A Copyfighter’s Musings

Check out C.E. Petit’s elaboration on his previous posts in response to my post.  I’ve written Petit with a few questions to better understand his point before I write up another comment.   I know exactly nothing about civil procedure so I’ll defer to those with sufficient expertise here – I would love to hear what others have to say about these issues as well.  It still seems strange that, given the standards articulated in Napster, Grokster, and the court of appeals in Aimster, intent is a primary factor in the application of Sony in any of the cases.  But that might just be my inability to untangle this complex topic properly, which is all the more reason for you to read Petit’s interesting take.

Also, a couple other links worth reading, along with the appeals court decisions listed in the previous post:

Napster district court decision, Aimster district court decision, Grokster district court decision, EFF amicus criticizing Aimster district court decision

Filed by Derek Slater at 12:44 am under General news
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Almost a year ago, the EFF agreed to defend Ross Plank, who claimed that the RIAA had mistakenly identified him as an infringer.  According to this article (via Furdlog), Plank paid an $11,000 settlement “after lawyers found on his computer traces of hundreds of songs that had been deleted one day after he was sued.”  Ouch for Mr. Plank, and perhaps a bit of egg on the face for the EFF.  It’s not clear whether the songs they found were the ones originally cited in the lawsuit or others.  I wonder what he told the EFF before they took on the case and if they were given the full story.  Who knows?

Filed by Derek Slater at 6:00 pm under General news
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He’s blogging over at Lessig’s.  UPDATE and edited: Whoops, thought he had already started, but Tim Wu posted, “Who Cares About Innovation?” (thanks Peter).  Silly me.  This post was originally written with Judge Posner in mind….

Let’s add a few more questions to [corrected:] Wu’s list.  It’s not just how to balance innovation v. other social values substantially, but who gets to do it and how is it done procedurally.  Given that innovation does not trump all, when an innovation runs up against social values, what method will we use to balance the values at stake?  More narrowly, what should be the role of the courts in this balancing?

Certainly in the indirect copyright liability context, my thinking would differ quite starkly from Judge Posner’s.

Filed by Derek Slater at 5:49 pm under General news
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C.E. Petit has some interesting commentary post-Grokster.  See his two posts.

I don’t quite understand Petit’s distinguishing Napster and Aimster based on intent.  In Napster, there was evidence that the system operators intended the system for infringement, but the court’s ruling didn’t rest on that at all.  In the contributory section, the court focused on Napster actual knowledge of specific infringements; the vicarious section focused on the right and ability to control in a similar fashion.  As was the case in Napster and was further clarified in Grokster, actual knowledge of specific infringement must be received at a time when the receiver is capable of acting on that knowledge, and the right and ability to control is fully cabined within existing architecture.   I’m not sure how you can read either of those cases to rest on an intent-based standard.

In Aimster, intent took on greater importance, but I’m not sure it was as critical as Petit makes it out to be.  Judge Posner notes that Aimster willfully blinded itself to infringements and that Aimster’s docs were focused on infringing content (like Napster’s).  However, he speaks of that in the context of noting that there was sufficient evidence for infringing uses and essentially no evidence of non-infringing uses.  Indeed, basically that encompasses the holding of the case, and everything else is dicta.  If you accept the rest of Posner’s standard as more than dicta, intent still isn’t the determining factor. He explains that infringing and non-infringing uses should be balanced, taking into account their probability and the ability for system operators to redesign to prevent infringement.  Intent can be factored in particularly when considering the redesign, but it hardly seems to be determinative.

Speaking of dicta in the Aimster opinion, that actually appears to me to be a sound reason why the SC wouldn’t accept cert.  The narrow holding is that, to meet the Sony standard, something more than mere speculation about non-infringing uses is required.  That’s fairly consistent with Grokster and Napster and overall not that big a deal.  Looked at that way, there is no circuit split.  Posner’s broader interpretation of Sony was irrelevant to the Aimster case, and thus its conflict with Grokster may also be irrelevant. 

