DMCA: New Regulations Loosen the Reins for Multiple Users of the Internet of Things

You may know the Digital Millennium Copyright At (“DMCA”) from the widely deployed DMCA take-down notices that copyright owners use to remove putatively infringing content from the Internet. Enacted in 1998, the DMCA is more, however, with provisions scattered throughout the Copyright Act.

One such DMCA provision springs to mind triennially. Section 1201 of the Copyright Act prohibits circumvention of access control technologies (“ACT”) associated with software and devices embodying software. Many such ACT are well known: encryption, scrambling, password protection. Subsection 1201(a)(1)(C) provides for exemptions from the circumvention rules. It mandates the Librarian of Congress, with the advice of the Register of Copyright (in turn advised by federal agencies and the public), to determine every three years whether users of certain copyrighted works are, or are likely to be, adversely affected by the imposition of ACT in the coming three-year period.

Case in point: computer programs contained in and controlling automobiles, previously restricted, may now be accessed for purposes of diagnosis, repair or lawful modification of the vehicle. As one member of the public commented prior to enactment of the new regulation: “It’s my own damn car, I paid for it, I should be able to repair it….” Whether an auto repair shop can access the software of the owner’s behalf remains unsettled.

The pace of technological change is swift; the pace of legislative change, glacial. Recognizing this, Congress incorporated Subsection 1201(a)(1)(C) into the DMCA to encourage the periodic recalibration between the desire of copyright owners to safeguard their content and technology and the desire of copyright users to access that content and the inner workings of that technology for purposes that are otherwise noninfringing.

The most recent triennial rulemaking exercise was concluded in October. All previously authorized DMCA circumventions were reauthorized. New this year—and of interest to many Morningstar Law Group clients—are permission to “unlock” certain digital devices (e.g., cellphones, tablets, etc.) for use with alternative wireless networks; permission to “jailbreak” certain digital devices to allow interoperation with software applications; patient access to medical data recorded by digital monitoring devices; what amounts to hacking of software for purposes of good-faith security research; broader rights for libraries and museums to archive and permit use of legally acquired video games, particularly in circumstances where technical support is no longer available from the copyright owners; expanded access to motion picture excerpts for certain educational uses and reproduction in documentary films and noncommercial videos; and access to computer programs that operate 3D printers to permit use of alternative feedstock.

The range of new regulations is broad. Feel free to reach out to a member of the Morningstar Law Group IP/Tech Law team to discuss your own DMCA circumvention concerns.

–Mitch Tuchman

PUBLISHING AGREEMENT FAQs (Part Two)

Photo by Patrick Tomasso on Unsplash

Photo by Patrick Tomasso on Unsplash

How are an author’s royalties calculated?

Publishing resembles a game:  the parties are aligned in some, but not all, respects. Both sides share the goal of enticing the public to purchase the book, but their interests diverge when it comes to the division of resulting revenues. Both sides want the greater share. An author’s share comes typically in the form of royalties and the basis of royalty computations, as well as the amount, deserves careful attention. A royalty based on a fixed percentage of a book’s cover price favors the author when it comes to certainty. A division of net revenues (that is, income after certain permissible deductions) may favor the publisher. Both bases are likely to permit the publisher to withhold a ppercentage ofan author’s earnings as a reserve against bookstore returns. That’s reasonable. Insist, however, on knowing each category of claimed deductibles. Resist those that are attributable to the publisher’s unpaid invoices (not the author’s fault) or reserves held for more than a single accounting period.

How often should royalties be paid?

The publishing agreement may call for royalties to be paid quarterly, semiannually or annually. Keep in mind that the longer the time between payments, the more the author steps into the shoes of the publisher’s banker.

What are termination provisions?

Termination provisions should identify each party’s exit strategy. Such provisions are typically aggregated near the end of the publishing agreement, but it is not unusual to find some scattered throughout. All should be expressly enumerated wherever the grounds for termination are discussed so that none is overlooked. An agreement may be terminated in whole or in part, and each whole or partial termination provision will likely have financial consequences that should also be explicit. By way of example, a publisher may reserve a right to terminate an agreement if an author fails to deliver an acceptable manuscript in a  timely manner. An author should be able to terminate an agreement if royalties are not timely paid or the publisher otherwise fails to perform its contractual obligations.

What does a publishing agreement have to say about an author’s next work?

