Supreme Court Weighing ‘First Sale’ Copyright Doctrine

Photo: Courtesy of Supreme Court

The Supreme Court on Monday will hold oral arguments concerning the global reach of U.S. copyright law, in a case testing whether buyers of foreign copyrighted works may resell them in the United States without the copyright holder’s permission.

The case tests the so-called “first sale” doctrine, which generally allows the purchaser of copyrighted works to re-sell or use the work without the copyright holder’s permission. That’s why used bookstores, libraries, GameStop, video rental stores and even eBay are all legal. But how the doctrine applies to foreign-purchased works — the so-called gray market — has been a matter of considerable debate. And the lower courts are conflicted.

The case the justices will hear Monday concerns textbook maker John Wiley & Sons and California entrepreneur Supap Kirtsaeng, who was reselling on eBay textbooks that were purchased at lower prices overseas — and he found eager buyers in U.S.-based students. The publisher sued, and a New York federal jury agreed with John Wiley & Sons’ position that the first-sale doctrine did not apply, and awarded $600,000 in damages for copyright infringement, a decision affirmed by the 2nd U.S. Circuit Court of Appeals.

And just as the lower courts are conflicted on the issue, so are the Supreme Court’s justices.

The Supreme Court in 2010 said the first-sale doctrine did not apply to overseas purchases of copyrighted works that were imported for resale in the United States. The 4-4 ruling meant Costco was liable for copyright infringement for selling foreign-made watches without the manufacturer’s authorization. However, because there was no majority decision, the ruling did not set a nationwide precedent and solely affirmed a lower court’s ruling.

Justice Elena Kagan recused herself from the Costco case, as she had worked on it when she was solicitor general. She had urged the justices to side with Omega, the watchmaker. The government’s position was, and still is that the U.S. Copyright Act’s first-sale doctrine does not apply to goods produced and copyrighted overseas and imported to the United States — period.  Costco had told the Supreme Court that the decision effectively urges U.S.-based manufacturers to flee the United States (.pdf) to acquire complete control over distribution of their goods in the American market, arguments now being made in the latest case.

To mark Monday’s hearing before the high court, activist group Demand Progress has set up a website, youvebeenowned.org, which has assisted more than 100,000 people in e-mailing their lawmakers in support of the first-sale doctrine. The site has embeddable ribbons and ball-and-chain icons saying “owned” or “you’ve been owned,” and is urging web admins to display it on their sites to protest.

“This vastly under-reported case has tremendous implications for millions of Americans and could undermine our ability to use sites like eBay and Craigslist — or even hold old-fashioned garage sales,” said David Segal, Demand Progress’ executive director.

In many ways, this is a battle over non-digital goods. Most digital goods, like software, e-books and MP3s — because of licensing or sandboxing — cannot be resold. However, a U.S. startup, ReDigi, is testing that theory when it comes to online music.

Stefan Mentzer, a partner of the law firm White & Case, says the outcome could have also wide-ranging ramifications even for the art world.

“The 2nd Circuit’s decision could have serious unintended consequences for the art museum community and the viewing public,” said Mentzer. “If the decision below is upheld, merely hanging a foreign-made painting on the walls of a museum, buying and importing a sculpture that was created outside the country, or loaning either to another institution for exhibition to the public, could give rise to claims of copyright infringement.”

The justices usually rule weeks or months after oral arguments.

Feds Reject Legalizing DVD Cracking, Game Console Modding

Xbox modding. Photo: videocrab

Copyright regulators rejected on Thursday proposals to make it lawful for people to copy DVDs for personal use or to jailbreak videogame consoles to run custom software.

The ruling hands yet another loss to digital rights groups who are waging an ongoing campaign to chip away at the scope of a law that limits citizens’ rights by treating copyright owners’ encryption techniques as sacrosanct.

Every three years, the U.S. Copyright Office entertains requests to create temporary loopholes in the Digital Millennium Copyright Act, which makes it unlawful to circumvent encryption technologies in items that you buy.

It’s all part of a long-running showdown between the big copyright holders who view the world as divided into creators and consumers, and a coalition of librarians, digital rights groups, disability activists and hackers who seek to preserve a world where people can repurpose, upgrade and build upon the devices and media they legally buy — just as hackers, painters and culture jammers had done for decades before the DMCA was adopted in 1998.

Librarian of Congress James Billington and Register of Copyrights Maria Pallante rejected the two most-sought-after items on the docket, game-console modding and DVD cracking for personal use and “space shifting.” Congress plays no role in the outcome.

