NISO Webinar: Copyright Decisions: Impact of Recent Cases on Libraries and Publishers

August 14, 2013

Speakers:

Skott Klebe, Manager of Special Initiatives, Copyright Clearance CenterBrandon Butler, Practitioner-in-Residence, Glushko Samuelson IP Clinic,

Washington College of LawLaura Quilter, Copyright and Information Policy Librarian,

University of Massachusetts

http://www.niso.org/news/events/2013/webinars/copyright

Kirtsaeng, ReDigi and the Future of First Sale

•Skott Klebe•Copyright Clearance Center

Extrapolation

THEN

NOW

SOMEDAY

Extrapolation

•NOT all lines are straight

THEN

NOW

SOMEDAY

THEN

NOW

SOMEDAY

THEN

NOW

Wiley v. Kirtsaeng

THEN

NOW

SOMEDAY

Wiley v. Kirtsaeng

•Unexpected turns

ASIAN EDITION:$19.99

US EDITION:$110.08

9% month’s wages at US minimum wage

42% month’s wages at Shenzen minimum

wages

8% month’s wages at Shenzen minimum wage

Source: chinadaily.com.cn

Strategy

•Some choices are obvious•Some

SELL ABROAD?

AT LOCAL PRICE

AT US PRICE

NO

Regional editions & pricing benefits

Widest possible audience for contentPricing competitive with products of local originRevenue opportunity, even at much lower marginDownward pressure on piracy

However...

Competing with yourself in US & Europe on price

First Sale & Global Business

First Sale

Copyright holder’s right to control distribution of copies ends when they are first sold

Bobbs-Merrill Co. v. Straus, 1909

109 (a) “...the owner of a particular copy or phonorecord lawfully made under this title ... is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord”§ 109 . Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord

Importation

602(a)(1)“Importation into the United States, without the authority of the owner of copyright under this title, of copies...of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies...”

§ 602 . Infringing importation or exportation of copies or phonorecords

“Without the authority”

109 (a)

• “...the owner of a particular copy ... is entitled, without the authority of the copyright owner, to sell ... that copy”

602(a)(1)

• “Importation into the United States, without the authority of the owner of copyright ... is an infringement of the exclusive right to distribute copies...”

§ 602 . Infringing importation or exportation of copies or phonorecords§ 109 . Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord

CBS v. Scorpio, 1983 Phonorecords

purchased abroad3rd Circuit 602

Sebastian v. Consumer Contacts,1988

Labels on hair products

3rd Circuit 109

BMG Music v. Perez, 1991Phonorecords

purchased abroad9th Circuit 602

Parfums Givenchy v. Drug Emporium, 1994

Perfumes purchased in US after unauthorized

imporation9th Circuit 602

Quality King v. L’Anza, 1998

Labels on US-manufactured hair

products

Supreme Court

109

Costco v. Omega, 2010 Logo on watchesSupreme

Court (divided)

602

602 or 109?

Columbia Broadcasting Sys. v. Scorpio Music

Parfums Givenchy, Inc. v. Drug Emporium, Inc., 38 F. 3d 477 - Court of Appeals, 9th Circuit

“Construing §109(a) as superseding the prohibition on importation set forth in ... §602 would render §602 virtually meaningless.”

“...This broad language, if taken literally, would render the first sale doctrine wholly inapplicable to foreign manufactured goods, even after the goods have been lawfully imported into the United States...”

Wiley v. Kirtsaeng•Argument prevails

PRECEDENT

LAW

EXPECTATION

OUTCOME

Kirtsaeng Decision

• “Held: The ‘first sale’ doctrine applies to

copies of a copyrighted work lawfully made

abroad”

Kirtsaeng v. John Wily & Sons, Supreme Court 11-697

“Parade of Horribles”

“A geographical interpretation of first sale would require libraries to obtain permission before circulating books ... printed overseas”“We also doubt that Congress would have intended to create the practical copyright-related harms with which a geographical interpretation would threaten ordinary scholarly, artistic, commercial, and consumer activities.”