Naturally, a publisher wants to reap the rewards of an author’s success. Typically publishers attempt to claim a right of first refusal with respect to an author’s next work in a similar genre. “Show it to me first,” the publisher seems to be saying, “and if I’m not interested, you may take it elsewhere.” In addition, the publisher might insist on a right to match or improve on a competitor’s offer. Meanwhile, the clock is ticking, and the competitor’s interest might wane. Demand if you can that the publisher make its best offer upon initial review and not reserve a right to piggyback on a competitor’s judgment of the value of your next work. Instead of a right of first refusal, bargain for a right of first negotiation and resist any effort on the publisher’s part to impose on your next book the same economic terms that exist in your current contract.

ABOUT MITCH TUCHMAN

Mitch Tuchman is of counsel to Morningstar Law Group. Before becoming an intellectual property attorney, Mitch Tuchman spent ten years as a freelance writer/ editor and fourteen years as publisher of exhibition and collection catalogs at the Los Angeles County Museum of Art. Having been both a publisher and writer, Mitch has a unique understanding of copyright matters and helps writers and other creatives optimize the value of their works, defend their rights, and develop mutually beneficial business relationships.

For more about Mitch and his practice, please visit morningstarlawgroup.com/mtuchman and www.ncpublaw.com.

PUBLISHING AGREEMENT FAQs (Part One)

Photo by Patrick Tomasso on Unsplash

Photo by Patrick Tomasso on Unsplash

In a world before self-publishing—and still today—authors with the ability to write but not the wherewithal or desire to print, promote and sell books in commercial quantities engage publishers to do so. Under grants of rights from authors, publishers promise to produce copies of books and offer them publicly. They look to resulting revenues to compensate for their costs and risks, sharing a portion of earnings with authors, who are in turn relieved of the burdensome business of bookselling.

This is the essence of the bargain known as a publishing agreement, though it commonly contemplates other rights, other products, other revenues. No one size fits all, but there are certain universals. Here are just a few. If you have questions or concerns, please contact me.

What rights does a publisher acquire from an author? What rights should an author grant?

A publisher typically wants the author to authorize an exclusive, worldwide license to exercise all of the author’s rights under copyright and the ability to authorize others to do so throughout the entire term and territory of the agreement. This might serve an author’s purposes but only if it doesn’t constitute “biting at air.” Know what your publisher has accomplished for writers who came before you with respect to each of the rights under discussion.

Ascertain whether your publisher has arranged for such things as foreign-language editions or the sale of motion picture rights, and if not, grant such rights sparingly if at all. Negotiate a reversion of any right not exploited by the publisher within a reasonable period.

What is the duration of a publishing agreement

The typical book publishing agreement recites its duration as the full term of copyright and applicable extensions and renewals, if any. Under current US law, the full term of copyright is the life of the author (or surviving joint author) plus  70 years. Say, an author writes a book at age 30 and lives till age 80. The duration of copyright is 50 (the difference between 30 and 80) + 70 = 120 years. As a practical matter, the duration of the publishing agreement is likely to be much shorter. The majority of books have a brief shelf life, certainly compared with the full term of copyright. Make sure that the agreement is terminable when the publisher declares the hard copy edition or softbound original out of print. Don’t let rights linger where they are unappreciated.

What geographical territories should a publishing agreement comprise?

Some agreement templates stipulate that the publisher’s rights extend “throughout the universe.” Simply put, the stipulated territory should be the territory where your publisher has a reasonable expectation of sales to customers or licenses to third parties and, better yet, a documented track record of having done so. Worldwide is too wide if the publisher does not serve overseas territories itself or through foreign associates. Ascertain the territories your publisher can serve effectively and negotiate a reversion with respect to any territory not actually served within a reasonable period.

Who owns the copyright in a published book?

The nature of most book publishing agreements is not a transfer of copyright ownership but a license under copyright granted by an author to a publisher for a reasonable length of time and breadth of territory. As an author you may wish, by way of example, to withhold dramatic rights. Before doing so, however, consider whether assisted by your agent or working alone you are any more likely to consummate a sale of such rights than your publisher is. Publishers frequently offer to register copyright in a book in the author’s name. If this not accomplished in a reasonably prompt manner, there can be unfavorable consequences for the author. You might wish to rely on yourself to ensure that an application to register copyright in your name is accomplished in a timely manner: no more than three months after first publication or one month after an infringement is discovered.

What are representations and warranties?

