6 ms·

Speak Out Against Copyright Holders Destroying True Property Rights

90 points by iProject 14y ago

briandear 14y ago
Besides the hyperbole of the title, this article is flawed in that products sold within the US must comply with US law. If a copyright holder hasn't given permission for usage of their copyright in a specific country or territory, than products bearing that copyright can't be sold within that country. Otherwise, copyright would offer no protection since I would simply have to set up a factory in Mexico and I could infringe all I wanted and then sell those products in the US with impunity. These are the same laws that prevent counterfeiting. If I own a copyright or a trademark for something I created, then how is it fair to me that my work be stolen? For example, if I record a great song and spend thousands of dollars in the studio, how is it fair that others can profit from that work without me getting compensated? Don't misunderstand, I'm not talking about fair use, I am talking about people receiving money (i.e. commercial gain) by stealing the labors of others. That's straight up theft.
- _delirium 14y ago
  What IP holders are arguing here is considerably stronger: that I need their permission to sell a product in a country even if it is a legitimate, non-ripoff product that I myself own. This is not about unlicensed, counterfeit products, as in your Mexico hypothetical, but about licensed products that were produced with authorization of the rightsholder and then legally purchased. The question is if, once that purchase has taken place, the new owner needs to go back and get permission a second time from the rightsholder if they want to do something with their property. IP holders are arguing that if I buy a Nike shoe in Japan, and then want to sell it on eBay in the United States, I need Nike's permission, because they never licensed me to distribute their trademarked shoe in the USA. But I own the shoe! And it's a genuine Nike shoe, not a ripoff! They licensed its production, then authorized its sale to me, and at this point the shoe should be my property, and they should not be in the picture anymore. This is essentially in non-book form what the first-sale doctrine put an end to in books: the rightsholder trying to control resale of the goods for their entire lifetime, past the initial sale. Which of course makes a mockery of the idea of "property". If I can't sell my shoes without getting permission of the shoemaker, I "own" my shoes in a sense considerably weaker than the traditional definition of property.
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  - antiterra 14y ago
    > This is essentially in non-book form what the first-sale doctrine put an end to in books: The case SCOTUS will rule on, Kirtsaeng v. John Wiley actually is "in book form." Also, be careful to not mix up trademark and copyright. Omega v. Costco occured because "the watches included a small copyrighted design on the back surface."[1] The cases were not based around an argument that involved trademark at all, only copyright. [1] http://www.patentlyo.com/patent/2010/12/supreme-court-does-not-decide-costco-v-omega-intl-exhaustion-case.html http://www.patentlyo.com/patent/2010/12/supreme-court-does-n...
- antiterra 14y ago
  I believe you have misunderstood the issue at hand. There is no straight up theft in going to the UK, buying a book published under contract with the author in the airport store, reading it on the plane back the US and selling it on Amazon. That is the sort of case that we're talking about here, works whose creation do not violate the laws of the US but which are not produced under US jurisdiction.
tptacek 14y ago
Count on Techdirt to thoroughly botch coverage of any legal issue it smears its pixels onto. At issue in the case Techdirt is alluding to isn't the long-term prospect of the first-sale doctrine. Nor is it about whether you can "resell a book you bought abroad"; at least, well, here, let's just dive in: What happened in this case is that a Cornell student noticed that textbooks are sold at a lower price in some countries abroad. This is because if you sold textbooks at the US price in those countries, you might as well not sell them at all. So the student first consulted "Google Answers" for legal advice, and then arranged to import cheap textbooks and resell them in the US. He made something like 1.2 million dollars. The problem with this scheme is that it constitutes "parallel importation", and the US is very weird about parallel importation. To wit: retailers luv parallel importation (it allows Costco to import huge numbers of Omega watches to sell way below US MSRP), every other business interest pretty much hates parallel importation (for obvious reasons), many countries outright ban parallel importation, but the US does not. Instead, a hodgepodge of different statutes are used to retard parallel importation (think: drugs from Canada). Among them is US Copyright law, which ostensibly (but not completely clearly) provides (a) the exclusive right to distribute and sell copyrighted works to Copyright owners, and (b) under US import law, forbids imports of copyrighted material without the permission of the owner. The First Sale doctrine says that once you've purchased a good, you're free to resell it without restriction. But obviously, having purchased a copyrighted good, you don't then obtain all the rights of the original copyright holder. For instance, you cannot then yourself make copies of the good for resale. So, while there's a tension between First Sale and "Infringing Importation", it's not a hard one to resolve: black --- or very dark grey --- letter law says you can't import copyrighted material without the permission of the copyright holder. What seems to have happened in this case was that a District Court came to the proper conclusion by way of the wrong reasoning. Specifically: the District Court held that a parallel import was unlawful... but it was unlawful because the First Sale doctrine doesn't apply overseas (? WAT?). It's not clear why they even needed to go there, but now SCOTUS needs to fix things.