Kirtsaeng v. John Wily & Sons, Supreme Court 11-697

Kirtsaeng Outcome

First sale is globalSupreme Court’s decision is finalOnly new legislation can change it

Libraries can lend and distribute their collections, regardless of where they were madeLibraries can acquire new works for their collections, regardless of where they were made

Kirtsaeng Futures

Does anything change?

109 OVER 602

LEGISLATION

PUBS RAISE INTERNATIONAL PRICES

PUBS HALT INTERNATIONAL SALES

PUBS LOWER DOMESTIC PRICES

NOTHING CHANGES AT ALL

Digital Media & First Sale

First Sale in ’76

109 (a) “...the owner of a particular copy or phonorecord lawfully made under this title ... is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord”

§ 109 . Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord

What’s a Copy?

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

USC 17 § 101 . Definitions

Material objects•From which the work can be perceived, reproduced, or communicated

The digital difference

No transfer of a material objectLicense, not a sale

Amazon MusicAmazon Kindle

“a non-exclusive, non-transferable right ... only for your personal, non-commercial, entertainment use”“Kindle Content is licensed, not sold...”

Barnes & Noble Nook

“We grant you a limited, non-exclusive, revocable licence ... personal, non-commercial use...”You may not participate in the transfer or sale”

Google Play

“You will have the non-exclusive right to view...for your personal, non-commercial use ...”“You may not sell, rent, lease...to any third party without authorization”

License, not a sale

Vernor v. Autodesk

Autocad software “sold” with click-through software license agreement

nonexclusive and nontransferable license

prohibiting sale, transfer, lease

Vernor sold used copies on eBayAutodesk won infringement case on appeal

Vernor v. Autodesk, Inc., 621 F. 3d 1102

Vernor v. Autodesk

Established conditions under which a softwaretransfer is considered a license and not a sale:Copyright owner:

Specifies that transfer is a license and not a saleRestricts user’s ability to transferImposes “notable” usage restrictions

License, not a sale:Apple?

Apple is the provider of the iTunes Service, which permits you to purchase or rent digital content ("iTunes Products") for end user use

You shall be authorized to use iTunes Products only for personal, noncommercial use.

The delivery of iTunes Products does not transfer to you any commercial or promotional use rights in the iTunes Products

N.B.: iTunes predates Vernor by 4 years

ReDigi and iTunes

Founded in 2011 to enable resale of music purchased through iTunesClaims novel technology for “migrating” music files “packet by packet” so that the data is never in two places at the same timeDesigned so that only iTunes songs could be resoldSued by Capitol Records in 2012

Capitol Records v. Redigi

Redigi

User A PC

ReDigiSoftware

iTunesSoftware

ReDigi “Cloud” Server

User B PC

ReDigiSoftware

iTunesSoftware

1.User A “migrates” file to cloud server

2.User B pays for it

3.ReDigi “migrates” file to User B

Capitol v ReDigi: Findings

“It is simply impossible that the same “material object” can be transferred over the Internet.”“the Internet transfer of a file results in [copy] being “created elsewhere at its finish.”“...It is the creation of a new material object and not an additional material object that defines the reproduction right” Capitol Records v. Redigi

Capitol v. ReDigi: Findings

ReDigi infringes the reproduction right by making new copies on the server and recipient PC

First sale defense not available, only applies to the distribution rightto “lawfully made copies”

Fair use fails on all four factors

Liable for direct, contributory, and vicarious infringement

Outcome

Judge declined to apply first sale to digital contentAt this time, first sale does not apply to digital content

just to physical media

ReDigi vows to try again with a new architecture

First sale futures

•Vendors take over?

NO DIGITALFIRST SALE

LEGISLATION

MORE COURT CASES

NOTHING CHANGES

VENDORS TAKE CHARGE

Vendor-locked Resale

Amazon received a patent on a digital resale architecture

Apple applied for one

Patents are not plans

Kindle EBook Sale

Royalty

Amazon fee

KINDLE SALE

Amazon PublisherUser

Kindle EBook Resale

Royalty

KINDLE SALE

AmazonPublisher

User 1

User 2

Commission

Amazon fee

Future?

Vendors can act fastThey’re moving forward with library lending already...

Whether we like how they’re doing it or not

Congress will be hard pressed to keep up

Thank you.

