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Betty Ballantine and the Manufacturing Clause

This week is Fair Use/Fair Dealing Week, an annual celebration of the important doctrines of fair use and fair dealing. It is designed to highlight and promote the opportunities presented by fair use and fair dealing, celebrate successful stories, and explain these doctrines.

*This is a guest blog post by Jonathan Band, policybandwidth*

Fair Use Week properly celebrates a critical limitation on copyright protection that enables free expression and creativity. And at the beginning of this year, we celebrated works entering into the public domain because their copyright term (finally!) expired. The recent death of Betty Ballantine, one of the founders of Bantam Books and Ballantine Books, reminds us of another limitation that stimulated the growth of the U.S. publishing industry: the manufacturing clause. Until the United States joined the Universal Copyright Convention in 1954, the Copyright Act’s manufacturing clause protected English-language literary works only if they were printed in the United States with the copyright owners’ authorization. This allowed U.S. publishers to reprint British works that weren’t printed in the United States without paying royalties to the British authors.

The importance of the manufacturing clause was underscored in the Washington Post’s obituary about Betty Ballantine, who passed away on February 12, 2019. The obituary explained how Betty Ballantine and her husband, Ian Ballantine, helped develop the market for paperback books in the United States. Prior to World War II, paperback books were primarily poorly made pulp novels. After the War, “the Ballantines took advantage of new technology in production and distribution and of a clause in copyright law discovered by Ian that waived fees on books from Britain, where high quality paperbacks were easier to find.” The clause that Ian “discovered” was the manufacturing clause, which actually was well known at the time. They founded Bantam Books, which, among other titles, published British bestsellers that had not yet been printed in the United States. In 1952, they established Ballantine Books based on the same business model. Both Bantam Books and Ballantine Books eventually became part of Penguin Random House.

In other words, large divisions of a major publishing house have their roots in a limitation on copyright protection. Moreover, this limitation encouraged the growth of an important market segment: paperback books. In this instance, the manufacturing clause worked exactly as intended; it promoted the development of U.S. printers and publishers at the expense of foreign rights holders. The manufacturing clause, when adopted in 1891, actually expanded the rights of foreign authors. Prior to the clause’s adoption, foreign authors received no copyright protection in the United States. Under the manufacturing clause, foreign works received copyright protection if they were printed in the United States. This approach provided increased protection for foreign authors without harming the developing U.S. printing industry because the foreign works received protection only if they were printed on U.S. presses. Nonetheless, the manufacturing clause departed from the national treatment approach of the Berne Convention, adopted five years earlier in 1886.

Although the manufacturing clause was an improvement over the previous situation of receiving no protection, foreign authors still objected to it because U.S. publishers often printed their books in the United States before they had the opportunity to authorize U.S. publication. In 1909, Congress exempted foreign language works from the manufacturing clause, but it still applied to books published in English. In 1954, in the context of joining the Universal Copyright Convention (“UCC”), Congress excluded all foreign works—even those in English–from the scope of the manufacturing clause. By then, the United States had become a major exporter of copyrighted works, and U.S. publishers would benefit from receiving protection of their works overseas under the UCC. The printing trade unions opposed the United States joining the UCC and the narrowing of the manufacturing clause. Nonetheless, until 1986, the manufacturing clause still applied to U.S. authors, meaning that U.S. authors received copyright protection only if their books were printed in the United States.

The exemption of English language books from the scope of the manufacturing clause in 1954 disrupted the Ballantines’ business model. But by then, their publishing houses were well established, and they went on to publish many popular books with the authors’ permission. Balzac said that “behind every great fortune there lies a great crime.” It could be said behind every publisher lies a copyright limitation.

Fair Use/Fair Dealing Week 2019: Day 2 Roundup

This week is Fair Use/Fair Dealing Week, an annual celebration of the important doctrines of fair use and fair dealing. It is designed to highlight and promote the opportunities presented by fair use and fair dealing, celebrate successful stories, and explain these doctrines.

Check out all the great posts from Day 2 of Fair Use/Fair Dealing Week 2019! Don’t see yours? Contact us to get yours added! You can view previous roundups here.