In agreements of many kinds each party seeks to shift liability to the other should adverse events occur. Representations by either party describe mutual declarations as the parties approach the starting line. Warranties are the representing party’s guarantees to stand behind those representations. With an eye to protecting its own interests in the context of a third-party claim of infringement, for instance, a publisher will insist that an author represent that he or she is the sole author (or joint author, as the case may be) of the work; the work is original, not copied from any preexisting work; the work does not violate any third-party right; no payment is due to any non-party on account of the publisher’s publication of the work; and so forth. A publisher’s insistence on an author’s carefully tailored representations is reasonable. Representations should not include covenants (that is, promises to perform future obligations) or survive the expiration or earlier termination of the agreement. Somewhat illogically, however, they often do.

ABOUT MITCH TUCHMAN

Mitch Tuchman is of counsel to Morningstar Law Group. Before becoming an intellectual property attorney, Mitch Tuchman spent ten years as a freelance writer/ editor and fourteen years as publisher of exhibition and collection catalogs at the Los Angeles County Museum of Art. Having been both a publisher and writer, Mitch has a unique understanding of copyright matters and helps writers and other creatives optimize the value of their works, defend their rights, and develop mutually beneficial business relationships.

For more about Mitch and his practice, please visit morningstarlawgroup.com/mtuchman and www.ncpublaw.com.

Monetary Recovery in Copyright Disputes

In a copyright infringement dispute in which the accused was indisputably liable, the plaintiff demanded $25,000 to settle the matter; the defendant countered with $12. You read that correctly.  Yet the parties settled. More about that later.

The Copyright Act of 1976, 17 U.S.C. §§ 101 et seq. (the “Act”), grants certain exclusive rights to copyright owners, among them the rights to reproduce protected works (that is, the right to make copies, hence “copyright”) and to distribute those copies.  Owners may exercise their rights or authorize others to do so, commonly in the form of a license. The exercise of those exclusive rights without authorization (absent an express exemption provided by law) is infringement, which at its simplest takes the form of an unlicensed use.

A copyright owner who prevails in an infringement action is entitled to monetary recovery.  Under the Act, the sources of recovery are (a) the owner’s actual damages and (b) any additional profits of the infringer or, alternatively, (c) statutory damages.  17 U.S.C. § 504(a). This deceptively simple formula reveals its complexity in practice.

To prevail on an infringement claim, the plaintiff must prove an ownership interest in a valid copyright and unauthorized copying of original elements of the protected work.  Lyons P’ship, Ltd. v. Morris Costumes, Inc., 243 F.3d 789, 801 (4th Cir. 2001).  Validity and copying are likely to be contentious issues, but as in any mediation the parties might be willing to compromise to avoid the cost and inconvenience of trial, not to mention the uncertainty created by the factual circumstances that affect trial outcomes, the deceptive simplicity of the statutory language—the term “damages,” for instance, is not defined in the Act—and the multiple rationales courts have articulated with respect to computations.

Plaintiff’s Actual Damages

“Damages are awarded to compensate the copyright owner for losses from the infringement.”  4 Nimmer on Copyright, § 14.03[A] (2017) (“Nimmer”).  Damages claimed by plaintiffs are at times more imaginative than the copyrightable creations at issue, and it is good to recall Judge Posner’s trenchant axiom: “Damages must be proved, and not just dreamed….”  MindGames, Inc. v. Western Pub. Co., 218 F.3d 652, 658 (7th Cir. 2000), cert. denied, 531 U.S. 1126 (2001), quoted in Nimmer, op. cit.  Defendants will attempt to identify and refute speculative claims.

There are numerous benchmarks for plaintiffs’ computations of damages, the most common of which appears to be the hypothetical fees the infringer might have paid to acquire rights legitimately.  Nimmer at § 14.02[B].  Other benchmarks have included, among others: lost customers, Univ. of Minn. v. Applied Innovations, Inc., 876 F.2d 626 (8th Cir. 1989); impairment of owner’s ability to authorize derivative works, Abend v. MCA, 863 F.2d 1465 (9th Cir. 1988), aff’d, 495 U.S. 207 (1990); and loss of market value, Faulkner v. Nat’l Geographic Soc., 576 F. Supp.2d (S.D.N.Y. 2008).

Defendant’s Profits Attributable to the Infringement

“The purpose of the award of defendant’s profits is ‘to prevent the infringer from unfairly benefitting from a wrongful act.’”  Nimmer at § 14.03.  The Act expresses the parties’ burdens straightforwardly:

In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.

