First Sale Doctrine & Audiobooks
The U.S. Sixth Circuit Court of Appeals recently ruled that while U.S. copyright's "first sale doctrine" applies to sound recordings of musical works, it does not apply to sound recordings of literary works, otherwise known as "audiobooks" or "books on tape". The first sale doctrine holds that a copyright owner controls the right to the underlying work, but the owner of the work itself can dispose of it in any manner chosen. In support of its claims for copyright and trademark infringement, Brilliance Audio, Inc. ("Brilliance"), a company in the business of producing and selling audiobooks in both retail and library editions, alleged that Haights Cross Communications, Inc. ("Haights"), a direct competitor, repackaged and relabelled Brilliance's retail editions as library editions, marketing the repackaged products as Brilliance's library editions and distributing them using Brilliance's trademarks for commercial gain.
On the allegation of copyright infringement, Haights argued that its actions were protected under the first sale doctrine thus no infringement occurred. In response, Brilliance argued that 17 U.S.C. ยง 109(b)(1)(A) of the Record Rental Amendment of 1984 provided for a limited exception to the first sale doctrine that extended to sound recordings of literary works. The Circuit Court of Appeals, however, determined that the record rental exception only applies to sound recordings of musical works for several reasons: (i) the exception was adopted by Congress in 1984 when the exclusive focus of the testimony and legislators was on protecting the music industry; (ii) there was no evidence that Congress ever considered audio recordings of literary works when drafting the exception, with at least one committee report making clear such recordings were not covered by the exception; (iii) Congress had a history of expressly exempting particular works, including computer software, where extension of the copyright monopoly was warranted; and (iv) construing the exception broadly to cover sound recordings of literary works would upset the traditional bargain between the rights of copyright owners and the personal property rights of individuals who own a particular copy. Consequently, the Circuit Court of Appeals affirmed the district court's initial dismissal of Brilliance's copyright claims against Haights.
The Circuit Court of Appeals, however, reversed the district court's dismissal of Brilliance's trademark claims. In the context of trademark infringement, the court identified two situations in which the resale of a product is not protected by the first sale doctrine: (i) when the notice that the item has been repackaged is inadequate; and (ii) when an alleged infringer sells trademarked goods that are 'materially different' than those sold by the trademark owner. In each case, there is a danger of consumer confusion and trademark dilution. Based on these criteria, the Circuit Court of Appeals could not conclude there were insufficient facts to permit granting relief to Brilliance. The case was, therefore, remanded for proceedings accordingly.
This entry first appeared in the February 8, 2007 edition of lawsof.com. For a copy of the decision, click here.
On the allegation of copyright infringement, Haights argued that its actions were protected under the first sale doctrine thus no infringement occurred. In response, Brilliance argued that 17 U.S.C. ยง 109(b)(1)(A) of the Record Rental Amendment of 1984 provided for a limited exception to the first sale doctrine that extended to sound recordings of literary works. The Circuit Court of Appeals, however, determined that the record rental exception only applies to sound recordings of musical works for several reasons: (i) the exception was adopted by Congress in 1984 when the exclusive focus of the testimony and legislators was on protecting the music industry; (ii) there was no evidence that Congress ever considered audio recordings of literary works when drafting the exception, with at least one committee report making clear such recordings were not covered by the exception; (iii) Congress had a history of expressly exempting particular works, including computer software, where extension of the copyright monopoly was warranted; and (iv) construing the exception broadly to cover sound recordings of literary works would upset the traditional bargain between the rights of copyright owners and the personal property rights of individuals who own a particular copy. Consequently, the Circuit Court of Appeals affirmed the district court's initial dismissal of Brilliance's copyright claims against Haights.
The Circuit Court of Appeals, however, reversed the district court's dismissal of Brilliance's trademark claims. In the context of trademark infringement, the court identified two situations in which the resale of a product is not protected by the first sale doctrine: (i) when the notice that the item has been repackaged is inadequate; and (ii) when an alleged infringer sells trademarked goods that are 'materially different' than those sold by the trademark owner. In each case, there is a danger of consumer confusion and trademark dilution. Based on these criteria, the Circuit Court of Appeals could not conclude there were insufficient facts to permit granting relief to Brilliance. The case was, therefore, remanded for proceedings accordingly.
This entry first appeared in the February 8, 2007 edition of lawsof.com. For a copy of the decision, click here.
posted by joeblog at 8:52 AM
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