- antiterra 14y ago
  Reading the Court of Appeals opinion for Kirtsaeng v. John Wiley shows that the district court interpreted the "lawfully made under this title" line as excluding works made outside of the US. The Court of Appeals said that the wording is ambiguous, and therefore referred to the SCOTUS opinion in Quality King which implied that there are some works that, although not in violation of copyright law, are not "lawfully made" under the title. It seems to me that the first-sale doctrine is definitely in danger (if EULAs haven't already effectively doomed it.) It also seems a valid concern to worry that such a finding would encourage entities to move outside the US to produce works that could not be resold.
antiterra 14y ago
"Made lawfully under this title" is the wording that mattered in Omega v Costco and lower court decisions in Kirtsaeng v John Wiley. In 17 USC §109 which limits copyright holder rights and is the codification of the first sale doctrine, all of the limitations listed apply only to works subject to that phrase.[1] In a nutshell: One interpretation is that "lawfully made under this title" simply means a work that does not infringe on other copyrights, as per Title 17. Another implies that the work must be made in the jurisdiction of US Law for the limitations to apply. I cannot see how first sale in all its forms would not be threatened by the latter interpretation. If you go out of the US and buy a book that is not produced in the US, you would have no codified right to resell it in the US. [1]http://www.law.cornell.edu/uscode/text/17/109 http://www.law.cornell.edu/uscode/text/17/109
TheAmazingIdiot 14y ago
Companies routinely lay off staff and hire in cheaper countries (China, India..). Companies routinely source materials to cheaper countries as to undercut everyone else. Companies are also willing to move the business to locales that provide cheaper (or free) taxation. If you're really lucky, you get a rebate of tax from that government for 'stimulating jobs'. Yet we people cannot 'legally' buy movies and music from other countries unless the copyright owner blesses us to do so ?! We cannot legally bought, import goods from out of country areas because that same company sells them more expensively here?! As to the comment from the guy who was importing and selling legally bought textbooks for a cheaper price.... Well, isn't that being a good business(wo)man? You find where something is being sold cheap and sell where it is high. Is that not providing a much needed service? So, companies extract much gain by playing regions against regions. Why can't we?
- czr80 14y ago
  Because then the rational response for companies would be to stop selling the product cheaper in other countries, denying people in poorer countries access to products at prices they can afford.
  - TheAmazingIdiot 14y ago
    These compains are still making profit. They just aren't making as much as they would selling to Americans. And that still doesn't answer my question as why companies can use price arbitrage yet we people cannot.
    - czr80 14y ago
      Example: Company sells 100 million of a product in the US + 10 million at lower price in poorer country (assume same number of units for simplicity). Total revenue: 110 million. Somebody starts to buy in the poor country and re-sell in the US. US consumers are happy because they can now get the product for a tenth of the price. Sales in the US collapse to 10 million. Total revenue: 20 million Company looks at the situation and reasons - if I raise the price in the poor country to the US price I can get back my lost revenue in the US, at the risk of losing my sales in the poor country. I'm going to do that. Sales in the poor country go to 0, sales in US back to normal. Total revenue: 100 million. Governments look at this situation - hey, we would like consumers in the poor country to get access to the product too. How about we pass a law making it illegal to import products destined for a different market? Company - ok, great - starts selling product at lower price in poor country. Who benefits from these laws? 1. US consumer - mostly neutral (pay similar price anyway) 2. Poor country consumer - positive (pay much less) 3. Company - positive (earn incremental revenue) Now this is a highly stylised example and the actual situation is very complicated, as this is governed by a patchwork of different laws and treaties and industry lobbying. I also certainly don't mean to suggest that the situation is uniformly optimal. However, this is the basic intuition behind these types of laws that you need to understand, otherwise I fear none of this will make any sense to you.

