Thursday, November 30, 2006

Judge Posner, Second Life, and Copyright

On December 7th, from 6 to 8 pm PST, in the Center Auditorium in Kula, Judge Posner, or more accurately, his avatar, will be interviewed. Kula is, of course, in Second Life, a virtual world created by Linden Lab. Here is a link to an article about his interview. One must make a reservation (the link gives the details), and this means joining Second Life (the basic membership is free) as well as creating your own avatar with its own name. (Mine is called Chalil Vandeverre and I look like a large version of Swiper the Fox, but not red). You can join here. (Over 1,713,000 people have).

The interview with Judge Posner is an important event in Second Life's appeal outside of its original uses, and also is a window into why Judge Posner is our country's most exciting legal figure: his curiosity and willingness to take the time to personally be involved in and learn about cutting edge of issues is awe inspiring. Being in Second Life isn't a matter of opening a book or writing an article; it involves a mastery of a new technology and the rules of a distinct community. It is a testament to Judge Posner's eternal youth that he has done so.

Second Life has gotten a lot of publicity lately. The Wall Street Journal has a reporter dedicated to it, and from that newspaper's general thrust, one could guess that the attention has been about Second Life's commercial applications. But Second Life has also been roiled by a copyright dispute, as a result of the libsecondlife's creation of the infamously named CopyBot, used to copy content created and available by Second Life store owners. Here is a link to a story in Reuters, which contains a snapshot of a store with a protest sign. (A number of stores closed rather than be copied). The official libsecondlife application of CopyBot required user permission and a response to a disclaimer before content could be copied. But once the source code for CopyBot was made available on the libsecondlife's website, it was downloaded, edited, and reconfigured into an unofficial version that led to highly controversial uses. Residents of Second Life even began selling links to the unofficial version in exchange for Linden dollars, the currency of Second Life. A more technical summary the origins of Copybot is provided by libsecondlife:

The libsl project is an open source effort to create a stable platform for third-party Second Life development. Since its inception, libsl has helped Linden Lab identify many potentially serious vulnerabilities, before they were detected and exploited by malicious users. It continues in these efforts to this day, reporting any potential bugs and security issues to Linden Labs once they are confirmed and reproduced. Linden Lab appreciates the effort being put into the Metaverse ideals by the libsecondlife development team, and have assisted the group when possible. There are many potential uses for the libSL project. The project itself is geared towards creating an API that any programmer could make use of for their own application. Its explanation of the Copybot is this: Copybot was created as a debugging tool by the development team. It became rapidly apparent that it could be used to show the potential of the libsecondlife project. The official Copybot application required a user to ask to be copied, and presented a disclaimer before it occurred. The libSL project has since tightened it's source control system to lessen the potential for abuse of debugging applications. Open Source software is a double edged sword. In the case of a project like libsecondlife, it is enabling new imaginative uses of the Second Life platform, as well as providing a valuable service by finding and reporting potentially dangerous security issues before an incident occurs. The other side is that people can make use of the software provided for less noble causes. The libsecondlife team does not endorse the theft of intellectual property in any way shape or form. Linden Lab has declared that they take intellectual property rights and copyright law seriously, and are considering several methods to help combat misuse. As well, the libsecondlife project could potentially evolve into a tool which could help detect and report upon users who are misusing intellectual property. Copybot acts similar to the official Second Life client. The difference being that instead of drawing the information being presented, it is "reflecting" it back down the connection to the server. Primitive based attachments are reconstructed, and attached. This information is freely available on the Second Life protocol stream, it is just being made use of in a different manner. Similar functionality has been available via LSL scripting as well as GLintercept based tools for some time now.

What the Official Copybot Could / Could not do Note that you would have to ask Copybot to do this, and a disclaimer would be presented. Could Make use of existing baked avatar textures Make use of existing avatar shapes Rebuild avatar attachments and attach them These are purged upon boot / daily On occasion crash Simulators This is a simulator bug, and has been reported -- a good example of libsecondlife helping uncover a hidden problem that could have exploited to wreck the grid Could not Copy contents of objects Includes scripts Cause any damage to the SL official Viewer, simulators, or any content. This includes client-side hardware

Linden Lab has had a number of postings on its blog, which have generated voluminous and passionate comments. Here is Linden's posting announcing its decision to ban use of the tool:

Second Life needs features to provide more information about assets and the results of copying them. Unfortunately, these are not yet in place. Until they are, the use of CopyBot or any other external application to make unauthorized duplicates within Second Life will be treated as a violation of Section 4.2 of the Second Life Terms of Service and may result in your account(s) being banned from Second Life. If you feel that someone has used CopyBot to make an infringing copy of your content, please file an abuse report. Note that this is completely separate from any copyright infringement claim you may wish to pursue via the DMCA.

Like the World Wide Web, it will never be possible to prevent data that is drawn on your screen from being copied. While Linden Lab could get into an arms race with residents in an attempt to stop this copying, those attempts would surely fail and could harm legitimate projects within Second Life.

There are features to allow Second Life residents more choices about how they respond to potential infringement beyond the DMCA. Specifically, we will add data to allow residents to compare asset creators and creation time; incorporate Creative Commons licenses so creators have the option to create content that allows free copying, modification, and exchange without having to utilize outside applications; expand ban lists and reputation so residents can share information about those who abuse copyright; and, publish additional statistics on the website so creators can make rational decisions about the health and strength of Second Life’s economy.

These are important features because the implications of copying should not be about Linden Lab’s approach to copyright enforcement. We are not in the copyright enforcement business. The communities within Second Life should have the tools and the freedoms to decide how and when they deal with potentially infringing content. Many will decide on less restrictive regimes in order to maximize innovation and creativity. Others will choose more restrictive options and ban visitors who do not respect them. Consumers, creators, and all residents need to have the final say about which approaches work best for them.

Please recognize that using the Terms of Service is not a permanent solution. Nor is it shift in Linden Lab’s support of libsecondlife (who have removed CopyBot from their Subversion repository), machinima creators, or others who have explored Second Life beyond the features of the Second Life client. I continue to feel that libsecondlife is an incredibly important part of Second Life’s development and community.

I do not extend those feelings to residents attempting to profit off of infringing use of CopyBot.
To the community, I am very sorry that we have not already completed the features needed for you to address these concerns yourself. We are working very hard to complete them and will release them as soon as they are ready. In terms of prioritization and scheduling, additional asset data will be deployed in Q1 2007. Adding in support for CC and expanding the ban lists will be deployed 3 to 6 months later. Until then, as described in the first paragraph, use of CopyBot or similar tools to create infringing copies within Second Life will be treated as a violation of the Terms of Service.

The dispute raises captivating questions about self-policing versus reliance on the copyright laws, including the DMCA notice and take down provisions, and in a community many members of which have had distinct view on copyright as enforced by traditional copyright industries. One could question to ask Judge Posner's avatar on December 7th is whether he thinks there is an analogy to law professor Robert Ellickson's Order without Law: How Neighbors Settle Disputes. In that book Ellickson explores the way neighbors informally dealt with border and cattle trespass disputes in Shasta County, in Northern California. The book is a tour de force, combining an empirical study and a theoretical romp through Coase, game theory and much more. A must read and one that raises wonderful issues for the Second Life dispute.

Fair Use and Personal Copying Exemptions

In civil law countries, exceptions to rights don't take the form of fair use, but rather statutory provisions that spell out the permitted conduct. This approach has some problems, though, principally rigidity: if something is not specifically enumerated, it is usually deemed excluded at least with respect to the provision in question. The U.S. has such provisions too, like Section 108, but then we also have the safety valve of Section 107. Fair use is designed to (but doesn't always in practice) provide the type of flexibility that specific exemptions don't. Even other common law countries, like the UK, Canada, and Australia, have migrated away from fair use and toward fair dealing and specific provisions. A current debate on Australia is over whether to have a mix of fair use or instead fair dealing and exemptions.

Many U.S. copyright buffs have an antipathy to the civil law approach, believing it too narrow, and in particular cases, it may be. But not always. Civil law countries tend to have more generous personal use exemptions, and a more consumer-oriented attitude. In the absence of such provisions here, we fall back on fair use, which would be fine if courts took seriously the doctrine as an integral part of our copyright scheme. The case for example is one example of an epoch failure. That failure still haunts us, and what made me recall this failure is a posting by Fred von Lohmann below:

For any who missed the Walmart - Warner Bros deal announcement -- now
it's official, they want us to pay again for a copy on an iPod. And
here I thought they were going to just roll out "Managed Copy" and
let us have our personal-use copies for free. Silly me. They keep
this up, and mainstream consumers are going to start getting angry...

