Communication Law and Policy ISSN: 1081-1680 (Print) 1532-6926 (Online) Journal homepage: http://www.tandfonline.com/loi/hclw20 Toward Cultural Democracy: Digital First Sale Doctrine and Copyright Yoonmo Sang To cite this article: Yoonmo Sang (2016) Toward Cultural Democracy: Digital First Sale Doctrine and Copyright, Communication Law and Policy, 21:2, 221-249, DOI: 10.1080/10811680.2016.1166031 To link to this article: http://dx.doi.org/10.1080/10811680.2016.1166031 Published online: 19 Apr 2016. Submit your article to this journal View related articles View Crossmark data Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=hclw20 Download by: [Howard University] Date: 19 April 2016, At: 12:43 21 COMM. L. & POL’Y 221–249 (2016) Copyright © Taylor & Francis Group, LLC ISSN: 1081-1680 print / 1532-6926 online DOI: 10.1080/10811680.2016.1166031 TOWARD CULTURAL DEMOCRACY: DIGITAL FIRST SALE DOCTRINE AND COPYRIGHT Downloaded by [Howard University] at 12:43 19 April 2016 YOONMO SANG* Economic efficiency has been the dominant justification for copyright protection in the United States. Challenging that narrow perspective, this study argues that cultural democracy provides a broader, more encompassing framework for reforming copyright laws in support of users’ access to and use of creative works. The study demonstrates how the normative values promoted by cultural democracy are synonymous with the socially beneficial effects of the first sale doctrine. Additionally, the study contextualizes and further elaborates the notion of cultural democracy by providing more concrete examples of how cultural democracy plays out in practice. In doing so, this study focuses on individuals’ use of ebooks and the role of public libraries in the digital age. Since enactment of the Copyright Act of 1790, U.S. lawmakers have continuously enlarged copyright protection in favor of copyright holders by extending the term of protection. In doing so, they have relied mainly on dominant justification — so-called “economic efficiency.” Proponents of economic efficiency claim that the goal of copyright legislation is to maximize the wealth of society.1 When rationalizing copyright legislation, they place a high value on the economic efficiency or welfare of society ∗ Assistant Professor, Department of Strategic, Legal and Management Communication, Howard University. This article is drawn from the author’s Ph.D. dissertation at the University of Texas at Austin. 1 See WILLIAM M. LANDES & RICHARD A. POSNER, THE ECONOMIC STRUCTURE OF INTELLECTUAL PROPERTY LAW (2003); Stephen Breyer, The Unease Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs, 84 HARV. L. REV. 281 (1970); Frank H. Easterbrook, Intellectual Property is Still Property, 13 HARV. J. L. & PUB. POL’Y 108 (1990). Downloaded by [Howard University] at 12:43 19 April 2016 222 Y. SANG as a whole.2 This reasoning was reflected in Mazer v. Stein, decided by the Supreme Court of the United States in 1954: “The economic philosophy behind the clause empowering Congress to grant patents and copyrights is the conviction that encouragement of individual effort by personal gains is the best way to advance public welfare.”3 Although there is disagreement within the framework of economics over what constitutes the proper level of copyright protection,4 regardless of their position on economic efficiency, most scholars agree that copyright is a mechanism that addresses two fundamental features of the public good: non-excludable and non-rivalrous.5 Intellectual and creative works are non-excludable, in that once they are created and made available, it is difficult to prevent others from enjoying them. Intellectual works are also non-rivalrous, in that one person’s use of a creative work does not reduce others’ ability to enjoy it. In other words, the use of creative expression in this study does not compete with that of others. It is commonly said that intangible goods, such as music and scientific knowledge, are non-rivalrous and non-excludable and subject to the so-called “free-rider” problem; therefore “the market by itself cannot provide a proper motivation for the production of intangible goods.”6 The granting of financial incentives to creators for new works is important. However, at the same time, cultural progress cannot move forward without a mechanism that secures the ability of users to access creative works that already exist. In recognition of those competing interests, copyright scholars, courts and policymakers argue that copyright law is intended to seek a balance between providing incentives to create and promoting access to creative works.7 From an economic perspective, finding the optimal balance between incentives and access is a challenge.8 To date, efforts to find a balance have relied on the law-and-economics framework that focuses on economic efficiency. This narrow reasoning mostly ignores other normative values that include equitable access to creative works, distribution, and furthering the 2 See, e.g., Oren Bracha & Talha Syed, Beyond Efficiency: Consequence-Sensitive Theories of Copyright, 29 BERK. TECH. L. J. 229 (2014). 3 347 U.S. 201, 219 (1954). 4 For a detailed discussion of the disagreement, see Neil Weinstock Netanel, Copyright and a Democratic Civil Society 26–62 (1998) (unpublished J.S.D. dissertation, Stanford University). 5 See TARLETON GILLESPIE, WIRED SHUT: COPYRIGHT AND THE SHAPE OF DIGITAL CULTURE 25 (2007); Minjeong Kim, The Representation of Two Competing Visions on the Fundamentals of Copyright: A Content Analysis of Associated Press News Coverage on Copyright, 2004-2009, 16 COMM. L. & POL’Y 49, 61-62 (2011). 6 Kim, supra note 5, at 62. 7 See David W. Barnes, The Incentives/Access Tradeoff , 9 NW. J. TECH. & INTELL. PROP. 96 (2010). 