SOFTWARE LICENSING and COPYRIGHT
Jerry Pournelle
Saturday, June 16, 2001
Date:
Mon, 02 Aug 1999 13:32:11 –0700
From:
Joshua M.K. Masur <jmkm@ispchannel.com>
Subject:
File 2--Prologue to UCITA
Intellectual
property owners, unsatisfied with the scope of rights available under
copyright law, decide to try to expand their rights using contract.
They seal their products with a wrapper, not to be opened unless
the purchaser agrees with the terms of the "license" printed
upon it.
Sound
familiar? It should. It's
the record industry in the 1930s.
Judge
Learned Hand, of the Second Circuit Court of Appeals, widely considered
the greatest American jurist on intellectual property issues, was faced
with the issue in 1940. His
decision? Using "licenses" to expand copyright was
unconstitutional. The
federal Copyright Act preempted all contradictory state law under the
Supremacy Clause of the U.S. Constitution In 1940, in a case called RCA
v. Whiteman, Judge Hand wrote, "Certainly when the 'common-law
property' is in a work which the Copyright Act covers, there can be no
doubt; Congress has created the monopoly in exchange for a dedication,
and when the monopoly expires the dedication must be complete."
In
other words, intellectual property proprietors make a trade when they
opt to protect their works with copyright.
They get all copyright's protections, including criminal
sanctions for particularly egregious offenders.
In return, they grant all other rights to the public.
In the 1930s, that meant allowing broadcast of their sound
recordings. In the 1980s
and 90s, that means allowing creation of archival copies, or incidental
necessary copies of software, rights specifically granted under section
117 of the Copyright Act.
Which
is to say, the fight over UCITA ain't over yet.
UCITA
(the Uniform Computer Information Transactions Act, formerly known as
Proposed Article 2B of the Uniform Commercial Code) may have been
ratified by the National Conference of Commissioners on Uniform State
Laws this afternoon in Denver. But this battle is far from over, even if
it has changed venue. Now the focus shifts to state legislatures, at
least one of which -- Washington -- is virtually certain to enact UCITA.
Then come the inevitable court challenges.
And
therein lies the problem for UCITA:
it attempts to use contract to expand on copyright, creating what
David Nimmer calls "copyright plus." (Nimmer is author of the
leading copyright treatise and the person who introduced me to this case
and this line of thought.) But
copyright is not the baseline protection; as Learned Hand noted, it is
the maximum. And because
federal law -- and in this case, the Constitution that provides
explicitly for copyright -- trumps state law like contracts, UCITA's
viability is at least open to serious question.
Back
before he was a Supreme Court Justice, Oliver Wendell Holmes wrote that
when we say that something is the law, what we mean is that we predict
that a court, if faced with a specific question, will rule in a certain
way.
If
you need to predict what the courts will do, my money's still on Learned
Hand.
________________________________________
RCA
Manufacturing Co., Inc., v. Whiteman
114
F.2d 86 (2d Cir. 1940) Case citations omitted
L.
HAND, Circuit Judge.
This case comes up upon appeals by the plaintiff, RCA Manufacturing Company, Inc., and the defendants, Paul Whiteman and W.B.O. Broadcasting Corporation Before the action was brought Whiteman had filed a complaint against W.B.O. Broadcasting Corporation and Elin, Inc., to restrain the broadcasting of phonograph records of musical performances by Whitemans orchestra. By leave of court RCA Manufacturing Company, Inc., then filed the complaint at bar, as ancillary to Whitemans action, asking the same relief against W.B.O. Broadcasting Corporation and Elin, Inc., as Whiteman had asked in his action, and in addition asking that Whiteman be adjudged to have no interest in the records of his performances, because of contracts between him and itself. Whiteman thereupon discontinued his action, leaving only the ancillary action in which the judgment on appeal was entered.
The dispute is as to whether W.B.O. Broadcasting Corporation, as the purchaser of phonographic records prepared by RCA Manufacturing Company, Inc., of Whitemans orchestral performances, may broadcast them by radio. Whitemans performances took place in studios of RCA Manufacturing Company, Inc., which arranged for their reproduction upon ordinary phonographic disc records, and which, with the consent of Whiteman, sold the records to the public at large. Of the nine records here in question five were sold between November, 1932, and August 15, 1937, during which period every record bore the legend: Not Licensed for Radio Broadcast. (Apparently the four earlier records did not advise the purchaser of any such limitation.)
