Copyright Case in US Supreme Court

Subject: Copyright Case in SCOTUS
From: JohnInKansas
Date: 26 Oct 12 - 10:33 PM

Copyright case could threaten eBay and garage sales

By Pete Williams, NBC News Justice Correspondent

The U.S. Supreme Court, in a case to be argued Monday, wades into a controversy over federal copyright law that could determine the legal rights of American consumers to sell thousands of used products on eBay and at garage sales and flea markets.

...

The article is a little long to post here, but appears to involve publishers' practice of selling cheap in foreign markets and at much higher prices in the US.

Other possibly related © questions relate to whether purchase of copyrighted material conveys ownership of the printed copy, or is, as Amazon is claiming in separate lawsuits, only a "lease of use" subject to withdrawal by the original seller (who in Amazon's case may not hold the copyright).

Greed appears to be a dominant force in © law, and has corrupted the original purposes of even having such law beyond anything that the originators would recognize, but I'm not sufficiently involved to make much comment.

The current case will require a whole bunch of serious thought to even guess at what unintended consequences may result, beyond the scope of the question before the Court.

John

Subject: RE: Copyright Case in SCOTUS
From: JohnInKansas
Date: 26 Oct 12 - 10:57 PM

Quite probably, I should have indicated that:

SCOTUS = Supreme Court of the United States

While it's sufficiently standard usage to be recognized by US-icans who care, it might confuse others who don't pay a lot of attention to our oddities.

The case in question does have implications for international trade in copyrighted materials.

John

Subject: RE: Copyright Case in US Supreme Court
From: Joe Offer
Date: 26 Oct 12 - 11:22 PM

Thanks, John. I changed the thread title. While SCOTUS may be immediately understandable to some, I think the majority of Americans themselves wouldn't understand the term. Since we have an international membership, I think we need to communicate in terms that are common to everyone - especially in thread titles, and especially with dates.

I wonder if you have more information on the issues central to the Supreme Court case. I guess I wouldn't mind "renting" intellectual content, as long as Amazon would reimburse me for the books I bought but didn't read, and the CDs I listened to only once.

We really do need an overhaul of our copyright system. It gives limited benefit to the originators and consumers, and lots of bucks to the middlemen.


-Joe-

Subject: RE: Copyright Case in US Supreme Court
From: GUEST,999
Date: 26 Oct 12 - 11:41 PM

It does, John. The thing is, as songwriters we have the right to licence our work or give it for free. No offence meant, but screw with me and I screw with you.

The US supreme court has not one thing to do with what I write. They have NO ownership nor as a result do they have any judgment. This issue involves only those who respect American law outside the USA. I do not.

In the words of the prophet, fuck 'em!

As you know--or at least suspect--I am Canadian. Our copyright law says that the moment I write it, it's mine. If I take from someone else, and am called before a court because of that--I will be required to prove not that I wrote it but that I wrote it first.

American law means to me that I respect the laws of the USA when I am in the USA. Outside that, I owe the USA jack shit.

No offence to the messenger.

BM

Subject: RE: Copyright Case in US Supreme Court
From: Crowhugger
Date: 27 Oct 12 - 01:06 AM

I hear you loud and clear, triple-niner! It always gobsmacks me to be reminded how US-ers consider their laws to apply beyond their borders. Can they not imagine the corollary: That every other country's laws would therefore apply beyond *those* borders?

Subject: RE: Copyright Case in US Supreme Court
From: JohnInKansas
Date: 27 Oct 12 - 01:06 AM

The link in the first post gives a fair rundown of the issues in the Supreme Court case.

Publishers often allow their books to be printed in foreign countries and sold there at much lower prices than for the same books distributed in the US.

A student in the US had his family purchase textbooks that he couldn't afford at US prices, and mail them to him here. After finding out the price differences he "imported" other books to sell to fellow students, at prices lower than what they would have to pay for the same books printed/distributed in the US.

There apparently is a disagreement between two separate sets of US copyright laws, with the buyer of a book distributed in the US being able to sell it to someone else ("sometimes, but we won't tell you when"), while the other law says that import of a book from a "discount publisher" elsewhere is prohibited if it's also sold at a higher price at the destination, and the "illegal import" doesn't give the original purchaser an "ownership" that can be passed to someone else. (Walmart is on the kid's side(?) since it seems they do this regularly.)