17 U.S.C. § 504(b).  Questions will arise, however, with respect to what is “deductible” and what is “attributable.”  The Fourth Circuit has played a leading role here. See Universal Furniture Int’l, Inc. v. Collezione Europa USA. Inc., 618 F.3d 417 (4th Cir. 2010) (awarding plaintiff the entirety of defendant’s profits when, after repeated opportunities to do so, defendant failed to articulate its deductibles); and Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514 (4th Cir. 2003) (excluding from the computation defendant’s revenues (1) with no conceivable connection to the infringement or (2) where, despite such a connection, only speculation was offered to show a causal link between the revenue source and the infringement).

Statutory Damages

At the instigation of the plaintiff “at any time before final judgment is rendered,” a court may award statutory damages rather than actual damages and infringer’s profits in “a sum of not less than $750 or more than $30,000 as the court considers just.”  17 U.S.C. § 504(c)(1). Such award may be increased to as much as $150,000 or diminished to as little as $200 for each act of infringement depending on the court’s finding regarding the willfulness of the infringer’s act. 17 U.S.C. § 504(c)(2).

A plaintiff may elect statutory damages irrespective of evidence of actual damages and infringer’s profits, Nimmer at § 14.04[A], though lack of such evidence might motivate the election.  While an award of statutory damages is a creature of litigation, the possibility of an election and award has its place in mediation.

Settlement

In the case mentioned in the opening paragraph, plaintiff was the author of a book published two decades before the dispute arose.  Defendant was the author of a book on an identical subject who copied from the earlier book without permission or attribution. Assuming plaintiff’s sales decades after first publication were minuscule, defendant reasoned that the diminished income from sales reported by plaintiff to the IRS in the years immediately preceding and following publication of the accused book would be indicative of plaintiff’s damages.  Further, defendant’s own profits from book sales were negligible. With neither appreciable damages to one nor profits to the other, the parties settled in the low hundreds.

Mitch Tuchman, a superior court certified mediator, is of counsel to Morningstar Law Group.

(This piece was originally published in the February 2018 issue of “The Peacemaker,” the quarterly newsletter of the Dispute Resolution Section of the North Carolina Bar Association.)

NOT COMING TO A THEATER NEAR YOU

By Mitch Tuchman

(Originally published March 2013)

This action for declaratory judgment centered on a planned movie, The Snow White Ladies of the Third Week (“Ladies”). Based on a decision issued on January 30, 2013, from the U.S. District Court for the Northern District of Georgia,[1] it appears unlikely that Ladies will be coming to any screen any time soon. The court resolved a motion for summary judgment directed to conflicting claims of copyright ownership in the Ladies screenplay and in so doing prevented plaintiffs from proceeding with production of Ladieswithout defendants’ consent.

Defendants, joint authors of the unpublished source novel, had entered in October 2009 into a brief agreement with plaintiffs, an actor and a cinematographer/production designer, respectively, for the creation of a screenplay based on defendants’ book. Whether the parties contracted for more was at issue.

The issues arising in Durkin v. Platz should be familiar to every copyright practitioner who has ever attempted to resolve an authors’ dispute, complicated here by a puzzling mathematical computation: a script possibly by four from a book possibly by two. Still, while there is hardly anything unfamiliar here, the court’s conclusion with respect to the rights of authors in what may have been intended as a joint work delivers a surprise ending to the Ladies saga.

Parties’ “Memorandum of Agreement”: What It Says, What It Doesn’t

With defendants identified as “Copyright Holders” and plaintiffs, as “Writers/Producers,” the parties entered into a Memorandum of Agreement by turns lucid and opaque.[2] The term, set forth in a preamble, commenced October 19, 2009, and continued “through satisfaction of Copyright Holders and/or date of first talent, creative or development attachment”[3] or October 19, 2010, whichever came sooner. Plaintiffs clearly obligated themselves to create a “first pass full feature film adaptation” of the book, to report their progress to defendants daily, and to submit “a Producers top sheet production budget.” Defendants obligated themselves to compensate plaintiffs $8,000 in two installments and to “[p]erform as [e]ditors” of that draft. The agreement stipulated that “Copyright Holders and Writers/Producers shall own the script in full partnership.” And further, “By signing this agreement both institutions agree to be active partners and agree to abide by this agreement.”[4]

The second installment of the agreed compensation was tied to completion of the screenplay. Plaintiffs’ production obligations, such as they were—“talent, creative or development attachment” and submission of “top sheet production budget”—were not conditions precedent to payment. There is no stated rationale for calling plaintiffs “producers.”