After
August 15, 1937, this notice was changed to read as follows: Licensed by
Mfr. under U.S. Pats. 1625705, 1637544, RE. 16588 (&; other Pats. Pending) Only For Non-Commercial Use on Phonographs in Homes.
Mfr. &; Original Purchaser Have Agreed This Record Shall Not
Be Resold Or Used For Any Other Purpose.
See Detailed Notice on Envelope.
These later records were inclosed in envelopes which even more
clearly gave notice of the same limitations.
W.B.O. Broadcasting Corporation every week bought from a New York
company, Bruno-New York, Inc., such records as it needed; it used them
thereafter to broadcast over its radio system.
Bruno-New York, Inc., had bought the records in question under a
contract with RCA Manufacturing Company, Inc. in which they agreed after
its date (August 9, 1937) to resell only for non-commercial use on
phonographs in homes as per the notice appearing on the record labels
and envelopes. It may be
assumed that W.B.O. Broadcasting Corporation is charged with notice of
the legends on the records, and with the contract of Bruno-New York,
Inc., and that it broadcasts them on its radio system in disregard of
both.
The
questions raised below were whether Whiteman and/or RCA Manufacturing
Company, Inc., had any musical property at common-law in the records
which radio broadcasting invaded; whether Whiteman had passed any rights
which he may have had to RCA Manufacturing Company, Inc., under certain
agreements, not necessary to be set out; and whether, if either Whiteman
or RCA Manufacturing Company, Inc., had any such common-law property,
the legends and notice enabled them, or either of them, to limit the
uses which the buyer might make of the records.
The judge held that all of Whitemans rights had passed to RCA
Manufacturing Company, Inc., which for that reason was entitled to
enjoin the broadcasting of these records; and that Whiteman was also
entitled to an injunction against W.B.O. Broadcasting Corporation
because it was unfair competition to broadcast his performances without
his consent. All parties
appealed except Elin, Inc. The
RCA Manufacturing Company, Inc., appealed because the judge did not
recognize its common-law artistic property, arising out of the skill and
art necessary to obtain good recording, and also because of the
affirmative relief granted to Whiteman.
Whiteman appealed because of the holding that he had lost all his
rights to RCA Manufacturing Company, Inc., under its contracts with him.
W.B.O. Broadcasting Corporation appealed because any relief was granted
against it
It
is only in comparatively recent times that a virtuoso, conductor, actor,
lecturer, or preacher could have any interest in the reproduction of his
performance. Until the
phonographic record made possible the preservation and reproduction of
sound, all audible renditions were of necessity fugitive and transitory;
once uttered they died; the nearest approach to their reproduction was
mimicry. Of late, however,
the power to reproduce the exact quality and sequence of sounds has
become possible, and the right to do so, exceedingly valuable; people
easily distinguish, or think they distinguish, the rendition of the same
score or the same text by their favorites, and they will pay large sums
to hear them. Hence this
action. It was settled at least a century ago that the monopoly of
the right to reproduce the compositions of any author his common-law
property in them was not limited to words; pictures were included.
This right has at times been stated as though it extended to all
productions demanding intellectual effort; and for the purposes of this
case we shall assume that it covers the performances of an orchestra
conductor, and what is far more doubtful the skill and art by which a
phonographic record maker makes possible the proper recording of those
performances upon a disc. It
would follow from this that, if a conductor played over the radio, and
if his performance was not an abandonment of his rights, it would be
unlawful without his consent to record it as it was received from a
receiving set an d to use the record.
Arguendo, we shall also assume that such a performance would not
be an abandonment, just as performance of a play, or the delivery of a
lecture is not; that is, that it does not publish the work and dedicate
it to the public. Nevertheless,
even if Whitemans common-law property in his performances survived the
sale of the records on which they were inscribed, it would be very
difficult to see how he, or a fortiori the maker of the records, could
impose valid restrictions upon their resale.
