Circumventing the first purchase doctrine with international manufacturing

By J. DeVoy

The Second Circuit dealt a body blow to the first purchase doctrine (aka first sale doctrine) in Wiley v. Kirtsaeng, a case about resold textbooks manufactured and obtained overseas – though subject to U.S. copyright registrations – and resold stateside.  The Second Circuit held that such transactions are not covered by the first purchase doctrine – codified in 17 U.S.C. § 109(a), and allowing the resale of copyrighted works by their first purchaser without royalty payments to the owner
- in part because because it would render 17 U.S.C. § 602(a)(1) (barring importation of copyrighted works obtained outside the U.S. without owner’s permission) a dead letter. (Op. at 15-16.)

The majority’s opinion can be summarized with this money quote from page 17:

In sum, we hold that the phrase “lawfully made under this Title” in § 109(a) refers specifically and exclusively to works that are made in territories in which the Copyright Act is law, and not to foreign-manufactured works.

The EFF contends that this harms free expression and consumer rights.  I don’t necessarily disagree, and align with the EFF far more often than not.  Pragmatically, though, the law is the law, and while one can observe the desirability in changing legislation to accord greater protections for free speech and open communication, it is not inconsistent to observe what one is allowed to do under existing statutory schemes.  Thus, I play the devil’s advocate; first, because that is why I went to law school, and second, because Satan is awesome (source: the entire genre of black metal).

The clear and mechanical way to circumvent the first purchase doctrine under the Second Circuit’s new precedent is simply to manufacture copyrighted works outside of the United States, and in countries known for their cheap labor, rather than robust IP laws.  It would also be best to ensure that there are no IP treaties potentially giving a defendant a toe-hold for claiming the manufactured works are “made under” the Copyright Act.

This result would kill the resale market.  On one hand, this comes about two decades too late, as VHS and DVD releases are increasingly uncommon.  At the same time, though, this allows content producers who do release such physical media to keep a leash on every copy they sell and ensure they receive a royalty on every subsequent sale of the material.

One must then query what constitutes “manufacture” of a file that is merely downloaded from a server onto a consumer’s hard drive, rather than physical media.  In Wiley, the term “manufacture” was constructed in a fairly literal sense that encompassed the book’s printing and binding outside of the US.  The closest analogue would be a whirr of storage media queueing up and transferring a large media file to an individual downloader.  If the servers are located in the USA, then the first purchase doctrine applies.  But, if the downloaded files originate from servers located in scofflaw nations like Malaysia, then it’s a different story.  If the “manufacture” analysis is pushed farther up the pipeline, a serious factual inquiry exists as to where the final work is “manufactured,” and exactly how much effort is needed from extraterritorial sources to remove a video from the Copyright Act.

The advantage of taking this route digitally is the ease with which producers can find their content being resold by others.  Admittedly, these resales are a minute piece of the free content pie plaguing mainstream and adult media, but they exist, and will become a larger share of infringements as legal action against one-click hosting sites, torrenters, torrent sites and even tube sites brings their respective unauthorized distribution of copyrighted content to heel.  By manufacturing products overseas – and going through the effort to determine at exactly what point a downloaded file is deemed “manufactured” so that point may be reached outside the Copyright Act’s clutches – opens a new stream of infringement monetization.

A caveat to this: The Ninth Circuit (i.e., California/Nevada/Washington/Arizona) has came to a different conclusion than the Second Circuit in Omega S.A. v. Costco Wholesale Corp, 541 F.3d 982 (9th Cir. 2008).  In that case, the Ninth Circuit held that the first purchase doctrine, 17 U.S.C. § 109(a), applied to foreign-manufactured items that were sold in the U.S. with the copyright owner’s permission.  Thus, the Ninth Circuit’s view does create some extraterritorial application of the first purchase doctrine.  In contrast, the Second Circuit’s view considers all private resales of foreign-manufactured goods to be in derogation of the legitimate copyright owner’s exclusive right of distribution.

This division may play out in several ways.  First, the Supreme Court could reconcile the circuit split on the issue.  Given the 9th Circuit’s record on Supreme Court appeals, I find it unlikely – though possible – that its view would prevail.  In the alternative, the applicability of 17 U.S.C. § 109(a) to foreign-manufactured goods may be a question with slight jurisdictional wrinkles, similar to the award of attorneys’ fees under the Copyright Act.  Similarly, the point at which “manufacture” occurs, especially digitally, may be subject to disagreement between the Circuits.

