things to read

Two new volumes relating to intellectual property are now available.

1) The United States’ annual Special 301 report, a charade of evaluation of intellectual property enforcement, was released on May 1. (As I have written before, this process has no international validity.) For those interested, in this year’s report Canada has moved up one level on the scale of American disgrace; we are on the  ”Watch List” instead of our previous standing of “Priority Watch List.”

The American government is pleased with Canada’s Copyright Modernization Act (replete as it was with protection from circumvention of digital locks) and the introduction of legislation “to strengthen IPR enforcement, which included provisions that would provide ex officio authority to Canadian customs officials to seize pirated and counterfeit goods at the border (p.46)”. However, concerns still exist with respect to Canadian patenting practices, including “the impact of the heightened utility requirements for patents that Canadian courts have been adopting recently (p.46).” (I wrote about our courts’ reluctance to uphold a patent that did not live up to expectations; see here.)

2) Much more interesting is the release of a new book by University of Ottawa Press. The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law is available for purchase and for free download via a Creative Commons license. Michael Geist served as editor; he envisioned the collection and ensured its realization. The book features Geist’s work along with contributions from thirteen other scholars, including me (see here for some details). It was a pleasure to participate in such a well-executed project. Congratulations must go to Geist and his entire team of students, editors, reviewers and the staff at University of Ottawa Press.

international publishers v. Indian photocopying

InfoJustice.org posted a brief note about a lawsuit underway in India; one which pits international publishers against a photocopy service at Delhi University. The complaint, filed in 2012 and now being heard in the courts, concerns the compilation and distribution of course packs. “This lawsuit sent shock waves across the academic community, leading more than 300 authors and academics including famed Nobel laureate Professor Amartya Sen to protest this copyright aggression in an open letter to publishers.”

In “Why students need the right to copy,” published by The Hindu, Shamnad Basheer writes: “What makes the lawsuit particularly egregious is the fact that publishers are effectively seeking an outright ban on all course packs, even those that extract and use no more than 10 per cent of the copyrighted book.” Basheer, a prominent intellectual property scholar, is keenly aware that such use would be considered legitimate in the United States and that Indian law offers even wider latitude for unauthorized uses of copyrighted works for educational needs:

… unlike the U.S., [Indian law] embodies a separate exception, under which it is perfectly legal to reproduce any copyrighted work during the course of educational instruction. These exceptions reflect a clear Parliamentary intention to exempt core aspects of education from the private sphere of copyright infringement. Eviscerating these exceptions at the behest of publishers will strike at the very heart of our constitutional guarantee of a fundamental right to education for all.

Noting that the publishers have dangled the offer of collective licensing to Indian educational institutions, Basheer is emphatic that this is a bad idea. He points to Canadian misfortune in this area; he indicates that the costs and administrative burdens inherent to licensing are unnecessary when a suitable educational exemption is available under the law.

Basheer also comments upon the paucity of material available for the Indian market:

That a majority of educational textbooks are priced above the affordability range of an average Indian student is well known. A recent empirical study done by me along with my students reveals that a vast majority of popular legal and social science titles have no corresponding Indian editions and need to be purchased at rates equivalent to or higher than in the West… (emphasis mine)

The Indian court is aware of the public interest implicated by this case and has permitted a students’ association to be party to the suit. The Association of Students for Equitable Access to Knowledge (ASEAK) expressed their concerns to Oxford University Press, Cambridge University Press and Taylor & Francis, and conveyed the open letter. The displeasure of 309 members from the international academic community, including the 33 authors whose works were allegedly infringed, is plain:

As authors and educators, we would like to place on record our distress at this act of the publishers, as we recognise the fact that in a country like India marked by sharp economic inequalities, it is often not possible for every student to obtain a personal copy of a book. …  In that situation the next best thing would have been for multiple copies of the book to be available in the library so that students are able to access these books without any difculty. But given the constraints that libraries in India work with, they may only have a single copy of a book and in many instances, none at all. The reason we make course packs is to ensure that students have access to the most relevant portions of the book without which we would be seriously compromising their education.

The argument made by publishers for strong copyright enforcement is based on presumed losses caused to them. Given the pricing strategy followed by publishers, we do not believe that students are the primary market for these books and hence it would be disingenuous to presume that every photocopied article or book would be a lost sale.

Moreover, the academic members question the claim that academic publishing will cease without publishers’ investments:

This claim hides the fact that most academics are able to write books because they are supported by public infrastructure and money by virtue of being employed by universities or research centers. Academic writers are paid salaries and make their living from the university system, which in India is still largely government subsidized. … [In effect] the profits of academic publishing houses are under-written by tax-payers’ money.

The students also submitted other letters of concern. Amartya Sen appealed to publishers’ consideration of the importance of education and pragmatically suggested this suit is not in their own long-term interests:

…. In fact, the introduction the students get through these course packs must tend to be favorable to the sale of books in the future when the existence and the quality of arguments presented in particular books become more familiar to the next generation of earning adults…

Perhaps the best argument for throwing out the case is from another plaintiff-without-consent, Raju Ramachandran.  He modestly describes himself as a lawyer (he is a senior advocate with the Supreme Court of India):

 I am of the clear view that photocopying of [my] essay for educational use would be ‘fair use’ and would also fall under the educational exception in our copyright law. I would also like to make my position as an author very clear that nothing can be more fulfilling for me than the fact that the student community would be reading and discussing my views. I would be deeply disappointed if students are not able to access and debate my views only because they are unable to buy the book in which my essay is printed.

