Category Archives: international IP

What’s up with Antigua?

March 1, 2013 Kevin Smith, J.D.

I wrote this post several weeks ago, intending to explain the oddities of international copyright treatises that led to Antigua being poised to become a “copyright haven” that does not recognize US copyrights. Many other events intervened, but I think it is still worth posting for the sake of the explanation, which some readers might find informative. As far as I know, nothing further has occurred, and I suspect that the two governments are negotiating, after the threat from Antigua got the attention of the US.

The media and bloggers have feasted on the irony — little Caribbean island nation Antigua is going to become a copyright haven, where works from the US film and music industry can be shared freely and without constraint from copyright laws. The US has warned Antigua not to do this, but the World Trade Organization has ruled that it is an acceptable sanction to impose on the U.S. for, of all things, not allowing Americans to gamble on Antigua’s online casino sites. The whole thing, I think, requires some explanation.

The story really begins when the World Trade Organization (WTO) adopted an agreement, called TRIPs, for “Trade-Related Aspects of Intellectual Property Rights,” that made the Berne Convention binding on all members of the WTO. Prior to TRIPS, the international copyright agreement known as the Berne Convention obligated its signers to do certain things, but it did not really have any “teeth.” If nations ignored the obligations they undertook, there was little that the World Intellectual Property Organization, a U.N. body that administers Berne, could do about it. But when the copyright requirements were made part of the obligations of all members of the World Trade Organization as part of the 1994 General Agreement on Tariffs and Trade (GATT), they suddenly gained an enforcement mechanism. WTO members are allowed to retaliate against other WTO members that implement unfair trade practices, as defined by the GATT.

Trade sanctions usually involve the same goods and the same market — if country X refuses to buy cotton from country Y, country Y is entitled to impose a tariff on cotton from country X. But the WTO also allows so-called cross-retaliation, where a country can redress the wrong done to it in one market by suspending its obligations in another market.

In the Antigua/U.S. dispute, cross-retaliation has been approved by the WTO. The origin of the dispute is in the U.S. Unlawful Internet Gaming Enforcement Act from 2006, which made it illegal for off-shore gaming sites to take wagers from gamblers in the U.S. Antigua complained that this was an unfair trade restraint, and the WTO agreed, saying that Antigua was harmed to the tune of 21 million U.S. dollars. The ruling also affirmed the right of Antigua to take retaliatory steps against the U.S., including in different markets. Since intellectual property is now a market governed by the WTO through the TRIPS agreement, Antigua announced, and the WTO approved, that retaliation would take the form of suspending the recognition of U.S. IP rights in Antigua. This was an astute strategy on the part of Antigua, given how dedicated the U.S. administration is to appeasing the traditional entertainment industries. Thus it has become possible, but not certain by any means, that free Internet movie and music sites would develop on the island, which could not really be called “pirate” sites because the failure to recognize US copyrights would be sanctioned by the WTO.

The irony of the situation is fodder to many commentators. This column from a British paper notes that the idea of allowing cross-retaliation in the first place came from the U.S. And Mike Masnick from TechDirt suggests that the US entertainment industry has been “hoist by its own petard,” since one of the many means by which the so-called “copyright minimalists” have sought to ratchet up IP enforcement seems to be coming back to bite them.

For my part, I think the whole dispute illustrates what a mistake it is to treat intellectual property rules, and especially copyrights, as mere trade regulations. First and foremost, to do so ignores the underlying purpose to serve the public good that animates those rules in the U.S. and in many other nations. When these rights become pawns in the cross-retaliation games of international trade organizations, it becomes clear how complete the divorce is between copyright and its justification, which is to build an incentive for creators to create. And what seemed like a good idea to the major content industries, because treating copyright as a purely trade issue would provide greater enforcement opportunities, has turned out to be a very sharp two-edged sword.

In reality, copyrights very seldom serve their proper function as incentives for creation. Many creators are unaware of the vast period of protection their works will receive automatically and create for entirely other reasons. For the small fraction of copyright holders who do rely on copyrights to produce income, those rights are almost always transferred to intermediaries who exploit them primarily for their own benefit, so that the incentive function is curtailed. Witness how ardently the music and movie industry is fighting the “termination right” that was enacted in our copyright law to ensure that creators would have an ongoing opportunity to gain from their rights. Although support for individual authors has always been the battle cry of the publishing and entertainment industry, its role as an incentive has always been dubious. And when it becomes a chip in this poker game over trade — a bargaining position to defend online gambling, of all things — it is even more clear that concern over creativity has gone out the window. We will hear, of course, that what Antigua has threatened will be bad for artists, musicians and actors, but those folks will likely never feel any effects if Antigua becomes a “copyright haven.” Instead, this is a battle over trade policy that reveals just how cynical we have become over IP rights.

The collision of copyright and e-science

January 21, 2013 Kevin Smith, J.D. 2 Comments

Last week I was attending a meeting on campus that had nothing to do with e-science (which today refers to virtually all science, I suppose) when a very fortuitous event occurred. Professor Jerome Reichman of the Duke Law School handed me a copy of the April 2012 issue of the Minnesota Law Review (vol. 96, no. 4). That entire issue is an article written by Reichman and Professor Ruth Okediji of the University of Minnesota Law school called “When Copyright Law and Science Collide: Empowering Digitally Integrated Research Methods in a Global State.” It is a long article at 118 pages, although, because of the structure and conventions of law review articles in general, it is a quicker read than one might expect. More importantly, however, it is a very rewarding excursion into the ways that copyright law around the world have developed and become an obstacle to scientific research, an even more “immediate and pervasive threat”, the authors suggest, than the more attention-grabbing problem of patent thickets.

