House first sale doctrine hearing written testimony: Graphic Artists Guild, Owners’ Rights Initiative
June 3, 2014 | 5:04 am
Here are two more documents from yesterday’s first sale hearing. Like yesterday’s pair, they’re a half-and-half split: one in favor of expanding first sale, the other concerned over what the implications might be. We begin with the concerned one.
Graphic Artists Guild
Writing on behalf of the Graphic Artists Guild, Ed Shems explains graphic artist concerns over the possible expansion of fair use in a 5-page PDF. Graphic artists, Shems explains, frequently license their work rather than selling it outright. This allows them to tailor their fees to a client’s needs and not have to charge more than the client can afford for uses the client doesn’t need.
Shems expresses concern over the possibility of first sale’s expansion to digital goods, and also over a related issue he had heard the subcommittee was considering: “whether artists and other copyright owners should be able to write the terms of our license agreements with our clients based upon their actual needs without being subject to government regulation.”
That’s an interesting spin on things. I know there had been concern over shrinkwrap licenses and the effect they have on first sale (most notably concerning the Autodesk case) but hadn’t expected that to affect ordinary license agreements for creative works. But Shems is concerned that it might.
Shems’s objections to digital first sale are essentially the same as Wiley’s: digital goods don’t degrade over time, and “used” digital goods resales, as for e-books, would adversely affect his clients who use his artwork in their books.
Additionally, under the proposed change, I am concerned that because infringement will become even harder to police than it is now, once my artwork has been published, my work may then be altered by an end user in a manner to which I may object. This may include reworking of the art in an objectionable way or using it to promote or convey a message with which I do not agree. My artwork represents me and my point of view and changes unapproved by me might impact negatively upon my reputation and therefore my ability to attract work/clients. As a creative professional and small business owner, I am able to choose which clients I work with. Under an extension of the first sale doctrine, where copies of my work could be digitally sold to others I don’t know or work with, that right would be taken away from me.
He also notes that digital first sale is not something visual artists’ clients have been asking for either.
In regard to the issue of government regulation of license agreements, Shems holds that restriction of artists’ ability to license work to their clients will cause them to have to sell that work outright instead, and thus necessarily price their work out of range of potential clients who previously could just license that work on favorable terms, with price and payment options customized to meet those clients’ needs and ability to pay.
I’m not sure this is an entirely realistic concern, but nonetheless it’s interesting to hear how the question of first sale affects people outside the range of stakeholders who usually get all the attention when the first sale question comes up.
Owners’ Rights Initiative
The next stakeholder to have his say is Jonathan Band, counsel for the Owners’ Rights Initiative. ORI is an association of over twenty companies and trade organizations. These include library associations such as the ALA, Goodwill Industries International, and a number of e-tailers such as eBay, Etsy, Overstock.com, Powell’s Books, and Redbox. (We previously covered the Owners’ Rights Initiative here.) The ORI, Band explains, formed while the Kirtsaeng vs. Wiley case was pending before the Supreme Court, and has the goal of protecting and fostering first sale principles. (Given how many of its members deal with reselling used merchandise, it’s not surprising.)
This 15-page PDF reads in part like a mirror image of the Wiley one from my last post. Band starts out by explaining why Kirtsaeng was a good decision. It’s consistent with consumer expectations of being able to resell, give away, or destroy any legally-made goods they own, no matter where they bought them. (I’m amused he uses the example of someone giving a North Face jacket to the Salvation Army, given that Goodwill is one of the SA’s direct competitors.)
The ORI feels the Court made the right decision, and Congress should not intervene further, and devotes several pages to explaining why, looking at the different potential policy choices and reasons why among all the alternatives, the “international exhaustion” rule from SCOTUS’s precedent is the best option.
Next, Band discusses digital first sale. He actually only devotes one paragraph in support of reselling pure digital goods (the ORI supports it) but spends a few pages talking about a side issue concerning digital first sale that doesn’t get as much press as companies that want to let people resell e-books or music. This is the issue of physical goods that have a software component, such as a computer server or an automobile with an on-board computer. Manufacturers are able to use restrictive licenses on the software to prohibit or complicate transferring the hardware.
Preserving the resale rights of consumers of physical products that contain software is important for reasons that go beyond the protecting the economic interests of these consumers and the secondary market consumers who would purchase these products. If the manufacturer refuses to provide to the secondary market consumer the security patches it provides to the original consumer, the security of the secondary consumer’s computer system could be compromised. Such security patches typically are provided to the original consumer free of charge. In essence, the original purchase price entitles the consumer to receive security patches and other patches that fix bugs in the program.
And it’s also helpful to the environment by keeping otherwise resalable products out of landfills. The ORI supports addressing this issue with “a relatively simple amendment to the Copyright Act.”
Band closes with a brief note praising the International Trade Commission for a report noting that overly-restrictive trademark enforcement can be a barrier to international trade.
This is proving to be quite an interesting set of documents so far. Everyone seems to have a different idea of what first sale ought to be, and even the stakeholders who are on the same side don’t always want the same thing or for the same reason. I look forward to reviewing more of them.