The case will continue on May 8, 2013.

from Braille to Mehta

“Access to communication in the widest sense is access to knowledge, and that is vitally important for us if we are not to go on being despised or patronized by condescending sighted people. We do not need pity, nor do we need to be reminded we are vulnerable. We must be treated as equals – and communication is the way this can be brought about.”
- Louis Braille (1809-1852), 1841 — quoted by Clifford E. Olstrom – Undaunted by Blindness.

“In India, one of the poorest countries the world has ever known, the lot of the blind was to beg with a walking stick in one hand and an alms bowl in the other. Hindus consider blindness a punishment for sins committed in a previous incarnation. But my father, a doctor, tried to fight the superstition and give me an education, like his other children, so that I could become, as he used to say, a self-supporting citizen of the world.”
- Ved Mehta (1934-), 1985  Sightless in a Sighted World.

James Love, writing for Knowledge Ecology International, gives the disappointing news that even the modest progress made in reaching a treaty for better access to copyrighted materials for the blind, is now a thing of the past. Publishers’ groups are “demanding that the Obama Administration push new global standards for technical protection measures, strip the treaty text of any reference to fair use and fair dealing, and impose new financial liabilities on libraries that serve blind people.” Under these terms, such a treaty will hardly be worth the paper it is written on.

No-one ought deny publishers’ legitimate market growth or expansion, but the publishing community has long since acknowledged that they have little interest in the small market of materials for the visually disabled. To put it crassly, there are not enough wealthy blind people out there. According to the International Agency for the Prevention of Blindness (IAPB), which works in concert with the World Health Organization, “… about 285 million people are visually impaired worldwide: 39 million are blind and 246 million have low vision (severe or moderate visual impairment).”  And, “about 90% of the world’s visually impaired people live in developing countries.”

Ved Mehta is an iconic writer from India. Like my parents, he straddled the end of the British Raj and the emergence of a new India (with all the bloodletting of Britain’s legacy known as Partition.) That he achieved acclaim in the West made his story that much more compelling to those of us who encountered his work before Canada was the multicultural haven we speak of today. Reading the autobiographical entry from his official website though, I could not help but think something was missing:

Before I turned five, [my father] sent me to what he had heard was the country’s best school for the blind, in Bombay, 1,300 miles away from our home, in the Punjab. It proved to be, like the score or so of other such schools in the country, an orphanage cum asylum. I spent a total of three years there, sick a good part of the time, and then was returned home because the school had nothing more to teach me.

The story as told to me by my mother was that Ved Mehta’s father insisted on removing him from that school, or possibly an earlier school. Reason being, the students were being taught only to weave rattan furniture for prospective means of livelihood. Visiting his son, Dr. Mehta saw the reality of a weaver’s life: calloused fingertips. His son would not be able to read Braille. And so ended that assay into schooling, available in India. Later Mehta was accepted into a school for the blind in the United States:

My father raised the necessary money, and I flew there alone when I was 15. I was finally on the road to a formal education. In due course, with the help of many scholarships, I earned a B.A. from Pomona College, in California, a B.A. from Balliol College, Oxford, and an M.A. from Harvard. While I was still a student, I started writing for The New Yorker.

Mehta describes the Social Adjustment program at his school:

“To be blind is an uphill struggle,” Mr. Chiles observed … He was almost totally blind himself. “You’ve got to sell yourself to every sighted person. You’ve got to show him that you can do things that he thinks you can’t possibly do. … Anything you do wrong in the sighted world, … like dressing untidily or putting your elbows on the table while eating, sighted people will chalk up to your blindness, even if most of them commit those sins themselves. They will call you poor wretches, feel sorry for you, and, to my way of thinking, commit the worst sin of all; excuse it on the ground that you’re blind.”

Like Louis Braille, Mehta had devoted parents who did all that was humanly possible to ensure that their son had a fair chance in life. But such families are rare in developing countries. When a family itself is struggling, the disabled inevitably is sidelined. Moreover, the social stigma of disability is not easily overcome under such circumstances.

Imagining the challenges of the disabled in a first world country is daunting enough; to stretch one’s imagination to disability in developing countries seems an impossibility. At least so for the publishing sector.

Update — April 23: The Huffington Post has published a detailed report by James Love on the degradation of the treaty. Love also sheds greater light on why the MPAA has become such a vociferous opponent of the treaty, even after having ensured that audio visual works were removed from the scope (thereby excluding the deaf and hard-of-hearing from any benefit.)

Update — April 24:  The Huffington Post has published a rebuttal from Chris Dodd, Chairman and CEO, Motion Picture Association of America. In contrast to Love’s detailed analysis, Dodd confines his remarks to speaking in generalities. According to Dodd, some “… groups have advocated for the inclusion of certain provisions that would establish lower thresholds for copyright protection and weaken certain means used for protecting copyright works.”  As Love details, the World Blind Union and those who actively believe in this treaty, wished for a treaty that “does not change the larger, global copyright system.”  Whereas the publishing community has sought to instill more complexity in the treatment of the exceptions necessary for a better sharing of copyrighted works, for visually disabled people around the world.  Which is (was?) the point of the treaty itself.

