Previously in this series:

Here’s the last batch (so far) of documents from the first sale House subcommittee hearing. If any additional material becomes available, I’ll pick that up down the line.

Public Knowledge

The first document for this entry comes from Sherwin Siy, the VP of Legal Affairs for copyright reform lobby group Public Knowledge. This six-page PDF barely even touches upon digital resale, being mainly interested in the evils of shrink-wrapped or click-through licenses.

Siy begins by discussing the original first sale case, Bobbs-Merrill v. Strauss, and drawing a parallel between the way the publisher in that case sought to control what buyers could do with his book afterward and the recent decision by Aspen Publishers to implement a program that would demand the return of its legal textbooks after students were finished using them. According to Siy, Aspen demonstrates that publishers of today have the same incentives, and try the same techniques, to eliminate the secondary resale market. (I would note that the fact publishers hate resale is not exactly news.)

More and more commonly, publishers of all sorts of media but especially digital ones are using licenses to make an end run around the first sale right. Consumers believe they have “bought” a work (and indeed, usually acquire it through a button on a web site labeled “Buy”) but clauses buried in the fine print on the license make clear they’re only licensing or renting it. As in the Autodesk case, this can make infringers of people who never even opened the software box.

Siy points out that in 1980 lawmakers created section 117 of title 17 to allow for computers copying all or part of a computer program as part of the normal process of its use. But progress has led to this section no longer offering as much protection as it once did.

However, technology and business practices have led to section 117 covering less ground than it should. For one thing, the clickwrap and shrinkwrap agreements mentioned earlier have been used to claim that computer users were not the “owners” of copies, and therefore were infringing copyrights merely by using the computer programs they paid for in a way disfavored by the copyright holder. While consumers should be held to contracts they have fairly agreed to, the remedies for breach of contract should not be merged with copyright infringement.

Examples of this include the successful suit brought against a maker of Warcraft “bot” software, and the project to create third-party BattleNet servers (PDF) for running private sessions of Starcraft and other Blizzard games.

Another problem that has emerged as technology progresses is that a vast amount of digital media consists of things other than computer programs. The mp3s being played on a phone, the photos or movies being displayed on a tablet, or the book being read on an e-reader are all subject to the same digital processes that generate RAM copies, buffer copies, and cached copies that computer programs do—yet section 117 does not explicitly cover them.

Then Siy devotes a single paragraph (blink and you miss it) to noting that this relates to the problem of transferring ownership of digital media, given that making copies is necessary to do this.

The rest of the document is devoted to proposing potential solutions. One suggestion is not enforcing deceptive licenses, and requiring that “buy” buttons be replaced with “rent” or “license” buttons so consumers know more clearly what they are and are not getting when they purchase digital media. (Yeah, I’m just sure I can see the big retailers going for that.) Another is to adopt a “numerus clausus” principle similar to that in real estate of limiting types of ownership attached to certain property. A third is to update section 117 to cover modern digital media and protect users of works instead of just their owners.

John Villasenor

Though John Villasenor is faculty of the Brookings Institution and UCLA, he makes clear his testimony in this 11-page PDF is entirely on his own behalf.

Villasenor’s stance is that digital first sale would harm content creators, and that it is also becoming less necessary as most digital content is no longer being distributed under models that confer ownership of the content.

Many licenses today are overly complex and restrictive. Content providers should provide consumers with clearer disclosures regarding the permissible and prohibited uses of licensed content. Once consumers are better informed about license-based offerings, I am optimistic that market pressure will lead content providers to offer licenses that are more flexible, and that in some cases could permit dispositions of digital content analogous to those that have long been available to owners of non-digital content under the existing first sale doctrine.

(Yeah, because they’ve just been rushing to do that so far. See above link about publishers hating resale.)

Villasenor spends a couple of pages discussing first sale as it currently exists, and why it doesn’t apply to digital content. He discusses the ReDigi case, and the fact that the judge who decided it didn’t feel he could apply first sale to digital goods of his own accord given that Congress hadn’t done it yet. then he goes on to the unintended consequences of digital first sale and lending, such as decreased sales of music since they’d only need to sell enough copies of a song for everyone who wanted to listen to the song at random times to be able to play it at once. He points to Aereo as an example of the kind of extreme exploits of legal loopholes that could apply. He also brings up the “no degradation of used media” thing again.

Next he moves on into licenses. To be fair, he does acknowledge the ambiguity of the content model where customers click “buy” but actually only license the content. And he believes that content providers have the obligation to make sure that users are clearly informed of restrictions before they make their purchase. But he doesn’t feel that should be resolved via changing copyright law, or via retroactively turning licenses into sales via the courts.

Instead, they should be addressed by ensuring what in fact should be common sense: that consumers who license copyrighted works have access to clear up-front descriptions regarding the permitted and prohibited uses of the content.

(As if content stores are going to want to do that…or consumers are going to bother to read it unless they get up front in-your-face about it.)

BSA/The Software Alliance

Finally, we have Emery Simon, a Counselor for the BSA, formerly the Business Software Alliance, which kept its old acronym when it changed its name to “The Software Alliance” just to confuse everyone, I guess. As might be expected, his seven-page PDF is definitely anti-digital-resale, pro-licenses.

He begins by discussing what a huge part of the economy the commercial software industry is—hundreds of billions of dollars in annual revenue, millions of jobs, and so on. And it lets the people who use it be more efficient and make more money too, yay.

Licensing models, Simon says, let the industry stay flexible in how it serves its customers, confer substantial benefits (including ones that wouldn’t be passed on in a sale) such as updates, multiple computer installation rights, and customization for specific needs. The courts have rejected arguments that licenses are actually sales (the Autodesk case again), and applying first-sale to licensed copies would cause considerable risk to consumers. They wouldn’t be able to tell if they’re buying a real or counterfeit good, the used software could be infected with malware, and so on. Licenses also provide a means to fight piracy, unauthorized use, and other infringement.

And that’s that. I’ll write a separate post later on summing up my overall impressions.


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