Denise hosted her 20th episode (Ethically Cleansed) of her legally-minded program This Week In Law. I had a great time appearing on the program with my co-panelists Evan Brown, Ernie Svenson, and Ben Franske.
I listened to the episode earlier this week and, in listening to our discussion about ipodmeister.com, I am a bit embarrassed by how many times I said "fair use" when I really meant "first sale" and vice versa. Over the past few days, I've also had a chance to think about ipodmeister's business a little further. The bottom line: I think that ipodmeister is going to lose any U.S. copyright action that is brought against it. Here's why:
When the customer exchanges the CDs for an iPod, there is no action that triggers the copyright act - namely, none of the six rights granted the copyright owner under 17 USC 106 are implicated (because the exchange is certainly a protected distribution under the first sale doctrine). But, when ipodmeister rips the CDs and sends the original CD owner a digital copy on the iPOD (with the later plan to sell the original CD), ipodmeister has at least three problems.
First, a court is unlikely to find that the ripping is a fair use reproduction because each of the factors will weigh against it:
1) nature of the use - clearly commercial and not truly transformative;
2) the works copied (songs/lyrics) are highly creative;
3) they are taking the whole work
4) intended future sale means a direct effect on the potential market for the CDs
Second, no matter how mixed up my comments were in the episode, ripping the CDs cannot be protected by the first sale doctrine because the first sale doctrine only applies to distribution claims (under 17 USC 106(3)) and does not apply to reproduction claims (under 17 USC 106(1)).
Third, since the copying is (most likely) infringing, the first sale doctrine also cannot apply to the subsequent sale of the CDs by ipodmeister because that doctrine only protects the downstream distribution of "a particular copy or phonorecord lawfully made under" the Copyright Act. {Updated 2-11-09!}distribution of the copied CDs back to the original owner (in the form of an iPod, recordable CD/DVD or whatever medium upon which the copies are made). These copies are not "lawfully made" under the Copyright Act. (Note, however, that there is nothing wrong with ipodmeister's further distribution (sale) of the original CDs received from the customer. Those are still the original, lawfully made CDs and the first sale doctrine will protect that distribution.){End Update!} So, there you have it, I think ipodmeister will not survive a US-based copyright claim against it.
Now, a more interesting fact pattern might be the example Denise suggested in the episode: assume the owner of the original (lawfully made) CDs rip them at some time and at that time intend that copy to be her backup (fair use) copy. Later, that same owner decides to discard or sell the original CDs for whatever reason -- e.g., decluttering her home or raising some money to feed children during a recession. Would this be an infringing distribution of the CDs or is the distribution protected under the first sale doctrine?
I'm not certain how this would play out yet. I can see arguments both ways:
The first copyright event in this fact pattern (the back up copy) is a fair use copy (notwithstanding the RIAA's wavering on this point). The second event (the distribution of the CD) is plainly protected by the first sale doctrine. Therefore, it is a completely protected series of actions for an owner of a non-DRM CD to take. Fair use and first sale actually work well for this scenario and as intended by the statute. The argument that it is not infringing, however, requires a court to find that the fair use copy remains a fair use copy forever, notwithstanding future actions relating to the CD from which the original ("lawfully made" = fair use) copy was made.
For this fact pattern, I could see certain facts having an impact on the outcome of the fair use analysis: how much time has passed between the fair use copy and the later first-sale distribution? Are there any facts that one could impute a bad faith motive by the "fair user" (that silent but sometimes deadly "fifth" fair use factor)? Finally, even if the time between the copy and the distribution were short and there is some evidence bad faith, one could argue that the intent or bad faith of the fair user is totally irrelevant to the fair use inquiry (copyright infringement is a strict-liability tort, after all).
In other words, what is the longevity of a "lawfully made" copy? I don't believe a court has ruled on this question before.
What do you all think? I would enjoy hearing some debate around this.