Stealing Fair Use, Selling It Back to You

"Apparently, Hollywood believes that you should have to re-purchase
all your DVD movies a second time if you want to watch them on your
iPod." That's what I said last week, commenting on the Paramount v.
Load-N-Go lawsuit, in which Hollywood studios claimed that it is
illegal to rip a DVD to put on a personal video player (PVP), even if
you own the DVD.

Well, this week the other shoe dropped. According to an article in
the New York Times:

"Customers who buy the physical DVD of Warner Brothers¹ ³Superman
Returns² in a Wal-Mart store will have the option of downloading a
digital copy of the film to their portable devices for $1.97,
personal computer for $2.97, or both for $3.97."
So you buy the DVD, and if you want a copy on your PVP or computer,
you have to pay a second time. Despite the fact that you bought the
DVD, and you have a DVD drive in your computer that is perfectly
capable of making a personal-use copy. Imagine if the record labels
offered you this "deal" for every CD you bought -- pay us a few
dollars extra, and you can have a copy for your iPod. And a few more
dollars, if you want a copy on your computer, too!

This latest bitter fruit from Hollywood is brought to you by the
DMCA, which treats "protected" content (like the encrypted video on
DVDs), differently from "unprotected" content (like every audio and
video media format introduced before 1996). Thanks to the DMCA,
Hollywood believes fair use personal-use copies simply do not exist
when it comes to DVDs.

Given that the Copyright Office has refused [PDF, see p. 71-72] to
recognize any DMCA exemption for space-shifting, claiming that
putting a DVD you own on your iPod "is either infringing, or, even if
it were noninfringing, would be merely a convenience," (excuse me,
Copyright Office, that's a decision for a court to make) the ball is
now in Congress' court. Let's hope Congressman Rick Boucher is
listening and will reintroduce his DMCA reform bill first thing next

Wednesday, November 29, 2006

A Novelty Claim

On November 17th, in Conwest Resources, Inc. v. Playtime Novelties, 2006 WL 3346226 (N.D. Cal.), Judge Saundra Brown Armstrong denied a motion for a preliminary injunction in a case which should immediately make its way into copyright casebooks. Plaintiff is in the business of producing adult entertainment, including what it claimed to be 12 copyrightable "sculptures" of male genitalia sold as "novelty items." A dispute arose with a licensee, whom plaintiff asserted had distributed copies after termination of the license. The licensee defended on the grounds that the works were not protectible, and that at least with respect to some of the acts of distribution, those acts occurred during the period when the license was in effect, thereby entitling it to the protection of the first sale doctrine in Section 109. The court agreed.

Defendant's lack of protectibility argument rested on the lack of separable features. That argument requires that the pictorial, graphic or sculptural item be a useful article, namely that it has an intrinsic utilitarian function. On this front, Judge Armstrong wrote: "Plaintiff conceded at oral argument, and it was plainly evident from an examination of the objects, that they can be, and generally are, used for sexual gratification. The packaging of the product notes that it is dishwasher safe and compatible with various types of lubricants, indicating that it is meant for use in sexual acts."

Plaintiff's contention that "the objects are tributes to certain models, and that collectors purchase them for display" was met with skepticism: "It is difficult to imagine how the sculptures' aesthetic features can be conceptually separated from their function: given that the function is to arouse, design features that are intended to stimulate the mind of the beholder the concept of sexuality are not truly independent from the utilitarian purpose of the object."

Moreover, defendant countered that basing the sculptures on actual men indicated there was no separability. Plaintiff rejoined, citing a Copyright Office examiner who wrote that the "work contains some additional sculptural authorship that may be regarded as copyrightable." Defendant asserted the "only differences from the original casts were size and color of the objects... ." The court left the issue to trial but found that plaintiff did not have a probability of success on the merits.

On the first sale doctrine, the court found that the distribution occurred during the term of the license and thus was lawful.

Tuesday, November 28, 2006

Israeli Scholars of U.S & U.K. Copyright Law

The ancient Israelites were described as עם הספר (Am-HaSefer), the People of the Book, specifically the Torah. The holiday of שמחת תורה (Simchat Torah) celebrates this love of the book; on that day the last parsha of the Torah for the year is read וְזֹאת הַבְּרָכָה (V'Zot HaBerachah) from one scroll and the first parsha of the next year בְּרֵאשִׁית (Bereisheet) is then read from a second scroll to keep up an endless cycle of study. Intellectual property issues have been debated from a scriptual or Talmudic basis for many centuries. An interesting decree was issued by the Jewish community of Venice in 1623:

We have agreed to the reasonable and proper request of the worthy and honored Master Salamon Rossi of Mantua (may his Rock keep and save him) who has become by his painstaking labors the first man to print Hebrew music. He has laid out a large disbursement which has not been provided for, and it is not proper that anyone should harm him by reprinting similar copies or purchasing them from a source other than himself. Therefore, having seen the license granted by His Excellence, the Cattavero (may his glory be exalted), we the undersigned decree by the authority of the angels and the world of the holy ones, invoking the curse of the serpent’s bite, that no Israelite, wherever he may be, may print the music contained in this work in any manner, in whole or in part, without the permission of the above-mentioned author or his heirs for a period of fifteen years from this date. Nor is any Jew permitted under the terms of this decree to buy from any person, whether he be of our nation or not, any of these works without the permission of the above-mentioned author, who is to indicate by some special mark that he has consented to their sale by another party. Let every Israelite hearken and stand in fear of being entrapped by this ban and curse. And those who hearken will dwell in confidence and ease, abiding in blessing under the shelter of the Almighty. Amen.

Rossi’s decree was hardly the first, but it was the most colorful issued under Jewish law. Menachem Elon, in an interesting, though too brief, discussion of application of the Biblical hassagat gevul (trespass) principle to intellectual property, wrote:

[F]rom the 16th century onward... copyright became a defined legal right, protected by sanctions and partly based on the extended doctrine of hassagat gevul.
As in other legal systems, this development arose from the spread of printing and a need for the protection of printers’ rights. As early as 1518 an approbation (haskamah) to the Sefer ha-Bahur of Elijah Levita contained a warning, on pain of ban, against anyone reprinting the book within the following ten years. In the mid-15th century, when Meir Katzenellenbogen complained to Moses Isserles about the appearance of a rival edition of Maimonides’ Mishneh Torah (shortly after his work had been printed by Katzenllenbogen), Isserles responded by imposing a ban on anyone purchasing the Mishneh Torah from Katzenellenbogen’s competitor.... Thereafter it became customary to preface books with approbations containing a warning against trespass in the form of any unauthorized reprint of the particular book within a specified period.

THE PRINCIPLES OF JEWISH LAW 344-45 (Menachem Elon ed. 1975, Encyclopedia Judaica, Jerusalem). Elon also refers to a later recognition "of a full legal right in respect of one’s own spiritual creation." Id. at 346. See also Adin Steinsaltz, THE ESSENTIAL TALMUD 78-79 (1992) (discussing copyrights granted by various European communities in the mid-18th century for the printing of the Talmud and disputes that arose); J. David Bleich, Current Responsa, Decisions of Bate Din and Rabbinic Literature: Copyright, 5 The Jewish Law Annual 71 (1985); Rabbi Israel Schneider, Jewish Law and Copyright,; Symposium: The Evolution and Impact of Jewish Law: Copyright, 1 U.C. Davis J. Int’l L. 3 Pol’y 83 (1985). Matthew Kozinets, Copyright and Jewish Law: The Dilemma of Change, 1 U.C. Davis J. Int’l L. & Pol’y 83 (1995); Samuel Petuchowski, Toward a Conceptual Basis for the Protection of Printing in a Post-Printing Era: Precedents in Jewish Law, 3 U. Balt. Intell. Prop. L. J. 47 (1995); Rabbi Israel Schneider from 21 Journal of Halacha and Contemporary Society, Pesach 5751 (Spring 1991)(available Here); Victor Hazan, The Origins of Copyright Law in Ancient Jewish Law, 18 Bull. Copr. Soc’y 23 (1971).

Now, though, we have a new phenomenon: Israeli scholars of early U.S. and U.K. copyright law, teaching at U.S. law schools. I want to mention two, Oren Bracha and Dotan Oliar. Fittingly, they are friends and have similar backgrounds. Both graduated from Tel Aviv University; both clerked on the Israeli Supreme Court; both were in the SJD program at Harvard; and, consistent with a true love of learning and the generosity of heart that one finds in the best, both have made their research freely available on the Internet. Professor Bracha teaches at the University of Texas Law School in Austin. Professor Oliar begins teaching at the University of Virginia Law School in January. What is so amazing about their scholarship is the depth of original research, the vast scope of their research, the tightness of their reasoning, their modesty in not arguing beyond the evidence (evidence which they have done more than others to uncover), and the fresh eyes and insights they bring to a field that has been well-dug into. In some ways, they represent the original instruments movement in classical music: doing original research into historical "styles" and stripping away centuries of bloated "interpretation" especially of the Romantic version. We do well to start with them and stay a very long time. (A third, Dr. Avishalom Tor, has done great work in law and economics and is an occasional co-author with Professor Oliar ).