The purpose of this post is to summarize the article and commend it to those who want more. The growing interest in e-science on campuses makes this a timely topic; we need to understand the potential difficulties that copyright law can create for digital research and scientific communications. And I have to begin by saying how grateful I am to Jerry Reichman for making the effort to keep me current with the work he and Ruth Okediji are doing. They are superb scholars whose work could and should have a direct impact on how universities support research and advocate for laws that facilitate, or at least do not impede, that research. Their joint work has tackled scientific issues and IP before, so I am delighted they are turning their considerable intellects to copyright and science. Jerry is also a good friend and, as I now know thanks to my young cousin who had him as her Contract Law professor a couple of years ago, a fine teacher.

Reichman and Okediji begin their article with an historical examination of the “growing divide between copyright law and scientific research” that encompasses both the unique conditions in the U.S. and international obstacles to science that arise out of the complex of treaties and directives that are now in place. They demonstrate convincingly that the traditional balance that has facilitated scientific research for years has been subverted recently by a variety of factors. Among these unhappy developments are the trend toward ever more protectionist approaches to copyright, database protection rules in the EU and judge-made protection for facts and data in the U.S., the use of technological protection measures to lock up data that would otherwise be free for scientific reuse, and an overemphasis on the so-called three-step test from the Berne Convention, which is too often applied without any normative guidance.

In the course of this discussion, Reichman and Okediji make an interesting observation about limitations and exceptions to copyright in general, and fair use in particular. They note that the traditional European approach to exceptions focuses on specific, narrow exceptions that lack flexibility. There is little surprise in their conclusion that the EU needs the flexibility of fair use. But they are also critical of the “all or nothing” approach that fair use fosters, where a use is either forbidden as infringing, or, if found to be fair use, does not allow for any compensation of the rights holder. In some situations, they suggest, especially when the path to scientific progress leads through commercial users, a “take and pay” rule, similar to what is found in the EU three-step test, might be welcome.

The overall situation that Reichman and Okediji outline is most unpromising, as they suggest that the rights of scientific users are shrinking even in the area of print media, and have been virtually eliminated for science conducted in the online environment. Again, the growing trend toward copyright or copyright-like protection over data is a large part of the problem.

In the area of e-science, Reichman and Okediji offer scientific research a Hobson’s choice between ignoring laws that have become unmanageable and unreasonable, or foregoing research opportunities. The two paragraphs in which they lay out these unavoidable options are worth quoting in full:

If the relevant intellectual property laws were strictly enforced, and the scientific community continued to respect them, scarce public resources earmarked for basic research would be siphoned off to intermediaries from scientists seeking access to and use of their own published research result. In that event, the public pays twice for the same output, plus a surcharge for mushrooming transaction costs … Less innovation, not more, is the predictable result over time.

Conversely, if intellectual property laws are ignored by researchers determined to carry on with their work irrespective of unreasonable legal constraints, automated knowledge discovery tools will become transformed into engines of massive infringement. It is hard to see how systematic disregard of intellectual property laws, coupled with growing contempt for the legislative process that fosters them, will benefit authors, artists and other creators in the long run, especially when those condemned to outlaw status are not free-riders on costly musical and cinematic productions, but publicly-funded scientific researchers in pursuit of greater knowledge and applications that benefit humanity as a whole.

This is a situation that cries out for reform, and it is clear from the above that reform must begin by distinguishing scientific and academic research from commercial productions. One-size fits all copyright laws are failing the scholarly community, and legislators and judges need to begin to treat scholarly works differently. Fortunately, Reichman and Okediji provide us with a detailed set of recommendations about what kind of reforms are needed.

One reform they suggest that judges could accomplish would be the aforementioned “take and pay” approach to some uses that might otherwise be defended, probably unsuccessfully, as fair use. The authors point out that Justice Souter suggested just such a possibility in a footnote to the Supreme Court’s decision in Campbell v. Acuff-Rose Music (the “Pretty Woman” case) but no judges have, up till now, taken the hint. The discussion from Reichman and Okediji on this point alone justifies a close look at the article.

Many of the other reforms they suggest are grouped under the heading “What E-Science Really Needs from Any Legislative Reform.” In that astonishing collection of suggestions, Reichman and Okediji include a tailor-made exemption for scientific research, rules allowing the breaking of technological locks more freely for research purposes, and limitations on the ability to override copyrights limitations and exceptions by using terms of use and other contractual arrangements. And one other that we should mention that is particularly relevant in the international context is an alignment between database protection rules and copyright exceptions. Not only should copyright exceptions be used to adjust database protection laws, say the authors, but these exceptions, both as the apply to copyright per se and to sui generis data protections, must be “preemptory, mandatory and immune from both contractual overrides and TPMs” (citing a report from the Max Plank Institute).

There is so much to digest in this article that I feel a little abashed trying to summarize it. But one thing is certain, I think. The attention that Reichman and Okediji shine on the conflict between copyright laws and scientific progress is simultaneously profoundly welcome and deeply troubling. Welcome because we must look at the problem squarely and honestly, and troubling because we have such a long way to go to solve it.