The GSU Case and the Future of Fair

Use

•Brandon Butler•Practitioner-in-Residence•Glushko-Samuelson IP Clinic•American University Washington College of Law•Presented for NISO

Aug. 14, 2013

BIG PICTURE• First federal decision to apply fair use to non-

profit educational use in Internet age

• District opinion was huge defeat for publishers, who favored a draconian standard (Classroom Guidelines), but only proved 5 of 99 alleged infringements

• Not binding on other libraries or other courts, but still a useful input

• Framework generally favors libraries who make modest uses, with some important caveats

• On appeal!

Background of the Dispute

• Course reserves: administered by libraries

• Course site: administered by a professor/TAs

• Well-established practice: students visit library to read excerpts (often photocopied) from books prof doesn’t believe should be assigned in their entirety

• Years of tension b/w libraries and CCC/AAP re: licensing of this use in electronic realm

• Case against GSU as impact litigation; AAP and CCC bankrolling lawsuit (“several million”)

Outcomes, in a nutshell:

•GSU’s policy was in good faith, with only five infringements shown (versus 99 alleged)

•GSU policy fell short by failing to limit amount taken to “decidedly small” portions (10%/1 chapter).

Fair Use Overview• Four Statutory Factors

• Purpose or character of use, incl. whether “transformative”

• Nature of the copyrighted work used

• Amount and substantiality of portion used

• Effect on market for or value of copyrighted work

• Plus, purpose of copyright (“additional factors”)

First Factor: Strongly favors GSU

•Citing the preamble of §107, text of first factor, court finds educational nonprofit use is at heart of fair use

•Distinguishes coursepacks, commercial uses

•Not transformative, but that's ok

Second Factor: favors GSU

•Scholarly non-fiction is "informational" and fair use encourages use of this category

•Rejects relevance of "sweat of the brow" -difficulty of academic production

Third Factor: favors pubs if amount taken > 10%/1

chapter• Court decisively rejects use of Classroom Guidelines, both as to amount and repeated use across semesters

• “The work” = the book, not individual chapters, even when each chapter has a separate author; includes index, front matter

• Because use is non-transformative, amount must be “decidedly small” and narrowly tailored to legit purpose

• Fewer than 10 chapters -> 10%; More than 10 chapters -> 1 chapter

Factor Four: strongly favors pubs if license

available•Would widespread fair use substitute for purchase of the underlying work?

•Clearly no harm to book market

•License must be “reasonably available” at “reasonable price” for excerpts in “convenient format”

Additional Factors• Fair use of excerpts will have zero effect on

authors’ incentives to create - prestige, advancement of knowledge, tenure

• Ditto publishers’ incentive to publish

• Argument that e-reserves would put pubs out of business is “glib” - revenues from academic licensing are minuscule

• Fair use will promote dissemination of knowledge, further purposes of ©

Applying the Framework to GSU

•Ownership issues

•“De miminis non curat lex”

•Licenses for digital excerpts rarely available

•Amounts almost always under 1 chapter

And then?• Judge Evans’ Final Order

• No classroom guidelines, no continuing oversight

• Not about textbooks

• Be sure to tailor uses and limit access

• GSU wins attorneys’ fees - $3mil

The Appeal

• Publishers have radically different view of fair use from libraries; to them, classroom guidelines are a ceiling

• Are libraries the same as Kinkos?

• “Forest vs. trees”

• Alleged past infringements

• Ownership issues

• “Razor thin margins”

Publishers’ Amici

• AAUP (we need every penny we can get)• Authors’ Guild & Textbook Authors (we do

it for the $$$)• Copyright Alliance (copyright über alles)• Former Copyright Registers (education is

not special)

GSU Amici

• Library Copyright Alliance (best practices + economics)

• The Other AAUP - Professors (teaching is transformative)

• Academic Authors (we don’t do it for the $$$)

• ACE, AAU, APLU (education is special)

Some Interesting Numbers from the

Case•The Court told us a lot about the “harm” publishers suffer from unlicensed course reserves

Final score: 94-5Universe of posted excerpts

99 Original excerpts chosen by pubs(average amount 9.6%)

75 excerpts submitted to court(average amount 10.1%)5 works found to infringe

Publisher Revenue from Academic Licensing of

Excerpts

Publishers’ Lost Sales Due to Proven GSU

Infringements?Publishers’ 2009 Aggregate Revenue: $507,804,000.00

Publishers’ Proven Lost Revenue: $750.00

(.00015%)

If you make $60,000/year, that’s like losing 8¢.