Professor Bracha's works

I mentioned Professor Bracha in a December 14, 2005 posting on whether ideology matters in copyright. (See his response). His comprehensive dissertation "Owning Ideas: The History of Anglo-American Intellectual Property, is available here. His subsequent 131 page article, "The Ideology of Authorship Revisited," is available here. He also published "The Commodification of Patents 1600-1836: How Patents Became Rights and Why We Should Care" in 38 Loyola of Los Angeles Law Review 177 (2004).

Professor Oliar's Works

Professor Oliar's LLM thesis was an economic analysis of fair use and won the Harvard Law School Irving Oberman Award for Best Essay on the Internet and Law. Professor Oliar has at least two works available on the Internet. The first is "Making Sense of the Intellectual Property Clause: Promotion of the Progress of Science as Limitation on Congress's Intellectual Property Power." It is to be published at 94 Georgetown L.L. 1771, but is available here (with an abstract), downloadable on SSRN. The other, unpublished now (but available here) is a masterful review of the origins of Article I, section 8, clause 8.

Wednesday, November 22, 2006

Who's Right? West or Me?

I am hoping readers can provide some empirical data in a series of disagreements I have been having with West Publishing Company in connection with my new 6,700 page treatise on copyright, due out the first of January. My theory is that West is dead wrong about what is useful to its customers or doesn’t care because it believes that if it brands its books like cattle with endless references to West somehow this is good advertising. I could be wrong; it could be West knows very well what research tools are useful to its customers and my objections are ill-founded and ill-tempered. If my theory is wrong I will quit abusing my long-suffering and abused attorney editor, an outstanding individual who deserves much much better. If I am right, I will get bragging rights, but given West’s corporate attitude I am skeptical anything will change: West’s attitude appears to be "there’s the right way, there’s the wrong way, and then there’s West’s way."

Let me be very clear that none of this has to do with substantive issues: on all substantive issues West has been extremely generous in letting me write the book I wanted , for which I am deeply grateful, while my attorney editor has provided incredibly helpful suggestions and corrections. My issues lie elsewhere, in the deeply nerdy issues of the use of key numbering, key cites, and citation forms, things which excite very few, maybe only me. The issues do go, however, to how we use online versus print versions of books and so may be of some general interest.

The print versus online distinction is a critical issue although not the only one, but let’s start with it. For the print version, my strong preference is to have no key cites or key numbering; none, no where; they cannot conceivably perform any useful function: slapping key cites or key numbering on a print version is an useless as you know what on a bull. You can’t link to anything. West asserts that people looking at the print version then go online and use the key cite or key number. I find that a fantastic assertion: how many people would put down the print version only to then go online and use the key cite or key numbering function, especially in a book like this which is 6,700 pages of fanatical detail? But even if such an individual exists, the actual key cites or key numbers are at such a level of insipid generality that I cannot imagine them ever being useful, but if so, they are never useful in a book of this sort where you have the print version right in front of you: there is nothing, absolutely nothing that you will learn by going just to the key cites or key numbering. To me it is the crassest form of cattle branding; utterly useless, and I think West knows it too. Am I correct, or am I exaggerating? Is there anyone who has ever been reading the print version of a comprehensive treatise and then gone online just to use key cites or key numbering (I am not talking about using them if you start your research online and are not using the print version).

But assuming there is such a person, to actually be useful, the key numbering would have to actually lead to someone useful. In my case, the key numbers could not be more useless. For example, Chapter 1 is an historical review; there are 111 sections, spanning 406 single spaced printed pages. The issues cover the entire history of copyright from Renaissance Italy to the Congress that just adjourned. For every section other than the first (which is no better), that is 110 times in a row, regardless of the subject matter of the section, there is the same key number: "West’s Key Number Digest, Copyrights and Intellectual Property 1,2." Of course, neither key number discusses anything covered in those 406 pages. Is this useful to you? Do you think it should be in the print version? Would you think West is telling you that those key numbers are useful to you in reading the sections they are inserted into? (And then there is in every chapter an enormous block of text explaining 25 times what KeyCite is, more useless, blatant advertising). My view is that the print version should be pristine: no reference guides, no references to KeyCite or key numbering.

For the online version, I assume some people (hopefully a very small number) use key cites or key numbers, so I have not taken the position that they should be totally banned as I think they must be from the print version. But in the online version, should key numbers and cites be strewn throughout every section in the book, as they are? Or, should they be used intelligently, say after West has determined by looking at a key number that there is relevant material in it? Use of the same key number: "West’s Key Number Digest, Copyrights and Intellectual Property 1,2" 110 times in a row where there is nothing of any relevance in 1 or 2 cannot possibly be helpful. It is instead banner advertising, relentlessly thrown up in every section. If you are going to do advertising, do it intelligently, make it relevant: that is an important reason why Google outperforms Yahoo: Google’s serving up of ads is tightly targeted: 110 repetitions of the same useless key number takes the opposite approach. My view is either make something useful or don’t do it, or come clean: "we know the key numbers aren’t useful, but we want to do advertising." OK, then why not really do advertising? Why not sell space to law firms, for example, that specialize in particular areas? For example, in a discussion of architectural works, LBK in Houston could run an ad. Someone who specialized in sampling could run an ad in that section. In short, do it right and be honest.

Citations are the next issue. For books and articles, I had inserted the first name of the author: West deleted them. The trend in legal scholarship is toward greater information, not less, for example even including middle names. Should the first names be present or not? Parallel cites are the next issue. If there is an a F Supp, F3d cite, that is all there should be in my opinion. If there isn’t such a report of a case, I think there should be a Westlaw cite so you can link on to it. West’s approach is to put a CCH cite first, then Westlaw usually without a pinpoint cite, which I had inserted but which was stripped out. Very few people use CCH and it is not linkable from Westlaw. It is placed first because of a bizarre view that CCH is a "published" form while Westlaw is unpublished. I say take out the CCH and in all cases provide the pinpoint cite. West also has what I regard as an equally bizarre citation form for older court of appeals decisions. The present court of appeals were created in 1981, but co-existed with the circuit courts until 1911. West’s form of citing to these older circuit court opinions (and I believe well past 1911) is X v. Y, 222 F. 222 (C.C.A. 1st Cir. 1906). That makes no sense, the C.C.A. being duplicative of Cir.). Another issue is repetition of the case name. I find this wholly unnecessary: if a case name is stated in the text, say X v. Y, West, in the first footnote and every other footnote, repeats the full name of the case and full cite. My view is that if the name is given in the text, it should not be repeated in the footnote and certainly not for every footnote thereafter.

There are other issues, but this is more than enough. Weigh in and tell me who has the better
arguments: am I kvetching about trivia that no one in their right mind cares about, or does it matter?

Tuesday, November 21, 2006


The concept of the territoriality of copyright plays out in a number of complex, interesting ways. By territoriality, people usually mean a legal connection of a copyright interest to one territory, i.e., country. That country's laws will then govern a particular (or all) legal issues involving the copyright.

Professor Willem Grosheide has written effusively that “the intellectual property law community over the whole range has cherished for many decades and still favours the territoriality” principle. The term “territoriality” though, is susceptible of different meanings. For purposes of the first sale doctrine (or “exhaustion” as it is called in other countries), copyright is quite “territorial” since an authorized sale or other distribution of a copy ends the copyright owner’s control in that territory (but not others) over further distribution or public display of that copy. Territoriality is also used as a device to determine certain points of attachment for national eligibility status of foreign works, i.e., one determines whether foreign works are eligible for protection in a different forum by reference to the work’s territorial paternity, such as the country of first publication.

If by territorial one means the copyright right is created by each sovereign, this is true of most, if not all, other laws, so to say copyright is territorial does not distinguish copyright from other laws that are subject to choice of law. Even assuming copyright is territorial (in any agreed meaning of that term), this characteristic is not determinative nor even helpful to the choice of law analysis: choice of law exists territorially too; that is, whether to apply choice of law is determined by the national (territorial) law of the forum. The territorial characterization, taken to its logical conclusion, eliminates entirely choice of law in favor of exclusive application of the law of the forum, and under circumstances where there is nothing inherent in forum law justifying the exclusion of foreign law. Indeed, one can argue that dogged insistence on applying the law of the forum deprives the forum of the exercise of its own sovereignty to utilize choice of law procedures, a result obviously at odds with the very nature of sovereignty.

