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House Judiciary Panel Vets Digital First-Sale Doctrine

WASHINGTON — The House Judiciary Committee is pushing to define the “first sale” exemption to copyright protections and how and whether the exemption applies to digital distribution of TV, movies, books and other copyrighted content.

The first-sale doctrine allows the owner of a legal copy of a copyrighted work to sell it or give it away, but not to make another copy of it.

Currently that doctrine covers physical copies, like books and DVDs, and thus protects Netflix’s DVD mailing business, libraries and bookstores. But at issue is how, and whether, the doctrine applies to digital copies that can be sent anywhere and do not degrade.

“Expectations in the digital context are still developing,” House Judiciary Committee chairman Bob Goodlatte (R-Va.) said in his opening statement for a hearing in New York last week. “Consumers are also accustomed to files such as apps, songs and movies being accessible on any device on a consumer’s home network at one purchase price without having to pay for multiple copies.”

Fair-use advocates argue that the doctrine applies and the law needs to be updated for the digital age. Studios and others, including the U.S. Copyright Office, have said physical objects remain a defining, and limiting, factor in the doctrine, which dates to the reselling of books around the turn of the century.

The Motion Picture Association of America said after the hearing last week that to establish a digital first-sale doctrine would upset the business model that in 2013 saw more than 100 legitimate online video services provide 56 billion TV show episodes in a TV Everywhere model that allows access on various devices.

Allowing a digital first-sale doctrine, the MPAA argued, could essentially supplant the original market. It could also discourage content creation and innovation, Randolph May, president of the Free State Foundation think tank, warned in a blog post about the hearing. He said the doctrine cannot simply be grafted onto the digital world.

“The first-sale doctrine applied to digital content risks stifl ing innovation and investment in new copyrightable works because it is so relatively easy to replicate and distribute exact copies of an original,” May said. “This ease of copying means that the price of the ‘first sale’ work effectively would become the market price for the ‘used’ work [like pricing a used car at new-car prices], in all likelihood supplanting the original market. Obviously, the incentive for creation of new works is diminished under this scenario.” The MPAA pointed out that the industry is moving to a licensing model for accessing digital video content anyway, which is not covered by the first sale doctrine; fair-use advocates argue that model is an attempt to circumvent a potential digital first-sale doctrine.

“Increasingly, more types of media are being sold digitally and can easily be offered to consumers with exactly this sort of language buried in a click-through, which will claim that, despite the fact that [a consumer] clicked on a bright yellow ‘buy’ button, [she] was only renting her ebook, or album or TV episode,” said witness Sherwin Siy, vice president of public affairs for Public Knowledge.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.