Public Knowledge Weighs In on Digital First Sale

The Internet advocacy group Public Knowledge (PK) recently published Copies, Rights, & Copyrights: Really Owning Your Digital Stuff, a think-piece on first sale for the digital age, authored by Sherwin Siy, PK’s VP of Legal Affairs.  PK’s position on digital first sale, characteristically, is that users should have the same types of rights to resell, lend, and give away their digital content as they do physical items such as books and CDs.  The law in the United States is at best ambiguous on this point, but as digital content consumption goes mainstream, the need for clarity increases.

This whitepaper, which mixes the scholarly with the pragmatic, should be fun for copyright law geeks to read and pick over.  It’s PK’s contribution to what will undoubtedly be years of dialog and argument over what to do about first sale for digital content.  It mines the history of first sale-related court decisions for precedents that justify the extrapolation of first sale rights to the digital age.

The doctrine of first sale, section 109 of the Copyright Act, says that once you buy (or otherwise lawfully obtain) a copy of a copyrighted work, it’s yours to do with as you please.  As Siy explains, the law evolved through litigation to cover things like the right to repair and publicly display one’s legitimately obtained works without permission from the publisher.  In examining how first sale ought to apply in the digital age, Siy considers not just obvious use cases such as reselling or lending downloaded music files or e-books, but also less straightforward scenarios like the right to “lend” access to a database through an Internet login, or to lend a DVD rented from Netflix (which is contrary to Netflix’s terms and conditions).

One mystifying aspect of this document is that despite the June 27 publication date, it is completely silent about the recent summary judgment against the MP3 resale startup ReDigi, which happened in a New York federal court three months previous.  This is tantamount to writing a piece on domestic terrorism without mentioning the Boston Marathon bombings.  One can’t help but wonder whether the omission was intentional, given that PK can’t have liked the way that case went, or if Siy is saving his ammunition for an amicus brief to be filed in ReDigi’s appeal.

At the heart of Siy’s analysis is the notion of copies made as “essential steps” in the normal usage of a copyrighted work.  If you rebind a book and put a new cover on it, for example, the law says that the result is a “derivative work” — a specific type of copy in legal terms — of the original book.   But one court decision said that you have the right to do this because of the essentiality of the derivative work to the functioning of the original.

Analogously, various copies of software or digital content that are made in the RAM of a PC or other devices can be argued to be made as essential steps in the use of the software or content.  Few people notice or care about such RAM copies.  They aren’t given much consideration in copyright law, and end-user license agreements (EULAs) usually don’t explicitly give users permission to make them.  In legal terms, they are de minimis copies.

ReDigi’s software — at least the version of it for which the court found ReDigi liable — made a copy of a music file as part of the process of making it available for resale.  It deleted the original copy in the process of making the new one, and it took steps to ensure that the user didn’t try to keep additional copies after the file was resold; but still, it made a new copy.  And the judge in the ReDigi case specifically ruled that the new copy was infringing.  In other words, the ReDigi opinion implied that the copy made for resale purposes was not essential to the normal use of digital music files.

In its white paper, PK, proposes short term fixes to the copyright law.  It also discusses longer term implications of first sale in an age where the concepts of copies of and access to content are increasingly muddy.  The short term fix focuses on adding language to the law that make “essential step” copies — including those made for transfer of ownership — presumptively legal.  Siy suggests that if publishers want to limit this at all, they can do so by putting terms into EULAs.

In addition, Siy proposes codifying distribution of files for transfer of ownership as part of the normal use of digital content:

“…the law could allow the lawful owners of lawful copies to make reproductions of the works necessary to the transfer of ownership of a copy to one other party, provided that the other party be the only one in possession of a copy at the end of the transfer, and that no more than one of the parties has the use of the work at one time.”

