In United States copyright law, the “first sale” doctrine allows the purchaser of a lawfully-made copy of a copyrighted work to transfer the copy by a subsequent sale, rental, or other means. The first sale doctrine originated in a 1908 Supreme Court decision, and it is codified at 17 U.S.C. 109(d).
In a recent decision from the U.S. District Court for the Northern District of California, the court ruled that the first sale doctrine did not apply to copies of software that are pre-installed on a computer and sold by the original equipment manufacturer with the computer itself. In Adobe Systems v Hoops Enterprise LLC (N.D. Cal. Feb. 1, 2012), the court considered the case of a company that bought computer hardware from Dell and Hewlett-Packard and resold OEM-installed Adobe software on eBay, separate and apart from the hardware.
The court indicated that the key question was whether the Adobe software was sold or licensed to the OEM computer manufacturers. If it were a sale, then the first sale doctrine could apply. However, if it were a license, then the first sale doctrine would not apply based on the precedent of Vernor v. Autodesk, Inc. (9th Cir. 2010).
Adobe did enter into license agreements with the OEMs, but the defendants argued that those agreements did not create significant restrictions on transfer, nor did they impose notable use restrictions, and Adobe did not retain sufficient control over the copies, so the agreements were effectively sale agreements rather than license agreements. The court disagreed, noting that there were “significant distribution restrictions” in the license agreements.
Filed under: Copyrights
It’s not often that a court decision about copyright law expressly acknowledges that the decision will be controversial. However, the U.S. Court of Appeals for the Second Circuit did just that in John Wiley and Sons Inc. v. Kirtsaeng (No. 09-4896, 2nd Cir. Aug. 15, 2011).
The decision related to the “first sale” doctrine under copyright law, which permits the owner of a lawfully purchased copyrighted work to resell it without limitations imposed by the copyright holder. (more…)
Filed under: Copyrights
In an unpublished opinion, the U.S. Court of Appeals for the 11th Circuit recently upheld a ruling that refused to impose liability on an employer for copyright infringement by an employee.
In Klein & Huchman Inc v. CoStar Realty Information Inc., No. 10-12201 (11th Cir. April 28, 2011), an employee of a real estate agency accessed a subscription-based database of real estate information, such as prices and form documents. The employee accessed the database without authorization, using a password that he received from a prior employer. The database provider sued the real estate agency, claiming copyright infringment.
The trial court ruled in favor of the real estate agency, finding that the employer could not be viacriously liable or liable for contributory copyright infringement when it was not clear that the employer enjoyed a direct, financial benefit from the infringement.
In the new ruling, designated as unpublished, the appeals court affirmed the trial court’s decision.
The Office of the U.S. Trade Representative periodically publishes a list of online and physical marketplaces that considers to be “notorious markets” for counterfeiting and intellectual property piracy. On February 28, 2011 the USTR released its latest notorious markets report, which includes markets such as:
- the number one-ranked website in China, which the report cites for enabling between 50 and 75 percent of all illegal music downloads in that country;
- a Russian website that was formerly the world’s largest server-based pirate music website;
- several Chinese B-2-B and B-2-C websites; and
- physical markets in China, Russia, South America, Poland, the Czech Republic, Indonesia, the Philippines, Thailand, and India.
The USTR states that the purpose of the report is to “shine a light’ on the markets and to “urge[] the responsible authorities in these markets to intensify efforts to combat piracy and counterfeiting in these and similar markets, and to use the information contained in the Notorious Markets List to pursue legal actions where appropriate.”
This weekend’s Super Bowl provides an opportunity to review some of the past year’s interesting developments relating to the National Football League and intellectual property:
1. Titlecraft v. NFL: wooden Lombardi trophy replicas infringe NFL copyright.
In Titlecraft Inc. v. National Football League (D. Minn. Dec. 20, 2010) the NFL and NFL Properties sued Titlecraft, a manufacturer of custom wooden trophies. Titlecraft made wooden replicas of the Vince Lombardi trophy. The Lombardi trophy is a silver statue made by Tiffany & Co. that is awarded to each year’s Super Bowl champion; Titlecraft’s trophies were small wooden replicas that were sold to fantasy football leagues for honoring their own champions.
Finding that (i) the NFL had a valid copyright registration for the Lombardi trophy; (ii) Titlecraft had access to the Lombardi trophy; and (iii) the two trophies were substantially similar, the court granted summary judgment for copyright infringement in favor of the NFL. Although Titlecraft pointed to minor differences in size, angles, and texture, the court stated that “‘if it walks like a duck, quacks like a like and looks like a duck, it has got to be a duck’ – or in this case a copy.”
2. Who dat say dey gonna own dem trademarks?
When the New Orleans Saints reached the Super Bowl in 2010, the NFL sent cease-and-desist letters to several Louisiana merchants, demanding that they stop selling (more…)
In 1909, the Charles Dickens book Oliver Twist was first adapted to the silver screen as a silent film. The film was distributed in 35 mm format, and it was most likely shown via Edison movie projectors in nickelodeons (movie theaters) around the country. 
