Intellectual Property, Information Dissemination, and
Consumer Protection “E-Commerce Liability” Copyright 2007, Lateef Mtima, Professor of Law and Director of The Institute for Intellectual Property and Social Justice, Howard University School of Law. I would like to thank Tiffany Tucker, HUSL '09, for her research assistance in the preparation of this Outline.
By Lateef Mtima
This Outline explores some of the principal liability issues which arise in connection with the conduct of E-commerce, particularly liability for violation of the intellectual property law and laws regulating the provision of goods and services to the consumer public. Whatever the nature of an e-business' products or services, "e-commerce liability" can arise not only as a result of an entity's own direct conduct, but also in connection with the conduct of third parties. Accordingly, this Outline examines the bases for direct and indirect e-commerce liability i) under the copyright law, including the Digital Millennium Copyright Act, ii) in connection with related "information injury" causes of action such as defamation, as addressed by the Communications Decency Act, and iii) in connection with the Federal Trade Commission's policies and guidelines regulating the provision of consumer goods and services through the Internet.
I. Forum Jurisdiction and the Internet
As a matter of practicality, e-commerce liability is a direct function of Internet jurisdiction: if the forum state whose substantive law has been violated by specific Internet conduct lacks jurisdiction over the offender, the prospects for legal remedy are essentially nil. However, inasmuch as anyone who has access to a computer in any "brick and mortar" locale can reach any cyber-destination (and the products and services offered thereat) it comes as no surprise that questions of forum jurisdiction have been of paramount importance in addressing e-commerce disputes.
In Digital Equipment Corp. v. Altavista Technology, Inc. 960 F. Supp. 456 (D. Mass. 1997) the Massachusetts District Court was one of the first courts to confront the question of Internet forum jurisdiction. Digital, the owner of the Altavista mark, brought an action against its licensee Altavista Technology ("ATI") interposing claims for trademark and servicemark infringement, unfair competition and trademark dilution in connection with ATI's use of the Altavista mark on the Internet. Non-resident ATI opposed the complaint on grounds of, inter alia, lack of forum jurisdiction. Denying ATI's motion, the court found ATI's Internet activity in Massachusetts sufficient to support personal jurisdiction under Massachusetts' long-arm statute. The court focused on ATI's license agreement with Digital (a Massachusetts corporation) which agreement expressly applied Massachusetts substantive law, together with the occurrence of at least three actual sales in Massachusetts obtained through ATI's website:
Using the Internet under the circumstances of this case is as much knowingly 'sending' into Massachusetts the allegedly infringing and therefore tortious uses of Digital's trademark as is a telex, mail or telephonic transmission; the only difference is that the transmission is not 'singularly' directed at Massachusetts, in the way a letter addressed to the State, or a telephone or fax number with a Massachusetts area code would be. But ATI 'knows' that its web site reaches residents of Massachusetts who choose to access it, just as surely as it 'knows' any letter or telephone call is likely to reach its destination, and it presumably 'knows' the contents of its website. ATI is a corporation whose primary business is providing Internet software; it is charged with the knowledge that its website is accessible through the Internet in Massachusetts.
960 F. Supp. at 462. The court was careful to point out however, that its ruling should not be construed to permit jurisdiction solely on the basis of an Internet presence:
This case does not reach the issue of whether any web activity, by anyone, absent commercial use, absent advertising and solicitation of both advertising and sales, absent a contract and sales and other contacts with the forum state, and absent the potentially foreseeable harm of trademark infringement, would be sufficient to permit the assertion of jurisdiction over a foreign defendant.
960 F. Supp. at 463 (emphasis in original). See also CompuServe, Inc. v. Patterson, 89 F. 3d 1257, 1264 (6th Cir. 1996) (finding that defendant created sufficient connection with Ohio for jurisdictional purposes when he subscribed to CompuServe's Ohio based computer information service, uploaded his own software onto the CompuServe system for other subscribers to review and purchase, and consequently marketed and sold his software in Ohio); American Network, Inc. v. Access America, 975 F. Supp. 494 (S.D.N.Y. 1997) (finding that foreseeable injury occurred in New York when computer users viewed allegedly infringing Web page on their home screens, which when coupled with defendant's signing up six New York subscribers, provided a sufficient basis for jurisdiction under New York's long arm statute, notwithstanding the court's acknowledgment that "a defendant should not be subjected to jurisdiction in New York simply because its home page could be viewed by users there."); but cf. Playboy Enterprises, Inc. v. Chuckleberry Publishing, Inc., 939 F. Supp. 1032, 1039 (S.D.N.Y. 1996) (display of magazine on Internet to American users constitutes distribution of magazine in the United States).
