November 20, 2017

Archives for October 2011

The Digital Death of Copyright's First Sale Doctrine

The legal media’s attention has been focused this past week on Supreme Court oral arguments in Golan v. Holder, an important copyright case involving the power of Congress to “restore” private rights in creative works that are already in the public domain. In this post, I’d like to focus on an important copyright case that won’t be argued in the Supreme Court. On October 3, the Supreme Court declined to review Vernor v. Autodesk, a Ninth Circuit Court of Appeals decision involving the applicability of copyright’s first sale doctrine to transactions involving software and other digital information goods.

The first sale doctrine is the provision in copyright law that gives the purchaser of a copy of a copyrighted work the right to sell or otherwise dispose of that copy without the permission of the copyright owner. If there were no first sale doctrine, there would be no free market for used books, CDs, or DVDs, because the copyright owner’s right of distribution would reach beyond the first sale, all the way down the stream of commerce. Without the first sale doctrine, movie rental services like Netflix and Redbox wouldn’t be able to lend DVDs without authorization from studios, and you wouldn’t be able to lend the bestseller you just finished to a friend without authorization from the book’s author or publisher. Along with fair use, the first sale doctrine promotes public access to culture and information by functioning as a crucial limit on the right of a copyright owner to control the disposition of a copyrighted work. A world without the first sale doctrine in it is a world I wouldn’t want to live in, but it’s one that’s quickly taking shape, thanks in part to legal decisions like the one in Vernor.

The Ninth Circuit’s decision in Vernor significantly erodes the first sale doctrine with respect to software and other mass-licensed digital goods. The plaintiff in the case, Timothy Vernor, bought several copies of an AutoCad software package from a direct customer of the software publisher. Vernor then resold the copies on eBay, only to be accused of having infringed the software publisher’s copyrights. He sued, seeking a declaration from the court that his sale of the software on eBay was protected by the first sale doctrine because the software publisher’s distribution right was exhausted by its “first sale” of the copies to its direct customer. By Vernor’s logic, software should be able to be purchased and resold in the same way that a book can be purchased and resold. Why should the two be treated any differently under copyright law, after all? The buyer of a book owns her copy of the book as personal property, and her ownership of that individual copy does not at all interfere with the author’s ownership of the copyright in the work. Once the author places a particular copy of the work into the stream of commerce, the author loses the right to control the fate of that copy; the author retains, however, all of the rights the statute gives her in the copyrighted work itself, including the exclusive right to make and sell new copies of it.

The Copyright Act makes an explicit distinction between ownership of a copy of a copyrighted work–whether that copy is printed on paper or burned onto an optical disk or stored in a computer’s memory–and ownership of the copyright in the work. The copy is tangible property owned by the purchaser; the copyrighted work embodied in the copy is intangible property owned by the author. A copy is a copy, the work is the work, and never the twain shall meet. In Timothy Vernor’s case, however, the publisher of the AutoCad software argued that it never actually sold the copies Vernor bought, so there was no “first sale” for copyright purposes. Under the software publisher’s logic, which the Ninth Circuit adopted in the case, both the copy and the intellectual property embodied in the copy were only licensed, and quite restrictively so, pursuant to the terms of a mass end user license agreement (EULA); nothing was ever sold, despite the retail transaction that put copies of the software into the hands of the initial purchaser, and despite the downstream transaction that put those copies into Timothy Vernor’s hands.

Existing copyright case law makes it clear that digital copies of works, even those stored only ephemerally in RAM, are “copies” within the meaning of the Copyright Act. Moreover, the the Copyright Act is clear on its face that there is a difference between ownership of a copy of a work and ownership of the work embodied in the copy. Decisions like the Ninth Circuit’s in Vernor v. Autodesk, however, permit copyright owners to conflate the copy and the work to the detriment of consumers in cases involving digital goods. Under Vernor, software copyright owners not only own the work embodied in every copy of a program they sell, they own every copy, too. Consumers are left with both empty pockets and empty hands.

As the transition from physical to streaming or cloud-based digital distribution continues, further divorcing copyrighted works from their traditional tangible embodiments, it will increasingly be the case that consumers do not own the information goods they buy (or, rather, think they’ve bought). Under the court’s decision in Vernor, all a copyright owner has to do to effectively repeal the statutory first sale doctrine is draft a EULA that (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions. Sad to say, it’s about as easy as falling off a log.