The latest film version of Oliver Twist, released in 2005, had a few more distribution channels. It premiered at the Toronto Film Festival, followed by a general release in theaters. In 2006, it was released on DVD. The DVD is available to rent from Netflix, Blockbuster, and other vendors. The film has been broadcast on subscription-based television. It can be viewed via the Internet on Amazon.com’s on-demand service. Excerpts can be seen on YouTube. The soundtrack is available on CD, as an MP3 download, or via streaming on services like Pandora.
Oh, and the original Oliver Twist novel is available as an audiobook; as an e-book in formats for the iPad, Kindle, Nook, and other e-readers; and also for free viewing on the web at various sites.
Do you think Charles Dickens’ attorneys thought of all of these possibilities when negotiating his book publishing contract?
In a recent article published in The Philadelphia Lawyer, my colleague Megan Kearney discusses how licensing law has often struggled to keep pace with ever-changing technologies. More details and Megan’s full article are available here.
Attorneys and IT consultants who handle intellectual property due diligence will want to note a recent decision by the Ninth Circuit relating to the transferability of licensed software. In Vernor v Autodesk, the Court considered the case of Timothy Vernor, who sold used copies of Autodesk’s AutoCAD software on eBay. Autodesk argued that the sales constituted copyright infringement. Vernor argued that the software copies were governed by the “first sale” doctrine, which is an affirmative defense to copyright infringement that allows owners of copies of copyrighted works (e.g., books, CDs, DVDs) to resell those copies.
The court analyzed the AutoCAD license agreement to determine whether AutoCAD users were “owners of a copy” or “licensees”, as only “owners of a copy” are eligible to assert the first sale doctrine. Reviewing the AutoCAD license agreement, the court noted that the agreement prohibited customers from renting, leasing, or otherwise transferring the software without Autodesk’s prior written consent. Focusing on the assignability and use restrictions of the license agreement, the court found that AutoCAD users are mere licensees and thus not permitted to resell the software:
We hold today that a software user is a licensee rather than an owner of a copy where the copyright owner (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.
The court’s decision should remind entities involved in merger and acquisition due diligence that software licenses may not automatically transfer in the transaction. If the license “significantly restricts the user’s ability to transfer” and imposes use restrictions (each of which is the case in many software licenses), then the purchaser may need to obtain consent before the software can transfer to the new entity.
Filed under: Copyrights
Section 1201 of the Digital Millennium Copyright Act (DMCA) prohibits circumvention of technical measures that copyright holders use to to control access to their copyrightable works. Anti-circumvention technologies may include items such as encryption and other digital rights management (DRM) measures.
Section 1201 exempts several activities from the anti-circumvention requirement. The statutory exemptions include the use of certain tools for encryption research, security testing, and other activities. In addition, every three years, the U.S. Copyright Office publishes a list of additional exemptions to the anti-circumvention requirement. This week, the Copyright office published six exemptions for 2010. The list includes two new exemptions:
- Noncommercial DVD sampling: for DVDs that are protected by content scrambling systems (CSS), the ruling allows circumvention of the CSS to use a short portion of the DVD content for (i) educational purposes by college and university professors or film studies students; (ii) documentary filmmaking; and (iii) noncommercial videos.
- “Jailbreaking”: circumvention for the purpose of enabling interoperability of computer programs on a wireless telephone handset.
The jailbreaking exemption has received much attention, as it may permit the use of iPhone or other handset apps that haven’t been sanctioned by the device’s supplier. However, although the process of “jailbreaking” no longer violates copyright law, the act may void the manufacturer’s warranty on the phone.
The Copyright Office’s 2010 list also removed some exemptions that were present in 2006. For example, an exemption governing sound recordings whose DRM created security flaws was not renewed in 2010. The Copyright Office also declined to renew an exemption permitting access to software and videogames that were distributed in now-obsolete formats.
When performing intellectual property due diligence in connection with a corporate acquisition, a frequently overlooked question is whether any of the company’s copyrights may be subject to termination at some point in the future. UCLA School of Law Professor Doug Lichtman’s excellent Intellectual Property Colloquium podcast recently prompted me to think about copyright termination rights in the context of IP diligence.
Ordinarily, an assignment of intellectual property is just that — irrevocable unless the agreement says otherwise. However, an exception exists for copyrights that were not made as “works for hire.” Section 203 and Section 304 of the Copyright Act permit a copyright owner (or his or her heirs) to terminate all licenses and or transfers of rights after a certain time period.
Because of this, if a company acquired copyrights from founders, from consultants who did not sign work for hire clauses, or from others who were not employees at the time that the work was created, then that company may be at risk of copyright recapture at some point in the future. (more…)
Filed under: Copyrights
Launch Media, Inc. was the original operator LAUNCHcast, a website that offered users Internet radio stations that play songs that are within a particular genre, or which are similar to a particular song or arist that the user selects.
LAUNCHcast offered radio stations with playlists that were customized to the preferences of individual listeners. Listeners were asked to identify or rate various artists and music genres. Users could also rate songs as they are played, and users could select an amount of “unrated” (i.e., newly-presented) music that would be played on their station. The system then created a playlist of songs for the user by randomly generating a larger list of songs, then excluding songs that did not match various criteria based on user preferences and ratings. Users could pause or skip songs, but they could not re-play or select specific songs.
The Digital Millennium Copyright Act (DMCA) requires those who offer an interactive service via digital audio transmission to pay licensing fees to the individual copyright holders. (more…)
