Libraries Worried About Potential Supreme Court Ruling Concerning Legality Of Selling Imported Omega Watches

from the greymarket-libraries dept

Earlier this year we discussed an important upcoming Supreme Court case between Omega (the watch company) and Costco over whether or not it can be considered copyright infringement to resell legally purchased watches that were bought overseas. The concept sounds crazy, right? What does reselling foreign watches have to do with copyright? Well, the details are a bit complicated, but basically lots of companies hate the concept of first sale rights (the ability to resell something you've legally bought) and have tried all sorts of tricks to try and block those rights. In this case, Omega inscribed a tiny globe on the back of its watches (where no one will ever see it) solely for the purpose of copyrighting that design and using it to try to stop resale. Of course, once again, the first sale doctrine does allow for resale, but here's where Omega got sneaky. It pointed out that the first sale doctrine technically only applies to copies that are "lawfully made under this title." Omega's argument is that because the copyrighted globe design was made outside of the US, the copy was not made under US law... and thus (voila!) there are no first sale rights on any copyrighted product made outside of the US.

Amazingly, the court agreed. Even more amazing? The Obama administration argues that the court decided correctly, in part because the recent ProIP Act (which gave us our friendly IP Czar) ever so slightly changed the rules on importing and exporting copyrighted goods... removing first sale rights from foreign goods.

The implications, if this is true, are immensely problematic. A coalition of libraries has now filed a detailed amicus brief in the case (pdf) noting what a massive problem it would be if the lower court ruling is upheld:

Over 200 million books in U.S. libraries have foreign publishers. Moreover, many books published by U.S. publishers were actually manufactured by printers in other countries. Although some books indicate on their copyright page where they were printed, many do not. Libraries, therefore, have no way of knowing whether these books comply with the Ninth Circuit's rule. Without the certainty of the protection of the first sale doctrine, librarians will have to confront the difficult policy decision of whether to continue to circulate these materials in their collections in the face of potential copyright infringement liability. For future acquisitions, libraries would be able to adjust to the Ninth Circuit's narrowing of Section 109(a) only by bearing the significant cost of obtaining a "lending license" whenever they acquired a copy that was not clearly manufactured in the United States.

How ridiculous is it that copyright law -- which was originally put in place "for the encouragement of learning," might now make it much more difficult to encourage learning through libraries.

Now, some will obviously state that this is a problem for Congress, not the courts, to fix. And, to some extent that is true. But the Supreme Court is also supposed to make sure that the laws that Congress has put in place are interpreted in line with the Constitution. In this case, copyright law is being so abused as to clearly have nothing to do with its intended purpose, and thus the court can and should note that this interpretation of copyright law is clearly outside the bounds of what Congress could have possibly meant.

Filed Under: copyright, first sale, foreign works, libraries, supreme court
Companies: costco, omega

Trio Of Important First Sale Cases All Hit Appeals Court In Early June

from the it's-first-sale-month dept

Zusha Elinson has noted that a trio of important cases concerning the "first sale doctrine" in copyright law will all be heard on appeal in the (at times wacky) 9th Circuit in early June. We've written about all three cases here before. There's UMG v. Augusto, which questions whether or not it's legal to resell "promo CDs" that record labels stamp "not for resale." In that case, the judge ruled that reselling was perfectly fine, and preventing such sales was a violation of the first sale doctrine (and would, effectively, give record labels a way of creating perpetual and all-controlling copyright, if the decision went the other way). Then there's Autodesk v. Vernor, similarly involving the right to resell software. Again, the district court ruled that this was allowed, noting that software is really sold, not (as Autodesk claimed) just licensed.

The third case is the troubling one. MDY v. Blizzard is the one case that went the other way, in a ruling that left many copyright experts scratching their heads, noting that it seemed to go against everything that the first sale doctrine stood for -- and that nothing the guy did (he made a bot that worked in World of Warcraft) actually violated copyright law.

Hopefully, the appeals court upholds the first two cases and reverses the third... but these days, you never know how courts are going to rule on these sorts of issues. And, the 9th Circuit is often notoriously... weird in some of its rulings. Either way, these are three cases worth watching, as they could have a pretty big impact on the question of whether or not you have the right to do what you want with products you bought.

