Reconciling intellectual and personal property.

Author:Perzanowski, Aaron
Position:II. The Erosion of Ownership D. The Shrinking Software Divide through Conclusion, with footnotes, p. 1235-1263
  1. The Shrinking Software Divide

    Courts have endorsed attempts to characterize purchases as licenses in the software context, but have proven far less open to that characterization when it comes to more traditional copyrighted works like movies, music, and books. (143) This fact might suggest that the effects of the software licensing paradigm will be contained. But there are two reasons to think this licensing model will have ripple effects across the copyright economy. First, despite the caselaw, assertions that consumers do not own the copies they buy are not limited to software transactions. Second, the gap between software and more traditional works is narrowing.

    The copyright marketplace is rife with examples of rightsholders and their intermediaries insisting that consumers do not actually own the copies they buy. (144) Amazon's Kindle Store is among the largest sellers of e-books in the United States. According to Amazon's Terms of Use, consumers who discover a book they would like to read and hit the "Buy now with 1-click[R]" button do not own the copy they download. (145) As those terms explain, "[u]nless specifically indicated otherwise, you may not sell, rent, lease, [or] distribute ... any rights to the Kindle Content." (146) This sort of restraint on alienation is clearly inconsistent with copyright law's understanding of copy ownership and likely at odds with what consumers reasonably understand the word "buy" to mean. (147)

    Apple's iTunes Store, the largest music retailer in the world, is somewhat more conflicted in how it characterizes transactions with consumers. (148) After describing those transactions as "purchases" and noting that "[a] 11 sales ... are final," Apple insists that consumers agree not to "rent, lease, loan, sell, [or] distribute" their purchases. (149) Amazon's competing MP3 store offers similar terms. Although Amazon's store "allow[s] you to purchase ... digital versions of audio recordings," your payment merely "grant[s] you a nonexclusive, non-transferable right to use [the] ... Music Content ... only for your personal, non-commercial purposes." (150) However, "you may not redistribute, ... sell, ... rent, share, lend, ... or otherwise transfer or use Purchased Music." (151)

    These efforts are not confined to digital downloads. Beachbody LLC, the makers of the popular P90X home workout routine, insists that its customers do not own the DVDs they purchase from the company's website. (152) According to the Beachbody Terms of Use, "[y]ou may not, without the express written permission of Beachbody or the respective copyright owner ... sell [or] resell ... services or products obtained through [its] Sites." (153) Beachbody has aggressively targeted individual consumers who resold legitimate copies of its DVDs on eBay, threatening litigation and demanding exorbitant compensation. (154) It is easy to understand why Beachbody would want to prevent customers from reselling their workout videos after their New Year's resolve runs out. As reasonable as three easy payments of $39.95 may be, (155) used DVDs on the secondary market would introduce unwanted downward price pressure. What is harder to see is how this restraint on alienation can be squared with the principle of exhaustion or consumer property interests more generally. (156)

    These examples illustrate that, despite the caselaw, the practices of rightsholders and the experiences of consumers reflect a trend to deny copy ownership and restrict resale that extends beyond the software market. In part, this trend reflects the shrinking gap between software and other classes of copyrighted works. In its early days, software was a thing unto itself in the copyright landscape. But as traditional forms of expression--books, music, visual art--become more interactive and leverage the new avenues for creativity and the market penetration technology offers, they are becoming indistinguishable from software.

    The line between programs and data has always been a largely artificial one. (157) But today that distinction is increasingly blurred. (158) Some video games are best described as interactive films. (159) E-books offer levels of responsiveness to user input impossible with the printed page. (160) And artists like Jay-Z, (161) Lady Gaga, (162) and Bjork (163) have all released new music embedded in smartphone applications. In short, traditional expressive content and software are merging.

    That blurring renders efforts to maintain the current bifurcated approach to licensing untenable. It depends on an identifiable line separating software from everything else copyright protects. If current legal and technological trends continue, the notion of personal property in copies will recede as more and more of copyright's subject matter evolves to resemble software. (164) As described in the next Part, that problem is compounded by the shifting nature of the copy itself.