How to solve the Berne Problem, part 1

April 18, 2012 Kevin Smith, J.D.

The conference on Orphan Works & Mass Digitization, hosted by the Law School at the University of California, Berkeley last week, was exciting — at least to the 230 copyright geeks like me who attended — and filled with well-researched papers. The three White Papers that were prepared by the Samuelson Law, Technology & Public Policy Clinic (written by former Duke Scholarly Communications Intern David Hansen) are well worth reading. In this first post I want to look at a basic terminological issue and then focus on two general observations from the event. In a subsequent post I will describe three specific suggestions made by conference speakers for solving the orphan works problem.

It is the phrase “orphan works problem” itself that sparked terminological debate. Several speakers were uncomfortable with that expression, and an alternative – “hostage works” – seemed to gain some traction among participants. But the suggestion that really got to the root of the issue was that we should refer to the proliferation of works still in copyright protection but for which no rights holder can be located as the “Berne problem.” This is appropriate because the problem was so severely exacerbated by U.S. adherence to the Berne Convention in 1988 and the legislative changes that that decision required. Four steps contributed significantly to the problematic situation we are currently in:

The move to automatic protection, which often makes people into rights holders against their will and without their knowledge,
Copyright term extension, which inevitably makes heirs or successors-in-interest into rights holders, again often unawares,
The end of the renewal requirement, so that rights holders no longer have a chance to indicate their continued interest in a work; thus no “abandoned” works move any longer into the public domain,
The end of the registration requirement, which now makes locating rights holders so much more difficult.

The combined effect of these changes to U.S. copyright law, all accomplished between 1978 and 1989, has been to create a huge class of orphan works. So it is not surprising that many of the suggestions for how to deal with the problem pushed toward reversing or mitigating some of these changes. Registries, for example, were a common theme; under these various proposals to create registries to assist in finding copyright holders for different types of works, we would simply be recreating (hopefully more efficiently) the registration database of the Copyright Office, which once could claim mandated comprehensiveness but unfortunately can do so no longer.

The first observation from the conference is that nearly all of the speakers (except the industry representatives and Registrar of Copyright Maria Pallante) seemed to think that legislation to solve orphan works is probably impossible and likely a bad idea. The political climate in Washington makes attention to copyright issues unpalatable, and the proposal we saw several years ago was unattractive to many of the speakers. Instead of newly created legislative schemes, potentially with burdensome and impractical requirements, many of the speakers looked for small changes that could be accomplished either in common law – by action of the courts, that is – or by simple legislative amendments to portion of the law as it currently stands. In our next post we will examine some of these more modest suggestions.

Closely related to this distrust of the legislative process as a path for solving orphan works was a clear distaste, again expressed by multiple speakers, for solutions that would create a regime of extended collective licensing (ECL). Such ECL programs would, of course, require a complex legislative enactment, and examples where such programs are in place were widely considered failures on a practical level; a professor from Canada, which has such a plan, was especially clear that this is not a workable option. On the level of policy, an ECL scheme, where potential users of orphan works apply to some government-authorized board for permission and pay a fee, was denounced as economically inefficient. The purpose of legislative licensing schemes is to facilitate the transactions so that users can find owners and owners benefit from the uses. With orphan works, of course, there is no owner to be found so no transaction like this is actually facilitated. Instead, the fee that would be paid to some collective organization would amount simply to a tax on use, with no economic benefit or incentive for creators at all. One speaker refer to this sort of approach as similar to the medieval practice of selling indulgences, based on a dogmatic conviction that all unauthorized uses are a form of “sin.” Any program based on such a foundation, rather than on solid economics, incentives for creation and cultural development, would be bad policy from the copyright point of view.

First sale goes to the Supreme Court, again

April 16, 2012 Kevin Smith, J.D. 2 Comments

With the Orphan Works conference taking place last week, there is an awful lot to blog about. I will address the conference in the next couple of postings (unless there is a GSU decision), but for now I want to look at another round in the John Wiley v. Kirtsaeng case.

Lest we have forgotten, Kirtsaeng was the latest in a series of cases asking to what degree the doctrine of first sale, which says that the purchaser of a lawful copy of a work may further distribute that copy as she pleases, applies to copies of works that were manufactured and sold abroad. In 2010 the Supreme Court looked at this issue in Costco V. Omega. In that case, Justice Kagan recused herself because she had worked on the case as Solicitor General for the Obama administration, urging a ruling in support of Omega watches over Costco, which was importing watches purchased cheaply overseas and underselling the MSRP in the US. The Ninth Circuit agreed with SG Kagan and ruled against Costco, holding that the US doctrine of first sale did not apply when an item was made and purchased overseas. The Supreme Court, without now-Justice Kagan, split 4-4, a vote which left the Ninth Circuit’s ruling in place but did not make it binding precedent for the rest of the country.

Then, in 2011, the Second Circuit upheld a lower court in ruling that Mr. Kirtsaeng was an infringer for reselling copyrighted textbooks that his family members bought in Thailand and sent to him in the US, where he could get a higher price for them than had been paid. The Second Circuit handed down a sweeping ruling, which I criticized here, in which the two-judge majority went further than Costco and maintained that first sale would not apply even if the work that had been manufactured abroad was sold in the US with the authorization of the rights holder. As I said in my earlier post, this created a situation where the copyright holder could knowingly and deliberately take advantage of all the protections of US law without being subject to one of its most important limitations.

