Copyright as Trade Regulation

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Id. at 518-19.

172 Id. at 520-21.

173 Id. at 520.

174 Sara K. Stadler, The Incentives Trap in Copyright Law, — Hastings L.J. —, — (2007) (forthcoming).

175 Id. at —.

176 Id.

177 Stadler, supra note 155, at 651; see generally id.

178 See id. at 634 (defining “printed works” as “works that can be replicated without diminishing their market value among intended users making intended uses”). Professor William Landes and Judge Posner prefer the phrase “easily copied works.” See William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law, 18 J. Legal Stud. 325, 328 (1989).

179 See James Madison (“Publius”), Federalist Paper No. XLIII, in Federalist Papers, supra note 48, at 279, quoted in Eldred v. Ashcroft, 537 U.S. 186, 212 n.18 (2003).

180 Patterson, supra note 40, at 7 (“[I]f copyright encourages creation, it does so only for the purpose of profit. Profit, however, cannot be obtained without distribution.”).

181 Stadler, supra note 155, at 632.

182 Copyright Act of 1909, ch. 320, § 41, 35 Stat. 1075, 1084 (Mar. 4, 1909).

183 See 17 U.S.C. § 109(a) (“the owner of a particular copy … 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 …”).

184 Patterson, supra note 33, at 262; see also Patterson, supra note 40, at 42 (“If the courts had perceived the dilemma, they could have avoided it easily by recognizing that the right to copy was, in fact, the right to copy and vend.”).

185 But see Mark A. Lemley & R. Anthony Reese, Reducing Digital Copyright Infringement Without Restricting Innovation, 56 Stan. L. Rev. 1345, 1429 (2004) (describing it as a “major victory” for “copyright enforcers” if sharing occurs “among small groups of friends, rather than open sharing with strangers”).

186 Mark A. Lemley, Property, Intellectual Property, and Free Riding, 83 Tex. L. Rev. 1031, 1052 (2005).

187 See id. at 1058-65. See also Feist Pubs. v. Rural Tel. Serv. Co., 499 U.S. 340, 349 (1991):

It may seem unfair that much of the fruit of the compiler’s labor may be used by others without compensation. As Justice Brennan has correctly observed, however, this is not “some unforeseen byproduct of a statutory scheme.” It is, rather, “the essence of copyright,” and a constitutional requirement. The primary objective of copyright is not to reward the labor of authors, but “[t]o promote the Progress of Science and useful Arts.

188 I do not take a position in this Article as to whether, and to what extent, creators should enjoy the exclusive rights of public performance and public display. See 17 U.S.C. §§ 106(4), (5). I leave that question for yet another day (and yet another article). See supra note 38.

189 See 17 U.S.C. § 101 (definition of “publicly”).

190 Marshall Leaffer, The Uncertain Future of Fair Use in a Global Information Marketplace, 62 Ohio St. L.J. 849, 850 (2001). Professor Leaffer does not explain why he places the phrase “copying problem” in quotation marks. See id.

191 Peter K. Yu, P2P and the Future of Private Copying, 76 U. Colo. L. Rev. 653, 698-739, 740 (2005).

192 William F. Patry & Richard A. Posner, Fair Use and Statutory Reform in the Wake of Eldred, 92 Cal. L. Rev. 1639, 1643 (2004).

193 See id.

194 Raymond Shih Ray Ku, Consumers and Creative Destruction: Fair Use Beyond Market Failure, 18 Berkeley Tech. L.J. 539, 548 (2003).

195 Lunney, supra note 5, at 818; see also Patry & Posner, supra note 192, at 1643 (arguing that “unlimited” copying “would make it difficult and in some cases impossible for authors of expressive works to recoup their expenses in creating [their] work[s]”).

196 See 17 U.S.C. § 101 (definition of “publicly”).

197 Lemley & Reese, supra note 185, at 1374.

198 See Wu, supra note 96, at 338 (“While this point is complicated by improved technologies of copy protection, so long as there exist rights that would be extremely expensive to enforce, the model of broad initial grants cannot be a complete answer.”).

199 In 1970, for example, Justice (then Professor) Stephen Breyer complained that a “law-abiding user wishing to copy only a portion of a book or article … [would] have to buy the whole book …” Stephen Breyer, The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 Harv. L. Rev. 281, 316 (1970); See also Litman [Paradox], supra note 62, at 932 (“When Congress extended copyright protection to sound recordings in 1971, it had repeatedly affirmed that the Copyright Act did not then reach consumer home taping of music, and would not reach it as amended.”). Today, copyright owners are likely to take the position that “law-abiding user[s]” cannot copy, period—even if the purchased the book from which they wish to copy. But see Gordon, supra note 3, at 190 (describing a “judicial and legislative unwillingness to impose copyright liability on individual at-home users”).