The #librarianscode•Different reasoning, but many

commonalities

•Purpose is core fair use

•Tailoring to audience and purpose

•More modest use of works whose core audience is classroom use

•Code applies to ALL MEDIA; GSU framework is all about scholarly books

Questions?• bbutler@wcl.american.edu

• @bc_butler

• ipclinic.org (forthcoming)

Google, HathiTrust, & the Future of Mass Digitization“Copyright Decisions” NISO Webinar, Aug. 14, 2013

Laura Quilter, MLS, JDCopyright & Information Policy LibrarianUniversity of Massachusetts, Amherst Libraries

Google BookSearch

Google BookSearch digitization project

Authors Guild v. Google (*Am Soc of Media Photographers)

Filed 2005 by Authors Guild; publishers joined

Settlement proposed 2008, criticized by civil libertarians, librarians, authors, and the Dept. of Justice; settlement rejected (770 F.Supp.2d 666, March 22, 2011)

Publishers settled (2012/10/04)

Class certification granted (2012/05/31, J.Denny Chin; order 2012/06/11) appealed, overturned (2013/07/01, 2d Cir.)

Fair use is queued up, possibly for this fall or winter

Authors Guild v. Google: Class Certification

“Class certification” including commonality of injury, typicality of claims, predominance of common questions of law or fact.

2012 - Class certification granted (SDNY, May 31 2012, J.Denny Chin)

Appealed “because many members of the class, perhaps even a majority, benefit from the Library Project and oppose plaintiffs’ efforts”

Overturned as “premature” on appeal (2d Cir., July 1, 2013, Leval, Cabranes, B.D. Parker)

2d Cir. thought the anti-certification argument “may carry some force”But fair use may “moot” the class certification issues: “we believe that the resolution of Google’s fair use defense in the first instance will necessarily inform and perhaps moot our analysis of many class certification issues, including those regarding the commonality of plaintiffs’ injuries, the typicality of their claims, and the predominance of common questions of law or fact”Remanded “for consideration of the fair use issues”“In the interest of judicial economy, any further appeal from the decisions of the District Court shall be assigned to this panel.”

Fair Use (17 USC 107)

[T]he fair use of a copyrighted work, including … copies … for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. [F]actors to be considered shall include

(1) purpose and character of the use – commerciality or nonprofit educational purposes? transformativeness? (2) nature of the copyrighted work – factual or creative? published or unpublished? in or out of print? (3) amount and substantiality of the portion used in relation to the copyrighted work as a whole; and(4) effect of the use upon the potential market for or value of the copyrighted work.

Google BookSearch : Fair Use?

Fair Use ? Authors Guild (Not Fair Use!)

Google (Fair Use)

Factor 1: Purpose & Character. Transformative?

No – no new work created.

Transformative search index; incidental use. Amici libraries & EFF: Consider public interest – research tool, new forms of research, helps authors

Factor 2: Nature of Work

Highly creative works; entire expression taken.

Irrelevant, because transformative (but mostly scholarly)

Factor 3: Amount & Substantiality

They copied the whole thing!

Irrelevant, because search & index requires entire work for indexing

Factor 4: Effect on the Market

Digital risk! Might even help, but market effects not relevant where transformative. Amici libraries & EFF: Can’t develop a market to license millions of books for index.

HathiTrust

Library copies of digitization projects (Google Books, Internet Archive, others; but mostly Google Books)

HathiTrust: Organization of libraries pooling their digitized copies for various purposes

Preservation copies under Section 108

Search & Data Mining

Disability Access

Orphan Works – Proposed on-campus access to so-called “orphan works”; List posted to solicit authors to contact; Authors did contact HathiTrust; Authors Guild sued

Authors Guild v. HathiTrust

Filed Sept. 12, 2011 – Authors Guild & related author organizations filed suit against HathiTrust and 5 universities

Oct. 10, 2012, SDNY - summary judgment for HathiTrust

On appeal to Second Circuit: June, 2013, amicus briefs filed by universities, libraries, etc.