US District Courts sided with the money the publishers and awarded them the customary exhorbitant punitive damages (about 6 times the publishers' optimistic estimate of how much profit the kid made(?)).

The Amazon case is a separate one, but low level courts have upheld the right of Amazon to cancel anyone's "subscription" to ebooks, without notice, and block their access to the ones they "bought," without giving them a reason - "because it says they can in the fine print of their EULA" - even though nobody's been able to find where it says that.

(I don't have a link handy for the Amazon case, but there were reports within the past week at MSNBC and others.)

John

Subject: RE: Copyright Case in US Supreme Court
From: Richard Bridge
Date: 27 Oct 12 - 03:50 AM

The article linked to does not appear to assist with a clear understanding of the issues. I hope the lawyers in the case do better.

Copyright is territorial (although international conventions limit disparities in national copyright laws). That is to say, US copyright law applies in the USA, and, for example, Canadian copyright law in Canada, and UK copyright law in the UK, French in France and so on. Indeed in some respects even within the USA copyright law can differ from state to state - although Federal pre-emption applies to matter within the ambit of US copyright statute, where state law applies to other things pre-emption may not apply. An example used to be (I'm not sure if it still pertains) that Californian common-law copyright extended to works that had not been reduced to a material form, for example a melody whistled but never written down nor recorded.

FIRST STRAND

Most countries' copyright laws extend in general to copying (ie making a copy) and also to importation. On the face of this the importation of an item brought abroad requires a licence from the copyright owner. In the UK (with the law of which I am more familiar) this is largely covered by sections 17, 22, and 27 of the Copyright Designs and Patents Act 1988 as amended.

S. 22 reads "he copyright in a work is infringed by a person who, without the licence of the copyright owner, imports into the United Kingdom, otherwise than for his private and domestic use, an article which is, and which he knows or has reason to believe is, an infringing copy of the work." S 27 is longer but defines "infringing copy" - and the key point is that an item is for this purpose an "infringing copy" on the basis of a juridical fiction - namely that is is "made" at the place of importation.

So the student could bring in his own copies for his own use (if he were doing this in the UK) but not run a business.

Now although copyright is divisible (in the UK) so that for example on e person might own copyright in Kent and another in Hertfordshire (or less controversially one in England and one in Wales) the importation rules only apply to importation into the UK.


SECOND STRAND.

We don't have what the US calls "the first sale doctrine" as such. I have some idea about it but ought really to leave comment mostly to one of the US lawyers who occasionally turn up here.


THIRD STRAND

A copyright licence may extend to all or some of the acts restricted by copyright. If no fresh copy is made (or no "importation" occurs) the copyright licence as such is irrelevant. It may contain collateral terms, but these are matters of contract not copyright. If a book said inside its flyleaf "This book may not be re-sold" that might (if the first owner had knowledge of the term and accepted it at purchase - rather as in a computer shrink-wrap licence) bind the first owner - but a second owner is not in contractual relations with the first owner so the doctrine of privity prevents him being bound as such. Dunlop (the tyre company) tried hard to make its resale price maintenance provisions stick in the UK courts in the early-ish 1900s but failed because of this and one of the very few useful things Thatcher did was generally abolish resale price maintenance - but not (at first) in the book trade).


FOURTH STRAND

Computers differ. A computer program is reproduced when it is loaded. So possibly shrink-wrap licences may affect a second owner of a computer disk. Very likely this train of thought may apply to e-books. Moral - when getting an e-book, download it and make a backup copy. If your e-book is in the cloud you are at risk!



Now that I have tried to separate the arguments, carry on chaps, this is interesting. It would be great fun if anyone could find reports of the US decisions so far.

Subject: RE: Copyright Case in US Supreme Court
From: Joe Offer
Date: 27 Oct 12 - 04:10 AM

Crowhugger and 999, I hope you realize that many or most of those U.S. laws benefit U.S. corporations, and not the people of the U.S.

Sometimes, I wish more U.S. citizens would realize that, too. Do the laws serve authors and inventors and consumers, or are they meant to protect only investors and corporate executives? The U.S. has been a corporate oligarchy since the 1840s, I think.

-Joe-

Subject: RE: Copyright Case in US Supreme Court
From: JohnInKansas
Date: 27 Oct 12 - 05:14 AM

Re: the Amazon fiasco.

