Welcome to Shades of Gray, a blog analyzing current developments in copyright law. Topics of discussion will include case law, legislation, pleadings, discovery, motion practice, pretrial and trial procedure, and Copyright Office practice. Please check back often for updates.

We welcome your comments!

Please contact us at copyright@shadesofgraylaw.com.
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Eldred Conquers Golan’s Heights
Supreme Court Upholds Copyright Restoration

January 23, 2012 by Naomi Jane Gray · Leave a Comment
Filed under: U.S. Constitution 

Last week, the Supreme Court issued its eagerly awaited ruling in Golan v. Holder, holding that Congress acted within its authority in passing legislation that restored copyright in certain foreign works that were previously in the public domain in the United States.  The Court found that its earlier opinion in Eldred v. Ashcroft largely disposed of the petitioners’ claims.  Though reactions to the case seemed muted in contrast to the raging debate over SOPA – which initially overshadowed news of the opinion – it is an important opinion with significant ramifications for those who use content in the public domain.

How Did We Get Here?

The opinion, authored by Justice Ginsburg, nicely describes the history of the legislation at issue.  In 1989, the United States signed on to the Berne Convention for the Protection of Literary and Artistic Works, a multilateral copyright treaty which first took effect in 1886.  The Berne Convention requires its members to afford “national treatment” to authors from other member countries – in other words, a country must provide foreign authors with the same degree of copyright protection that it provides to its own nationals.  The legislation passed in the United States to implement Berne, however, gave no protection to any foreign work that had already entered the public domain the United States.  The U.S. considered that protecting future foreign works was sufficient to satisfy Berne.  Though other Berne members disagreed with this interpretation and disapproved of it, the Berne Convention does not include an effective enforcement mechanism, leaving disgruntled parties with little recourse.

That changed in 1994, when the Uruguay Round of multilateral trade negotiations resulted in the establishment of the World Trade Organization (”WTO”), an international organization dealing with the global rules of trade between nations, and the Agreement on Trade-Related Aspects of Intellectual Property Rights(”TRIPS”).  The United States became a WTO member and signed the TRIPS agreement.  TRIPS requires its signatories to implement the first 21 articles of the Berne Convention, including the provision requiring national treatment.  Breach of the agreement is subject to enforcement by the WTO, which could subject the breaching party to tariffs or other punitive measures.  The threat of a challenge from other Berne members to the United States’ implementation of the Berne Convention took on new urgency.

Accordingly, Congress took action to ensure that United States was indisputably in compliance with the national treatment requirements of Berne.  It passed Section 514 of the Uruguay Round Agreements Act, which extended copyright to works that remained protected by copyright in their countries of origin, but has passed into the public domain in the United States for any one of three reasons: (1) lack of copyright relations between the country of origin and the U.S. at the time of publication; (2) lack of protection for sound recordings fixed before 1972; and (3) failure to comply with U.S. statutory formalities (such as failure to affix notice of copyright to the work, or failure to register or renew copyright in the work – requirements which no longer exist under U.S. law).  To avoid Takings Clause problems, Congress included some protections for ”reliance parties” – those who had been using foreign public domain works.  A reliance party may continue to make use of a restored work until the owner of the restored copyright gives notice of intent to enforce, either by filing notice with the U.S. Copyright Office within two years of restoration, or by actually notifying the reliance party.  After that, a reliance party may continue to exploit existing copies for one year.  Any reliance party who created a derivative work of a restored work may indefinitely exploit the derivative work upon payment of “reasonable compensation” to the owner of the restored work.  If the parties cannot agree upon “reasonable compensation,” a federal district court judge may set the fee.

As a result of this legislation, a large body of foreign works previously in the public domain became subject to copyright protection in the U.S.  This disrupted the activities of individuals and organizations who were making use of these public domain works.  Some of these individuals and organizations sued to have the legislation declared unconstitutional.  The petitioners included orchestra conductors, musicians, publishers, and others who were making uses of works that were formerly within the public domain.

The Opinion

The petitioners argued that Section 514 of the URAA violates two Constitutional provisions: the Copyright Clause and the First Amendment.

