Video Games and Digital Media Conference: The First Sale Doctrine and the World of Digital Media #EntLaw #FashionLaw

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The First Sale Doctrine and the World of Digital Media

Organizer: American Bar Association, Forum on the Entertainment & Sports Industries

Moderator: Professor Ben Depoorter, UC Hastings School of Law

Simon Frankel, Partner Covington & Burling, LLP
Gregor Schmid, Partner, Taylor Wessing, LLP

(USA focus only, although there was a European presentation)

1. U.S. Supreme Court broadened the first sale application doctrine.
a. What is a sale and what is a license transaction?
b. Technological protection measures. You see your game but there is a code that blocks full use on second hand market.

2. Overview of first sale doctrine.
a. The Bruce Willis/Itunes Case which was never filed, raised the issue of what happens to your digital music catalog when you die, especially where Itunes’ terms of service makes it impossible for you to transfer your catalog to your heirs.
b. Who owns your download or stream?
c. Who owns it when you die?

3. The First Sale Doctrine found in 17 USC 109(a).
a. If you buy the physical work, you can do whatever you want with it. Give it away, sell it or throw it out.
b. Section 109(b)(1)(A) provides for limited exceptions i.e. sound recordings etc.

4. 2 Main Forms of Content Delivery
a. Analog = Past
b. Digital = present and future (kindle, mp3, streaming services like Spotify and Pandora). User exchanges payment to listen, stream etc. but the platform is key issue and has implications.

5. What are the key issues?
a. Has there been a sale?
b. If there is a first sale, can a used digital copy be sold?
c. If the first sale occurs outside the USA, did it really occur outside the USA?

6. Has There Been a Sale?
a. Distinction between License v. Sales?
b. Shrink wrapped computer software
c. Clickwrap software
d. Vernor v. Autodesk, Inc. defines the test for determining applicability of first sale doctrine.

7. If there is a first sale, can a used digital copy be resold?
a. If you are “transferring” then it complicates matters.
b. The answer turns on what is a copy?
c. 17 USC 101 defines a copy. The definition was meant to allow for new technology but its breadth has made it challenging in its application.

8. 2 Perspectives on Digital Resales?
a. When a digital copy is “transferred” from one computer to another, this necessarily creates a second infringing copy.
b. A digital copy is capable of being transferred just like a physical copy without implicating the reproduction right.
c. What is the significance of the “forward” and “delete” technology?

9. Digital Resale Models
a. Redigi Case (Cout rules resales on redigis not protected and resales on redigi are infringing reproductions not protected first sales)
b. Murfie company avoids issue in Redigi case. (Link digital copy with physical to avoid the Redigi issue)

10. What Lies Ahead?
a. Understand how digital distribution and resale technology actually works to decide infringement under copyright law.
b. Strike a balance between technical processes and functional results.
c. Assess whether congress will revise first sale doctrine

Photocredit: Lehrmach