1. NISO Webinar: Copyright Decisions: Impact of
Recent Cases on Libraries and Publishers
August 14, 2013
Speakers:
Skott Klebe, Manager of Special Initiatives, Copyright Clearance Center
Brandon Butler, Practitioner-in-Residence, Glushko Samuelson IP Clinic,
Washington College of Law
Laura Quilter, Copyright and Information Policy Librarian,
University of Massachusetts
http://www.niso.org/news/events/2013/webinars/copyright

2. Kirtsaeng, ReDigi and the
Future of First Sale
•Skott Klebe
•Copyright Clearance Center

3. Extrapolation
THEN
NOW
SOMEDAY

4. Extrapolation
•NOT all lines are
straight
THEN
NOW
SOMEDAY
THEN
NOW
SOMEDAY
THEN
NOW

5. Wiley v. Kirtsaeng
THEN
NOW
SOMEDAY

6. Wiley v. Kirtsaeng
•Unexpected turns

7. ASIAN
EDITION:
$19.99
US EDITION:
$110.08
9% month’s wages
at US minimum wage
42% month’s wages
at Shenzen minimum wages
8% month’s wages
at Shenzen minimum wage
Source: chinadaily.com.cn

8. Strategy
•Some choices are obvious
•Some
SELL
ABROAD?
AT LOCAL PRICE
AT US PRICE
NO

9. Regional editions & pricing
benefits
Widest possible audience for content
Pricing competitive with products of local
origin
Revenue opportunity, even at much lower
margin
Downward pressure on piracy
However...
Competing with yourself in US & Europe on price

10. First Sale
& Global Business

11. First Sale
Copyright holder‟s right to control distribution
of copies ends when they are first sold
Bobbs-Merrill Co. v. Straus, 1909
109 (a) “...the owner of a particular copy or
phonorecord lawfully made under this title ...
is entitled, without the authority of the
copyright owner, to sell or otherwise
dispose of the possession of that copy or
phonorecord”
§ 109 . Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord

12. Importation
602(a)(1)
“Importation into the United States,
without the authority of the owner of
copyright under this title, of copies...of a
work that have been acquired outside the
United States is an infringement of the
exclusive right to distribute copies...”
§ 602 . Infringing importation or exportation of copies or phonorecords

13. “Without the authority”
109 (a)
• “...the owner of a
particular copy ... is
entitled, without the
authority of the
copyright owner, to sell
... that copy”
602(a)(1)
• “Importation into the
United States, without
the authority of the
owner of copyright ... is
an infringement of the
exclusive right to
distribute copies...”
§ 602 . Infringing importation or exportation of copies or phonorecords
§ 109 . Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord

14. CBS v. Scorpio, 1983
Phonorecords
purchased abroad
3rd Circuit 602
Sebastian v. Consumer
Contacts,1988
Labels on hair
products
3rd Circuit 109
BMG Music v. Perez, 1991
Phonorecords
purchased abroad
9th Circuit 602
Parfums Givenchy v. Drug
Emporium, 1994
Perfumes purchased in US
after unauthorized
imporation
9th Circuit 602
Quality King v. L‟Anza, 1998
Labels on US-
manufactured hair products
Supreme
Court
109
Costco v. Omega, 2010 Logo on watches
Supreme Court
(divided)
602
602 or 109?

15. Columbia Broadcasting Sys. v. Scorpio Music
Parfums Givenchy, Inc. v. Drug Emporium, Inc., 38 F. 3d 477 - Court of Appeals, 9th Circuit
“Construing §109(a) as superseding the prohibition on
importation set forth in ... §602 would render §602
virtually meaningless.”
“...This broad language, if taken literally, would render
the first sale doctrine wholly inapplicable to foreign
manufactured goods, even after the goods have been
lawfully imported into the United States...”

16. Wiley v. Kirtsaeng
•Argument prevails
PRECEDENT
LAW
EXPECTATION
OUTCOME

17. Kirtsaeng Decision
• “Held: The „first sale‟
doctrine applies to copies of
a copyrighted work lawfully
made abroad”
Kirtsaeng v. John Wily & Sons, Supreme Court 11-697

18. “Parade of Horribles”
“A geographical interpretation of first sale
would require libraries to obtain permission
before circulating books ... printed
overseas”
“We also doubt that Congress would have
intended to create the practical copyright-
related harms with which a geographical
interpretation would threaten ordinary
scholarly, artistic, commercial, and
consumer activities.” Kirtsaeng v. John Wily & Sons, Supreme Court 11-697