In a comment, Doug Hudson makes a related point.  He argues that the difference is that Aimster requires economically substantial uses and Grokster required technically substantial uses.  Again, that conflict is much narrower than the split between Grokster‘s knowledge and conntrol requirement and Posner’s balancing test approach. 

Petit provides some other reasons why cert might not be provided.  He notes that the Aimster case was at a different appeal stage, and that both the Ninth and Seventh circuits reached the same conclusion regarding centralized services.

Meanwhile, Tim Wu offers reasons to believe cert is likely.

Filed by Derek Slater at 5:10 pm under General news
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By now, you’ve probably heard the wonderful news about the Grokster victory and that you’ve read the litany of posts (catalogued by Ernest).  I’ll assume you’ve already done so and touch on a few leftover points:

1.  The opinion is remarkably clear and straightforward.  It builds on the already solid district court opinion and clarifies a few of the details regarding incidental elements of centralization.  My biggest worry was that the court would get caught up in those details, like the relevance of Streamcast’s XML files, and make some vague or elaborate arguments.  Worst case scenario: exemptions for these services, but open-ended language that allowed for suits to be brought again should they add another “incidental” feature that cumulatively could lead to liability.  Instead, the court made fairly clear divisions between these merely “incidental” features.  While not entirely limiting the relevant factors, they stick to hosting lists of infringing files and login servers as key.  The issue is control, and if the other features don’t build in any control over user’s actions, then they can be set aside.

2.  While appropriately narrowing Napster‘s broad holding in this manner, the court followed Napster in its treatment of remedies.  As I discussed before, the Napster decisions went awry when they effectively decided that, once liable, a technology company can be forced to redesign its software in any manner.  Had the Napster courts truly restricted Napster’s policing to the limits of its architecture, it would have helped preserve the thrust of Sony in a significant way.  I can’t really blame the Grokster court for following Napster‘s approach, since even the defendants basically accepted this view so that they could effectively make their argument about vicariously liability.

3.  A lot of folks are bemoaning the decision because it will ratchet up pressure for the INDUCE Act.  Fine – I agree with that take on things to an extent.  It’s unfortunate, but to some extent it was also inevitable.  It’s still worth celebrating that the court got it right.  That’s big.  And until today, the Aimster and Napster decisions were alone as circuit court P2P opinions.  Following Aimster, this decision could have come out the other way.  Now Grokster exists as a contrary circuit court decision.  This could all be rendered irrelevant by INDUCE, but at least this decision gives everyone a chance to fight another day.  Had this gone the other way, we would have two circuits with harsh liability, probably both adopting something close to a negligence approach.  That could have been Game Over – losing in Congress wouldn’t really matter, because we’d already have lost in the courts.

4.  INDUCE might pass in some form before the SC even gets a chance to look at this case.  But if INDUCE gets massively delayed, and SC takes this case before passage of any new laws, that could be quite messy.  Given that the circuits are now split on the standard – expressed explicitly as discussed in footnote 9 – it seems like now would be the time for the SC to step in.  Some people have mentioned that Congressmen may listen to the wisdom of the Grokster decision’s last few paragraphs.  Sounds doubtful.  Would they take more heed if that wisdom came from the SC?  Maybe.  Or, the SC could simply reverse the decision and use something like Aimster’s approach.

At the same time, at least Mary Beth Peters and Co. can no longer treat the Grokster decision as the result of some rogue district court judge.  This is a well-reasoned, unanimous opinion.  Sure, they can still argue that the doctrine is bad, but it’s a bit harder to argue that the court’s interpretation of the doctrine was obviously wrong.

5. I spent a little time today reviewing my thoughts post-district court decision.  Like Judge Wilson, this court clearly did their homework on the technical aspects.  Also, see my earlier article called, “Protecting Sony and the Internet: A Discussion and Critique of Imposing Harsher Secondary Copyright Infringement Rules to Inhibit Peer-to-Peer File-Sharing.”  Hopefully, I’ll be actually finishing that draft sometime in the future and updating it to reflect this case and INDUCE.