Now the Supreme Court has agreed to review the case, and many people hope that they will correct the overly broad ruling made in the Second Circuit.

One of the things that often leads the Supreme Court to agree to hear a case is a split amongst the Circuit Courts of Appeal on a particular point of law. Here such a split is very clear. The Second Circuit holds that a foreign-made work can never be resold in the US by any purchaser without the consent of the rights holder. The Ninth Circuit, in the Costco case, says that such a work may be resold in the US, but only after an authorized “first sale” in the US. And the Third Circuit believes that a US resale is alright anytime the original sale was authorized by the rights holder, even if that sale occurred outside the US (so that both the resales in Costco and Kirtsaeng would be legit). Given Justice Kagan’s position in the Costco case, I would guess, if I had to guess, that the Court would opt for the Ninth Circuit rule, which mitigates the absurd results from Kirtsaeng but still narrows first sale considerably over what the Third Circuit would allow.

I hope that as the Justices consider this case they will recall that, by adhering to the Berne Convention and the WTO’s TRIPS agreement, nearly all countries now extend “national treatment” to the citizens of every other signatory nation. This means, I believe, that we should read the requirement of “lawfully made” quite broadly. As long as a work is not pirated — that is, it is made and/or initially sold with authorization of the rights holder — we should recognize that it is entitled to full protection under US law and therefore ought to be subject to all of the limitations of that law. If rights holders want to practice price discrimination in different countries, they should rely on the cost of exporting to enforce those differentials and accept a certain percentage of “gray market” goods. But that is not what I expect to happen.

If my expectations rather than my hopes are fulfilled, it will be difficult for libraries to be secure in lending any of the works they purchase abroad, especially film. And vendors who sell to libraries might have to bear the extra expense of selling through a US outlet, if libraries become fearful of buying abroad. It is an issue that the library community, which depends for its most fundamental activities on first sale, needs to continue to watch closely.

Losing our focus

January 18, 2012 Kevin Smith, J.D. 3 Comments

Today the Supreme Court issued a decision in the case of Golan v. Holder which is a significant defeat, I think, for the public domain in the United States. Reading the opinion has made me wonder if we have really strayed from our fundamental commitments about intellectual property.

The case involved the complex and technical issue of restored copyrights in foreign works – works that were originally created and published abroad. As part of the U.S.’s decision to join the Berne Convention and other international treaties on intellectual property, Congress enacted an amendment to the Copyright Act, now found in section 104A, that restored copyright in foreign works that had risen into the public domain in the U.S. but were still protected in their countries of origin. The effect was to remove works from the public domain after they had already lawfully become the property of every U.S. citizen. Several groups, including musicians, publishers and others who had relied on the ability to freely exploit these public domain works, brought a lawsuit to challenge the constitutionality of this unprecedented alteration in the terms of the copyright bargain.

Those groups lost today. Six Justice of the Court found that the “Uruguay Round Agreements Act,” which enacted this restoration of copyrights, neither exceeded Congressional authority under the copyright and patent clause of the Constitution nor created a conflict with the guarantee of free expression found in the First Amendment. The full decision can be found here, and there is a brief report from the Chronicle of Higher Education as well. For me, several recent readings and discussions provided a context as I read the decision.

Last night my colleague Will Cross and I were teaching a class session on copyright for library students. Will discussed (among other things) two aspects or principles of copyright decision making that seem relevant to today’s decision. First was the idea that the federal courts tend to show great deference to Congress in the area of copyright. That deference is very evident in today’s majority opinion: “This Court has no warrant to reject Congress’ rational judgment that exemplary adherence to Berne would serve the objectives of the Copyright Clause.”

The other principle Will discussed was the incentive purpose that is given as the reason, in the Constitution, for allowing Congress to enact intellectual property laws. This purpose is pretty clearly rejected by the majority, when Justice Ginsberg writes that “Nothing in the text or history of the Copyright Clause, moreover, confines the ‘Progress of Science’ exclusively to ‘incentives for creation.’” It is hard to see how else that clause can be read, and Justice Breyer, in his dissent, provides a compelling account of why the U.S. enacted copyright in the first place, and why it is supposed to be limited. He goes on to note that “The statute before us, however, does not encourage anyone to produce a single new work.”

It seems clear to me, as it does to Justice Breyer, that the wording of the Constitution’s Copyright Clause was to restrain Congress and direct that laws serve a specific purpose. The majority of the current Court, however, does not see it that way. We really have opposing visions of copyright law at work here, and the deference to any Congressional enactment, no matter how one-sided and counter-productive to new creativity, has made the Constitutional language increasingly ineffective. It is one of those situations where we must hope that, over time, the persuasiveness of the dissent will eventually move it to be the majority view.

I recently read an article from 1890 on “The Evolution of Copyright” by Brander Matthews. It was written just as the Berne Convention was being formed, and its intent was to commend the new international organization to U.S. lawmakers. Matthews is clear about how much the Berne approach, modeled on the French “natural rights” view of copyright as it is, differs from the approach taken in England and the U.S. Clearly he hopes the U.S will change course. For nearly a hundred years that did not happen, but perhaps now we are seeing, unfortunately in my view, the steady erosion of the instrumentalist view of copyright that has prevailed in the U.S. for some time, and is enshrined in our Constitution, in favor of a natural rights approach that favors those who already own rights even when that favoritism disadvantages those who would create new works.