19. Kirtsaeng Outcome
First sale is global
Supreme Court‟s decision is final
Only new legislation can change it
Libraries can lend and distribute their
collections, regardless of where they were
made
Libraries can acquire new works for their
collections, regardless of where they were
made

20. Kirtsaeng Futures
Does
anything
change?
109 OVER 602
LEGISLATION
PUBS RAISE
INTERNATIONAL PRICES
PUBS HALT
INTERNATIONAL SALES
PUBS LOWER
DOMESTIC PRICES
NOTHING CHANGES
AT ALL

21. Digital Media
& First Sale

22. First Sale in ‟76
109 (a) “...the owner of a particular copy
or phonorecord lawfully made under this
title ... is entitled, without the authority of
the copyright owner, to sell or otherwise
dispose of the possession of that copy or
phonorecord”
§ 109 . Limitations on exclusive rights: Effect of transfer of particular copy or phonorecord

23. What‟s a Copy?
“Copies” are material objects, other than
phonorecords, in which a work is fixed by
any method now known or later
developed, and from which the work can
be perceived, reproduced, or otherwise
communicated, either directly or with the
aid of a machine or device. The term
“copies” includes the material object, other
than a phonorecord, in which the work is
first fixed. USC 17 § 101 . Definitions

24. Material objects
•From which the work can be perceived,
reproduced, or communicated

25. The digital difference
No transfer of a
material object
License, not a
sale

26. Amazon Music
Amazon Kindle
“a non-exclusive, non-transferable right ...
only for your personal, non-commercial,
entertainment use”
“Kindle Content is licensed, not sold...”
Barnes &
Noble Nook
“We grant you a limited, non-exclusive,
revocable licence ... personal, non-commercial
use...”
You may not participate in the transfer or
sale”
Google Play
“You will have the non-exclusive right to
view...for your personal, non-commercial
use ...”
“You may not sell, rent, lease...to any third
party without authorization”

27. License, not a sale
Vernor v. Autodesk
Autocad software “sold” with click-through
software license agreement
nonexclusive and nontransferable license
prohibiting sale, transfer, lease
Vernor sold used copies on eBay
Autodesk won infringement case on
appeal
Vernor v. Autodesk, Inc., 621 F. 3d 1102

28. Vernor v. Autodesk
Established conditions under which a
software
transfer is considered a license and not a
sale:
Copyright owner:
Specifies that transfer is a license and not a
sale
Restricts user‟s ability to transfer
Imposes “notable” usage restrictions

29. License, not a sale:
Apple?
Apple is the provider of the iTunes Service, which
permits you to purchase or rent digital content
("iTunes Products") for end user use
You shall be authorized to use iTunes Products only
for personal, noncommercial use.
The delivery of iTunes Products does not transfer
to you any commercial or promotional use rights in
the iTunes Products
N.B.: iTunes predates Vernor by 4 years

30. ReDigi and iTunes
Founded in 2011 to enable resale of music
purchased through iTunes
Claims novel technology for “migrating”
music files “packet by packet” so that the
data is never in two places at the same
time
Designed so that only iTunes songs could
be resold
Sued by Capitol Records in 2012
Capitol Records v. Redigi

31. Redigi
User A PC
ReDigi
Software
iTunes
Software
ReDigi “Cloud”
Server
User B PC
ReDigi
Software
iTunes
Software
1.User A “migrates”
file to cloud server
2.User B pays for it
3.ReDigi “migrates”
file to User B

32. Capitol v ReDigi: Findings
“It is simply impossible that the same
“material object” can be transferred over
the Internet.”
“the Internet transfer of a file results in
[copy] being “created elsewhere at its
finish.”
“...It is the creation of a new material
object and not an additional material object
that defines the reproduction right”
Capitol Records v. Redigi

33. Capitol v. ReDigi: Findings
ReDigi infringes the reproduction right by making new
copies on the server and recipient PC
First sale defense not available, only applies
to the distribution right
to “lawfully made copies”
Fair use fails on all four factors
Liable for direct, contributory, and vicarious
infringement

34. Outcome
Judge declined to apply first sale to digital
content
At this time, first sale does not apply to
digital content
just to physical media
ReDigi vows to try again with a new
architecture

35. First sale futures
•Vendors take over?
NO DIGITAL
FIRST SALE
LEGISLATION
MORE COURT CASES
NOTHING CHANGES
VENDORS TAKE
CHARGE

36. Vendor-locked Resale
Amazon received a patent
on a digital resale architecture
Apple applied for one
Patents are not plans