Filed by Derek Slater at 8:47 pm under General news
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Do go check out JD Lasica’s and Marc Canter’s posting about the Open Media project.  I (we?) often focus first on music, then on text (blogging) when it comes to digital media.  Come pervasive broadband, video will play an increasingly important role.  This is an exciting project that will hopefully harness video’s potential in the personal/grassroots media ecology.

Filed by Derek Slater at 11:00 pm under General news
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Following up on all the commotion about Real’s “Harmony“, Virgin Mega has filed suit against Apple in France for its use of FairPlay.  I’m not exactly sure what claims they’re making – sounds like some sort of anti-trust issue.

In other news, Roxio has sold off everything except for its Napster division and in fact is going to change its name to Napster.  Even though they’ve been behind iTunes in the downloads market and Rhapsody in the subscriptions market, they’re committed to this as-of-now relatively small market.  Interesting.

PaidContent has some nice notes from the conference call today.  Apparently, the Napster division had another losing quarter, but they’re projecting significant growth in Q3.  So far, the gross margins on downloads are 10 percent, while they’re 40 percent for subscriptions. Growing the subscriptions market is imperative.
 
Given that, here’s what’s unclear to me: why would they want to charge more for the Janus enabled, “portable” subscriptions?  I suppose they think that consumers will start buying into the subscription model soon and thus providing a low price is long run counterproductive.  Moreover, portable subscriptions will take away from the people who’re buying today’s subscriptions and then purchasing individual tracks.  But will the subscriptions market really grow so quickly?  It seems to need a kick-start right now.  I’m not sure that most people are going to want to pay spend between 11-20 for a portable subscription, when totalled over the course of a year that’s well over the average person’s spending on music (so is today’s regular 10 dollar subscription fee).  Furthermore, by price discriminating and segmenting based on usage restrictions, consumers might grow even more frustrated with DRM offerings in general.

One thing to keep in mind: who knows what the royalty rates are for the portable subscriptions.  Permanant downloads with download royalties via a subscription service spelled the death of E-music.  I wonder what sort of compromise the labels made in this regard. Maybe they’re the reason why the portable subscription fee will be higher.  Meanwhile, Canadian publisher agreements are supposedly holding back Napster venture up north.

According to Napster’s execs, the labels have cooperated with the discounted licensing to universities.  As expected, university income is basically nothing.  They’re just using the licenses to build the brand.

And now that Roxio/Napster is concentrating solely on digital music, what else might the brand be used for?  They already have some tie-ins with hardware developers, but they may decide to go after that market even more as their focus shifts.

Filed by Derek Slater at 10:50 pm under General news
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Building off what I said yesterday about Real’s press release, I presented two questions to a Real executive on pho regarding a message he had posted supporting Harmony and interoperability.

“1. Why did Real sue, under the DMCA, creators of interoperable software
products?  Streambox created Harmony-esque software for Real’s streaming
files.  If interoperability is permitted by the DMCA and is something that
you’re in favor of, it seems totally at odds with your actions against
Streambox.

2.  Why did you implement your own proprietary DRM standard, Helix?  Why didn’t
you act in concert with other music services and tech providers to use a more
open standard?
(Although, no DRM can be truly open, see: Freedom-to-tinker)”

I haven’t heard back yet, but I’m interested in their answers. I have argued that they adopted Helix for the same reasons Apple uses FairPlay – to control the other markets and generate licensing revenue. But perhaps there’s some other strategy I don’t know about.

As for the former question regarding Streambox, let me attempt to provide answers Real could provide.  Though these arguments may provide Real with some wiggle room in court, they still don’t map particularly well to the principles stated in their press release yesterday. (Note that I am assuming that the possible violation was in circumventing to analyze the FairPlay DRM.  As discussed previously, it doesn’t seem like Harmony itself would be a circumvention device, and thus there is no 1201(a)(2) or 1201(b) issue.)