To slightly change focus, however, I want to end with one note of optimism. The past couple of weeks has seen, in my opinion, a remarkable awakening of public interest in copyright and access issues, sparked by a couple of unfortunate pieces of legislation. There has been a lead article about open science in the New York Times, and the 24 hour shut down of Wikipedia in protest over one of these bills – the Stop Online Piracy Act — has made digital copyright a topic of national discussion. The web site PopVox has set up a central site for comments and advocacy against the other bill, called the Research Works Act and designed to undermine efforts toward public access for publicly-funded research. With all this attention, it is still possible to hope that public pressure, and especially concern over the functioning of the Internet, will begin to turn our national focus back toward that instrumental and incentive-based view of copyright.

Using copyright for its intended purpose

December 28, 2011 Kevin Smith, J.D. 2 Comments

At its roots, copyright in the Anglo-American legal system is a statutory grant of rights intended to be an engine for innovation. Copyright and patent legislation is the only type of law whose authorization in the Constitution is specifically tied to a purpose — “to promote the progress of science and useful arts.” If copyright legislation does not serve this purpose it is, arguably, unconstitutional.

This is part of the real irony of SOPA, the bill currently being considered by the House of Representatives that would fundamentally alter how the Internet works in the U.S. in order to protect the traditional entertainment industries. Such a bill, which would kill innovation in the name of protectionism, may be unconstitutional. That it is a bad idea is especially clear when we look at how other countries are considering adjusting their copyright laws precisely to better support innovation and economic growth.

In Brazil, a third draft of proposed copyright legislation has recently been released. As Pedro Paranagua, a Brazilian copyright expert, tells us, there is both good and bad in the bill, but as I read his list of incorporated provisions, I am jealous of the attention being given to the real purpose of copyright, which is economic development through innovation. Exhaustion of rights, what we call first sale in the U.S., would be defined in a way to prevent the recent debacle in which Omega abused copyright, in my opinion, to suppress legitimate price competition for its watches. Collecting societies would be overseen by government watchdogs, and contract principles about serving the public interest and avoiding undue burdens would be explicitly incorporated into the copyright law. Compulsory licenses would be available for uses of orphan works, and creators would have the explicit ability to dedicate their work to the public domain. Finally, there is a proposed set of exceptions that covers at a lot of the socially beneficial uses that are still unreasonably controversial in the U.S.

Even one of the things that Pedro is nervous about, ISP liability under a notice and take down scheme, seems like a good idea that the U.S. must fight to maintain. The notice and take-down system under the DMCA has allowed a lot of innovative businesses to thrive (YouTube being the most prominent), and that system is under severe threat if the provisions of SOPA get enacted. So while Paranagua worries about a DMCA-style regime in Brazil, I am desperately hoping that we can keep that regime in place in the U.S.

Brazil has also been at the forefront of the World Intellectual Property Organizations discussion of limitations and exceptions. The resulting WIPO agenda, looking primarily at exceptions for libraries and for access for persons with disabilities, reflects many of the ideas mention above, including cross-border uses (the subject of first sale and the Costco dispute), a solution to the problem of orphan works, and the relationship between copyright law and private contracts.

This last issue brings me to the most detailed document I have been looking at recently, the “Consultation on Copyright” released by the British government. The UK has undertaken a thorough review of their copyright law in the past couple of years, explicitly to address the places where copyright interferes with innovation rather than fostering it. The consultation is seeking hard data about the impact of the changes that were proposed by the commission it set up, called the Hargreaves Commission. Many of the provisions are similar to the ones I have already mentioned. But here is the language the really caught my eye:

The Government agrees that, where a copyright exception has been established in UK law in order to serve certain public purposes, restrictions should not be re-imposed by other means, such as contractual terms, in such ways as to undermine the benefits of the exception.
Although contract terms that purport to limit existing exceptions are widespread, it is far from clear whether such terms are enforceable under current contract law. Making it clear that every exception can be used to its fullest extent without being restricted by contract will introduce legal and practical certainty for those who rely on them.

I have argued in the past that contracts should not be allowed to preempt copyright’s limitations and exceptions, at least in cases where the contract at issue is not subject to “arms length” negotiation. Here the Conservative government seems to be embracing that position (not because I suggested it, of course, but because the Hargreaves commission did) and even carrying it further. Recognizing that copyright exists to serve a public purpose, and that that purpose should not be undermined by one-sided private agreement, such a “click-through” contracts on websites, would be an important step toward providing the consistency and certainty that all law-making aims for.

The point of this very quick and cursory survey of international proposals for copyright reform is simple. Throughout the world, even in those countries that, unlike the U.S., embrace a natural-rights account of copyright, reform is focused on supporting innovation and not allowing a system that worked in the past become an obstacle for the future. Yet in the U.S. all of our copyright proposals, and even statements from our Registrar of Copyrights, seem focused on protecting the old ways and staving off as long as possible the innovation that provides our best economic hope. If we cannot learn from our competitors and our trading partners, we will certainly be left behind.