Filed Under: augusto, copyright, first sale, mdy, vernor
Companies: autodesk, blizzard, umg

Solicitor General Tells Supreme Court That First Sale Shouldn't Apply To Foreign-Made Goods

from the unintended-consequences dept

Earlier this year, we discussed an interesting lawsuit that was being appealed to the Supreme Court between retailer Costco and Omega over copyright claims on some imported watches. Copyright on watches? You can read all the details at that link, but basically, Omega started stamping its watches with a tiny, meaningless, barely noticeable engraving, and then registered that with the copyright office. Omega then sold some cheap watches in Europe, while keeping the prices of its US watches much higher. Sensing an arbitrage opportunity, someone who legally bought the cheap Omega watches in Europe sold them to Costco to offer to US consumers. Now, all of this should be legit under basic common sense and any "first sale doctrine," but not so fast. Omega claims the first sale doctrine only applies to goods made in the US... and while a district court sided with Costco, the 9th circuit appeals agreed with Omega. This could lead to seriously troubling outcomes -- such as if you buy a painting made outside the US and import it to the US, you might not actually be allowed to sell it again!

Unfortunately, it looks like the White House's Solicitor General is siding with Omega, recommending that the Supreme Court not take the case. That link has some more details on the case as well, including one tidbit I hadn't noticed before: which is that part of the case hinges on the ProIP Act, which you may recall the entertainment industry pushed hard for a couple years back. Apparently, one of the little noticed sections of ProIP changed the rules on import and export of copyright goods, such that first sale no longer applies to foreign goods. If this interpretation stands, that's incredibly troubling, and once again demonstrates the massive damage caused by entertainment industry lobbyists continuing to push through their own language into copyright law, and pretending it's mostly innocuous changes.

Filed Under: first sale, supreme court

Psystar Loses Big To Apple

from the and-so-it-goes dept

When Psystar first started selling PCs with Apple OS's installed on them, we knew there would be a lawsuit -- though it took a bit more time than we expected. Originally, Psystar tried to claim that Apple was violating antitrust law, which seemed like a wasted path for exploration -- and, indeed, a court rejected that claim. Then Psystar went back to more reasonable defenses... or so we thought.

The court hearing the case didn't seem to think any of Psystar's main lines of defense had any validity at all and granted summary judgment to Apple on all of the major points, saying that a trial wasn't even necessary. The "fair use" claim was already weak, and the judge noted that Psystar didn't even try to discuss any of the four factors generally used in determining fair use. The two (I thought) stronger claims were that (a) the right of first sale applied, and once Psystar purchased OSX legally, it could resell it, provided it was only installed on that one computer, and (b) that Apple went too far in its EULA terms, which demanded that OS X could only work on a Mac. Unfortunately, the judge didn't agree to either one, though I find the judge's reasoning perplexing and hardly convincing.

On the issue of first sale, here's what the ruling said:

The copies at issue here were not lawfully manufactured with the authorization of the copyright owner. As stated, Psystar made an unauthorized copy of Mac OS X from a Mac mini that was placed onto an "imaging station" and then used a "master copy" to make many more unauthorized copies that were installed on individual Psystar computers. The first-sale defense does not apply to those unauthorized copies.

Perhaps I'm missing something here, because earlier reports had suggested that Psystar legally purchased each copy of OS X and then installed the legally purchased copy on the new machine (which it then included with the sold machine). But from the description above, it sounds like part of the problem is that a single "master copy" was used to make multiple installations. Of course, that raises a whole host of separate issues. If Psystar legally purchased a separate license for each one, but still used a single master copy, is that really infringing? After all, the code is identical, and it seems positively ridiculous to say that even though you bought, say, 20 licenses, you can't just use one master copy to install 20 times. It seems like this could use additional clarification. Because, the other way one could interpret this is that there is no right of first sale if the company says a copy is unauthorized -- which would have troubling implications.

On the EULA front, the court again basically just takes Apple's position, and insists it did nothing wrong. I'm not surprised by the outcome at all, but I would have expected at least a more complete response to the First Sale doctrine rights issues. Even ignoring that a "copy" was being made -- with the physical copy, it really is a matter of first sale. The company is selling something it legally purchased.

Psystar will likely appeal, though I still have little faith that will get anywhere.

Filed Under: copyright, eula, first sale, mac os
Companies: apple, psystar

Nanda's Alarm Clock Not Only Runs Away From You, It Runs Away From eBay Too

from the wake-up-nanda dept

It looks like more tangible product companies are trying to pretend they can restrict what you do with legally purchased products post-sale (perhaps they're jealous of content companies). Case in point: my brother received the Nanda Clocky as a gift awhile back -- it's a pretty novel alarm clock, when it goes off, its wheels turn on, and it jumps off your dresser, forcing you to climb out of bed to turn it off. Since he already had an alarm clock that worked for him, he decided to sell it on eBay. A few days before his auction was supposed to close, he got a notice that his listing was removed for a "Trademark Violation - Unauthorized Item." Yes, for a legitimately owned product. The email stated:

"Nanda Home Inc. is the owner of the intellectual property rights pertaining to these listings. By listing the 'Clocky' product you are in serious violation of the company's rights. Additionally, Nanda Home does not permit the re-sale of any of their brand product on eBay. There are no authorized Nanda Home re-sellers on eBay. If you continue to list our items, further legal action may be taken."