37. Kindle EBook Sale
Royalty
Amazon
fee
KINDLE SALE
Amazon PublisherUser

38. Kindle EBook Resale
Royalty
KINDLE SALE
Amazon Publisher
User 1
User 2
Commission
Amazon fee

39. Future?
Vendors can act fast
They‟re moving forward with library lending
already...
Whether we like how they‟re doing it or not
Congress will be hard pressed to keep up

40. Thank you.

41. The GSU Case and
the Future of Fair Use
•Brandon Butler
•Practitioner-in-Residence
•Glushko-Samuelson IP Clinic
•American University Washington College of Law
•Presented for NISO
Aug. 14, 2013

42. BIG PICTURE
• First federal decision to apply fair use to non-profit
educational use in Internet age
• District opinion was huge defeat for publishers, who
favored a draconian standard (Classroom Guidelines),
but only proved 5 of 99 alleged infringements
• Not binding on other libraries or other courts, but still a
useful input
• Framework generally favors libraries who make modest
uses, with some important caveats
• On appeal!

43. Background of the
Dispute
• Course reserves: administered by libraries
• Course site: administered by a professor/TAs
• Well-established practice: students visit library to
read excerpts (often photocopied) from books
prof doesn‟t believe should be assigned in their
entirety
• Years of tension b/w libraries and CCC/AAP re:
licensing of this use in electronic realm
• Case against GSU as impact litigation; AAP and
CCC bankrolling lawsuit (“several million”)

44. Outcomes, in a
nutshell:
• GSU‟s policy was in good faith, with
only five infringements shown (versus
99 alleged)
• GSU policy fell short by failing to limit
amount taken to “decidedly small”
portions (10%/1 chapter).

45. Fair Use Overview
• Four Statutory Factors
• Purpose or character of use, incl. whether
“transformative”
• Nature of the copyrighted work used
• Amount and substantiality of portion used
• Effect on market for or value of copyrighted
work
• Plus, purpose of copyright (“additional factors”)

46. First Factor: Strongly
favors GSU
• Citing the preamble of §107, text of first
factor, court finds educational nonprofit
use is at heart of fair use
• Distinguishes coursepacks, commercial
uses
• Not transformative, but that's ok

47. Second Factor: favors
GSU
• Scholarly non-fiction is "informational"
and fair use encourages use of this
category
• Rejects relevance of "sweat of the brow"
-difficulty of academic production

48. Third Factor: favors pubs if
amount taken > 10%/1
chapter• Court decisively rejects use of Classroom Guidelines,
both as to amount and repeated use across
semesters
• “The work” = the book, not individual chapters, even
when each chapter has a separate author; includes
index, front matter
• Because use is non-transformative, amount must be
“decidedly small” and narrowly tailored to legit
purpose
• Fewer than 10 chapters -> 10%; More than 10
chapters -> 1 chapter

49. Factor Four: strongly
favors pubs if license
available• Would widespread fair use substitute for
purchase of the underlying work?
• Clearly no harm to book market
• License must be “reasonably available”
at “reasonable price” for excerpts in
“convenient format”

50. Additional Factors
• Fair use of excerpts will have zero effect on
authors‟ incentives to create - prestige,
advancement of knowledge, tenure
• Ditto publishers‟ incentive to publish
• Argument that e-reserves would put pubs out of
business is “glib” - revenues from academic
licensing are minuscule
• Fair use will promote dissemination of knowledge,
further purposes of ©

51. Applying the
Framework to GSU
• Ownership issues
• “De miminis non curat lex”
• Licenses for digital excerpts rarely
available
• Amounts almost always under 1 chapter

52. And then?
• Judge Evans‟ Final Order
• No classroom guidelines, no continuing
oversight
• Not about textbooks
• Be sure to tailor uses and limit access
• GSU wins attorneys‟ fees - $3mil

53. The Appeal
• Publishers have radically different view of
fair use from libraries; to them, classroom
guidelines are a ceiling
• Are libraries the same as Kinkos?
• “Forest vs. trees”
• Alleged past infringements
• Ownership issues

54. Publishers‟ Amici
• AAUP (we need every penny we can get)
• Authors‟ Guild & Textbook Authors (we do it for
the $$$)
• Copyright Alliance (copyright über alles)
• Former Copyright Registers (education is not
special)

55. GSU Amici
• Library Copyright Alliance (best practices +
economics)
• The Other AAUP - Professors (teaching is
transformative)
• Academic Authors (we don‟t do it for the $$$)
• ACE, AAU, APLU (education is special)

56. Some Interesting
Numbers from the
Case•The Court told us a lot about the “harm” publishers
suffer from unlicensed course reserves