What is clear, though, is that the Second Circuit has torn open wide a new vein for content monetization.  How it will be taken advantage of, and when – as the content resale market has always existed, but is superseded by piracy now – remains to be seen.  Unless the Supreme Court or Congress (lol) does something, though, copyright law now is more royalty-friendly within the 2d Circuit.

Prior discussion of the first purchase doctrine’s use in porn is available here.

Our thoughts are with the victims of the recent natural disaster

As someone who survived the San Diego Tsunami, my heart goes out to those brave souls who endured today’s earthquake.

Update: I am pleased that others find this an occasion for patriotism as well.

Planet “Fitness” Sucks

By J. DeVoy

Planet Fitness is a joke and a toilet.  Ostensibly a gym, its policies ban deadlifts and other “unapproved lifts” (i.e., the exercises that accomplish anything), its locations do not have squat racks, it traffics solely in equipment fit for an old folks’ home, and doesn’t have dumbbells going much above 50 lbs, if at all.  And why would it? It’s a “judgment free zone” – whatever that means.  Yet, its advertisements seem quite judgmental themselves.

Isn’t that hilarious?!  Someone with the wherewithal to build his body into something massive through diet, exercise and use of supplements is an amusing comic foil against the skinnyfat-to-waifish mongrels who are the denizens of this “gym.”

The judgment goes father still, though: Planet Fatness has a device called a “lunk alarm,” which screams and flashes when someone drops a heavy weight, grunts, or actually exerts effort.  Once the alarm sounds, then comes the onslaught of scorn for fit people from the Reddit commenters and, um,”Rubenesque” figures using the gym.  From Wikipedia:

Planet Fitness has a device called the “Lunk Alarm” at all of its facilities. [...] The “Lunk Alarm” sign has a spinning light, and sounds like a tornado siren. The sign also defines a “Lunk”, and it reads as this: “Lunk , n, [slang], One who Grunts, Drops Weights, or JUDGES”.

Had enough?  It gets better.  Not content to do a disservice to its members by lying to their face about the efficacy of their workouts and lack of “judgment,” Planet Fitness ensures the chains of bondage will never be broken by force-feeding its members, like the ducks that make delicious foie gras.  Planet “Fitness” gives away truckloads of Tootsie Rolls to its members, also tempting them with bagels and, get this, free all-you-can-eat pizza on the first Monday of every month.  That’s right, why limit yourself to peddling shitty, ineffective workouts when you can compound the damage with junk food!  EliteFTS puts it this way:

Imagine that I’m a drug dealer and you’re addicted to crack. You want to get clean but I keep dangling crack rocks in your face, telling you that “No one will judge you.” It’s going to be pretty hard for you to break that addiction when I keep fueling it, isn’t it? Even if I didn’t give you any crack, I’m certainly not helping you overcome your problem. Planet Fitness does the same thing, but instead of crack they throw pizza and candy in front of their clients’ faces.

There are a bunch of different workouts out there that suit the needs of different people.  A marathon runner doesn’t need to do Rippetoe or the Texas Method of weight training.  Similarly, a football player doesn’t want to speed bike 20-30 miles a day.  The common theme, though, is that an effective workout requires effort.  Sacrifice.  Pain.  Planet Fitness, however, perpetuates the bullshit of helicopter parents and mendaciously tells its customers that they’re beautiful just the way they are and they can change if they think about it, no pain or sacrifice needed – and there won’t be any judgment!

Everything Planet Fitness stands for is a lie – but it’s a comfortable one that its customers desperately want to believe in, using it to wrap themselves and their mediocrity with its comforting falsity.  Sweating and puking and wanting to die sometimes is part of looking good.  In fact, that level of sacrifice is requisite to do anything well.  Telling people that won’t be needed to look good is false, but could be excused as puffery to support a business.  But lying and telling people they won’t be judged – and taking steps to remove that pesky specter of another person’s superiority, or even worse, realistic criticism – is just damaging.

This blog is a veritable catalogue of America’s pussification.  Whiners sue for baseless defamation claims, and scurry like rats when they realize the courts, as well as the public, might punish them for spewing utterly unsupportable bullshit.  Wimps surrender their freedoms because some bureaucrat told them they should do so in the name of “safety,” and, hey, everyone else is doing it too so what the hell.  And, apparently, congenital losers are created in the gym by hack companies such as Planet Fitness, which exacerbate America’s many health problems while claiming to alleviate them.