Authors Guild v. HathiTrust

902 F.Sup.2d 445 (SDNY, Oct. 10, 2012) (J. Harold Baer)

1. Orphan works question not ripe (no program active)

2. Section 108 does not preclude Section 107

3. all major HathiTrust initiatives were fair use: “I cannot imagine a definition of fair use that would not encompass the transformative uses made by defendants [] and would require that I terminate this invaluable contribute to the progress of science and cultivation of the arts that at the same time effectuates the ideals espoused by the [Americans with Disabilities Act].”

4. Chafee Amendment (17 USC 121) means academic libraries can be “authorized entities” to provide equal access to copyrighted materials for people by disabilities, as required by ADA

Authors Guild v. HathiTrust (SDNY 2012)

Fair Use Preservation copies

Search / Text Mining

Disability Access

Factor 1: Purpose & Character. Transformative?

Preservation furthers scholarship & research. Prob. not transformative, but strong public interest.

Scholarship and research uses. Search is a highly transformative and different use.

Scholarship and research uses. Highly transformative because not the intended original audience.

Factor 2: Nature of Work

Irrelevant for the use.

Irrelevant for transformative use.

Irrelevant for disability access.

Factor 3: Amount & Substantiality

Entirety required for preservation.

Entirety required for text mining.

Entirety & copy required for disability access.

Factor 4: Effect on the Market

* AG alleges security risk; not supported.

Prohibitive cost to develop a market. Does not substitute for sale.

Market abandoned by rightsholders. Does not substitute for sale.

Authors Guild v. HathiTrust

On appeal to the 2d Circuit, this fall

Handicapping HathiTrust:Preservation: Is it a fair use, or can Section 108’s preservation provisions prevent reliance on 107? 108(f)(4) “Nothing in this section … in any way affects right of fair use as provided by section 107”

Search indexing: Can you digitize without permission for a different purpose?

Search indexes as transformative uses (Kelly v. Arriba (2003), Perfect 10 v. Amazon (2007); see also AV v. iParadigm (4th Cir 2009) and White v. West (SDNY 2013))

2d Circuit transformative use cases: Bill Graham Archives v. Dorling Kindersley (1996); Cariou v. Prince (2013) appropriation art; hints in Authors Guild v. Google (2013)

Digital humanities scholars’ amicus brief

Disability access: Interactions of ADA and 17 USC 121

Interactions of 17 USC 121 and 17 USC 107

Marrakesh Treaty (WIPO)

Mass Digitization US

Copyright Office orphan works studyIdentified “orphan works” as a problem:

Works presumptively or apparently under copyright,

whose rightsholders cannot be identified or located.

Legislation proposed in 2006, 2008

Notice of Inquiry (2012)

“Next Great Copyright Act”: 20 years off?

See: Copyright Office, http://www.copyright.gov/orphan/

Mass Digitization Abroad

State licensing approachCanada: Copyright Board may offer a non-exclusive license after “reasonable efforts” to locate copyright owner (Copyright Act, Section 77)

Japan (Japanese Copyright Act, Article 67)

South Korea (South Korean Copyright Act, Article 47)

Selected categories of orphan worksIndia: Unpublished orphan works (Indian Copyright Act, Article 31a)

France, Feb. 2012: Out-of-commerce, books only

EU implementations of Directive on Orphan Works 2012/28/EU (Oct. 2012)

Directive excludes photographs unless embedded

Restricts exception to libraries, educational, museums, cultural heritage, public broadcasting

More info

Authors Guild, http://www.authorsguild.org

Google BookSearch

HathiTrust, http://www.hathitrust.org/

US Copyright Office, http://www.copyright.gov/orphan/

NISO Webinar:Copyright Decisions: Impact of Recent Cases on Libraries and Publishers

NISO Webinar • August 14, 2013

Questions?All questions will be posted with presenter answers on the NISO website following the webinar:

http://www.niso.org/news/events/2013/webinars/copyright

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