Kirtsaeng – Part III

In Part I and Part II of my Kirtsaeng saga, I detailed an American Supreme Court decision that addressed control of copyrighted works, after works have been transacted in sale according to the law. Two clauses of the American Copyright Act were in opposition; a right of control, to ban importation of copyrighted works acquired outside the United States collided with the limitation of control imposed by the doctrine of first sale. The majority opinion, written by Justice Breyer, decreed that first sale applies if the copies were legitimately produced and sold, irrespective of geographical consideration. In this case, the textbooks entering the United States were made and purchased in accordance with the publisher’s subsidiary organization for production and sales in Asia.

The importation ban allows publishers to more easily segment their markets. Similar books may be sold in different regions at different prices, without fear that cheaper copies would be resold in the United States undermining the American market. Publishers price their works according to the constraints of their target markets; higher-priced American books simply will not sell in lower-income countries. Thus those books are produced with lesser quality (i.e. cheaper paper, no colour images, etc. ) and priced with an eye to cost recovery. Which means the revenue from foreign market productions does not serve to reduce the costs incurred at home.

According to the brief submitted by Wiley (and similar language is found in the brief submitted by the Association of American Publishers) the development costs of a textbook are significant and are paid for by domestic market sales. If domestic wholesalers (i.e. campus bookstores or Costco) could import cheaper books and resell them, publishers’ revenues will severely decline, leaving little to fund the production of new books. “The likely result of Kirtsaeng’s proposal would be reduced access to educational materials around the world, with little corresponding benefit for American students (Wiley, p.49).”

Which raises the question of why bother to sell to foreign markets at all? If the sales only cover printing and distribution there seems little incentive to supply to those markets. A possible answer is that publishers are concerned with providing access to “educational materials around the world.” But altruism gives way to pragmatism; if consumers cannot afford the high-priced American textbook, piracy is likely to occur. And Wiley notes that “‘governments have been more responsive in dealing with piracy cases when textbooks are priced at a level that local students can afford.’ (Wiley, p.47).”

In making their argument, Wiley makes constant reference to a study by the Governmental Accountability Office (College Textbooks – Enhanced Offerings Appear to Drive Recent Price Increases, 2005). Wiley does not endorse all the findings and points to concerns expressed by the Association of American Publishers but: “nonetheless believes that the report’s summary of the many factors that bear on pricing in different countries provides useful context for the Court (Wiley, p.7).” In fact, the Association disagreed with the study almost in its entirety, objecting to the data used, the methodology, and the tone of the report (GAO 2005, p.38-43). Their concerns were addressed by the authors of the report, who emphasized the objective of the study was not to assign blame to publishers but to better understand how publishing practices (and the factors influencing those practices) affect the cost of college textbooks (GAO 2005, p.26-28).

The data used within the report spanned 1986-2004 and thus does not serve to reflect pricing today. That said, the principle reason cited for the heightened expense of books is the need to provide more than just a textbook (this might still play a part in pricing today and invites further study):

While many factors affect textbook pricing, the increasing costs associated with developing products designed to accompany textbooks, such as CDROMs and other instructional supplements, best explain price increases in recent years. Publishers say they have increased investments in developing supplements in response to demand from instructors (GAO 2005, p.i).

Returning to the Kirtsaeng dilemma, the challenges for the publishers to produce quality textbooks at home and abroad, while acknowledged by Justice Breyer, did not shift the focus of the case. He writes:

Wiley and the dissent claim that a nongeographical interpretation will make it difficult, perhaps impossible, for publishers (and other copyright holders) to divide foreign and domestic markets. We concede that is so. A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights (p.31).

Breyer even goes so far as to indicate that giving the publishing sector the legislative power to divide markets would bring in an undercurrent of antitrust behavior:

We have found no precedent suggesting a legal preference for interpretations of copyright statutes that would provide for market divisions. … To the contrary, Congress enacted a copyright law that (through the “first sale” doctrine) limits copyright holders’ability to divide domestic markets. And that limitation is consistent with antitrust laws that ordinarily forbid market divisions…. Whether copyright owners should, or should not, have more than ordinary commercial power to divide international markets is a matter for Congress to decide (p.32)

And that is where American copyright debate is heading. The last significant changes to the American regime of copyright took place in 1998; with the Digital Millennium Copyright Act and the Copyright Term Extension Act. The last revision of the entire Act was in 1976. Maria Pallante (U.S. Registrar of Copyright) is calling for a complete overhaul of the law; Mike Masnick, writing for TechDirt on 18 March 2013, gave a comprehensive review and analysis of her early proposals. No doubt lobbyists of all stripes are gearing up for debate; the publishing community is sure to seek modification of first sale.

In the meantime, questions of importation are part and parcel of looming international trade agreements. Canada is eager to join the TransPacific Partnership Agreement (TPP), despite having no recourse to negotiating any of its terms. In November 2011, members of the Program on Information Justice and Intellectual Property provided a sobering analysis of the agreement from the perspective of the public interest. On the matter of market segmentation, the TPP would remove the flexibility of nations to import copyrighted works from the supplier (and country) of their choice, a flexibility that benefits consumers and is consistent with existing World Trade Organization regulations.

interrupting Kirtsaeng

My planned third and final installment of Kirtsaeng must wait a little longer; Access Copyright is once again trying to roll back the interpretation of fair dealing fostered in Canada by both the Supreme Court of Canada and the Government of Canada. This progressive interpretation took shape slowly, with Court decisions spanning 2002-2012  and Government efforts at amendment benefiting from more than ten years of deliberation. Both bodies took measured steps that recognize the importance of maintaining copyright’s limits. Access Copyright is setting its sights on the educational community that took guidance from the government and the Court. Access Copyright states:

Canada’s writers and publishers take a stand against damaging interpretations of fair dealing by the education sector.  Access Copyright is taking legal action—on three fronts. The actions focus on York University, ministries of education, school boards and post‐secondary institutions that copy—and promote the copying—of copyright‐protected materials without a licence.

