Frey Lecture 2014 | David Nimmer, Infringement 2.0

good afternoon welcome to the annual fry lecture in intellectual property i’m david levy dean of the Duke Law School I think this is our 12th fry lecture it and the room couldn’t be fuller this lecture was established by our graduate Kip fry and his wife Meredith who are here today welcome Kip has had a great career in law and entrepreneurship and entertainment law as well and he teaches at the law school and at the Sanford School for Public Policy and he’s one of the leading faculty in our law and entrepreneurship program and new degrees thank you Kip and Meredith each year the fry lecture brings a distinguished thinker scholar or practitioner to the law school to discuss issues that are related to intellectual property and to innovation and we are very very fortunate to have David nimmer with us here today professor James Boyle has the honor of the introduction professor Boyle is the William Neil Reynolds professor at Duke Law School he’s a leader in the study of the public domain he directs the Duke Law Center of that name he’s a founding director of creative commons his books and articles are path-breaking they always change the discussion and they are always freely available on the web professor Boyle thank you David and thank you Meredith and Kip professor Boyle has a cold which makes him sound very much like ingrid bergman I just want to be alone and it’s truly an honor to introduce David nimmer those of you who are even passingly acquainted with copyright law know that whenever federal courts get a question of copyright law they turn immediately to nimmer on copyright a the treatise which bears his name has in his father’s name and they actually rely on it and generally follow it for a lot of academics this idea that judges would actually know what they had said rely on what they said even be guided by what they said is simply unbelievable whole careers have been made from being slightingly mentioned in a footnote by Justice Scalia or cited in a string site by Justice Breyer to be funny more on copyright is truly a foundational important status and one that he bears lightly but it’s not just as a treatise writer he’s also a great teacher the teacher of of many many copyright lawyers in the United States and around the world a scholar of academic articles i’m going to mention one because it’s my favorite it’s an article on the copyright ability of a reconstruction of the Dead Sea Scrolls you might be saying even after the Sonny Bono term extension Act I don’t think that the Dead Sea Scrolls should be under copyright but this was an actual reconstruction of the fragments the literal fragments of a scroll David writes an article about whether this is copyrightable for those of you who are not copyright geeks copyright covers only original creative works of authorship to the extent this was an accurate reconstruction of a historical document to what extent was it original or creative labor yes creativity ? and of course as you can imagine the professor who had reconstructed it wished to say this is accurate this is the real thing I have reconstructed which of course would bar him completely from getting copyright status I won’t tell you how it comes out for that you’ll have to read the I think a hundred and fifty three pages of David’s article I didn’t say he was terse a beginning it’s 225 225 excuse me 153 is this the meat though there are more digressions in this article than interest from Shandy I have to say it is it is just a magisterial piece of work and there’s a lecture as you will see david is inspiring magisterial learn it and extremely illuminating thank you for coming thank you for gracing the fry electric david nimir Thank You Dean leaving and thank you professor blow up for that most kind introduction it’s a delight for me to be back here at Duke see old friends David lang jury Reichman and what a pleasure it was to Mead Kip fry get a chance to talk to Meredith last night that’s delightful and I thank you for bringing me into the inner circle here I’m going to be addressing infringement 2 point 0 starting off with the internet and the changes it has affected to copyright will begin with copyright entrapment and go through a number of other doctrines until we look at the past as a touchstone for getting

into the future well you’re all familiar with Internet one point oh the Napster case doesn’t need much explication any peer somebody in North Carolina could connect with someone who knows could be in Calcutta could be in California ask for a song and the lyrics say it’s going to be a long long time but it’s actually a very short time that peer-to-peer established copying all nine justices of the US Supreme Court recognized that this is copyright infringement when there is unauthorized copying on a wholesale basis of works of high authorship and that’s going to be some of my theme as we go forward there should be infringement when those three factors are present when those three factors are not present it’s questionable whether there should be infringement and sometimes the net of infringement has been cast too broadly which is what i’m calling infringement 2.0 let’s in with copyright entrapment we start with a lawyer in Las Vegas Nevada named leg field he ginned up a copyright case and asked for to a cool 2.5 million dollars from google the case was based on his authorship of short stories but I really should call these miniscule stories because there’s something that a fifth grader might write for an English class they were only written for the sake of filing his copyright infringement lawsuit he wrote these miniscule stories he then set the robots.txt file so that it would indeed be cataloged when the Googlebot crawled his space and that’s exactly what happened Google cashed his works namely it made a copy on its server and then he filed a lawsuit against google for copying his works the very works he wrote so that there be well the judge ruled look this is something that you ginned up you may perhaps you gave an implied license or you should be a stopped from complaining about this year and the judge looked to a fair use case there was a search engine and early search engine called alta vista which provided thumbnail sketches of photographs that have been lawfully uploaded to the internet so it’s kind of an index of the internet when that lawsuit was filed by the art by the artist Kelly the Ninth Circuit decided that those thumbnail sketches with lower resolution were not copyright infringement it was not a wholesale copying was copping perhaps of ten percent of the pixels for purposes of indexing and that ruling also came here into this fair use case and for that reason as well field lost his case so he gambled that he would win but came up with a big goose egg so his case was dismissed now I have to introduce you to perfect 10 it’s a magazine as well as a website in later years that has images the most beautiful natural women in the world and by natural women I do indeed mean naked women people who subscribe to perfect 10 were authorized to download copies and perhaps put them on their hard drive