Article I, Section 8, Clause 8 of the Constitution authorizes Congress “[t]o promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries . . .”  The petitioners argued that clawing back works from the public domain violated the “limited times” restriction.  The Supreme Court dismissed this argument on the basis of its earlier decision in Eldred v Ashcroft, which upheld the extension of the term of copyright in the U.S. to the life of the author plus 70 years.  In Eldred, the Court “declined to infer from the text of the Copyright Clause ‘the command that a time prescription, once set, becomes forever ‘fixed’ or ‘inalterable.””  Applying this reasoning, the Court found that the “terms afforded works restored by §514 are no less ‘limited’. . .”   The Court was unpersuaded by the petitioners’ argument that the “limited term” of foreign works which were previously unprotected by U.S. law was “expressly set to zero.”  The Court found “scant sense in this argument, for surely a ‘limited time’ of exclusivity must begin before it may end.”

In support of conclusion, the Court noted that Congress has removed works from the public domain before.  Most notably, the Copyright Act of 1790 – the first federal copyright act passed in the newly minted United States – granted protection to many works that were previously in the public domain.  Because the drafters of the 1790 Act were “men who were contemporary with [the Constitution's] formation, many of whom were members of the convention which framed it,” the Court found their action “entitled to very great weight.” 

The Court also rejected the petitioners’ argument that the Copyright Clause’s emphasis on “progress of science and the useful arts” requires that any legislation be designed to incentivize the creation of new works – an argument embraced by the dissent.  “Nothing in the text of the Copyright Clause confines the ‘Progress of Science’ exclusively to ‘incentives for creation.’”  Rather, Congress may also “promote[] the diffusion of knowledge” by encouraging the dissemination of works as well.  This seems to put a new gloss on the Copyright Clause, which many - including dissenting Justices Breyer and Alito – have understood to encourage authors to create new works. 

The petitioners also argued that Section 514 violated the First Amendment by inhibiting the free speech rights of individuals and organizations who were already making legal uses of foreign works in the public domain.  The Supreme Court again turned to Eldred to dispatch this argument.  In Eldred, the Court identified “traditional contours of copyright” that “are recognized in our jurisprudence as ‘built-in First Amendment accommodations.’”  One is the idea/expression dichotomy, which provides that copyright does not protect ideas, only the original expression of ideas.  The other, the fair use doctrine, allows the public make certain uses of copyrighted works that would otherwise constitute infringement.  Because Section 514 does not curtail either the idea/expression dichotomy or the fair use doctrine, the Court found that there was no need to subject the statute to the kind of heightened scrutiny otherwise required when legislation places limits on First Amendment rights.  Congress included safeguards within Section 514 to ease the burden on reliance parties who were making uses of foreign works previously within the public domain.  Nor does Section 514 bar public access to the works at issue.  Rather, it requires those who seek to exploit the works to pay for that exploitation or to limit it to “fair uses.”

Where We Go From Here

Reactions to the opinion have varied, predictably, from those who decry it as the destruction of the public domain to those who see no injustice in bringing U.S. copyright law in line with our international treaty obligations.  (A particularly spirited debate can be found at the Chronicle of Higher Education, http://bit.ly/x8rEPG.)  The nagging question remains in many commentators’ minds, in view of of Eldred and Golan, whether Congress can do wrong  in legislating copyrights.  Congress was authorized to extend the term of copyright by 20 years in Eldred, and Congress was likewise authorized to claw back works from the public domain in Golan.  There were reasons for both pieces of legislation, though reasonable minds can disagree about the validity of those reasons.  Could Congress suddenly extend the term of copyright to life of the author plus 150 years?  These questions are not new, and the Golan opinion leaves us to continue chewing them over for the foreseeable future.

It will be interesting to see how the accommodations for reliance parties work as a practical matter.  Will the owners of newly restored copyrights and their associated reliance parties find a way to negotiate mutually acceptable arrangements for ongoing uses?  Or will this provide more fertile ground for litigation?  I would love to hear opinions from those involved.

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Appealing YouTube: The Experts Debate!

