others; and authors may reserve the right to dramatize or to translate their own works.

The Cassilis Engagement (1907)

More Rights Reservation

Bobbs-Merrill v. Straus

Selling The Castaway by Hallie Ermine Rives

The Castaway

Copyright Page

Selling the Book

Core Facts Bobbs-Merrill sells The Castaway with the

reservations notice beneath the copyright statement in each copy of the book

Macy’s is selling the book for 89 cents Macy’s bought the book from wholesalers;

everyone knew of the notice; no contracts regarding sales price

Reading Sec. 4592 From the Opinion

“Sec. 4952. Any citizen of the United States or resident therein, who shall be the author, inventor, designer, or proprietor of any book, map, chart, dramatic or musical composition, engraving, cut, print, or photograph or negative thereof, or of a painting, drawing, chromo, statute, statuary, and of models or designs intended to be perfected as works of the fine arts, and the executors, administrators, or assigns of any such person, shall, upon complying with the provisions of this chapter, have the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing, and vending the same.” U.S. Comp. Stat. 1901, p. 3406.

Meaning?

Says the Court “In our view the copyright statutes, while

protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice, such as is disclosed in this case, a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.”

Meaning?

Says the Court “To add to the right of exclusive sale the authority

to control all future retail sales, by a notice that such sales must be made at a fixed sum, would give a right not included in the terms of the statute, and, in our view, extend its operation, by construction, beyond its meaning, when interpreted with a view to ascertaining the legislative intent in its enactment.”

[Amazon: The Castaway]

Sec. 41: 1909 Copyright Act

“That the copyright is distinct from the property in the material object copyrighted, and the sale or conveyance, by gift or otherwise, of the material object shall not of itself constitute a transfer of the copyright, nor shall the assignment of the copyright constitute a transfer of the title to the material object; but nothing in this title shall be deemed to forbid, prevent, or restrict the transfer of any copy of a copyrighted work the possession of which has been lawfully obtained.”

Organizing Secondary Markets

Three Situations Sequential ownership (used books) One owner, many users (rental markets) One owner, many users (libraries)

[SC: Amazon: GT&L]

[SC: Used Prices]

[SC: Author’s Guild]

Music Rental

Hypo/History I buy music CDs Customers rent those from me; I sell blank

cassettes Where do I stand under 109(a)? 109(b)?

Types of Works

102(a) Works of authorship include the following

categories: (2) musical works, including any

accompanying words; … (7) sound recordings

Musical Works? Undefined (H.R. 94-1476)

Of the seven items listed, four are defined in section 101. The three undefined categories—“musical works,” “dramatic works,” and “pantomimes and choreographic works”—have fairly settled meanings. There is no need, for example, to specify the copyrightability of electronic or concrete music in the statute since the form of a work would no longer be of any importance, nor is it necessary to specify that “choreographic works” do not include social dance steps and simple routines.

101: Sound recording

“Sound recordings” are works that result from the fixation of a series

of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied.

101: Phonorecords “Phonorecords” are

material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term “phonorecords” includes the material object in which the sounds are first fixed.

Controlling Sound Recording and Software Rental

109(b)(1)(A) Notwithstanding the provisions of

subsection (a), unless authorized by the owners of copyright in the sound recording or the owner of copyright in a computer program (including any tape, disk, or other medium embodying such program), and in the case of a sound recording in the musical works embodied therein,

Controlling … neither the owner of a particular phonorecord nor

any person in possession of a particular copy of a computer program (including any tape, disk, or other medium embodying such program), may, for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord or computer program (including any tape, disk, or other medium embodying such program) by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.

Controlling …

Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution.

[BA Audiobook Home]

[Personal Use Edition]

[Library Edition]

[LE: Free Fixes]

[LE: Discounts]

[HCC Home]

[HCC Library Downloads]

Getting to the Case I

Hypo BA sells two editions of music CDs:

personal edition and library edition at higher price

Copyright issues? Why?

Answer

Getting to the Case II

HCC buys personal editions and attempts to resell them to libraries

Copyright issues?

Answer

Getting to the Case III

HCC buys personal editions and attempts to rent them to libraries

Copyright issues?

Answer

Getting to the Case IV

Hypo BA sells two editions of audio books:

HCC buys personal editions and attempts to rent them to libraries

Copyright issues?

Answer

Organizing Domestic and Foreign Markets

Two Examples DVDs: Technological Separation Quality King: Legal Separation

[SC: Amazon Incred US]

[SC: Amazon Incred UK]

Comparing Prices

Same DVD US: $17.99 UK: £14.99

Exchange Rate (as of April 21, 2005): $1 = £0.510915, $1.91969 = £1

Matching Prices $17.99 = £9.37 £14.99 = $28.77

[SC: US Encoding]

[SC: UK Encoding]

[SC: Amazon on Encoding]

601. Manufacture, importation, and public distribution of

certain copies (a)

Prior to July 1, 1986, and except as provided by subsection (b), the importation into or public distribution in the United States of copies of a work consisting preponderantly of nondramatic literary material that is in the English language and is protected under this title is prohibited unless the portions consisting of such material have been manufactured in the United States or Canada.

