Class 11 Copyright, Spring, 2008 Distribution and First-Sale Doctrine Randal C. Picker Leffmann Professor of Commercial Law The Law School The University of Chicago Copyright © Randal C. Picker. All Rights Reserved.

August 6, 2015Copyright © Randal C. Picker Exclusive rights in copyrighted works n Subject to sections 107 through 121, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following: u … u (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;

August 6, 2015Copyright © Randal C. Picker3 The First-Sale Doctrine n 109(a) u 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.

August 6, 2015Copyright © Randal C. Picker4 Bobbs-Merrill v. Straus n 210 U.S. 339 (1908)

August 6, 2015Copyright © Randal C. Picker Copyright Act: 2 nd General Revision That any citizen of the United States, or resident therein, who shall be the author, inventor, designer, or proprietor of any book, map, chart, dramatic or musical composition, engraving, cut, print, or photographs or negative thereof, or of a painting, drawing, chromo, statue, statuary, and of models or designs intended to be perfected as works of the fine arts, and his executors, administrators, or assigns,

August 6, 2015Copyright © Randal C. Picker Copyright Act shall, upon complying with the provisions of this act, have the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing, and vending the same; and in the case of a dramatic composition, of publicly performing or representing it, or causing it to be performed or represented by others; and authors may reserve the right to dramatize or to translate their own works.

August 6, 2015Copyright © Randal C. Picker7 The Cassilis Engagement (1907)

August 6, 2015Copyright © Randal C. Picker8 The Cassilis Engagement (1907)

August 6, 2015Copyright © Randal C. Picker9 More Rights Reservation

August 6, 2015Copyright © Randal C. Picker10 Bobbs-Merrill v. Straus n Selling The Castaway by Hallie Ermine Rives

August 6, 2015Copyright © Randal C. Picker11 The Castaway

August 6, 2015Copyright © Randal C. Picker12 Copyright Page

August 6, 2015Copyright © Randal C. Picker13 Selling the Book n Core Facts u Bobbs-Merrill sells The Castaway with the reservations notice beneath the copyright statement in each copy of the book u Macy’s is selling the book for 89 cents u Macy’s bought the book from wholesalers; everyone knew of the notice; no contracts regarding sales price

August 6, 2015Copyright © Randal C. Picker14 Reading Sec n From the Opinion u “Sec Any citizen of the United States or resident therein, who shall be the author, inventor, designer, or proprietor of any book, map, chart, dramatic or musical composition, engraving, cut, print, or photograph or negative thereof, or of a painting, drawing, chromo, statute, statuary, and of models or designs intended to be perfected as works of the fine arts, and the executors, administrators, or assigns of any such person, shall, upon complying with the provisions of this chapter, have the sole liberty of printing, reprinting, publishing, completing, copying, executing, finishing, and vending the same.” U.S. Comp. Stat. 1901, p

August 6, 2015Copyright © Randal C. Picker15 Meaning? n Says the Court u “In our view the copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice, such as is disclosed in this case, a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.”

August 6, 2015Copyright © Randal C. Picker16 Meaning? n Says the Court u “To add to the right of exclusive sale the authority to control all future retail sales, by a notice that such sales must be made at a fixed sum, would give a right not included in the terms of the statute, and, in our view, extend its operation, by construction, beyond its meaning, when interpreted with a view to ascertaining the legislative intent in its enactment.”

August 6, 2015Copyright © Randal C. Picker17 [Amazon: The Castaway]

August 6, 2015Copyright © Randal C. Picker18 Sec. 41: 1909 Copyright Act “ That the copyright is distinct from the property in the material object copyrighted, and the sale or conveyance, by gift or otherwise, of the material object shall not of itself constitute a transfer of the copyright, nor shall the assignment of the copyright constitute a transfer of the title to the material object; but nothing in this title shall be deemed to forbid, prevent, or restrict the transfer of any copy of a copyrighted work the possession of which has been lawfully obtained. ”

August 6, 2015Copyright © Randal C. Picker19 Organizing Secondary Markets n Three Situations u Sequential ownership (used books) u One owner, many users (rental markets) u One owner, many users (libraries)

August 6, 2015Copyright © Randal C. Picker20 [SC: Amazon: GT&L]

August 6, 2015Copyright © Randal C. Picker21 [SC: Used Prices]

August 6, 2015Copyright © Randal C. Picker22 [SC: Author’s Guild]

August 6, 2015Copyright © Randal C. Picker23 Music Rental n Hypo/History u I buy music CDs u Customers rent those from me; I sell blank cassettes n Where do I stand under 109(a)? 109(b)?