July 22, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Programs, Secondary Liability 

I have been an active member of the Copyright Society of the USA for years, and am currently a member of its Executive Committee. It’s a terrific group for those interested in copyright issues, and maintains chapters throughout the country. I thought readers of this blog might like to know about this upcoming chapter event in Washington, D.C.:

The Washington D.C. Chapter of the Copyright Society of the U.S.A. is holding a membership building event on Wednesday, July 27th, 2011 from 4 p.m. to 6 p.m.

Arent Fox LLP, 1050 Connecticut Ave., N.W., Washington, D.C. 20036, will host the event.
There will be a networking reception from 4: p.m. to 4:30 p.m, followed by the panel discussion from 4:30 p.m. to 6 p.m.

Lawyers who submitted amici briefs to the Second Circuit in the pending appeal of Viacom/Football Association Premier League v. YouTube will debate issues related to copyright safe-harbors for user generated content sites. The case will be argued soon, so don’t miss this opportunity to learn about the issues from experts.

The speakers will include:
Moderator
Robert Kasunic, Deputy General Counsel, U.S. Copyright Office

Panelists
Jonathan Band of Jonathan Band PLLC
Patrick Coyne of Finnegan, Henderson, Farabow, Garrett & Dunner LLP
Russell Frackman of Mitchell Silberberg & Knupp LLP
Ron Lazebnik of Fordham University School of Law
Mary Rasenberger of Skadden, Arps, Slate, Meagher & Flom LLP.

Any non-member who joins the Copyright Society of the U.S.A. immediately prior to registering for the event may attend for free. Attendance is $40 for non-members and Copyright Society members. Attendance is $25 for Student members of the Copyright Society. Any Copyright Society member who invites a guest who joins the Society immediately prior to registering for the event may attend at half price.

Registration materials and a membership application are at the following link.
http://www.csusa.org/chapters/dc/CSUSA%20DC%20EVENT%20July%202011.pdf

Space is limited. Please register early. The registration deadline is extended to July 25, 2011.

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Trademarks Shouldn’t Be This Much Fun
(But They Are)

July 8, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Uncategorized 

LJS headshotMy partner, Larry Siskind, will be delivering his annual talk, “Nuts and Bolts of Trademark Law,” at the San Francisco Bar Association on July 14, 2011 at noon. I’ve attended this presentation before, and it is both informative and entertaining. All that and an hour of CLE credit to boot! You can view details and register here.

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Second Round
Who’s on Second? A look at secondary liability and the DMCA

July 5, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Secondary Liability 

A couple of weeks ago, I reprised my talk on secondary liability and the DMCA for the State Bar of California’s IP Section. I updated my original talk – initially delivered last fall to the ABA – to reflect the current status of the UMG v. Veoh and Viacom v. YouTube appeals, which in the interim were fully briefed (and, in the case of Veoh, argued). You can review the revised and updated outline here.

The outline also notes a late-breaking development in the YouTube case stemming from the United States Supreme Court’s recent decision in Global-Tech v. SEB, a patent case addressing the doctrine of willful blindness. I have posted a fuller analysis of this development over at The 1709 Blog, which you can read here.

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Maria
Maria Pallante appointed Register of Copyrights

June 1, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Uncategorized 

Today the Librarian of Congress appointed Maria Pallante as the new Register of Copyrights.  Ms. Pallante has served as Acting Register since the previous Register, Marybeth Peters, resigned in December.  You can find the announcement of the appointment here.

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Sharing the Love
Naomi Jane Gray joins The 1709 Blog team

May 25, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Uncategorized 

I am pleased to announce that I have joined the team of The 1709 Blog, which is dedicated to “all things copyright, warts and all.”  The blog takes its name from the year of passage of the Statute of Anne, the copyright act that started it all, to which I am eternally indebted for my livelihood (h/t Her Maj. Queen A.).  Thanks to Jeremy Phillips, dean of the IP blogosphere, for the invitation.  You can also view the announcement of my joining The 1709 Blog over at Jeremy’s sister blog, The IPKat.

I will, of course, continue to post regularly here at Shades of Gray, so please keep reading!

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Vernor v. Autodesk and the First Sale Doctrine
Going, Going, Gone?

