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A Balancing Act: The Movie Industry, Consumers’ Rights, and Fair Use.

August 19, 2009 by · Comments Off
Filed under: Copyright Articles 

When an author creates an original work in a tangible medium of expression they generally have a copyright in their work that prevents others from using it without the author’s permission.  The notable exception to this rule is the Fair Use Doctrine, where certain types of uses of copyrighted material do not create liability.

The following examples are generally considered Fair Use:

  • Criticism and Comment,
  • News Reporting,
  • Research and Scholarship,
  • Teaching, and
  • Parody

The line between what is Fair Use and what is infringement will often be uncertain, and while judges must decide each copyright infringement case on its own merits, copyright law is very closely tied to public policy.

New Law Suit over the Same Problems

In a landmark decision in intellectual property the Supreme Court in Sony Corp. of America v. University City Studios, Inc. ruled that the production of the Sony Betamax player does not make Sony liable for indirect copyright infringement.  Even though the device allowed home users to make copies of TV programs, the court found that home users were using the device to record shows so that they could watch them at a time other than when they aired.  They also held this ‘time shifting’ was Fair Use even though consumers were making copies of the programs.  This holding not only allowed users to take advantage of technological innovation but it also laid the groundwork for the purchase and rental of movies, actually increasing the market for the companies that tried to put a stop to this new technology.

What does this history lesson have to do with today?  A federal Judge in California has just issued a preliminary injunction against Real Networks preventing them from distributing their newest technological innovation: software that will allow users to easily transfer their DVDs onto their computer.  Real Networks is being sued by virtually all the big names in the movie industry under the claim that Real Networks software is in violation of its license agreement with the DVD Copy Control Association, and is thus violating the “Circumvention of copyright protection systems” section of the DMCA.  While this case has mostly been framed as a contractual dispute, it raises important questions about Fair Use and about the right for consumers to space shift (transfer their movie from one medium, the DVD, to another, the hard drive).  As intellectual property becomes a more and more valuable component of people’s lives the issue of what rights people have in regards to this property will become of increasing importance.

Tangible vs. Intellectual Property

There is one primary difference between intellectual and tangible property that has numerous repercussions in the way we can use each type of property.  When a person buys a piece of tangible property they own the physical object without restriction, generally.  When a person buys intellectual property, however, they don’t buy the song, or the movie, they are actually just buying a license and entering into a contract to use the intellectual property.  For example, even though you buy a song, you are not free to make copies of the song and distribute it to your friends.  Because you are entering into a contract when you buy intellectual property you may be agreeing to specific conditions about how you can use the property, such as only using software for personal, non-business use.  This sale through licensing agreements gives copyright holders a lot more control over how you can use your intellectual property.

Competing Interests

The arguments are compelling for both sides of the issue of copying DVDs.  If Real Networks is allowed to sell its DVD-ripping software users will be able to rent or borrow DVDs and make a movie library on their computer of films they never purchased.  An increase in movies available through illicit file sharing networks also seems conceivable.

On the other hand, computers are becoming a central part of people’s home entertainment.  As home theater computers increase in popularity and people begin to use computers more and more for entertainment that was traditionally viewed on the television set, the product Real Networks is selling has the potential to be an excellent tool for legitimate movie watchers.  After all, a person buys a DVD so they can watch a movie, not out of a desire to use their DVD player.  The medium they use to watch the movie is a matter of convenience, and is generally not substantive to the purchase of the movie.

The Real Networks and Betamax cases are strikingly similar, as they are both the result of the movie and television industry lagging behind the technological innovations used to view their products.  This case, like the Betamax case, is about record industries wanting to control how people can view their media.  The movie industry is using legal remedies to hold off technology until they create a business model that will allow them to effectively profit from this new technology.

As the cost of digital storage space declines, internet connection speeds increase, and the television and computer merge into a single device the idea of tying movies to a DVD is going to become as antiquated as the idea that music should only be listened to from a CD.  From a technological perspective the DVD and the CD are excellent comparisons.  However, from a legal standpoint the DVD is much more securely protected under the DMCA.  Under 17 U.S.C. § 1201 it is illegal for someone to circumvent a technological measure designed to protect a copyrighted work.  What this means is that anyone who wishes to create a device that can read a DVD must buy a license from the DVD Copy Control Association.  It is this method of licensing the right to decode DVDs that has made it so that the average consumer can’t create backups of their legally purchased DVDs.

The Balancing Act

Copyright is designed to balance two competing interests: the incentivizing of authors to create new works, and the value the public receives from freely using those works.  Right now, for DVDs the equation is stacked in favor of the copyright holders.  This makes sense as the interest of the public in having copies of movies on their hard drive is still relatively low.  But the public’s value in this technology is growing, and because of this the balance will shift toward the consumers and so will the law (hopefully).  Unfortunately, for now consumers will just have to wait until the balance of Fair Use shifts in their favor.