8 See Bracha & Syed, supra note 2, at 237–40. Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 223 cultural participation of ordinary people.9 As Madhavi Sunder argues, the law-and-economics paradigm “(1) . . . fails descriptively as a comprehensive account of extant legal doctrine, (2) . . . fails prescriptively as the exclusive basis for deciding the important intellectual property conflicts of the day, and (3) . . . fails to capture fully the dynamics of cultural creation and circulation.”10 In other words, the law-and-economics paradigm focuses on the overall welfare as measured by monetary value. The basic tenet of the economic efficiency approach is the “maximization of cultural output,”11 a calculus that does not confront “distinctions between the developed and developing worlds, the urban and the rural, and women and men, or among blacks, Asians, Latinos, and whites.”12 As Henry Jenkins notes, “Current copyright law simply doesn’t have a category for dealing with amateur creative expression . . . . It surely demands reconsideration as we develop technologies that broaden who may produce and circulate cultural materials.”13 Many creators participate in the creation and circulation of creative works without economic motives.14 For example, the profit motive does not serve well the desire for widespread distribution among developers of free and open software and authors of academic papers. In recognition of limitations of economic efficiency framework, a growing body of scholarship on copyright calls for the need to expand the economic paradigm’s narrow focus.15 Alternative views of the goals of copyright law, as Madhavi Sunder points out, pay greater attention to the word “culture.”16 Such phrases as “cultural environmentalism,” “free culture,” “democratic culture,” and “cultural democracy” elaborate normative values within the context of copyright.17 Normative values such as self-determination, political democracy, and cultural democracy are 9 See SIVA VAIDHYANATHAN, COPYRIGHTS AND COPYWRONGS: THE RISE OF INTELLECPROPERTY AND HOW IT THREATENS CREATIVITY (2001). 10 MADHAVI SUNDER, FROM GOODS TO A GOOD LIFE: INTELLECTUAL PROPERTY AND GLOBAL JUSTICE 25 (2012). 11 Id. at 29. 12 Id. at 30. 13 HENRY JENKINS, CONVERGENCE CULTURE: WHERE OLD AND NEW MEDIA COLLIDE 198 (2006). 14 See YOCHAI BENKLER, THE WEALTH OF NETWORKS: HOW SOCIAL PRODUCTION TRANSFORMS MARKETS AND FREEDOM 60 (2006). 15 See Bracha & Syed, supra note 2, at 232. See also SUNDER, supra note 10, at 31. 16 SUNDER, supra note 10, at 6. 17 See JAMES BOYLE, THE PUBLIC DOMAIN: ENCLOSING THE COMMONS OF THE MIND 241 (2008); LAWRENCE LESSIG, FREE CULTURE: HOW BIG MEDIA USES TECHNOLOGY AND THE LAW TO LOCK DOWN CULTURE AND CONTROL CREATIVITY 30 (2004); Jack Balkin, Digital Speech and Democratic Culture: A Theory of Freedom of Expression for the Information Society, 79 N. Y. U. L. REV. 1, 3 (2004); Bracha & Syed, supra note 2, at 253-56. TUAL Downloaded by [Howard University] at 12:43 19 April 2016 224 Y. SANG valued by democratic copyright theorists who envision copyright as a tool for protecting copyright’s democratic principles.18 To be sure, democratic copyright theorists do not deny the importance of economic analysis in determining who gets the rewards of creative expression and how the output is distributed. Rather, in challenging the dominance of the economic efficiency paradigm, they argue that the narrow economic discourse needs to be supplemented by other democratic approaches to copyright law. Some commentators argue that the economic efficiency paradigm needs to be complemented by insights from other disciplines, such as anthropology, cultural studies, philosophy, science and technology studies, and sociology.19 This study seeks to contribute to that line of thinking by showing that the notion of cultural democracy can provide a broader, more encompassing framework for reforming copyright laws. In doing so, the study provides a detailed discussion of the concept of cultural democracy and describes examples of values the concept promotes. Then it illustrates ways cultural democracy can be understood in connection with individuals’ engagement with cultural works. A discussion of the relationship between cultural democracy and social benefits of the first sale doctrine follows. (The first sale doctrine, codified at Section 109(a) of the Copyright Act, states that “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.”). Finally, the study concludes that having a normative framework that considers broader societal interests is important for balancing interests between copyright holders and users of copyrighted material. THE CONCEPT OF CULTURAL DEMOCRACY In discussions of copyright law, the term “culture” has garnered attention from intellectual property scholars but with scant attention directed to the meaning of “culture.”20 Given that culture carves out spaces within which individuals’ decisions about their own lives and collective decisions are made and various alternative options are considered, it is important that the shaping of those spaces be frequently 18 See Yochai Benkler, Free as the Air to Common Use: First Amendment Constraints on Enclosure of the Public Domain, 74 N.Y.U. L. REV. 354 (1999); Bracha & Syed, supra note 2; Niva Elkin-Koren, Cyberlaw and Social Change: A Democratic Approach to Copyright Law in Cyberspace, 14 CARDOZO ARTS & ENT. L.J. 215 (1996); Neil Weinstock Netanel, Copyright and a Democratic Civil Society, 106 YALE L.J. 283 (1996). 19 See JULIE COHEN, CONFIGURING THE NETWORKED SELF: LAW, CODE, AND THE PLAY OF EVERYDAY PRACTICE 19 (2012); SUNDER, supra note 10, at 32. 20 See SUNDER, supra note 10, at 6-7, 45. Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 225 recalibrated. Intellectual property is considered a legal tool that regulates how the cultural sphere is reshaped through ongoing processes of boundary making.21 Within the broad category of culture, cultural democracy emphasizes democratic values, such as individual autonomy, expressive diversity, and active participation by ordinary people in cultural meaning-making processes.22 More specifically, in rationalizing copyright protection and its consequences, proponents of cultural democracy look upon copyright law as a tool that helps individuals fulfill their life-choices and express their autonomy in the cultural sphere.23 Cultural democracy is a concept found in arenas other than intellectual property scholarship. In the early twentieth-century, Rachel Davis DuBois developed the concept of cultural democracy that advocates the significance of intercultural education and the sharing of cultural values.24 DuBois defined cultural democracy as “a conscious sharing of our cultural values — a creative use of differences.”25 DuBois noted that only in a democracy is it possible to carve out cultural spaces where “a creative use of differences” can take place.26 The type of cultural sharing occurring within those spaces she referred to as “cultural democracy.”27 DuBois explained: To hold that each of these [various cultural and religious groups], as each individual, is entitled to its right to life, liberty, and the pursuit of its particular kind of happiness, as long as it does not interfere with the welfare of the whole, is the virtue of tolerance. But this is to be merely tolerant. Because society is one organic whole, it must be sustained by more than tolerance. It requires integration. Society needs to make a creative use of differences.28 During the 1940s, when the dominant American philosophy of culture focused on cultural assimilation, DuBois advocated the importance of differences and argued for accepting and benefiting from diverse perspectives and cultures. Her unique American voice has since resonated 21 See id. at 45. See Bracha & Syed, supra note 2, at 253-56. 23 See id. at 253-56. 24 RACHEL DAVIS DUBOIS, GET TOGETHER AMERICANS: FRIENDLY APPROACHES TO RACIAL AND CULTURAL CONFLICTS THROUGH THE NEIGHBORHOOD-HOME FESTIVAL (1943). See also JAMES BAU GRAVES, CULTURAL DEMOCRACY: THE ARTS, COMMUNITY, AND THE PUBLIC PURPOSE (2005). 25 DUBOIS, supra note 24, at 54. 26 Id. at 5. 27 Id. 28 Id. at 6 (emphasis in original). 22 226 Y. SANG Downloaded by [Howard University] at 12:43 19 April 2016 with peace efforts during wartime and in support of the civil rights of ethnic minorities. With reference to copyright law, cultural democracy has not received adequate attention compared to political and economic democracy, although the notion of cultural democracy is equally important and the three domains are inextricably interconnected.29 Echoing DuBois’ perspective, the 1976 Oslo Ad Hoc Conference of European Ministers with Responsibility for Cultural Affairs offered: Cultural democracy implies placing importance on amateurs and on creating conditions which will allow people to choose to be active participants rather than just passive receivers of culture. A cultural policy which aims at creating cultural democracy must necessarily be decentralized. Decentralization must be considered both a means and an end in cultural policy.30 Yves Evrard explored the origin of, philosophical roots of, and links between the two paradigms of the democratization of culture and cultural democracy.31 Democratization of culture is to “disseminate major cultural works to an audience that does not have ready access to them, for lack of financial means or knowledge derived from education,”32 a paradigm that emphasizes outcomes rather than opportunities. By contrast, cultural democracy valorizes individuals’ freedom to make life choices based on their own preferences. The cultural democracy paradigm implies “an equality of opportunities, in which the market structure needs to be varied enough to respect taste diversity and satisfy each segment of taste.”33 That is, cultural democracy supports the value of individual preferences and encourages the acceptance of and benefits derived from the diversity of perspectives and cultures. More pertinent to the present study, Oren Bracha and Talha Syed articulated the notion of cultural democracy in the context of copyright.34 They argued that cultural democracy takes the notion of selfdetermination to the cultural sphere and seeks decentralized cultural meaning-making processes by ensuring opportunities for ordinary people to actively participate in those cultural meaning-making processes.35 Here, cultural democracy is about providing equitable opportunities 29 See GRAVES, supra note 24, at 10. Quoted in Jørn Langsted, Double Strategies in a Modern Cultural Policy, 19 J. OF ARTS MGT. AND L., 53, 55-56 (1989). 31 Yves Evrard, Democratizing Culture or Cultural Democracy?, 27 J. OF ARTS MGT., L. AND SOC’Y, 167, 167 (1997). 32 Id. at 167. 33 Id. at 173. 34 Bracha & Syed, supra note 2. 35 Id. at 253-56. 