May 24, 2011 by Naomi Jane Gray · 1 Comment
Filed under: First sale doctrine 

I drafted this piece in preparation for my ABA-sponsored speaking engagement in Washington, D.C. on June 10, 2011.  If you’re going to be in the DC area on that day, please consider joining us.  In addition to the Vernor case analyzed below, my panel will also address the Ninth Circuit’s opinion in UMG v. Augusto and the future of the first sale doctrine in the wake of these two significant cases.  There will also be panels on topics relating to trademarks, patents and trade secrets.  To register for the event, click here.

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The first sale doctrine entitles “the owner of a particular copy . . . lawfully made under this title” to “sell . . . that copy.” 17 U.S.C. § 109(a).  The Supreme Court first recognized this doctrine in 1908 in Bobbs-Merrill Co. v. Straus, 210 U.S. 339 (1908).  In that case, a book publisher sold copies of a book to the wholesale trade bearing a notice stating that the book could not be sold for a retail price of less than $1.  There was no license agreement between the book publisher and wholesale purchasers.  The defendants bought copies of the book and resold them at retail for less than $1 per copy.  The Supreme Court held that the Copyright Act did “not create the right to impose, by notice . . . a limitation at which the book shall be sold at retail by future purchasers, with whom there is no privity of contract.”  Bobbs-Merrill, 210 U.S. at 350. “[O]ne who has sold a copyrighted article, without restriction, has parted with all right to control the sale of it. . . . [T]he books sold by the appellant were sold at wholesale, and purchased by those who made no agreement as to the control of future sales of the book, and took upon themselves no obligation to enforce the notice printed in the book, undertaking to restrict retail sales to a price of one dollar per copy.”   Because the Copyright Act did not grant the publisher the right to control the pricing of downstream sales, and there was no privity of contract between the publisher and the defendants, the defendants were free to resell the books as they saw fit.

Over the last 100 years, the first sale doctrine has furthered the dual purposes of the U.S. Constitution’s Copyright Clause by acting as a limitation on the copyright owner’s monopoly and providing a corresponding benefit to the public’s interest in access to creative works.  In June 2010, the Ninth Circuit dealt a significant blow to the applicability of the first sale doctrine to software when it ruled that a downstream purchaser had obtained a mere license to the software and could not resell his copy of it.  Vernor v. Autodesk, 621 F.3d 1102 (9th Cir. 2010) (“Vernor II”).  Timothy Vernor, an eBay reseller, purchased several copies of Autodesk’s AutoCAD software from CTA, one of Autodesk’s direct customers, and sought to resell them on eBay.  Vernor succeeded in selling some copies, but after Autodesk served eBay with repeated DMCA takedown notices accusing Vernor of copyright infringement, eBay eventually terminated his account, effectively prohibiting him from selling his remaining copies.

District Court proceedings and opinion

Vernor brought an action for declaratory relief, seeking a declaration that his sales of AutoCAD were noninfringing because he was an “owner” of the “particular copy” of each software package pursuant to §109.  Vernor also claimed immunity under §117 of the Copyright Act, which authorizes the “owner of a copy of a computer program” to make a copy of the program if doing so is an “essential step in the utilization of the program.”  This provision exempts from liability the copying of a software program into a computer’s memory as part of the program’s normal operation.
Autodesk argued that though it transferred possession of the software to CTA, its license agreement (“License”), which imposed a variety of limits on CTA’s ability to use and dispose of the software, did not transfer ownership of the software to CTA.  The License reserved title and copyright in the software to Autodesk.  Moreover, the License allowed CTA to install the software on only two computers at a time, and prohibited CTA from using the software simultaneously on those computers.  The License forbade CTA from modifying or reverse engineering the software, and from using or transferring the software outside the Western Hemisphere.  It likewise barred any transfer of the software without Autodesk’s written permission.  And it provided that if CTA obtained the software as an upgrade from an earlier version of the software, CTA must destroy its copies of the earlier version.  When CTA purchased the software packages at issue, however, it did not agree to destroy them if it later upgraded to a subsequent version.

