Commandeering copyright.

• Author: Kenneally, Michael E.

This Article examines the increasingly common phenomenon of copyright commandeering, which is the use of standardized contracts and other legal devices to reassign, on a massive scale, the entitlements initially assigned by copyright law. Though many commentators have discussed examples of this phenomenon, it is more widespread than existing commentary suggests. Users of copyrighted works as well as copyright owners have attempted to reassign a wide range of copyright entitlements.

Yet although previous writers have taken too narrow a view of what qualifies as commandeering, they have simultaneously criticized commandeering with arguments that are too broad. This Article shows where such criticisms overreach and proposes a new response to commandeering that focuses on the practical differences between property rights, such as copyright law provides, and contract rights created through private actions. Courts should refuse to enforce those large-scale copyright entitlement transfers that operate as alterations of property rights to the detriment of individuals who have not consented to the change.

INTRODUCTION I. MAPPING THE COMMANDEERING LANDSCAPE A. Offensive Copyright Commandeering 1. Restricting Fair Use 2. Restricting Use of Uncopyrightable Material 3. Restricting Resale Rights B. Defensive Copyright Commandeering 1. Controlling Rights to Reproduce and to Distribute 2. Controlling Right to Authorize Public Performance 3. Controlling Authorized Derivative Works II. THREE OVERBROAD ARGUMENTS AGAINST COMMANDEERING A. Legislative Intent and Copyright's Delicate Balance B. Complexity and Information Costs C. Externalities and Social Welfare III. A PROPERTY-BASED APPROACH TO COMMANDEERING A. Google's Attempted Property Taking B. Securing Property Remedies Through License Gerrymandering C. Rights Against the World, Including Third Parties CONCLUSION INTRODUCTION

Over the last fifteen years, private parties have sought to reassign the rights that federal law grants to creators and users of copyrighted works in novel and ambitious ways. ProCD, Inc. v. Zeidenberg (1) encouraged such ambitions by upholding a standard form software agreement that prohibited the unauthorized copying of uncopyrightable factual material. Since that decision, creators and users alike have pursued diverse strategies for reallocating copyright entitlements to further their own interests. What sets these developments apart from their predecessors in previous decades is the enormous scale on which they occur. No longer is the transfer of copyright entitlements principally the result of individual negotiations or simple litigation. Copyright entitlements are now routinely transferred in the aggregate. And aggregated across large numbers of creators or users, these transfers operate like revisions of the copyright laws, provided that courts enforce them. The extent to which courts should enforce such transfers, however, is open to debate. On the one hand, they might serve to channel assets to those parties who value them most. On the other hand, they might undermine the policies of copyright law or impose net social costs. Either way, these large-scale transfers dramatically change the way that copyrights operate, and recognizing them risks allowing private parties to commandeer copyright law for their own purposes.

The standard form license agreement is a familiar species of large-scale copyright entitlement transfer. In the digital age, users of technology agree almost daily to contracts labeled "Terms of Use" or "End User License Agreement." Intellectual property licenses have attracted significant academic attention and continue to do so, (2) but with few exceptions the scholarly consensus is that licenses that augment intellectual property rights are bad for society.3 Scholars persistently condemn restrictive licenses on grounds of policy and doctrine. Yet courts have not embraced this scholarship. Recently, for example, the Ninth Circuit issued two important decisions ratifying right-holders' use of standardized contracts to eliminate privileges assigned by copyright law to owners of individual copies of copyrighted works. (4) The court could have followed the lead of the district court's thoughtful opinion (5) by distancing itself from precedents that have been criticized for threatening such user privileges as the first sale doctrine. (6) Instead, the Ninth Circuit reaffirmed the significance of those precedents, adopting the now-common approach of ignoring academics' arguments against restrictive licenses.

A very different massive attempt to rearrange copyright entitlements can be found in the Google Books settlement, which was rejected by a United States district court last March. (7) Google attempted to extinguish copyright entitlements held by the authors of an enormous number of books in an intensely negotiated class action settlement, but the court held that approving the settlement proposed by Google would be a misuse of the class action device. (8) The court worried that an opt-out settlement with as sweeping an effect as the one Google proposed would yield a result "incongruous with the purpose of the copyright laws" by giving Google permission, going forward, to duplicate copyrighted works without first obtaining permission from the right-holder. (9) As compared to the Ninth Circuit's software licensors, Google was on the other side of the creator/ user divide. Yet Google and those licensors shared the aim of restructuring a significant area of copyright law through private ordering.

As these two dissimilar examples suggest, large-scale copyright entitlement transfers implicate a variety of policy considerations. This Article argues for an overarching, normative principle that can provide consistent and sensible answers to the question--which shows no signs of disappearing--of when courts should enforce such transfers. This principle derives from the near-truism that copyright's exclusive rights are designed to function as property rights, albeit property rights that are limited by certain privileges granted to users of copyrighted works. Although it is a basic premise of copyright law that creators and users should be able to exchange rights and privileges through contract, the result of large-scale exchanges can, in the aggregate, go beyond contractual arrangement and generate a new regime of what are functionally property rights, in place of the property rights created by copyright law. Because property rights and contract rights function differently in ways I describe below, (10) I propose that courts refuse to enforce massive copyright entitlement transfers that result in changes to property rights without the consent of the affected parties. These entitlement transfers--constituting what I call copyright commandeering in the strict sense--form a smaller set than the set of practices that other commentators have condemned, but a larger set than the set of practices that courts have refused to enforce. By disallowing copyright commandeering in this strict sense and ensuring that copyright's basic property rights framework remains fixed, courts can combat clear threats to social welfare while also protecting private parties' settled expectations.

The Article begins in Part I with a tour through the real-world behavior that exemplifies copyright commandeering. The examples I discuss do not cover every possible form of commandeering, but they provide an overview of the variety of private actions that can be analyzed as large-scale transfers of copyright entitlements. Particularly noteworthy is the fact that users as well as creators orchestrate such transfers. In Part II, I turn to three lines of argument that have been advanced by other commentators against forms of commandeering. I show that each line of argument and its associated doctrinal proposal are unconvincing because they carry a reasonable concern too far. Then, in Part III, I present my own case against commandeering, based on several characteristic features of property fights: they persist over long stretches of time, are protected by distinctive remedies, and bind third parties who have had no interaction with the right-holder. By targeting practices that interfere with these features in the copyright context, my property-based approach is able to account for many of the concerns that have animated other scholars, but avoids the overreaching that has likely dissuaded courts from policing commandeering more actively. Enforcement of large-scale copyright entitlement transfers can be selective and yet still principled.

1. MAPPING THE COMMANDEERING LANDSCAPE

   At a first cut, copyright commandeering can be divided into offensive and defensive forms. This division is based not on the presence or absence of aggression, but rather on the position of the party who engages in the commandeering. Offensive commandeering is done by those who hold copyrights and attempt to secure greater legal powers over their copyrighted works than they have under copyright law's initial assignment. Defensive commandeering is done by those who infringe or are in a position to infringe others' copyrights and wish to eliminate or take control of the copyright owners' legal powers under copyright law's initial assignment.

   1. Offensive Copyright Commandeering

      1. Restricting Fair Use

         The fair use doctrine gives users of copyrighted content a defense against infringement when their use satisfies a four-factor balancing test. (11) Successful fair use defenses are most likely when the user is engaged in criticism, reporting, or educational activities, (12) or when the user is transforming the preexisting work to accomplish a new purpose. (13) Some scholars have argued that fair use is needed to ensure that copyright's prohibition of certain expressive acts comports with the First Amendment. (14) Others have argued that fair use corrects for market failure when transaction costs or...