Some of the other early Internet jurisdiction decisions, however, were not as carefully analyzed, and often resulted in a finding of jurisdiction on little more than the presence of an Internet website. Perhaps the principal basis for these decisions was that in many of the early cases, lack of jurisdiction was raised in connection with various Internet misconduct, such as "cyber-squatting". For example, in Panavision Intern L.P. v. Toeppen, 938 F. Supp. 616 (CD. Cal. 1996) the court concluded that an Illinois cyber-squatter was subject to California long-arm jurisdiction when he registered the Internet domain name "panavision.com." The registration was part of a scheme to register corporate company names as domain names and then extort an exorbitant price from each company when it sought to acquire the domain name for use on the Internet. The court held that Toeppen had "directed" tortious conduct at the state of California, plaintiff's place of incorporation:
Toeppen identified Panavision (and other businesses), as a business whose trademarks were not registered as domain names. Toeppen then registered Panavision's trademarks as his domain names. Toeppen registered Panavision's trademarks because he believed that Panavision would eventually decide to create its own web address using its trademarks, that Panavision would discover that Toeppen had previously registered the trademarks as domain names, and that Panavision would pay Toeppen to relinquish his domain registration rather than incur the expense and delay inherent in suing him... Toeppen allegedly registered Panavision's trademarks as domain names ... with the intent to interfere with Panavision's business. [Therefore] Toeppen expressly aimed his conduct at California.
938 F. Supp. at 621. The court distinguished prior decisions which based forum jurisdiction on the defendants actually doing at least some business in the forum state, by characterizing his scheme as being aimed at California. 938 F. Supp. at 622. See also Animation Station, Ltd. v. The Chicago Bulk, L.P., 992 F. Supp. 382 (S.D.N.Y. 1998) (unauthorized posting on the Internet of copyrighted animation sequence featuring the Chicago Bulls supported Illinois long-arm jurisdiction, on the grounds that defendant "would have had to know that many, if not most [Bulls] fans reside in [the Chicago area] which would therefore be a prominent place in which the Illinois-based plaintiff ... would suffer injury ..."); accord, Bunn-O-Matic Corp v. Bunn Coffee Service, 46 U.S.P.Q. 2d 1375 (CD. Ill. 1998). See further Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161, 164 (D. Conn. 1996) (mere advertising on the Internet which can be viewed from computers resident in the forum state, constitutes solicitation towards forum state sufficient to sustain long-arm jurisdiction); Maritz, Inc. v. Cybergold, Inc., 947 F. Supp. 1328, 1330 (E.D. Mo. 1996) (advertisement on the Internet of the intention to start a business in the forum state constituted jurisdictional activity therein, notwithstanding the fact that defendant had not yet done any business, any where).
While Toeppen's overall scheme may have been tortious in nature, it is debatable whether it was "aimed" at California, any more than it was aimed at any other state, in as much as he targeted businesses all over the country, or if you will, throughout cyberspace. Moreover the court failed to observe that the mere registration of a domain name is not itself prima facie tortious conduct:
Domain names present a special problem...because they are used for both a non-trademark technical purpose, to designate a set of computers on the Internet, and for trademark purposes, to identify an Internet user who offers goods or services on the Internet... when a domain name is used only to indicate an address on the Internet the domain name is not functioning as a trademark... [thus] something more than the registration of the name is required before the use of a domain name is infringing.
Lockheed Martin Corp. v. Network Solutions, Inc., 985 F. Supp. 949, 956. (CD. Cal. 1997). Nor did Toeppen undertake any steps to implement his plan in California, such as initiating contact with Panavision to extract a payment. Under the circumstances, the holding in this case effectively permits jurisdiction on no more than a mere presence on the Internet.