Getting first sale wrong

August 24, 2011 Kevin Smith, J.D. 13 Comments

Last week the Second Circuit Court of Appeals handed down a decision with potentially disastrous consequences for higher education. I admit that I have been reluctant to write about it because I cannot think of a good remedy for the situation and I dislike the role of Chicken Little, always crying that the sky is falling. But with this decision two judges on the 2d Circuit really did open some cracks in the firmament above higher ed., and there is no way to ignore them.

In the case of John Wiley & Sons, Inc. v. Supap Kirtsaeng, the court has held that the “First Sale” doctrine in copyright law – which allows libraries to lend books and consumers to resell the books they buy – applies only to works that were manufactured in the United States. In an earlier case (Costco v. Omega, which was affirmed by an evenly divided Supreme Court) the Ninth Circuit had ruled that first sale did not apply if a work was manufactured and sold abroad, but the Second Circuit went much further. In last week’s ruling they decided that first sale did not apply even when the work manufactured abroad was sold in the U.S. with the authorization of the copyright holder. Thus they have created the anomalous situation where a rights holder enjoys the full protection of U.S. law, but consumers who buy the work do not have the advantage of a basic rule for their protection.

The Second Circuit panel seems to know this is a bad decision, and yet they make it anyway. In a footnote they acknowledge that they are creating an incentive for content companies to move their operations, and the jobs that go with them, off-shore. And the very well-reasoned dissent also makes it clear that the state of the law did not require this sweeping limitation on first sale. After several readings I am still not sure why these two judges felt compelled to so dramatically change first sale after over a century of its successful application.

The irony of this decision is that in creating an incentive for publishers to publish their books overseas, the “manufacturing clause” in the Copyright Act (section 602) was used by the Second Circuit panel to accomplish the exact opposite of what it was originally intended to do, which was to defend U.S. businesses. (Note, as a sidebar, this article from Forbes on the “chain reaction of decline” in U.S. manufacturing and imagine it getting worse as both law and economic conditions create negative incentives for U.S. manufacturing).

One of the problems that the Wiley decision creates is uncertainty about library lending. Libraries do not even know, I am afraid, how much of their collections are manufactured abroad. In the Second Circuit, however, lending anything that was manufactured outside the U.S. is now in question, regardless of where it was purchased (even directly from the publisher). The manufacturing clause that is at the root of this decision does contain an exception for the importation of books “for library lending purposes,” but it does not say is that libraries can actually lend these books. There was no reason to say that, of course, since Congress clearly assumed that first sale would apply. But Congress didn’t anticipate the short-sightedness of these two judges. And the situation is even worse for video, since the exception for audio-visual works in the manufacturing clause only mentions “archival purposes,” not lending. So potentially very large, and probably indeterminate, portions of a library’s collection in the Second Circuit (NY, VT and CT) may now be in a grey area – they can certainly be used in the library but may not be available for legal lending.

I hate to imagine it, but this decision raises some frightening possibilities and requires greater vigilance on the part of librarians. At the very least, libraries must demand information from publishers about where every item has been manufactured. Obtaining such information is no longer an option, since our legal uses of the things we buy now depends on knowing this, and the place where the publisher is located or where the sale took place is simply not sufficient. But what I really fear is that publishers will begin to manufacture more of their works overseas and then try to demand a higher price – one that includes “public lending rights” – from libraries.

If libraries are in a difficult position, students may be even worse off under the Second Circuit’s ruling. Again, publishers now have an incentive to manufacture their textbooks abroad and sell them to U.S. students. Such students would no longer have the right to re-sell their textbooks or to purchase used texts. The defendant in the case, Supap Kirtsaeng, had made a lucrative business out of reselling textbooks purchased in Asia. He was perhaps an unsympathetic party, but what he was doing was not different in kind from the resale of texts that is common on all college campuses. This activity makes higher education a little more possible for many. Now publishers have an easy way for to close down this secondary market for textbooks, about which they have complained for years. In the process, the cost of education for college students would be pushed up even further.

So what can be done about this appalling decision? There are very few real options, but here are some suggestions:

In the short term, libraries can demand manufacturing information and, for works manufactured outside the U.S., insist on a “right to lend” being including in purchase agreements. If publishers try to charge extra for this, libraries must walk away from the purchase.
The Second Circuit could be petitioned to re-hear the case en banc. The decision as it came out last Tuesday seems almost careless, and it certainly went beyond what was necessary to uphold the District Court ruling against Kirtsaeng. The Ninth Circuit rule from Costco would have been sufficient grounds for an affirmation, so there was no cause in either the facts or the law for this strange holding. Perhaps the whole Second Circuit could reexamine the situation and set it right. But is the defendant willing to take this path?
Congress could amend the law to make clear that first sale applies in the U.S. whenever a work is sold with the authority of the rights holder. Much in the Copyright Act indicates that this was the intent of the law in the first place, and either section 109 or 602 (or both) could be easily amended to reverse the harmful effects of the Wiley court’s misunderstanding. But is Congress really interested in technical amendments to the Copyright Act right now, however badly they are needed? The two Judges in Wiley themselves suggested that Congress could correct them if they were getting it wrong (they were!), but as the ARL Policy blog noted last week, this seems more like a taunt, in the current political climate, than a real option.

international IP, Traditional Knowledge

US endorses public domain for TK — Man bites dog!