The District Court ruled in Vernor’s favor, finding that Autodesk transferred ownership of the AutoCAD packages to CTA, which in turn transferred its ownership interest to Vernor.  In so doing, the District Court made an important distinction: that although there was no dispute that Autodesk licensed the software itself to CTA, “the use of software copies can be licensed while the copies themselves are sold.”  Vernor v. Autodesk, 2009 U.S. Dist. LEXIS 90906 (W.D. Wa. Sept. 30, 2009)(“Vernor I”).

In order to determine who was the “owner” of the AutoCAD copies, the District Court attempted to reconcile four apparently conflicting Ninth Circuit opinions.  United States v. Wise, 550 F.2d 1180 (9th Cir. 1977), involved movie prints distributed by studios to theaters for display, or to various “V.I.P. licensees” like the actress Vanessa Redgrave for personal use.  The Wise panel looked to the terms of the applicable transfer agreements to assess whether the studios had transferred ownership of the prints or merely licensed them.  The transfer agreements contained a variety of contradictory terms; some suggested a transfer of ownership, while others suggested a mere license.  Thus, the Wise panel considered whether an agreement contained a clause reserving title in the transferred work to the copyright owner; whether the transferee made a single, up-front payment; whether the agreement required the transferee to return or destroy the transferred copy after a certain period of time; and whether the agreement imposed restrictions on the use or subsequent disposition of the copy.  The Vernor I court found that none of these terms was dispositive of the issue, with one exception: the Wise panel found a transfer of ownership in each agreement which allowed the transferee to retain possession of the transferred copy indefinitely, and gave the copyright owner no right to reclaim the copy.  By contrast, the Wise panel construed as a license each agreement which gave the copyright holder the right to regain possession of the transferred copy.

The Vernor I court concluded that, under Wise, Autodesk had transferred ownership in AutoCAD to CTA.  Though the License purported to reserve title in the software to Autodesk, and imposed restrictions on the use and disposition of the transferred copy, it did not allow Autodesk to regain possession of the copy. “In [the District Court’s] view, retaining title in a copy is meaningless unless the copyright holder has some means to regain possession of the copy.”

The Vernor I court then turned its attention to a trio of Ninth Circuit opinions issued long after Wise, in the digital era: MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993); Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330 (9th Cir. 1995); and Wall Data Inc. v. Los Angeles County Sheriff’s Dep’t, 447 F.3d 769 (9th Cir. 2006).  Each of these cases addressed whether a licensee was an owner entitled to invoke the “essential step” defense in §117.  In MAI, the Ninth Circuit addressed whether a computer repair service that serviced computer systems containing licensed software made unauthorized copies of that software when they operated the computers that they were servicing.  In a footnote, the court noted, “Since MAI licensed its software, [its] customers do not qualify as ‘owners’ of the software and are not eligible for protection under §117.”  Consequently, those customers could not authorize the repair service to make repairs to the computers, since doing so necessarily involved the making of a copy of the software in the computer’s memory.

Triad also involved software and a computer repair service.  The software in Triad was distributed pursuant to three different agreements.  The first sold the software outright; these transferees were owners under §117.  The second licensed the software but restricted duplication and third-party use, and the third added a requirement that licensees pay a transfer fee to sell computer systems on which the software had been installed.  Transferees under these agreements were licensees, not owners, and could not authorize repairs pursuant to §117.

Finally, in Wall Data, the Los Angeles County Sheriff’s Department purchased software pursuant to a license which (1) prohibited the department from installing the software in “multiple computer” or networked arrangements; (2) restricted transfers of the software between computers to once every thirty days; and (3) limited the department to installing the software on 3600 machines.  The license did not, however, prohibit resale of the software.  The department proceeded to install the software on more than 6000 machines, but configured it so that no more than 3600 users could access it at any given time.  The Wall Data panel held that “if the copyright owner makes it clear that she or he is granting only a license to the copy of software and imposes significant restrictions on the purchaser’s ability to redistribute or transfer that copy, the purchaser is considered a licensee, not an owner, of the software.”  As in MAI, the Wall Data licensing agreement “imposed severe restrictions on the Sheriff’s Department’s rights with respect to the software.  Such restrictions would not be imposed on a party who owned the software.”  Thus, the Sheriff’s Department did not own its copies of the software, and could not rely upon the essential step defense.  The panel also denied §117 protection to the Sheriff’s Department because copying the software to the additional computers was not an “essential step” in the operation of the software.

