Consumer Protection "e-commerce Liability"




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-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.)

-Copyright Misuse

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.





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Consumer Protection "e-commerce Liability"

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