Apparently I didn't make notes when I saw a more significant report about the Amazon thing, but a quick search turned up one earlier report of what is said to have happened. I'm pretty sure that the later article indicated "suits were being filed" but the blip that came up doesn't report that so it might be I just didn't read carefully. (I make better notes when I think it's important enough - usually.)

Amazon's DRM drama: Whose Kindle is it anyway?

October 24, 2012

A Kindle customer thought she owned her e-books -- until Amazon erased them overnight

By Robert X. Cringely

We interrupt today's endless cycle of election news, iPad Mini lovefests, and hate mail for the Microsoft Surface to bring you the tale of one tech firm behaving rather badly. That firm is Amazon, and this is far from the first time it's been caught acting like a bully.

There's a story crossing the Interwebs about a Norwegian woman named Linn Nygaard, who opened up her Kindle one morning recently to find she was unable to access any of the roughly 40 books it had contained. Surely, she thought, this was some kind of technical glitch. She contacted Amazon, but no -- it appeared that Amazon had wiped the Kindle clean while she slept. The reason: The company determined that Linn's account was "directly related to another which has been previously closed for abuse of [Amazon's] policies," so it closed her account.

The problem? Nygaard had only one Amazon account. She wrote back, explaining there must be some mistake. She received an email from Michael Murphy, Amazon UK's executive customer relations, stating:

"As previously advised, your Amazon.co.uk account has been closed, as it has come to our attention that this account is related to a previously blocked account. While we are unable to provide detailed information on how we link related accounts, please know that we have reviewed your account on the basis of the information provided and regret to inform you that it will not be reopened."

"Please understand that the closure of an account is a permanent action. Any subsequent accounts that are opened will be closed as well. Thank you for your understanding with our decision."

In other words, Amazon says she has multiple accounts, but it won't tell her which ones they allegedly are. Think about that for a second. If Amazon is sure Nygaard was using multiple linked accounts, what is the harm is naming them, exactly? Wouldn't she already know about them? And if she doesn't already know about them, isn't this a case of account hijacking where Nygaard is the victim and not the culprit?

First publicized by tech blogger Martin Bekkelund, Linn's story found its way to my inbox via Yosem Company, a doctoral candidate at Stanford who runs the university's Liberation Technology Program. It has since been retold at Forbes, BoingBoing, Gizmodo, the Huffington Post, and a dozen lesser blogs.

So far, Amazon remains officially mum on the matter. At publication time, the only response so far has been a cryptic note, posted to the Amazon support forum by a moderator named Josh W.:

"We would like to clarify our policy on this topic. Account status should not affect any customer's ability to access their library. If any customer has trouble accessing their content, he or she should contact customer service for help."

Which, of course, Nygaard already has, and we know how far that got her. For what it's worth, that help forum is anything but helpful -- there's an amazing amount of hostility toward Nygaard and others who are asking legitimate questions: What could happen to the e-books I thought I owned? Are they really mine, or do they belong to Amazon?

*********

The later article pointed out that when you go to Amazon to get a Kindle book the "button" says "buy now," but Amazon claims they don't really mean "buy" and you only "rent" the book. Nobody has been able to penetrate enough of the fine print to find where in the EULA for the books there is any clarification, but Amazon says "it doesn't matter 'cause we're bigger'n you are."

Another similar(?) item reported an incident where Microsoft "banned for life" someone who played an unauthorized version of a game (that he says he didn't(?), but the provenance of that story was so marginal that I'm sure I didn't make notes.

*********

Related to the other case on copyright vs imported books, for those unfamiliar with how the Supreme Court works, cases accepted for consideration are announced at the beginning of the session; but there generally is no indication of what order they'll be taken up or when decisions will be announced. It's not uncommon for it take a couple of months - or longer - before results are seen.

Plenty of time to get a more complete story(?) if someone wants to dig it out.

John

Subject: RE: Copyright Case in US Supreme Court
From: Richard Bridge
Date: 29 Oct 12 - 03:56 PM

From the IPKat blog to which I subscribe (cut and paste follows)

Today the US Supreme Court hears the opening arguments in Kirtsaeng v. John Wiley & Sons Inc., labelled as one of the most important copyright cases of the decade. The case is about whether works manufactured outside the US can be resold in the US without the permission of the copyright owner.



Freefoto.com
The case will deal with two apparently conflicting provisions in the US Copyright Act. Section 602(a)(1) says that (without permission) importation into the US of copies of a protected work is an infringement of the exclusive right to distribute copies under section 106. This protects the copyright owner's importation right.