30 Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 227 through which people can have meaningful liberty with regard to life choices that reflect their own preferences and tastes and that they can afford. Secondary markets in which copyrighted books are sold or donated to others by original owners under the first sale doctrine can be seen as providing equitable opportunities. In that regard, cultural democracy and the first sale doctrine share a common goal, supported also by the lending practices of public libraries. Jack Balkin defined democratic culture as a culture where “individuals have a fair opportunity to participate in the forms of meaning making that constitute them as individuals.”36 He argued that “democratic culture is valuable because it gives ordinary people a say in the progress and development of the cultural forces that in turn produce them.”37 This line of thinking is related to the concept of self-determination that values an individual’s ability to effectively pursue his or her life choices and to revise them freely.38 In that regard, the particular values that are promoted by the core concept of cultural democracy and democratic culture are similar. CULTURAL DEMOCRACY VALUES Cultural democracy supports values of a democratic culture in these ways: through advancement of individuals’ self-determination, through decentralization of cultural meaning-making processes that encourage individuals’ active participation, and through policies that support public libraries as core cultural institutions that provide access to information and knowledge, intellectual freedom, preservation of our culture, and other democratic values. Many of the goals that public lending libraries pursue are connected to the core values of cultural democracy. Advancement of Individuals’ Self-Determination Building upon liberal democratic theories, cultural democracy takes the notion of self-determination to the cultural sphere by emphasizing the realization of self-determination based on individuals’ freedom of expression.39 The liberties of self-expression include not only individuals’ freedom to express their ideas but also their ability to use copyrighted expressions.40 36 Balkin, supra note 17, at 3. Id. at 35. 38 See Bracha & Syed, supra note 2, at 251-52. 39 See id. at 254. 40 See Balkin, supra note 17, at 43-44. The liberty of self-expression does not imply that cultural participation necessarily requires the appropriation of existing cultural works. 37 Downloaded by [Howard University] at 12:43 19 April 2016 228 Y. SANG Access to knowledge and creative works is prerequisite to the realization of speech rights.41 Copyright holders, however, are able to inhibit people’s realization of speech or cultural participation by blocking their access to copyrighted works. Accordingly, the interrelationship and tension between free speech and copyright law continues to garner attention.42 It is worth noting that “free speech defenses are inconsistently interpreted and dismissed without due consideration” in intellectual property cases.43 Notably, when it comes to copyright cases, free speech arguments are not always successful in court.44 When the fair use defense is not applied, various types of free speech activities, including making documentary films, parodies or Internet memes, can be subject to copyright infringement arguments.45 Free speech is essential to both individual autonomy and democracy. The question of how far or to what extent one can use and manipulate copyrighted expressions by others is also intrinsically related to the issue of self-determination. Oren Bracha and Talha Syed define selfdetermination as “the ability of individuals reflectively to form and revise their own conception of the good, and effectively to pursue a life plan for realizing it.”46 Several conditions should be met when an individual fulfills his or her self-determination: (1) a variety of options are available; (2) people are able to understand and evaluate those options; and (3) people are able to critically revise their options.47 Certainly, there are many instances in which people can participate in these processes without appropriation of existing cultural works. However, there are also situations in which the appropriation of existing cultural works is necessary when criticizing or challenging culturally dominant texts and arguments. 41 See LAURA STEIN, SPEECH RIGHTS IN AMERICA: THE FIRST AMENDMENT, DEMOCRACY, AND THE MEDIA (2006). 42 See NEIL WEINSTOCK NETANEL, COPYRIGHT’S PARADOX (2008); Paul Goldstein, Copyright and the First Amendment, 70 COLUM. L. REV. 983 (1970). 43 ROSEMARY J. COOMBE, THE CULTURAL LIFE OF INTELLECTUAL PROPERTIES: AUTHORSHIP, APPROPRIATION AND THE LAW 77 (1998). 44 Most notably, in the case of Eldred v. Ashcroft, 537 U.S. 186 (2003), the Supreme Court found free speech arguments unpersuasive. Opponents of the 1998 Sonny Bono Copyright Term Extension Act argued the act was unconstitutional, an argument the Court rejected. 45 For a detailed discussion of fair use, see PATRICIA AUFDERHEIDE & PETER JASZI, RECLAIMING FAIR USE: HOW TO PUT BALANCE BACK IN COPYRIGHT (2011). It is worth noting that increased access to cultural works does not guarantee a greater number of cultural creations. The first sale doctrine promotes broad access to knowledge, information and creative works, whereas the fair use doctrine enables users to remix or generate creative works by granting more leverage for users to manipulate existing cultural works. Having a digital first sale doctrine itself would not automatically enhance users’ freedom to engage in creative cultural activities such as mashups, fan fiction and remixes. 46 Bracha & Syed, supra note 2, at 251. 47 Id. Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 229 As Jack Balkin contends, “Freedom of speech allows ordinary people to participate freely in the spread of ideas and in the creation of meanings that, in turn, help constitute them as persons.”48 Freedom of expression is critical to individuals’ meaningful engagement in cultural meaning-making processes. Democratic theorists, including those in support of cultural democracy, assign weight to individual autonomy and active participation in meaning-making processes. Continuing that line of thought, Oren Bracha notes that one of the key themes of cultural democracy is “the maximization and empowerment of individual autonomy . . . . [I]ndividual autonomy includes the freedom to interact in an active way with existing cultural materials, to recreate and reshape them, and to express one’s own voice through a dialogue with those of others.”49 This idea intersects the ways people gain access to knowledge and creative works of others in their everyday lives. Individual property ownership also relates to the development of an individual’s autonomy. Crawford Macpherson views property as something “instrumental to a full and free life,” arguing that individual property needs to include “a right to a set of power relations that permits a full life of enjoyment and development of one’s human capacities.”50 Today, those who duly purchase digital content cannot fully exert their autonomy in terms of distributing their possessions. Copy owners’ rights are limited or restricted by the current licensing regime represented by click-wrap or browse-wrap licenses.51 These licensing schemes usually employ boilerplate terms that require people to be bound by them.52 According to Amazon’s Kindle Store Terms of Use, Amazon defines the purchase of ebooks through Kindle Store as use of content. Many consumers do not fully understand the difference between obtaining a license and obtaining an ownership of ebooks. Even though they may know the difference, in many cases they do not carefully read all the terms of use. When purchasing an ebook by clicking a “Buy now with 1-Click” button on Amazon’s Kindle Store, it is not easy for consumers to recognize the fact that they are obtaining only a license for their purchased products, thus they are essentially misled about the nature of the transaction. In most cases, boilerplate terms prevent digital content consumers from selling or transferring their legally obtained digital media. On the other 48 Balkin, supra note 17, at 3. Oren Bracha, Standing Copyright Law on Its Head? The Googlization of Everything and the Many Faces of Property, 85 TEX. L. REV. 1799, 1846-47 (2007). 50 C. B. MACPHERSON, DEMOCRATIC THEORY: ESSAYS IN RETRIEVAL 138 (1973). 51 See MARGARET J. RADIN, BOILERPLATE: THE FINE PRINT, VANISHING RIGHTS, AND THE RULE OF LAW 22, 88 (2013); Sarah Reis, Toward a “Digital Transfer Doctrine”? The First Sale Doctrine in the Digital Era, 109 NW. U. L. REV. 173 (2015). In this article, “copy owners” is used to refer to those who lawfully own a copyrighted work. 52 See RADIN, supra note 51, at 12-17. 49 230 Y. SANG hand, if digital content consumers were allowed to resell or transfer lawfully purchased content, that permission would be understood as giving them more autonomy and facilitating the distribution of cultural works, in effect reinforcing a vision of cultural democracy. Downloaded by [Howard University] at 12:43 19 April 2016 Decentralization of the Cultural Meaning-Making Process In the context of traditional cultural policy, decentralization focuses mainly on geographical decentralization, such as relocating cultural venues or sharing the state’s economic responsibilities with local authorities.53 Jørn Langsted predicts that in a new cultural policy, decentralization will mean paying increased attention to those groups that have been underserved in terms of opportunities to participate in cultural activities.54 In addition, decentralization is forecast to encourage interaction between consumers and producers of cultural works that, in turn, will unlock new opportunities for cultural works to be diverse in terms of form and content.55 From a cultural democracy perspective, individuals are not just passive consumers of cultural works but are regarded as active participants in cultural meaning-making processes.56 In that regard, cultural democracy relates to the concept of participatory culture that can be regarded as something “promoting freedom, engendering equality, and fostering human and economic development.”57 As Neil Netanel contends, “From feminist fan fiction to mashups that meld white-bread music with hip-hop, creative appropriation gives individuals a voice, a means to challenge the ubiquity of mass media culture and the prevailing mores, ideology, and artistic judgments it represents.”58 Creative appropriation of copyrighted works or the so-called participatory culture that Henry Jenkins and Yochai Benkler address allows individuals to raise their voices and in so doing contest the dominant cultural discourses. It is worth noting that “participation is valuable only in cases where it forms an engagement with expressive works that involves the exercise of a person’s autonomy.”59 The possibility of participation in cultural meaning-making processes holds particular significance when we try to challenge or demystify 53 See Langsted, supra note 30, at 61. Id. 55 See Balkin, supra note 17, at 4-5. 56 See Bracha & Syed, supra note 2, at 255. 57 SUNDER, supra note 10, at 64. 58 NETANEL, supra note 42, at 160. 59 David A. Snyder, Two Problems with the Value of Participation in Democratic Theory and Copyright, 89 TEX. L. REV. 1019, 1029 (2011). 