The Long Arm of the Law: A Tale of Two Copyright Cases by Lauren Schoenthaler, Stanford University


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Charleston Conference
Saturday Morning Plenary
November 6, 2010, 10:00 AM

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  • Courts will often discuss copyright laws in terms of economic principles, and I think that’s partially true – certainly copyright is trying to secure economic benefits to creators. But the purpose of copyright is more profound than simply capitalism – it seems to me this is a principle about advancing ourselves as a society and the mechanism to do that is by providing monetary incentive to creators. And as we talk about these two cases, it’s important to keep the purpose of copyright law in the back of your mind.
  • Fair Use checklist authored by Kenneth Crews
    Not enough to settle because – at least in part – Georgia State didn’t set money aside for permissions. Publishers claim that checklist guiding people towards when permissions are necessary is hollow absent a pot of money to pay for content.
  • Two factors must exist for respondeat superior to kick in: 1) employee and 2) acting in course and scope of employement
    “respondeat superior applies in the copyright context as a basis for finding vicarious liability for infringement; it does not convert an indirect infringer into a direct infringer.” Ct. Dec.
    The normal agency rule of respondeat superior applies to copyright infringement by a servant within the scope of his employment, Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F. 2d 304, 307 (2d Cir. 1963); “To the extent that the infringer is the agent of another, the master can be held culpable for the infringement.” Nimmer on Copyrights sec. 12.04(A)(1).
  • Course participants
    Entire college community
    Open to the world
  • Importation is a specific type of distribution protected by 106
  • 9th Circuit relied on presumption against extraterritoriality – but the problem with that is it seems to ignore section 104 of the copyright act , which provides for copyright protection for all works domestic and foreign created in “treaty party” nations (under the Berne Convention). The very existence of 602 implies a Congressional expectation that US copyright law did apply to foreign made works.
    109 applies to domestics goods put into the stream of commerce (even if shipped overseas and then back to US without permission) Quality King = hair product case; sold goods to UK distributor, who sold to Malta, who sold back to California.
  • 4th Cir. Decision holding that making books available for lending = distribution; widely criticized by others.
  • Jonathan Band estimated license fee at around 20%
    Public right issue: 602 limits itself to “copies” of works. Does a single original constitute an original
    1st Amendment: The right to receive ideas is a necessary predicate to the recipient’s meaningful exercise of his own rights of free speech, press and political freedom, Bd. Of Educ.v Pico, Sup. Ct. 1982
  • The Long Arm of the Law: A Tale of Two Copyright Cases by Lauren Schoenthaler, Stanford University