The regulators said that the controls were necessary to prevent software piracy and differentiated gaming consoles from smart phones, which legally can be jailbroken:

[T]he record demonstrated that access controls on gaming consoles protect not only the console firmware, but the video games and applications that run on the console as well. The evidence showed that video games are far more difficult and complex to produce than smartphone applications, requiring teams of developers and potential investments in the millions of dollars. While the access controls at issue might serve to further manufacturers’ business interests, they also protect highly valuable expressive works – many of which are created and owned by the manufacturers – in addition to console firmware itself.

On the plus side, the regulators re-authorized jailbreaking of mobile phones.

On the downside, they denied it for tablets, saying an “ebook reading device might be considered a tablet, as might a handheld video game device.” We don’t suspect Apple or Google would sue anybody for jailbreaking their tablets, as they never sued anybody for jailbreaking mobile phones even before regulators first approved jailbreaking in 2010.

That said, when the only difference between a Galaxy Note and a Android tablet is an inch and a radio that can handle voice and data channels, it’s a pretty odd line to draw.

Digital-rights group Public Knowledge blasted the decision forbidding DVD cracking to enable consumers the ability to make copies of their DVDs so they can be watched on various devices in different platforms.

The group had asked regulators to grant consumers the lawful right to make copies of DVDs for personal use, a request the Motion Picture Association of America strongly opposed. While plenty of programs exist to decrypt the so-called content-scramble-system encryption on DVDs, the decision against making it lawful means the mainstream public must live under Hollywood’s rules.

“Today’s decision flies in the face of reality. The register and the librarian were unable to recognize that personal space shifting is protected by fair use. This has implications beyond making personal copies of motion pictures on DVD,” said Michael Weinberg, a Public Knowledge vice president. “Under this view of the law every personal non-commercial space shift is a violation of copyright law. That means, according to the Copyright Office, every person who has ever ripped a CD to put on her iPod is a copyright infringer.”

Alleged Cannibal Cop Faces Hacking Charge — The Computer Kind

A New York City cop arrested Thursday for being part of a conspiracy to kidnap, rape, cook and eat women is being charged, in part, with violating computer crime laws for using a federal law enforcement database to track a potential victim.

Active-duty New York City police officer Gilberto Valle is accused of plotting with multiple people to kidnap a number of women. The FBI says they found dossiers on 100 potential female victims on his computer and that they interviewed 10 of them, who all say they know Valle. One of his co-conspirators allegedly planned to rape one of the women and then cook her, alive, in a cage.

In addition to one count of conspiracy to kidnap, Valle faces one count of violating computer crime law by accessing the FBI’s National Crime Information Center (NCIC) database to glean information on a woman identified only as Victim 3. According to the criminal complaint (.pdf), Valle exceeded his authorization to use the database around May 31, and did not have authorization to search for Victim 3.

Valle allegedly wanted to become a professional kidnapper and was asking $5,000 to kidnap a woman and deliver her, alive but unconscious, to an unnamed conspirator.

According to chats in the complaint, Valle reluctantly declined to stick around for the proposed rape and cooking, citing his desire to maintain his professionalism.

“It is going to be so hard to restrain myself when I knock her out, but I am aspiring to be a professional kidnapper and that’s business,” Valle allegedly wrote. “But I will really get off on knocking her out, tying up her hands and bare feet and gagging her. Then she will be stuffed into a large piece of luggage and wheeled out to the van.”

According to the complaint, the FBI was told by a New York Police Department officer about Valle’s alleged NCIC search, but it’s not clear if that evidence comes from NCIC audit logs or from a fellow officer’s observation of the search.

If true, it would hardly be the first time that government databases were abused by people in power for stalking. Just this February, for instance, a former police officer discovered that her DMV records had been accessed by 104 officers in 18 different agencies.

Cybercrime: Mobile Changes Everything — And No One’s Safe

Photo: whiteafrican / Flickr

The FBI recently put out a mobile malware alert, providing us with a sobering reminder of this “evil software” for phones and tablets. In this particular case, the FBI was warning against the Finfisher and Loofzon malware, which spies on our data and leaks GPS positions to track our movements. While these threats appear to have been developed for government surveillance purposes, they can of course be used by any organization.

And therein lies the problem. Mobile malware affects all of us.

Unfortunately, the advice the FBI alert shared was vague and maddeningly difficult to follow. For example: “Users should look at the reviews of the developer/company who published the application” and “Turn off features of the device not needed to minimize the attack surface of the device.” Heck, I’m a security researcher, and I’m fuzzy about what all that means.