54 Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 231 taken-for-granted constructs.60 As Madhavi Sunder notes, “The liberty to contest hegemonic discourses has particularly profound possibilities for women and other minorities who have not traditionally had power over the stories that dominate our lives.”61 Cultural democracy intrinsically relates to engendering diverse voices and portraits of our culture by promoting ordinary citizens’ active participation in cultural meaningmaking processes, rejecting the passive consumption of cultural works. While the law-and-economics paradigm gives weight to individuals’ willingness and ability to pay for creative works, the paradigm’s primary concerns do not encompass distribution schemes appropriate for those unable to pay. Due to the lack of purchasing power of the poor, lower income individuals do not benefit greatly from the creation of more cultural works under the strong economics approach.62 In that respect, when it comes to issues such as inequality in access to cultural works, the law and economics paradigm, which values the creation of more creative works and an overall increase of people’s welfare as measured by individuals’ willingness and ability to pay, cannot fully address distributive concerns. Cultural democracy, on the other hand, can justify considerations of distributive equity in the context of copyright.63 Today, ordinary citizens’ interaction with cultural works is mediated largely by access to the Internet and broadband. Yet, even as broadband seems to be an integral part of our daily lives, not all Americans enjoy its economic, social and cultural benefits. As of 2013, a high-speed Internet connection was not available in 31.4% of U.S. households with an annual income less than $50,000 and children aged 6 to 17.64 Additionally, broadband disparity between rural and urban areas in the United States is well documented.65 A recent study of the broadband adoption gap between metro and non-metro areas reports a consistent 13% gap in household broadband adoption between 2003 and 2010.66 60 See SUNDER, supra note 10, at 45-81; Xiyin Tang, That Old Thing, Copyright: Reconciling the Postmodern Paradox in the New Digital Age, 39 AIPLA Q.J. 71, 98 (2011). 61 SUNDER, supra note 10, at 65-66. 62 See Pew Internet & American Life Project, The Rise of E-Reading, Apr. 4, 2012, http:// libraries.pewinternet.org/2012/04/04/the-rise-of-e-reading. According to Pew Research Center’s survey conducted in 2012, e-reading device owners tended to read more books and were likely to buy more books. The same data showed that the consumption of ebooks was correlated with income level with low-income users consuming fewer ebooks. 63 See Bracha & Syed, supra note 2, at 296-311. 64 Pew Research Center, The Numbers Behind the Broadband “Homework Gap,” Apr. 20, 2015, http://www.pewresearch.org/fact-tank/2015/04/20/the-numbers-. 65 See Sharon Strover, Rural Internet Connectivity, 25 TELECOMMUNICATIONS POL’Y 331 (2001). 66 National Agricultural and Rural Development Policy Center, Rural Broadband Availability and Adoption: Evidence, Policy Challenges, and Options, 2013, http://www. oregonbroadbandplanning.org/assets/docs/RuralBroadbandWhitePaper.pdf . Downloaded by [Howard University] at 12:43 19 April 2016 232 Y. SANG Until recently, policy efforts intended to bridge the digital divide have focused mostly on increasing broadband access and adoption. It is important to note, however, that “if policy efforts directed to remediating the digital divide continue to focus primarily on access, which is easier to measure, compared to digital literacy and competency, the divide is liable to continue.”67 A great deal of attention, therefore, should be devoted to enhancing digital literacy and competency. What especially deserves more attention in the context of cultural democracy is the role of public libraries in “cultivating opportunities for participatory learning and co-creation that are hallmarks of digital culture.”68 In a connected society, if individuals do not know how to participate in cultural meaning-making processes, they are likely to remain culturally disconnected and apart from others, which is incompatible with the normative ideal of cultural democracy. Assistance to Public Libraries Public libraries, as indispensable cultural institutions in many Western democracies, are central to cultural democracy. They exist “to promote a public good.”69 As John Palfrey notes, “The knowledge that libraries offer and the help that librarians provide are the lifeblood of an informed and engaged republic.”70 In addition to preserving cultural works, public libraries provide access to knowledge and information, facilitating people’s engagement with and contributions to the nation’s cultural heritage and helping them to achieve life-long learning experiences. Participation in cultural meaning-making processes first requires access to existing works, and libraries play a crucial role in offering access points for ordinary citizens. As culturally significant works are increasingly distributed in digital formats, it is of paramount importance to address the issue of transferring cultural works, as digital content, over time and space — whether in libraries or other institutions. In the age of licensing, libraries struggle to deal with various licensing models imposed by content distributors. In fact, their capacity to provide access to culturally significant digital content is significantly limited. When it comes to ebooks, publishers often impose much higher prices 67 Sharon Strover, Kenneth Flamm & Yoonmo Sang, Public Computing Centers: Beyond “Public” and “Computing,” paper presented at the Telecommunications Policy Research Conference, Arlington, Virginia (2013), available at http://papers.ssrn.com/sol3/ papers.cfm?abstract id=2241173. 68 Ian McShane, Public Libraries, Digital Literacy and Participatory Culture, 32 DISCOURSE: STUDIES IN THE CULTURAL POLITICS OF EDUCATION 393 (2011). 69 ROBERT DARNTON, THE CASE FOR BOOKS: PAST, PRESENT, AND FUTURE 11 (2009). 70 JOHN PALFREY, BIBLIOTECH: WHY LIBRARIES MATTER MORE THAN EVER IN THE AGE OF GOOGLE 10 (2015). Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 233 on libraries; publishers can choose not to sell ebooks to libraries; they can even eliminate library access to their new releases. In November 2011, Penguin refused to sell its new ebook titles to libraries.71 Thus, libraries are unable to maintain access to content at a level equivalent to that of printed books to which the first sale doctrine applies.72 Libraries encounter problems adding ebooks to their service catalogs, leaving patrons unable to access them.73 Given that libraries provide individuals who cannot afford the primary markets with free and unfettered access to knowledge and creative works, the problems libraries face warrant serious attention. Having to increasingly rely on licensing presents a particular problem to libraries; licensing tends to employ onerous agreements. Licensing agreements are regulated by contract laws that make it difficult to impose legal limits on contractual agreements between libraries and content distributors.74 That said, some efforts are being made to address the constraints. Examples of such efforts include the collection of culturally significant works in digitized format, licensed by Creative Commons and by the Digital Public Library of America’s initiative. Since its launch in 2013, the Digital Public Library of America has served as a core digital platform for a wide range of hub-libraries and hubinstitutions that hold digital collections; additionally, it offers access to digital cultural works for libraries that use hub-organizations.75 In addition to providing access to digital cultural works, the Digital Public Library of America helps citizens “contribute materials in their possession to a national data store.”76 Contributions by ordinary citizens involve their active participation in the process of cultural meaningmaking, thereby helping to achieve another value promoted by cultural democracy. One of the key features of cultural democracy is facilitating ordinary citizens’ participation in cultural meaning-making processes. That feature is well-aligned with the mission of public libraries. This study argues that the best way to incorporate cultural works both exhaustively and effectively in the digital age is to challenge the current copyright 71 See http://www.ala.org/news/mediapresscenter/americaslibraries/soal2012/new-foc us-on-ebooks. 72 See Tomas A. Lipinski, The Incursion of Contract Law (Licensing) in the Library: Concerns, Challenges, Opportunities and Risks, paper presented at the IFLA General Conference and Assembly, Lyon, France (2014). 73 See Marshall Breeding, Observations, Trends, and Ongoing Challenges, 49 LIBRARY TECHNOLOGY REPORTS 32 (2013); Judith Brook & Anne A. Salter, E-books and the Use of E-book Readers in Academic Libraries: Results of An Online Survey, 49 GEORGIA LIBRARY Q. 16 (2012). 74 See Lipinski, supra note 72, at 2. 75 See PALFREY, supra note 70, at 98-108. 76 Id. at 102. Downloaded by [Howard University] at 12:43 19 April 2016 234 Y. SANG legislation and to enable libraries to better meet the needs of the public. The goals of providing access to information and enabling people to participate in cultural meaning-making processes are particularly important to libraries that serve economically vulnerable populations, because in many cases low-income individuals and their families cannot afford to purchase cultural resources so that public libraries offer an alternative where they can borrow cultural works. Inasmuch as public libraries have functioned as core institutions that further democracy, their mission should, even in the digital age, continue to receive support under the copyright law. Indeed, the notion of cultural democracy provides a theoretical backbone for public libraries to accomplish their mission. CULTURAL DEMOCRACY IN PRACTICE Understanding the cultural sphere is germane to a vision of cultural democracy.77 The very essence of self-determination is the ability of individuals to critically and independently consider and reconsider various life choices and pursue their own life plans.78 Thus, applying the basic conditions of self-determination to the cultural sphere necessitates that meaningful choices are available to individuals along with equal opportunities for everyone to participate in cultural meaning-making processes. This brings us back to earlier concerns about the autonomy of owners (those who legally purchased copyrighted works) with regard to the digital content they paid for. In terms of promoting self-determination, allowing copy owners to sell or transfer ownership of their content is desirable as it bestows more freedom on individuals with regard to their possessions (or what they believe are their possessions). From the perspective of copyright holders, however, allowing copy owners to resell or lend their paid digital content may be viewed as favoring copy owners over copyright holders because of limitations placed on the distribution rights of copyright holders. One might ask why we should care about ordinary citizens’ freedom to transfer the ownership of their lawfully purchased works and why we should favor the freedom of users over that of copyright owners. Is there any good justification for granting users this right? The cultural democracy response is that giving digital content consumers more freedom to tinker with and interact with their possessions — including transferring ownership of their lawfully purchased works — promotes 77 See Bracha & Syed, supra note 2, at 255. See GERALD DWORKIN, THE THEORY AND PRACTICE OF AUTONOMY 80-81 (1988); JOEL FEINBERG, HARM TO SELF 33-35 (1986). 