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become the property of the user, and the library or archives must have no notice that the copy or phonorecord will be used for any purpose other than private study, scholarship, or research. Second, the library or archives must prominently display a warning of copyright at the place where orders are accepted and on its order form.276

OUT-OF-PRINT WORKS FOR SCHOLARLY PURPOSES

A library may make and distribute a copy or phonorecord of an entire work if it has determined that a copy or phonorecord of the copyrighted work cannot be obtained at a fair price, subject to two additional conditions.27 First, the copy or phonorecord must become the property of the user, and the library or archives must have no notice that the copy or phonorecord will be used for any purpose other than private study, scholarship, or research. Second, the library or archives must prominently display a warning of copyright at the place where orders are accepted and on its order form.278

NEWS PROGRAMS

A library may reproduce and distribute by lending

a limited number of copies of an audiovisual news program.

INTERLIBRARY LOAN

The Copyright Act allows a library to make single copies of copyrighted works and to enter into interlibrary arrangements, but prohibits copying "in such aggregate quantities as to substitute for a subscription to or purchase

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of [a copyrighted) work."280 CONTU offered its offices to the interested parties

copyright owners, educators and libraries to develop guidelines to interpret the quoted phrase. The parties were successful in defining when such copying for the purpose of "borrowing" was not done in such aggregate quantities as

as to substitute for the subscription to or purchase of a work. These so-called CONTU Guidelines were later included in the Conference Report on the Copyright Act of 1976.281 The guidelines provide that a library may "borrow" not more than five copies per year of articles from the most recent five years of any journal title.282

The CONTU Guidelines have been an effective means to protect both the interests of copyright owners and to provide libraries a clear "safe" guide to follow in "borrowing" from other libraries. 283 In 1976, there were no readily available systems for the supply of single copies of, or for the licensing of the reproduction of multiple copies of copyrighted works. Now, that situation has changed and the continuing evolution of the NII will permit the establishment of licensing systems to supply copies or to permit users to make reproductions of works or portions of works more widely available. Indeed, a publisher's license to access or download all or a portion of the aggregated copyrighted works on a server might be viewed as the online equivalent of a subscription. A publisher might allow free access to a table of contents and then through an appropriate payment mechanism such as electronic cash or a credit card, license the downloading of a single article. This "publication on demand" might become an effective and economic substitute for interlibrary loan on the NII. While

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281

See H.R. REP. No. 1733, 94th Cong., 2d Sess. 72-73 (1976), reprinted in 1976 U.S.C.C.A.N. 5810, 5813-14 (hereinafter CONFERENCE REPORT).

282

Id. at 72, reprinted in 1976 U.S.C.C.A.N. 5813.

283

See discussion supra pp. 87-88.

the precise nature of all such systems cannot be known at this time, it is clear that the CONTU Guidelines, while remaining effective for print materials, cannot readily be generalized to "borrowing" electronic publications.

The Working Group emphasizes that the existence of systems for the supply of licensed copies of works or portions of works by electronic means does not negate the privileges conferred on libraries in Section 108(g)(2), nor do they limit "borrowing" permitted under existing voluntarily negotiated guidelines or such guidelines to set rules for interlibrary loan via the NII that may be negotiated in the

While it is clear that Section 108 does not authorize unlimited reproduction of copies in digital form, it is equally clear that Section 108(g)(2) permits "borrowing" in electronic form for interlibrary loan in the NII environment, so long as such "borrowing" does not lead to "systematic" copying. However, the existence of such licensing systems in a world of electronic publishing may make it difficult, if not impossible, to define "subscription or purchase" as intended, and equally impossible to apply the existing guidelines to all electronic transactions.