August 6, 2015Copyright © Randal C. Picker24 Types of Works n 102(a) u Works of authorship include the following categories: w (2) musical works, including any accompanying words; w … w (7) sound recordings

August 6, 2015Copyright © Randal C. Picker25 Musical Works? n Undefined (H.R ) u Of the seven items listed, four are defined in section 101. The three undefined categories— “musical works,” “dramatic works,” and “pantomimes and choreographic works”—have fairly settled meanings. There is no need, for example, to specify the copyrightability of electronic or concrete music in the statute since the form of a work would no longer be of any importance, nor is it necessary to specify that “choreographic works” do not include social dance steps and simple routines.

August 6, 2015Copyright © Randal C. Picker26 101: Sound recording n “Sound recordings” are u works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied.

August 6, 2015Copyright © Randal C. Picker27 101: Phonorecords n “Phonorecords” are u material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term “phonorecords” includes the material object in which the sounds are first fixed.

August 6, 2015Copyright © Randal C. Picker28 Controlling Sound Recording and Software Rental n 109(b)(1)(A) u Notwithstanding the provisions of subsection (a), unless authorized by the owners of copyright in the sound recording or the owner of copyright in a computer program (including any tape, disk, or other medium embodying such program), and in the case of a sound recording in the musical works embodied therein,

August 6, 2015Copyright © Randal C. Picker29 Controlling … u neither the owner of a particular phonorecord nor any person in possession of a particular copy of a computer program (including any tape, disk, or other medium embodying such program), may, for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord or computer program (including any tape, disk, or other medium embodying such program) by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending.

August 6, 2015Copyright © Randal C. Picker30 Controlling … u Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution.

August 6, 2015Copyright © Randal C. Picker31 [BA Audiobook Home]

August 6, 2015Copyright © Randal C. Picker32 [Personal Use Edition]

August 6, 2015Copyright © Randal C. Picker33 [Library Edition]

August 6, 2015Copyright © Randal C. Picker34 [LE: Free Fixes]

August 6, 2015Copyright © Randal C. Picker35 [LE: Discounts]

August 6, 2015Copyright © Randal C. Picker36 [HCC Home]

August 6, 2015Copyright © Randal C. Picker37 [HCC Library Downloads]

August 6, 2015Copyright © Randal C. Picker38 Getting to the Case I n Hypo u BA sells two editions of music CDs: personal edition and library edition at higher price n Copyright issues? Why?

August 6, 2015Copyright © Randal C. Picker39 Answer

August 6, 2015Copyright © Randal C. Picker40 Getting to the Case II n Hypo u BA sells two editions of music CDs: personal edition and library edition at higher price u HCC buys personal editions and attempts to resell them to libraries n Copyright issues?

August 6, 2015Copyright © Randal C. Picker41 Answer

August 6, 2015Copyright © Randal C. Picker42 Getting to the Case III n Hypo u BA sells two editions of music CDs: personal edition and library edition at higher price u HCC buys personal editions and attempts to rent them to libraries n Copyright issues?

August 6, 2015Copyright © Randal C. Picker43 Answer

August 6, 2015Copyright © Randal C. Picker44 Getting to the Case IV n Hypo u BA sells two editions of audio books: personal edition and library edition at higher price u HCC buys personal editions and attempts to rent them to libraries n Copyright issues?