Resources:

CAUT: Fair Copyright Kaleidocycle Flyer

Cambridge University Libraries, Office of Scholarly Communication: Fair Dealing Fact Sheet

UK Copyright Literacy: Copyright the Card Game (not a new resource; Canadian and US versions also available if you scroll down the page)

Podcasts:

Ben Franklin’s World, “Kyle Courtney, Copyright & Fair Use in Early America

Video:

Duke University Libraries, “The Importance of Fair Use: A Fair Use Week Celebration

Blog Posts:

Amber Reichert on University of Virginia Library News, “Fair Use: Vital to Media Studies’ Faculty and Students Alike

Authors Alliance, “Spotlight on Publication Contracts: Fair Use and Third-Party Permissions Clauses

Brandon Butler on Copyright at Harvard Library, “Some Software-informed Thoughts on Fair Use and Licensing for Fair Use Week” cross-posted to The Taper

Center for Media & Social Impact, “Green Fog, Fair Use and Creativity

Dave Rodriguez on FSU Libraries Blog, “Celebrate Fair Use Week with GIF It Up, Florida!

Greg Walters on UK Copyright Literacy, “Developing the Digital version of Copyright the Card Game – an update

IFLA, “Fair’s Fair: How Fair Use and Fair Dealing Provide a Balanced Approach

Krista L. Cox on ARL Policy Notes, “Great Resources from Past Fair Use/Fair Dealing Week Celebrations

Krista L. Cox on ARL Policy Notes, “Fair Use/Fair Dealing Week 2019: Day 1 Roundup

Marlo MacKay on The Libvine, “Fair Dealing Week 2019—Fair Dealing: Myths and Facts

Nora Slonimsky on Omohundro Institute of Early American History and Culture: Uncommon Sense, “The Public Figure Exception(s): Finding Fair Use in the Vastness of Early American IP

UC San Diego Library, “Fair Use Week 2019

University of Alabama Libraries, “College Students and Fair Use

Great Resources from Past Fair Use/Fair Dealing Week Celebrations

This week is Fair Use/Fair Dealing Week, an annual celebration of the important doctrines of fair use and fair dealing. It is designed to highlight and promote the opportunities presented by fair use and fair dealing, celebrate successful stories, and explain these doctrines.

Over the past five years, ARL has enjoyed coordinating the international Fair Use/Fair Dealing Week celebrations. I’ve enjoyed seeing the celebration grow in number of participants across the world with great events and resources shared each year.  While I always look forward to seeing what new resources each celebration brings, we shouldn’t forget about all the great infographics, videos, podcasts and other materials shared previously.  Below are some of my favorite resources from past celebrations:

Logos

Fair Use/Fair Dealing Week Logos and Brand Guide: Want logos for your promotional materials? Download logos for Fair Use Week and Fair Dealing Week (French version also available).

Infographics

ARL “Fair Use Fundamentals

ARL “Fair Use in a Day in the Life of a College Student

ARL “Fair Use Myths & Facts

ARL “Fair Use Promotes the Creation of New Knowledge

Canadian Association of Research Libraries (CARL) “Fair Dealing in Canada Myths & Facts

Center for Media and Social Impact (CMSi) “Code of Best Practices for the Visual Arts: How to Use Copyrighted Material in Your Work

International Federation of Library Associations and Institutions (IFLA) “Fair Use and Fair Dealing for Libraries

Short Videos:

CMSi “Fair Use Video Code: Documentary FIlmmakers’ Statement of Best Practices

Fred von Lohmann, “Fair Use and Technology

Public Knowledge, “Let Them Go: A Copyright Policy Song

Texas A&M Libraries, “Libraries & Fair Use

University of New Brunswick, “Fair Dealing 2016

University of Virginia Library, “Fair Use in Seven Words

University of Winnipeg, “Fair Dealing Week

Long Videos:

Association of College and Research Libraries (ACRL), “Webinar: Can’t you just say Yes? Answering Copyright Questions About Fair Use for Patrons” (with Carla Myers)

ACRL, “Webinar: Using Fair Use to Preserve and Share Disappearing Government Information: A Guide for Rogue Librarians” (with Lillian Rigling and Will Cross)

