Congressional Testimony: First Sale Under Title 17

Editor's Note: On June 2, 2014, John Villasenor testified before the House Committee on the Judiciary on the topic of copyright law as it relates to resales of digital content for the"Hearing: First Sale Under Title 17."

Good morning Chairman Coble, Ranking Member Nadler, Chairman Goodlatte, Ranking Member Conyers, and Members of the Subcommittee. Thank you very much for the opportunity to testify today regarding the first sale doctrine in U.S. copyright law.

I am a nonresident senior fellow in Governance Studies and the Center for Technology Innovation at the Brookings Institution. I am also a professor at UCLA, where I hold appointments in the Electrical Engineering Department and the Department of Public Policy. The views I am expressing here are my own, and do not necessarily represent those of the Brookings Institution or the University of California. Portions of my testimony today are adapted from an article I published last year in Competition Policy International Antitrust Chronicle.[1]

My testimony today can be summarized as follows: First, modification of U.S. copyright law to introduce a broad “digital first sale”[2] doctrine would lead to unintended consequences that would dramatically reduce the ability of content creators to be properly compensated for works sold digitally. If loans, sales, and other dispositions of such digital content could be made instantly, without the authorization of the copyright holder, and among parties who might be separated by thousands of miles, those dispositions would largely replace the market for initial sales.

Second, the question of digital first sale, as important as it has been, is becoming less so with each passing year. As licensing-based models continue to become more common, fewer creative works are distributed using sales that confer ownership over a particular digital copy of the content. And when there is no sale, the first sale doctrine does not apply. Instead, the permissible downstream uses of digital content in a license-based ecosystem are addressed through a combination of contract law and intellectual property law.

Many licenses today are overly complex and restrictive. Content providers should provide consumers with clearer disclosures regarding the permissible and prohibited uses of licensed content. Once consumers are better informed about license-based offerings, I am optimistic that market pressure will lead content providers to offer licenses that are more flexible, and that in some cases could permit dispositions of digital content analogous to those that have long been available to owners of non-digital content under the existing first sale doctrine.

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[1] John Villasenor, “Rethinking a Digital First Sale Doctrine in a Post-Kirtsaeng World: The Case for Caution,” Competition Policy International Antitrust Chronicle, May 2013, Vol. 2., available at  http://ssrn.com/abstract=2273022. Used with permission.

[2] As used herein, “digital first sale doctrine” refers to a hypothetically expanded 17 U.S.C. §109 that would allow for resales absent any physical transfer of an accompanying storage medium, without the authoriziation of the copyright holder. In addition, as used herein, “digital” refers to works conveyed to consumers through digital transmission, and not to digital works delivered in tangible form such as a music CD.

 

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