Nothing in the agreement indicates whether, in addition to being co-owners of copyright, the parties intended to create the screenplay as a joint work; whether the parties anticipated that defendants’ editorial work would rise to the level of copyrightable subject matter; whether the work done by any party was a work made for hire for either entity; whether defendants or their Third Week Brigade, LLC, could claim an undivided, proportional interest in the screenplay as a joint work. The agreement is silent on these salient subjects, typically addressed in well-crafted authorship agreements. In short, the nature of the parties’ bargain was open to interpretation.

Initially the parties appeared cordial. As the screenplay developed and plaintiffs submitted pages to defendants, presumably to facilitate their editorial obligations, Platz responded enthusiastically in e-mails dated October through December 2009. “Absolutely wonderful … great job”; “Great!!!!!!”; “Bravo! I love it sooooooo much … I love it all”; and “I am thrilled to be working with you.” Defendant Hale, after reading the completed first draft, wrote to plaintiffs on December 30, 2009, “You all have done a magnificent job and we love it.” [5]

In March 2010, for reasons unexplained, defendants broke off communications. On March 30 they demanded that plaintiffs enter into a work-made-for-hire agreement. Plaintiffs declined. This action followed.[6] Plaintiffs sought declarations that (1) they own a valid, enforceable copyright in the script, (2) the script does not infringe any copyright owned by defendants, and (3) they are entitled to market and produce a film based on the script without interference from defendants.[7]

The Holdings

With respect to copyright ownership, the court held the screenplay “is copyrightable as a derivative work that it is co-owned by the parties[8] and “as a matter of law Plaintiffs are co-owners of the copyright.”[9]Defendants had argued the screenplay lacked sufficient originality to be copyrightable,”[10] but the court observed that plaintiffs transformed the source sufficiently—by additions, revisions and deletions—to satisfy the originality standard commonly applied. Further, the language of the parties’ agreement provided that the parties would “own the screenplay in full partnership.”[11] “Here,” the court said, “the parties clearlyintended to create the screenplay together and co-own the copyright.”[12]

With respect to infringement, the court held as a matter of law that “the copyright in the screenplay … does not infringe Defendants’ copyright in their manuscript.”[13] The screenplay was prepared under license from the authors of the book, thus there is no issue as to whether plaintiffs used the preexisting work without permission.

With respect to plaintiffs’ claim of entitlement to proceed unilaterally with production of a Ladies film, the court disagreed. Quoting Section 103(b) of the Copyright Act, the court stated, the copyright in a derivative work “extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work….”[14] The court reasoned that the movie would be a derivative of a derivative, and proceeding with the film would violate “[t]he established doctrine that a derivative-work author cannot create additional derivative works that incorporate the original work without the permission of the owner of the original work….”[15] In the absence of a license granted by defendants to use the underlying source materials, “as a matter of law Plaintiffs are not entitled to declaratory judgment that they have the right to use any materials from the screenplay that are from the underlying manuscript.”[16] The court did not indicate what constituted the source materials embodied in the script.

Analysis

The court’s bar on preparation of a derivative of a derivative without defendants’ consent appears at odds with its own finding that “the parties clearly intended to create the screenplay together…..” Given the statutory definition of a joint work—“A ‘joint work’ is a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole” [17]—a screenplay prepared “together” by the parties would likely constitute a joint work if the requisite intention existed. The court signaled that it did, [18] although it did not specifically locate the source of its finding in the parties’ agreement, which speaks of co-ownership of copyright arising as a creature of contract and not as a consequence of joint authorship. The court did acknowledge that Plaintiffs submitted revised portions of the screenplay to Defendants, and Defendants edited the revisions.[19]

The statutorily required intention to create a joint work notwithstanding, some commentators have urged that in addition each contribution to a joint work must in and of itself rise to the level of independently copyrightable subject matter for rights to be conveyed. The Nimmer treatise (“Nimmer”) declares this a contentious issue.[20] Nimmer itself submits that “copyright’s goal of fostering creativity is best served, particularly in the motion picture context, by rewarding all parties who labor together…,”[21] a more permissive standard and a position shared by William Patry.[22] The court in Durkin v. Platz did not opine on whether defendants’ contribution, presumably in the nature of editorial emendations, rose to that level.

With respect to a joint work, each contributor automatically acquires a proportional ownership in the entire work, including all contributions made by coauthors[23] and may individually exercise all the rights pertaining to the protected work,[24] subject only to a caveat that there be an accounting of revenues to each collaborator uninvolved in the exploitation.[25]

While the court made plain that the parties in Durkin v. Platz co-own copyright in a derivative work both by contract and by law, the question remains with respect to the exercise of their rights as owners of a joint work.