William Fisher, Copyright X, “Lecture, Fair Use: The History of Fair Use

William Fisher, Copyright X, “Lecture, Fair Use: Fair Use Today

Podcasts/Audio:

Berkman Klein Center, “How Fair Use Works in Six Minutes or Less

Radio Free Culture, “Wishing You A Happy Fair Use Week” (with Ellen Duranceau)

Re:Create, “Everything About Fair Use” (with Corynne McSherry)

Re:Create, “Copying is Human Nature” (with Laura Quilter)

Techdirt, “Fair Use Protects Culture From Copyright, Not the Other Way Around

WOSU “Libraries Reinforce Fair Use Exception on Copyrighted Materials” (with Sandra Enimil)

Comics:

Kyle K. Courtney, Jackie Roche & Sarah W. Searle for Harvard University, “The Origin of U.S. Fair Use

Kyle K. Courtney and Jackie Roche for Harvard University, “Authors Guild, Inc. v. Google

Kyle K. Courtney, Jackie Roche & Sarah W. Searle for Harvard University, “Fair Use of Unpublished Works

Other Resources:

CARL: Fair Dealing Testimonials

Charles Duan, “The Creative Side of R Street

Jonathan Band, “Fair Use in the Day in the Life of a Legislative Assistant

Krista L. Cox on Above the Law, “Fair Use Week: An Interview with Peter Jaszi

MIT, “Make a Fair Use Kaleidocycle

Re:Create, “19 Reasons to be Thankful for ‘Fair Use‘”

Stan Adams, Center for Democracy and Technology (CDT), “I Didn’t Write This Conversation About Fair Use

Wikimedia, “Fairer than Fair: a history of fair use on Wikipedia

Fair Use/Fair Dealing Week 2019: Day 1 Roundup

This week is Fair Use/Fair Dealing Week, an annual celebration of the important doctrines of fair use and fair dealing. It is designed to highlight and promote the opportunities presented by fair use and fair dealing, celebrate successful stories, and explain these doctrines.

Check out all the great posts from Day 1 of Fair Use/Fair Dealing Week 2019! Don’t see yours? Contact us to get yours added! You can view previous roundups here.

Resources:

Infographic: How Fair Use Helps in Saving Software

Video:

ALA CopyTalk Webinar, “Fair Use Week Activity Ideas and Sharing

Events:

Fair Use/Fair Dealing Week 2019 events

Fair Dealing Week 2019 events in Canada

Contest: University of Waterloo, Memes are Fair Game

Petitions:

Canadian Alliance of Student Associations Petition: Take action to protect fair dealing in Canada

Blog Posts/News:

Brandon Butler on University of Virginia Library News, “Fair Use Week begins Monday, February 25

Center for Media & Social Impact, “Artistic Innovation, ‘The Clock,’ and Copyright

Chase Ollis on ACRL Insider, “Fair Use/Fair Dealing Week 2019 Is Coming Soon

Christina Muehlberger on University of Toronto Faculty Association, “Fair Dealing Week is (almost) here!

Christine Fruin on ATLA Newsletter “SCOOP: Fair Use/Fair Dealing Week 2019 – Fair Use in Online Education

Esmeralda Fisher on UH Libraries News, “Fair Use Week 2019

Galter Health Sciences Library & Learning Center, Northwestern Medicine “Keeping it Fair: Celebrating Fair Use Week 2019

Georgetown University Libraries, “Celebrate Fair Use Week 2019

Jennifer Zerkee on Radical Access: The SFU Scholarly Publishing Blog, “What do trade agreements have to do with copyright? The Canada-US-Mexico Agreement and fair dealing

Kathryn Vela, “Fair Use Week 2019

Katie Zimmerman, “Celebrate Fair Use Week with the MIT Libraries

Kenneth D. Crews on Copyright at Harvard Library, “Fair Use and the Growth of Creativity: Celebrating a Quarter Century,”

Krista Cox on ARL Policy Notes “Infographic Shows How Fair Use Helps in Saving Software”

Lachlan MacLeod on The Libvine, “Fair Dealing Week 2019—What Is Fair Dealing?