57. Final score: 94-5
Universe of posted
excerpts
99 Original excerpts chosen by
pubs
(average amount 9.6%)
75 excerpts submitted to
court
(average amount 10.1%)
5 works found to
infringe

58. Publisher Revenue from
Academic Licensing of
Excerpts

59. Publishers‟ Lost Sales Due
to Proven GSU
Infringements?
Publishers‟ 2009
Aggregate Revenue:
$507,804,000.00
Publishers‟ Proven
Lost Revenue:
$750.00
(.00015%)

60. If you make $60,000/year,
that‟s like losing 8¢.

61. The #librarianscode
• Different reasoning, but many
commonalities
• Purpose is core fair use
• Tailoring to audience and purpose
• More modest use of works whose core
audience is classroom use
• Code applies to ALL MEDIA; GSU
framework is all about scholarly books

62. Questions?
• bbutler@wcl.american.edu
• @bc_butler
• ipclinic.org (forthcoming)

63. Google, HathiTrust, &
the Future of Mass
Digitization
“Copyright Decisions” NISO Webinar, Aug. 14,
2013
Laura Quilter, MLS, JD
Copyright & Information Policy Librarian
University of Massachusetts, Amherst Libraries

64. Google BookSearch
Google BookSearch digitization project
Authors Guild v. Google (*Am Soc of Media
Photographers)
Filed 2005 by Authors Guild; publishers joined
Settlement proposed 2008, criticized by civil
libertarians, librarians, authors, and the Dept. of
Justice; settlement rejected (770 F.Supp.2d 666, March
22, 2011)
Publishers settled (2012/10/04)
Class certification granted (2012/05/31, J.Denny Chin;
order 2012/06/11) appealed, overturned (2013/07/01,
2d Cir.)
Fair use is queued up, possibly for this fall or winter

65. Authors Guild v. Google: Class
Certification
“Class certification” including commonality of injury, typicality of
claims, predominance of common questions of law or fact.
2012 - Class certification granted (SDNY, May 31 2012, J.Denny
Chin)
Appealed “because many members of the class, perhaps even a
majority, benefit from the Library Project and oppose plaintiffs‟ efforts”
Overturned as “premature” on appeal (2d Cir., July 1, 2013, Leval,
Cabranes, B.D. Parker)
2d Cir. thought the anti-certification argument “may carry some force”
But fair use may “moot” the class certification issues: “we believe that the
resolution of Google‟s fair use defense in the first instance will
necessarily inform and perhaps moot our analysis of many class
certification issues, including those regarding the commonality of
plaintiffs‟ injuries, the typicality of their claims, and the predominance of
common questions of law or fact”
Remanded “for consideration of the fair use issues”
“In the interest of judicial economy, any further appeal from the decisions
of the District Court shall be assigned to this panel.”

66. Fair Use (17 USC 107)
[T]he fair use of a copyrighted work, including … copies
… for purposes such as criticism, comment, news
reporting, teaching (including multiple copies for
classroom use), scholarship, or research, is not an
infringement of copyright. [F]actors to be considered
shall include
(1) purpose and character of the use – commerciality or
nonprofit educational purposes? transformativeness?
(2) nature of the copyrighted work – factual or creative?
published or unpublished? in or out of print?
(3) amount and substantiality of the portion used in
relation to the copyrighted work as a whole; and
(4) effect of the use upon the potential market for or
value of the copyrighted work.

67. Google BookSearch : Fair
Use?
Fair Use ? Authors Guild (Not Fair
Use!)
Google (Fair Use)
Factor 1:
Purpose &
Character.
Transformative
?
No – no new work created. Transformative search index;
incidental use. Amici libraries &
EFF: Consider public interest –
research tool, new forms of
research, helps authors
Factor 2:
Nature of Work
Highly creative works; entire
expression taken.
Irrelevant, because transformative
(but mostly scholarly)
Factor 3:
Amount &
Substantiality
They copied the whole thing! Irrelevant, because search & index
requires entire work for indexing
Factor 4:
Effect on the
Market
Digital risk! Might even help, but market effects
not relevant where transformative.
Amici libraries & EFF: Can‟t
develop a market to license
millions of books for index.

