Digital Copyright Exhaustion and Personal Property
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Description
Typically, copyright law is understood as a set of rules that governs intangible expression. But for consumers, copyright law governs the otherwise autonomous and intimate realm of our personal possessions. As invasive as it might seem, copyright law can tell us where we can play our records, to whom we can display our paintings, and whether we can resell our books. And as more and more of our possessions are digital, it can also tell us what devices we can use them on, where we can access them, and with whom we can share them. In this way copyright law serves as both a bridge and a barrier between intellectual and personal property, attempting to balance the competing interests of both regimes. For more than a century, copyright law mediated the tension between these two interests through the principle of exhaustion: the rights holder’s power to prevent distributing, using, or sometimes even reproducing a work yields to the personal property interests of consumers once they lawfully acquired a copy of a work. As a result, exhaustion enables libraries to lend their books, museums to display their paintings, and consumers to fill up their bookshelves, borrow DVDs, and back up their software. Rather than an idiosyncratic carve out, exhaustion is an inherent part of copyright law’s balance between the rights of creators and the rights of the public. It is a fundamental component of almost every intellectual property system, one that recognizes that the rights of consumers are not at odds with the goals of the copyright system, but at its core. Meaningful consumer rights to use and transfer personal property are essential to the ultimate goals of the copyright system, public access to, and enjoyment of, new creative works. Exhaustion also helps preserve copyright’s legitimacy and lawful markets for copyrighted works by encouraging consumers to pay supra-competitive prices in exchange for the right to use, alienate, and under certain conditions, modify their copy. Nonetheless, exhaustion has become controversial as of late, with many commentators and copyright owners arguing that it is nothing more than a legacy loophole or market inefficiency that allows consumers to make unauthorized uses of intellectual property rightly controlled by the copyright owner. And in recent years, rights holders have taken aggressive steps to undermine exhaustion and weaken consumer property interests in an effort to shift the property balance in their favor. They have argued that exhaustion does not apply to goods imported into the United States or to copies manufactured abroad; they have developed technologies to block the resale and use of pre-owned media; they have used spurious complaints to remove legitimate used items from secondary markets like eBay. These efforts have met with mixed success. But two legal and technological trends have proven much more effective in curtailing exhaustion and threatening consumer interests. The first is a set of copyright holder efforts that seek to redefine the notion of ownership by characterizing certain consumer transactions as licenses even when they “buy” the work. Second, technology has shifted consumer purchases in copyright markets away from tangible copies. Rather than picking up books and records from store shelves, we stream, download, and store content in the Cloud. These shifts have created something of a crisis for the exhaustion doctrine. In an economy premised on tangible goods, exhaustion is a concept so deeply engrained that it often goes unnoticed. But in the digital marketplace we increasingly occupy, exhaustion risks being dismissed as an anachronism, a concept that simply cannot be ported into the economy of bits. According to copyright holders, you do not own the digital media you purchase online. According to the Ninth Circuit, you do not own the plastic disc on which your software programs are encoded. And according to General Motors and John Deere, you do not own the software embedded in your car or your tractor. In short, the very notion of personal property is under attack. This chapter, building on our earlier work, attempts to find a way forward for the exhaustion doctrine. We suggest that the equilibrium between personal and intellectual property enabled by exhaustion depends on assumptions about the copyright marketplace that are quickly becoming outdated. And we argue that consumer rights must be preserved, but in a manner that recognizes the differences between digital and analog distribution.
Source Publication
Research Handbook on Intellectual Property Exhaustion and Parallel Imports
Source Editors/Authors
Irene Calboli, Edward Lee
Publication Date
2016
Recommended Citation
Perzanowski, Aaron and Schultz, Jason M., "Digital Copyright Exhaustion and Personal Property" (2016). Faculty Chapters. 1775.
https://gretchen.law.nyu.edu/fac-chapt/1775