August 6, 2015Copyright © Randal C. Picker45 Answer

August 6, 2015Copyright © Randal C. Picker46 Organizing Domestic and Foreign Markets n Two Examples u DVDs: Technological Separation u Quality King: Legal Separation

August 6, 2015Copyright © Randal C. Picker47 [SC: Amazon Incred US]

August 6, 2015Copyright © Randal C. Picker48 [SC: Amazon Incred UK]

August 6, 2015Copyright © Randal C. Picker49 Comparing Prices n Same DVD u US: $17.99 u UK: £14.99 n Exchange Rate (as of April 21, 2005): $1 = £ , $ = £1 n Matching Prices u $17.99 = £9.37 u £14.99 = $28.77

August 6, 2015Copyright © Randal C. Picker50 [SC: US Encoding]

August 6, 2015Copyright © Randal C. Picker51 [SC: UK Encoding]

August 6, 2015Copyright © Randal C. Picker52 [SC: Amazon on Encoding]

August 6, 2015Copyright © Randal C. Picker Manufacture, importation, and public distribution of certain copies n (a) u Prior to July 1, 1986, and except as provided by subsection (b), the importation into or public distribution in the United States of copies of a work consisting preponderantly of nondramatic literary material that is in the English language and is protected under this title is prohibited unless the portions consisting of such material have been manufactured in the United States or Canada.

August 6, 2015Copyright © Randal C. Picker Infringing importation of copies or phonorecords n (a) u 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.

August 6, 2015Copyright © Randal C. Picker Infringement of copyright n (a) u Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 121 or of the author as provided in section 106A(a), or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright or right of the author, as the case may be.

August 6, 2015Copyright © Randal C. Picker56 Quality King n Core Facts u L’anza makes shampoo; labels are copyrighted works u L’anza sells at higher prices in the US than in foreign markets u Quality King acts as middleman to bring shampoo back to US

August 6, 2015Copyright © Randal C. Picker57 Quality King u Ninth Circuit rules for L’anza, saying that applying 109 first-sale defense would gut 602

August 6, 2015Copyright © Randal C. Picker58 Making, Selling, Importing n Hypo u I print a copyrighted book in the US u I sell copies in the US for $50 u I export copies to the UK and sell them there myself for $25 u Importer buys in the UK for $25, takes the book to the US and sells for $35 n How does Sec. 602 apply to this situation?

August 6, 2015Copyright © Randal C. Picker59 Quality King Result n This is the “round trip” case u Books started in US, left and returned u Under Quality King, 109(a) first-sale rights “attach” w Attach based on location of printing in US— “lawfully made under this title” w That is independent of where the particular copy of the book is sold (see fn. 14 on p. 661)

August 6, 2015Copyright © Randal C. Picker60 Making, Selling, Importing n Hypo u I print a copyrighted book in the US and sell copies in the US for $50 u I print copies in the UK and sell them there for $25 u Importer buys in the UK for $25, takes the book to the US and sells for $35 n How does Sec. 602 apply to this situation?

August 6, 2015Copyright © Randal C. Picker61 Analysis n This is the one-way case u 109(a) doesn’t attach, seemingly, to the books printed in the UK u 602(a) should apply and should block imports n Does this make it possible to enforce price discrimination in this case?

August 6, 2015Copyright © Randal C. Picker62 Analysis u Only way to enforce the across-country price discrimination is by moving the printing overseas n Contrary to US interests?; compare Sec. 601

August 6, 2015Copyright © Randal C. Picker63 602(a) Rewrite n (a) u 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 actionable under section 501. n How would Quality King come out?

August 6, 2015Copyright © Randal C. Picker64 Analysis n 109 and First-Sale Doctrine u Irrelevant under Rewrite n Overinclusive? u Would cover US tourist buying book covered by 602(a) in England to read on plane home

August 6, 2015Copyright © Randal C. Picker65 But See 602(a)(2) n This subsection does not apply to ‑ u (2) importation, for the private use of the importer and not for distribution, w by any person with respect to no more than one copy or phonorecord of any one work at any one time, or w by any person arriving from outside the United States with respect to copies or phonorecords forming part of such person’s personal baggage

August 6, 2015Copyright © Randal C. Picker66 Legislative History n From the Congressional Report u Section 602(a) first states the general rule that unauthorized importation is an infringement merely if the copies or phonorecords “have been acquired outside the United States,” but then enumerates three specific exceptions … If none of the three exemptions applies, any unauthorized importer of copies or phonorecords acquired abroad, could be sued for damages and enjoined from making use of them, even before any public distribution in this country has taken place.