Copyright Law - Copy Right Codex

First Sale Doctrine

The “first sale doctrine” helps balance the interests of authors against the rights of the public. In short, authors only control the first distribution of any particular copy of his or her work. Once a copy has been distributed to the public, the owner of the copy is able to assert the typical rights of an owner of personal property (subject to limitations on making further copies and public displays). The first sale “exhausts” the author’s rights in the further distribution of that particular copy of the work. Without this limitation, there would be no market for used books or movies or art. History of the First Sale Doctrine The first sale doctrine comes from the English common law tradition of limiting the ability of sellers to restrain the future alienation of property. The Supreme Court first articulated the first sale doctrine in its 1908 decision of Bobbs-Merrill Co. v. Straus, writing: “[O]ne who has sold a copyrighted article, without restriction, has parted with all right to control the sale of it. The purchaser of a book, once sold by authority of the owner of the copyright, may sell it again, although he could not publish a new edition of it.” 210 U.S. 339, 350 (1908). The first sale doctrine as codified in §109(a) of the Copyright Act, reads: Notwithstanding the provisions of §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. Under the first sale doctrine, it is lawful, for example, for a person to purchase secondhand copies of copyrighted works, to remove the covers or to bind them in new covers, and to resell them to the public. Fawcett Publ’ns, Inc. v. Elliot Publ’g Co., 46 F. Supp. 717 (S.D.N.Y. 1942). This careful balance between authors and the public may, however, be losing its stability in the digital age. More works are purchased (or licensed) and stored as digital copies. Changes in the first sale doctrine raises interesting questions about the nature of ownership of software and digital goods. First Sale Allows Lending By virtue of the ﬁrst sale doctrine, U.S. law does not afford the kind of “public lending right” given to the copyright owner in such nations as Great Britain and Germany. U.S. copyright owners can claim no royalty, and can interpose no ban, when third persons—such as public libraries or private lending libraries—lawfully purchase one or two copies of a work and lend them to the public many times, either free or for a price. Section 109(a) negates any such lending right. It is lawful, for example, for a person to purchase secondhand copies of copyrighted works, to remove the covers or to bind them in new covers, and to resell them to the public. Fawcett Publ’ns, Inc. v. Elliot Publ’g Co., 46 F. Supp. 717 (SDNY 1942). First Sale Doctrine Does Not Allow Creation of Infringing Derivative Works The right to dispose of a lawfully purchased copy of a work does not include the right to makes alteration or incorporate such work in a compilation as a derivative work. For example, a court held that when a defendant purchased old copies of National Geographic magazine, tore out articles, and bound them together for sale with articles relating to a common subject matter, it had infringed on the owner’s exclusive right to prepare derivative works. Nat’l Geographic Soc’y v. Classiﬁed Geographic, Inc., 27 F. Supp. 655 (D. Mass. 1939). International First Sales Following decades of debate and uncertainty, the Supreme Court has finally held that the first sale doctrine applies to goods manufactured outside of the jurisdiction of the United States and that the Copyright Act cannot be used to prevent importation of gray-market goods. See Kirtsaeng v. John Wiley & Sons, Inc., 133 S.Ct. 1351 (2013). In Kirtsaeng, the Supreme Court addressed the question of whether the clause “lawfully made under this title” in §109(a) of the Copyright Act effectively means “made in geographic area of the United States”. Additionally, the Court upheld the finding that the right of importation provided in §602(a)(1) is subject to the resale and transfer rights provided to owners under the first sale doctrine. See Quality King Distributors, Inc.v.L’anza Research Int’l, Inc., 523 U. S. 135 (1998). The Court reversed the holding of the Second Circuit, finding the “lawfully made under this title” is best interpreted as meaning lawful with respect to being in compliance with Copyright Act and not, as the Second Circuit had held, to mean with the physical boundaries where the Copyright Act applies. The Court found that a non-geographical interpretation of the contested clause was a more straightforward reading of the words, noting that pirated copies of an American work that are printed or manufactured abroad are considered unlawfully made under the Copyright Act. See Id. at 1359-60. The Court also notes that the geographically interpretation could give rise to a list of “horribles”, which could severely limit the ability of Americans to re-sell everyday consumer items and of museums or libraries to display and lend books and art. See Id. at 1364-66. Justice Kagan, concurring, writes that in essence what John Wiley is asking the Court to do is to eviscerate the first sale doctrine so that §106(3) does the hard work of preventing unauthorized importation, which should instead be the job of §602(a)(1). Justice Kagan, in what reads like a legislative guide map for Congress, suggests that issue be taken with the Court’s decision in Quality King and not Kirtsaeng. The prior Supreme Court authority on this matter in Quality King Distributors, Inc. v. L’Anza Research International, Inc., 523 U.S. 135 (1998) confronted the question of whether the first-sale doctrine applies to works manufactured in the United States, but distributed and purchased abroad and then re-imported into the United States. Quality King Distributors, Inc. v. L’Anza Research International, Inc., 523 U.S. 135 (1998). To answer that question, the Court analyzed §602(a)(1)1, which gives the U.S. copyright owner the exclusive right of importation. The central issue was whether the first-sale limitation set