Clearly, Nanda has a gross misunderstanding of the right of people to re-sell their own property. While it's true that it is against the law to sell counterfeit copies of a product, re-selling your own goods and representing them as "real" is completely within the bounds of the law, and eBay policy. To make matters worse, the condescending tone of the email also suggests that:

"You may need to take a tutorial. The next time you sell, you may be asked to take the tutorial, if it's required. Once you've completed the tutorial successfully, please review your account status for any other possible concerns. If there are no other issues, you should be able to sell again."

Or, perhaps Nanda and eBay should take a tutorial on the right of first sale. In the aforementioned tutorial, eBay clearly understands the right to re-sell (in fact, a huge part of its business relies upon this fact). Yet, to make matters worse under eBay policy it's still a laborious process to get the item relisted -- even with the bogus takedown notice. As a seller of an incorrectly taken down Clocky listing, you have to contact Nanda and have them specifically authorize your product to be re-listed. Yes, even though it's Nanda who issued the incorrect takedown in the first place. So much for frictionless commerce.

The even bigger problem is in the process in which such listing takedowns are handled. Under the guise of rooting out counterfeit products, Nanda is able to unfairly reduce the number of its own secondhand goods in the marketplace. Other manufacturers have tried to do this in the past for everything from shampoo to radar detectors. And, much like the DMCA process, this "guilty until proven innocent" approach ultimately hurts the consumer, who now has unfairly reduced access to many products that were to be sold completely legally.

That said, my brother followed the eBay process to get his Clocky relisted. They sent him an email apologizing for their error and authorizing him to relist, which he did. Guess what? In an effort to punctuate how ridiculous this policy is, one day later, he got an email, "Trademark Violation - Unauthorized Item."

Anyone want to buy a Clocky?

Filed Under: alarm clock, auctions, clocky, first sale, trademark
Companies: ebay, nanda

Can A Radio Station Give Away Tickets To A Football Game? The Eagles Say No...

from the right-of-first-sale dept

We've noted the trend of trying to cut down on scalping by using e-tickets to stop the transfer of tickets, but it appears that the Philadelphia Eagles football team also is trying to stop radio stations from doing promotional giveaways. The team has sued the owner of the radio station, saying that the terms on the back of the ticket forbid the use of the tickets for commercial purposes -- such as contests -- and also that the station is violating the Eagles' trademarks in naming them around the ticket giveaway promotion. This raises a bunch of questions about the right of first sale on a ticket. While the stadium may have the right to forbid entry to anyone, it seems like that would be a dumb move on the team's part. My guess is that the team's main concern is that it only wants partner (i.e., those who paid a ton for broadcast rights) radio stations to give away tickets -- but that doesn't mean there's a legal right there. If the tickets were legitimately bought, why shouldn't the station be able to sell them or give them away? And, considering that the radio station was accurately describing the team when using the name, that shouldn't be a trademark violation.

Filed Under: first sale, football, tickets
Companies: philadelphia eagles

Ownership Or License: The Difference Matters

from the quantum-bullshit dept

Those who rely on copyright like to do a neat little trick at times. When it's convenient, they like to claim that what they're offering is no different than a physical good. In such situations, if you make a copy, they claim that you "stole" it, and that it's "no different" that walking into a store and taking something off the shelf without paying for it. Yet, at other times, if you point out the sorts of restrictions that would lead to -- such as no control over the product post-sale -- suddenly they change their tune. You didn't buy the product, you merely "licensed" it, and thus they could post sale restrictions on things. If you buy a chair, and then build a replica yourself, that's perfectly legal. But copyright holders claim that's not the case when it comes to products covered by copyright -- because they insist that it's "licensed" not "owned."

Luckily, the courts have long pushed back on this attempt by copyright holders to extend copyright's power beyond what happens with physical goods. That's why, for example, we have a right to first sale, allowing you to resell a book. The copyright holder cannot claim that you only "licensed" the book, rather than bought it, so you are, in fact, allowed to resell it. But the law isn't entirely clear on all aspects of this, and software "licensing" is one key area where there are some problems.