Decrees and Buses: How the Open Government Partnership Translates into Action in Brazil

The U.S. and Brazil teamed up to form an important global initiative, the Open Government Partnership (OGP). The project was launched by President Obama and President Dilma Rousseff right before the General Assembly of the United Nations this year (which by the way, was opened for the first time by a woman, President Rousseff).

The initiative outlines four key commitments to be undertaken by participating governments: a) increase the availability of information about government activities; b) support civic participation; c) implement the highest standards of professional integrity; d) increase access to new technologies for openness and accountability. Until September 20 the OGP declaration had been endorsed by Indonesia, Mexico, Norway, Philippines, South Africa, UK, US, and Brazil.

It is doubtless a great initiative, which has been supported by many NGO’s and other civil society organizations worldwide. However, a question remains about how the initiative will be translated into concrete action at each participating country. One criticism often heard in Brazil is that the initiative has not be so broadly publicized internally as it has been publicized internationally.

A few reasons might help explain that. One is the OGP´s commitment that requires governments to “increase the availability of information about government activities”. Brazil still does not have a “freedom of information act”. Citizens seeking for government information have to navigate through several different pieces of legislation, none of them providing a comprehensive and satisfactory solution. The very few avenues that exist for access to information include class action laws (“ação civil pública” and “ação popular”), and the traditional writ of mandamus. Neither of them is really practical, nor accessible to the common citizen.

In the meantime, congress has been discussing since April 2010 a draft bill that would truly enact an effective freedom of information law in the country. Named “PLC 41/2010”, it quickly proved itself a controversial proposal. Members of Senate, most notably Senator Fernando Collor, resorted to procedural speed bumps in order to slow down the project discussion, to the point that it has been currently halted at the Senate. Senator Collor also proposed a substitute version to the text, which would make the law basically toothless.

One of the reasons for the controversy is that it would grant access to documents from the military government, which ruled Brazil from 1964 until 1985. The substitute version presented by Senator Collor includes exceptions in the law that would virtually create “eternal confidentiality” for certain documents. That proposal has been harshly criticized by both civil society and the press, but to no avail. The substitute version still has to be voted, and the “eternal confidentiality” can actually end up being incorporated in the text. The final vote might take months, or even years to happen. And Brazil will remain without a freedom of information law until them, in spite of its commitments under the OGP.

That is not, however, the end of the story. Fully aware that Congress might take time to enact the law, President Rousseff was quick enough to issue a federal decree establishing an array of provisions in support to open government. The Decree was enacted in September 15th, 2011, right in time for the UN General Assembly and the launch of the OGP. The president exercised her powers granted under Article 84 of the Brazilian Constitution, whereby the president has the authority to provide for the “organization and structure of federal administration, in the cases where there is neither increase of expenses nor creation or extinction of public agencies.”

The Decree establishes a set of principles to promote of open government, and creates an inter-ministerial committee (called GICA), with the mandate to propose and coordinate open government initiatives inside the federal government. The Decree does get to the point of creating concrete steps or goals that must be implemented, but it certainly creates a framework in which these concrete steps might (or not) emerge.

Being a federal decree, it is binding only to the federal government. However, other state and city governments have been adopting policies consistent with the commitments of the OGP. One example is the city of Sao Paulo that recently enacted a decree mandating that every learning material produced by the city must be licensed and made available under an open license, such as Creative Commons. That is just one example of the growing Open Educational Resources movement in Brazil, and the strength of civil society in pushing for an open government agenda much before OGP took place.

One of my favorite examples, however, is the “Hacker Bus” (“Onibus Hacker”), an initiative by a group of hacktivists called Transparencia Hacker. They had been pushing for the open government agenda for years. Tired of being stood up by state and city government officers, they decided to resort to Catarse, a Brazilian version for Kickstarter. They asked money to buy an old bus that would then travel around Brazil promoting meetings between the vagrant group of hakers and city and state government authorities. They quickly raised R$58,000 (approximately $32,000) and the bus has been acquired. The group is in the final preparations to start their hacker trip, and it is expected to increase visibility to the commitments undertaken by Brazil under the OGP.

In short, the Open Government agenda in Brazil is not a new one, and it certainly sounds like an expected development the fact that Brazil and the U.S. are co-chairing the Open Government Partnership. There will be more speed bumps ahead, either in the way of Congress or in the way of the hacker bus, but at least both seem to be bearing the right direction.

UPDATE: The Brazilian Freedom of Information Law was passed on October 25th, rejecting the “eternal confidentiality” articles and the substitute version prepared by Senator Collor, therefore sticking to the original (and better) text. It now remains to see how the law will be actually implemented, and if access to public information will become an effective tangible right for most citizens.