In the available statement of claim, Access Copyright identifies five members of York University as having:

…  reproduced, in whole or substantial part, and authorized the reproduction by students and third-party copyright-shops, in whole or substantial part, of more than one copyright-protected work within the Repertoire. … Each separate act of reproduction … has been undertaken without the consent or permission of the plaintiff…

(According to the statement of claim, details are available in Schedule B; this schedule is not posted online.)

Access Copyright places the blame for the individuals’ alleged infringement upon York University’s Fair Dealing Guidelines:

The arbitrary and purely mathematical extent and systematic, recurring nature of the reproduction and dealing with copyright-protected works authorized and encouraged by such guidelines is not encompassed within the fair dealing exemption under the Copyright Act.

The Copyright Act does not stipulate precise conditions of fair dealing for the reason that fair dealing must meet the flexibility inherent to the purposes it serves (research, private study, education, parody, satire, criticism/review, and news reporting). York University, like many educational institutions, has a conservative framework of what is an allowable amount and takes pains to explain the fullness of a decision of fair dealing. Drawing from CCH Canadian, York lays out questions to be asked and emphasizes: “The circumstances that qualify within the Fair Dealing Exception may vary from case to case.”

Michael Geist describes Access Copyright’s behaviour for what it is: a “desperate declaration of war against fair dealing”. He reminds us that Access Copyright’s last effort to challenge fair dealing in educational institutions resulted in failure (decided by the Supreme Court in July 2012, commentary available from here). Recycling failed arguments hardly seems like good strategy. But Access Copyright reveals an added objective, surveillance and control of all copying within post-secondary institutions:

In any event, such guidelines, are incapable of any effective, reliable or consistent enforcement by the defendant. All such purported “fair dealing” limits have been and will be regularly exceeded by the acts of reproduction and authorized reproduction by the Educators and the defendant’s students.

To suggest that students regularly exceed the limits of fair dealing is an odd tactic. The majority of fair dealing’s purposes are tasks implicitly and explicitly carried out every day in the course of educating oneself. And fair dealing is at its strongest in the hands of an individual — far from the modest 10% allowance of a work permitted in the guidelines, entire works are conceivably eligible for reproduction when a student or researcher chooses to delve into a subject. And when operating with supplemental material, the Supreme Court decision of last summer offers teachers strong support for standing in the shoes of their students. Until further details of this case come to light, nothing more can be said about the merits (or lack thereof) of Access Copyright’s claim.

All that is evident now is Access Copyright’s willingness to distort the operation of copyright to give their grievance a greater sense of pathos: “It’s harmful to arbitrarily take materials for free, without permission, without respect or regard for the sustainability of content essential for students and teachers alike.” Fair dealing is precisely the taking of materials for free, without permission. It ensures that copyright does not devolve into an instrument of absolute control, with the concomitant loss of creativity that would follow. And to suggest that fair dealing is responsible for the lack of “sustainability of content essential for students and teachers alike” ignores the behaviour of the publishing sector itself.

Which leads me back to Kirtsaeng. Next time.

Update – April 11: Howard Knopf has all the initial documents, including Schedule B, available at Excess Copyright.  But Schedule B only lists the works copied, no detail is provided as to what role those works played in the learning activity between the teachers and students.  Without more information, it is not possible to judge whether copying the works was infringement or fail dealing.

Kirtsaeng – Part II

The potential consequences of a geographical interpretation of first sale were what engaged me in my last post. In the Kirtsaeng decision, Justice Stephen Breyer gives due consideration to those risks and writes: “Neither Wiley nor any of its many amici deny that a geographical interpretation could bring about these ‘horribles’—at least in principle. Rather, Wiley essentially says that the list is artificially invented.”

Breyer limits his reference to that single word, but commentators (listed in the last post) all made reference to a “parade of horribles,” each being careful to make the reference in quotation marks. A casual Canadian reader, while aware that the phrase must have some distinctive meaning, is lost as to what it actually is. Indeed to anyone from Vancouver, “parade of horribles” conjures up images of the Parade of Lost Souls, of Commercial Drive fame, where Halloween revellers in ghoulish costumes happily followed the parade’s motto: “Honour the Dead and Wake the Living” (which may not be entirely inappropriate). But clearly something else was to be inferred here.

In an article dated to 1 July 2012 Ben Zimmer, writing for the Boston Globe, explains that the expression is rooted in nineteenth century satires of seventeenth century military parades in New England. Later adopted as a “legal-world insult,” the expression is used to “dismiss opponents’ concerns about a ruling’s negative effects.” Zimmer identifies an early proponent of the phrase as Thomas Reed Powell. Born in 1880, Powell attended Harvard Law School and went on to become a prominent legal observer. “One of his favorite expressions was ‘parade of imaginary horribles,’ which appeared in his writing as early as 1921.”  Zimmer also observes:

The expression, and the scorn for the opposition that it carries, are holding strong in the legal world, much to the chagrin of Justice Antonin Scalia, the Supreme Court’s foremost language kvetcher. In a 1990 law review article, Scalia listed “the familiar parade of horribles” as one of the “canards of contemporary legal analysis.” More often than not, Scalia feels, countering the doubts of dissenters as a “parade of horribles” is lazy reasoning: It’s still up to the writer of an opinion to explain “why all of the untoward results asserted to follow from the principle the court is adopting indeed do not follow.”