Gallagher v. Gallagher

By J. DeVoy

In a derivative soft-rock battle of epic proportions, Liam Gallagher has sued his brother, Noel Gallagher – both of the band Oasis – for libel. (Source.)  Liam’s basis for suing Noel relates to statements Noel made to the press in 2009, when Oasis was forced to cancel its appearance at the V Festival.  Noel told journalists that the performance was cancelled.  The official story, which Liam insists is true today, is that he was hungover.

Offhand, I am unsure if the U.K. recognizes the standard for defamation of a public figure (actual malice – knowing the falsity of a statement – or reckless disregard for the truth).  More to the point, though, anyone who vaguely paid attention to music in the 1990s knows of Liam Gallagher’s temper tantrums, heavy partying, and other problems.  In short, he’s libel-proof, and nothing that can be said about him that would harm his reputation, professionally or otherwise.

Growing up in the 1990s, I never found Oasis particularly compelling.  I thought its contemporaries, the Brian Jonestown Massacre, led by heroin-addled guitarist/vocalist Anton Newcombe, actually were the counter-culturalists and talented musicians Oasis strove to be.

Do you know who Ruth Orkin is?

By Tatiana von Tauber

Ruth Orkin's "American Girl in Italy"

Recognize this photo?

Ruth Orkin photographed it in the early 50′s after meeting another young woman, Ninalee Craig (the model) in Italy while traveling solo.  Together they attempted to capture the experience of traveling alone in Italy. 

Some have claimed this photo is a symbol of harassment.  While Craig claims it’s a symbol of having a “wonderful time”  (source), I think it’s more a symbol of the kind of power feminine beauty has in Italy – and not much has changed in 60 years.  In Germany guys don’t make gestures, in America construction worker comments have killed the romantic potential but in Italy and in France, there still exists a “romance-worship” to the female.  With that comes a level of sexualization, sure, but when placed into the correct context, it’s a turn on rather than any symbol of harassment.  This photograph is a compliment.

By default of existing we are looked at.  Where some see judgment other see compliment.  If more men weren’t afraid of being accused of sexual harassment when none was intended more women might enjoy the compliment of a whistle or two.  Attention isn’t always comfortable but no attention for too long makes for an old, bitter maid.

Has Chief Justice John Roberts been reading this blog?

By J. DeVoy

“Pick up a copy of any law review that you see, and the first article is likely to be, you know, the influence of Immanuel Kant on evidentiary approaches in 18th Century Bulgaria, or something, which I’m sure was of great interest to the academic that wrote it, but isn’t of much help to the bar.”
-Chief Justice John Roberts

“Most [law professors] are incapable of working as my copy boy / copy girl, let alone as real attorneys. What would they do if all of a sudden, the fourth tier was shut down (as it should be) and then the competition for all lawprof jobs got a lot more stiff? You can bet your ass that professors who teach ‘critical crybaby studies and vegetarianism’ would be where they belong, cleaning toilets.”
-Marc Randazza

Righthaven — with BABIES!

By J. DeVoy

No cute pictures of infants here — just a bizarre story from San Diego

Attorney Theresa Erickson pled guilty to conspiracy to commit fraud for her role in what federal prosecutors described as a “baby-selling ring.” (source.)  Technologically, the scheme was pretty simple: Women would travel to the Ukraine to get pregnant with the eggs and sperm of donors.  This was done overseas because, at least in California, nobody would perform such an IVF using both donated eggs and sperm without a pre-existing surrogacy contract.  [I learned just enough family law to pass the bar. Bear with me. - Ed.]  The conspirators apparently misrepresented to the San Diego Superior Court that such surrogacy contracts existed, though – a fact belied by having to go Ukraine to complete the procedure.  Indeed, there was no underlying surrogacy contract, and no surrogates. (source.)

Once the pregnancy was into the second trimester, the conspirators would start shopping the babies to prospective parents.  The conspirators apparently claimed that the original adoptive parents bailed out of the deal, and a new home was needed for the baby.  The targeted parents, believing they were picking up where another couple left off, paid more than $100,000 in fees, with the women carrying the babies receiving $38,000 to $45,000 in compensation. (source.)

