by Terence Keegan
Hollywood studios view the UltraViolet cloud service as a make-or-break marketing effort to rejuvenate packaged media sales in anÂ access-everywhere era.Â However, the response from consumers who remain faithful to buying Blu-rays and DVDs â but who have no use for UV access to movies â is raising new legal questions of consumer âownership.â
From the launch of UltraViolet value-adds with Blu-ray and DVD packages last October, industry analysts have warned that an online secondary market for access codes to digital copies of films could quickly develop, creating a new headache for Hollywood (see GigaOm).Â The issue resurfaced this week, when The Consumerist reported that eBay had taken down a consumer auction of an unused UltraViolet code from a copy of new Paramount release âMission: Impossible â Ghost Protocol.â
According to the report, eBay cited copyright infringement as the reason for the takedown â obviously irksome to the bona fide Blu-ray purchaser, who believes the digital copy of the movie is “his.”
Itâs long been accepted that consumers are not violating U.S. copyright law when they sell Blu-ray discs that they previously purchased. But is it legal for consumers to keep the discs they bought and sell the UltraViolet access codes that come with them?
Probably not, says Jim Burger, an attorney who specializes in intellectual property and entertainment content licensing. As a consumer, says Burger, âthe UV access codes represent the purchase of a bundle of rights to download copies of movies for playback on authorized devices or to stream the movies.â
Essentially, he continues, âuse of the UV code is governed by the UV license, [which] permit[s] the owner of the disc to access digital content in the cloud and does not allow resale of the service.â Unlike with used discs and other packaged media, the transfer of such a license is likely not protected under the âfirst sale doctrineâ in U.S. copyright law, says Burger, who is a member of the Washington, DC law firm Dow Lohnes.
Sellers of UltraViolet codes also may be in violation of the âshrinkwrap licenseâ that they agree to when they purchase the UltraViolet titles, Burger says. Meanwhile, the buyers of the codes on eBay could be theoretically liable for copyright infringement, as their downloading of movies using the codes would be unauthorized by the studio.
Given all this, says Burger, itâs not surprising that eBay is being âsuper-cautiousâ in removing UV code auctions from its site.
How Big A Problem?
One comment to the April 18 Consumerist story observed that there were only 39 listings for UV codes on eBay at the time. Yet other comments maintain that download code auctions are much more numerous, with most ending soon after they begin to elude takedown â and few mentioning “UltraViolet” by name.
A handful of auctions for UltraViolet digital copy codes â as well as for download codes from CD and video game packages â Â were live on eBay Friday afternoon. No UV code auctions were fetching more than $6, and none had more than three bids.
For UltraViolet marketers, the legal questions surrounding “first sale” issues of digital copy codes may mount. But it seems likely that for now, simply introducing consumers to UltraViolet, and selling them on the benefits of the system, will remain studiosâ biggest challenges.
The U.S. Supreme Court issued a split decision (with Justice Elena Kagan having recused herself) in a case involving an application of the so-called âfirst saleâ doctrine: specifically, retailer Costcoâs right to resell in U.S. stores luxury Omega watches that it purchased from a third party abroad.
The Courtâs 4-4 tie means that a lower courtâs rejection of Costcoâs first-sale defense stands, along with a narrow view of the copyright doctrine as limited to purchases within the U.S.
But the Supreme Court decision sets no new nationwide precedent on the doctrine, without which the DVD rental and pre-owned videogame retail businesses might not exist. Legal analysis at Wired and SCOTUSblog.
A federal appeals court in Seattle recently held the terms of a commercial software publisherâs end user license agreement (EULA) to bar the softwareâs resale by the original consumer. On its face, the courtâs decision in Vernor v. Autodesk brings business software in line with the entertainment media business, where digital distribution models have already begun to supplant the âfirst sale doctrineâ of physical media.
Larry Downes, a nonresident fellow at the Stanford Law School Center for Internet & Society, argues on CNET that the Vernor v. Autodesk case reinforces a shift in information consumption that âhas already happenedâ for software publishers. The shift, Downes says, is a good thing. In the entertainment space, âas consumers overcome their emotional attachment to ownership and embrace the rental model, subscription and rental services for all kinds of content are becoming increasingly popular.â
But ownership still has its applications â and its defenders. The Electronic Frontier Foundation (EFF), which filed an amicus brief in the Vernor case, criticizes the Ninth Circuit Court of Appeals for essentially finding that a software publisher can gain the rights of a licensor by labeling software their sales as âlicenses.â The Vernor courtâs test could make quick work of the first sale doctrine if entertainment software (viz. videogame) publishers ever pushed for its adoption.
According to the EFF, âThe Court held that the copyrightâs first sale doctrine â the law that allows you to resell books and that protects libraries and archives from claims of copyright infringement â doesnât apply to software (and possibly DVDs, CDs and other âlicensedâ content) as long as the vendor saddles the transfer with enough restrictions to transform what the buyer may think is sale into a mere license.â