Eventually Internet jurisdiction jurisprudence began to reject the notion that mere domain name piracy, in the absence of additional contacts with the subject forum, is an appropriate basis for personam jurisdiction. For example, in K.C.P.L., Inc. v. Nash, 49 U.S.P.Q. 2d 1584 (S.D.N.Y. 1998), defendant had no contacts with New York whatsoever, and thus his alleged cyber squatting was plaintiff's sole basis for asserting personal jurisdiction. Rejecting plaintiff's assertion, the New York court both distinguished and disagreed with Toeppen, noting that, inter alia, (i) California's long-arm statute is broader in scope than the New York statute, (ii) the actual evidence indicated that defendant in this case had some legitimate claim to the domain name, and (iii) in any event, simply registering a domain name and allegedly asking to be paid to release it is activity insufficient to be characterized as the commission of a tortious act within a particular forum state. 49 U.S.P.Q. 2d at 1589-91.
In Hearst Corporation v. Goldberger, 1997 U.S. Dist. LEXIS 2065 (S.D.N.Y.) the New York District Court directly confronted the question as to whether a mere presence on the Internet can provide a proper basis for in personam jurisdiction in a particular forum. In this case, a New Jersey lawyer advertised to provide legal services via his web site, but had not yet actually provided any services to anyone, anywhere, when trademark infringement litigation was filed against him in New York.
Reviewing the prior federal and state decisions addressing the issue, the court concluded that it lacked personal jurisdiction over the defendant, notwithstanding the fact that New Yorkers had at least accessed defendant's web site and he had used it to send e-mails to and receive e-mails sent from New York. While acknowledging that "[t]he issue of personal jurisdiction and the Internet has split the federal districts courts that have addressed the issue to date" the court nonetheless ruled that "[defendant's] Internet web site... is most analogous to an advertisement in a national magazine. Like such an ad, [defendant's] Internet web site may be viewed by people in all fifty states (and all over the world too for that matter), but it is not targeted at the residents of New York or any other particular state." 1997 WL97097 at *7, *10.
In declining to follow those courts that found sufficient basis for forum jurisdiction upon little or no more than an Internet presence, "[t]he Court recognizes that [although] there is some truth in the [position of some other courts] that "while modern technology has made nationwide commercial transactions simpler and more feasible,... it must broaden correspondingly the permissible scope of jurisdiction exercisable by the courts"... this court, however, agrees [that such] 'would be tantamount to a declaration that this court, and every other court throughout the world, may assert [personal] jurisdiction over all information providers on the global Worldwide Web.'" 1997 WL97097 at *20. See also, Bensusan Restaurant Corp., v. King, 937 F. Supp. 295, 299 (S. D. N.Y. 1996). ("The mere fact that a person can gain information [from the Internet] on the allegedly infringing product is not the equivalent of a person advertising, promoting, selling or otherwise making an effort to target its product in New York."); Cybersell, Inc. V. Cybersell, Inc., 130 F.3d 414, 415, 420 (9th Cir. 1997) (reviewing prior Internet forum jurisdiction cases and holding that "we conclude that it would not comport with traditional notions of fair play and substantial justice" ... for Arizona to exercise personal jurisdiction over an allegedly infringing Florida web site advertiser who has no contacts with Arizona other than maintaining a home page that is accessible to Arizonans, and everyone else, over the Internet ...
Florida - AQShning jan. qismidagi shtat. Florida ya.o., materikning unga yondosh qismi va FloridaKis o.larida. Maydoni 152 ming km². Axrlisi 16,7 mln. kishi (2002). Shahar aholisi 85%. Maʼmuriy markazi - Tallaxassi shahri, eng yirik sanoat shahri - Jeksonvill.
Otherwise, every complaint arising out of alleged trademark infringement on the Internet would automatically result in personal jurisdiction wherever the plaintiff's principal place of business is located.")
Finally, in Zippo MFG. Co. v. Zippo Dot.Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997) the Pennsylvania District Court analyzed the spectrum of possible jurisdiction bases arising in the Internet context, focusing on the quality and context of the specific Internet activity, and synthesized and refined the analysis set out in AltaVista, CompuServe and Hearst:
That personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet... If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper... A passive web site that does little more than make information available to those are interested in it, is not grounds for the exercise of personal jurisdiction... The middle ground is occupied by interactive web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the web site.
952 F.Supp. at 1124, citing Pres-kap, Inc. v. System One, Direct Access, Inc. 636 So.2d 1351 (Fla. App. 1994) (distinguishing between consumer and commercial transactions on the Internet in analyzing forum jurisdiction issues).