Mark A. McCutcheon on Academicalism, “#FairDealingWorks: Fair Dealing Week 2019

Meera Nair on Fair Duty, “Fair Dealing Week 2019

Micah Zeller on Washington University in St. Louis Libraries, “Fair Use and WashU

National Network of Libraries of Medicine, New England Region, “Fair Use Week

University of Central Florida, “Fair Use/Fair Dealing Week 2019

University of Guelph, “Join us for Fair Dealing Week 2019

University of Lethbridge, “Fair Dealing Week

Yale University Library, “Fair Use Week

Infographic Shows How Fair Use Helps in Saving Software

*Cross-posted from ARL News*

This week is Fair Use Week, an annual celebration of the important doctrines of fair use and fair dealing. It is designed to highlight and promote the opportunities presented by fair use and fair dealing, celebrate successful stories, and explain these doctrines.

In conjunction with Fair Use/Fair Dealing Week 2019, the Association of Research Libraries (ARL) is releasing an infographic that illustrates how fair use helps people preserve software for teaching, learning, and research.

Fair use is the right to use copyrighted material without permission or payment, under some circumstances. The statute, numerous court decisions, and best practices provide ample guidance about when fair use applies. Fair use is widely used by journalists, researchers, and search engines—and, increasingly, by software preservationists.

The “How Fair Use Helps in Saving Software” infographic is freely available as a PDF to embed on blogs and websites and to print and hand out at events. Share the link, embed the PDF on your site, print copies for your next event, and continue to support and work with your partners on promoting fair use.

This new infographic continues an ARL tradition of releasing an infographic in conjunction with Fair Use/Fair Dealing Week each year since 2015:

Fair Use/Fair Dealing Week is an annual, international celebration coordinated by the Association of Research Libraries to promote the opportunities presented by fair use and fair dealing, highlight successful stories, and explain these doctrines. Fair Use/Fair Dealing Week 2019 is being observed this week, Monday, February 25, through Friday, March 1. You can participate on a single day during the week, multiple days, or the full week—publish a blog post, host an event, share resources. Visit fairuseweek.org to participate or find additional resources.

Oral Arguments in Mozilla v. FCC

On February 1, 2019, the Court of Appeals for the DC Circuit heard oral arguments in Mozilla v. FCC, the case challenging the FCC’s decision to abandon its order protecting net neutrality. In the more than four hour oral arguments, the court explored a variety of challenges and practical concerns, including those related to administrative law, industry actions and public safety. The three-judge panel is comprised of Judge Patricia Millet, Judge Robert Wilkins and Judge Stephen Williams (NB: Williams dissented from the 2016 opinion upholding the FCC’s 2015 Open Internet Order).

The FCC has a long history in the area of net neutrality, including the two most recent rulemakings. In 2014, the FCC issued a notice of proposed rulemaking, in response to the DC Circuit overturning its 2010 net neutrality rules because the court found that those rules amounted to common carriage. As a result of this rulemaking, in 2015 the FCC issued its Open Internet Order, reclassifying broadband under Title II, subjecting broadband to “common carriage” rules and setting forth prohibitions against blocking, throttling and paid prioritization. In 2017, the FCC, under new leadership from Chairman Pai, issued another notice of proposed rulemaking. In December 2017, the FCC voted 3-2 to eliminate the 2015 net neutrality protections. Immediately following this decision, Internet companies, public interest groups, and consumers, as well as state governments and agencies initiated litigation. ARL joined with other library and higher education associations in filing an amicus brief.

Petitioners in the case have relied on several arguments, including that the FCC violated the Administrative Procedure Act, by failing to engage in reasoned decision-making and instead acting in an arbitrary and capricious manner.

One portion of oral arguments centered on the practical consequences the FCC’s 2017 repeal of net neutrality rules has on public safety. As noted in the brief of government petitioners, when Verizon throttled the data plan of a fire station during the Mendocino Complex fire in California, the largest wildfire in state history. The Santa Clara County counsel noted that the FCC is required by to consider public safety, yet failed to address the impacts that rules that do not prohibit blocking and throttling have. Public safety agencies, such as fire departments or public health agencies, could be blocked or throttled from sending emergency messages. While the FCC’s 2017 order would allow for the FTC to engage in post-hoc remedies, these would be insufficient in addressing public safety concerns because such remedies occur only after the emergency is done.