The Vernor I court concluded that if it were to follow the MAI trio, “Autodesk would prevail.”  Under MAI and Triad, “the mere labeling of an agreement as a license is sufficient to ensure that the licensee does not have ownership of any copy of the software.”  The Wall Data holding, while “more flexible” according to the Vernor I court, nonetheless provided that “if the copyright owner makes it clear that she or he is granting only a license to the copy of software and imposes significant restrictions on the purchaser’s ability to redistribute or transfer that copy, the purchaser is considered a licensee, not an owner, of the software.” 

The Vernor I court found Wise and the MAI trio in irreconcilable conflict with each other.  Under the reasoning of Wise, Vernor should prevail, because the Autodesk License allowed CTA to retain possession of the copy of the software indefinitely.  Under the MAI trio, Autodesk should prevail, because the licenses in question unequivocally provided that they were licenses, and reserved ownership to the copyright holder.  When precedent conflicts, the court must follow “the oldest precedent among conflicting opinions from three-judge Ninth Circuit panels.”  Consequently, the Vernor I court applied Wise and ruled in favor of Vernor.

Ninth Circuit opinion

The Ninth Circuit reversed, finding that Autodesk’s direct customers were licensees, not owners, and therefore could not transfer ownership rights to Vernor.  The Vernor II court found no conflict between Wise and the MAI trio.  It reasoned that under Wise, the Ninth Circuit considers all of the provisions of a transfer agreement to determine whether it constitutes a license or a transfer of ownership, including “(1) whether the agreement was labeled a license and (2) whether the copyright owner retained title to the copy, required its return or destruction, forbade its duplication, or required the transferee to maintain possession of the copy for the agreement’s duration.”  Vernor II rejected Vernor I’s interpretation of Wise as holding that “a transferee’s right to indefinite possession itself established a first sale.”  To the contrary, no one factor is dispositive, and each transfer agreement must be examined in its entirety.

The Vernor II court characterized the MAI and Triad agreements as “restrictive license agreements,” and thus their customers were licensees who could not qualify for the essential step defense.  Finally, the Vernor II court interpreted Wall Data as holding “that the essential step defense does not apply where the copyright owner grants the user a license and significantly restricts the user’s ability to transfer the software.”  Thus, the Vernor II court read “Wise and the MAI trio to prescribe three considerations that we may use to determine whether a software user is a licensee, rather than an owner of a copy.  First, we consider whether the copyright owner specifies that a user is granted a license.  Second, we consider whether the copyright owner significantly restricts the user’s ability to transfer the software.  Finally, we consider whether the copyright owner imposes notable use restrictions.” 

The Vernor II court went on to hold that “a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.”  It found that Autodesk’s agreement was a license rather than a sale.  “Autodesk retained title to the software and imposed significant transfer restrictions: it stated that the license is nontransferable, the software could not be transferred or leased without Autodesk’s written consent, and the software could not be transferred out of the Western Hemisphere.”  Moreover, the License “imposed use restrictions against the use of the software outside the Western Hemisphere and against modifying, translating, or reverse-engineering the software.”  The License provided for termination “upon the licensee’s unauthorized copying or failure to comply with other license restrictions.  Thus, because Autodesk reserved title to [AutoCAD] copies and imposed significant transfer and use restrictions, we conclude that its customers are licensees of their copies . . . rather than owners.”  As licensees, Autodesk’s direct customer thus could not transfer ownership to Vernor.  In turn, Vernor could not invoke the first sale doctrine or the essential step defense.