In practice, this does not prevent parallel imports: indeed the grey market in the US was valued by Deloitte at USD 63 billion in 2009. Importers rely on section 109(a) of the US Copyright Act which says that anyone who buys a work which is "lawfully made under this title" (meaning under the Copyright Act), may re-sell that work without the permission of the copyright holder. This is the first sale doctrine, which is similar to the principle of exhaustion in Europe, both of which aim to allow a second hand market for goods.

In this case Supap Kirtsaeng, originally from Thailand, realised that he could import textbooks from Thailand and sell them in the US, on eBay, at a profit. John Wiley & Sons a textbook publisher noticed that Kirtsaeng was re-selling some of its textbooks. These were editions intended for distribution outside the US. They were of slightly lower quality and were of course sold at a much lower price, enabling Kirtsaeng to make a profit of USD 37,000.

Wiley sued Kirtsaeng for copyright infringement, and the judge at first instance barred Kirtsaeng from relying on the first sale doctrine as the books were manufactured outside the US. The first instance judge found in Wiley's favour and awarded damages of USD 600,000. This was upheld on appeal: the 2nd US Circuit Court of Appeals held that the first sale doctrine was inapplicable because the wording "lawfully made under this title" at section 109(a) referred only to copies manufactured in the US. The case now proceeds to the Supreme Court.
This is not the first time that this issue has reached the Supreme Court: in 2010, it upheld a 9th Circuit decision that the first sale doctrine did not apply to works manufactured outside the US (in relation to Costco's sale of grey market Omega brand watches). Unhelpfully however there was no opinion as the decision was the result of a 4-4 tie.

This time around Kirtsaeng's legal team is arguing that if the appeal is dismissed by the Supreme Court any businesses which rely on resales (such as eBay), as well as second hand cars (containing copyright protected software), second hand bookshops and DVD rentals, and also libraries and museums which acquire works from around the world, will be affected. The Library Copyright Alliance (LCA) filed an amicus curiae brief with the US Supreme Court in support of Kirtsaeng.
Wiley argues however that the court does not need to address what happens to the first sale doctrine in the event of an authorised importation and that it should focus on unauthorised import and sale."

I comment that the Court of Appeals version would fit with most European concepts of exhaustion.

Subject: RE: EU similarities?
From: Richard Bridge
Date: 15 Nov 12 - 04:16 AM

Also from the IPKat blog, a discussion of some vaguely similar issues under EU law and teh WIPO treaty. Of course WIPO is the catspaw of US economic interests.

"Case C-128/11 Oracle v UsedSoft has attracted a good deal of attention and analysis from within Europe, much of it sharply critical -- but it has also been noted by both academics and practitioners from further afield. One such distant source is a respected and seasoned New Zealand lawyer, Ken Moon (AJ Park Law), who has expressed himself as being troubled by it. His perspective on the case is reproduced here:

"Europe in breach of international copyright treaty
A recent decision of the European Court of Justice (CJEU) on the licensing model for software transactions, has inadvertently breached the WIPO Copyright Treaty of 1996. There are numerous international treaties governing copyright law, but the treaty which brought copyright law up to date with the internet was the 1996 World Intellectual Property Organisation (WIPO) Copyright Treaty (WCT).

It now appears that a decision from the European Union's highest court, the CJEU, means that the countries of Europe, despite ratifying the WCT in 2001, are now breaching it, although the court itself seems not have realised this.

The Oracle v UsedSoft decision

In July, the CJEU in the case Oracle v UsedSoft decided two things. First, that a software licence was actually a sale and second, that the downloading of the Oracle software over the internet to the licensee "exhausted" a component of Oracle's copyright in the software, namely its exclusive "right to communicate" that copy of the software. This article focuses on the second issue.

UsedSoft GmbH was a German company which marketed "used" software licences and for this purpose purchased licences from Oracle's licensees (including Oracle client-server databank licences) for the purposes of resale on the second hand market.

The CJEU was referred this case by Germany's Federal Supreme Court (BGH) after two prior appeals by UsedSoft, and the CJEU's decision is final and non-appealable.

Finding that a licence is a sale is in conflict with US and Commonwealth decisions, and is controversial in itself, but it is the decision on the exhaustion of copyright issue which offends the WIPO Copyright Treaty.