but not to upload copies so here’s an instance of copyright infringement where when our erstwhile user was handed down a few years ago today we go on facebook then he went on myspace and created an image unlawfully using one of the perfect 10 natural women well there’s the Googlebot in action which crawled his web space and made a copy so now we have on Google not only the authorized perfect 10 images but this particular unauthorized image so when a user makes a request that user might come across this copyright infringing image the question is whether Google should be responsible when when someone does a search for perfect 10 that person could have many things in mind perhaps he’s thinking of Nadia Comaneci at the 1976 Olympics getting the first perfect 10 score perhaps he’s thinking of bo Derek in the movie Chad whoops i guess it was that good it was that good he could be trying to locate the seminar that Professor Peter Mandel and I gave two federal judges about the perfect-10 case I myself did not become aware of the existence of perfect ten or vibe Sorensen until the district court handed down an injunction against Google commanding them for copyright infringement to take down this image it was subsequently reversed by the Ninth Circuit because Google did not have knowledge what was being searched for but as soon as I read the district court opinion I myself got curious so i logged on to see this image of vybz orissa but i was for stalled in my efforts because already the next day the image had been taken down but google said that if you want to know about this complaint you

can go to chilling effects org now there is something a bit underhanded going on here because Google conveyed to Jill it chilling effects org an organization that is perfectly legitimate that is trying to document the ill effects of the digital NT and copyright act not only in the complaint but the actual image that was taken down and so therefore the same image that was taken down on Google now became available on chilling effects org but things got much worse than that as I’m about to illustrate there have been many cases filed for peer-to-peer sharing of pornography as you know peer to peer services have moved on no longer as it Napster and rockster moved on to bittorrent BitTorrent has a distributed model soon so it’s not one peer in North Carolina dealing with one peer in in California instead the works are divided up a swarm takes individual pieces and then sends them on how is bit BitTorrent used well you can see trying to get my cursor here but it’s not letting me access it but in any way you can see in the bottom thirty-five percent is for film TV is 14.5 percent as a as a book reader i’m a bit discouraged as a culture matter to see that 0.2% is for books but the plurality the largest usage 35.8 percent is indeed for pornography so we have seen litigation being filed in this actual case over 5,000 individuals were targeted it’s been a veritable tsunami of copyright infringement litigation which of course has filled up the f.supp with numerous basis of challenging the subpoenas that have been issued but what I want to emphasize at the moment is the social aspects that are going on imagine that the man of the family is home when the mailman arrives and he opens up a letter well the letter is from prenda law and it contains the unwelcome news that you have been tagged for unlawful viewing of big butt oil orgy number 32 site one of the very few titles that I can even pronounce publicly and not only that but you’re welcome to pay a hundred and fifty thousand dollars for the privilege what’s the result well because of embarrassment many people simply send a check right away now judge right in my jurisdiction observed that the federal courts are not cogs and plaintiffs copyright enforcement business model I agree with that proposition as a normative matter federal court should not be cogs however Congress in its wisdom has seen fit to confer copyright protection on pornography works like it or not federal courts are cogs in this copyright enforcement business model the judge went on to say that he did not wish to idly watch what is essentially an extortion scheme and I’m very sympathetic to that in fact I think it’s even worse than is being revealed here back in the Napster day rocket man was put up on the net without authorization from the copyright owner here in this instance Malibu media and like copyright proprietors are seeding the internet with pornography in the hopes that John Doe one will download it in John Doe 2 & 3 4 & 5 and they’ll file 10 lawsuits as a result indeed I fear and although i do not have the empirical proof of this that it might be even worse copyright is supposed to provide incentives for the creation of works of authorship I fear that there is incentive to engage in pornographic filming today for the purpose of uploading it only to file the lawsuits against the individuals who are caught in the net so this is not unauthorized in the true sense its entrapment its induced and I see that as a danger of infringement two point oh I mentioned the fair use doctrine let’s go a little more deeply into it later on we’re going to emphasize factor too but for the moment I want to talk about factor three the amount and substantiality it used to be an old chestnut that when the defendant copied one hundred percent of the plaintiffs work there was no fair use defense well there were exceptions to that today as I want to show you the exceptions have become the rule there can be fair use when a hundred percent of the plaintiffs work has been copied and here’s the perfect lead-in example I’m switching from copyright law to patent law I assure you I know nothing whatsoever about patent law but it is relevant in the following copyright sense there are copyrighted articles in journals and text books and those have to be submitted to the Patent Office when the patentee relies on them for patent art it’s called npl non-patent literature as a result of the copying that npl the textbook publisher and the magazine publisher filed a lawsuit against a patent firm for copying their works and submitting them to the US

