Thursday, March 21, 2013

3.21.13 Sanity

This article originally appeared in the 3.21.13 issue of Metroland.

            I’m happy to report that the Supreme Court got something right.  Some months ago we talked here about a case before the Court involving a Thai student who bought inexpensive English textbooks in Thailand and sold them in the United States for sixable profits.  The publisher of the textbooks, Wiley, sued, saying that this was somehow illegal.  At the center of this is a fundamental principle of copyright law (and of personal property law in general) called the “first sale doctrine” which stands for the rather unremarkable idea that once you buy something, it’s yours and you can do whatever you want with it, including giving or selling it to somebody else.  Wiley claimed that this principle didn’t apply for some reason to copies of copyrighted products purchased outside of the United States.

            Sound insane?  Of course it does, but that didn’t stop a jury from finding the Thai student guilty of infringement and awarding Wiley damages $75,000 for each title he brought into this country.  And it didn’t stop the Second Circuit Court of Appeals, the most influential federal appeals court in the land, from upholding the verdict.  And it didn’t stop the Ninth Circuit Court of Appeals, the second most influential appeals court in the land, from making a similar finding in a similar case.

            And the Supreme Court restored some sanity this week, with a 6-3 vote reversing the lower courts and announcing that the first sale doctrine applies to goods that are purchased outside of the country.  Now, we’re all quite used to (and sick of) years of Supreme Court decisions by what appears to be a totally dysfunctional and partisan court, votes that are always split “along party lines,” right?  Well, lookie.  As I’ve often said, IP decisions never seem to go that way, and this case was no exception: Justice Brewer wrote the majority decision, joined by Alito, Kagan, Roberts, Sotomayor and Thomas; Justice Ginsberg wrote the dissent, joined by Kennedy and Scalia.  WTF is right!  One can only scratch one’s head.

            The 72-page decision starts out with an exhaustive (and exhausting) but not terribly convincing statutory analysis and discussion of the legislative history supporting its decision.  Then it starts flinging some basic and practical reality: libraries are full of books printed elsewhere; most new books sold in the U.S. are printed off-shore, many books don’t even say where they’re printed; “automobiles, micro­ waves, calculators, mobile phones, tablets, and personal computers” contain copyrightable software programs or packaging” that originate in foreign countries,  retailers of all types import mountains of copyrightable stuff overseas that’s already been sold once; how about museums wanting to display works created overseas that still have copyright protection?
            All these things would present huge issues and uncertainties if the first sale doctrine only applied to things purchased in the U.S..  The best that Wiley and the various amicus parties supporting it (including, shamefully, the Obama administration) could argue was that the law had never been applied that way, and that these were merely theoretical problems.  You know, the old “trust us, we’d never ever do that” routine.
            The majority, wonderfully, wasn’t buying this load of tripe, and wasn’t eager to open a Pandora’s box if it endorsed a copyright holder’s right to extraordinary control over copies of works manufactured and sold in foreign countries.
            Finally, and significantly, the majority smacked down Wiley’s, Obama’s, and the dissenters’ sniveling argument that the ruling would disrupt publishers’ long-standing business model of dividing up foreign markets and charging different prices in different countries as a way to maximize profits.  You know how we rant here from time to time that corporate America has hijacked copyright law?  How instead of promoting social good (as dictated in the Constitution), Big Media has mutated copyright law into a vehicle to prop up its outdated business models?  Well here it is in a legal argument before the Supreme Court—Big Publishing wants copyright law to protect the way it’s always done business, because to change would... it would... why, it would hurt profits and shareholder value!
            In a delightful passage that totally gooses us copyright geeks and portends more good things to come the Court ruled:
Wiley and the dissent claim that [today’s ruling] will make it difficult, perhaps impossible, for publishers (and other copyright holders) to divide foreign and domestic markets. We concede that is so. A publisher may find it more difficult to charge different prices for the same book in different geographic markets. But we do not see how these facts help Wiley, for we can find no basic principle of copyright law that suggests that publishers are especially entitled to such rights ...the Constitution’s language nowhere suggests that [copyright’s] limited exclusive right should include a right to divide markets or a concomitant right to charge different purchasers different prices for the same book, say to increase or to maximize gain. Neither, to our knowledge, did any Founder make any such suggestion.

            Expect a Big Media mad rush to Congress to “fix” this ruling.  Here’s hoping the Obama administration has learned a lesson here and starts to watch out for us, not them, for a change.