So to recap: Defendants, a lawyer among them, make misrepresentations to the court about rights they don’t actually have – and that never existed – in order to make money off of unwitting third parties who believed they had such rights.  Gee, never seen that before! Nope, never ever!

Erickson’s sentencing is scheduled for October 28.

H/T: Brian, Ken and Patrick

Cooley, New York Law School hit with lawsuits from former students

By J. DeVoy

Two lawsuits were filed today in New York and Michigan against New York Law School (not to be confused with New York University School of Law) and Thomas M. Cooley Law School, respectively.  The plaintiffs, former students of the two schools – which have been in at least the bottom half of U.S. News & World Report’s rankings for as long as I can recall – claim that the schools “knowingly inflated employment and salary statistics to recruit and retain students.” (source.)  Moreover, the article is unclear which of Cooley’s four campuses were sued, but presumably all of them were, including its nascent Tampa outpost.

At the heart of the lawsuit is a question of classification.  The plaintiffs allege that NYLS and Cooley knowingly misclassified students in part-time or temporary jobs as “fully employed,” benefitting from the appearance of employment rates higher than they actually were.  Logically, these employment rates were part of the reason students attended those schools, and thus the schools’ alleged inflation of these employment rates made it easier to attract prospective students and their federal student loans… or so the theory goes. (source.)

The Bloomberg article notes that Cooley is suing the plaintiffs’ firm for defamation related to blog comments it made about Cooley’s business practices. (source.)  In an odd twist of irony, NYLS’ apparently outgoing dean, Richard Matasar, has been an outspoken critic of legal education’s flaws while simultaneously engaging in the practices that leave it so broken, including tuition hikes, dramatically increasing class sizes, and a myopic focus on investing in facilities. (source.)

Some may be cheering that this day has come.  I regret that it has, as the ABA should have been a better steward to the profession and prevented legal education from reaching this point.  Admittedly, it is no easy task, especially with the DOE falling over itself to give hundreds of thousands of dollars of non-dischargable debt to anyone with a pulse, but it must be done.  If the ABA lacks the fortitude to tell some people “no, you cannot be a lawyer,” it should outsource its spine to the American Association of Law Schools (“AALS”).  While trading the ABA for the AALS as an accreditation body may be trading one set of problems for another, at least the AALS has standards (theoretically) and sees the devastation wrought in other education sectors by for-profit toilets and fly-by-night schools concerned more by their own earnings and existence than the detritus they spew into the world – and the young lives they ruin in the process.

Needless to say, a segment of the legal education community likely will follow these cases with considerable detail.  It is, however, an issue with broader implications.  Hey CoOp – this affects your jobs and the legitimacy of the institutions that employ you.  Pay attention to it.  Stop letting the ABA turn your institutions into profit mills while you eat lotus flowers and philosophize the day away.  Even if these lawsuits do not achieve their intended objectives, they finally shine a light on the high cost of worthless graduate education, and the extent to which some programs will conceal their utter failure.

A Message About Texas Governor’s “Religious Revival”

Negligence and Open Wifi in Torrent Cases Debate

In the wake of this recent legal development, Torrent Freak has published an open debate over the issue of negligence claims in copyright infringement cases involving open wifi networks.

I provided the pro side of the debate here.

Nick Ranallo provides the con side of the debate here.

Fair Use is Awesome

A number of weeks ago, the RLG scored a major fair use victory in Righthaven v. Hoehn. In that case, we argued that even using an entire editorial could be fair use as long as the fair user made a transformative use of the original. The Court agreed.

The issue of whether an entire work can be taken as fair use raised some controversy. The almost-always-awesome Ken Paulson doesn’t seem to get it, reading too much into the opinion’s dissection of the editorial in that case. But, it really is rather simple. The bargain we make with copyright owners is this: Creators of content get a monopoly over the commercial exploitation of their works. In exchange, we all get to engage in creative or transformative expression using those works, as long as we don’t go too far.

Withiout fair use, we don’t get this awesomeness — which uses the entirety of the original musical work. Would you want to live in a country where the video below is illegal? Creators have the right to profit from their works, but the rest of us get a right to free expression without having to hire a lawyer every time we want to use something that someone else made. Fair use. Learn it. Love it.

Cuz Fair Use be gangsta as a muthafucka.

Because this is what happens when awesomeness meets assholes who don’t understand fair use.