1.  Real never circumvented Harmony; they simply built a product based on Hymn and other public information. Thus, there is no conflict with 1201(a)(1).  This may be true, but it still doesn’t explain why they would support interoperability here but not in the case of Streambox.

2.  Real’s intentions in creating Harmony were pure. They simply wanted interoperability.  Streambox allowed people to record streams that they otherwise could not and thus you could infer wrong intentions. Similarly, DecSS could be used for any purpose associated with decryption, not just interop. On its own, this doesn’t matter in the eyes of the DMCA.  Circumvention under (a)(1) is circumvention regardless of the intentions.  321 Studios seemed to have fine intentions, building copy protection into their DVDs, but that didn’t save them.

3. Harmony fits the definition of 1201(f) because it is for the “sole” purpose of interoperability.  Again, unlike Streambox and DeCSS, the circumvention needed for Harmony was solely intended to make certain files work with other devices.  Harmony even puts an analogous layer of DRM restrictions on the songs it converts.

Despite this, Harmony still does not seem to fit the terms of 1201(f). As noted in Remeirdes, 1201(f) only exempts computer program to computer program interoperability. The definition of computer program in Title 17 is rather narrow.  It applies to executables, but not data.  Remeirdes stated plainly that it does not apply to interop with movies. Thus, it would not seem to apply to interop with music files. (See 82 F. Supp. 2d 211, 218: “Finally, and most important, the legislative history makes it abundantly clear that Section 1201(f) permits reverse engineering of copyrighted computer programs only and does not authorize circumvention of technological systems that control access to other copyrighted works, such as movies.”) (see also ChillingEffects discussion)

If Real can make this argument successfully in court, more power to them.  However, it appears to me as a fairly restricted view of the “well-established tradition” of interop. 

Take music editing software.  Because of DRM, this software can’t open music files to edit them.  One could add in a feature that decrypted the files so that the editing software could interoperate – that is, read the files and edit them.  But, unlike Harmony and like Streambox, this editing could now also create copies of the songs.  Moreover, these copies would be unencrypted.  If you take Harmony as your benchmark of legality, perhaps this editing software could be legal if it layered DRM on top of any song produced using parts of the decrypted song. 

As you can see, the scope of this interop exemption seems rather narrow.  To me, this view creates an odd dividing line.

Filed by Derek Slater at 3:38 pm under General news
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What a riot.  First, Real implements a proprietary DRM scheme, and then tells Apple that they should license FairPlay.  Now, having sued the makers of software that interoperates with Real’s software, Real tells Apple that the DMCA allows creation of interoperable software and Apple has no grounds to sue over Harmony.

Here’s Real’s press release: (emphasis added)

“RealNetworks, Inc. is delighted by initial consumer and music industry support for Harmony. Compatibility, choice and quality are critically important to consumers and Harmony provides all of these to users of the iPod and over 70 other music devices including those from Creative, Rio, iRiver, and others. RealPlayer Music Store provides the highest sound quality of any download music service. That’s why so many consumers have welcomed news of Harmony. Consumers, and not Apple, should be the ones choosing what music goes on their iPod.

Harmony follows in a well-established tradition of fully legal, independently developed paths to achieve compatibility. There is ample and clear precedent for this activity, for instance the first IBM compatible PCs from Compaq. Harmony creates a way to lock content from Real’s music store in a way that is compatible with the iPod, Windows Media DRM devices, and Helix DRM devices. Harmony technology does not remove or disable any digital rights management system. Apple has suggested that new laws such as the DMCA are relevant to this dispute. In fact, the DMCA is not designed to prevent the creation of new methods of locking content and explicitly allows the creation of interoperable software.

We remain fully committed to Harmony and to giving millions of consumers who own portable music devices, including the Apple iPod, choice and compatibility.”