In other words, it should be legal to do this as long as the original copy disappears.  Siy adds:

“Skeptics of this approach might note that the copyright  holder would have to rely upon the goodwill of the transferring parties not to make more permanent reproductions in the course of the transfer and just keep the copy they claim to have sold to someone else. This is true. However, it is not a significant change from the state of play now. Photocopiers continue to operate without licenses from copyright holders despite the fact that they may be used for infringing reproductions.”

Here’s where his analysis starts to lose credibility.  First, the U.S. Copyright Office investigated this very issue in a 2001 report on digital first sale.  It decided that while it’s possible to build a mechanism to delete the original when making a copy — a “forward and delete” scheme similar to ReDigi’s — it would be neither prudent to trust people to do this nor practical to mandate such a mechanism.  Given that the Copyright Office is the advisor to Congress on copyright law, this report is tantamount to Congress’s last word on the subject.  (The Copyright Office hasn’t been asked to revise the report since 2001.)  Siy doesn’t mention this.

Secondly, there are two things wrong with Siy’s photocopying analogy.  First, while publishers don’t bother trying to seek licenses for photocopying from individuals, they do seek licenses from institutions via the Copyright Clearance Center that are based on an institution’s size, industry, and other factors; the vast majority of the Fortune 500, for example, pays fees for such licenses.  Second, and most fundamentally, a photocopy is not the same as the original, whereas a bit-for-bit copy of a digital file is.  This difference has to be relevant, as it was to Judge Sullivan in his ReDigi opinion.  I’d argue that the exactness of digital copies has to be at the heart of any debate on the future of first sale in the digital age, yet Siy doesn’t touch this issue.

After his suggested short-term solutions for a structured settlement buyer, Siy surveys the emerging landscape of content distribution models that focus more on access than on copies, and he wonders — quite appropriately — whether copies are still the most appropriate measure of the usage of copyrighted works.  Looking creatively at the present and future of content business models, he says:

“As technology advances, we can see the relationship diminishing between the structure of the Copyright Act and the reality of how authors and audiences alike value and use copyrighted works. … increasingly, consumption of copyrighted works comes not through the distribution of fixed copies, or even the distribution of digital ones. People listen to music via subscriptions to Spotify, pay for online access to the New York Times and Wall Street Journal, and ‘rent’ (actually, pay for streaming access to) digital movies from Amazon. Access, not copies, seems to be more the question. We own copies now; we don’t necessarily own access. Should we be able to trade access … ? This is actually more than just a fix for the first sale doctrine; it’s a realignment of how we think of copyright and what the value of the thing is.”

Yet at the end of the day, Siy decides that focusing on copies is still the most sensible approach to laws intended to balance the interests of content creators and the public.  The alternative would be to enable content distributors to grant or deny rights on every conceivable type of content access, including, for example, the ability to flip back and forth or search through text. He says that this could lead to a future that is “at best tedious and at worst dystopian,” and uses that as a rationale to conclude that maybe focusing on copies isn’t so bad after all.

Another landmark case in the world of digital first sale, which Siy does mention, is Vernor v. Autodesk.  In my discussion of that case, I suggested that specifying such fine-grained limitations in a EULA amounts to “verbal DRM,” which in a way is worse than technological DRM because of its potential for ambiguity and thus legal risk to users.  Commercial content distributors need to make their services easy to understand and use, because the alternative is irrelevance, not to mention piracy.  Just as importantly, digital content and software developers should know that byzantine usage restrictions in EULAs without technological measures to back them up are virtually impossible to enforce; users will merely ignore and/or complain about them.

Therefore I’m not so concerned about Sherwin Siy’s “tedious” and “dystopian” future, and I continue to wonder whether there’s a better way forward than looking at copies.

2 comments

  1. Quick question, if I quote a specific part of this posting,
    what is the procedure you would like me to credit
    you?

  2. Hi, if you want to quote me as saying such-and-such, you can quote me as Bill Rosenblatt, president of GiantSteps Media Technology Strategies. Or just ping back to the permalink. Thanks.

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