Another issue that has been hotly debated is whether the FCC’s preemption language is valid, given that it has abdicated its authority to regulate broadband. As petitioners and amici have pointed out, the FCC cannot claim it does not have the authority to regulate broadband, but then claim that it can prevent states from doing so. Additionally, during oral arguments, Judge Wilkins linked the preemption issue to public safety issues, since broad preemption could prevent states from even protecting its citizens from throttling during emergencies—such as in the case of California wildfires. FCC counsel did not answer whether a state could implement a law prohibiting the throttling of firefighters’ data without running afoul of the FCC’s preemption provisions, instead arguing that the transparency rule will prevent bad behavior on the part of broadband providers. However, the FCC counsel conceded that as long as the provider disclosed throttling or blocking practices in compliance with the transparency rule, the FTC would not be able to regulate because there would be no deceptive practice.

The FCC asserted that the FCC repealed the prior net neutrality rules because of a “chilling effect” on investment into broadband. A less strict regulatory regime would promote broadband investment, according to the FCC. Judge Millet pressed the FCC on this point, noting statements that broadband providers previously told investors that the net neutrality regulations did not harm investment.

The FCC appeared to rely on Supreme Court precedent in Brand X, which affirmed an earlier FCC’s decision to classify broadband under Title I, rather than under Title II. Indeed, Judge Millet pressed Petitioners’ counsel on this point, asking how the DC Circuit could come to a different conclusion than the one reached by the Supreme Court. Petitioners’ counsel responded that the nature of broadband service has changed since Brand X was decided in 2005.

While predicting the outcome of a particular case can often be difficult, petitioners in the case presented strong arguments—both legal and practical.

 

Celebrating New Works Entering the Public Domain in the United States

On January 1, 2019, the United States saw a mass number of new published works enter the public domain for the first time in twenty years.  After the enactment of the Copyright Term Extension Act, which extended copyright term for 20 years, a moratorium was placed on most new works entering the public domain.  Although works published in 1923 were originally scheduled to enter the public domain in 1999, the Copyright Term Extension Act gave works published between 1923 and 1977 and expanded term of 95 years.  (Note: determining the term of copyright can be incredibly complex; this chart is helpful in determining the potential public domain status of a work.)

A rich, robust public domain provides critical building blocks for the creation of new works because authors can use and reuse existing material without first seeking permission.  Examples of culturally prominent works that relied on existing works abound, from this list of 50 Disney movies based on the public domain to this paper, “Nothing New Under the Sun” (covering everything from classical music and modern jazz to literature to the stage and movies to visual arts).  While an author’s talent and work certainly contribute to great new works, such creations are not created in a vacuum; these examples of new works building on old works demonstrate the importance of the public domain.

In celebration of Public Domain Day, cultural heritage institutions are digitizing and making available a number of works and collections that are entering the public domain. The Association of Research Libraries (ARL) is gathering information about and publicizing such resources that are available in ARL member institutions. Below are just a few examples:

The Ohio State University Libraries, for example, working with the School of Music, are highlighting musical compositions entering the public domain.  The digital scores have been made available and new recordings will be posted.

The University of Oregon has created a Public Domain Day exhibit highlighting key works entering the public domain from the libraries’ collection in the categories of movies, books and music.

MIT Libraries is celebrating the public domain by digitizing 100 books from its collection, such as J.M. Barrie’s play A Kiss for Cinderella.

The University of Illinois-Urbana Champaign Libraries is featuring 1923 works of Helen Louis Thorndyke.

Significantly, HathiTrust Digital Library has made more than 53,000 works from 1923 available online.

Celebrating the public domain can give new life to old works and lead to new creations. Enjoy the mass numbers of newly available digitized works from 1923!

Advocacy and Public Policy Update

ARL has released a new Advocacy and Public Policy Update, covering the period from September 14, 2018 to January 15, 2019.  Prior updates are available here.

