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Internet Copyright Issues Take Center Stage

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Amid the fierce backlash against a pair of proposed bills in Congress, the Stop Online Piracy Act and the Protect Intellectual Property Act, issues of copyright law have risen to the forefront of national discussion. With the controversy surrounding the bills as a timely backdrop, the University of Miami School of Law hosted a talk last Thursday by renowned copyright law expert David Nimmer.

Professor Nimmer's presentation, "Paper or Plastic? Copyright in the Cloud," was held in Gusman Concert Hall and was attended by members of both the School of Law and Frost School of Music. He focused his talk primarily on the Supreme Court's invention of the "first-sale" doctrine in copyright law over a century ago, as well as a series of recent Ninth Circuit Court of Appeals cases, which Nimmer used to demonstrate the pressure that digital distribution places on that doctrine.

United States copyright law traces its roots back to a 1908 Supreme Court decision, in which the Court held that the exclusive right to sell a copyrighted work applies only to that specific copy's "first-sale." Thus was born the first-sale doctrine. After purchase, the physical owner of a copyrighted work is generally free to do with his or her copy as they please. The same holds true for plastic media, such as computer software written on DVDs. Where things become muddled, however, is in determining whether the transfer of the copyrighted material was in fact a sale or a license to use. To Professor Nimmer, the critical question becomes, "Who actually owns the paper or the plastic?" The copyright owner, or the end-user?

In 2010, the Ninth Circuit Court of Appeals weighed the applicability of the first-sale doctrine to computer software in Vernor v. Autodesk, Inc. Originally, the district court sided with the end-user, finding that the first-sale doctrine applied and that the copyright owner was precluded from limiting secondary distribution of the copyrighted software.

On appeal, the Ninth Circuit reversed the ruling, finding the first-sale doctrine inapplicable, as the original transaction was not a sale, but rather a license to use the software in question. Unlike a purchaser who retains the right to dispose of purchased copyrighted material, a licensee is restricted by the terms of the particular end-user licensing agreement.

Professor Nimmer, who teaches at UCLA Law School, then shifted his lecture to an examination of how "the cloud" is fundamentally changing the landscape of copyright law, especially with respect to the application of the first-sale doctrine. "The fascinating hinge where we find ourselves is going from a physical world to a non-physical world," in which media is hosted and distributed digitally, Nimmer explained. Copyright owners worried about losing under the first-sale doctrine just have to stop selling physical materials. Companies like Netflix, who have deals in place with copyright owners, never transfer physical ownership of copyrighted media to consumers. As a result, the end-user is barred from re-distributing the copyrighted material.

The ability of copyright owners to avoid the pitfalls of the first-sale doctrine through cloud distribution may, at first glance, appear to be a boon for their business. However, Professor Nimmer noted the challenges that copyright owners face in the era of cloud computing, particularly in the context of online file storage services. Nimmer refers to such technologies as "dual-use." Although the capability for infringement exists, the mere fact that end-users are using cloud-based storage services to infringe on copyrights is not enough to make the companies who host such services implicit copyright infringers.

Of course, the lecture could not have ended without questions about the potential effects on copyright law of the two anti-piracy measures, which have resulted in widespread protests by Internet outfits but have the support of major media companies, the motion-picture industry and the Recording Industry Association of America.

Playing coy with the audience, Professor Nimmer avoided giving a definitive answer when asked if he agreed in principle with the two pieces of legislation. "Anything I say now would be beside the point because the eventual legislation will be so different."

As momentum against the bills in their current form continues to build, we can be left sure of only one thing: If and when the bills pass – which at present seems unlikely – we can expect a more definitive response from Professor Nimmer.

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Watch David Nimmer discuss internet copyright protection and intellectual property.