Paul Rapp is an intellectual property attorney from the Berkshires who, unlike you, wouldn’t mind if winter lasted forever.

Wednesday, March 06, 2013


This article originally appeared in the 3.7.13 issue of Metroland

            Maybe the most obscene trend of our lifetime is this mania about free markets.  It’s part of the racist tea party dogma, it’s central to neocon dogma, it’s why we have a sequestration happening in Washington.  It’s why the wealth inequality in this country is at an all time high.  It’s why both Wall Street and homeless shelters set records this week.  It’s why your net worth dropped at least 30% in the last 5 years.  And it’s been orchestrated by cretins like the Koch Brothers and rammed down our throats.

            And it’s utter bullshit.  Yes the law of supply and demand is nice and symmetrical and it makes sense, but as any college freshman econ student will explain, it only really works when there are many undifferentiated sellers.  When there’s not, and there almost never is, there’s an unbalanced market and who gets screwed?  You, the buyers.

            I got into a nice scrape last week on Facebook with one of these free market tards, (or freetards), when I posted a news item that some Republican running for governor somewhere had on his platform that the internet should be treated like a public utility.  I thought, first, damn, this guy gets it and second, what a refreshing thing for a Republican to be running on, what with the usual crap the party spews about guns and vaginas and stuff.

            And a message pops up “so, you’re for SOPA and PIPA, then?”  The inference being that if the big bad government is involved with the internet it will somehow wreck it.  The market will handle it.  Wrong.

            It’s like this: public utilities, like the phone and power companies, are public utilities because they provide things considered essential, because they use public property (like streets) and because they tend to be natural monopolies, and to the extent they’re not natural monopolies, they need supervision so they operate in the public interest, which they would not do otherwise.  

            For example, in 1934 Congress created the Federal Communications Commission (“FCC”) to oversee the telephone companies and declared that every citizen should be hooked up to the phone system and charged reasonable rates.  Very quickly, telephone lines went up across America in places they hadn’t been before, particularly in remote areas and small towns where providing cheap phone service was simply not profitable.  Everybody paid the same rate for service, with folks in densely populated areas generally subsidizing the service of folks out in the boonies.  And phone companies were required to offer super-cheap “life-line” rates, which again are subsidized by everybody else.  In 1936, Congress did the same thing for electric service with the Rural Electrification Act.

            Soon, virtually everyone in the country had at least the opportunity to have reasonably priced phone service and electricity, even those for whom providing this stuff was really expensive.  Power and phone companies have their operations and rates reviewed by regulators.   Where technology allows something resembling competition to take place, quasi-governmental institutions (like NYISO, which runs the New York State power grid) have sprung up to mimic a marketplace while maintaining enough control to protect the public.  If all this were just left to the market, lots of folks would still be talking to themselves in the dark.  Or dead.   And no one can seriously argue that these initiatives, which have almost nothing to do with the free market and everything to do with socialism, aren’t good things.  Fantastic things.

            It’s way past time for the same considerations to be applied to the internet.  The market is not providing.  Broadband internet is an essential of modern life, of public safety, and economic growth.  And we’re getting reamed.

            The United States is 29th in the world both in terms of internet speed and price.  Freakin’ Bulgaria has better and cheaper internet than we do.   We are 19th in the world in terms of broadband connectivity.    And we invented the damn thing! 

            Why do we suck so bad?  Two words: market failure.  There is no real competition and our government is controlled by the very corporations who are boning us with high prices and crap service.

            I’m in Western Massachusetts, suffering with slow and unreliable satellite internet that costs me $150 a month.  I have to be careful of what I download and upload because my service is metered.  It blows.  The state has some “public/private” thing going on that is supposedly running broadband-ready fiber-optic cable along some of the main roads out here, with the stated goal of bringing everyone wicked-fast internet.  They’re saying the “last mile” part of this, for those of use who don’t live on one of these main roads (which is most of us), will be a big no problemo, but there’s absolutely no specifics on, for instance, who is going to run the cable two and a half miles up to my house and how it’s gonna get paid for.

            I’m not optimistic.  But I’m praying to be proven wrong.  But even if this sketchy little initiative comes through, what about the rest of the country?  Remember, this is Massachusetts over here.  We’re different.  We went for George McGovern, for crying out loud.

Paul Rapp is an intellectual property attorney who maintains a hermit-like existence in the mountainous wilds of Western Massachusetts.  He often goes days without meaningful human contact save that with his so-called “friends” on various social media sites.