90 points by iProject 14y ago

Besides the hyperbole of the title, this article is flawed in that products sold within the US must comply with US law. If a copyright holder hasn't given permission for usage of their copyright in a specific country or territory, than products bearing that copyright can't be sold within that country. Otherwise, copyright would offer no protection since I would simply have to set up a factory in Mexico and I could infringe all I wanted and then sell those products in the US with impunity. These are the same laws that prevent counterfeiting. If I own a copyright or a trademark for something I created, then how is it fair to me that my work be stolen? For example, if I record a great song and spend thousands of dollars in the studio, how is it fair that others can profit from that work without me getting compensated? Don't misunderstand, I'm not talking about fair use, I am talking about people receiving money (i.e. commercial gain) by stealing the labors of others. That's straight up theft.

_delirium 14y ago
What IP holders are arguing here is considerably stronger: that I need their permission to sell a product in a country even if it is a legitimate, non-ripoff product that I myself own. This is not about unlicensed, counterfeit products, as in your Mexico hypothetical, but about licensed products that were produced with authorization of the rightsholder and then legally purchased. The question is if, once that purchase has taken place, the new owner needs to go back and get permission a second time from the rightsholder if they want to do something with their property. IP holders are arguing that if I buy a Nike shoe in Japan, and then want to sell it on eBay in the United States, I need Nike's permission, because they never licensed me to distribute their trademarked shoe in the USA. But I own the shoe! And it's a genuine Nike shoe, not a ripoff! They licensed its production, then authorized its sale to me, and at this point the shoe should be my property, and they should not be in the picture anymore. This is essentially in non-book form what the first-sale doctrine put an end to in books: the rightsholder trying to control resale of the goods for their entire lifetime, past the initial sale. Which of course makes a mockery of the idea of "property". If I can't sell my shoes without getting permission of the shoemaker, I "own" my shoes in a sense considerably weaker than the traditional definition of property.
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- antiterra 14y ago
  > This is essentially in non-book form what the first-sale doctrine put an end to in books: The case SCOTUS will rule on, Kirtsaeng v. John Wiley actually is "in book form." Also, be careful to not mix up trademark and copyright. Omega v. Costco occured because "the watches included a small copyrighted design on the back surface."[1] The cases were not based around an argument that involved trademark at all, only copyright. [1] http://www.patentlyo.com/patent/2010/12/supreme-court-does-not-decide-costco-v-omega-intl-exhaustion-case.html http://www.patentlyo.com/patent/2010/12/supreme-court-does-n...
antiterra 14y ago
I believe you have misunderstood the issue at hand. There is no straight up theft in going to the UK, buying a book published under contract with the author in the airport store, reading it on the plane back the US and selling it on Amazon. That is the sort of case that we're talking about here, works whose creation do not violate the laws of the US but which are not produced under US jurisdiction.

tptacek 14y ago

Count on Techdirt to thoroughly botch coverage of any legal issue it smears its pixels onto. At issue in the case Techdirt is alluding to isn't the long-term prospect of the first-sale doctrine. Nor is it about whether you can "resell a book you bought abroad"; at least, well, here, let's just dive in: What happened in this case is that a Cornell student noticed that textbooks are sold at a lower price in some countries abroad. This is because if you sold textbooks at the US price in those countries, you might as well not sell them at all. So the student first consulted "Google Answers" for legal advice, and then arranged to import cheap textbooks and resell them in the US. He made something like 1.2 million dollars. The problem with this scheme is that it constitutes "parallel importation", and the US is very weird about parallel importation. To wit: retailers luv parallel importation (it allows Costco to import huge numbers of Omega watches to sell way below US MSRP), every other business interest pretty much hates parallel importation (for obvious reasons), many countries outright ban parallel importation, but the US does not. Instead, a hodgepodge of different statutes are used to retard parallel importation (think: drugs from Canada). Among them is US Copyright law, which ostensibly (but not completely clearly) provides (a) the exclusive right to distribute and sell copyrighted works to Copyright owners, and (b) under US import law, forbids imports of copyrighted material without the permission of the owner. The First Sale doctrine says that once you've purchased a good, you're free to resell it without restriction. But obviously, having purchased a copyrighted good, you don't then obtain all the rights of the original copyright holder. For instance, you cannot then yourself make copies of the good for resale. So, while there's a tension between First Sale and "Infringing Importation", it's not a hard one to resolve: black --- or very dark grey --- letter law says you can't import copyrighted material without the permission of the copyright holder. What seems to have happened in this case was that a District Court came to the proper conclusion by way of the wrong reasoning. Specifically: the District Court held that a parallel import was unlawful... but it was unlawful because the First Sale doctrine doesn't apply overseas (? WAT?). It's not clear why they even needed to go there, but now SCOTUS needs to fix things.