See also this article in Forbes.  I see the distinction Real’s trying to make; Streambox actually removed the DRM such that you could record the stream.  But the distinction is irrelevant in the eyes of the DMCA.  You’re either circumventing or you’re not. It doesn’t matter that you circumvent and then put the file in another DRM format.  update: See above and the comments section for this post for what I mean by this.

Filed by Derek Slater at 4:04 pm under General news
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Apple has released a statement in response to Harmony:

“We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod(R), and we are investigating the implications of their actions under the DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real’s Harmony technology will cease to work with current and future iPods.”

Along with piracy rhetoric, we now get evil hacker rhetoric.  Since when is reverse engineering unethical?  Oh right – since the DMCA, which Apple is predictably waving around.  Let me remind you that Real was one of the first companies to sue the creator of an interoperating product under the DMCA, so it’s not as if they’re the innocent defenders of innovation here.  This could make for a fine DMCA battle royale, with copyright holders caught in between.  Or it could fade away – we’ll see.  (For more on the legal, business, and social welfare perspective on these issues, see also an earlier Harmony specific post, earlier posts on the iPod-iTunes tie and the Berkman Center’s iTunes Music Store Case Study.)

I certainly believe Apple’s threat to alter FairPlay/iPod/et. al. so that Harmony-made songs can’t play.  We’re bound to see some back-and-forth on the tech side.  There was some discussion yesterday about the mechanics of the DRM and whether altering iTMS songs would affect Harmony-made songs.  Hymn co-creator Jon Johansen chimed in saying that Harmony “generates a new user key which is added to the key store on the iPod.”  On his blog, he cited a posting by a supposed Real codec engineer.  If this is the case, can Apple simply update the iPod software to cut out Harmony?

Also, see News.com’s coverage of Apple’s statement.  Forrester Research also has an analysis up with some predictions of what’s to come.  Forrester predicts that Microsoft will try to create something similar to Harmony, but I doubt it.  They’ve been doing just fine licensing WMA out to everyone; they don’t need to get WMA songs onto the iPod.  Only if Microsoft’s DRM/media side ended up in the desperate state that Real’s in would they make such a move.  However, I do agree that this is going to be a tricky situation for Apple to deal with. Short run, the iPod is probably running too strong for this to matter. But, long term, as cheaper, alternative players come out, Apple will probably have to make some adjustments.  Finally, Forrester notes that Real created Harmony with the record label’s consent and thus the question of copyright holders suing Real under the DMCA is probably moot, as I had assumed.

BusinessWeek has an editorial (via PaidContent.org) with some useful nuggets surrounded by some plainly silly arguments (the author argues that an open standards approach to digital music never worked and Apple saved the industry, when the music industry never even tried such an approach).  From a business perspective, the author may be right that it’s in Apple’s best interests to end Harmony.  In any case, PaidContent is right that the hidden gem in this article is this quote from Napster’s Chris Gorog: “We’re going to look at [licensing Harmony from Real] very carefully,” he says. “If Apple doesn’t fight it, and the technology works, we’d be seriously interested. But Apple will most likely fight it.”

Remember, though, Harmony does not convert WMA (which Napster uses) to FairPlay-AAC.  It only moves from Helix-AAC to WMA and FairPlay.  Gorog would need to talk to Microsoft about a WMA to FairPlay converter, I’d assume.  I don’t think he has the power to create a Harmony-like converter for Napster.

More coverage of the business questions for Apple from CNN Money (via PaidContent.org).

Filed by Derek Slater at 1:47 pm under General news
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 (Pending RSVP confirmation) I’ll be at the Creative Commons book party for Dan Gillmor’s We the Media on Friday – see Lessig’s blog for the details.  If you’re in the area, I hope to see you there.