Another area in which the concept of territoriality is tested is droit de suite, the resale royalty right mandated within the European Union by Directive 2001/84, and to date implemented in few countries within the Community, despite a January 1, 2006 deadline. In a fascinating article by Pierre Valentin, Droit de Suite, 28 E.I.P.R. 268 (2006), the nature of territoriality is explored in efforts to assign a country of origin to the sale that triggers the resale royalty obligation. Assigning such a country is important for at least two reasons: first, the sale may have occurred outside the Community, thereby resulting in no obligation; or, two, the resale could have occurred in one or more countries within the Community but which have different coverage or royalty rates. One approach to assigning a territorial location for the obligation is the place of sale test, according to which the resale royalty obligation is assigned to the country where the sale takes place. This approach, however, requires further agreement about where a sale can be said to take place. Outside of cases where the seller, buyer, and the work of art are all in the same country, there are many permutations: the seller is in Country A, the buyer in Country B. The parties communicate by telephone, fax, or email and agreement is reached. Is the place of sale the place where the seller is located or where the buyer is located? What if the work or art is in one of the two countries, or, in a third country, C? Under English choice of law rules, the country assigned is the generally the country where the art work is located, but this gives an unusual emphasis to a material object that may be owned by even a different person , say, someone who purchased the work of art from the artist, and who lives in country D. In the case of Joseph Beuys, BGH Judgment of June 16, 1991; I ZR 24/92 [1994] GRUR 798, comment [1995] E.I.P.R. D-94, a German court held that the place of sale governed (London), resulting in no royalty obligation. Since as M. Valentin notes, the droit de suite, like all copyright rights, are governed by domestic laws, these issues will not be resolved for a long time if ever.

Friday, November 17, 2006

Chan Chan

When two music publishers are fighting over who treated poor Cuban musicians best, one is in uncharted waters. Choice of law, forum selection clauses, and great Cuban music were in the news yesterday, in an English dispute involving two music publishers, and the music of the Buena Vista Social Club. Here is a link to the opinion.

In earlier decisions in Peer International Corp. v. Termidor Music Publishers, [2002] All ER (D) 143 (Ch. Div. 2002), aff’d, [2004] Ch. 212 (Ct. App., Civ. Div. July 1, 2, 30 2003), the court had enforced a number of different forum selection clauses. At issue were five contracts entered into in Cuba between 1930 and 1945. The signatories to the contracts were Cuban composers and a foreign music publisher. Three of the contracts picked Cuba as the forum, one was silent, and one picked New York. The contracts selecting Cuba were enforced as was the one selecting New York. The silent contract was construed as having been entered into in Cuba, and thus Cuban law applied. All this was for naught, though, since the court ended up refusing to apply a subsequent Cuban statute that had the effect of voiding the contracts. The court’s reasoning was most extraordinary: enforcing a Cuban contract under a Cuban statute according to a Cuban forum selection clause would violate English public policy. The English public policy at issue? The court held that under the principle of territoriality the copyrights at issue (the court refused to be drawn into the copyright versus contract characterization debate, having settled on construing it as a copyright matter), were English copyrights, not Cuban copyrights, and thus the Cuban government was impermissibly attempting to take away an English copyright. One may ask, though, how the forum selection clauses were enforced at all, given this conclusion? Had the contracts selected England as the forum, one might have concluded that either an English contract or (less certain) an English property right was at issue. But since the court upheld the Cuban forum selection clauses (and it certainly wasn’t repugnant to New York law for Cuba to void an English contract), it is far from apparent what this meant at the end of the day.

In the recent opinion, a copy of which I have not seen, Justice Lindsay is reported to have held that the Cuban government's take-over of the catalogue was not unlawful, but that Peer might have rights in a few works.

Thursday, November 16, 2006

Overreaching Copyright Notices

In an era when a notice of copyright is not required and is of legal utility only in connection with innocent infringement claims, why go to the trouble to affix one at all? I regard notices as a relic of the past, but they do serve other purposes, including for some publishers an opportunity to state their view of the scope of their rights. In an article I wrote with Judge Posner, Fair Use and Statutory Reform in the Wake of Eldred, 92 Cal. L. Rev. 1639 (2004) we pointed out some examples and argued for application of the misuse doctrine for overreaching efforts.

In an article in yesterday's AgoraVox, Canadian law professor Michael Geist also wrote about the problem. He gave an example from a Frommer's guide in which readers were admonished that "The use of any part of this publication in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system, without the prior written consent of the publisher -- or, in the case of photocopying or other reprographic copying, a licence from the Canadian Copyright Licensing Agency -- is an abridgment of the copyright law."

As Professor Geist pointed out, he (and now me) have abridged Frommer's copyright by reproducing the notice itself. Also amusing is the effort by the publisher to bind itself to written permission; why, if the publisher subsequently gives oral permission isn't that OK too?

I decided to hunt around and see how others dealt with the issue. One can do this on one's own by going to, punching in an author or book title and then going to the copyright page of the book. Some books don't let you look inside, and ironically, none let you copy the copyright notice itself or even print it out. I looked at two, both by Larry Lessig. The first is "Code and the Laws of Cyberspace." The notice for this book reads: "No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews." The second is "Free Culture: The Nature and Future of Creativity." The notice for this book reads: "The scanning, uploading and distribution of this book via the Internet or via any other means without the permission of the publisher is illegal and punishable by law. Please purchase only authorized electronic editions and do not participate in or encourage piracy of copyrighted materials. Your support of the author's rights is appreciated."

Wednesday, November 15, 2006

The Book Corner

Yesterday's posting reviewed Ronan Deazley's masterful "Rethinking Copyright" book. Readers were dismayed at the $95 price, as am I, although i love the book itself. Today, I want to review two other recent releases, both of which are quite worth having and at much better prices.

Foundation Press has a delightful series of "law stories." Each book in the series contains an article about well-known cases in the field, and gives a type of behind the scenes look at the personalities behind the disputes. The most recent, is "Intellectual Property Stories." (Although the title gives a date of 2005, it is a 2006 release). It is priced extremely reasonably at $19.95. The organization of the book, choices of cases, and editing may not be everyone's cup of tea; I also found the introduction to be a bit pompous and of no real help, but it is easily skipped.

In a book of this sort, there are a number of shoals to navigate which I think many of the authors did admirably: one doesn't want the discussion to be simply war stories; the details should illuminate something, or failing that, be amusing. One should also learn things one can't get from other sources; on this front, not all of the stories succeed. For example, the background story of the Sony case has been told before, especially by Jonathan Band and Andrew McLaughlin, as have a number of the details in Folsom v. Marsh. But perhaps not everyone has read these previous sources; still, there are areas where one would have wished for different stories that have yet to be told.

For example, even though there is a section on the scope on protection, there are only two cases, in the copyright area Folsom, which is hardly the most interesting or illuminating case. Why not have had something that deals with substantial similarity such as the George Harrison case, which had color aplenty, or the Sid & Marty Krofft case? The book is heavily oriented toward oldy-moldies, but even here discussions have been truncated. For example, Professor Craig Joyce's piece on Wheaton v. Peters should have gone first, and has been so severely edited that its wonderful flavor has been all but eliminated. (Those who wish to see the original, unedited version can find it at 42 Houston Law Review 325). On the international front, an important area, we have only Steele v. Bullova, and no copyright cases. Why not Quality King or some of the Ninth Circuit cases?

It is of course the nature of any selection that they reflect the personal interests of the editors (that is also of course one of the bases of protection for compilations), and for $19.95 one can't go wrong.

The other book is the second edition of John Feather's "A History of British Publishing." At $29.95 is a fantastic bargain, rich with amazing original research, by a UK scholar of the highest order. This is a classic in the area, with a great deal of important discussion about copyrght; a must have book.

Tuesday, November 14, 2006

Why UK Scholars Eat Our Lunch

It is a common thread that the writing of history is concerned not so much with setting forth an accurate description of the past, as it is an effort to shape the present. In this thread, history merely serves as the justification for one's present position. Evidence of this is seen in much copyright scholarship, and in judicial opinions. One example is the infamous battle of the booksellers in England, following the expiration of the 21 year term of protection for existing works granted in the 1710 Statute of Anne, and culminating in Millar v. Taylor and Donaldson v. Beckett. These cases brought forth a formidable array of arguments about the existence or non-existence of a common law right in published works. It is fitting that, as with most efforts to use history for partisan purposes, the exact holding in Donaldson v. Beckett continues to be debated.

