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

Lauren Schoenthaler Senior University Counsel Stanford University November 6, 2010 Issues in Book & Serials Acquisition

A Copyright Quote
Only one thing is impossible for God:
to find any sense in any copyright law on the planet.

Mark Twain

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

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

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
11 th 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

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

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?

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

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)

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?

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

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

Costco v. Omega 9 th 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.

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?

Costco v. Omega 9 th Circuit Decision
Much ado about: . “lawfully made under this title”
9 th 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

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.”

Costco v. Omega The Parade of Horribles
If the 9 th 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)
1 st Amendment Concerns

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

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?

So What Happens if Omega Win?
Longstanding recognition for import of libraries and educational institutions
107, 108, 109
11 th 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

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?

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

by Charleston Conference on Nov 09, 2010

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