This update covers a wide range of topics including:

Copyright and Intellectual Property Issues

  • Public Domain Day 2019
  • Capitol Records v. ReDigi
  • Georgia v. Public.Resources.Org
  • GSU e-reserves
  • LCA comments on non-commercial uses of pre-1972 sound recordings

Net Neutrality

International Issues

  • NAFTA renegotiation
  • Marrakesh Treaty updates

Legislation and Agencies

  • US Appropriations update
  • Museum and Library Services Act
  • Geospatial Data Act
  • Open Government Data Act
  • ARL comments on NTIA’s request on consumer privacy

The Implications of the ReDigi Decision for Libraries

*Guest blog post by Jonathan Band, Counsel to the Library Copyright Alliance, which consists of the American Library Association, the Association of College and Research Libraries, and the Association of Research Libraries*

Summary

The U.S. Court of Appeals for the Second Circuit has finally issued its long-awaited decision in Capitol Records v. ReDigi. The Second Circuit affirmed the district court’s finding that the ReDigi service, which allowed the resale of iTunes files, infringed copyright. The Second Circuit’s reasoning clearly closes the door on the concept of digital first sale in a commercial setting. It also raises questions concerning the viability of Controlled Digital Lending (“CDL”) by libraries. Accordingly, CDL initiatives must be carefully reevaluated in light of this decision.

  • The Second Circuit affirmed that the first sale right, codified at 17 U.S.C. 109(a), is a limitation on the distribution right, not the reproduction right, and thus does not provide a defense to the making of copies during the course of the sale of digital files.
  • The court rejected ReDigi’s argument that its technology transferred digital files without reproducing them.
  • The court rejected ReDigi’s argument that fair use permitted any copies it made.
  • The decision is problematic for CDL for two reasons:
  1. The decision is the most analogous precedent to the library sharing of digital files of copyrighted works; and
  2. The decision could be read as implicitly rejecting the cornerstone of CDL’s fair use argument: that the first sale right should have a positive influence on the analysis of the first fair use factor.
  • Libraries need to consider whether their CDL programs are likely to pass muster under a more traditional fair use analysis that does not rely on section 109 exercising a positive influence on the first factor.

Background

The now defunct ReDigi service allowed a consumer to sell iTunes music files to other consumers. Under ReDigi’s technology, the music file on the seller’s server was broken into small packets, which were transferred one at a time to ReDigi’s server. When a packet was transferred from the seller’s computer, it was deleted from her computer. The same process was repeated when the file was transferred from ReDigi’s server to the buyer’s computer.

Capitol Records and other record labels sued ReDigi for copyright infringement. In 2013, the district court rejected ReDigi’s first sale defense on the grounds that the first sale doctrine is an exception to the distribution right and not the reproduction right, and ReDigi’s technology infringed the reproduction right. Further, the district court rejected ReDigi’s fair use defense with little discussion, noting that ReDigi’s use was commercial, non-transformative, and harmful to the market for music files.

The Second Circuit held a marathon two-hour oral argument on August 22, 2017. On December 12, 2018, the Second Circuit affirmed the district court’s decision with an opinion written by Judge Leval, one of the country’s leading copyright jurists.

Judge Leval’s Opinion

Judge Leval agreed with the district court that the first sale doctrine provided ReDigi with no defense against Capitol’s claim that ReDigi infringed its reproduction right; the first sale doctrine was a limitation on the distribution right, not the reproduction right. Judge Leval then turned to ReDigi’s contention that it had not infringed Capitol’s reproduction right. ReDigi noted that in its system, each packet was deleted from the seller’s computer as soon as it was transferred to ReDigi’s server. Accord to ReDigi, at no time was there a copy of a file on both the seller’s computer and ReDigi’s server. ReDigi argued that this meant that it didn’t reproduce the file, but just transferred it. Judge Leval rejected this interpretation, finding that the “phonorecord”—a defined term in the Copyright Act–that ended up on ReDigi’s server was a different “material object” from the phonorecord that had existed on the seller’s computer. Additionally, Judge Leval observed that as a factual matter, ReDigi could not ensure that a user had not retained duplicates stored on devices other than the computer on which the user installed the ReDigi software.

Next, Judge Leval considered whether the creation of this new phonorecord was a fair use. His analysis of fair use was more thorough and thoughtful than the district court’s, although he reached the same conclusion. He focused on the first and fourth factors, the purpose and character of the use and the impact of the use on the market for the work. His first factor analysis centered on whether the use was transformative—whether the use “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message, that than merely superseding the original work.” He explained, “uses that criticize, comment on, provide information about, or provide new uses for the copyrighted work are those likely to be deemed transformative.”