Patent and Trademark Office not only against one firm but against a second a third and a fourth so these four lawsuits were pending in four different district courts across the country as a result the PTO made a motion to intervene to tell the court this is fair use it’s not copyright infringement to make a one copy from the American Journal of physics or rapid communications in mass spectrometry and to submit it to the patio too truthfully apprise the patent office about prior art the PTL came up with a memorandum in which it explained that it obtains much of its material through licenses but not everything and it hastened to add that the PTO does not provide copies of this copyrighted material to the public because of the concern that it could be used and copied for reasons unrelated to patent matters so if it simply submitted the patent office that’s fair if it fosters systematic copying on a wide scale basis that is not fair so this is not wholesale copying in that sense here’s an illustration of turning in a term paper in high school this is an actual case which I’ve dramatized so a case a litigated before the Fourth Circuit concerned copyrighted works admittedly term papers submitted by high school students which were aggregated into the Turnitin service so that they could review it and determine whether another paper was infringing was it the result of plagiarism several students ginned up a copyright case they claimed a copyright in their term papers which is indeed a copyrightable work and they said you’ve copied it into the Turnitin service without our permission the Fourth Circuit rejected that claim there was no proof that anyone even read it it was simply put into the database to do this electronic searching so this was not an example of copying of work of high authorship and I approve of the ruling but let’s go to copying of works of high authorship the library of alexandria has been transposed in our modern image to the 20 million books to date that have been copied from the libraries at Harvard Stanford University of Michigan York Public Library by Google they’ve been scanned and optical character readers have made them available on the google book search snippets are available when the keyword is found to be reviewed by the public without permission of the copyright owner resulted in two lawsuits being filed in 2005 full disclosure I participated in the case having been retained by to oppose the class action settlement we did not take a position on the underlying causes of action but we said it’s not appropriate to bind the world through the mechanism of class action and to give Google on advantage over all other competitors such as Amazon we succeeded in that but the case went out went forward so here we have unauthorized copying of works of high authorship and in some sense its wholesale because the entirety of the book is put into the database but it’s put there for the purpose of increasing knowledge of making these little snippets available to someone whose key word in context it represents a hit so when Judge chin resolved the case last year he ruled in favor of Google based on the cases that I’ve already Illustrated to you that this is fair use but item I’m it’s more important than even fair use rather than saying that one individual for-profit corporation is allowed to do this we should look at it in the broader scheme I agree with the sentiment google books provide significant public benefits it advances the progress of the arts and science it’s your tremendous breakthrough indeed even the non-display uses that numbers crunching and determining the evolution of the English language and the French language in the Romanian language themselves are extremely valuable but it’s so important that I’m going to come back to this later in my talk to talk about the purposes of copyright and whether whether it should should the litigation might have been properly resolved but the larger social issue remains here’s an example of copying outs not not from google books not for scholarly purposes for very different purposes patrick care you was an author who spent six years living in jamaica and gain the trust of the Rastafarians people such that he could produce a gorgeous coffee table book of haunting images so the books sold for a hefty price he only made about 1500 dollars per year for all of his efforts but nonetheless it was a worthwhile venture for him but it doesn’t mean that no one was earning

money because here we have appropriation artist Richard Prince in the gagosian gallery who charges more than patrick care you will even probably learn in a lifetime for just one canvas what are these canvases well here’s an example of here use Rastafarians work which when lozenges and a guitar are added into it become one of the defendants works here’s another example the image repeated naked women put in yet another example many more naked women the images repeated twice you kind of have to look for it kind of like a game of discovering where it is did I mention that he likes to have a lot of naked women in his artwork so there you have the image again care you files a lawsuit against not only the artist but also the gallery and the fine art publisher of the exhibition catalogue when the case is presented to judge bats in the district court she quotes Prince’s testimony that his purpose for taking the art was to get as much fact into my work was possible and reduce the amount of speculation namely his the the defendants purpose was the same as the plaintiffs original purpose a desire to communicate to the viewer core truths about Rastafarians Prince also testified that he has no interest in the original meaning the photographs he uses he does he said I don’t really have a message so why did he put the the qatar on he collage the guitars on two portraits of rastafarians men he testified that his message related to the fact that men had become guitar players that was his message well the district judge ruled against the defendant on all 30 counts decision as a matter of law for the plaintiff it was then appealed to the Second Circuit which severely reversed as to 25 of the counts it said we’re just going to look we’re going to set aside the testimony we’re going to do our own ocular examination and we think this is transformation we think as to 25 of them this is fair use as a matter of law so complete whipsaw not fair fair use denied as a matter of law fair use mandated as a matter of law except as 25 of the works there wasn’t anything said in the Second Circuit opinion particularly distinguishing one from the other so I have a question here’s on the left is alleged fair use number one you see it’s repeated both vertically and horizontally and on the right is fair use number two also repeated horizontally so here’s my pop quiz and and there’s no such thing as soon as abstaining the answer is either a only only one is fair use or be only two or seen either or D both everybody take out your pencil and and write a B C or D okay now honesty being demanded raise your hand if you very high if you voted a okay if you raise your hand very high if you voted be okay well you people have great wisdom that has denied me because that’s the answer I don’t know why if it’s just putting lozenges on that makes a transformative lozenges are absent and the image on the right one of them lacks lozenges so I don’t know why the court ruled this way that’s not enough though for me to bring this case to you I’m not talking about mysteries and fair use and transformation I’m talking about unauthorized wholesale reproduction of works of high authorship so why am I illustrating this case it’s because of footnote 3 in the Second Circuit’s opinion which I have reproduced here images of kaerios yes rasta photographs appear in the appendix to this opinion which is loaded onto the Second Circuit’s website so you see on the right lied links to everything that I presented to you I presented to you very faithful not thumbnail images perfect digital images of all of carrying his artwork is it because care you uploaded them to the Internet no is it because Prince uploaded them through the internet and it was held to be fair use no it’s because the Second Circuit uploaded all of them to the Internet and I contrast that lack of sensitivity with what the Patent and Trademark Office said look it’s fine to make a copy for a limited purpose to get a patent to file in the government office but we’re not going to facilitate the wide-scale systematic copy why do they rule that way well I’m sorry to say this but I see that the Second Circuit is mired in the most ancient sensibility at the outset of courts a court was simply an adjunct of the royal court it was there to favor the rich and powerful that was the first level the second level a court existed maybe to do distributed justice a poor man is suing a rich man and the judges say you know we don’t really know about the legality here but this poor man deserves a break hey already 3,000 years ago in Leviticus 19 15 the commandment comes in Lotus a evil don’t do injustice in court cases do not raise up the face of the poor man

