Another Kirtsaeng Question: Why Have the Distribution Right?

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In the wake of the Kirtsaeng oral argument, I wanted to look at a strange thing about how the first sale doctrine works in our copyright laws. The first sale doctrine makes it legal for you to sell, lend, or give away copies of copyrighted works that you own. Without it, it would be copyright infringement for you to do any of those things with a book, a CD, or a DVD, even if you'd bought and paid for a legitimate copy of the thing.

In much the same way that deeply-held values of free speech and expression are reconciled with copyright law through the doctrine of fair use, first sale allows copyright law to coexist with the older doctrines of property: the fact that I own this physical object means I get to decide how I want to dispose of it.

Even though the law recognizes that owning your own copies of works is a fundamental right, it still gets to that right in a slightly roundabout way. If I were to walk through how copyright and first sale governed my sale of a paperback, I'd first look at section 106(3) and see that it gives a copyright holder the ability to prevent me from selling my copy of a book. But then, section 109(a) sweeps in to preserve my property rights within the sphere of copyright.

But if it's an inherent right for the owner of a book to be able to display and distribute that book, why do we restrict that distribution and display through copyright law, only to grant back those rights to the owner with an exception to copyright? It would seem to be simpler to not make display and distribution copyright rights in the first place. Because under the current system, the wording of the first sale doctrine in section 109 becomes incredibly important. If you fail to meet any of the criteria for section 109 protection, you become an infringer.

For example, the right to publicly display a copy only extends to the owner of a copy, or someone authorized by that owner. If I borrow a poster from a friend and don't get his explicit permission to display it, does that make me liable to the original artist?

The same is true of distribution. If someone rents a DVD from Netflix, he isn't its owner—merely its possessor, or renter, or lessee. If he distributes the DVD to someone, for instance, giving it to his daughter, he would not only be stealing the copy from Netflix, but also, apparently, infringing the movie studio's copyrights. More strangely, the daughter, even if she was ignorant of the DVD's provenance, would herself be infringing copyright if she were to give the hot DVD to a friend. The tainted disk would afflict each of its subsequent owners, making them copyright infringers when they pass it on, even if they were uninvolved in the original sin of the theft from Netflix.

The fact that you can create such a legally poisoned copy is one of the larger flaws in the implementation of first sale in section 109. And this is more than just a theoretical oddity. This sort of near-perpetual burden on copies of copyrighted works could possibly apply to any copies that were made outside of the US, depending upon the results of Kirtsaeng.

The ins and outs of this particular case are important, but for the purposes of this post, I'll just note that the question isn't just about whether it's legal to import copies of copyrighted works that were manufactured overseas. It's also about the legal status of those copies once they arrive here.

Under Wiley's theory of first sale, a foreign-edition textbook, just like the cursed DVD, doesn't just render Kirtsaeng a copyright infringer. The buyer, if she decides to sell the book after she's done, or give it away to a classmate, herself becomes an infringer. And so on down the chain, for the next several decades until the copyright in the textbook finally expires.

Even legally imported works face the same problem. If I come back from London with a first-run copy of Harry Potter in my luggage—a perfectly legal importation—I can't, under Wiley's theory of first sale, give it to my niece without becoming a copyright infringer. If she lends it to a friend, she becomes a tiny scofflaw.

But it's not just the odd interpretation of "lawfully made under this title" that does the damage—it's the structure of the distribution right itself.

The fact that every distribution of a copyrighted work starts out as an infringement (before we look to see if section 109 applies) means that section 109 carries a lot of weight. An extraordinary number of distributions of copyrighted materials take advantage of first sale—pretty much every time a copyrighted work changes hands after its initial sale. This means that any flaw in section 109 can leave a copy outside the scope of its protection and attaching liability to that object forevermore.

This is particularly counterproductive given the prominence of Bobbs-Merrill in the history of the first sale doctrine. This Supreme Court case is often cited as the origin of first sale in the US.Take a look at one of the most important holdings from that case:

In our view, the copyright statutes, while protecting the owner of the copyright in his right to multiply and sell his production, do not create the right to impose, by notice…a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.

A big part of Bobbs-Merrill was the Supreme Court's discomfort with the idea that copyrights would continue to place restrictions upon subsequent owners of these books without there ever being any sort of deal struck between the copyright holder and the owner. (It's a basic tenet of contract law that you don't get enforceable deals between two parties that have never communicated with each other.) Yet we face this prospect any time that one of the several criteria needed to fit under section 109 is circumvented, by chance or by a clever plaintiff.

So while the particular statutory interpretation problems raised in Kirtsaeng might be fixed with some language that clarifies exactly what "lawfully made under this title" means, there's also a more radical solution.

Eliminating (or Downgrading) the Distribution Right

The distribution right is odd. Look, for example, at the strangeness of holding someone who steals a DVD from Netflix liable to a movie studio, or the fact that we’ve created a restriction on distribution that we're actually going to undercut with an exception that covers most distributions. We might wonder why the distribution right exists in the first place. Just as we have a strange baseline assumption that every user of a computer program starts out as a copyright infringer (take a look at section 117), we have a strange baseline assumption that every distribution of a copyrighted work is an infringement. Since we can already get at someone for making unauthorized copies in the first place, why should we even have a legal structure in place to limit distributions of existing copies? The likely answer is that you want to be able to go after the distributors of illicit copies, when they themselves might not have been the makers of the copies in the first place.

But this doesn't require the creation of an exclusive distribution right—it just requires the punishment of both making and distributing infringing copies. Copies that were authorized or otherwise legal (say, made under a compulsory license) should be allowed to be distributed. If the ability to punish downstream distributors of infringing copies is the primary concern of the distribution right, it could actually be eliminated and replaced with a specific prohibition on the distribution of unlawfully-made copies.

This change would eliminate any copyright problems that resulted from disputed ownership—ownership questions would therefore be limited to disputes between owners of the copy, and limited to the value of the copy.

Furthermore, the reversal of assumptions makes it easier to craft an infringement based on the distribution of infringing copies without running the risk of making some other sort of distribution illegal. If there were no distribution right in section 106, a separate section of the Copyright Act could simply say that distribution of a copy that was made in violation of the section 106(1) right of reproduction is to be considered an infringement of the reproduction right, with the attendant penalties of copyright infringement. Or it could be considered an offense distinct from copyright infringement.

That would still leave us, though with the question of what it means when a copy was manufactured in another country. Would such a copy have been made “in violation of the section 106(1) right of reproduction?” It might not be necessary to answer that question, though. Taking a cue from the existing section 602, we could simply make it an infringement to import copies whose manufacture would have been an infringement of the section 106(1) right of reproduction had they been made in the US, and make the distribution of those copies infringements as well, even after importation.

This might seem to be a lot of rearranging to do for the sake of a small bit of clarity. But flipping the presumption of infringement so that distribution is by default legal should let the law align with the reality of commerce: the vast majority of distributions take place under the first sale doctrine. In fact, almost every distribution of an authorized copy of a copyrighted work falls under first sale. Eliminating the distribution right and replacing it with a specific prohibition on distributing illegal reproductions converts the system, from a user's point of view, from a fail-to-danger to a fail-to-safe system. In the event that something unexpected occurs (for example, a new form of reproduction, distribution, or ownership falls outside of existing definitions), users aren't going to become infringers by default. Should the unexpected result be something worth preventing, it seems far more likely that legislation can be easily passed to prohibit the behavior than it would be to permit it.

We currently have a system that potentially renders nearly everyone in the country a copyright infringer—in the service of a policy goal that can be reached with a simpler, less kludgy solution.

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