68. HathiTrust
Library copies of digitization projects (Google
Books, Internet Archive, others; but mostly
Google Books)
HathiTrust: Organization of libraries pooling their
digitized copies for various purposes
Preservation copies under Section 108
Search & Data Mining
Disability Access
Orphan Works – Proposed on-campus access to
so-called “orphan works”; List posted to solicit
authors to contact; Authors did contact HathiTrust;
Authors Guild sued

69. Authors Guild v. HathiTrust
Filed Sept. 12, 2011 – Authors Guild & related
author organizations filed suit against HathiTrust
and 5 universities
Oct. 10, 2012, SDNY - summary judgment for
HathiTrust
On appeal to Second Circuit: June, 2013, amicus
briefs filed by universities, libraries, etc.

70. Authors Guild v. HathiTrust
902 F.Sup.2d 445 (SDNY, Oct. 10, 2012) (J. Harold Baer)
1. Orphan works question not ripe (no program active)
2. Section 108 does not preclude Section 107
3. all major HathiTrust initiatives were fair use: “I cannot
imagine a definition of fair use that would not encompass
the transformative uses made by defendants [] and would
require that I terminate this invaluable contribute to the
progress of science and cultivation of the arts that at the
same time effectuates the ideals espoused by the
[Americans with Disabilities Act].”
4. Chafee Amendment (17 USC 121) means academic
libraries can be “authorized entities” to provide equal
access to copyrighted materials for people by disabilities,
as required by ADA

71. Authors Guild v. HathiTrust (SDNY
2012)
Fair Use Preservation
copies
Search / Text Mining Disability Access
Factor 1:
Purpose &
Character.
Transformativ
e?
Preservation
furthers
scholarship &
research. Prob.
not
transformative,
but strong public
interest.
Scholarship and
research uses.
Search is a highly
transformative and
different use.
Scholarship and
research uses. Highly
transformative
because not the
intended original
audience.
Factor 2:
Nature of
Work
Irrelevant for the
use.
Irrelevant for
transformative use.
Irrelevant for disability
access.
Factor 3:
Amount &
Substantiality
Entirety required
for preservation.
Entirety required for
text mining.
Entirety & copy
required for disability
access.
Factor 4:
Effect on the
* AG alleges
security risk; not
Prohibitive cost to
develop a market.
Market abandoned by
rightsholders. Does

72. Authors Guild v. HathiTrust
On appeal to the 2d Circuit, this fall
Handicapping HathiTrust:
Preservation: Is it a fair use, or can Section 108‟s preservation provisions
prevent reliance on 107? 108(f)(4) “Nothing in this section … in any way
affects right of fair use as provided by section 107”
Search indexing: Can you digitize without permission for a different
purpose?
Search indexes as transformative uses (Kelly v. Arriba (2003), Perfect 10
v. Amazon (2007); see also AV v. iParadigm (4th Cir 2009) and White v.
West (SDNY 2013))
2d Circuit transformative use cases: Bill Graham Archives v. Dorling
Kindersley (1996); Cariou v. Prince (2013) appropriation art; hints in
Authors Guild v. Google (2013)
Digital humanities scholars‟ amicus brief
Disability access:
Interactions of ADA and 17 USC 121
Interactions of 17 USC 121 and 17 USC 107
Marrakesh Treaty (WIPO)

73. Mass Digitization US
Copyright Office orphan works study
Identified “orphan works” as a problem:
Works presumptively or apparently under copyright,
whose rightsholders cannot be identified or located.
Legislation proposed in 2006, 2008
Notice of Inquiry (2012)
“Next Great Copyright Act”: 20 years off?
See: Copyright Office, http://www.copyright.gov/orphan/

74. Mass Digitization Abroad
State licensing approach
Canada: Copyright Board may offer a non-exclusive license after
“reasonable efforts” to locate copyright owner (Copyright Act,
Section 77)
Japan (Japanese Copyright Act, Article 67)
South Korea (South Korean Copyright Act, Article 47)
Selected categories of orphan works
India: Unpublished orphan works (Indian Copyright Act, Article
31a)
France, Feb. 2012: Out-of-commerce, books only
EU implementations of Directive on Orphan Works 2012/28/EU
(Oct. 2012)
Directive excludes photographs unless embedded
Restricts exception to libraries, educational, museums, cultural
heritage, public broadcasting

75. More info
Authors Guild, http://www.authorsguild.org
Google BookSearch
HathiTrust, http://www.hathitrust.org/
US Copyright Office,
http://www.copyright.gov/orphan/

76. NISO Webinar:
Copyright Decisions: Impact of Recent Cases on
Libraries and Publishers
NISO Webinar • August 14, 2013
Questions?
All questions will be posted with presenter answers on
the NISO website following the webinar:
http://www.niso.org/news/events/2013/webinars/copyright

77. Thank you for joining us today.
Please take a moment to fill out the brief online survey.
We look forward to hearing from you!
THANK YOU