but neither should you magnify the face of the great men but said ‘ok tshepo tomita use justice in reaching a result for your fellow man I fear that the Second Circuit was oblivious to that Sensibility because of what they said on page 7 09 of the opinion unlike the poor Schmo care you who could barely eke out eight thousand dollars for six years of work the defendant has a show in which jay-z Beyonce Tom Brady Jonathan Franzen and Brangelina attend what better proof could there be a fair use than that I can’t imagine that the Second Circuit would produce a coffee table book of carrying these images and yet it did the current equivalent and I quote this work from a millennial writing about copyright and the mysteries of what people do in the context of the Internet including Second Circuit Judges you may remonstrate ah but care you introduced his works into evidence and so therefore was perfectly fair for the Second Circuit to reproduce them to the public think about it for them it for a minute every complaint that is filed in federal court for copyright infringement requires the plaintiff to tender to the court a copy of the work so that the court can evaluate it if it’s an automatic incident of filing a copyright infringement lawsuit that your work will be nationalized and X procreated and present it to the public the way the Second Circuit did then the entire enterprise of copyright litigation is completely fruitless so I see here a sad example of unauthorized wholesale copying of a work of high authorship coming from the most unlikely sources one of the curiosities we have to deal with my expectations for how courts rule were entirely shattered in this case what my expectations have been shattered in five separate domains as I see the way copyright law has migrated onto the internet and those domains are first publication second access third what is law fourth standing and fifth the puzzle of dematerialization now because of my limited time I’ve had to cut out all my slides for the for the intermediate one so I’m going to go to the bookends which are the most significant ones let’s start with publication what is publication publication is the distribution of copies so when you have in your hand a copy of of a work then when if it’s been made available to you with permission the copyright owner the work has been published how does somebody publish a work 50 years ago or a hundred years ago it took a significant commercial operation it wasn’t something that was done casually it’s very difficult to do same question how were sound recordings published whether we’re talking about vinyl or audio CDs very difficult operation to do what about publication of movies making DVDs also extremely complicated there was some video piracy and us on a small scale basis in the 1980s but it took a large commercial endeavor to engage in publication for most of copyright history how is publication effectuated today well if you have a laptop with a wireless connection you can post things to your blog your facebook your whatever you want your website and pretty soon it’s promulgated to more recipients than any other anything other than the absolute best seller of 1964 so publication is extremely wide scale what’s the significance of publication it used to be the be-all and end-all federal copyright protection under the 1909 Act apply to published works and only published works today it’s much more broad than that there’s the so-called dark matter of copyright which is all sorts of family photographs and ephemera which technically has copyright protection even though publication is not the dividing line that it used to be it’s still extremely significant and copyright law and I’ll just illustrate a few of the examples the US has copyright law with most nations on earth but there are a few that are outside the fold Iran and Afghanistan no copyright relations so if an Afghani publishes a work in Kabul there’s no copyright protection board but unpublished works are protected no matter where they’re created in the universe if somebody’s writing an opera on the moon right now that is protected under us copyright law even as to Americans fair use is very significant in that it distinguishes between published and unpublished works if you have unpublished email archives or letters that say the Diebold archive fair use is much more difficult to establish as to an unpublished work and then as to a published work so that’s another significance it’s mandatory to deposit published works in the library of congress the term of protection for copyright seventy years post mortem out taurus how do you know that an author has been dead for 70 years you look at publication and there was a presumption

that if the work was published 95 years ago that the author has been dead for 75 years the work is expired to maximize your rights under copyright you need to register your works you have a grace period from publication of three months within which to register the work so there are dozens of effects of publication today and the fact that publication has been so expanded is extremely significant for our investigation of the law of copyright well skipping through the other fact faculties let’s go to the puzzle of dematerialization we’re going to start right off with the other main defense of copyright law besides fair use there is the first sale doctrine let’s illustrate the first sale doctrine we’ll look at a Supreme Court case that was handed down as well as a more recent district court case the first sale doctrine poses attention on the left our rights belonging to the copyright owner on the right are privileges belonging to users if you have a copy of a book you are allowed to distribute it and there’s a further wrinkle with the importation right which will get to going to take us back in time to the beginning of the first sale doctrine here’s the best seller of 1904 of the cast away now if you look at the copyright notice in 1904 it says that the price of the book is one dollar and no one is licensed to sell it at a less price so the shrink-wrap if you will of 1904 says thou shalt not resell this for less than one