602. Infringing importation of copies or phonorecords

(a) Importation into the United States, without

the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords under section 106, actionable under section 501.

501. Infringement of copyright

(a) Anyone who violates any of the exclusive

rights of the copyright owner as provided by sections 106 through 121 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be.

Quality King

Core Facts L’anza makes shampoo; labels are

copyrighted works L’anza sells at higher prices in the US than

in foreign markets Quality King acts as middleman to bring

shampoo back to US

Quality King

Ninth Circuit rules for L’anza, saying that applying 109 first-sale defense would gut 602

Making, Selling, Importing

Hypo I print a copyrighted book in the US I sell copies in the US for $50 I export copies to the UK and sell them

there myself for $25 Importer buys in the UK for $25, takes the

book to the US and sells for $35 How does Sec. 602 apply to this situation?

Quality King Result

This is the “round trip” case Books started in US, left and returned Under Quality King, 109(a) first-sale rights

“attach” Attach based on location of printing in US

—“lawfully made under this title” That is independent of where the particular

copy of the book is sold (see fn. 14 on p. 661)

Making, Selling, Importing

Hypo I print a copyrighted book in the US and sell

copies in the US for $50 I print copies in the UK and sell them there

for $25 Importer buys in the UK for $25, takes the

book to the US and sells for $35 How does Sec. 602 apply to this situation?

Analysis

This is the one-way case 109(a) doesn’t attach, seemingly, to the

books printed in the UK 602(a) should apply and should block

imports Does this make it possible to enforce price

discrimination in this case?

Analysis

Only way to enforce the across-country price discrimination is by moving the printing overseas

Contrary to US interests?; compare Sec. 601

602(a) Rewrite

(a) Importation into the United States, without

the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is actionable under section 501.

How would Quality King come out?

Analysis

109 and First-Sale Doctrine Irrelevant under Rewrite

Overinclusive? Would cover US tourist buying book

covered by 602(a) in England to read on plane home

But See 602(a)(2)

This subsection does not apply to‑ (2) importation, for the private use of the

importer and not for distribution, by any person with respect to no more than one

copy or phonorecord of any one work at any one time, or

by any person arriving from outside the United States with respect to copies or phonorecords forming part of such person’s personal baggage

Legislative History From the Congressional Report

Section 602(a) first states the general rule that unauthorized importation is an infringement merely if the copies or phonorecords “have been acquired outside the United States,” but then enumerates three specific exceptions … If none of the three exemptions applies, any unauthorized importer of copies or phonorecords acquired abroad, could be sued for damages and enjoined from making use of them, even before any public distribution in this country has taken place.

Class 11 Copyright, Spring, 2008 Distribution and First-Sale Doctrine Randal C. Picker Leffmann...

Documents

Transcript of Class 11 Copyright, Spring, 2008 Distribution and First-Sale Doctrine Randal C. Picker Leffmann...

Class 19 Bankruptcy, Spring, 2009 Absolute Priority Rule Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago.

Class 13 Copyright, Winter, 2010 Fair Use: Parody Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 12 Copyright, Spring, 2008 Performance and Display Rights Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of.

Class 9 Whiteboard Antitrust, Fall, 2012 Vertical Restraints: Double Marginalization Randal C. Picker Leffmann Professor of Commercial Law The Law School.

Class 17 Bankruptcy, Spring, 2009 Overview of Plan Process Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago.

Class 13 Copyright, Spring, 2008 Fair Use: Parody Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 14 Copyright, Winter, 2010 Fair Use: Political Speech Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago.

Class 6 Bankruptcy, Spring, 2009 Executory Contracts Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 11 Copyright, Winter, 2010 Proof of Copying and Infringement Randal C. Picker Leffmann Professor of Commercial Law The Law School The University.

Class 21 Copyright, Winter, 2010 Online Distribution Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 24 Copyright, Winter, 2010 International Issues Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 23 Bankruptcy, Spring, 2009 Chrysler Sale Order Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 6 Copyright, Winter, 2010 Characters Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Randal E. Bryant

Class 15 Whiteboard Antitrust, Fall, 2012 Horizontal Mergers Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago.

Class 18 Bankruptcy, Spring, 2009 Disclosure, Solicitation and Voting Randal C. Picker Leffmann Professor of Commercial Law The Law School The University.

Class 1 Copyright, Spring, 2008 Introduction Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 20 Bankruptcy, Spring, 2009 Interest Rates Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.

Class 4 Bankruptcy, Spring, 2009 Allowance and Disallowance of Claims Randal C. Picker Leffmann Professor of Commercial Law The Law School The University.

Class 2 Bankruptcy, Spring, 2009 The Automatic Stay Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago 773.702.0864/r-picker@uchicago.edu.