A few years back, Blizzard sued the maker of a bot, the Glider bot by MDY, claiming that the software violated its copyright. Now, even many who are against abuses of copyright, emotionally started to side with Blizzard here, due to what the bot allowed: it effectively allowed cheating, by automating many repetitive tasks, to let users "level up" more quickly. But, if you get past that element, the case has important implications for copyright law, and whether or not the software you buy is really purchased... or merely licensed.

The district court ruling was incredibly problematic. Nothing the guy actually did with the bot software appears to violate copyright law. Basically, the court just decided that it didn't like what the guy did, and thus it used copyright law to shut him down, though it used rather tortured reasoning. This sets an incredibly bad precedent and seems entirely at odds with the purpose of copyright law itself.

The case is now being appealed, and Public Knowledge has filed an amicus brief while the EFF explains what's at stake:

Ownership matters, because otherwise Blizzard and other software vendors can wipe away important consumer rights with legalese contained in license agreements. For example, in Section 117 of the Copyright Act, Congress gave owners of computer software the right to use their legitimately purchased software without having to rely on permissions in license agreements. Blizzard and other software vendors are arguing that customers are not owners, but mere licensees, in an effort to eliminate our rights under Section 117.

This "owner-versus-licensee" trick is not just an end-run on Section 117, it's inconsistent with the law in other areas--the courts and Congress have long rejected efforts by copyright and patent owners to impose all kinds of post-sale use restrictions on books, patented machines, and compact discs. Why should software be different? Just as with those other copyrighted works, if you bought the disc that the software comes on outright (as opposed to leasing it, for example), you should get the privileges of an owner (i.e., the right to resell and the right to make copies and adaptations as necessary to use software).

In short, Blizzard's legal arguments here are all about using copyright law to take away consumers' rights in the software they purchased.

Hopefully, the Appeals Court recognizes this. Copyright owners shouldn't be able to play a quantum game of calling something "owned" when it suits them or "licensed" at other times when it suits them.

Filed Under: bots, copyright, first sale, glider, license, ownership, world of warcraft
Companies: blizzard, mdy

If You Build A House Based On Copyright Infringing Plans That You Bought In Good Faith... Are You Infringing?

from the maybe-so dept

Michael Scott points us to an interesting -- if a bit technical legally speaking -- discussion over whether or not indemnifications exist for copyrighted materials. The discussion involves a homebuilder, who built some homes based on plans he bought from a third party. It later turned out that the plans were infringing copies, but the builder believed they were legit. So, in any common sense world, the liable party should be the guy who sold the infringing plans. But at least some lawyers and judges seem to believe that there is no indemnification in copyright law, and thus the copyright holder can basically sue whoever he wants up and down the chain. But, of course, not everyone sees it that way, and by the end of the post, it's pretty clear that the court in this particular case got it wrong. Blaming the builder, who had no clue that the plans were infringing, simply makes no sense.

Filed Under: building, copyright, first sale, indemnification

Psystar Back To A First Sale Defense Against Apple: Software Was Legally Purchased...

from the and-we-can-do-what-we-want-with-it dept

Psystar tried and failed to pin an antitrust case on Apple in its fight over whether or not Psystar can install MacOS on non-Apple hardware. Now, it appears that the company is back to where we thought it would originally focus: on whether or not a software license agreement can preclude the first sale doctrine that allows you to resell software you legally purchased. It's still a long shot -- but a few recent rulings suggest the courts are at least more open to these discussions. Of course, if Psystar wins, it could severely limit the power of end user license agreements (EULAs) that software companies often use to limit uses of software.

Filed Under: copyright, eula, first sale, macos
Companies: apple, psystar

Is Motorola Trying To Ban Reselling Phones?

from the hopefully-not dept

We've seen video game execs freaking out about the second-hand sales market, and apparently that may be expanding to other arenas. The Register has an unnamed source (so make of that what you will) claiming that Motorola is asking people to sign contracts on a new phone that ban the buyer from reselling the phone to anyone, other than back to the manufacturer. Of course, this is an economically dumb argument. The resale market helps add value to the primary market, and allows the company to charge more for its product initially. As Mathew Ingram points out, some are suggesting that this move would violate the first sale doctrine, though that could depend on a variety of factors. I would imagine that the terms could establish the situation as a "lease" of the phone rather than a purchase, but that might be difficult to get the courts to accept. Also, my understanding of first sale doctrine was that it only applied to intellectual property -- not physical goods, so I'm not sure it would really apply here. Either way, it would seem to be dumb, whether or not it's legal. If you want to decrease interest in your product, adding such a clause seems like a reasonable way to do so.

Filed Under: economics, first sale, phones, resale
Companies: motorola