Additionally, Judge Leval stated that a secondary use may be transformative if it expands the utility of the original. Examples of utility-expanding transformative fair uses include scanning books to create a full text searchable database (Authors Guild v. HathTrust); copying works into a database to detect plagiarism (A.V. ex. rel. Vanderhye v. iPardigms); and displaying low resolution thumbnail images to facilitate image search (Perfect 10 v. Amazon, Kelly v. Arriba Soft).

To this familiar list of utility-expanding uses Judge Leval added the Supreme Court’s decision in Sony v. Universal, where the Court found that fair use permitted a consumer to record a television broadcast for viewing a more convenient time. Sony typically is treated as a paradigmatic example of a non-transformative fair use. Judge Leval, however, endorsed the Second Circuit’s interpretation earlier this year in Fox News v. TV Eyes that the consumers’ use in Sony was transformative: a use may be fair “if it utilizes technology to achieve the transformative purpose of improving the efficiency of delivering content without unreasonably encroaching on the commercial entitlements of the rights holder.”

Judge Leval found that ReDigi’s use was not transformative because “it provides neither criticism, commentary, nor information” about copyrighted works. Moreover, it did not “deliver the content in a more convenient and usable form to one who has acquired an entitlement to receive the content.” Instead, it just provided “a market for the resale of digital music files, which sales compete with sales of the same recorded music by the rights holder.” Further tilting the first factor against fair use was the commercial nature of ReDigi’s activity.

After cursory treatment of the second and third factors, the nature of the copyright work and the amount and substantiality of the portion used, Judge Leval examined the fourth factor, the effect of the use upon the potential market for or value of the copyrighted work, in more detail. Judge Leval noted that ReDigi made reproductions for “the purpose of resale in competition with the Plaintiffs’ market for the sale of their sound recordings.” ReDigi sold its copies “to the same consumers whose objective in purchasing was to acquire Plaintiffs’ music.” Judge Leval also distinguished the resale of physical copies from digital copies. “The digital files resold by ReDigi, although used, do not deteriorate the way printed books and physical records deteriorate.” The only difference between the copies sold by Capitol and the copies sold in ReDigi’s secondary market was that ReDigi’s copies were less expensive.

Judge Leval then weighed the four factors together. He found that “even if ReDigi is credited with some faint showing of a transformative purpose, that purpose is overwhelmed by the substantial harm ReDigi inflicts on the value of Plaintiffs’ copyrights through direct competition in the rights holders’ legitimate market, offering consumers a substitute for purchasing from the rights holders.”

At the end of the opinion, Judge Leval considered an argument raised in an amicus brief by copyright law professors that the first sale doctrine “must be read to vindicate purchasers’ ability to alienate digital copyright works…without regard to technological medium.” Judge Leval expressed reluctance to wade into this policy argument. “Courts are poorly equipped to assess the inevitably multifarious economic consequences that would result from such changes of law.” Furthermore, reading section 109(a) to accommodate digital resale “would exceed the proper exercise of the court’s authority.” Here, “Congress dictated the terms of the statutory entitlement.” Section 109(a) clearly “negates a claim of unauthorized distribution in violation of the author’s exclusive rights…but not a claim of unauthorized reproduction.” Accordingly, “if ReDigi and its champions have persuasive arguments in favor of the change of law they advocate, it is Congress they should persuade.

Implications for Libraries

The ReDigi decision requires reevaluation of CDL initiatives. The decision is the most analogous precedent to library sharing of digital files of copyrighted works. To be sure, a library would engage in CDL for noncommercial educational purposes, in contrast to ReDigi’s clearly commercial motivation. Moreover, a library could design its CDL program to make it as different from ReDigi’s as possible. For example, the library might engage in CDL only with respect to out of print scholarly monographs. Nonetheless, libraries cannot ignore the long shadow cast by the decision.

Furthermore, the decision calls into question the theoretical underpinnings of CDL. Specifically, CDL relies on the fair use right to replicate the first sale right in the digital environment. Judge Leval’s decision, however, could be read to suggest that the objectives of the first sale right cannot guide the fair use analysis.