    1. 1. Lauren Schoenthaler Senior University Counsel Stanford University November 6, 2010 Issues in Book & Serials Acquisition
    2. 2. A Copyright Quote Only one thing is impossible for God: to find any sense in any copyright law on the planet.
    3. 3. Mark Twain
    4. 4. 4 U.S. Constitution, Art. 1, s. 8, cl. 8 To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries
    5. 5. Georgia State Litigation: Setting the Stage Cambridge Press, Oxford U. Press & Sage Publications filed suit on April 15, 2008, N.D. of Georgia Alleges “systemic, widespread and unauthorized copying and distribution of a vast amount of copyrighted works[.] In 2008, Georgia State was on the far end of the continuum -- where on one side are institutions that always seek permission before putting things on electronic reserve and on the other side are institutions that never seek permission -- of almost never seeking permission. Paraphrase of Laura Gasaway, Dean of Academic Affairs, UNC, Chronicle of Higher Education, May 12, 2008
    6. 6. Georgia State Litigation: The Plot Thickens February 2009, Georgia State adopted a comprehensive Copyright Policy providing detailed instructions to faculty about fair use  Includes a Fair Use Checklist  Wasn’t enough to settle 11th A immunity prohibits suits against state entities seeking damages for past wrongs Ex Parte Young doctrine permits prospective relief Court limited review of Georgia State practices to alleged violations occurring after February 2009 policy adoption
    7. 7. Georgia State: Summary Judgement Cross motions for Summary Judgment Filed Plaintiffs theory is that Georgia State is responsible for  Direct Infringement  Vicarious Infringement  Contributory Infringement
    8. 8. Georgia State: Direct Liability Direct Infringement – Georgia State Wins Named defendants never engaged in posting material Respondeat Superior theory  Georgia State not responsible for actions of employees because -- even though faculty posting content into ERes and uLearn are acting in course and scope of employment,  Respondeat Superior theory is necessarily an indirect theory of liability that cannot be applied in a direct liability claim Really? Motion for reconsideration on this point is pending Rich body of case law where employers have been held directly responsible for copyright infringement of employees  Should there be an exception for faculty in academia?
    9. 9. Georgia State: Vicarious Liability Vicarious Infringement – Georgia State Wins A theory of secondary liability, applies if Georgia State (1) profited directly from an infringement (2) had the ability to supervise the infringer Court found no evidence that Georgia State directly profited from posting materials electronically in violation of copyright law Therefore no liability
    10. 10. Georgia State: Contributory Infringement Contributory Infringement -- Draw One who with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another. No liability for distribution of product capable of substantial lawful use (SONY rule), UNLESS Distributed with object of promoting its use to infringe copyright as shown by clear expression or other affirmative steps taken to foster infringement. (GROKSTER rule)
    11. 11. Georgia State: Contributory Infringement Is fact that Georgia State hasn’t set aside $ for permissions evidence of promotion of product to infringe? Court said no . . . Back to the beginning: The court’s analysis to date demonstrates an attempt to apply copyright law to advance the progress of arts and sciences, while balancing the legitimate interests of the rightsholders. But will it withstand further review?
    12. 12. Georgia State Takeaways Practice Tips to Avoid Litigation Rely on Fair Use, but don’t assume it’s fair without analysis Link to content lawfully hosted on the Internet Expand Digital Library Holdings Have clear e-content policies and guidance Embed copyright guidance for faculty into Course Management Websites
    13. 13. Watch the Watches Costco v. Omega Setting the stage -- The Gray Market Omega, Swiss watchmakers, place a U.S. copyrighted “Omega Globe Design” on the underside of watches Omega authorized sales of the watches overseas, but not to the United States Costco purchased the watches from a distributor who purchased the watches abroad and then sold the watches to customers in California at bargain prices Trademark law does not prevent the importation so a copyrighted design is added merely for the purpose of placing the watches under copyright protection
    14. 14. Costco v. Omega 9th Circuit’s Battle of Statutes Omega filed suit against Costco alleging that its distribution violated 17 U.S.C. §§ 106(3) & 602(a) §106(3) provides in part: Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to . . . distribute copies . . . to the public by sale or other transfer of ownership §602(a) provides in part: Importation into the United States, without the authority of the owner of copyright under this title . . . of copies . . . that have been acquired outside the United States is an infringement of the exclusive right to distribute copies.
    15. 15. Costco v. Omega First Sale Doctrine §109(a) provides: “Notwithstanding the provisions of §106(3), the owner of a particular copy . . . lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy.” Once a copyright owner puts copies into the marketplace, he can no longer control the distribution of those copies. United States libraries exist because of this principle But how do you square 109 with 602?
    16. 16. Costco v. Omega 9th Circuit Decision Much ado about: . “lawfully made under this title” 9th Circuit held that §109 only applies to works manufactured within the territorial limits of U.S. law §109 grants first sale protection only to copies legally made and sold in the United States But they are lawfully made by the US copyright holder As no §109 exception existed to these foreign- manufactured works, §602’s prohibition on import to the United States without permission of the copyright owner prevailed. Omega wins, First Sale Doctrine & Libraries Lose
    17. 17. Costco v. Omega Supreme Court Review Oral arguments Monday, November 8 Why do watches matter to libraries? 20% of books in libraries have foreign publishers 200 million foreign published books Increasing # of domestic works published abroad “If the Court affirms the Ninth Circuit’s decision, the first sale doctrine may no longer apply to hundreds of millions of lawfully acquired books, phonorecords and audio-visual materials in the collections of U.S. libraries.”
    18. 18. Costco v. Omega The Parade of Horribles If the 9th Circuit Decision is affirmed: There will be an incentive to manufacture all copyrighted works abroad to avoid first sale doctrine It could also eviscerate the public display right – prohibiting museums from displaying foreign works over which they hold lawful title Bad title attaches – buyers of the Omegas from Costco cannot rely on the first sale doctrine to re-sell Libraries could be forced to pay for lending licenses for foreign works (akin to the public lending right license in EU countries) 1st Amendment Concerns
    19. 19. What will the outcome be? Too close to call American Intellectual Property Law Association: Both 109 and 602 can be given effect. 602 is an exception to 109’s general application and provides a copyright holder the right to preclude unauthorized imports to the United States.  This construction would at least limit the problem of having domestic works avoid 109 by having them printed overseas
    20. 20. So What Happens if Omega wins? 602(a)(3)(C) provides that the prohibition on unauthorized importation does not apply if imported by an organization for scholarly, educational or religious purposes, and not for private gain, with respect to no more than one audiovisual work solely for archival purposes and no more than five copies or phonorecords of any other work for its library lending or archival purposes Danger: this exception does not apply to foreign works purchased domestically – how are we to know if the works were imported to the US with authorization?
    21. 21. So What Happens if Omega Win? Longstanding recognition for import of libraries and educational institutions 107, 108, 109 11th A. Immunity Congressional intervention In short term, look closely at policies relating to lending of foreign audio-visual materials In long term, 400 years of U.S. based library lending traditions will prevail
    22. 22. Back to the Beginning Does 602 further the purpose of promoting the arts & sciences ? Art. 1, s. 8, cl. 8 Can a product manufacturer -- with a .05 centimeter mark on the underside of a watch -- eviscerate 400 years of collecting, preserving and lending foreign works? Watch the watches. Questions?