The court concluded that although defendants' offices and employees were all located in California and its contacts with Pennsylvania occurred exclusively over the Internet, there was sufficient basis for personal jurisdiction in that defendant had signed up more than 3,000 Pennsylvania residents as subscribers to its Internet information service, and had entered into agreements with seven Internet access providers in the state to provide subscriber access. 952 F. Supp. at 1121.
Accord, Gary Scott Intern Inc. v. Baroudi, 981 F.Supp. 714 (D. Mass. 1997 (advertising on Internet and sale of humidors in the forum state a basis for jurisdiction); Heros, Inc. v. Heros Foundation, 958 F. Supp. 1 (D.D.C. 1996) (advertisement on Internet coupled with advertising in local forum newspaper); Resuscitation Technologies, Inc. v. Continental Health Care Corp., 1997 U.S. Dist. LEXIS 3523 *17 ("Certainly, one or two inquiries about some Indiana goods or services would not support local jurisdiction. Here, however, the electronic mail messages [and business negotiations] were numerous and continuous over a period of months. The purpose of that activity was for the defendants and the plaintiff to unite in a joint venture to capitalize production of certain medical devices. Without question [defendants] reached beyond the boundaries of their own states to do business in Indiana"); National Football League v. Miller, 2000 WL 335566 (S.D.N.Y.) (unauthorized use of plaintiff's trademarks and copyrighted material in domain name and on a website, coupled with hyperlink to an "electronic bookie", held sufficient basis for finding that defendant "must have recognized that in using the NFL mark to attract people to a site that could pass them on to an electronic bookie...could do significant damage to the image of the NFL ...in [its forum state]"); Dagesse v. Plant Hotel N.V., 2000 WL 1371381 (D.N.H. 2000); Aero Products International, Inc. v. Intex Corp., 2002 U.S. Dist. LEXIS 17948; 64 U.S.P.Q. 2D (BNA) 1772 (although passive website is an insufficient basis for jurisdiction, actual sales through a separate, interactive website supplies a proper basis for Illinois jurisdiction over California defendant); Andrew Greenberg, Inc., v. Sir-Tech Software, Inc., 297 A.D. 2d 834 (App. Div. 2002) (passive website insufficient basis for jurisdiction); Auid AG v. Izumi, 204 F. Supp. 2d 1014 (E.D. Mi. 2002); Verizon Online Services, Inc. v. Ralsky, 203 F. Supp. 2d 601 (E.D. Va. 2002) ("spamming" trespass on to computer network a proper basis for long-arm jurisdiction); Pavolvich v. DVD Copy Control Association, Inc, 58 P. 3d 2 (Sup. Ct. Ca. 2002) (posting of misappropriated trade secret on passive website insufficient basis for jurisdiction); Systems Designs, Inc., v. New Customware Company, Inc., 2003 U.S. Dist. LEXIS 3271 (D. Utah).
At the same time, it should be noted that the standardized contract term that generates extensive litigation is that denoting forum selection and choice of law. Although many courts were initially reluctant to enforce such terms, increasingly courts have applied a reasonableness test on a case-by-case basis. See America Online, Inc. v. Booker, 781 So. 2d 423 (Fla. Dist. Ct. of App. 2001); America Online, Inc. v. Superior Court of Alameda County, 108 Cal. Rptr. 2d 699 (Cal. Ct. of App. 2001); Forest v. Verizon Communications, Inc., 805 A. 2d 1007 (D.C. Ct of App. 2002). Net2Phone, Inc. v. Superior Court of Los Angeles, 109 Cal. App. 4th 583 (Cal. Ct. of App. 2003). Courts have become increasingly comfortable with the notion that requiring consumers to litigate their claims in a single forum convenient to an e-commerce vendor is not unreasonable per se, and appear to require some bona fide hardship before invalidating such clauses.