antiterra 14y ago
Reading the Court of Appeals opinion for Kirtsaeng v. John Wiley shows that the district court interpreted the "lawfully made under this title" line as excluding works made outside of the US. The Court of Appeals said that the wording is ambiguous, and therefore referred to the SCOTUS opinion in Quality King which implied that there are some works that, although not in violation of copyright law, are not "lawfully made" under the title. It seems to me that the first-sale doctrine is definitely in danger (if EULAs haven't already effectively doomed it.) It also seems a valid concern to worry that such a finding would encourage entities to move outside the US to produce works that could not be resold.

antiterra 14y ago

"Made lawfully under this title" is the wording that mattered in Omega v Costco and lower court decisions in Kirtsaeng v John Wiley. In 17 USC §109 which limits copyright holder rights and is the codification of the first sale doctrine, all of the limitations listed apply only to works subject to that phrase.[1] In a nutshell: One interpretation is that "lawfully made under this title" simply means a work that does not infringe on other copyrights, as per Title 17. Another implies that the work must be made in the jurisdiction of US Law for the limitations to apply. I cannot see how first sale in all its forms would not be threatened by the latter interpretation. If you go out of the US and buy a book that is not produced in the US, you would have no codified right to resell it in the US. [1]http://www.law.cornell.edu/uscode/text/17/109 http://www.law.cornell.edu/uscode/text/17/109

TheAmazingIdiot 14y ago

Companies routinely lay off staff and hire in cheaper countries (China, India..). Companies routinely source materials to cheaper countries as to undercut everyone else. Companies are also willing to move the business to locales that provide cheaper (or free) taxation. If you're really lucky, you get a rebate of tax from that government for 'stimulating jobs'. Yet we people cannot 'legally' buy movies and music from other countries unless the copyright owner blesses us to do so ?! We cannot legally bought, import goods from out of country areas because that same company sells them more expensively here?! As to the comment from the guy who was importing and selling legally bought textbooks for a cheaper price.... Well, isn't that being a good business(wo)man? You find where something is being sold cheap and sell where it is high. Is that not providing a much needed service? So, companies extract much gain by playing regions against regions. Why can't we?

czr80 14y ago
Because then the rational response for companies would be to stop selling the product cheaper in other countries, denying people in poorer countries access to products at prices they can afford.
- TheAmazingIdiot 14y ago
  These compains are still making profit. They just aren't making as much as they would selling to Americans. And that still doesn't answer my question as why companies can use price arbitrage yet we people cannot.
  - czr80 14y ago
    Example: Company sells 100 million of a product in the US + 10 million at lower price in poorer country (assume same number of units for simplicity). Total revenue: 110 million. Somebody starts to buy in the poor country and re-sell in the US. US consumers are happy because they can now get the product for a tenth of the price. Sales in the US collapse to 10 million. Total revenue: 20 million Company looks at the situation and reasons - if I raise the price in the poor country to the US price I can get back my lost revenue in the US, at the risk of losing my sales in the poor country. I'm going to do that. Sales in the poor country go to 0, sales in US back to normal. Total revenue: 100 million. Governments look at this situation - hey, we would like consumers in the poor country to get access to the product too. How about we pass a law making it illegal to import products destined for a different market? Company - ok, great - starts selling product at lower price in poor country. Who benefits from these laws? 1. US consumer - mostly neutral (pay similar price anyway) 2. Poor country consumer - positive (pay much less) 3. Company - positive (earn incremental revenue) Now this is a highly stylised example and the actual situation is very complicated, as this is governed by a patchwork of different laws and treaties and industry lobbying. I also certainly don't mean to suggest that the situation is uniformly optimal. However, this is the basic intuition behind these types of laws that you need to understand, otherwise I fear none of this will make any sense to you.