future.284

Therefore, new scenarios should be considered to avoid ambiguity and to continue to protect both the interests of copyright owners and to continue to provide libraries with a safe “borrowing” guide. Such scenarios are being considered in the on-going Conference on Fair Use. Should the parties fail to reach agreement in that forum, as noted earlier, a regulatory or legislative solution

may

be appropriate. Appropriate use of such electronic publishing systems by libraries can provide a ready means for avoiding not only liability for “borrowing” that exceeds that which is permitted under Section 108(g)(2) or any voluntarily negotiated guidelines developed by the concerned parties

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but also

any

need to devote resources to consider whether the "nth" transaction is "safe."

c. FIRST SALE DOCTRINE

285

A fundamental tenet of copyright law, and another limitation on the exclusive rights, is the "first sale doctrine, which prevents an owner of copyright in a work from controlling subsequent transfers of copies of that work. Once the copyright owner transfers ownership of a particular copy (a material object) embodying a copyrighted work, the copyright owner's exclusive right to distribute copies of the work is "extinguished" with respect only to that particular copy.

Section 109(a) of the Copyright Act provides:
Notwithstanding the provisions of section 106(3)
(which grants copyright owners the exclusive
right to distribute copies or phonorecords of a
work], the owner of a particular copy or
phonorecord lawfully made under this title, or
any person authorized by such owner, is entitled,
without the authority of the copyright owner, to
sell or otherwise dispose of the possession of that

copy or phonorecord.286 This limitation on the copyright owner's distribution right allows wholesalers who buy books to distribute those copies to retailers and retailers to sell them to consumers and consumers to give them to friends and friends to sell them in garage sales and so on -- all without the permission of (or payment to) the copyright owner of the work.

285

See T.B. Harms Co. v. Jem Records, Inc., 655 F. Supp. 1575, 1582 (D.N.J. 1987); Columbia Pictures Indus., Inc. v. Aveco, Inc., 612 F. Supp. 315, 319-20 (M.D. Pa. 1985), affd, 800 F.2d 59 (3d Cir. 1986).

286

17 U.S.C. S 109(a) (1988).

The first sale doctrine allows the owner of a particular copy of a work to dispose of possession of that

copy

in

any way for example, by selling it, leasing it, loaning it or giving it away. However, there is an exception to this exemption with respect to two types of works computer programs and sound recordings. The owner of a particular copy of a computer program or a particular phonorecord of a sound recording may not rent, lease or lend that copy or phonorecord for the purpose of direct or indirect commercial advantage.287 These exceptions were enacted because of the ease with which reproductions of those works can be made at a lower cost than the original with minimum degradation in quality.288 The rationale for these exceptions may apply to other types of works as more types of works become available in digital form and the "nexus" of rental and reproduction of those works "may directly and adversely affect the ability of copyright holders to exercise their reproduction and distribution rights under the Copyright Act.

11 289

287

of

a

See 17 U.S.C. S 109(b)(1)(A) (Supp. V 1993). The prohibition with respect to record rental does not apply to nonprofit libraries or nonprofit educational institutions for nonprofit purposes. Id. In addition, a nonprofit educational institution may transfer possession of a lawfully made copy computer program to another nonprofit educational institution or to faculty, staff and students. Id. Nonprofit libraries may also lend a computer program for nonprofit purposes if each copy has a copyright warning affixed to the package. 17 U.S.C. $ 109(b)(2)(A) (Supp. V 1993). The prohibition with respect to computer program rental does not apply to a computer program "which is embodied in a machine or product and which cannot be copied during the ordinary operation or use of the machine or product" or "a computer program embodied in or used in conjunction with a limited purpose computer that is designed for playing video games and may be designed for other purposes." 17 U.S.C. $ 109(b)(1)(B) (Supp. V 1993).

288

K. Corsello, The Computer Software Rental Amendments Act of 1990: Another Bend in the First Sale Doctrine, 41 CATH. U. L. REV. 177, 192 (1991).

289

See H.R. REP. No. 98-987, 98th Cong., 2d Sess. 2 (1984), reprinted in 1984 U.S.C.C.A.N. 2898, 2899 (justifying the Record Rental Amendment of 1984).

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