Internet Policy Task Force: Don't Extend First Sale to Digital Transmissions

The Commerce Department's Internet Policy Task Force has recommended that the Patent and Trademark Office not extend the first sale doctrine to digital transmissions of copyrighted works.

That came in a white paper issued Thursday and is a victory for copyright holders including TV and movie studios.

The first sale doctrine allows the owner of a physical copy of a copyrighted work to resell to someone else without getting permission from the copyright owner.

According to Commerce offiials, the task force was concerned about the impact on the market for originals of copies that are essentially identical to the original, rather than the "used" nature of first sale physical copies, as well as the fact that a digital original remains after it is transmitted to a second person.

Although the task force did not propose expanding the first-sale doctrine to digital transmissions, it did concede there was consumer confusion when they clicked on a "buy" button for a digital work that was only a one-time license, so advised better consumer education.

The task force also said there was insufficient evidence to recommend either creating a specific exception to copyright protections for remixes--mashups, fan fiction--or to create a compulsory license regime for compensating copyright holders. But it did recommend developing fair use guidelines and best practices for and to offer "enhanced licensing options."

The task force was created in 2010 to review copyright, privacy, cybersecurity and fee flow of information issues as part of an effort to modernize copyright policy by finding a balance between protecting intellectual property and promoting the growth of the Internet and digital technology.

The task force published a green paper in 2013 and since then has held multistakeholder forums on notice and takedown under the Digital Millennium Copyright Act and talked with stakeholders about online licensing and in particular remixes, first sale and statutory damages as a deterrent to IP infringement.

On statutory damages, the task force recommended the following three amendments to the Copyright Act: 1) incorporate a list of factors for courts and juries to consider when determining the amount of such damages to provide for greater predictability; 2) amend the copyright notice provisions to remove allow for lower "innocent infringement" damage awards; and 3) for non-willful secondary liability of online services providing large numbers of works, give courts the discretion to assess damages on other than a per-work basis.

Among the factors it recommended were the need to deter infringement; a defendant's financial situation; the value of a work; the circumstances; duration and scope of the infringement; a defendants state of mind; and whether the infringement was wilfull or innocent.

The task force also recommended creating a streamlined procedure for small claims of infringement.

"Ensuring that our copyright policy continues to provide incentives for creativity while keeping up with the world’s technology advancements has been a critical priority for the Internet Policy Task Force” said Under Secretary for Intellectual Property and USPTO Director Michelle K. Lee in a statement following release of the white paper. “These new policy recommendations are the culmination of many sessions hearing from stakeholders—from publishers and producers to artists to digital entrepreneurs and consumers—and will help the United States’ creative sectors continue to unleash new works and technologies that spur our competitive economic growth."

“We have long advocated a balanced approach to copyright protection in the digital age,” added National Telecommunications & Information Administration chief Lawrence Strickling, the Obama administration's top telecom policy advisor. “These updates will continue to provide meaningful protection for intellectual property and also support the innovation that has fueled unprecedented growth in the Internet-based economy.”

Congress will have to make the changes to the statory damages, but a Commerce official said that whether that took a yaer or five years, they expected changes would be made and that the recommendations would inform that process.

John Eggerton

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.