The Library Copyright Alliance (“LCA”) filed an amicus brief in support of ReDigi, where we argued that the similarity between the use ReDigi sought to make and uses authorized by section 109(a) should have tilted the first fair use factor in favor of ReDigi. We noted that in Authors Guild v. HathiTrust, the Second Circuit used the rationale for a specific exception—17 U.S.C. § 121, which permits the making of accessible format copies for people who have print disabilities—to support a finding of a valid purpose under the first factor. Likewise, the Copyright Office has repeatedly based fair use conclusions on specific exceptions in the context of a rulemaking under section 1201 of the Digital Millennium Copyright Act, 17 U.S.C. § 1201. We urged the Second Circuit to recognize that the purpose behind the first sale right favored ReDigi in the first fair use factor analysis.

Unfortunately, Judge Leval did not address this argument. The lack of reference to this argument is somewhat surprising given that it was based on the Second Circuit’s reasoning in the HathiTrust decision, and that the Association of American Publishers filed an amicus brief specifically responding to LCA’s brief. Moreover, fair use was the obvious means of addressing the policy concerns raised by the copyright law professors in their amicus brief. Fair use could achieve the objectives of the first sale doctrine in the digital environment without Congress amending the statute.

In one passage, Judge Leval arguably disagreed with this argument. When responding to the law professors’ suggestion that section 109(a) be interpreted to apply in the digital context, Judge Leval stated “the copyright statute is a patchwork, sometimes varying from clause to clause, as between provisions for which Congress has taken control, dictating both policy and the details of its execution, and provisions in which Congress approximatively summarized common law developments, implicitly leaving further such developments to the courts. The paradigm of the latter category is § 107 on fair use.” This could be interpreted to imply that specific exceptions should not influence the first factor analysis—that specific exceptions and fair use should each stick to their own lanes.

On the other hand, by not rejecting it, Judge Leval arguably allowed the argument to live to fight another day. Additionally, Judge Leval’s copyright patchwork argument really doesn’t make much sense. The first sale right is a judge-made doctrine which was codified in section 109(a), just as the fair use right is a judge-made doctrine which was codified in section 107. Thus, it is completely appropriate for a court to consider the principles underlying the first sale right when applying the fair use right.

The status of the argument is particularly significant for libraries interested in engaging in CDL. CDL relies heavily on the notion that fair use enables libraries to replicate the first sale right in a digital context. In their White Paper on Controlled Digital Lending of Library Books, David Hansen and Kyle Courtney state,

The core concept with CDL is that it closely mimics the economic transaction that Congress has already provided for through the first sale doctrine under Section 109. The purpose of the use with CDL is to fulfill the statutory objectives and balance of rights already identified by Congress in Section 109, effectuating that balance considering a new technological use not contemplated at the time Section 109 was enacted. The crux of the proposition is that the purpose and intent of Section 109 should positively influence the “purpose and character” assessment in the fair use analysis.

This, of course, is the same theory LCA articulated in its amicus brief. LCA still believes this theory is correct, and will continue believing in its correctness unless and until the Supreme Court explicitly rejects it. However, Judge Leval’s failure to even acknowledge the theory when he had the opportunity to do so should cause libraries to reevaluate their CDL initiatives. In particular, they need to consider whether their CDL programs are likely to pass muster under a more traditional fair use analysis that does not rely on section 109 exercising a positive influence on the first factor.

ARL Files Comments in NTIA Request for Comment on Consumer Privacy

On Friday, November 9, ARL filed comments responding to National Telecommunications and Information Administration’s (NTIA) request for comment on “Developing the Administration’s Approach to Consumer Privacy.”

In the submitted comments, ARL recognizes that strong privacy protections for users is necessary, but also that overly-prescriptive requirements can cause difficulties in compliance. The comments point to several elements that are critical for meaningful privacy protection, including ensuring transparency and consent, while other areas may be nuanced and policymakers must consider unintended consequences of particular regulations.  For example, the right to deletion raises complex issues and requires a nuanced approach to avoid unnecessary alterations to the cultural and historical record.  The comments also note that effective remedies and enforcement mechanisms are needed to make regulations meaningful.

All filed comments are available on the NTIA site.