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Breakdown of Exclusive Rights

The Copyright Act enumerates 6 exclusive rights enjoyed by copyright owners. A violation of any one of these rights is copyright infringement. Six Exclusive Rights of § 106 The exclusive rights of § 106 are the rights to: Authorize. Not only do copyright owners have the exclusive right to do the listed acts, but also to authorize others to do them. For example, if A owns the copyright in a novel, which is published by B, and B (without A’s consent) authorizes producer C to make a motion picture based upon the novel, when C’s film is later released A can bring infringement actions against both B and C. The Supreme Court has, in effect, concluded that this “authorize” language furnishes the basis for incorporating into copyright law the principle of contributory infringement. Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 435 & n.17 (1984) (manufacturer-seller of videotape recorder is not contributorily liable for home taping of copyrighted television programs, which is fair use under the circumstances). See Columbia Pictures Indus. v. Aveco, Inc., 800 F.3d 59 (3d Cir. 1986). The first three listed exclusive rights—reproduction, preparation of derivative works, and public distribution—are applicable to all forms of copyrightable works listed in § 102(a). The next two listed rights—public performance and public display—are, by their nature, applicable only to certain categories of copyrightable works, and those categories are expressly set forth in §§ 106(4) and (5). For example, the right of public performance attaches to musical works but not to sound recordings; that means that an unauthorized public playing by a disk jockey in a nightclub of a recording of a copyrighted song will constitute an infringement of the song but not of the sound recording, so that the songwriter–author will have legal redress but the record manufacturer and performer will not. If, however, the public playing of the recorded song is “by means of a digital audio transmission,” (streaming podcast, streaming audio, etc.), then this is among the exclusive rights of the sound-recording copyright owner. § 106(6) (added to Copyright Act in a 1995). Infringing Activity Need Not be “Fixed in a Tangible Medium” Although a work cannot be copyrighted until its fixed in a tangible medium of expression, unauthorized conduct can infringe without being fixed. For example, a public sale, performance or display can infringe. Likewise, a copyrighted song or play can be infringed by an unauthorized (and “unfixed”) public performance. Limits on the Exclusive Rights All of the exclusive rights in § 106 are subject to the provisions in § 107 through 122. Those provisions exempt from liability a wide range of reproductions, derivative works, and the like that would otherwise constitute infringements, particularly for nonprofit, charitable or educational purposes. More to read: Navigating Cross-border Property Transactions

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Sovereign Immunity: Suing the State