Another use of history during the same time period was the battle between the Stationers Company and royal patentees. The Stationers Company challenged the legitimacy of the royal patents, which continued to be granted even after the Statute of Anne was enacted. This fight was fought on the odd ground of the true origin of printing in England: was printing introduced by the King (in which case he was authorized to regulate it, including granting royal patents), or was it introduced by other means (in which case Parliament could regulate it, including granting a monopoly to the Stationers)?

A considerable amount of scholarship is still being published about this era, indeed, I assert that the best scholarship is the most recent. Some will be familiar with the late Lyman Ray Patterson's 1968 "Copyright in Historical Perspective." In U.S. scholarship, Professor Patterson was one of the first to discuss the Stationers Company at length. His citations to Arber's compilations of records of the Stationers Company gave his work a patina of historical legitimacy. But Patterson was, in my opinion (an opinion formed through a debate with him and from reading a vast amount about the period), an incomplete scholar. His brief was simple: copyright thwarts the desires of those who wish to use copyrighted works without permission. It is a form of censorhip. So, an historical pedigree had to be invented for copyright. For Patterson, the Stationers Company, especially in league with the Star Chamber, served this purpose admirably, and so his trope was that copyright arose from the loins of censorship and, like Cain's mark, will bear that origin forever. Hogwash.

Another, more recent trope is the idea of copyright arising out of a Romantic view of authorship. The scholarship on this is highly selective, and is limited to a few authors in a few countries. It ignores vast amounts of contrary evidence, and in any event suffers fatally from historical determinism: copyright developed as it did allegedly because authors, legislatures, and society evolved to the point of finally recognizing that no work is as much a man's or woman's as the fruits of his or her own mind. A variant on this, much beloved by some law professors, is a Lockean view of property, in which copyright came to be analogically with its real property cousin. At least one academic career was made on this theory, a theory which UK scholars have effectively debunked on many grounds, not the least of which is that when it came to intellectual property, Locke was not a Lockean.

But such is the nature of academic legal scholarship in the U.S., which contains a unique facet that has doomed it from engaging in serious historical work. That facet is how academic legal scholarship is rewarded. Academic careers at top tier (and those who aspire to be top tier)schools are made by publishing in the most prestigious law reviews. Those law reviews are run by law students. In a 2004 article in Legal Affairs (link here), Judge Posner, who knows a thing or two about legal scholarship, issued a scathing indictment of the process: "Welcome to a world where inexperienced editors make articles about the wrong topics worse." Judge Posner also refers to the heavy emphasis on fields outside of law in much law review writing, done of course, by law professors almost none of whom have training in the fields of non-law they are supposedly analyzing. One can hardly blame law students for the results: it is law schools and law professors who run the prison and if they want to place their future careers in the inmates' hands, inmates everywhere will jump at the chance.

But the consequences are easy to see: serious works of doctrine and history are devalued, treatises and books rarely count toward tenure: it is only publication in a prestigiously ranked law review that matters, and to get published there one must be trendy indeed. Enter UK scholarship: unburdened by such a system, the UK (and Australia) have produced a series of stunning works of historical scholarship. I want to mention one, just released, Ronan Deazley's "Rethinking Copyright: History, Theory, Language." Professor Deazley (who is Irish), teaches at the School of Law at the University of Birmingham, England. In 2004, he published "On the Origin of the Right to Copy: Charting the Movement of Copyright Law in Eighteenth-Century Britian 1695-1775." That work was a fantastic romp through original sources and provided the best explanation yet of the vote in Donaldson v. Beckett (except perhaps the discussion in his new book). Professor Deazley also did a magisterial job of placing the Statute of Anne in context, including a thorough review of the period after Anne; indeed, his focus post-Anne is seen in the dates given in the title. Far too much scholarship on the Statute of Anne has focused on the Stationers Company as if that Company's efforts were the sole reason for and sum of the parts of the Statute of Anne; that certainly is Patterson's approach, because it served his purpose to do so: the Stationers were censors, that censorship led to Anne, and copyright has been infected ever since. Deazley blows such nonsense out of the water.

In his new book, Professor Deazley builds on his previous work, which he revisits a bit, but principally as a way to asking questions about the nature of copyright, a task that dominates most of the book, and which takes Professor Deazley into the 20th and 21st centuries. Professor Deazley is open about the relationship between our reconstruction of the past for present purposes. But it is the depth of his historical research, of the kind that very, very few American legal academicians do, that is the most radical; radical because it make impossible the many non-positivist views of copyright one encounters, especially among those who do not openly state their natural rights views. Natural rights advocates don't regard their views as advocacy, and not surprisingly so: their views are natural. To such advocates, it is Professor Deazley's work that is a manifesto, or rhetoric, or a "trend." Such terms of belittlement are merely an embarrassed admission that his research is a profound stake through the heart of a view of copyright that has dominated European copyright theory for a century or so. But it is only a pet theory, not history, as Professor Deazley is rude enough to point out. He will never be forgiven by them, but he warrants our heartiest thanks.

Sunday, November 12, 2006

Are Dogs Funny?

On the classic 1968 album "Cheaps Thrills" (should there be any other kind?), Janis Joplin sings "Whoa, call me mean or call me evil, I've been called much worse things, all things around, yeah, but I'm gonna take good care of Janis, yeah, Honey, ain't no one gonna dog me down." On the greatest blues album ever made, Count Basie and Big Joe Turner's The Bosses, Turner sings this line: "I've Been Your Dog Ever Since I've Been Your Man." In the visual arts, though, dogs have been portrayed more favorably, even as objects of humor. William Wegman has made quite a career out of photographing dogs, many of them quite humorous. So are dogs funny?

One court recently thought so, Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 2006 WL 3182468 (E.D. Va. Nov. 3, 2006), granting summary judgment to Haute Diggity Dog, LLC in a suit brought by Louis Vuitton over HGG's parody of its logo. HGG sells stuffed toys and beds for dogs under names and designs that make fun of the products of other companies, things like Dog Perignon, Sniffany & Co. In this case it was Chewy Vuitton that sent the frogs over the cliff. Vuitton does sell luxury goods for luxury pooches, such as collars and leashes that range from $250 to $1600; presumably the canines cost more.

Vuitton's well-known logo underwent a change in 2002, in a design by Takashi Murakami. HGG used enough to conjure up LV's design, but asserted parody as a defense. That the parody was purely in the marketing of products didn't bother the court at all. The court's discussion is worth reproducing:

This Court must first consider the purpose and character of the use. Commercial use is one factor to be considered in determining fairness, and is not by itself presumptively unfair. Id. at 591. Parody, even when done for the purpose of commercial gain, can be a fair use, as the Supreme Court has stated specifically that it is more likely that “the new work [a parody] will not affect the market for the original in a way cognizable under this factor, that is, by acting as a substitute for it.” Id. at 591. In this case, the use of similar marks and name in a line of dog chew toys and beds parodies the high-end fashion status of LVM's products in a market that LVM does not participate-the market for pet toys and beds. This Court finds that the use of similar markings and colors to those copyrighted by LVM for Chewy Vuiton products is a parody.The next element, nature of the copyrighted work (creative) is a less-important factor for a parody case and “not much help” in separating infringers from parodies. Id. at 586. Therefore, this Court will not address nature of the copyrighted work, other than to acknowledge that it is a creative design.This Court will finally consider the amount and substantiality of the portion used in relation to the copyrighted work as a whole. The Supreme Court held that in a parody case, the parody itselfnecessarily springs from recognizable allusion to its object through distorted imitation. Its art lies in the tension between a known original and its parodic twin. When parody takes aim at a particular original work, the parody must be able to ‘conjure up’ at least enough of that original to make the object of its critical wit recognizable.Id. at 588.In this case, the name “Chewy Vuiton” is an obvious wordplay on the name Louis Vuitton, and the superimposed C and V on the logo are intended to “conjure up” enough of the Louis Vuitton logo in order to make the object of its wit-a humorous play on Louis Vuitton's high-end image in the form of dog toys-recognizable. The parody is not possible unless the logo and name are similar to those of Plaintiff, and therefore such parody constitutes a fair use in this respect.*11 Finally, this Court considers interference with the potential market for plaintiff's original and derivative works caused by Defendants' actions. First, the market overlap between Plaintiff and Defendants is tenuous. Louis Vuitton's primary market is for high-end women's apparel, not pet toys. As explained supra, Plaintiff does sell some pet items, but not toys or beds, and only in a limited, high-end market. Second, Plaintiff has offered no evidence of interference with potential markets or control of its copyrights. Defendants, on the other hand, have presented deposition testimony and an expert declaration indicating that there has been no effect on LVM's potential markets or control of its copyrights. (Def.'s Mot. Summ. J. Ex. E-F). For the foregoing reasons, summary judgment should be granted for the Defendants.

