May 27, 2003
First Sale, Video Rental, and Bowers (Mostly Questions)
Here’s one of the biggest semi-myths about copyright: video stores are only allowed to rent out movies because the MPAA has given them permission.
It’s a myth because of the first sale doctrine. Video stores can do what they wish with the particular copies they purchase. (Interestingly enough, this is not true for sound recordings and computer programs.)
I’d say it’s only a semi-myth because (I think) most video stores do enter into licensing agreements these days. Check out this article for a brief history of the video rental industry (with comparisons to libraries). In the 1980s, the movie industry tried various licensing schemes to hamper the video rental industry. Today, the two industries enter into mutually beneficial agreements, like this one.
So, a couple of issues come to mind. First, how was the movie industry able to price discriminate against rental stores in the first place? How did they determine who was purchasing copies in order to rent them out? How does anti-trust law look at this sort of price discrimination? (Perhaps I should try to find this at my library.)
Second, look at page 12 of the Universal-Blockbuster agreement linked to above. Section g states, “No First Sale: Blockbuster agrees that the license of a Copy … under this Agreement … shall not be deemed a ‘sale or other transfer of ownership’ within the meaning of Section 106(3) of the Copyright Act, … and shall not render Blockbuster an ‘owner’ of the Copy … within the meaning of the Section 109(a) of the Copyright Act…. Blockbuster expressly agrees that as license it has no right to ‘sell or otherwise dispose of the possession of any Copy … except as expressly provided in this Agreement.” This seems like something similar to Bowers. It’s a contractual agreement that nullifies the public’s rights in copyright. Unlike Bowers, it’s an agreement with a quid pro quo that is clearly acceptable and acknowledged by both parties. Blockbuster agreed to this not because it had to, but because it wanted this special arrangement. But is this difference significant enough? If the Supreme Court takes this case, and reverses, how will it draw the line?
Would this sort of license be ok in a typical consumer context, say, when purchasing a CD? If you were given the option of purchasing a CD for 10 dollars with no restrictions, or purchasing the same CD but without the ability to copy for 5 dollars, would that be ok? Proponents of DRM repeatedly cite the benefits of this sort of price discrimination. Is this active undermining of fair use as a right bad? Is it only bad because of unfair conditions within the current marketplace? Or is it bad generally, because we should have a right to copy? Should we follow the lead of the Lofgren bill in this regard, nullifying such contracts?
Filed by Derek Slater at 12:45 am under General news
1 Comment
IMO, the “freedom to contract” of individuals and rights-holders is contrary to the balance of copyright, and is probably a good place for contract regulation.
The problem, as I see it, is that rights-holders are granted a regulated monopoly. There are those who say that DRM’s acceptable draconian-ness will be set by the market, which will punish vendors whose ToS are too harsh. But that supposes that there is a competitive market for the IP in question: that Madonna’s license-arrangements for her work have to compete with someone else’s ToS over the same work. There’s lots of reasons that this isn’t true — for starters, it may be that you really *want* Madonna’s song, and not someone else’s, and on into long arguments about media consolidation and the strong likelihood that you will never discover someone you like better than Madonna except via the same gatekeepers who will set the same ToS.
Put another way: the blind have a statuatory right to transform published books into assistive formats, like Braille. If I publish my book with a shrinkwrap around it that bears a sticker informing you that by buying this book, you waive your right to convert to Braille, and agree to bind all subsequent owners, borrowers and lessees to the same terms, should we sit on our hands and wait for the market to correct my over-reach?
What if I wrap it in a wrapper that says that you will not reproduce the work even after its copyright expires? If the five movie studios and seven recording studios got together and shrinkwrapped all its product with these terms, they won’t need another CTEA — they can just use contract-law to extend copyright forever.
I believe that state-enforced monopolies are inherently contrary to the public good. Copyright grants the author’s monopoly not because this is a special kind of monopoly that is good, but rather because it is preferable to a world where authors are deprived of financial incentive to create: it’s the lesser of two evils.
But the monopoly should be strictly regulated so that it does not exceed its tactical objective: providing the incentive to create. Allowing rights-holders to extend the scope of their monopoly through contract subverts this tactical objective: it trades the lesser-evil goodness of an author’s monopoly for a windfall to authors that’s in excess of the minimum monopoly required to provide authors with their incentive to create.