dollar well you can guess what next naturally Macy’s went and sold the cast away from for a for a fraction of the price and was sued for copyright infringement the Supreme Court said there is no restraint on alienation that attaches to the channel and so it rejected the cause of action for copyright infringement against Macy’s for reselling this in violation of this erstwhile shrink-wrap agreement and that’s been codified in the law at present the law says that the owner of a particular copy is privileged to sell give away rent or do whatever he or she wants with that copy and that’s why we have used book stores in the United States and that’s why we have used record stores that’s why libraries in the united states do not need to pay royalties to copyright owners unlike canadian libraries for example if before i mentioned me last night that one of his exercises is to send his students to blockbuster blockbuster also exists because of the of the first sale doctrine and late at least until it went bankrupt but that was not because of the first belv copyright law that was because of other considerations and so I pose to you the question of the age namely who owns the paper or plastic and I’m talking about the paper that is the substrate for the literary work or the plastic that is the substrate also for the literary work in the eyes of the Copyright Act a novel and the computer software program are both literary works and they’re both embodied in a physical medium and the question that first sale doctrine asks is not who owns the copyright but who owns the physical product I don’t think it’s that evanescent a question but if you understand it you’re doing better than the Ninth Circuit here’s an illustration of the Ninth Circuit case autocad was a product that was sold to do to do design so cargo Thomas associates an architectural firm bought a copy of autocad the question is not licensing if I read a book I’m only licensed by the publisher I don’t own the copyright but the first sale question is do I own the paper here the question is okay of course cardwell Thomas is only licensed by the copyright owner it does not own the copyright but the question is there’s a little piece of plastic polycarbonate plastic of the cd-rom does it own that piece of polycarbonate plastic is it as it on the hook if it punches holes in it or uses it as a frisbee that’s the question that’s being posed ninth circuit looked at the circumstances it said well you bought a copy and was called a license in the shrink wrap and then later on you the architectural firm upgraded your copy and you paid a lesser price for the upgrade then you would have had to pay for a brand new set and you’re supposed to destroy the original so you by the way you breached your contract but in any event not only do they breach their contract they went bankrupt and so there is a sale of the physical product that big box of AutoCAD 14 was sold along comes mr. Vernor he buys it and he offers it for sale on eBay and he says look this is not loaded on any computer this is my property this is my physical personal property because I bought it from the previous owner of the physical personal property and they lead carville

Thomas the publisher files a notice for takedown verna responds by interposing his own law suit for declaratory relief saying no I have every right to do this on the first sale doctrine now the Ninth Circuit posed the question sale or license that’s the wrong question if the question is who owns a book that I’m holding the question is is it sold or is it lent or rented me when I go to the library I borrow a book if I start punching holes in it the library is going to get angry at me on the other hand if I buy a book at a bookstore and I decide to throw it in the river that’s perfectly fine it should be the same question here for the for the physical product the polycarbonate plastic that was the audio that there was the cd-rom but the Ninth Circuit didn’t look at that question it said oh we’re going to investigate the shrink wrapping you know what it says you may not lease or transfer the software with Autodesk prior consent well what’s that like you know what it’s like to me it’s very much like the copyright notice in 1904 that says this is sold for one dollar no one is licensed to sell it at a lesser price but the Ninth Circuit evoked three basis for saying no there’s no first sale defense here the first is the shrink-wrap specifies that the user is granted a license well exactly like in 1904 second is that license significantly restricts the user’s ability to transfer the software Wow again that’s exactly like 1904 and the third is that this license imposes notable use restrictions so let’s imagine that those you that those notable use restrictions had been present in 1904 let’s say that the copyright notice I’m showing you in addition had said the following you may not read chapter 3 until you have finished reading chapter 2 you may not read chapter 10 more than four times and certainly not allowed to your friends you may not write a book review about this book unless you get our advance permission all of those are fair use just like this number four is its fair use to engage in reverse engineering but the copyright owner ratcheted up to itself unilateral rights and said you may not engage in fair use so let’s just imagine that in 1904 the publisher had said the same thing does that mean the Supreme Court which had said we’re not going to countenance alienability restrictions on chattels would have said oh but these are a lot of alienability restrictions so we are going to enforce it well that’s evidently the logic that the Ninth Circuit used here in this case so you might get the idea that I disagree with the holding of this case and find it inconsistent with old Supreme Court authority but it’s not only inconsistent with all Supreme Court of authority let’s go to new Supreme Court Authority the copyright owners distribution right also includes the right of importation so now we have a question sue pop Kirtsaeng was an exchange student in Thailand he found that because of price discrimination you can buy the identical book in Bangkok for thirty dollars they did have to pay two hundred dollars for in Durham what I mean is it’s a book by an American in English with 15 chapters American author same book same language same chapters published in the United States published in Thailand but the Thai edition has a legend on it and the legend says this copy for sale in Asia only may not be resold in the United States of course mr. Kirtsaeng did sell in the United States publisher sued and said you’re in violation of our rights so the Supreme Court construed the language there are some very technical features of 602 and 109 which I won’t get into I have some problems with the majority’s ruling but I’m talking about the broad strokes here according to the Supreme Court the first sale doctrine triumphs here and it was a ruling not only did Wiley lose its lawsuit against the patent law firms had also lost this case as well so when I asked the question about auto deaths that Ninth Circuit authority I see it as not only inconsistent with 1904 law but also with 2013 ruling by the Supreme Court now one can imagine the Supreme Court reaching the opposite result one would have to imagine that wiley would alter its theory to say we’re not going to sue you for violation the importation right we’re going to sue based on you opened up the shrink-wrap in bangkok and you entered into a license with us and you’re only a licensee of the work and you didn’t have the ownership of it therefore you could not lawfully bring it into the United States I suppose it’s conceivable that the Supreme Court would have held in that direction however I have to tell you that from reading the opinion none of the nine justices of the court not the majority not that send cared one whit for the legend that was on the book that says this book for sale and Asia only may not be re-imported in the United States so I