200 See Lemley & Reese, supra note 185, at 1376; Lunney, supra note 5, at 849 (“Digital technology has fundamentally altered copyright doctrine by making widespread private copying possible.”)

201 I. Trotter Hardy, Property (and Copyright) in Cyberspace, 1996 U. Chi. Legal F. 217, 222.

202 See Cohen, supra note 36, at 965 (noting that the Register of Copyrights believes that “[a]ppropriate norms to govern the public conduct of users must be publicly inculcated through a combination of persuasion and fear, which means that judiciously targeted lawsuits against users still have a role to play”).

203 Cohen, supra note 116, at 160.

204 Patterson, supra note 33, at 262; see also Patterson, supra note 40, at 42 (“If the courts had perceived the dilemma, they could have avoided it easily by recognizing that the right to copy was, in fact, the right to copy and vend.”).

205 Professor Gregory Lastowka has observed that “[c]opies of the past were valuable objects,” F. Gregory Lastowka, Free Access and the Future of Copyright, 27 Rutgers Computer & Tech. L.J. 293, 300 (2001), and if anything happened to the power grid, copies of the future would be valuable objects, too. See also Michael J. Madison, Legal-Ware: Contract and Copyright in the Digital Age, 67 Fordham L. Rev. 1025, 1061 (1998) (“Books and other information in physical form, however, continue to play an important role.”).

206 Cf. H.R. Rep. No. 551(II), 105th Cong., at 36 (1998) (in House Report on Digital Millennium Copyright Act, noting the “concern” of the Committee that “marketplace realities may someday dictate … less access, rather than more, to copyrighted materials,” which “result could flow from a confluence of factors, including the elimination of print or other hard-copy versions …”).

207 U.S. Const. art I, § 8, cl. 8. In The Trademark Cases, the Supreme Court defined “Writings” to mean “the fruits of intellectual labor, embodied in the form of books, prints, engravings, and the like.” In re Trade-Mark Cases, 100 U.S. 82, 94 (1879).

208 17 U.S.C. § 102(a).

209 See Douglas Lichtman, Copyright as a Rule of Evidence, 52 Duke L.J. 683, 730-34 (2003).

210 See Wu, supra note 96, at 361 (“[F]ixed media has the advantage of the fixed form, packaging, and in some cases a superior product (real books are beautiful, very portable, and operate without batteries).”).

211 Benkler, supra note 113, at 97-98.

212 See generally Ginsburg, supra note 3.

213 See Lunney, supra note 5, at 888 (“Seeking the common denominator among a wider audience leads almost inevitably to a lower common denominator.”).

214 464 U.S. 417 (1984). See also Litman, supra note 62.

215 Sony, 464 U.S. at 442.

216 Id.

217 See Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., — U.S. —, — (2005) (instructing that “where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple-article rule will not preclude liability” and observing that “the summary judgment record [was] replete with other evidence that Grokster and StreamCast, unlike the manufacturer and distributor in Sony, acted with a purpose to cause copyright violations by use of software suitable for illegal use”).

218 Id. at —. See also A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). The holdings in Sony and Napster and Grokster are not limited to new technologies, of course. As Judge Leval once asked, “why not … enjoin the use of the camera, … the photocopier, and the computer—perhaps even pen and paper, or the printing press[?]” Pierre N. Leval, Fair Use Rescued, 44 UCLA L. Rev. 1449, 1457 (1997).

219 See Grokster, — U.S. at — (quoting and distinguishing Sony, 464 U.S. at 442).

220 Stephen M. McJohn, Fair Use and Privatization in Copyright, 35 San Diego L. Rev. 61, 90 (1998).

221 Litman, supra note 62, at 960.

222 Subafilms Ltd. v. MGM-Pathe Communications Co., 24 F.3d 1088, 1092-93 (9th Cir. 1994).

223 See Grokster, — U.S. at —.

224 See Litman, supra note 62, at 960.

225 Pub. L. No. 105-304, tit. I, § 103, 112 Stat. 2860, 2863-77 (Oct. 28, 1998), codified at 17 U.S.C. § 1201 et seq..

226 See, e.g., 17 U.S.C. § 1201(a) (prohibiting the circumvention of any “technological measure that effectively controls access to a work protected under [Title 17]”).

227 See Gordon, supra note 5, at 915 (“[O]verbroad contract rules and the DMCA are the true threats. They threaten the culturally-viable practices that fair use has historically sheltered.”); Lunney, supra note 5; Dennis S. Karjala, Federal Preemption of Shrinkwrap and On-Line Licenses, 22 U. Dayton L. Rev. 511, 513 (1997) (“If these [shrinkwrap] ‘licenses’ are uniformly enforceable, all of the users’ rights of copyright will soon disappear.”). But see Goldstein, supra note 4, at 147 (arguing that “[b]oth the critics and the proponents of anti-circumvention rules have probably overstated the capacity of encryption measures to close off access to literary and artistic works” and noting that “[a]ny signal that can be seen or heard can also be copied, and without circumventing any encryption technology.”).

