Manufacturing controversy

Some copyright cases just don’t grab one’s attention, and I have to admit that I saw reports of the decision in Omega v. Costco several times before the potential impact on academic libraries began to sink in.  The case involves chapter 6 of the Copyright Act, referred to as the manufacturing clauses.  Since the principle requirement of the chapter, that works be manufactured in the US in order to be eligible for copyright protection, expired in 1986, I pretty much ignored the case the first few times I read about it.  Now I think that was a mistake.

The case is fairly complicated, and there is a nice summary of it here, on the IP Law blog.  The basic ruling, however, from the Ninth Circuit Court of Appeals, was that the doctrine of first sale, the rule that says that one who purchases a lawfully made copy of a copyrighted work may lend, resell, or otherwise dispose of that particular copy, does not apply to works that are manufactured and sold outside the US.  Basically, the court held, on reasonably good authority, that such works do not qualify as “lawfully made under this title (i.e. the Copyright Act),” which is a condition on the application of first sale.

Once I paid attention, it became very clear why this is a cause for concern in libraries.  Academic libraries especially buy lots of foreign materials, often from overseas distributors.  If first sale does not apply to those materials, can libraries lend them at all?  A negative answer could devastate our services in support of all kinds of language programs and area studies.  This possibility is raised in passing in this amicus brief urging the Supreme Court to review the case, filed by the Electronic Frontier Foundation.  Interestingly, however, the major library associations have not taken a position on the petition asking the Supremes to hear the case.  I was given two different reasons for this decision not to act, one which seems sound to me and one which leaves me with some concern.

One reason for not encouraging the Supreme Court to “take cert” (that is, agree to review the lower court’s opinion) is that there is real danger that the Supreme Court would affirm the decision.  That would make a problematic case from the West coast into binding law throughout the country.  Better, perhaps, that this remain an anomalous precedent only impacting libraries in the nine western states that comprise the Ninth Circuit.  Several authorities (Patry on Copyright and a concurring opinion in an earlier Supreme Court case) seem to support the position taken by the appeals court, and asking for cert might be asking for trouble.

More reassuring, but more problematic, is the other reason given for not taking action on this case — the exception for libraries that is built into the manufacturing clauses.  Section 602(a)(3) excludes certain copies purchased by libraries for lending or archival purposes from the general statement in 602 that importation of copies of copyrighted works purchased overseas into the US is an infringement of the distribution right.  That seems to let libraries off the hook.  But it is not entirely clear that this exception, specific as it is to section 602, actually solves the first sale problem created by the Ninth Circuit.  Even if it does, however, I am left with two concerns.

First, the section 602(a)(3) exception explicitly excludes audiovisual works from its scope.  For those works, only a single copy for archival purposes is allowed, and no mention of lending is made.  This suggests that even if print collections of foreign materials purchased overseas are OK, collections of film are not.  That would be a crippling lacunae for academic libraries.

The other problem is that, if the Ninth Circuit ruling stands, it might encourage textbook publishers to move their manufacturing and distributing operations overseas in order to be able to shut down secondary markets and thereby increase their profits.  The exception for libraries would not apply to resale of used textbooks, on which so many students depend to reduce their educational costs.  Closing off those used book markets would not directly harm academic libraries, but it would certainly hurt higher education.  Also, it hardly seems sensible to add to the incentives that are luring American manufacturing overseas.

I am thus left on the horns of a dilemma.  I want to see this decision overturned, but I agree that the review that would be necessary to reverse it would also carry a significant risk of an affirmation, which would be far worse.  It is an uncomfortable place to be, and one in which a good outcome is difficult to imagine.

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