[1] Brian F. Durkin and Craig W. Richards v. Ann Platz and Rachel Thomas Hale, No. 1:10-cv-2662-TCB, 2013 WL 388430 (N.D.Ga Jan. 30, 2013).

[2] According to the court, plaintiff Richards prepared the initial draft of the agreement, which was revised in turn by defendants and plaintiffs prior to execution.

[3] Plaintiffs contended that “‘talent attachment’ refers to securing actors to commit to the film”; “‘creative attachment’ refers to securing the director for the film”; “‘development attachment’ refers to securing the production team and financing the film.” Durkin, 2013 WL 388430 at *15-*16.

[4] Id. at *3. Plaintiffs and defendants did not execute the agreement as authorized representatives of Durkin Richards Creative Productions or The Third Week Brigade, LLC, respectively. So the implications of this statement are unclear.

[5] Id.

[6] Id at *4.

[7] Id.

[8] Id. at *19.

[9] Id. at *23.

[10] Id.

[11] Id. at *21.

[12] Id. at *22 (emphasis added).

[13] Id. at *23.

[14] Id. at *24, quoting 17 U.S.C. § 103(b).

[15] Id., citing Russell v. Price, 612 F.2d 1123, 1128 (9th Cir. 1979).

[16] Id.

[17] Section 101 Copyright Act of 1976, as amended; 17 U.S.C. § 101 s.v.

[18] Id. at *22.

[19] Id. at *3.

[20] Nimmer on Copyright (2012), § 6.07 (noting that some courts supporting the “idea-contributor-as-joint-author doctrine”).

[21] Id.

[22] William Patry, “Joint Authorship Problems.” The Patry Copyright Blog (March 14, 2006), http:williampatry.blogspot.com/2006/03/joint-authorship-problem.html (criticizing Paul Goldstein’s view that “to be a joint author one must contribute expression which can stand on its own as a copyrightable work.” See Paul Goldstein, Goldstein on Copyright (3rd ed.) (2013 (“Goldstein”), § 4.2.1.2.

[23] “[A]ll joint authors share equally in the ownership of the joint work, even where it is clear that their respective contributions to the joint work are not equal.” Nimmer § 6.08 (footnotes omitted).

[24] “[A] joint owner may exploit the work himself, without obtaining the consent of the other joint owners.. Nimmer § 6.10, citing Oddo v. Ries, 743 F.2d 630 (9th Cir. 1984).

[25] “[A] joint owner is under a duty to account to the other joint owners of the work for a rateable share of profits realized from his use of the work.” Nimmer § 6.12, citing Oddo v. Ries, supra.

COPYRIGHT OFFICE REPORT ON SOFTWARE-ENABLED CONSUMER DEVICES

By: Mitch Tuchman

Software-enabled consumer devices are ubiquitous.  Think not only personal computers—desktop, laptop, handheld—but thermostats, cameras, refrigerators, power tools, self-driving cars, even dolls, toys and games, among others devices too numerous to mention.  This was not so in 1976 when Congress enacted the present Copyright Act (the “Act”), including computer software for the first time among protected “literary works.”  Software was not then, as it is now, in the palms of toddlers.

In an effort to ascertain whether the Act remains adequate with respect to embedded software, leaders of the Senate Judiciary Committee requested that the United States Copyright Office (the “Office”) provide its expert advice.  Specifically, the Committee asked, does current law permit today’s consumers to resell their devices, particularly if the embedded software is subject to a license rather than an outright sale?  Can consumers repair and tinker with embedded software if doing so requires unauthorized reproduction of the code?  Can consumers engage in good faith security research or adapt their devices for purposes of interoperability with other devices?  If no, Congress asked, does the Office recommend remedial legislative measures?

The Office responded recently with a voluminous, but comprehensible report found at https://www.copyright.gov/policy/software/software-full-report.pdf.  In short, the Office does not recommend legislative changes at this time, relying instead on the thoughtful judicial application of such provisions of copyright law as fair use, the first sale doctrine and statutory limitations on exclusive rights as well as various common law defenses against claims of infringement.

If you have questions about the issues discussed in this alert, please contact Mitch Tuchman at mtuchman@morningstarlawgroup.com or (919) 590-0390 or consult any member of the firm’s intellectual property law and information technology practice group.