Keeping politicians' hands off the Net & everything else related to technology
I earlier promised some graphs to illustrate a parable about copyright’s future. I’d like to start, here, by offering a picture of the standard economic model of IP. (Attentive readers may recall that whereas other use “IP” for “intellectual property,” I use it to stand for “intellectual privilege“). See figure 1, below:
I was going to elaborate on Cord’s post, but as luck would have it other people have beaten me to it. First, Tom Lee points out that phone unlocking is one of the DMCA exemptions granted by the Library of Congress in its triennial review process. So iPhone hackers are safe from the DMCA. However, there are other potential issues:
Apple may still have some claim against the iPhone hackers. That’s because circumvention devices typically employ code that’s the property of the device designer. Unless I’m mistaken, the DMCA exemption doesn’t grant anyone the right to use or redistribute others’ code. It’s also possible that circumventing the protection may necessitate the violation of patents held by the device designer.
A similar situation exists in the world of Xbox modding. Until recently it was easy to buy a modchip online. Properly installed, this allows you to turn your Xbox into a device that can run Linux, emulate older consoles, or act as a media center (and, yes, you can play pirated games, too).
This is fantastic! But does it qualify as “comment or criticism” under copyright law? Discuss in the comments.
More at Techdirt.
When more players enter the market for expressive works, an author faces both new competitors and new customers. What affect does that have on copyright’s power to stimulate authorship? Assume, both for the sake of simplicity and because it seems reasonable, that the ratio of authors/consumers holds steady. I posit that copyright will in that event offer greater rewards for authorship. Allow me to explain, here with a parable, and in a later post with some graphs.
When economists draw graphs to describe monopolies, they typically represent both average revenue (i.e., price) and aggregate demand with a single line. Why? Because they assume that, by dint of revealed preference theory, sales of a good reveal the demand for it, and that a monopolist, by definition, alone satisfies the demand for a particular good. See figure one, below.
I question, though, whether that sort of graph does an adequate job of describing the sorts of monopolies protected by copyrights and patents. Because the law does not protect them perfectly, those sorts of “intellectual privilege” (the term I advocate in lieu of “intellectual property”) suffer unremunerated uses. Some such uses happen through infringement, such as street corner sales of pirated DVDs. Others happen by dint of special legislative exceptions, such as the unlicensed public performances of musical works allowed to certain small commercial retail establishments.
How does market growth affect the efficiency of copyright? I earlier argued that, holding all else equal, the low marginal cost of reproducing expressive works ensures that a larger audience will tend to reward copyright owners with larger profits. Population increases thus threaten to throw copyright policy out of balance, making the costs of its restrictions outweigh the benefits of its incentives. I’d here like to air a related but distinctly different argument: Holding all else equal, an increase in population, because it brings an increase in the number of authors motivated by non-pecuniary incentives, tends to render copyright less necessary.
Over at the American, I’ve got a new piece up on the First Sale Doctrine, shrinkwrap licenses, and EFF’s new “promo CD” case. My favorite part was the part I didn’t write:
“Frankly, UMG’s argument reminds me of the one made by the goblin banker in the latest Harry Potter book—that somehow everything made by UMG remains their property forever, even after it is sold or given away,” von Lohmann says. “As readers of the book will recall, that’s not how the law works, not even in the fantasy world of J. K. Rowling.”
Over at Ars, I’ve got a write-up of EFF’s new case defending the First Sale Doctrine. Universal Music has been suing people who sell promotional CDs on eBay. EFF says (and I’m inclined to agree) that under the First Sale Doctrine, those CDs are the property of whoever the labels give them to, and the new owners are entitled to do what they wish with them. The case could have broader implications for the software industry:
Attempts to circumvent the first sale principle using license agreements is not unique to UMG. The practice is especially common among software firms, which routinely distribute their products with a shrinkwrap license. Such end-user license agreements typically state that the software has not been sold to users but has only been licensed for the customer’s personal use, subject to a variety of conditions spelled out in the EULA. Software firms contend that because their software is merely licensed to users rather than sold, the First Sale Doctrine does not apply.
Such shrinkwrap licenses have generated considerable controversy, and some courts have rejected them outright. For example, in a 2001 case, a California judge ruled that Adobe’s EULA did not apply to a California businessman who bought bundled Adobe software and resold the individual components. In that case, the judge held that despite Adobe’s contention that it merely licensed its software, “the circumstances surrounding the transaction strongly suggest that the transaction is in fact a sale rather than a license.”
UMG’s lawsuit against Augustino will test the boundaries of the First Sale Doctrine. UMG may argue that the First Sale Doctrine only applies to sales of copyrighted materials and not to CDs it gives away. But EFF attorney Fred von Lohmann tells Ars that the courts have applied the First Sale Doctrine to gifts in the past. For example, he points to a 1984 case in which Disney tried to prevent the auction of film cells that had been given to a former employee. The court found that the First Sale Doctrine applied and allowed the auction to go forward.
I think there are good reasons to be skeptical of the notion that these kinds of “shrinkwrap licenses” are validly enacted contracts at all, given that they are often presented to the customer only after he has completed his purchase and returned home. One party to a transaction can’t just unilaterally add new conditions after the transaction is complete. If UMG really believes it’s only licensing its promo CDs, it should require recipients to sign an explicit license agreement before giving them the CD, and it should demand the return of the CD after it’s been reviewed. But if they simply ship these CDs out to people unsolicited, it’s a little silly for them to then turn around and claim they weren’t really gifts. If it looks like a gift and quacks like a gift, the court should treat it like a gift, no matter what might fine print might be stamped on the CD itself.
Fred von Lohmann explains why the Electronic Frontier Foundation has taken up the case of a used music merchant who’s been targeted by UMG for selling CDs marked “promotional use only.” At stake is the first sale doctrine: the principle that once a copyright holder sells or gives away a copy of a copyrighted work, that the new owner has the right to do as he pleases with that copy, including re-selling it, and that printing “not for resale” on the CD doesn’t change the equation.
Sounds like a worthwhile case. Legal documents are here.
A funny comment in response to my NBC debates story:
FOX news has every right to own it’s debates because they are fictional and for entertainment purposes only. If you want non-fiction, try a legitimate news source.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.