    The copy, needless to say, has been an essential concept in the law of copyright for centuries, (165) and part of copyright law in the United States since its inception. (166) The term's use is somewhat counterintuitive since "copy" refers not only to infringing and noninfringing reproductions of a work, (167) but also to the initial fixation of the work. (168) So Mary Shelley's original handwritten manuscript of Frankenstein is as much of a copy as a Xeroxed paperback. (169) Central to contemporary copyright thinking is the notion that copies and their statutory companions, phonorecords, (170) are material objects distinct from the intangible works that the copyright grant is meant to encourage.

    Much like the once clear but increasingly opaque notion of ownership, the copy is now a concept plagued by uncertainty. Changes in storage and distribution technologies alongside shifting media consumption patterns have profoundly altered the way in which we interact with copyrighted works. The tangible copy, once the primary means of distribution, has been displaced by cloud storage, streaming, and "software as a service." Copies were once finite, stable, and valuable. But the unitary copy--the hardcover, the LP, the film reel--has been largely displaced. Today's marketplace is characterized by ubiquitous, temporary instantiations of works that have diminished independent value. Copyright law has struggled to assimilate these developments. This Part first describes those changes and then turns to the efforts of the courts to make sense of the shifting role of the copy and the implications for the distinction between the copy and the work.

  2. Technology and the Copy

    Dramatic improvements in remote computational capacity and storage, along with increasingly fast and pervasive data connectivity, allow consumers to acquire, store, and access their media through the much-ballyhooed cloud, that assemblage of remote servers housing our contacts, family photos, and media collections. Consumers can choose between cloud storage services from Amazon, Apple, Dropbox, Google, and Microsoft, among others, at nearly no cost. But the cloud has moved beyond mere storage. Amazon's MP3 store enables consumers to buy, save, and play their purchases directly from its Cloud Player without ever downloading a permanent file to their laptop or mobile device, let alone handling a plastic disc. (171) Software-as-a-service offerings, like Adobe Creative Cloud--the new home for Photoshop and other editing and layout programs--or the Google Apps suite of office productivity tools, prove that the functionality that once required the distribution of copies can be achieved by remotely accessing data and processing power. (172)

    These technological developments have been accompanied and partly driven by changing consumer preferences. As evidenced by the fact that close to half of internet traffic is attributable to Netflix, many consumers would rather access a library of streaming video titles than purchase or even rent tangible copies. (173) The popularity of Spotify, Pandora, and other streaming music services suggest the same might be true for music. (174) This transition from distribution to performance is evident in the video game market as well. OnLive launched a cloud-based gaming platform in 2010. (175) And Sony has recently announced Playstation Now, a cross-platform service that will allow subscribers to rent and stream games to consoles and mobile devices. (176) Taken together, these changes offer great promise to consumers. But they also threaten to destabilize our understanding of the copy and its place in the copyright system.

  3. Law and the Copy

    Four cases--one from the early twentieth century and three of more recent vintage--illustrate the ongoing dialogue between technological innovation and the legal understanding of the copy.

    In the late 1800s, the advent of perforated player piano rolls prompted both the courts and Congress to reconsider what constituted a copy. In White-Smith v. Apollo, the Supreme Court was asked to decide whether perforated rolls, which in conjunction with a player piano performed copyrighted musical compositions, were infringing copies. (177) The Court, following a number of earlier opinions addressing both piano rolls and phonographs, (178) held that the perforated rolls were not "a written or printed record of ... intelligible notation." (179) If "even those skilled in the making of these rolls are unable to read them as musical compositions," they could not be copies. (180) To hold otherwise, according to the Court, would be to force "a strained and artificial meaning" on the copy. (181) Congress, revising the Copyright Act just a year later, had an opportunity to weigh in on White-Smith's vision of the copy. (182) However, it took a decidedly unclear position, ultimately maintaining the general White-Smith interpretation but extending protection to piano rolls. (183)

    White-Smith demonstrates that judicial and legislative struggles...

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