Concededly that could not be done (regardless of the present
statutory prohibition) if the restriction went to the resale price.
It would also have been impossible if the restriction forbad the
buyer to use the article except with other articles bought of the record
maker. We do not, however,
have that question to decide, for we think that the common-law property
in these performances ended with the sale of the records and that the
restriction did not save it; and that if it did, the records themselves
could not be clogged with a servitude.
Copyright
in any form, whether statutory or at common-law, is a monopoly; it
consists only in the power to prevent others from reproducing the
copyrighted work. W.B.O.
Broadcasting Corporation has never invaded any such right of Whiteman;
they have never copied his performances at all; they have merely used
those copies which he and the RCA Manufacturing Company, Inc.; made and
distributed. The putatively
protected performances were themselves intended for that purpose and for
that alone; the situation was precisely the same as though Whiteman and
RCA Manufacturing Company, Inc., had combined to produce an original
musical score and inscribe it upon records.
The records at bar embodied Whitemans common-law property his
contribution as a conductor in precisely the same way that the record of
such a score would embody his composition.
Hence the question is no different from whether he might
disseminate a musical score to the public at large, but impose a
limitation upon it that buyers should not use it to broadcast for
profit. Whatever might be said of that if the sale were not a
publication it will hardly be argued that if it was a publication in the
sense that that destroys the common-law property, the restriction upon
the use of the record would be valid notwithstanding.
Restrictions upon the uses of chattels once absolutely sold are
at least prima facie invalid; they must be justified for some
exceptional reason, normally they are repugnant to the transfer of
title. If the common-law
property in the rendition be gone, then anyone may copy it who chances
to hear it, and may use it as he pleases.
It would be the height of unreasonableness to forbid any uses to
the owner of the record which were open to anyone who might choose to
copy the rendition from the record.
To revert to the illustration of a musical score, it would be
absurd to forbid the broadcast for profit of its record, if any hearer
might copy it and broadcast the copy.
Thus, even if Whiteman and RCA Manufacturing Company, Inc., have
a common-law property which performance does not end, it is immaterial,
unless the right to copy the rendition from the records was preserved
through the notice of the restriction.
As
applied to books, where the problem is precisely the same, there is not
very much law as to whether such restrictions prevent complete
dedication, but the judges who have passed upon the question have
declared, at times with much certainty, that they are nugatory.
In 1898 the Court of Appeals of New York flatly so decided in
Jewelers Mercantile Agency v. Jewelers Publishing Co., and that is the
leading case. Judge Putnam
had held the same in 1896 and he was followed by Judge Townsend, Judge
Lacombe and Judge Ward. In
his dissenting opinion in International News Service v. Associated
Press, Mr. Justice Brandeis spoke of the law as well-settled to that
effect. It is quite true
that if publication were merely a question of intent, these decisions
are wrong, for the intent is obvious not to dedicate the whole right.
The problem is not so simple; in dealing with a monopoly the law
imposes its own limits. Certainly when the common-law property is in a
work which the Copyright Act covers, there can be no doubt; Congress has
created the monopoly in exchange for a dedication, and when the monopoly
expires the dedication must be complete. If the records were registrable under the act, the
restriction would therefore certainly not limit the dedication. The fact that they are not within the act should make no
difference. It is indeed
argued that by virtue of Donaldson v. Becket, there is a perpetual
common-law copyright in works not copyrightable under the act; we have
answered that argument in Fashion Originators Guild v. Federal Trade
Commission, and need not repeat what we said.
That being true, we see no reason why the same acts that
unconditionally dedicate the common-law copyright in works copyrightable
under the act, should not do the same in the case of works not
copyrightable. Otherwise it
would be possible, at least pro tanto, to have the advantage of
dissemination of the work at large, and to retain a perpetual though
partial, monopoly in it. That
is contrary to the whole policy of the Copyright Act and of the
Constitution. Any relief
which justice demands must be found in extending statutory copyright to
such works, not in recognizing perpetual monopolies, however limited
their scope.
