September 13, 2004
Tivo-Netflix and Some Legal Questions
Rafat Ali dropped me a line with a question about the Tivo-Netflix deal. Pointing to this post by Jeremy Allaire, he wanted to know about how first sale might affect licensing for online movies. Here’s my response:
Good question. 17 USC 109 (the first sale doctrine) is even stronger for movies. Music and computer programs have limitations regarding rental; movies (and books) have no such limitations. While some video stores (e.g., Blockbuster) have entered into licensing and revenue agreements with the studios, any video store can simply buy copies of DVDs and rent/sell them to customers without getting the approval of copyright holders.
However, Jeremy is basically right in his statement: they can’t just take the content off of the DVDs and put it online. Just like we discussed with eBay, first sale only applies to the distribution right, and it only applies to lawfully made copies. Putting the songs online would implicate the right to copy, and the only clearly lawfully made copy is the DVD that Netflix owns. Also, distributing the movies via streams might implicate the public performance right.
As we have seen in the music industry, these definitional issues (copying v. distribution v. performance) can be a huge drag on license negotiations. Just as the first sale doctrine protected rental outlets in the analog world, the mechanical compulsory aided distributors of music. For the digital world, Harry Fox Agency, the record labels, and online distributors have long fought over what requires a mechanical and what falls under the compulsory. See the Section 115 hearing testimony.
We’ve seen some licensing problems with the online movie industry. Beyond the anti-trust suit against Movielink, see the Video Pipeline case, in which a licensed distributor of movie trailers was barred from putting those same trailers online.
Filed by Derek Slater at 7:13 pm under General news
1 Comment
Derek has posted one of the most accurate and succinct statements on this issue that I have seen. A lot of professionals have gotten mixed up when it comes to Section 109 and digitally delivered works. When works are offered for download, they are not being distributed; they are being offered for reproduction. When works are offered for streaming, they are not being distributed; they are being offered as public performances.
Despite Derek’s accurate explanation and admonition about the difference between a distribution and a public performance, I was amused to find one slip of the tongue: “distributing the movies via streams might implicate the public performance right.” This particular use of the term “distributing” was obviously meant in the broad sense of the term (“disseminating”?) and not in the Copyright Act’s sense of the “distribution right” which, as Derek points out, only applies to tangible copies.
This illustrates the fact that even persons well versed in copyright law have trouble speaking “in plain English” when the best term for general discourse may be a term that is narrowly defined under the Copyright Act.
The Ninth Circuit blurred this distinction when it declared in the Napster decision that the distribution right was implicated by p2p reproductions. While it is pretty obvious that the Court wasn’t thinking it through or referring back to the definition of the distribution right in Section 106(3) of the Copyright Act, which cannot possibly include p2p reproductions, its faux pas has contributed to the confusion.