Returning to the case at hand, the phrase appears in the brief representing the position of Wiley. Their last argument calling for a geographically-based reading of first sale is titled: “Kirtsaeng’s Parade of Horribles is Speculative and Unpersuasive.” According to the publisher, “Kirtsaeng’s arguments depend on his assumption that the copyright owner could impose restrictions on downstream purchasers even after having authorized the sale of a particular copy in the United States.” Kirtsaeng’s argument (the brief is here) is that a geographical reading of first sale renders copyright owners with the capability of imposing “restrictions on downstream purchasers” – that is the crux of the dispute.

In any case, parade of horribles next appears in the dissent included with the majority opinion. Penned* by Justice Ruth Ginsburg, she writes: “The Court’s parade of horribles, however, is largely imaginary. Congress’ objective in enacting [the] importation prohibition can be honored without generating the absurd consequences hypothesized in the Court’s opinion.” In Part V-B-1 of the dissent, Ginsburg argues that “Copyright law and precedent … erect barriers to the anticipated horribles.” As illustration of how the horribles will not come to pass, seeking permission, implied license and fair use are all offered. But the principle argument by the publisher and echoed by Ginsberg, was that no such suits were likely to happen. From the dissent:

Most telling in this regard, no court, it appears, has been called upon to answer any of the Court’s “horribles” in an actual case. Three decades have passed since a federal court first published an opinion reading [first sale] as applicable exclusively to copies made in the United States. … Yet Kirtsaeng and his supporting amici cite not a single case in which the owner of a consumer good authorized for sale in the United States has been sued for copyright infringement after reselling the item or giving it away as a gift or to charity. The absence of such lawsuits is unsurprising. Routinely suing one’s customers is hardly a best business practice.

However, Breyer reminds all that “the law has not been long settled on this matter.” A geographical interpretation of first sale achieved favour at a Court of Appeal only through the Kirtsaeng/Wiley dispute. Meaning support from a higher court is less than two years old. Breyer writes:

The fact that harm has proved limited so far may simply reflect the reluctance of copyright holders so far to assert geographically based resale rights. They may decide differently if the law is clarified in their favor. … Thus, we believe that the practical problems that petitioner and his amici have described are too serious, too extensive, and too likely to come about for us to dismiss them as insignificant.

Between Wiley and Kirtsaeng, this case was fought on two fronts. For Kirtsaeng and its amici (friends of the court), the issue was the dilution of the limit of first sale. In response to that risk, libraries, museums, advocacy groups and many more parties offered articulate and well-reasoned arguments. Arguments not easily rejected by a “canard of legal analysis.” But from the perspective of Wiley and its supporters, the issue was not the role of first sale, but another section of Title 17, one which prohibits unauthorized imports. §106(a)(1) states “Importation into the United States, without the authority of the owner of copyright under this title, of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies or phonorecords … .”

For copyright owners, such a prohibition provides a mechanism by which markets can be divided into domestic and international segments, with varying products and pricing as desired by the copyright holder. Wiley argued that allowing first sale to apply to copies made outside the United States deprives the prohibition of meaningful effect. And that this will have negative consequences for publishers:

… there is a reason why Congress chose in 1976 to permit segmentation of international markets: It is both common practice and economically efficient for companies to sell their products in different countries at different prices, and in different forms, based on differing conditions in the relevant marketplaces. The market for college textbooks provides an excellent example.

With the disparity of income levels between the United States and developing nations, Wiley states:

If publishers were to price these textbooks at the same level as the U.S. editions, then the result would either be less widespread access to quality educational materials, or at least fewer legitimate copies of the textbooks as consumers unable to afford them turn instead to piracy.

To address market segmentation, my Kirtsaeng saga must run to a third post.

* For those curious as to how the Justices aligned on this case, the syllabus (headnote) gives the answer: “Breyer,  J., delivered the opinion of the Court, in which Roberts, C. J., and Thomas, Alito, Sotomayor, and Kagan, JJ., joined. Kagan, J., filed a concurring opinion, in which Alito, J., joined. Ginsburg, J., filed a dissenting opinion, in which Kennedy, J., joined, and in which Scalia, J., joined except as to Parts III and V–B–1.”

Update – April 2, 2013:  CBC describes the defeat of first sale in a New York District Court. ReDigi, an online market place for used iTunes songs, was deemed in violation of copyright. The court denied ReDigi’s reliance on first sale in part because of first sale’s seeming ineligibility in the digital sphere. (Fortunately, the Canadian Supreme Court insists that copyright be read in a technologically neutral fashion.) While the circumstances of this case differ from Kirtsaeng, a common theme is: should copyright owners have the means to control downstream uses of their works after receiving compensation for a sale conducted in accordance with copyright law?

Kirtsaeng – Part I

Last week the United States Supreme Court handed down its decision on Kirtsaeng v. Wiley, a decision favourable to libraries, consumers, and, notably, capitalists. At issue was a foundational element of market operations: the right to resell property free of constraint by the original owner of the property. In this case, a foreign graduate student attending an American university arranged for the lawful purchase of textbooks in his home country, which he then resold in the United States. The publisher claimed infringement.