In sum, while the Zippo decision reflects the prevailing approach in assessing Internet activity as the basis for personam jurisdiction, the astute practitioner must also account for the Toeppen line of domain name piracy cases as well. Where tortious conduct or intellectual property infringement is alleged, some courts continue to interpret state long-arm statutes or traditional "intellectual property injury occurs where the trademark owner is" analysis as permitting jurisdiction on little more than a presence on the Internet. See e.g. Northern Light Technology, supra, 97 F. Supp. at 104-09; Bird v. Parsons, 289 F. 3d 865 (6th Cir. 2002) (allegation that domain name registrar registered Ohio residents' domain names on the Internet provides sufficient basis for long-arm jurisdiction); Metro-Goldwyn-Mayer Studios Inc. v. Grotsker, 2003 U.S. Dist. LEXIS 800 (CD. Cal.) (dissemination of peer to peer music sharing software via website provides sufficient basis for both long-arm and "copyright injury occurs where defendants know the copyright owner is" jurisdiction); but cf. AOL, Inc. v. Chih-Hshen Huang, 106 F. Supp. 2d 848 (E.D. Va. 2000) (delineation, analysis, and application of tests for jurisdiction based on registration of domain name as (i) doing business in (ii) aiming long-arm conduct at and/or (iii) trademark injury occurring in forum state).
Arguably, the weight of authority will continue to amass in favor of requiring some actual activity or injury in the subject forum beyond improper domain name registration, to support long-arm jurisdiction. On the other hand, while the advent of the Internet has highlighted the deficiencies of the traditional intellectual property jurisdiction approach (are the New York customers of my New York based business actually aware that a competitor is using my mark in California- if not, isn't it more accurate to assess my injury as having occurred in California?) it also raises the question as to whether the traditional approach might not be the best approach for intellectual property injury that occurs exclusively cyberspace (when customers who are familiar with the owner's mark log on to an infringer's website, where does the resulting injury occur-in the forum of each viewing customer or where the intellectual property owner resides?) Finally, it should be noted that specifically in so far as trademark injury is concerned, the Internet Corporation for Assigned Names and Numbers (ICANN) provides a Uniform Domain Name Dispute Resolution Policy, which further mandates that the parties agree to submit to a court of "mutual jurisdiction" in connection with the ultimate resolution of the dispute.
II. Introduction to Copyright Protection
Copyright infringement claims provide the basis for a tremendous amount of e-commerce litigation disputes. The existence of the Internet as an avenue for immediate and surreptitious unauthorized distribution of copyrighted works has presented an unprecedented threat to copyright protection, notwithstanding the fact that for the most part, all of the copyright holder's traditional rights and interests apply in the Internet context. Accordingly, understanding copyright infringement liability with respect to e-commerce requires an understanding of the basic copyright law.
A. The Copyright Holder's Exclusive Rights
In general, any creative, original expression such as a poem, a painting, or a song can be the subject of copyright protection.
General (lot. generalis - umumiy, bosh) - qurolli kuchlardagi harbiy unvon (daraja). Dastlab, 16-a.da Fransiyada joriy qilingan. Rossiyada 17-a.ning 2-yarmidan maʼlum. Oʻzbekiston qurolli kuchlarida G.
The Copyright Act provides that "copyright protection subsists...in original works of authorship fixed in any tangible medium of expression... from which they can be perceived, reproduced, or otherwise communicated..." 17 U.S.C. 101. Thus, once a creative work has become appropriately fixed, i.e., written down, videotaped, etc., it is entitled to copyright protection. But see Darden v. Peters, 402 F. Supp. 2d 638, 642-44 (E.D.N.C. 2005) (affirming denial of copyright registration of website reproducing public maps, reflecting limited changes by the website author, and noting that "the longstanding practice of the Copyright Office is to deny registration of the arrangement of elements on the basis of physical or directional layout in a given space, whether that space is a sheet of paper or a screen of space meant for information displayed digitally.")
The copyright law permits the copyright owner to preclude and/or recover for any unauthorized "copying" of her work, that is to say any unauthorized engagement in any of the uses designated as the copyright holder's "exclusive rights" under Section 106 of the Copyright Act. "The owner of a copyright ... has the exclusive rights...(i) to reproduce the copyrighted works in copies...(ii) to prepare derivative works based upon the copyrighted work; (iii) to distribute copies ... of the copyrighted work to the public... and (iv) in the case of...pictorial works...to display the copyrighted work publicly." See e.g. Avtec Systems, Inc. v. Peiffer, 21 F.3d 568, 571 (4th Cir. 1994); Ford Motor Co. v. Summit Motor Products, Inc., 930 F.2d 277, 291 (3d Cir. 1991); Meridian Project Systems, Inc. v. Hardin Construction Company, LLC, 426 F. Supp. 2d 1101, 1107-09 (E.D. Cal 2006); I-Sytems, Inc. v. Softwares, Inc., 2004 WL742082 at *7 (D. Minn.); Playboy Enterprises, Inc. v. Frena, 839 F. Supp. 1552, 1555 (M.D. Fla. 1993). The copyright holder can recover compensatory or statutory damages upon establishing a case of infringement, and injunctive relief may also be obtained to prevent further incursions upon her rights.