It
is true that the law is otherwise in Pennsylvania, whose Supreme Court
in 1937 decided that such a legend as the records at bar bore, fixed a
servitude upon the discs in the hands of any buyer.
We have of course given the most respectful consideration to the
conclusions of that great court, but with much regret we find ourselves
unconvinced for the reasons we have tried to state.
However, since that is the law of Pennsylvania and since the
broadcasting will reach receiving sets in that state, it will constitute
a tort committed there; and if an injunction could be confined to those
sets alone, it would be proper. It cannot; for even if it be mechanically possible to prevent
any broadcasting through the angle which the state of Pennsylvania
subtends at the transmission station, that would shut out points both in
front of, and beyond, Pennsylvania.
We must therefore choose between denying any injunction whatever
since in our judgment the act is unlawful only in Pennsylvania or
enjoining W.B.O. Broadcasting Corporation from broadcasting throughout
the Union and in Canada in order to prevent a tort in Pennsylvania
alone. This would be an
obvious misuse of the writ which goes only in aid of justice.
Whiteman
and the plaintiff also rest their case upon the theory of unfair
competition, depending for that upon International News Service v.
Associated Press. That
much discussed decision really held no more than that a western
newspaper might not take advantage of the fact that it was published
some hours later than papers in the east, to copy the news which the
plaintiff had collected at its own expense.
In spite of some general language it must be confined to that
situation; certainly it cannot be used as a cover to prevent competitors
from ever appropriating the results of the industry, skill, and expense
of others. Property is a historical concept; one may bestow much labor
and ingenuity which inures only to the public benefit; ideas, for
instance, though upon them all civilization is built, may never be
owned. The law does not
protect them at all, but only their expression; and how far that
protection shall go is a question of more or less; an author has no
natural right even so far, and is not free to make his own terms with
the public. In the case at
bar if Whiteman and RCA Manufacturing Company, Inc., cannot bring
themselves within the law of common-law copyright, there is nothing to
justify a priori any continuance of their control over the activities of
the public to which they have seen fit to dedicate the larger part of
their contribution. We are
adjured that courts must adjust themselves to new conditions, and that
in the case at ba r justice clearly points the way to some relief. We
cannot agree; no doubt we should be jealous to execute all reasonable
implications of established doctrines; but we should be equally jealous
not to undertake the composition of substantial conflicts of interests,
between which neither the common-law, nor the statute, has given any
clue to its preference. We cannot know how Congress would solve this issue; we can
guess and our guess is that it would refuse relief as we are refusing it
but if our guess were the opposite, we should have no right to enforce
it. If the talents of
conductors of orchestras are denied that compensation which is necessary
to evoke their efforts because they get too little for phonographic
records, we have no means of knowing it, or any right to assume it; and
it is idle to invoke the deus ex machina of a progress which is probably
spurious, and would not be for us to realize, if it were genuine.
Finally,
appeal is made to the doctrine that W.B.O. Broadcasting Corporation is
guilty of a tort or at least that it is a factor in determining its
unfair competition because it induces Bruno-New York, Inc., to violate
its contract with RCA Manufacturing Company, Inc.
Whatever remedies RCA Manufacturing Company, Inc., may have under
that contract, they are not before us.
As between Bruno-New York, Inc., and W.B.O. Broadcasting
Corporation, the contract is a nullity; RCA Manufacturing Company. Inc.,
had no power to impose the pretended servitude upon the records; and
W.B.O. Broadcasting Corporation is free to buy and use them in entire
disregard of any attempt to do so.
It scarcely seems necessary to discuss the strange assertion that
to broadcast the records in some way invades somebodys right of privacy,
presumably Whitemans. Nor
need we say that insofar as radio announcers declare, directly or
indirectly, that the broadcast of a Whiteman record is the broadcast of
a Whiteman performance, that conduct is a tort which Whiteman could
enjoin. That would indeed be unfair competition.
It
follows that the complaint must be dismissed, and for reasons which make
it unnecessary to determine how far Whitemans contracts with RCA
Manufacturing Company, Inc., preserved any common-law copyrights he
might have had, if they had survived the sale of the records.
Judgment
reversed; complaint dismissed; costs to W.B.O. Broadcasting Corporation.