The case makes for good reading, not only as it illustrates (and rebuts) a disturbing effort on the part of an academic press to claim larger rights than copyright actually affords, but also because of the elegance of the language of rebuttal. The majority opinion, written by Justice Stephen Breyer, leaves no doubt that the argument of the publisher is ill-conceived. Breyer’s erudite prose also raises the story to something far more enjoyable than merely bewildering references to sections and subsections.

The grant of copyright under Title 17 (the United States’ Copyright Act) includes an extensive list of exclusive rights reserved for copyright owners, rights that allow for significant control of copyrighted work and subsequent copies. However, those rights are subject to a few limitations; one such limitation being that of First Sale: “the owner of a particular copy or phonorecord lawfully made under this title … is entitled, without the authority of the copyright owner, to sell or oth­erwise dispose of the possession of that copy or phonorecord.”

For a body of law that involves much arcane language, “first sale” is refreshingly transparent. With the proviso that the property transferred was lawfully made, “first sale” literally indicates where a copyright owner’s control stops: at the conclusion of the first transfer of the property. Clearly, pirated copies do not enjoy the shelter of first sale. But the property under question was not an outcome of piracy; these books were produced in accordance with the publisher’s wishes, by the publisher’s subsidiary organization for the Asian market.

The case hinged upon the meaning of five words: “lawfully made under this title”. The publisher asserted that the limitation of first sale did not apply to copies manufactured outside the United States. But as a significant amount of book printing is carried out overseas, such an interpretation has ramifications far beyond this case.

Imagine a not improbable scenario: a consumer purchases a new book in the United States (unaware that it was manufactured on foreign soil) and later gives away some books, including the foreign production, to a charitable organization collecting books, toys and other household items. A used bookstore then acquires the book from the charity and sells it to another consumer who eventually donates the book to a library. Not surprisingly, the library loans the book to its patrons. If the location of the book’s manufacture becomes the determinant of first sale, all actions after the first purchase become suspect.

To any ordinary individual, it is beyond belief that the United States Congress intended this outcome. Yet, the publisher’s interpretation was shared by lower Courts and the United States Solicitor General. Breyer acknowledges those views and then writes:

The geographical interpretation, however, bristles with linguistic difficulties. It gives the word “lawfully” little, if any, linguistic work to do. (How could a book be unlawfully “made under this title”?) It imports geography into a statutory provision that says nothing explicitly about it.

Breyer spends considerable time exploring the meaning of those five words, dryly observing: “…  neither ‘under’ nor any other word in the phrase means ‘where’”. He determines that “lawfully made under this title” means that to enjoy the limit of first sale, the manufacture must have met the requirements of American law. In other words, when a copyright holder authorizes the foreign production, location does not render first sale inapplicable. Alerting readers to the entirety of his analysis, Breyer writes: “We believe that geographical interpretations create more linguistic problems than they resolve. And considerations of simplicity and coherence tip the purely linguistic balance in Kirtsaeng’s, nongeographical, favor.”

Breyer then examines the past and present language of the exception of first sale, the common law history of first sale, and, the challenge a geographic reading of first sale would pose to other conditions within Title 17 that specifically reject geography (i.e.,“§104 of the Act itself says that works ‘subject to protection under this title’ include unpublished works ‘without regard to the nationality or domicile of the author,’…”). Following the linguistic and legal analyses, Breyer considers the social practices that have been built upon the exception of first sale. With reference to a myriad of briefs submitted to the Court, Breyer uncovers a range of activities taken for granted today that would have been cloaked in fear and uncertainty if the publisher’s arguments had prevailed.

Briefly, library collections in the United States contain some 200 million foreign produced works; “How are the libraries to obtain permission to distribute these millions of books? How can they find, say, the copyright owner of a foreign book, perhaps written decades ago?” Art museums would be at risk if they choose to display foreign-made art, i.e. the 20^th century works of René Magritte, Henry Matisse and Pablo Picasso. Even the works of American Cy Twombly would be affected, given that Twombly took up residence in Italy in 1957. And used-book dealers have  “operated … for centuries under the assumption that the ‘first sale’ doctrine applies.”

Libraries, museums and used-bookstores are at the forefront of the dissemination necessary for copyright to live up to its American constitutional mandate of furthering the progress of the arts and sciences. To impede such accepted practices of operation is troubling, to say the least. And yet, that is only one aspect of the problems created by a geographical reading of first sale. The very functioning of a consumer culture is at risk. A truly fearsome prospect was raised by technology companies and retailers; a loss of first sale means potential disruption to the resale of any consumer item that has copyrighted material within it and is manufactured abroad. At the top of the list were items which rely on software, including automobiles, mobile phones, tablets and computers. Yet, even this list is modest – the reality is that “over $2.3 trillion worth of foreign goods were imported in 2011.” Given that packaging materials contain copyrighted work, the potential reach of copyright holders into legitimate market operations is almost beyond comprehension.

