January 2002
Among the many studies that the U.S. Copyright Office was directed to undertake in the Digital Millennium Copyright Act (DMCA) was an examination of the effects of the DMCA on the development of electronic commerce under the first sale doctrine[1] and Section 117 of the Copyright Act. Section 117 is a limitation on the exclusive rights of the copyright holder for computer programs. This column deals with the first sale portion of the Register’s Report;[2] next month’s “Copyright Corner” will address the report’s treatment and recommendations relating to computer programs and temporary copies in computer random access memory.
The purpose of the study and the resulting report was to examine the relationship between existing and developing technologies on the operation of these statutes. In order to conduct the necessary study, the Copyright Office called for public comment and held hearings in November, 2000. The first sale doctrine permits the owner of a copy of a copyrighted work to dispose of that copy without the permission of the copyright owner. In fact, this is how libraries lend materials from their collections to users. The first sale doctrine means that the author receives royalties only for the first sale of that copy of a work, but receives no additionally royalties for subsequent sales of the copy. Traditionally, the first sale doctrine related to distributions of tangible copies; whether and how the first sale doctrine applies to digital copies is the issue.
Library associations had hoped that the report would include recommendations to ensure that the’ rights of users to use digital works would be protected and that libraries would be able to lend and archive digital works. Librarians continue to point out that copyright holders want to lock up both access and use of their digital works to the point that libraries’ abilities to lend works in digital form is virtually eliminated. This is due to the interaction of the DMCA’s anti-circumvention provisions[3] with non-negotiable licenses from publishers and producers. Proof of this is found in many license agreements that prevent use of the work for interlibrary loan at all. Unfortunately, the Register’s Report finds that the DMCA does not undermine the first sale doctrine in any meaningful way, and therefore it recommends only minor changes in the law. The report concludes that it is simply too early to recommend significant changes in the law. To the dismay of the library community, the report found that transmissions over the Internet produces a copy on the recipient’s computer which is a reproduction to which the first sale doctrine does not apply. The argument was made that transmission followed by the immediate deletion of the original file is the equivalent of the transfer of a physical copy. The report rejected this argument primarily because physical copies degrade over time while digital copies do not. Further, in attempting to apply the first sale doctrine to digital works, proponents are really applying pre-digital age distribution models. The benefits of expanding the first sale doctrine do not exceed the likelihood of increased harm, according to the report.
Librarians have recognized that the traditional first sale doctrine may not literally apply to digital works, but it certainly should – at least when there is near simultaneous deletion of the digital work from the computer of one who transfers the copy by transmitting it to someone else. The discomfort with the report’s analysis is the fact that it fails to recognize the role the first sale doctrine has played in promoting the purposes of U.S. copyright law. Instead, the report focuses on how difficult it would be either to determine whether near simultaneous deletion occurred or to prove that it occurred and when.
Copyright holders testified in the hearings against extension of the first sale doctrine to digital works because lending a digital work means that a copy is duplicated rather than that one physical copy is exchanged. Copyright proprietors were not persuaded by librarians’ arguments concerning near simultaneous deletion of the original copy.
The report does recognize that the problems raised by librarians are valid concerns despite the fact that the Register recommends no change in Section 109(a). Librarians and other testified that a new digital first sale doctrine should supersede overly restrictive license agreements for digital works. In what is becoming a common theme in these Copyright Office reports, the primary reason the Office fails to recommend changes in the law is lack of proof of present harm. Yet, by the time there is substantial proof of harm, thousands of library users will have suffered in their ability to use works that increasingly will be available only in digital format.