February 28, 2011 Kevin Smith, J.D.

From Dave Hansen, J.D., the 2010-11 intern for Duke’s Scholarly Communications office:

A while back Kevin wrote a blog post highlighting the Ghanaian copyright law’s treatment of traditional knowledge and folklore. He pointed out two very basic ambiguities in Ghana’s domestic protections: (1) How exactly is “traditional knowledge” defined, and (2) who owns it?

These two questions are coming up again this week as a group of intellectual property delegates will meet at the World Intellectual Property Organization (WIPO) headquarters in Geneva to discuss a draft text for the international protection of traditional knowledge. As the WIPO meeting agenda indicates, the discussion will focus on a heavily annotated draft text produced at the last meeting of WIPO’s traditional knowledge working group.

First, delegates must address the contentious question of what, exactly, constitutes “traditional knowledge.” Although the working text of the agreement has more bracketed terms than anything else, it generally focuses on protecting three general classes of knowledge: (1) knowledge created or preserved in a “traditional context,” (2) knowledge customarily recognized as belonging to traditional groups, and (3) knowledge integral to the cultural identity of a particular community. These definitions, while just as vague as those in the Ghanaian copyright law, are the subject of intense comment and seem likely to change.

What is more interesting is the discussion of who should be granted traditional knowledge rights—a debate which largely centers on the type of protection afforded by the agreement. Traditional knowledge protections can come in two basic varieties: “defensive” and “positive.” Defensive traditional knowledge protections ensure that rights to pre-existing content will not become restricted from use by the original community. This protection is typically achieved by instituting a registry or database of existing TK, providing prior art which will defeat future claims of originality or novelty by those trying to assert copyright or patent rights over TK content. Positive protections, however, grant exclusive rights over traditional knowledge that are analogous to the rights granted by copyright or patent law—rights that can be asserted to exclude, license, and profit from particular works. While the draft agreement certainly provides for some increased defensive protections, the bulk of the rights granting language focuses on positive rights.

The implications that this positive-defensive rights debate has on the scope of the global public domain is not lost on negotiators. While defensive protections essentially seek to document what should already be available for public use, positive protections seek to pull some works out of what, in the United States at least, would be considered the public domain. In the comments to the draft text it is clear that some delegates are resisting the push for strong positive rights. Norway and the United States, among others, are asking that the agreement find the “right balance between TK that was subject to protection and knowledge which was or had become part of the public domain.” The United States, echoing this concern, cited the WIPO Development Agenda’s call to “support a robust public domain in WIPO’s Member States” as reason to resist a broad positive rights framework.

On the other end of the spectrum, representatives from developing nations made the point that already traditional knowledge—some of which would be thought of as in the public domain in the United States—is not freely available for anyone to use, and those given access should have responsibilities and obligations extending indefinitely into the future. The representative of one indigenous tribe made the following comment:

Public domain was a western concept that was designed for commerce and was a bargain that was set for a grant of private property rights for a limited amount of time after which knowledge would go into the public domain. Such a concept did not necessarily exist in indigenous knowledge systems.

True enough, but the underlying “commerce” concerns of the western public domain, in the United States at least, go to the very heart of its philosophy on the appropriate encouragement of the “progress science and the useful arts” and the scope of acceptable limitations on free speech.

As the draft text develops, it seems increasingly likely that this agreement will provide the first ever legal definition of the scope of the international public domain—something ACTA, TRIPS, Berne, and all other international IP agreements have thus far failed to do. While the move toward international protection of traditional knowledge has been a long time coming, this deliberate new focus on the scope of the public domain is, hopefully, a sign that that IP and trade representatives from the United States and Europe have (finally) come to acknowledge the importance of a vibrant public domain.

Bringing this back to the world of scholarly communications, positive protections that award rights over certain traditional knowledge works is somewhat worrisome because it is library collections that house some of the rare copies of expressions of traditional knowledge existing in the United States and other developed nations. Expanding international protections may severely curtail what academics can do with those works, and it will almost certainly limit their ability to collect some of these works in the future. The big picture impact of this traditional knowledge agreement remains to be seen, but the scope of the public domain is at play—for traditional knowledge specifically, but inevitably outlining its scope in general—and that is a concern which extends far beyond libraries and the scholarly world.

Some good examples from abroad

February 15, 2011 Kevin Smith, J.D. 2 Comments

It seems I have been looking at a lot of international comments and writings about copyright lately, for reasons I explained a couple of weeks ago. Now I have the chance to pass on two really interesting examples of sensible approaches to the reform of copyright law.

When British Prime Minister David Cameron announced that he was ordering a review of the relationship between IP protection and economic growth, I was one of many who was heartened by the decision. That was especially true because Cameron singled out the possibility, certainly correct but frequently ignored, that fair use provisions could be an essential part of copyright laws that truly foster growth.

Now I am pleased to report that the review panel for this effort has been named. It includes not merely representatives from the traditional content industries, but an economist, two law professors and a specialist in entrepreneurship, as well as one of Britain’s most creative media executives. One of those professors, I am happy to say, is Duke’s own (but Scotland’s native son) James Boyle.

In addition to the desire to hear a diversity of views that is evinced by this panel, there is also strong evidence that the work of the review group will be carried on in an open and public fashion. The panel has a blog that is being used to recount the various travels and interviews that will go into creating a final report. It should make for fascinating reading.