My next post will continue this story. Included are the publisher’s efforts to paint these potential consequences as merely a “parade of horribles”, market segmentation, and how Canada might be affected should the site of production become a consideration in the handling of lawfully made products. In the meantime, the 6-3 opinion, delivered by Justice Stephen Breyer is here; Jennifer Howard covered the story for The Chronicle of Higher Education, and detailed analyses are available from Kenneth Crewes, Director of the Copyright Advisory Office for Columbia Law School, Howard Knopf of Excess Copyright, and Kevin Smith, Scholarly Communications Officer for Duke University.

disingenuous

On Thursday, March 7th, Michael Geist described a new copyright policy at the National Post – that if a reader highlighted a portion of text with a presumed intention to copy and paste it, a pop-up window requesting payment of $150 appeared. That this pop-up was encountered while reading the work of Chris Selley, who routinely excerpts material from other news organizations in order to provide readers with a comprehensive view of Canada’s leading editorials, made this doubly perplexing. Geist noted that the National Post uses the services of iCopyright, which extols a very restrictive interpretation of fair use and fair dealing.

On Friday, Leigh Beadon, a former freelance journalist for the National Post  now writing for Tech Dirt, gave further analysis of the hypocrisy of an institution whose raison d’etre (news reporting) is shielded via fair dealing, and yet presumably denies that fair dealing is available to all Canadians. Beadon later updated the post to indicate that the pop-up activity has ceased (for now).

Beadon describes iCopyright’s interpretation of fair use/fair dealing as “a masterpiece of menacing disingenuousness.” In no uncertain terms, Geist and Beadon debunk iCopyright’s efforts to minimize the applicability of fair dealing; I would add but one more peculiarity about iCopyright’s interpretation. In its checklist of factors which affect the legitimacy of fair dealing is this astounding condition: “Is the work that was excerpted highly creative?”

It needs no mention that creativity is a term fraught with uncertainty; I doubt lawyers or judges would come to agreement on what it means, let alone individual Canadians. But it hardly matters, as questions of creativity are irrelevant. Fair dealing is an exception to copyright. If the material in question is from copyrighted work, fair dealing is an option. If the originating material is not under copyright, then we may all do what we please with the work in its entirety—no exceptions of any kind required. Fair dealing is resolved on issues such as how the work was used, to what purpose and in what setting. Whether the originating material came from a masterpiece of artistic interpretation or a banal and insipid advertisement has no bearing on fair dealing.

Canadian copyright shines

As readers may know, each year the Office of the United States Trade Representative (USTR) compiles assessments of intellectual property regimes around the world and places nations found lacking in their protection of (American) intellectual property on a ’301′ list of varying degrees of disgrace. This process of judging nations is of questionable objectivity and has no international validity. Canada, having cemented free trade agreements with the United States decades earlier, can ignore its annual disgrace. Whereas those countries who sought trade agreements in recent years, or seek aid from the United States, have less independence with their domestic intellectual property laws. The USTR does not let niceties such as compassion enter discussion; as Michael Geist wrote last year:

…  Perhaps the most shameful inclusion in this year’s report are a series of countries whose primary fault is being poor.  For example, the list includes Guatemala, a small country the size of Tennessee with a per capita GDP of just  over $5,000. It is coming out of an economic depression that had a severe impact on rural income. … In response to past pressures and the conclusion of a trade agreement, Guatemala amended its copyright laws, toughened penalties, created a special IP prosecutor, and increased IP enforcement within the government. Yet the USTR included it with the following comment: ‘However, pirated and counterfeit goods continue to be widely available in Guatemala, and enforcement efforts are hampered by limited resources and the need for better coordination among all enforcement agencies.’  Indeed, there is no obvious reason for inclusion on the Special 301 list other than an attempt to lobby a country that ranks 123rd worldwide in per capita GDP to spend even more money enforcing US intellectual property rights rather than on education, health care or infrastructure, the sorts of expenditures that might improve the country’s overall economy and ultimately lead to reduced rates of infringement.

The Program on Information Justice and Intellectual Property (PIJIP) at American University’s Washington College of Law submitted comments upon the 2013 301 process, reminding the USTR that by their own language in the Trans-Pacific Partnership talks: “A robust copyright framework ensures that authors and creators are respected, investments (both intellectual and financial) are promoted, that limitations and exceptions provide an appropriate balance, and that enforcement measures are effective (p.4).”

PIJIP proposes, “the 301 Process should examine limitations and exceptions just as it does other aspects of foreign law. Again, as emphasized by the TPP: “An important part of the copyright ecosystem is the limitations or exceptions placed on the exercise of exclusive rights in certain circumstances. In the United States, for example, consumers and businesses rely on a range of exceptions and limitations, such as fair use, in their businesses and daily lives.” As such, the 301 report should also identify best practices which “reflect the U.S. commitment to balance and describe the benefits of flexible limitations and exceptions similar to U.S. fair use (p.5).”

Enter Canada. Of the ten practices identified under Copyright in the Digital Age and  Remedies and Enforcement (pages 6 and 7), with reference to the amendments implemented in Bill C-11, Canada serves as an example for six practices:

Copyright in the Digital Environment

• Adoption of “notice and notice” systems for limiting ISP liability that do not rely on censorship of online material without a court order, including in Chile and Canada.
  
• Implementing open ended, flexible exceptions that can adapt to technology and use changes, including in Korea, Israel, Philippines, and Malaysia, and are under consideration in countries including Australia.
  
• Offering flexible and open ended limitations and exceptions to liability [such as in Canada].
  
• Protecting free expression by promoting exceptions to copyright for non-commercial user-generated content, such as in Canada.
  
• Promoting exceptions to copyright for temporary reproductions for technological purposes (e.g. cache and RAM copies on internet), such as in Canada.
  