Filed by Derek Slater at 11:01 pm under General news
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Interesting new feature from a Music Store: MusicMatch now allows people to share songs with friends for up to three playbacks.  Features like this certainly add value and help differentiate the Stores.  But, with these limited sharing features, I wonder why the industry does not more aggressively pursue models like Wippit and Weed.  I know that, with Altnet, there’s plenty of legitimate bad business blood.  But Wippit and Weed are intriguing ways of linking the selling copies biz model with P2P.

People are always talking about how P2P is used for sampling.  People hear a song for free there, then go buy the artists songs.  Well, if they like the sample, why not allow them to buy it right there in the P2P environment? With Weed, you can do that. Plus, people get bonuses for sharing with their friends – it works with the mechanics of the environment.  You take the biz model to the consumers, not the other way around.

With Wippit, you do have to transplant consumers a bit more.  But you get to replicate the environment along with a feels free subscription service.  Plus, if done right, you get some cost savings by using your customers as servers.

Filed by Derek Slater at 10:59 pm under General news
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Speaking of lock-in issues, I want to get back to an argument made by a few blog-commentators (Brad Hutchings among them) that, even if you accept that the DRM lock-in’s theoretical impact from business and social welfare perspectives, there is no practical impact because people can easily get around the DRM.  If they can do so, then they are by definition not locked-in.

The point most often made is that the iTunes Music Store songs can be burned to CD, ripped, and re-encoded in MP3.  You can do so without violating the DMCA and it’s trivially easy.  That’s true, but note that the same argument would not apply to Janus-wrapped songs that do not allow burning.  In any case, you can output to the soundcard and record.  There are also methods that, though illegal, are available and thus would seem to diminish lock-in effects in practive. Circumvention devices are still available, so people can go that route as well.  Moreover, there are other environmental factors that seem to limit its effects further.  The availability of MP3s over P2P does so.  To some limited extent, so does the limited competition in music services and formats.

As noted in the iTMS case study, the extent to which all this is true does indeed limit the effect of lock-in.  Whether it entirely eliminates the effects in practice is far more questionable. In fact, it appears that the empirical evidence is to the contrary.  If people were so easily getting around the DRM, why would eLabs find that consumers are frustrated by this limitation? (See Paul Gluckman, “Building Business on Legal Downloads Isn’t Easy, Panelists Say” Washington Internet Daily (Feb. 10, 2004)).  Why would SunnComm be getting similar complaints?  If the limitations of DRM were bothering no one, why would anyone complain?

Some people then take this argument and turn it into a criticism of the DRM-does-not-impede-piracy argument.  The argument goes: if people are not actually creating unencrypted copies, then DRM does limit what can get on P2P.  But this misses a critical point.  If many, or just a few, or maybe even just one user gets around the DRM and uploads a copy to P2P, the DRM is basically irrelevant in stopping piracy (save for the narrow, presently theoretical exceptions discussed elsewhere).  However, for the consumers who are buying legit and don’t evade the DRM, the DRM lock-in effect remains. 

Filed by Derek Slater at 10:57 pm under General news
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Ernest covers the most important points  about Real’s Harmony and I chipped in a few in the comments. As we discussed, it isn’t clear that there’s a DMCA violation here – if anything, it’s an (a)(1) access control violation.  But, it seems they might have simply created a conversion tool based on Hymn without doing any circumvention or reverse engineering themselves.  If that’s the case, there no a contract issue either.  So, a widely-available circumvention device helped create a DRM evasion device that doesn’t circumvent.

Which is not to say that those are actually the facts or that Apple won’t sue.  From a more general standpoint, Apple could argue, in a twisted but perhaps intellectually consistent way, that it’s not fair for them to be able to make FairPlay files but for him to not be able to make Helix files. And then Rob Glaser could say, but you never asked. 

But how could Glaser say that with a straight face to Apple? In that dynamic, Apple has all the leverage. They have the market share in the Music store and portable player markets.  Why would Jobs care about Real’s format?  Real’s nothing to Apple.