WIPO Copyright Treaty 1996

Among other things the WCT required member states to incorporate in their copyright law a more comprehensive "right of communication" for copyright owners than had been required previously under the Berne Copyright Convention. This right, contained in Article 8 of WCT, is the "right of communication to the public" and it gives copyright owners the exclusive right to communicate their copyright works to the public. "Communicate" here means communication "by wire or wireless means". It covers "transmission" and, as it was intended to do, covers transmissions of digital and digitised works over the internet. Under Article 22 of WCT no member state could implement Article 8 (or any other Articles) in a manner which amounted to a variation of the Treaty text. The online aspect of this communication right was said to be one of the greatest achievements of the WCT.

In case there was any doubt as to the copyright status of a computer program, Article 4, in line with what was then the law of most countries, expressly confirmed that "computer programs are protected as literary works", "whatever may be the mode or their form of expression" and the right to transfer computer programs was made exclusive to their copyright owner. The Treaty also confirmed in Article 6 an exclusive "right of distribution" which relates to "copies that can be put into circulation as tangible objects". A number of countries had long had a principle of "exhaustion" of the right to distribute copies after their first sale (first sale doctrine). For example, the purchaser of a book would be free to resell the book without breaching the copyright owner's distribution right. The WCT expressly allowed exhaustion of right of distribution (of tangible physical copies) in Article 6(2), but not for the Article 8 right of communication of intangible digital files.

The European Union was one of the sponsors of the right to communicate in the WCT negotiations and ratified the WCT in 2001 by way of the Information Society Directive 2001/29/EC. This obligated the members of the EU to ensure their national copyright law implemented the provisions of the WCT.

Confusing the right to communicate with the right to distribute

The CJEU in the Oracle case, despite the fact that the Oracle software was only transferred to licensees in digital form over the internet, decided that this amounted to distribution and that being the case that the copyright owner's distribution right in each downloaded copy was exhausted. This meant that those copies could be freely "sold" on despite the Oracle licence agreement saying that they could not.

Oracle, the European Commission itself and some EU governments, unsuccessfully argued that the appropriate right that should be considered by the court was the WCT Article 8 communication right and not the Article 6 distribution right which should only apply to physical things. The CJEU relied on the later EU Software Directive 2009/24/EC, which in Article 4(2) confirmed first sale of software exhausted the distribution right and which whether deliberately or by oversight made no reference to the status of the right to communicate after first sale. The ECJ said this software specific law overrode the 2001 general copyright law.

But it is stretching legal logic somewhat to say that because the Software Directive does not refer to the right to communicate then this right is somehow subsumed within the right to distribute to thereby allow the first sale doctrine to apply.

Breach of the WIPO Copyright Treaty

Even if the CJEU reasoning is correct for current EU law, its decision in the Oracle case means that European copyright law does not comply with the WCT Article 8 which does not authorise any exhaustion of the copyright owner's right of communication on first sale, let alone what in reality was a licence and not a sale.

Article 8 of WCT requires that member states of WCT must give to copyright owners the exclusive right to communicate their works to the public by wire or wireless means. Article 4 WCT confirms a computer program is a copyright work. Oracle communicated its software to its licensees. Under the WCT, licensees do not acquire any right to "re-communicate" their Oracle software to third parties. The WCT Article 8 does not allow any member state to make laws which exhaust Oracle's exclusive right to communicate its software. The CJEU has interpreted European Union law to do just that. Such an interpretation means European law is in breach of the WIPO Copyright Treaty.

Impact of the CJEU decision on software licensing

The Oracle decision will severely impact software developers who trade in Europe, especially as all existing licences in Europe will be now classed as sales. For the future the traditional software licensing model will have to be modified (annual royalty fees perhaps?) or replaced with a software as a service model (SAS) with the software resident in the cloud and not with the end user. However while this may mean Europe's breach of the WCT becomes less exposed it cannot cure it. A cure will have to come through a new EU Directive amending the 2009 Software Directive to expressly recite the WCT right to communicate and the denial of any exhaustion of this right by first "sale".

Fortunately, because the CJEU relied on an interpretation of the Software Directive 2009 to override EU copyright law it is hard to see how the Oracle decision could be interpreted to extend to other licensed digital products communicated online such as films and sound recordings. The licensing model for online dissemination of these products should remain viable".
Is Ken right? And has he overstated the significance of this case, or understated it? Do let us --and him -- know what you think.

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