• Encouraging protections for cross border sharing of copyrighted works created under an exception for visually impaired, as proposed by the World Blind Union.

Remedies and Enforcement

• Limiting criminal remedies to infringing conduct that is both willful, for profit and on a commercial scale as is proposed for the U.S. under the Aaron Swartz Act and as exist in Canada.
• Promoting restrictions on damages to ensure proportionality to harm to rights owner, such as in Canada.
  
• Promoting safeguards on internet enforcement policies to avoid threats to free expression, business innovation and free trade. 
• Promoting explicit human rights checks and balances on intellectual property enforcement measures, such as would be required under the U.S. due process guarantees.

PIJIP took the novel step of citing countries lacking in due attention to limitations and exceptions, and proposed that the USTR should do the same. Canada made an appearance on this list as well; fortunately, we do not have too much to fix:

The United States should be concerned that Canada’s exception for the incidental inclusion of a work in other work does not protect deliberate incidental inclusion. Canada should be applauded for its recent court decisions that have made the interpretation of their fair dealing clause much more flexible and also for its new and innovative copyright reform that has expanded users rights and protections (p.12).

PIJIPs comments are supported by a number of individuals and organizations including Electronic Frontier Foundation and Public Knowledge.

the bad, the good and the expensive

A persistent cold has sidelined me for a few days; reading is the silver lining.

the bad

InfoJustice’s latest bulletin provides details of Eli Lilly’s challenge to Canada’s patenting system. Eli Lilly’s patent for Strattera, a drug used to treat ADHD, was invalidated by Canadian courts on the grounds that the drug did not live up to expectations. Eli Lilly is pressing their claim via NAFTA, which allows multinational corporations to seek compensation from Canadian taxpayers.

“Invention” is defined as “any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter.”  Eli Lilly complains  that:

In a series of decisions issued since 2005, the Federal Court of Canada and the Federal Court of Appeal have created a new judicial doctrine whereby utility is assessed not by reference to the requirement in the Patent Act that an invention be “useful”, but rather against the “promise” that the courts derive from the patent specification. This nonstatutory “promise doctrine” is not applied in any other jurisdiction in the world.

If the Federal Courts do not construe a promise from the patent, the statutory requirement for utility that historically required only a “scintilla of utility” applies. However, if the Federal Courts derive a “promise” from the patent specification (for example, to treat a human disease with fewer side effects) then utility is measured against that promise, and the patentee is required to prove that it had demonstrated or soundly predicted the promised result as of the date the patent was filed (paras 37-38).

Eli Lilly insists that such a standard violates Canada’s international obligations and creates a climate of “uncertainty and unpredictability”:

A patentee cannot know how the promise will be construed by the Federal Courts. Some Justices have looked only to the claims to derive the promise, other Justices have derived a promise from statements made within the patent disclosure, while others have “implied” a promise from the nature of the disease treated by the invention (para 43).

While the company laments the seeming capriciousness of our Judges, readers are likely to understand that different drugs in different circumstances may very well entail different perspectives. The timing (beginning in 2005) is interesting, coming as it does after 2004 when our Supreme Court emphasized the importance of a case by case analysis of  questions of fair dealing v. infringement. “Uncertainty and unpredictability” are the better byproducts of an information society, far better than the certainty of poor consumer satisfaction that comes when international corporations are able to monopolize market places.

InfoJustice’s bulletin draws from Public Citizen’s Global Trade Watch which gives the full story of Eli Lilly’s “inventive interpretation” of our trade agreements and makes plain how dangerous these proceedings are in matters of overall access to medicines. Public Citizen concludes with:

The outcome of Eli Lilly’s investor-state attack under NAFTA is critical for those seeking to safeguard countries’ ability to determine the patent standards they believe serve the public interest in access to affordable medicines. It is critical not just to protect Canada’s prerogative to end patents found to not deliver promised results, but to avoid instilling other governments with fear of investor-state reprisal for similar policies to rein in medicine costs. It is critical not just so that Canadian taxpayers can ensure that the demanded $100 million goes to more worthy ends than enhancing Eli Lilly’s profit margin, but to avoid emboldening other pharmaceutical firms contemplating the launch of similar investor-state demands against other governments seeking to balance the rights of consumers and pharmaceutical firms. As the Eli Lilly case gets under way, negotiations for the TPP and its proposed expansion of the investor-state system continue. Stopping the NAFTA expansion deal presents health advocates with today’s biggest opportunity to halt the advance of the system that empowered Eli Lilly’s audacious threat.

the good

Writing for the New Yorker, Columbia law professor Tim Wu describes a fascinating story about an indie film “surreptiously shot inside of Disney World.”  Wu refutes assertions that the filming violated intellectual property rights; fair use and social commentary feature prominently in his explanation. Spoiler alert: the full plot of the story is given so if you are inclined to see a movie where “Disney World is not as simple window dressing [but transformed] into something gruesome and disturbing,” then you may not wish to read Wu’s article.

the expensive

Writing for the Globe and Mail, Frances Bula reports that TED is coming to Vancouver for 2014-2015. The Tourism Commission of British Columbia hopes that the presence of TED will further position Vancouver as an internationally recognized site of creative thinking. Tickets to TED events run at $7,500.00; I hope that some effort is made to include Vancouver’s high-school teachers in the audience — they are among the first to encourage future creators.

Update: February 7, 2013.  More on TED in Vancouver; by Mike Chisholm writing for the Vancouver Observer.