Implications

Vernor II raises the question whether and to what extent the first sale doctrine will retain its vitality in the digital age.  It vests software developers with tremendous power to restrict downstream uses of their products.  Purchasers of software rarely – if ever – have the opportunity to negotiate the licenses that come with the products they think they are “purchasing.”  Under Vernor II, saying it makes it so – the opinion makes it all too easy for owners of all types of digital content to include restrictive language in their licenses and strip §109 of any applicability to digital technologies.  Nor is it too great a stretch to imagine Vernor II being extended to other, traditional, contexts.  Imagine, for example, a print book purchased pursuant to a shrink-wrap license that prohibits the purchaser from reselling it on eBay or outside the United States.

Vernor II also appears to conflate the important distinction between a copyrighted work and the tangible medium in which it is reproduced.  In Vernor, the copyrighted work was the AutoCAD software program, but that program was reproduced and distributed on a physical object – a disc. “Ownership of a copyright . . . is distinct from ownership of any material object in which the work is embodied.”  17 U.S.C. § 202.  Transferring a copy does not necessarily transfer the copyright, and vice versa.  As the Vernor I court noted, “the use of software copies can be licensed while the copies themselves are sold.”  Yet nowhere did the Vernor II court explicitly address the issue of ownership of the physical discs as distinct from the copyrighted AutoCAD program.  Consider a printed book: the purchaser obtains no rights in the words printed on the pages of the book (the intellectual property), but the purchaser plainly owns the paper upon which the words are printed.  The same rationale can be used to distinguish software code from the disc on which it is embedded.  Of course, as commerce and digital products increasingly move into the cloud, where products are simply downloaded rather than distributed in a physical medium, this distinction may likewise lose relevance.

On the other hand, the software industry has built itself and its various business models on the foundation that software is licensed, not sold.  A ruling in favor of Vernor could upset settled expectations in an industry with a significant impact on the economy.

Vernor’s deadline to seek certiorari to the Supreme Court was May 18, 2011.  It remains to be seen whether he can defy the very slim odds of winning Supreme Court review.  Until then, the continuing applicability of the first sale doctrine in the context of digital technologies will remain in flux.

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In Memoriam
Schelle Simcox

May 18, 2011 by Naomi Jane Gray · 1 Comment
Filed under: Uncategorized 

It is with great sadness that I dedicate this post to the memory of my friend and former colleague, Schelle Simcox, who passed away last weekend after a courageous struggle with cancer. Schelle was formerly a law librarian in the San Francisco office of Paul Hastings, where I had the great privilege of working with her and becoming her friend. Schelle, along with her fellow law librarian Sara Paul, inspired and encouraged me to start this blog. Schelle was not only a terrific librarian and researcher (and as the daughter of a librarian, I know a good one when I see one). More importantly, she was simply the most wonderful friend and colleague a person could have. In addition to her professional skills, she had a deep and abiding interest in midwifery, and was a tremendous resource and source of support for me during my first pregnancy. I miss you, Schelle. I will never forget you.

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Buy, Buy, License?
Naomi Jane Gray to join panel at ABA CLE event

May 16, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Programs 

I will be a panelist at the upcoming First Annual Intellectual Property Litigation Committee Regional CLE Workshop on June 10, 2011 in Washington, D.C. The full-day program is sponsored by the ABA Section of Litigation Intellectual Property Litigation Committee and will feature panels on copyright, trademark, trade secret and patent topics. The Honorable Randall L. Rader, Chief Judge of the U.S. Court of Appeals for the Federal Circuit, will deliver a lunchtime address. This is going to be a dynamite program and will be capped by a networking reception at the end of the day.

My panel is entitled “Buy, Buy, License? The First Sale Doctrine and What Happens When You Thought You Bought But You Didn’t.” Along with my fellow panelist, Cecil Key of Dickinson Wright, and our moderator, Michael Steger of the Law Offices of Michael Steger, we will address the recent UMG v. Augusto and Vernor v. Autodesk cases and their impact on the first sale doctrine.

Please join us! To register, click here.

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Hearing is Believing
Audio of Oral Argument in Sony v Tenenbaum Available

April 4, 2011 by Naomi Jane Gray · Leave a Comment
Filed under: Secondary Liability 

The audio recording of this morning’s oral argument in Sony v. Tenenbaum is now available through the First Circuit’s RSS feed. Click on the link and scroll down to find the recording. Enjoy!

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