From: "McAllister-Erickson, Jonah Yan" <[log in to unmask]>
Date: Tue, 1 Mar 2022 15:14:26 +0000

Related to the question of factors is Vernor v. Autodesk, Inc. case*, *which
sort of helps clarify the question of when is a sale and sale vs a
license.  The distinguishing factor in my opinion is that Autodesk “(3)
imposes notable use restrictions.” significantly beyond just the language
of the shrink wrap agreement.



“Autodesk takes measures to enforce these license requirements. It assigns
a serial number to each copy of AutoCAD and tracks registered licensees. It
requires customers to input "activation codes" within one month after
installation to continue using the software. The customer obtains the code
by providing the product's serial number to Autodesk. Autodesk issues the
activation code after confirming that the serial number is authentic, the
copy is not registered to a different customer, and the product has not
been upgraded. Once a customer has an activation code, he or she may use it
to activate the software on additional computers without notifying
Autodesk. ” *Vernor v. Autodesk, Inc.*, 621 F.3d 1102, 1104-5 (9th Cir.
2010)



Where in UMG the record label was sending promotional CDs without any
controls on their eventual use, discard, etc. My feeling is that the
important question is what controls does The Chronicle actually implement
and at least attempt to enforce.



Perhaps there will be future litigation involving copies of movies only
available on streaming platforms that are sent to members of various trade
groups that give out awards, this isn’t just limited to the Oscars, but
also local and regional bodies like the *New York Film Critics. *Those
screeners aren’t sent just out in the hopes somebody will listen to it or
play in on the radio, but for the specific purpose of viewing a film that
has been nominated for an award, and I think screeners are supposed to
return the films after voting. I know some libraries have been able to
acquire physical media for movies that should be only online through the
second hand market, aka bought on Ebay for example. Perhaps as a sign of
good judgement, or because the effect on the distribution of those films is
so limited, nobody as sued (yet)



The type of activity that the Chronicle is engaging in is not unheard for
print content providers, the restrictions imposed on Harvard Business
Review Case Studies takes my breath away. Of course HRB’s business model
doesn’t sell Case Studies to libraries. HBR also restricts the use of their
journals 500 most popular articles, and had some onerous restrictions when
they were a print only publication.





Best,



Jonah




From: "Dave Hansen, J.D." <[log in to unmask]>

Date: Mon, 28 Feb 2022 20:01:08 +0000

In terms of legality – copyright holders *can *put significant license
restrictions on downstream use (e.g., library loans), but efforts to do so
aren’t always effective.  The courts have developed a set of factors to
determine whether any given transfer of a copy constitutes a “sale” or
actually a “license.” If it’s actually a “sale” then the “first sale”
doctrine applies and copyright law doesn’t restrict further transfer,
lending, or sale.



For example, in *UMG Recordings v. Augusto,* UMG sent out promotional CDs
with the following text on a sticker that came with it:



*This CD is the property of the record company and is licensed to the
intended recipient for personal use only. Acceptance of this CD shall
constitute an agreement to comply with the terms of the license. Resale or
transfer of possession is not allowed and may be punishable under federal
and state laws. *



Augusto sold a bunch of these copies on eBay and UMG sued. The court said
that downstream distribution did not constitute copyright infringement in
violation of the license because the initial distribution constituted a
sale (transfer) of the CD, and therefore the “first sale” doctrine
applied.  Among the factors that the court looked at in that case were 1)
whether the license was designated as a “license”, 2) whether  the
purported license reserved title in the copy to the original owner, and 3)
whether it required eventual return of the copy to the owner. Ultimately,
it was looking for whether UMG still held “sufficient incidents of
ownership” to “sensibly be considered the owner of the copies,” or whether
in fact ownership of the CDs had been transferred.



In this case, the text that The Chronicle includes does call itself a
“license” but… it seems to me, that’s about all The Chronicle has going for
it to assert that these print copies are actually just “licensed” and not
sold to libraries. CHE isn’t otherwise asserting continued physical title
over the copies sold, or requiring eventual return of the copies, and
(aside from the restriction on distribution) isn’t making any other
meaningful restrictions on uses of the copies.



----

Dave Hansen

Lead, Copyright & Information Policy

Associate University Librarian for Research, Collections & Scholarly
Communications

Duke University Libraries

(m) 704-747-4314

Zoom: https://duke.zoom.us/my/davehansen
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