Sovereign Immunity severely limits lawsuits against the government. It limits copyright infringement lawsuits against both States and the Federal Government. The 11th Amendment generally prevents lawsuits against a state in federal courts. However, sovereign immunity does not prevent injunctions against states. Nor does it prevent infringement suits against state officials acting in their individual capacity (as opposed to their official government capacity). To sue the Federal Government for copyright infringement, a special procedure is required. United States v. Mitchell, 445 U.S. 535, 538 (1980); United States v. Sherwood, 312 U.S. 584, 586 (1941). Suing the Federal Government Procedure. Infringement claims against the Federal Government require a special procedure. 28 U.S.C. § 1498(b), see also, Boyle v. United States, 200 F.3d 1369, 1372-73 (Fed. Cir. 2000). First, the plaintiff must file an administrative claim. 28 C.F.R. § 14.2(a). If the claim is denied, or after 6 months of inaction from the Government, the plaintiff can then sue the Government for copyright infringement. This lawsuit must be brought in the Court of Federal Claims in D.C. Damages. Compensation is limited to “the minimum statutory damages” for copyright infringement. 28 U.S.C. § 1498(b). Suing State Governments Congress can limit the state’s sovereign immunity. Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989). But a statute limiting sovereign immunity must use explicit language. Atascadero State Hosp. v. Scanlon, 473 U.S. 234 (1985). Congress amended the Copyright Act in 1990 to incorporate explicit language limiting sovereign immunity. The “Copyright Remedy Clarification Act” added two sentences to section 501(a), which deﬁnes copyright infringers. The addition states: As used in this subsection, the term “anyone” includes any State, any instrumentality of a State, and any ofﬁcer or employee of a State acting in his or her ofﬁcial capacity. [They] shall be subject to the provisions of this title in the same manner and to the same extent as any nongovernmental entity. In addition, a new section 511 was added, explicitly providing that the state, the state instrumentality, or their employees “shall not be immune, under the Eleventh Amendment of the Constitution of the United States or any other doctrine of sovereign immunity” from suit in a federal court for copyright infringement, and that the full range of remedies ordinarily available against private defendants is also available in such suits. Constitutional Challenges for Lawsuits Against States The constitutionality of the 1990 amendments were subject to serious question. In Seminole Tribe of Florida v. Florida, the Supreme Court overruled earlier precedent and held (5 to 4) that the Commerce Clause is not a source of congressional authority to overturn states’ sovereign immunity. Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996). Then, in 1999, the Court considered whether it was constitutional for Congress to subject the states to patent-infringement or trademark-infringement liability by means of provisions that were essentially the same as those added to the Copyright Act in 1990. In the two Florida Prepaid Postsecondary cases, the Court considered the Commerce and Patent Clauses of the Constitution, as well as the Fourteenth Amendment, which empowers Congress to enact legislation implementing the constitutional ban on state deprivation of “property” without due process of law. The Court held (again, 5 to 4) that on the facts presented none of those constitutional sources empowered Congress to abrogate the immunity of the states against federal-court actions for damages for patent or trademark infringement. Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666 (1999) (Lanham Trademark Act); Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627 (1999) (Patent Act). The following year, in Chavez v. Arte Publico Press, the Florida Prepaid Patent Act decision was held dispositive by the Court of Appeals for the Fifth Circuit in an action for copyright infringement by an author against the University of Houston, a state agency. Chavez v. Arte Publico Press, 204 F.3d 601 (5th Cir. 2000). The court held that the 1990 amendments to the Copyright Act purporting to render states fully liable for copyright infringement, including damages, exceeded Congress’s power under both Article I and the 14th Amendment. Practical Significance Given the broad use of copyrighted materials by state instrumentalities—libraries, schools, universities, as well as the wide range of typical executive and administrative agencies—their immunity against damages actions would create a major gap in the enforcement of the copyright laws. More to read: Breakdown of Exclusive Rights

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Transfer of Copyright Ownership