find it very hard to believe so I see this case as being wrongly decided on multiple bases and let’s imagine for a moment that the Ninth Circuit reads the 50 pages that I devoted to this case and decides to repent and say we hereby unilaterally rule the opposite we come up with the opposite ruling retro actively in autodesk and we will vindicate the first sale doctrine does that mean that copyright law is out of the woods and we can proceed along our merry way will we have a further puzzle of dematerialization and that is whether the first sale doctrine will survive the cloud so far it’s only been litigated in one district court case if you bought a vinyl record in 1970 you could resell it if you bought an eight-track in or sorry the vinyl would be 1950 the 8-track was in nineteen seventy you could resell that if you bought an audio CD in 1990 you could resell it for a fraction of the price and so the question arises if you spent 99 cents to download a track can you resell it and the answer on the first sale doctrine is yes but the question is can you resell it what is the it if I download onto my laptop here a number of works from iTunes I may sell my laptop the the copyright owner may not restrain me from selling the laptop but what if I like my laptop and I only want to sell the bits that i downloaded well in that case for a technical reason the first sale doctrine does not apply first of all if one could simply lift the bits off my hard drive and put them onto your hard drive that would be defensible but that’s not the way the technology works the technology works by taking the bits from my hard drive making a full copy on the remote purchasers hard drive and then erasing them from my hard drive meaning that there’s been an active reproduction the first sale doctrine only allows that particular copy to be so that does not allow a copy of that copy to be made and then the first copy to be erased so this first ruling is that there is no first sale defense in the cloud but let’s imagine that not only does the Ninth Circuit reverse autodesk but that the Second Circuit reverses this case does that mean that fear that the first sale doctrine will be vindicated in the context of the cloud well we still have a lot to worry about let’s imagine our world of pan electronic access anytime you want to avail yourself of a work of authorship you’re going to go to the cloud so unlike the 99 cents that you pay to download a track and put it on your hard drive unlike the 999 that you pay to Amazon to download a book and to put it on your kindle a digital download in this new world if you want to read a book gravity’s rainbow it’s going to take you many hours the publisher will charge you four cents a minute and however long it takes you to read the book that’s how much you’ll pay you want to watch the movie avatar the publisher will charge you ten dollars per hour if you want to run an Excel spreadsheet the publisher will charge you two dollars for every quarter hour whatever it is the point is there will be nothing resident on your computer when the link is severed when you log off there will be nothing resident there for you to turn to residually you’ll just have to come right back and and start again where you left off and pay another ten dollars for an hour’s viewing or or whatever whatever figure i quoted two dollars for a minute of viewing and that’s because the first sale doctrine is limited to a particular copy and there is no particular copy in the context of cloud computing this is a very great puzzle for copyright law I’ve talked about the beauty of copyright protection and I’ve talked about the beauty of the safeguards that limit copyright protection and the two that I’ve emphasized our fair use and for sale so how does that apply in the context of the cloud well to answer that question I want to turn to the events of 16 years ago when congress enacted the Digital Millennium Copyright Act there was a specter in the air the specter of moving our nation towards a paper you society that is not a good thing I’m quoting senator john ashcroft in this particular regard but every senator every representative every Democrat every Republican said the same thing there was universal agreement the Committee on Commerce felt compelled to address the risk that an act of the bill could establish the legal framework that would inexorably create a pay-per-use society and it guarded against that unsuccessfully but at least had tried the chairman of the committee said that pay-per-view is profoundly antithetical to a long tradition what about digital rappers representative Dingell said it’s may sound like the American Way but it is not us cap rate law historically has

carved out important exceptions to the rights of copyright owners so and here’s one more statement we could go on and on so there was unanimity about this in fact there was more opposition to apple pie than to a pay-per-view world at the end of the day so that’s the DMCA but the cloud I’ve already showed you does not have any first sale defense it only has licenses and what about fair use on the cloud well there is no fair use you have to pay ten dollars for every minute you’re every hour you’re logged on or one dollar whatever the copyright owner wants to charge you pay a fair the chairman of the committee also praised libraries where people could access things for free okay in the context of the cloud there is no digital library where people can access things for free so what is the upshot here well if Congress wishes to be true to its aight diced in 1998 it has a great dilemma it has to car it has to promulgate entirely new strictures to allow user privileges when we no longer have the first sale doctrine and the fair use doctrine so so automatically available to us I testified before Congress on joining 14th this year and my testimony was about the distribution right at the invitation the committee it was about a part of the distribution right called making available but I highlighted this issue as something that is extremely confusing and that the committee should take up and I volunteered to help the committee because at this moment I don’t have the solution but if the Congress wishes to retain fidelity to the proposition that was unanimous in 1998 then when