228 Burk & Cohen, supra note 6, at 51. But see Ginsburg, supra note 3, at 125 (“[T]he ‘market failure’ genre of fair use should fade away in a world of ... direct enforcement of copyright through access controls.”).

229 86 F.3d 1447 (7th Cir. 1996).

230 17 U.S.C. § 102(b).

231 86 F.3d at 1454 (quoting 17 U.S.C. § 301(a)).

232 273 F.3d 429 (2d Cir. 2001).

233 Id. at 458-59.

234 Id. at 459.

235 17 U.S.C. § 301(a).

236 Burk & Cohen, supra note 6, at 52 (“Where enforcement of a state law contract would violate the public policy inherent in the federal intellectual property scheme, or that embedded in the Constitution itself, such contractual provisions are preempted.”). Professor Wendy Gordon predicts that “if such contracts become so ubiquitous that they attach to virtually all copies, the result will be so property-like that courts will subject the contracts to copyright preemption.” Gordon, supra note 5, at 912.

237 Lemley, supra note 104, at 145; see also Mark A. Lemley, Intellectual Property and Shrinkwrap Licenses, 68 S. Cal. L. Rev. 1239, 1269 (1995) (noting “the … complex question of whether and how to preempt certain parts of contract law without bringing down the whole edifice”).

238 Lemley, supra note 104, at 145.

239 See generally Burk & Cohen, supra note 6. “Rights holders that opt[ed] not to deposit keys with the escrow agent would be unable to invoke legal protection against circumvention.” Id. at 66. To their credit, Professor Burk and Cohen admit that their proposal “is a second-best solution designed to make the best of a bad situation.” Id. at 80.

240 See Benkler, supra note 116, at 577-78.

241 S. Rep. No. 190, 105th Cong., at 8 (1998); see also H.R. Rep. No. 551(II), 105th Cong., at 25 (1998) (“In contrast to the analog experience, digital technology enables pirates to reproduce and distribute perfect copies of works—at virtually no cost at all to the pirate.”); Universal City Studios, Inc. v. Corley, 273 F.3d 429, 435 (2d Cir. 2001) (“Fearful that the ease with which pirates could copy and distribute a copyrightable work in digital form was overwhelming the capacity of conventional copyright enforcement to find and enjoin unlawfully copied material, Congress sought to combat copyright piracy in its earlier stages, before the work was even copied.”).

242 S. Rep. No. 190, at 12 (emphasis added). See also Corley, 273 F.3d at 441 (“[T]he focus of subsection 1201(a)(2) is circumvention of technologies designed to prevent access to a work, and the focus of subsection 1201(b)(1) is circumvention of technologies designed to permit access to a work but prevent copying of the work or some other act that infringes a copyright.”) (citing S. Rep. No. 190, 105th Cong., at 11-12 (1998)).

243 Id. at 435 (emphasis added). See also Universal City Studios, Inc. v. Reimerdes, 111 F. Supp. 2d 294, 345 (S.D.N.Y. 2000) (“[T]aking what is not yours and not freely offered to you is stealing.”).

244 See Corley, 273 F.3d at 435 (writing that Congress enacted the Digital Millennium Copyright Act in 1998 “to strengthen copyright protection in the digital age”).

245 Julie E. Cohen, Some Reflections on Copyright Management Systems and Laws Designed to Protect Them, 12 Berkeley Tech. L.J. 161, 178 (1997). Professors Burk and Cohen have argued that “[i]n some instances of overreaching via technological controls, the Constitution may even demand a limited … ‘right to hack,’ to surmount privately erected technological barriers to information that the Constitution requires be publicly accessible.” Burk & Cohen, supra note 6, at 52.

246 376 U.S. 225 (1964) (citation omitted).

247 Id. at 229.

248 Lemley, supra note 104, at 157-58; see also id. at 163 (suggesting, too, that courts might wish to use the “contract defense of ‘void as against public policy’ … without invoking the mechanisms of preemption”).

249 Lasercomb America, Inc. v. Reynolds, 911 F.2d 970, 978 (4th Cir. 1990).

250 Video Pipeline, Inc. v. Buena Vista Home Ent’mt, Inc., 342 F.3d 191, 204 (3d Cir. 2003) (citations omitted); see also Practice Mgmt. Info. Corp. v. Am. Medical Ass’n, 121 F.2d 516, 520 n.9 (9th Cir. 1997); Lasercomb, 911 F.2d at 979 n.22.