Both these approaches should be lessons to the Obama administration, whose own recent report on IP protections is clearly the work solely of “the usual suspects” from traditional content industries and which also worked hard to keep the recent ACTA negotiations as secret as possible. The contrast could not be more telling.

Back on this side of the Atlantic, there is also a great deal to learn from the ongoing process of copyright reform in Brazil. As Pedro Paranagua explains in this post on the IP Watch blog, there is a lot of pressure being brought to bear on the Minister of Culture, who is leading the effort at reform. That pressure, of course, comes from both sides of the debate. One unfortunate effect has been that the Ministry of Culture itself has stopped using a Creative Commons license on its website. Paranagua asks if it is inevitable that the process of reform remain polarized and schizophrenic, or if it is possible to take a “both/and” approach to the debate between wider cultural access and fair remuneration for copyright holders.

Needless to say, Paranagua advocates the both/and approach, arguing that both broader access AND fair profits are possible, as well as suggesting that both a non-exclusive list of exceptions and limitations AND a fair use style flexible exception would make for a truly balanced law.

A more sensible copyright law

February 2, 2011 Kevin Smith, J.D. 4 Comments

One of the ways I try to deepen and provide nuance to my understanding of copyright law is to engage in thought experiments about how different alterations to the law might make a practical difference for creators, rights holders and users. Copyright law is so metaphysical (as Justice Story famously observed) that its practical application is by no means intuitive. Anyone who teaches regularly in this area has had the experience of drilling some point home, only to discover that the listeners get the point as an abstraction but cannot apply it. Reading case law is one way to address this difficulty. Another is to ask what difference changes in a particular provision might make in the everyday world.

So when I saw this blog post about about Fair Usage in Caribbean Intellectual Property I saw an opportunity to consider alternative structures for copyright. Ms. Inniss observes, in her brief discussion, that the Jamaican Copyright Act is “the most comprehensive piece(s) of copyright legislation which seeks to balance the interests of both the copyright holder and the end users.” Since I have often commented on the imbalance of US copyright law, here was a chance, I hoped, to see how other decisions might make a real difference. I was not disappointed.

My brief perusal of the Jamaican Copyright Act has not been either comprehensive or critical; I claim no expertise and nothing I write here should be taken as anything but one of those thought experiments. With that caveat, here are some of the different choices made in Jamaican law, as opposed to that in the U.S., that seem sensible to me:

In its definitions section, Jamaican law defines an “arrangement,” over which the rights holder has control, in a much more exact and limited way than “derivative work” is defined in the U.S (section 2). The Jamaican definition suggests how to protect the legitimate interests of a rights holder without choking off too many creative opportunities that could arguably considered derivative. Most creativity, after all, is derivative of something, but the degree of dependence and similarity varies a great deal, so more nuance in a derivative works right would foster the goal of copyright.

The term of the Jamaican law is life of the author plus fifty years, and anonymous works are protected for 50 years from first publication. Film and sound recordings are also protected for 50 years, from the time of their creation (sections 10-13). In short, Jamaica has not followed the U.S. down the ruinous route of every longer terms, but stuck with the minimums required by international law.

Jamaica protects the moral rights of attribution and integrity of the work that are so important especially for scholars, but it subjects these rights to numerous exceptions to avoid preventing socially desirable reuse (sections 14-21). These rights are co-terminus with the economic rights (some last a shorter time, in fact) so they protect significant authorial interests without tying the works on which culture is built to the personality of the author forever (J.D. Salinger, anyone?).

There are no statutory damages available for infringement in Jamaica, although a form of punitive damages are at the discretion of a judge (section 32). This means that unscrupulous rights holders cannot threaten users with immense financial liability before even making their case to a court. The need to prove actual damage is just one of several ways in which the Jamaican law roots copyright protection in unfair business practices, which is, in my opinion, where it rightfully belongs. In this way, users of creative works who have no financial or competitive interest are not turned into targets for avaricious litigants.

It is important to note that the protection of moral rights in Jamaican law is a major reason that it is possible to make the economic rights more truly economic and focused on protecting real competition. Because reputational issues are unbundled from economic ones, rights holders with very different concerns are not all directed down the same legal paths.

Finally, the exceptions to the economic rights struck me as clearer and more designed to promote the general progress of “science and the useful arts.” There is a fair dealing provision applied to criticism, review and reporting that is exactly like the US four-factor fair use analysis (sections 53 & 54). But there is also a fleshed-out educational exception, so that repeated and socially valuable teaching activities do not depend on the vagaries of a balancing test. There are specific provisions that govern the creation of course packs and electronic reserves for teaching (sections 57 & 59). In the latter case, I might complain that the limits are too strict — 5% of a work and only when no license is available — except for the fact that licenses are governed by a Copyright Tribunal (section 96). Thus educational use is not left to the whims and profit motives of collective rights organizations that operate without oversight (as, for example, the Copyright Clearance Center in the U.S. does). And when all else fails, the Ministry of Justice in Jamaica is empowered to prescribe new exceptions that are deemed in the public interest (section 86).

All these things seem like sensible decisions to me; I hope others will join me in looking at this and other national copyright laws to see what we can learn about how our own law works, fails, and might be improved.

Discussions about the changing world of scholarly communications and copyright