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

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

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

3. Mark
Twain

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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?