Thus, under the copyright law, someone who wishes to make copies of a book must first obtain permission from the copyright owner, which is usually granted in the form of a license for a fee. On the other hand, someone who merely wishes to read a book (which is not one of the exclusive uses or rights) need only gain access to it; once in possession of a copy, the user is free to read a book without first gaining the author's permission or paying her any fees or royalties of any kind.
B. Limits On the Copyright Holder's 106 Rights
Notwithstanding the express reservation of exclusive rights and uses by Section 106, the copyright law permits the public certain intrusions upon the copyright holder's statutory rights. The principal, countervailing public rights and privileges are as follows:
-17 U.S.C. 107: The Fair Use Doctrine
All copyrighted works are subject to the Fair Use Doctrine, "an equitable doctrine [that] permits other people to use copyrighted material without the owner's consent in a reasonable manner for certain purposes." See Rogers v. Koons, 960 F.2d 301, 308 (2d Cir. 1992). The doctrine reflects Congress' belief that there are some circumstances in which the benefit to society in permitting the unauthorized engagement in one or more of the exclusive rights in connection with a particular copyrighted work, outweighs the author's interest in being able to control or profit from the use of her work.
Section 107 sets out four factors in evaluating whether a particular use should be allowed as a fair use: (i) the purpose and the character of the use, such as whether it is primarily commercial in nature or, if it is a transformative use, that is, a use that substantively enhances or builds upon the copyrighted work; (ii) the nature of the copyrighted work involved, that is, whether it is primarily a creative work such as a fiction novel, or a factual work, such as a biography; (iii) the amount and substantiality of the work to be used without the author's permission; and (iv) the effect that allowing the unauthorized use is likely to have upon the commercial market for the copyrighted work. See e.g. Wall Data Incorporated v. Los Angeles County Sherriff's Department, 447 F. 3d 769, 777-81 (9th Cir. 2006) (holding that the unauthorized duplication of licensed software, undertaken in order to avoid the purchase of additional licenses, is not a Fair Use); Kelly v. Arriba Soft Corp, 77 F. Supp. 2d 1116, modified, 336 F.3d 811 (9th Cir. 2003) (the unauthorized creation of "thumbnail" versions of copyright images on the Internet, for use in creating an Internet image search engine, is a Fair Use of the protected images); Religious Technology Center v. Lerma, 908 F. Supp. 1362, 1366-67 (E.D. Va. 1995) (unauthorized publication of portions of copyrighted church documents in newspaper investigative report is a Fair Use).
-17 U.S.C 109: The First Sale Doctrine
The copyright law treats the sale of a copy of a copyrighted work essentially as a sale of goods-the purchaser is allowed to resell (i.e. redistribute) her copy without the permission of the copyright holder. This privilege, referred to as the First Sale Doctrine, is based upon the premise that the copyright holder has already received compensation for that specific copy of her work, and consequently is not entitled to be paid again should the purchaser decide to part with her goods. See e.g. Novell, Inc. v. Unicom Sales, Inc., 2004WL1839117 at *7 (N.D. Cal); Okocha v. Amazon.com, 2005 U.S. App. LEXIS 23788 ("[A]ssuming that [plaintiff] owned a valid copyright, Amazon...did not interfere with [plaintiff's] exclusive right to distribute his book because reselling a copy of a previously purchased book does not infringe upon the right of distribution.")
It is important to remember, however, that the sale of a copy of a copyrighted work does not include a transfer of the copyright holder's 106 exclusive rights; it merely transfers the right to possess (and re-distribute) the subject copy. Partially in response to the advent of digital technology, Congress amended Section 109 to provide expressly that First Sale privileges attach only to legitimate purchases, as opposed to leases or other acquisitions of copies of a copyrighted work. See e.g. Mapfino Corp. v. Spatial Re-engineering Consultants, 2004 WL 26350 (N.D.N.Y.)