copyright owners begin to do everything that I’ve said about their motion pictures and they’re in their software programs and their songs and their books then the answer of Congress to those copyright owners has to be well the question is what do we do in order to get to some resolution here I’ve looked very much backwards in order to find the resolution and something that I’m calling formalities over substance for formalities are something that have been jettisoned from us copyright law 25 years ago the united states joined the Berne Convention and our burn to mention implementation act eliminated formalities from us copyright law except that it didn’t completely formalities can sometimes be extremely onerous here is the classic Italian movie The Bicycle Thief which was published in 1948 meaning 28 years later 1976 it needed to be renewed in the records of the US Copyright Office or else it would go public domain happily the Italians were not asleep the licensee did come on a timely basis to Washington DC and file a piece of paper and you know what happened the court ruled ah the licensee filed a piece of paper according to the technicalities the license or has to file the piece of paper you’re out copyright is dead so there were all sorts of traps for the unwary the copyright notice had to be in a certain place it had to have the certain words in it and cases are legions in which the courts to agree in eliminating copyrights okay that’s not really what a mature copyright system should do it should not promulgate formalities to to randomly kill people because they don’t know the intricacies of us copyright law but I mentioned that copyright formalities are not dead the day before I got on the plane to fly here to Duke I co-hosted the round table that the US Copyright Office sponsored on record ation of transfers which is a type of formality which is every bit as vital now as it has always been so formalities continue to be around us one way that Congress could act would be to try to restore some of the balance that existed under the 1909 act so remember was only published works that were protected well today everything can be published which is why we have the dark matter of copyright but Congress could take a look afresh at the issue Congress could decide we want to protect works of high authorship but we don’t necessarily wish to clothe pornography with copyright protection there would be some first thorny First Amendment issues to confront it would hire scrutiny whether there is a legitimate government interest and I’d love to join that debate in terms of whether there could be discrimination on that basis so many copyright cases have been filing about multiple listing services this is something that Congress wishes to embrace within copyright protection simples duties that people come up with at home family photographs should they be subject to copyright protection every email that you send it’s a fixed work should it be subject to copyright protection just in general we could go through the range of works and say copyright law is designed to incentivize authorship do kidnappers really need the incentive of copyright protection in order to come up with a ransom note okay

probably not and throughout the realm of copyright we can try to identify works that are not of high authorship and draw a distinction on that basis but we can also invoke formalities now at the time that the fathers of the Berne Convention convened formalities were a bad thing first of all if you were Belgian you had no protection in France okay the Berne Convention managed to solve that second if you had to go from Spain to look at the at the copyright records in ottawa canada or canberra australia as of 1905 or 1935 or even 1965 that would have been terribly onerous today we don’t have that same of disability we have the possibility of registration on a wide scale basis and so as we unwind through history I want to talk about revision of the Berne Convention to accommodate the world of the Internet now there’s only been one diplomatic conference that was convened for that purpose I happen to have been present as the representative of MCI AT&T Verizon AOL and a host of tech companies my job was mainly to give press conferences at the intercontinental hotel because nobody else wanted to listen to me but I had a good idea that not even my clients wish to hear and the good idea was the following you know what we’re gathered here in Geneva to revise the Berne Convention which comes from 1886 berne convention is based on national treatment it’s based on a very archaic notion that really doesn’t fit what were what we’re here to do which is to come up with the word the rules of cyberspace which is not localized in fact I remember Jerry I remember you you and I spending a lot of time talking I think maybe you were listening to me I hope okay so uh I thought was a good idea until the first vote was held and then I realized I was just spitting in the wind the first vote was the following the EU delegate made in motion a procedural motion saying i represent 12 member states i should be clothed with 12 votes japan went ballistic said i only get one vote why should you get 12 votes does u.s. broker to compromise the compromise was as follows yes you delegate you will be able to cast 12-block votes but only at such moments as all 12 national gilad delegates are sitting in the conference room I couldn’t believe it here we are trying to make the rules of cyberspace which is the rules of no space and the most important thing is I you have to be within eyeshot of me or else you don’t exist so i gave up then and I’d be happy to to come back to it but at the moment I have a more modest proposal which is to reinstitute formalities there have been some scholarly articles about it recent conference at Berkeley took place on the subject how would we do it well there’s they’re they’re low cost there’s there’s all sorts of benefits that come with it we have to have data and we have two works that are provided it’s already beginning to happen in a small way last week the billion-dollar multi in dollar litigation that Viacom brought against YouTube was settled and part of the settlement had to do with filtering in order to find copyrightable works so my in modest proposal only has two propositions in it first we establish a panopticon and everything that’s in the panopticon will get great enforceability and everything that’s not there will get limited enforceability what is the panopticon well it goes back to an idea that was promulgated as part of prison management actually but the participatory panopticon refers to making a comprehensive database of all human activity available and those sources that I’ve indicated have started the process how do you identify something for the panopticon well we already looked at the google book search the google book search needs to be put on steroids a tester include not only books but sculptures and songs and architecture novels the Journal of catalysis and everything else that was the subject that patent case etc etc but it shouldn’t be the google book search it should be something beyond that perhaps the Library of Congress search or perhaps the United Nations search the world intellectual property search if we have one central registry and it’s located in Johannesburg it’s not difficult the way it was in 1932 go to Australia it’s very easy to use the internet to look at this panopticon plagiarism machine now what is this machine it’s really nothing other than the Turnitin machine on steroids instead of having those term papers it has everything in it but obviously it has to be implemented in the manner of the Patent and Trademark Office not in the manner of the Second Circuit in other words it’s not there to make everything publishing everything available it’s there to do a search and once that search is facilitated it’s going to benefit both putative defendants and

