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2011 Charleston Conference Something’s Gotta Give—Plenary

Jack Bernard

Associate General Counsel

University of Michigan

November 4, 2011

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2011 Charleston Conference Something’s Gotta Give—Plenary

Kool-Aid and Pad Thai: to go or not to go?

Jack Bernard

Associate General Counsel

University of Michigan

November 4, 2011

Today’s Menu

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Today’s Menu

• Appetizer: Fermented Kool-Aid

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Today’s Menu

• Appetizer: Fermented Kool-Aid

• Main Course: Thai food, but not to go.

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Today’s Menu

• Appetizer: Fermented Kool-Aid

• Main Course: Thai food, but not to go.

• Dessert: Questions and Discussion

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Finish This Statement:

The purpose of U.S. © law is to:

• A) Reward authors for their creative efforts

• B) Provide an economic incentive to write & publish

• C) Advance public learning

• D) Provide legal remedies for infringement

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Finish This Statement:

The purpose of U.S. © law is to:

• A) Reward authors for their creative efforts

• B) Provide an economic incentive to write & publish

• C) Advance public learning (about 3% guess this)

• D) Provide legal remedies for infringement

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The purpose of copyright is etched right into the Constitution.

To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;

---U.S. Const. Art.1 §8 cl. 8

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What is the purpose of copyright?“…copyright law ultimately serves the purpose of

enriching the general public through access to creative works…” Fogerty v. Fantasy, Inc. 510 U.S. 517, 527 (1994)

“The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.” Sony. v. Universal City Studios, 464 U.S. 417 (1984)

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What is the purpose of copyright?“…it should not be forgotten that the Framers

intended copyright itself to be the engine of free expression. By establishing a marketable right to the use of one's expression, copyright supplies the economic incentive to create and disseminate ideas.” Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 558 (1985)

“…monopoly created by copyright thus rewards the individual author in order to benefit the public” id. at 546

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Means---------------->Ends

Reward Authors

Provide Incentive Promote Progress

Provide Legal Remedies

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Copyright law codifies a constant balancing act

rights, needs, and desires among:

– authors and copyright holders

– publishers and distributors

– users and the public

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Copyright Requirements• Original

– not copied + a minimal degree of creativity• Work of authorship

– including not only literary, but also musical, dramatic, choreographic, pictorial, graphic, sculptural, audiovisual, and architectural works

• Fixed in a tangible medium of expression– embodiment is sufficiently permanent to permit it

to be perceived for a period of more than transitory duration

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§106 Exclusive Rights of © Holders

• Reproduction of the work in whole or in part

• Preparation of derivative works

– e.g., translations, musical arrangements, dramatizations, sound recordings, & second editions

• Distribution of copies of the work to the public by sale, gift, rental, loan, or other transfer

• Public performance of the work

• Public display of the work

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Who is the Copyright Holder?• Default Rules:

– The author is the copyright holder.

– The employer is the copyright holder if it’s a “work made for hire”.

• Independent Contractors

• Who’s the © holder: start with the author.

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§106 Exclusive Rights in Copyrighted Works

Notwithstanding sections 107 through 122, the owner of copyright under this title has the exclusive right to make and to authorize all uses including the following:

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§106 Exclusive Rights of © Holders

• Reproduction of the work in whole or in part;

• Preparation of derivative works;• Distribution of copies of the work to the

public by sale, lease, rental, loan; or other transfer of ownership;

• Public performance of the work;• Public display of the work.

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§106 Exclusive Rights in Copyrighted Works

Notwithstanding sections 107 through 122, the owner of copyright under this title has the exclusive right to make and to authorize all uses including the following:

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§106 Exclusive Rights in Copyrighted Works

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following:

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CompareNotwithstanding sections 107 through

122, the owner of copyright under this title has the exclusive right to make and to authorize all uses including the following: (false)

Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: (true)

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• Copyright protection “has never accorded the copyright owner complete control over all possible uses of his work. ... All reproductions of the work, however, are not within the exclusive domain of the copyright owner; some are in the public domain. Any individual may reproduce a copyrighted work for a ‘fair use’; the copyright owner does not possess the exclusive right to such a use.” Sony. v. Universal City Studios, 464 U.S. 417 (1984)

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It is not infringement if . . .

• You are the copyright holder

• You have express permission

• The work you are using is uncopyrightable or otherwise in the public domain

• Your use falls within a specific statutory limitation (§§107-122 of the copyright act); i.e., outside the ambit of authorization.

• E.g. you buy a book in the hotel gift shop, read it, and sell it on ebay.com (§109)

You Cannot Read §106 alone…let’s look at an example

§106 “Subject to sections 107 through 122, 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;”…

You Cannot Read §106 alone…let’s look at an example

§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.”

“First Sale” Limitation

• Remember, the rights in §106(3) operate “subject to” and are limited by §109

• Consider the purpose of the §109 limitation– Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908)

• §109 limits §106(3) to controlling the first instance in which a work enters the market place.

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John Wiley & Sons v. Kirtsaeng No. 09-4896-cv (2d Cir. Aug. 15, 2011)

• Basic facts: Thai student imports cheaper, foreign editions of textbooks published by Wiley, which he sells on ebay.com (resulting in 1.2 million in paypal sales)

• Wiley says Kirtsaeng violated its rights by importing foreign editions and reselling.

• Kirtsaeng asserts §109 as a defense.

• Second Circuit upholds lower court: foreign manufactured works are beyond §109

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John Wiley & Sons v. Kirtsaeng:How does the court get there?

• §602 (a) Infringing Importation or Exportation.– (1)Importation.—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.

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John Wiley & Sons v. Kirtsaeng:How does the court get here?

• The courts says: – First sale limitation does not apply here because

• Kirtsaeng imported foreign manufactured works

• §109(a) only applies to copies “lawfully made under this title,”

• Which means physically manufactured in the US.

• The court relies on Supreme Court dicta in Quality King Distributors, Inc. v. L'anza Research Int'l, Inc., 523 US 135 (1998)

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John Wiley & Sons v. Kirtsaeng:“lawfully made under this title”

• This could mean a variety of things– Made in the US (court’s choice)– Not otherwise made in violation of 17 USC (dissent’s

choice)

• Courts do not agree on how to interpret such language.

• And in a recent similar case, a “tied” supreme court offerd no guidance (OMEGA SA v. Costco Wholesale

Corp., 541 F. 3d 982 - Court of Appeals, 9th Circuit 2008)32

John Wiley & Sons v. Kirtsaeng:Manufactured?

• Not a defined term in 17 USC

• Plain meaning ambiguous in this context– Manufacturing v. Authoring– Any portion manufactured?

• Amount

• Authorship

• What about incidental works on substantial chattels: cars, electronics, etc.?

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John Wiley & Sons v. Kirtsaeng:Library Concerns

• Concerns about library lending– §602 does have language authorizing limited import for “library

lending purposes”, but how this affects actually lending is unclear.• Is there a difference between lending a book for use on library premises

and for use beyond?

• Do libraries know the provenance of the construction of works in the collection?– Can this even be determined in most cases?

• Will libraries have to query foreign manufacture?

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John Wiley & Sons v. Kirtsaeng:Other Concerns

• Encourages foreign manufacture

• Invites mass unwitting infringement

• Runs counter to common sense

• It protects some markets; but is anti-competitive in others

• Bad facts make bad law

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Questions and Discussion