Copyright ownership can be sold or exchanged, given as a gift, or donated to the public domain. Copyright ownership may be transferred during the owner’s life (inter vivos), or it may pass to the owner’s heirs at death. Copyright Generally Transferrable as Personal Property This basic principle is afﬁrmed in § 201(d)(1) of the Copyright Act, which provides: “The ownership of a copyright may be transferred in whole or in part by any means of conveyance or by operation of law, and may be bequeathed by will or pass as personal property by the applicable laws of intestate succession.” ‘indivisibility’ under the 1909 Copyright Act. The 1976 Act abandoned the concept of indivisibility of copyright ownership along with its more dubious ramiﬁcations. Section 201(d)(2) provides: Any of the exclusive rights comprised in a copyright, including any subdivision of any of the rights speciﬁed by section 106, may be transferred as provided by clause (1) and owned separately. The owner of any particular exclusive right is entitled, to the extent of that rig ht, to all of the protection and remedies accorded to the copyright owner by this title. Thus, a person who owns no more than an exclusive license to publicly perform a dramatic work or a musical composition (but not to make or sell copies) is nonetheless regarded as the “owner” of that right. It is that person who can properly bring an action for infringement of that particular exclusive right. § 501(b). The Copyright Act refers to the conveyance of either all rights or less than all rights as a “transfer,” and it eliminates the signiﬁcance of characterizing a transfer as either an assignment or a license. Under current law, what is important in connection with copyright transfers is whether the transfer is exclusive or nonexclusive. The influence of the old law, however, is still felt. For example, the Court of Appeals for the Ninth Circuit, incorporating doctrine developed under the 1909 Act, has held that the transferee of an exclusive right must, in order to make a valid retransfer of that right to a third party, give notice to and secure the assent of its own initial transferor. Gardner v. Nike, Inc., 279 F.3d 774 (9th Cir. 2003). Transfer Requires Signed Writing Section 204(a) provides that “a transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” Because § 101 deﬁnes “transfer of copyright ownership” to include both assignments and exclusive licenses, a grant of an exclusive license of any of the rights or subdivisions of rights in § 106 must be manifested in a signed writing if it is to be effective, by virtue of the copyright “statute of frauds” (a legal term referring to a law that requires a signed writing). § 204(a). The grant of a nonexclusive license—for example, separate grants to several production companies to perform a dramatic work—will be valid even without a signed writting (although, of course, the practicing attorney will routinely give or take such a license by written agreement). Such a transfer can often be inferred simply from the conduct of the parties, without any kind of writing. Effects Assocs. v. Cohen, 908 F.2d 555 (9th Cir. 1990) (short footage was prepared at request of motion picture producer; for lack of a writing, this was found to transfer to the latter an implied nonexclusive license to incorporate the footage, and distribute it, as part of the film). Recording Copyright Transfers at the Copyright Office In the interest of maintaining intelligible records relating to copyright ownership, the Copyright Ofﬁce not only registers initial (and renewal) claims of copyright but also records “any transfer of copyright ownership or other document pertaining to a copyright,” under § 205(a) of the Copyright Act. Recording a transfer of copyright in a registered work provides constructive notice of the facts stated in the recorded document. Like the real estate recording system, copyright recordation will protect the transferee (recipient) of the copyright against subsequent conﬂicting transfers, even to good-faith purchasers. § 205(c), (e), (f). Assignment of Rights to Future Technology New technology and media formats can create interesting copyright assignment issues. Often, years after a valid transfer, the parties will dispute whether the grant was meant to embrace some new technology format. This issue first arose in grants of dramatization rights, just before the advent of motion pictures. It arose against when film rights were granted prior to the advent of television. More recently, there have been disputes about whether grants of film rights include the right to make and distribute DVDs, and whether magazine or book publishing rights embrace digital media. Since the contracts were made before the new technology was even known, let alone commercially widespread, it is difficult for the parties to properly define their intentions. The court decisions do not form a consistent pattern. They often place more weight on contract analysis than on analysis of the Copyright Act. Some courts emphasize the lack of awareness of the new technology and the obligation of the drafter (usually the large media company) to make its intentions clear; E.g., Cohen v. Paramount Pictures Corp., 845 F.2d 851 (9th Cir. 1988) (music incorporated in motion picture, later distributed in videocassettes), other courts emphasize that new technologies will ordinarily be facilitated through a contract presumption favoring transfer of rights. E.g., Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481 (2d Cir. 1998) (Stravinsky’s transfer of music rights for Disney film Fantasia, later distributed in videocassettes) (relying on Bartsch v. Metro-Goldwyn-Mayer, Inc., 391 F.2d 150 (2d Cir. 1968)). Most recently, book publishers have been found not to have taken transfers of the right to publish in the form of electronic books, so that several major authors were held to have acted lawfully when conveying “e-Book” rights to digital publishers. Random House, Inc. v. Rosetta Books, L.L.C., 150 F. Supp. 2d 613 (SDNY 2001). The Supreme Court reached a similar conclusion in New York Times Co. v. Tasini, 533 U.S. 483 (2001). In Tasini, the