putative plaintiffs in copyright infringement cases here’s some testimony earlier this month to Congress by a grammy-winning artist who talks about content identification she says just like there’s a Do Not Call list there should be a do not upload list well with the panopticon that could theoretically be possible so it benefits defendants in the sense that if I’m putting something out and I don’t want to be sued for copyright infringement I don’t have to worry about being blindsided about something whose existence I know nothing about I searched the panopticon and I know about it if I’m a putative plaintiff I’m benefited because I put my work in there and I’m going to get full relief what about treaty obligations is there is the u.s. under an obligation not to have those formalities to the extent that I’m proposing well the only mandate of the Berne Convention is that infringing copies must be liable to seizure and the trips convention adds you have to have effective enforcement it also adds there has to be procedures that are fair and equitable and not unnecessarily complicated or costly I know many district court judges who are walking violations of the trips protocol but that’s the problem that copyright law cannot redress so the identifying the legislation to implement this would be very simple either you include your work in the panopticon which could be automatic when you upload it to the internet and it could be automatic when you publish a book or you can decline the register the work in which case you will simply get reasonable compensation namely your out-of-pocket loss which is not terribly palatable for filing a lawsuit well as I’ve looked at the curiosities I’m delighted to be in North Carolina because right there on the outer banks before the 1909 act was adopted we had the new technological innovation that set us forth on our modern era and I’ve tried to illustrate for you some of where we can head in infringement two point oh mr. Nomura has read take some questions student come on you’re absolutely right i think my question about license the backstory to this is that the courts have to deal with software being thrown into the copyright most would potentially devastating consequences to the software industry many people including gary and myself prefer outside it would be a disaster and the courts having did a brilliant job instead of trimming and retrofitting copyright law by and large so that it didn’t discuss off early interoperability using fear using all the common law techniques and then he comes a licensing and they do what it is effectively 180 degree turn and and it really put in the seeds of completely undermining everything else that they’ve already done my fear is that the students in this room will get the question wrong their children daddy was there ever a time when people opened their books that will actually be inconceivable to the world of the future so why give it all this background did the courts get it so wrong oh okay the think the answer of why the courts got it wrong is that what I said about software being a literary work in nineteen eighty the decision was made to clothe software with some protection and photo demew copyright protection what within copyright well I don’t know worth it has numbers and letters that’s kind of like a book which has numbers and letters so we’ll make we’ll call it a literary work and that’s fine because all of copyright laws made around literary works namely books so it won’t be a big dislocation then fast-forward 25 years what if all the litigation is about software and not about books if you have the same legal regime than what’s decided about software will determine what you can do for books so the Ninth Circuit made a choice that I think is perfectly reasonable writing on a blank slate as a policy they’re saying you know what books should be resold but we don’t think that software should be resold there’s a different economic package that’s there and we like to foster price discrimination we want to tell you autodesk sell your student copy for thirty dollars sell the the advanced copy four hundred dollars and sell the architectural copy for five hundred dollars great problem is the US Supreme Court talked about price discrimination the Kurds same case and said this will ruin price discrimination good so we need to have a new legal regime and in I testified to Congress about that too and I talked about this case and I said look maybe Congress wishes to divide up the first sale doctrine one should apply to traditional works and then there should be a different for sale doctrine that applies to computer software that would

be a coherent way of proceeding so the problem is in nineteen eighty good so there’s been some isn’t doing a good job with the transformative use so if you have even more to get the panopticon then how how do you sort of balance those two things okay good okay Thank You TG good question uh I was talking about slavish copy at the moment we could have other levies in place for user user content so for instance Girl Talk doesn’t match up it has some elements that are taken from other works and and and yet its original in its own right perhaps there should be a levy that girl talk will pay used to be you would pay to sense a record in 1909 two proofs of mechanical recording and over the century that has elevated until it’s today it’s fourteen cents per record could be to make a mash-up it would be fourteen cents per record divided among all the people who are sampled so what I presented today I didn’t have time to get into everything and there there need to be refinements along the lines you suggest as we have you here a question dear to my heart is there any possibility thing will actually adopt the making available right that we were supposed to get out of the WCT well if Congress listened to my testimony in january fourteenth then it’s quite possible but you know that this raises the bigger question when will the new amendment come into effect and I’m invite I’m I told Jamie this and I’m actually gonna do it I’m gonna make a website that everyone can participate in we’re going to have a pool as to when the next copyright act will be adopted right now I’m reserving May twenty-fifth 2029 for myself but whoever hits the date will get the big prize yeah billion dollars that’s right the Dean is offered good