Lauren Schoenthaler Senior University Counsel

Stanford University

November 6, 2010Issues in Book & Serials Acquisition

A Copyright QuoteOnly one thing is impossible for God:to find any sense in any copyright law on the planet.

Mark Twain

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U.S. Constitution, Art. 1, s. 8, cl. 8

To 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

Georgia State Litigation: Setting the Stage

Cambridge Press, Oxford U. Press & Sage Publications filed suit on April 15, 2008, N.D. of Georgia

Alleges “systemic, widespread and unauthorized copying and distribution of a vast amount of copyrighted works[.]

In 2008, Georgia State was on the far end of the continuum -- where on one side are institutions that always seek permission before putting things on electronic reserve and on the other side are institutions that never seek permission -- of almost never seeking permission. Paraphrase of Laura Gasaway, Dean of Academic Affairs, UNC, Chronicle of Higher Education, May 12, 2008

Georgia State Litigation:The Plot Thickens

February 2009, Georgia State adopted a comprehensive Copyright Policy providing detailed instructions to faculty about fair use

Includes a Fair Use Checklist Wasn’t enough to settle

11th A immunity prohibits suits against state entities seeking damages for past wrongs Ex Parte Young doctrine permits prospective relief Court limited review of Georgia State practices to

alleged violations occurring after February 2009 policy adoption

Georgia State:Summary Judgement

Cross motions for Summary Judgment FiledPlaintiffs theory is that Georgia State is

responsible for Direct Infringement Vicarious Infringement Contributory Infringement

Georgia State:Direct Liability

Direct Infringement – Georgia State WinsNamed defendants never engaged in posting materialRespondeat Superior theory

Georgia State not responsible for actions of employees because -- even though faculty posting content into ERes and uLearn are acting in course and scope of employment, Respondeat Superior theory is necessarily an indirect theory

of liability that cannot be applied in a direct liability claim

Really?Motion for reconsideration on this point is pendingRich body of case law where employers have been held directly

responsible for copyright infringement of employees Should there be an exception for faculty in academia?

Georgia State:Vicarious Liability

Vicarious Infringement – Georgia State WinsA theory of secondary liability, applies if

Georgia State(1) profited directly from an infringement (2) had the ability to supervise the infringer

Court found no evidence that Georgia State directly profited from posting materials electronically in violation of copyright law

Therefore no liability

Georgia State:Contributory Infringement

Contributory Infringement -- DrawOne who with knowledge of the infringing

activity, induces, causes or materially contributes to the infringing conduct of another.

No liability for distribution of product capable of substantial lawful use (SONY rule), UNLESS

Distributed with object of promoting its use to infringe copyright as shown by clear expression or other affirmative steps taken to foster infringement. (GROKSTER rule)

Georgia State:Contributory Infringement

Is fact that Georgia State hasn’t set aside $ for permissions evidence of promotion of product to infringe?Court said no . . .

Back to the beginning: The court’s analysis to date demonstrates an attempt to apply copyright law to advance the progress of arts and sciences, while balancing the legitimate interests of the rightsholders.But will it withstand further review?

Georgia State TakeawaysPractice Tips to Avoid LitigationRely on Fair Use, but don’t assume it’s fair

without analysisLink to content lawfully hosted on the

InternetExpand Digital Library HoldingsHave clear e-content policies and guidanceEmbed copyright guidance for faculty into

Course Management Websites

Watch the WatchesCostco v. Omega

Setting the stage -- The Gray MarketOmega, Swiss watchmakers, place a U.S. copyrighted

“Omega Globe Design” on the underside of watchesOmega authorized sales of the watches overseas, but

not to the United StatesCostco purchased the watches from a distributor

who purchased the watches abroad and then sold the watches to customers in California at bargain prices

Trademark law does not prevent the importation so a copyrighted design is added merely for the purpose of placing the watches under copyright protection

Costco v. Omega9th Circuit’s Battle of Statutes

Omega filed suit against Costco alleging that its distribution violated 17 U.S.C. §§ 106(3) & 602(a)

§106(3) provides in part: Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to . . . distribute copies . . . to the public by sale or other transfer of ownership

§602(a) provides in part: Importation into the United States, without the authority of the owner of copyright under this title . . . of copies . . . that have been acquired outside the United States is an infringement of the exclusive right to distribute copies.

Costco v. OmegaFirst Sale Doctrine

§109(a) provides: “Notwithstanding the provisions of §106(3), the owner of a particular copy . . . 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.”

Once a copyright owner puts copies into the marketplace, he can no longer control the distribution of those copies.

United States libraries exist because of this principle

But how do you square 109 with 602?

Costco v. Omega9th Circuit Decision

Much ado about: . “lawfully made under this title”9th Circuit held that §109 only applies to works

manufactured within the territorial limits of U.S. law§109 grants first sale protection only to copies legally

made and sold in the United StatesBut they are lawfully made by the US copyright holder

As no §109 exception existed to these foreign-manufactured works, §602’s prohibition on import to the United States without permission of the copyright owner prevailed.

Omega wins, First Sale Doctrine & Libraries Lose

Costco v. OmegaSupreme Court Review

Oral arguments Monday, November 8Why do watches matter to libraries?

20% of books in libraries have foreign publishers200 million foreign published booksIncreasing # of domestic works published abroad

“If the Court affirms the Ninth Circuit’s decision, the first sale doctrine may no longer apply to hundreds of millions of lawfully acquired books, phonorecords and audio-visual materials in the collections of U.S. libraries.”

Costco v. OmegaThe Parade of Horribles

If the 9th Circuit Decision is affirmed:There will be an incentive to manufacture all

copyrighted works abroad to avoid first sale doctrineIt could also eviscerate the public display right –

prohibiting museums from displaying foreign works over which they hold lawful title

Bad title attaches – buyers of the Omegas from Costco cannot rely on the first sale doctrine to re-sell

Libraries could be forced to pay for lending licenses for foreign works (akin to the public lending right license in EU countries)

1st Amendment Concerns

What will the outcome be?Too close to callAmerican Intellectual Property Law

Association:Both 109 and 602 can be given effect. 602 is

an exception to 109’s general application and provides a copyright holder the right to preclude unauthorized imports to the United States. This construction would at least limit the problem of

having domestic works avoid 109 by having them printed overseas

So What Happens if Omega wins?

602(a)(3)(C) provides that the prohibition on unauthorized importation does not apply if imported by an organization for scholarly, educational or religious purposes, and not for private gain, with respect to no more than one audiovisual work solely for archival purposes and no more than five copies or phonorecords of any other work for its library lending or archival purposesDanger: this exception does not apply to foreign

works purchased domestically – how are we to know if the works were imported to the US with authorization?

So What Happens if Omega Win?

Longstanding recognition for import of libraries and educational institutions

107, 108, 10911th A. ImmunityCongressional interventionIn short term, look closely at policies relating

to lending of foreign audio-visual materials In long term, 400 years of U.S. based library

lending traditions will prevail

Back to the BeginningDoes 602 further the purpose of promoting

the arts & sciences ? Art. 1, s. 8, cl. 8Can a product manufacturer -- with a .05

centimeter mark on the underside of a watch -- eviscerate 400 years of collecting, preserving and lending foreign works?

Watch the watches.Questions?