As consumers auction off iPods loaded with music on eBay and sell CD collections after copying tracks to iTunes, a question repeatedly comes up: What’s fair and what’s infringement? Even copyright experts find the law fuzzy when consumers want to sell extra copies of music and upgrade MP3 players.
To sort out the rights, the original sources of music copied and stored on such software as iTunes — CDs and MP3 files — is the place to begin.
The CDs may have been purchased, borrowed from friends, pirated (unauthorized copies of authorized recordings) or bootlegged (unauthorized recordings). The downloads may have been purchased from legitimate online stores, received as free promotions authorized by copyright owners or swapped through unauthorized peer-to-peer services.
It’s clear under U.S. law that music copied from pirated CDs or downloaded without the copyright owners’ permission infringes the copyrights. When these recordings are sold with an iPod, most lawyers would agree that the sale is unlawful. Bootlegs are trickier and best left for another column.
This leaves four areas to explore: authorized downloads and copied tracks from borrowed, promotional and purchased CDs.
Under copyright law’s first sale doctrine, purchasing a lawfully made copy of music — such as a CD made from the original master recording with permission from the artist, publisher and label — permits the purchaser to sell or otherwise dispose of that copy (but, under U.S. law, not to rent it). This also applies to reselling a download, says copyright expert Bill Patry, a partner with Thelen Reid & Priest in New York.
“When a consumer purchases a digital copy from a store like iTunes and stores it on an iPod, that is a lawfully made copy that can be sold,” Patry says. “The [first sale doctrine] doesn’t make a distinction between hard copies and digital copies.”
Further, the Audio Home Recording Act recognizes the fair use doctrine — that anyone may copy music for personal (noncommercial) use and share it with a select group of others.
Even though the law is not crystal clear, Patry believes that this means once the CD is sold, the consumer still has the right to keep the digital copy on iTunes and on an iPod. The CD itself may be sold under the first sale doctrine with the digital copy of that CD lawfully kept, under the fair use doctrine. This doctrine also permits limited copying from a friend’s CD.
But what the consumer may do with copies stored on iTunes and an iPod is another matter. For example, it would probably not be legal for a consumer to maintain an iTunes library on their computer, copy it over to an iPod, sell the iPod and then keep filling and selling iPods with that computer-based song library.
“You have to analyze the second source of content — the copies,” says Bobby Schwartz, a partner with O’Melveny & Meyers in Los Angeles and one of the attorneys litigating the MGM Studios vs. Grokster case. “After making a copy onto my own iPod, how many opportunities would I have to make more copies? I’m not sure that I can then aggregate the content over and over again. Making multiple copies was not envisioned by the first sale doctrine or fair use.”
Other copyright experts, who asked that their names not be used, argue that fair use provides a “safe harbor,” protecting someone from being liable for copyright infringement. The Audio Home Recording Act does the same thing. No law gives someone a “right” to copy someone else’s copyrighted work.
Being insulated from an infringement action does not mean that the copy was lawfully made, the lawyers argue. So copies protected by fair use may not be sold without the copyright holder’s permission.
They add that making a copy from a CD so that one can then sell the CD does not fall under fair use. That copy doesn’t qualify under the definition of fair use — especially since it displaces a sale. When the CD is sold, the copy must go, too.
Contractual restrictions may also come into play. While Patry believes that an iPod filled only with authorized downloads may be sold under the first sale doctrine, both attorneys note that an end-user agreement may restrict the number of copies the user may make.
For example, the iTunes Music Store usage rules restrict consumers from using the music on more than five authorized Apple devices or to burn CDs from an iTunes play list more than seven times.
The agreements may restrict the number and types of copies that may be made from music copied with the software. When a consumer agrees to make only five copies of a music file and not to share them with more than three people, for example, making more copies or sharing them with more people would be unlawful regardless of the first sale and fair use doctrines.
It’s no wonder that music lovers using legitimate online services can’t figure out what’s legal and illegal when it comes to sharing music. Although lawyers may disagree with legal interpretations, perhaps it’s time for the music industry, the Copyright Office and digital music companies to write consumer guidelines about copyright infringement — with a disclaimer to consult an experienced copyright lawyer if the consumer disagrees with the guidelines. These can then be clearly posted on Web sites and provided with all sales of digital music and players.