As long as the services operate in an environment in which they must use some form of DRM, there is little incentive for them to share one DRM. The only way is if everyone decided, collectively and simultaneously, to drop their own formats and share one format. But I doubt either Apple or Microsoft would want to do that.  They have all the leverage here – it’s not in their interest to have one format here.

That’s why, in my view, ending the format conflicts won’t happen in the foreseeable future unless the music industry, not the services, choose to drop the DRM.  Even in the long term, if DRM sticks around, the format conflict will only end temporarily when enough consumers settle on a particular format, possibly creating some quite terrible lock-in; the conflict will then erupt again when a new service comes out that consumers cannot take advantage of because of the lock-in.

Regardless, will this move benefit Real in any way?  I suppose.  It’s basically a last ditch effort by them. The only reason for them to have used the Helix format in the first place is if they wanted some control over formats. Otherwise, why not just give in in the first place and license WMA?  Now, they see that they don’t have the market share to push Helix on their customers, so they have to make do.  Consumers benefit a little, but, as Ernest makes clear, Harmony is mostly hype.

Filed by Derek Slater at 10:48 pm under General news
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In reading a couple of the links below about eBay’s new music store, I noticed a little confusion (which Techdirt duly noted) about first sale.  I dropped a line to Rafat Ali at PaidContent, and he noted that a short explanation might be helpful.  So here goes.

Copyright owners hold an exclusive right to distribute copies of their work.  The first sale doctrine is an exception to this right.  As codified in 17 USC 109, as long as the particular copy was lawfully made, whoever owns it can distribute it however he chooses without infringing.  Thus, after a copyright holder distributes a particular copy of a copyrighted work, their right to control distribution of that particular copy is over.  Note that the copyright holder retains the right to distribute their copyrighted work in general, but loses rights to the particular distributed copy.

Examples of this doctrine in action are numerous.  Video rental stores depend on the doctrine; once they purchase a copy of a video or DVD, they can distribute it to customers on whatever terms they choose, without consulting the copyright owner.  Used book and CD stores depend on the doctrine; people can buy a CD, sell it to the store, which can then resell the CD, all without the authorization of the copyright owner.  You can lend a book to a friend because of first sale.  (Certain restrictions on rental do apply to music and computer programs, with exceptions for libraries and non-profit institutions.)

Having said this, it might seem that eBay could quite easily create a resale market in digital music. After all, given the underlying logic of first sale, it would seem people could download a song from iTunes, then go to eBay, and resell it.

The problem is, the first sale doctrine only provides an exception to the right to distribute.  It does not implicate copyright holders’ exclusive right to make copies of their works.  If you were to resell your iTunes song, you would necessarily have to makie copies – a copy in RAM, in intermediate computers in transit, and a copy on the buyer’s computer.  At least the latter and perhaps all would likely infringe the right to make copies, even though you might not infringe the distribution right.  The only way you might be able to resell that song in a clearly legal way is to send the physical hard drive on which the song is stored to the other person.

The Register of Copyrights argued that first sale does not apply to the digital world.  People have since suggested an exception for “forward-and-delete” technologies, which would immediately delete the copy on the distributor’s computer if it is being resold.  But until such an exception exists, forward-and-delete still involves making copies and thus still could be infringing.

That’s probably a primary reason why eBay will only allow digital songs to be sold with the authorization of the copyright holder.  A few other reasons may also apply.  First, the first sale doctrine only applies to lawfully made copies.  eBay may worry about people trying to resell pirated copies, claiming that they were licensed, and that eBay would somehow be held liable for secondary copyright infringement.  Second, both contract and DRM can limit consumer’s rights to resell.  While these restrictions apply to the consumers who own the file and not to eBay directly, eBay might worry about people trying to sell songs limited by contract and DRM and then being caught in between the buyer and seller.

For more on first sale as it applies to digital music in particular with a broader look to other jurisdictions, see the Berkman Center’s iTunes Case Study.   Regarding first sale in the digital world in general, see this paper by R. Anthony Reese.

Filed by Derek Slater at 4:09 am under General news
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