Plaintiff also lost on its trademark and dilution claims: now that will dog any poodle down!

Friday, November 10, 2006

Gnu Gnu

Nu Nu is the name of a vacuum cleaner in the deeply annoying TeleTubbies show for children. GNU is something else, it refers to a license distributed by the Free Software Foundation. An unusual antitrust claim was made about it, and rejected in a pithy opinion by Judge Easterbrook. Here is the opinion in full.

United States Court of Appeals,Seventh Circuit.
Daniel WALLACE, Plaintiff-Appellant,
INTERNATIONAL BUSINESS MACHINES CORPORATION; Red Hat, Inc.; and Novell, Inc., Defendants-Appellees.
No. 06-2454.
Submitted Oct. 26, 2006.
Decided Nov. 9, 2006.

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:05-cv-678 RLY-VSS-Richard L. Young, Judge.
Daniel Wallace, New Palestine, IN, pro se.
Michael H. Gottschlich, Kendall H. Millard, Barnes & Thornburg, Philip A. Whistler, Curtis W. McCauley, Ice Miller, Indianapolis, IN, for Defendants-Appellees.

Before EASTERBROOK, KANNE, and EVANS, Circuit Judges.

EASTERBROOK, Circuit Judge.
*1 Does the provision of copyrighted software under the GNU General Public License (“GPL”) violate the federal antitrust laws? Authors who distribute their works under this license, devised by the Free Software Foundation, Inc., authorize not only copying but also the creation of derivative works-and the license prohibits charging for the derivative work. People may make and distribute derivative works if and only if they come under the same license terms as the original work. Thus the GPL propagates from user to user and revision to revision: neither the original author, nor any creator of a revised or improved version, may charge for the software or allow any successor to charge. Copyright law, usually the basis of limiting reproduction in order to collect a fee, ensures that open-source software remains free: any attempt to sell a derivative work will violate the copyright laws, even if the improver has not accepted the GPL. The Free Software Foundation calls the result “copyleft.”
One prominent example of free, open-source software is the Linux operating system, a derivative of the Unix operating system written by AT & T in the 1960s and now available without cost. (Unix® is a trademark of The Open Group, but the source code to many variants of AT & T's work is freely available.) Linux is one of many modern derivatives of Unix-which is not itself under the GPL. Thus Apple Computer, which uses the Berkeley Software Distribution variant of Unix as the foundation for the Mac OS X operating system, is entitled to charge for its software. Linux, initially the work of Linus Torvalds, is maintained by a large open-source community. International Business Machines offers Linux with many of its servers, or customers can install it themselves. IBM has contributed code to the Linux project and furnishes this derivative work to anyone else with an interest. Red Hat, Inc., sells media (such as DVDs), manuals, and support for the installation and maintenance of Linux. The GPL covers only the software; people are free to charge for the physical media on which it comes and for assistance in making it work. Paper manuals, and the time of knowledgeable people who service and support an installation, thus are the most expensive part of using Linux.

Daniel Wallace would like to compete with Linux-either by offering a derivative work or by writing an operating system from scratch-but maintains that this is impossible as long as Linux and its derivatives are available for free. He contends that IBM, Red Hat, and Novell have conspired among themselves and with others (including the Free Software Foundation) to eliminate competition in the operating system market by making Linux available at an unbeatable price. Under the GPL, which passes from user to improver to user, Linux and all software that incorporates any of its source code will be free forever, and nothing could be a more effective deterrent to competition, Wallace maintains. The GPL is the conspiracy as Wallace sees things; it is a joint undertaking among users and creators of derivative works to undercut the price of any potential rival. But the district judge dismissed the complaint, ruling that Wallace does not suffer antitrust injury, see Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977), because he is a would-be producer rather than a consumer.
*2 Although antitrust law serves the interests of consumers rather than producers, the Supreme Court has permitted producers to initiate predatory-pricing litigation. See Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). This does not assist Williams, however, because his legal theory is faulty substantively.
Predatory pricing is a three-stage process: Low prices, followed by the exit of producers who can no longer make a profit, followed by monopoly prices. The law's worry is the final period in which the survivor (or cartel of survivors) recoups losses incurred during the low-price period. When exit does not occur, or recoupment is improbable even if some producers give up the market, there is no antitrust problem. So the Court held in both Brooke Group and Matsushita. See also, e.g., R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, 462 F.3d 690 (7th Cir.2006); Schor v. Abbott Laboratories, 457 F.3d 608 (7th Cir.2006). Either prices will stay low (reflecting efficient production and enduring benefits to consumers) or the practice will be self-deterring (because the predator loses more during the low-price period than it gains later, and consumers are net beneficiaries). When monopoly does not ensue, low prices remain-and the goal of antitrust law is to use rivalry to keep prices low for consumers' benefit. Employing antitrust law to drive prices up would turn the Sherman Act on its head.

Wallace does not contend that software available for free under the GPL will lead to monopoly prices in the future. How could it, when the GPL keeps price low forever and precludes the reduction of output that is essential to monopoly? “[I]f a manufacturer cannot make itself better off by injuring consumers through lower output and higher prices, there is no role for antitrust law to play.” Schor, 457 F.3d at 612.
Software that is not maintained and improved eventually becomes obsolete, and the lack of reward may reduce the resources devoted to maintenance and improvement of Linux and other open-source projects. If that occurs, however, then proprietary software will enter or gain market share. People willingly pay for quality software even when they can get free (but imperfect) substitutes. Open Office is a free, open-source suite of word processor, spreadsheet and presentation software, but the proprietary Microsoft Office has many more users. Gimp is a free, open-source image editor, but the proprietary Adobe Photoshop enjoys the lion's share of the market. Likewise there is a flourishing market in legal treatises and other materials, plus reference databases such as LEXIS and Westlaw, even though courts give away their work (this opinion, for example, is not covered by copyright and may be downloaded from the court's web site and copied without charge). And so it is with operating systems. Many more people use Microsoft Windows, Apple OS X, or Sun Solaris than use Linux. IBM, which includes Linux with servers, sells mainframes and supercomputers that run proprietary operating systems. The number of proprietary operating systems is growing, not shrinking, so competition in this market continues quite apart from the fact that the GPL ensures the future availability of Linux and other Unix offshoots.
*3 It does not help to characterize people who accept the GPL as “conspirators.” Although the antitrust laws forbid conspiracies “in restraint of trade,” 15 U.S.C. § 1, § 26, the GPL does not restrain trade. It is a cooperative agreement that facilitates production of new derivative works, and agreements that yield new products that would not arise through unilateral action are lawful. See, e.g., Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979); Polk Bros., Inc. v. Forest City Enterprises, Inc., 776 F.2d 185 (7th Cir.1985). Cf. Texaco Inc. v. Dagher, 126 S.Ct. 1276 (2006).
Nor does it help to call the GPL “price fixing.” Although it sets a price of zero, agreements to set maximum prices usually assist consumers and therefore are evaluated under the Rule of Reason. See State Oil Co. v. Khan, 522 U.S. 3 (1997). Intellectual property can be used without being used up; the marginal cost of an additional user is zero (costs of media and paper to one side), so once a piece of intellectual property exists the efficient price of an extra copy is zero, for that is where price equals marginal cost. Copyright and patent laws give authors a right to charge more, so that they can recover their fixed costs (and thus promote innovation), but they do not require authors to charge more. No more does antitrust law require higher prices. Linux and other open-source projects have been able to cover their fixed costs through donations of time; as long as that remains true, it would reduce efficiency and consumers' welfare to force the authors to levy a charge on each new user.
Wallace does not contend that Linux has such a large market share, or poses such a threat to consumers' welfare in the long run, that evaluation under the Rule of Reason could lead to condemnation. A “quick look” is all that's needed to reject Wallace's claim. See, e.g., California Dental Association v. FTC, 526 U.S. 756 (1999); National Collegiate Athletic Ass'n v. University of Oklahoma, 468 U.S. 85 (1984); Ball Memorial Hospital, Inc. v. Mutual Hospital Insurance, Inc., 784 F.2d 1325 (7th Cir.1986) (unless a firm with market power can increase its profits by curtailing output, the practice is lawful under the Rule of Reason). The GPL and open-source software have n

Thursday, November 09, 2006

Right of Impoundment

The remedy of impoundment of allegedly infringing copies has a long and somewhat tangled history. Sections 101(c) and (d) of the 1909 Act provided for impoundment and destruction:

(c) Impounding during action
To deliver up on oath, to be impounded during the pendency of the action, upon such terms and conditions as the court may prescribe, all articles alleged to infringe a copyright;
(d) Destruction of infringing copies and plates
To deliver up on oath for destruction all the infringing copies or devices, as well as all plates, molds, matrices, or other means for making such infringing copies as the court may order.