Finally, an infringing party who cannot claim the benefit of Fair Use may argue that the copyright holder should not be allowed to recover because she has misused or abused her copyright in an effort to obtain benefits not intended by the copyright law. The defense of copyright misuse "bars a culpable plaintiff from prevailing on an action for the infringement of the misused copyright." Laser comb Am. Inc. v. Reynolds, 911 F.2d 970, 972 (4th Cir. 1990); see also Passport Software, Inc. v. Do It Best Corp., 2005WL743083 at *7 (N.D. Ill.) The copyright law provides only specific property rights to the copyright holder, and competitors and the general public retain the right to challenge any over-reaching in connection with those rights. Thus the copyright law "forbids the use of the copyright law to secure an exclusive right or limited monopoly not granted by the Copyright Office and which is contrary to public policy to grant." Lasercomb Am. Inc. v. Reynolds, at 977. See generally, DSC Comm. Corp. v. DGI Tech., Inc., 81 F.3d 597 (5th Cir. 1996) (copyright of software programs cannot be deployed to create monopoly in related technology or service industries); Dun & Bradstreet Software Services, Inc. v. Grace Consulting, Inc., 307 F. 3d 197, 221 (3rd Cir. 2002) (software developer's license agreement explicitly permitting "maintenance-necessary" use of copyrighted programs by ISO's precludes a finding of copyright misuse); Davidson & Associates, Inc. v. Internet Gateway, 334 F. Supp. 2d 1164, 1182 (E.D. Miss. 2004), affirmed 422 F. 3d 630 (8th Cir. 2005) (requiring licensees to agree not to reverse engineer copyrighted programs does not constitute copyright misuse); Lexmark International, Inc. v. Static Control Components, Inc., supra, 253 F. Supp. 2d at 965-66; MGE UPS Systems, Inc. v. Fakouri Electrical Engineering, Inc., 422 F. Supp. 2d 724, 733-34 (N.D. Texas 2006); see also Lateef Mtima, The Hunt For A Clear October: Manufacturers, ISOS, and the Fonar Decision, 3/12/97 ANIPLR 20 (1997).
C. The Advent of Digital Technology
Up until the digital technological revolution, the foregoing division between the copyright holder's exclusive rights and the uses available to the public worked relatively well. Copyright owners routinely granted assignments and licenses of their exclusive rights to commercial users of their work, such as publishers who wished to make multiple copies and distribute them for sale to the public. In as much as authors thereby authorized only the sale of individual copies of their works to the general public, they granted the public no right to engage in any 106 exclusive rights' activities (such as making copies) in connection with the authors' works. At the same time, however, once in possession of a copy of a copyrighted work, an individual purchaser (or possessor) did not need any license to read or listen to it.
Notwithstanding the copyright division of authors' rights and public privileges, however, the real reason that members of the public were not likely to infringe upon a copyright holder's exclusive rights, at least not in any meaningful way, was one of basic practicality. Making multiple copies and/or engaging in the mass distribution of copyrighted material was an expensive undertaking, and one that was difficult to conceal. With the advent of digital technology, however, the practical obstacles to surreptitious copyright infringement largely disappeared. Today, possession of a single digital copy enables reproduction and distribution of a copyrighted work to an infinite number of people-and all from the privacy of a personal laptop.
Nonetheless, unauthorized engagement in any of the 106 exclusive rights still constitutes copyright infringement. See generally, Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 1296, 113 L. Ed. 2d 358 (1991); Lotus Development Corp. v. Borland, 49 F.3d 807, 813 (1st Cir. 1995); Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9 F.3d 823, 831 (10th Cir. 1993); Rogers v. Koons, 960 F.2d 301, 306 (2d Cir. 1992); Dallal v. The New York Company, 386 F. Supp. 2d 319, 321 (S.D.N.Y. 2005) (Internet publication constitutes engagement in Section 106 exclusive rights; plaintiff may be equitably estopped, however, from claiming infringement); Religious Technology Center v. Netcom On-Line Communication Services, Inc., 907 F. Supp. 1361, 1366-67 (N.D. Cal. 1995). Thus, the key issue in Internet copyright litigation disputes is whether the subject activity involves or constitutes one or more of the 106 exclusive rights.