251 See James Madison (“Publius”), Federalist Paper No. XLIII, in Federalist Papers, supra note 48, at 279, quoted in Eldred v. Ashcroft, 537 U.S. 186, 212 n.18 (2003).

252 Patterson, supra note 33, at 249.

253 Litman, supra note 33, at 365.

254 See Leval, supra note 31, at 1110.

255 See Glynn S. Lunney, Jr., Fair Use and Market Failure: Sony Revisited, 82 B.U. L. Rev. 975, 977 (2002).

256 See Weinreb, supra note 32, at 1148 (“To a considerable extent, primary resort to the market vindicates the copyright owner’s claim that the copyright is his property, to do with as he chooses; so long as a transfer may occur, he is allowed to obtain as large a share of the profit as he can.”)

257 See Netanel, supra note 116, at 309 (“For neoclassicists, copyright enables owners to charge users for access to creative work public goods not so much to preserve author incentives as to determine what creative works are worth and thus to create a guide for resource allocation.”).

258 See Gordon, supra note 2. Specifically, Professor Gordon has proposed to apply the fair use doctrine “[w]here (1) defendant could not appropriately purchase the desired use through the market; (2) transferring control over the use to defendant would serve the public interest; and (3) the copyright owner’s incentives would not be substantially impaired by allowing the user to proceed …” Id. at 1601.

259 Goldstein, supra note 4, at 137; see also Lunney, supra note 255, at 976 (“Interpreted as an exceptional instance of market failure, Sony has become its own limitation.”); Ginsburg, supra note 3, at 125 (“[T]he ‘market failure’ genre of fair use should fade away in a world of perfect price discrimination ...”).

260 Leval, supra note 31, at 1111; see also Campbell v. Acuff-Rose Music , Inc., 510 U.S. 569, 579 (1994) (describing a transformative work as a work that “adds something new, with a further purpose or different character, altering the first [work] with new expression, meaning, or message”).

261 Leval, supra note 31, at 1110 (emphasis added).

262 Zimmerman, supra note 3, at 260.

263 See id. at 262 (“Rather than adding certainty to the fair use analysis, [the “transformation” test] seems … merely to have pumped more silt into already muddy waters.”).

264 Weinreb, supra note 32, at 1143. See Lunney, supra note 255, at 977 (“Merely increasing access to a work, even unauthorized access, represents a sufficient public interest to invoke the fair use doctrine. A transformative or ‘productive’ use is not required.”).

265 Campbell v. Acuff-Rose Music , Inc., 510 U.S. 569, 579 (1994).

266 See Madison, supra note 7, at 402 (“The substantive emptiness of fair use makes it something of a dumping ground for copyright analysis that courts can’t manage in other areas.”);

267 Gordon, supra note 2, at 1632.

268 See Cohen, supra note 35, at 509 (“Self-evidently, this broad property-as-profit rule protects the status quo distribution of entitlements and wealth; a right insulated by a penumbra of monetary expectation will be relatively impervious to legislative change.”).

269 See Gordon, supra note 2, at 1618. See also Justin Hughes, Fair Use Across Time, 50 UCLA L. Rev. 775, 777 (2003) (“[T]here is recognition that permitting too much adverse economic impact under fair use would undermine copyright’s incentive structure.”); Weinreb, supra note 32, at 1150 (noting the “broad agreement that a determination of fair use should depend largely, if not exclusively,” on “utilitarian assumptions about the copyright scheme,” including the question “does the use interfere with copyright incentives to creative authorship?”); Fisher, supra note 116, at 1687 (“The fair use doctrine enables the judiciary to permit unauthorized uses of copyrighted works … when doing so will result in wider dissemination of those works without seriously eroding the incentives for artistic and intellectual innovation.”).

270 See Goldstein, supra note 4, at 141 (“Copyright owners will invest no more in producing copyrighted works than they can expect to profit from them, and if the profit horizon is systematically lowered by fair use, investment will be correspondingly lower.”)

271 But see McJohn, supra note 220, at 89 (“[T]he role of fair use is broader and more central to the overall structure of copyright law.”).

272 See supra Part II.

273 See Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 420 (1984).

274 Thus, Professor Stacy Dogan is correct in stating that “Sony’s exemption for noncommercial copying … would not have shielded the vast majority of unauthorized file sharing at issue in today’s peer-to-peer wars.” Comment: Sony, Fair Use, and File Sharing, 55 Case W. Res. L. Rev. 971, 971-72 (2005). Sony involved private copying, not the sort of public distribution that so characterizes “p2p.”

275 Litman, supra note 62, at 929. Unfortunately, scholars also would be deprived of the wonderful article in which Professor Litman has told the story of the Sony case before the Supreme Court. See generally id.

276 Patterson, supra note 40, at 7.

277 Cohen, supra note 36, at 967.

Draft -- July 31, 2006

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