Seizure and impoundment have been rightly described as "drastic acts," to be imposed only in special circumstances. There were no provisions in the 1909 Act governing how impoundment and destruction were to be carried out, which raised many questions—for example, by whom, under what protections (e.g., notice, security). The Federal Rules of Civil Procedure were 29 years in the future, so into the breach stepped the Supreme Court. Acting under authorization it interpreted to exist in Section 25 of the 1909 Act as passed, the Court promulgated rules governing the practice in copyright cases. The Supreme Court rules had some positive and some negative features. Impoundment was not discretionary, which copyright owners favored. Yet the bond requirement was not only mandatory but was required in amount not less than double the value of the article seized; within three days of seizure, defendant had the right to appear before the court and argue for an increased bond amount. The lack of judicial oversight except perhaps for ensuring formal compliance with the bond requirements was severely criticized, as was the lack of a requirement that seizure be ordered only when it was likely defendant would destroy or conceal evidence.

When the Federal Rules of Civil Procedure were promulgated in 1938, the Supreme Court rules were not repealed, even though the FRCP would have answered virtually all, if not all, of the issues that arose under the statutory provisions and the Supreme Court rules. The paragraph following Section 25(e), on which the Supreme Court rested its authority, was repealed in 1948 (and the rules themselves have subsequently been repealed in favor of application of the FRCP).

The relevant provisions of the 1976 Act are far more detailed than those in the 1909 Act:

Remedies for Infringement: Impounding and Disposition of Infringing Articles
(a) At any time while an action under this title is pending, the court may order the impounding, on such terms as it may deem reasonable, of all copies or phonorecords claimed to have been made or used in violation of the copyright owner’s exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.
(b) As part of a final judgment or decree, the court may order the destruction or other reasonable disposition of all copies or phonorecords found to have been made or used in violation of the copyright owner’s exclusive rights, and of all plates, molds, matrices, masters, tapes, film negatives, or other articles by means of which such copies or phonorecords may be reproduced.

How far does Section 503 reach, specifically, does it authorize the impoundment of infringing copies innocently purchased by a non-infringing person? In Socieite Civile Succession Richard Guino v. International Foundation for Anticancer Drug Recovery, 2006 WL 3138796 (D. Arizona Nov. 3, 2006), the court held the section does not reach that far, being limited to those who both infringe and possess the copies. The opinion is very well-researched and for those who doubt that resort to legislative history is the norm in copyright cases, it is a good opinion to read for that too. The policy is sound and has been applied to recall orders, most notably in cases involving infringing lace on wedding dresses, where the courts have been willing to order the recall of copies from retailers, but not from the brides or brides-to-be.

Wednesday, November 08, 2006

What the Election May Mean for Copyright

With the fate of the Senate still unknown, a full picture of the election remains to be drawn. On the House side, there is no uncertainty as to the majority, but we may not know for awhile who becomes chair of the IP subcommittee. Two names are mentioned frequently, Rick Boucher of Virginia, and Howard Berman of California. Both have a great deal of experience with copyright, and are highly regarded by their peers. I worked with both when I was subcommittee counsel, although quite a bit more with Mr. Berman who was on the subcommittee at the time. Mr. Boucher was very interested in technology and telecommunications issues and was not shy about expressing his views. I was also neighbors with both on a street two blocks from the Capitol and saw them around often. Either would be an excellent choice, and the choice is Mr. Berman's. The Democrats (unlike the Republicans) select committee and subcommittee chairs by seniority, and Mr. Berman has more seniority than Mr. Boucher. Mr. Berman therefore has what's called a right of first refusal to the IP subcommittee.

But will he exercise that right? I have heard that some in the copyright industries think it a foregone conclusion he will, especially if by declining Mr. Boucher takes over. Mr. Boucher is viewed by content owners as generally less sympathetic to their interests, although I would phrase the matter quite differently. Mr. Berman will always play an important role in the House on IP matters even if he is not chair of the subcommittee. In the past, he has taken great interest in international issues, and that may be the way he goes. The idea that he would pass on a different chairmanship solely at the urging of content owners is an idea that doesn't reflect Mr. Berman's overall interests or his role as a member of Congress. This isn't to say he won't take the IP subcommittee, it is only to say that I doubt the matter is as settled as some think.

Possible insights into Mr. Boucher's views are seen in his skepticism about the wisdom of sui generis database legislation and in this editorial he wrote in CNET on January 29, 2002, about why the DMCA has to be rewritten:

The American public has traditionally enjoyed the ability to make convenient and incidental copies of copyrighted works without obtaining the prior consent of copyright owners. These traditional "fair use" rights are at the foundation of the receipt and use of information by the American people.

Unfortunately, those rights are now under attack.

In 1997, motion picture studios, record producers, book publishers and other content owners came to Congress with a simple proposition: Give us a law that will stop pirates from circumventing technical protection measures used to safeguard copyrighted works, and we will release all sorts of exciting new content in digital formats.

At the time, libraries, universities, consumer electronics manufacturers, Internet portals and others warned that enactment of the broadly worded legislation would stifle new technology, would threaten access to information, and would move us inexorably towards a "pay per use" society. That day is now close at hand.

When Congress considered the content community's anti-circumvention proposal, I put forward a series of amendments intended to preserve the fair-use rights of consumers. My colleagues and I feared that broad application of the proposed new anti-circumvention law would threaten the viability of the fair-use doctrine in the digital age.

Unfortunately, as so often happens, Congress paid more attention to the loudest voices in the debate.

In writing the Digital Millennium Copyright Act (DMCA) of 1998, Congress made some important, but ultimately modest, changes to the original proposal. And we persuaded ourselves that we had achieved a rough balance of interests. But in the end, Congress agreed to a fundamentally flawed bill, which created the new crime of circumvention--a crime divorced from over a century and a half of respect for the fair-use rights of consumers.

The DMCA, as enacted, quite clearly tilted the balance in the Copyright Act toward complete protection and away from information availability.

In the three years since the law was enacted, we have not seen the promised new digital content. Instead, we have seen a rash of lawsuits; the imprisonment by U.S. authorities of a Russian computer programmer who had come to the United States to give a technical talk; and, more recently, the release of compact discs into the market that cannot be played in computers or even some CD players, and thus cannot be used to create custom compilations of consumers' favorite songs.

Some of the most serious lawsuits have implicated academic freedom and free speech. In response to an open challenge by the Secure Digital Music Initiative (SDMI), which invited the world to seek to defeat the watermarking technologies it had proposed for protecting digital audio content, Princeton University Professor Edward Felten and his colleagues defeated all of the proposed watermarks. The Felten team then sought to exercise their First Amendment rights by publishing the results of their scientific research and presenting the paper at a security conference.

Before he presented the paper, however, Felten received a threatening letter from the SDMI warning that doing so would subject him to liability under the DMCA. Felten then filed a lawsuit to uphold his First Amendment right to publish his research findings. The case has been dismissed, but the issue has not gone away, because the judge did not rule on the actual merits of his complaint.

Similarly, the publisher of 2600 magazine was sued by motion picture studios for providing a link to a Web site that contained the DeCSS code, which can be used to defeat the industry-standard DVD copy protection system enabling movies to be played on a Linux-based operating system. After losing at the trial level, the magazine publisher appealed, trying to preserve his right to link to sites without being held responsible for everything on those sites.

Unfortunately, the federal courts in these cases did not uphold the First Amendment rights of these publishers. In the 2600 case, the appellate court circumscribed traditionally accepted fair-use rights by declaring that these rights did not apply to the most convenient, highest-quality formats available to consumers. These examples of the content community successfully threatening and hauling into court individuals seeking to exercise traditional free speech rights demonstrate how the DMCA is flawed, and has tipped the copyright balance in a damaging way against traditional fair-use rights.

Given the breadth of the DMCA, the fair-use rights of the public at large also are at risk. From the college student who photocopies a page from a library book or prints an article from a newspaper's Web site for use in writing a report, to the newspaper reporter excerpting materials from a document for a story, to the typical television viewer who records a broadcast program for viewing at a later time, we all depend on the ability to make limited copies of copyrighted material without having to pay a fee or obtain prior approval of the copyright owner.

In fact, fair-use rights to obtain and use a wide array of information are essential to the exercise of First Amendment rights. The very vibrancy of our democracy is dependent upon the information availability and use facilitated by the fair-use doctrine.

Yet, efforts to exercise those rights increasingly are being threatened by section 1201 of the DMCA, which created the new crime of circumvention. Section 1201 (a)(1), for example, prohibits unauthorized access to a work by circumventing an effective technological protection measure used by a copyright owner to control access to a copyrighted work. Because the law does not limit its application to circumvention for the purpose of infringing a copyright, all types of traditionally accepted activities may be at risk. Any action of circumvention without the consent of the copyright owner is made criminal.

Consider the implications. A time may soon come when what is available for free on library shelves will only be available on a pay-per-use basis. It would be a simple matter for a copyright owner to impose a requirement that a small fee be paid each time a digital book or video documentary is accessed by a library patron. Even the student who wants even the most basic access to only a portion of the book to write a term paper would have to pay to avoid committing a crime.

The day is already here in which copyright owners use "click on" licenses to limit what purchasers of a copyrighted work may do with it. Some e-book licenses, for example, prohibit the reader from reading the book out loud. Some go so far as to make it a violation of the license to even criticize the contents of a work, let alone to make a copy of a paragraph or two.

To counter this emerging threat to traditionally accepted fair-use values, Congress must rewrite the law. We should begin by revising section 1201, which is at the heart of the Felten and 2600 magazine litigations, and which can be used to keep library patrons from copying even a paragraph from a book without making a separate payment.

The only conduct that should be declared criminal is circumvention for the purpose of infringing a copyright. That approach would provide adequate protection for copyright owners without abridging the legitimate fair-use rights of consumers, libraries, educators and other users.

For over 150 years, the fair-use doctrine has helped stimulate broad advances in scientific inquiry and education, and has advanced broad societal goals in countless other ways. In this emerging digital era, we need to return to first principles. We need to achieve the balance that should be at the heart of our efforts to promote the interests of copyright owners while respecting the rights of information consumers. We need to rewrite the law for the benefit of society as a whole before all access to information is irreversibly controlled. In short, we need to reaffirm fair use.

Tuesday, November 07, 2006

AT&T v. Microsoft

A patent battle between two titans, AT&T and Microsoft, currently before the Supreme Court awaiting oral argument, raises the increasingly important question of the ability to U.S. federal courts to award damages for infringing activity that occurs overseas. The case is one principally of statutory interpretation, but the Solicitor General's brief on Microsoft's side is couched in policy terms. Those policy considerations may apply to copyright as well. This is a case well worth watching.

AT&T sued Microsoft in the SDNY for patent infringement of speech codecs, software that was embedded in the Windows operating system. Simplifying, Judge William Pauley found the codecs to infringe an AT&T patent and the question turned to damages, where the relevant dispute turned on whether AT&T could collect for overseas infringement facilitated by Miicrosoft's having sent master copies of the infringing disks (and in some cases electronically transmitting them) overseas, where they were then further disseminated. This issue turned on how to intepret 35 USC Section 271(f):

(1) Whoever without authority supplies or causes to be supplied in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.
(2) Whoever without authority supplies or causes to be supplied in or from the United States any component of a patented invention that is especially made or especially adapted for use in the invention and not a staple article or commodity of commerce suitable for substantial noninfringing use, where such component is uncombined in whole or in part, knowing that such component is so made or adapted and intending that such component will be combined outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.

Both Judge Pualey and the Federal Circuit (414 F.3d 1366) thought Microsoft's activity fit within the statute as a component. As I read the statute, though, it requires that there be things that aren't put together here, which are then shipped overseas, and put together there. I don;t think those are the facts. As I understand it - which may well be way off base), there was a single work created here and sent in its entirety overseas. if this is correct, then I don;t see how Section 271(f) applies.

There is no analog to Section 271(f) in the Copyright Act, but that hasn't stopped some courts from awarding damages for overseas conduct. Judge Learned Hand’s opinion in Sheldon v. MGM Pictures Corp., which involved the making of an infringing motion picture negative in the United States from which unauthorized foreign theatrical performances occurred is a foundational opinion. In developing a "constructive trust" theory in order to capture foreign proceeds, Judge Hand wrote:

The negatives were "records" from which the work could be "reproduced," and it was a tort to make them in this country. The plaintiffs acquired an equitable interest in them as soon as they were made, which attached to any profits from their exploitation, whether in the form of money remitted to the United States, or of increase in value of shares of foreign companies held by the defendants. We need not decide whether the law of those countries where the negatives were exploited recognized the plaintiff’s equitable interest; we can assume arguendo that it did not, for, as soon as any of the profits so realized took the form of property who situs was in the United States, our law seized upon them and impressed them with a constructive trust.

This passage is farfetched, to say the least. Judge Hand assumes that a foreign country would not recognize plaintiff’s claim to damages, but doesn’t matter because notwithstanding the non-extraterritoriality of the U.S. Copyright Act and a conflict with a foreign statute, U.S. law reached across the Atlantic Ocean, grabbed foreign proceeds, and brought them back to the United States, the alleged situs of the property. The "property," of course, is a claim to damages arising from conduct occurring overseas, governed entirely by a foreign law that Judge Hand assumes does not recognize the claim, and therefore denies the existence of the "property." Under these circumstances, calling an award of legal damages an equitable trust is sophistry: it is not only legal causes of action that are not extraterritorial under the Copyright Act, all elements of those cases of action, including equitable remedies, are non-extraterritorial.
The next important opinion is the Second Circuit’s opinion Update Art, Inc. v. Modi’in Publishing, Ltd. After correctly finding that damages are not available for foreign violations of the performance right, the Update Art court incorrectly held damages are available for certain foreign violations of the reproduction right:

It is well established that copyright laws generally do not have extraterritorial application. There is an exception – when the type of infringement permits further reproduction abroad – such as the unauthorized manufacture of copyrighted material in the United States . . ..
. . . As the applicability of American copyright laws over the Israeli newspapers depends on the occurrence of a predicate act in the United States, the geographic location of the illegal reproduction is crucial. If the illegal reproduction of the poster occurred in the United States and then was exported to Israel, the magistrate properly could include damages accruing from the Israeli newspapers. If, as appellants assert, this predicate act occurred in Israel, American copyright laws would have no application to the Israeli newspapers.

There is no basis in the statute for the court’s predicate act exception to extraterritoriality, an exception that is essentially an unarticulated application of contributory infringement: If the predicate act is itself non-infringing, as by definition it must be, how can it form the basis for subject matter jurisdiction in U.S. federal courts whose jurisdiction is limited by statute to adjudicating acts of infringement of title 17? Application of U.S. copyright damages to foreign conduct will very likely give rise to "unintended clashes between our laws and those of other nations which could result in international discord."

One might ask what harm there is of a U.S. court asserting jurisdiction over and awarding damages for foreign activity if that activity also violates the copyright law of that foreign country. The answer is that the harm is done to international relations by divesting foreign courts and legislatures over the right to determine the appropriate amount and type of damages, and harm is done to defendants, who may be required to pay greater damages than would be assessed had the case been brought under the laws of the proper jurisdiction. The U.S. Copyright Act does not make conduct overseas, or authorization here of conduct overseas, a violation of our statute. Thus, whatever may be the case in other fields of law, there is a statutory mandate to think local even if defendants act globally. Nor is this a quaint or parochial anachronism that can be safely disregarded by those who have a grander sense of justice than Congress: copyright is not extraterritorial precisely because it embodies important national views about how political and culture goals should be furthered. Until an international consensus develops on global jurisdiction – as the European Union regionally came to with the 1968 Brussels Convention on enforcing judgments – U.S. courts should decline the role of world enforcer of Copyright Americana.

But even if one wishes a court to ignore the statute under which it is deciding a case, there are likely to be cases where a defendant can assert at least a legitimate claim that its activity does not violate the laws of the foreign country. United States courts would then be required to evaluate the claim under foreign law: not an impossible task, to be sure, but an unnecessary one given the availability of adjudicating the foreign infringement in that foreign country. Even if the substantive law is the same, the remedies are not likely to be. It is certainly against principles of comity to willy-nilly award a plaintiff remedies against a foreign defendant that would not be imposed in the defendant’s country of origin. Should, for example, a foreign defendant be subject to the very generous and unique U.S. statutory damage provisions for engaging only in contributory infringement here, when the foreign country where the direct infringement occurred does not award such damages?

And there is another factor to consider for those who think only of litigation brought in the United States: why, under comity, should not foreign countries exercise similar power? In a case where the predicate act occurred in England but the direct infringement was in the United States, an English court, applying Update Art’s rationale, would be forced to deny a U.S. defendant his or her constitutional right to a jury to award the statutory damage amounts resulting from the U.S. infringements since English law does not recognize those damages or the right to a jury for their assessment. Before U.S. copyright owners rush to advocate a rule permitting the courts of the forum to award world-wide damages, they should consider the consequences of other countries applying their remedial provisions to conduct that occurs in the United States.