78 Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 235 an individual’s self-determination. Our culture is built around countless contractual transactions, and individual autonomy is the foundation of contractual transactions. As Mindy Chen-Wishart aptly notes, “The ability to create property rights (to obtain the exclusive use and possession of a thing) and to transfer property rights is a necessary precondition of individual autonomy.”79 The normative concept of self-determination may not be enough to fully address the question of favoring users’ freedom. After all, if we treat the opportunity to maximize subjective preferences equally, we may need to equally protect copyright holders’ freedom to earn more money by exerting their control over their copyrighted works. Here the notion of cultural democracy provides a justification for favoring ordinary citizens’ freedom to access and use cultural works. When weighing the simple goal of earning more money through copyright protection and that of realizing one’s life goals (such as becoming a musician or writer) by being exposed to and consuming more cultural works, cultural democracy gives greater importance to the latter. Life goals do not have to be professional. Creating and distributing user-generated content can be considered the realization of one’s life choice. Allowing broader access and cheaper access is good because it helps ordinary citizens define and form their life plans without constraints. Cultural democracy places great value on promoting a participatory culture and that value is the basis for justifying the favoring of digital content consumers. Recent developments in the cultural domain provide a concrete context in which the notion of cultural democracy plays out. Cultural democracy offers a more robust work environment because it opens the possibility for people to choose creative occupations or careers. With the advancement of digital technologies and the Internet, ordinary citizens increasingly exert their right to participate in various forms of cultural meaning-making processes. This is ably documented in the growing literature on participatory media, whether it be the creation of fan fiction, peer-to-peer collaboration efforts, or remixing.80 As William Fisher notes, technology “has radically increased the ability of innovating users to communicate with each other — to exchange ideas concerning techniques and products, and to form communities centered on their shared interests.”81 Innovative users can even make a lot of money through social media outlets. Consider Sweden’s Felix “PewDiePie” Kjellberg, one of 79 MINDY CHEN-WISHART, CONTRACT LAW 25-26 (2015). See JEAN BURGESS & JOSHUA GREEN, YOUTUBE: ONLINE VIDEO AND PARTICIPATORY CULTURE (2009); Suzanne Scott, The Moral Economy of Crowdfunding and the Transformative Capacity of Fan-Ancing, 17 NEW MEDIA & SOC’Y 167 (2015). 81 William Fisher, The Implications for Law of User Innovation, 94 MINN. L. REV. 1417, 1430 (2010). 80 Downloaded by [Howard University] at 12:43 19 April 2016 236 Y. SANG YouTube’s biggest stars. By posting his videos to YouTube, the Swedish video-game commentator made, in 2013, more than $4 million through advertising revenue.82 He started uploading his videos “motivated primarily by a combination of curiosity and passion.”83 It is increasingly difficult to tell whether “innovating users” are amateurs or professionals. It is not so uncommon for people to make several million dollars from their own YouTube channel by commenting on or making derivative works based on preexisting videos or other creative works.84 Not only are they making money by participating in cultural meaning-making processes, their activities sometimes enable them to discover new professions. Michelle Phan, for example, has several million YouTube subscribers for her videos about how to shop and use cosmetics. She was hired by the cosmetics company Lancôme to be the firm’s official video makeup artist.85 As of September 2014, she had more than 6.9 million subscribers, her own line of makeup, and an online subscription service called Ipsy.86 The ubiquitous presence of user-generated content is important because it opens opportunities for other users to build on preexisting creative works, generate new cultural works, and share them, which eventually serves as a catalyst to decentralize cultural meaning-making processes. In that sense alone, the digital environment, with its “relative ease of commenting on others’ cultural expressions and making one’s own content destabilizes traditional cultural authorities, making that authority more transparent and contingent.”87 In the pre-digital media world, the participation by individuals in the process of cultural meaning-making was often mediated by books and other print material. Even today, books serve as the primary source for individuals to access knowledge and cultural expression by offering a wide range of perspectives and experiences across time and space. Books provide opportunities for individuals to become informed citizens 82 See Caroline Moss, YouTube Multimillionaire Pewdiepie: “I’m Tired of Talking About How Much Money I Make,” BUS. INSIDER, Oct. 11, 2014, available at http: //www.businessinsider.com/pewdiepie-is-youtubes-biggest-star-2014-10. 83 Fisher, supra note 81, at 1433-34. 84 See Harrison Jacobs, We Ranked YouTube’s Biggest Stars by How Much Money They Make, BUS. INSIDER, Mar. 10, 2014, http://www.businessinsider.co.id/ richest-youtube-stars-2014-3/8/#.Vh6ysPlViko. 85 See Alan Farnham, More People Getting Rich off YouTube Videos, ABC NEWS, Aug. 30, 2012, http://abcnews.go.com/Business/youtube-making-people-rich/story?id= 17104798. 86 See Bree Brouwer, Michelle Phan Reaches a Milestone with Over 1 Billion Channel Views, TUBEFILTER, Sept. 5, 2014, http://www.tubefilter.com/2014/09/05/ michelle-phan-channel-one-billion-views/. 87 SUNDER, supra note 10, at 58. It is important to note that the democratic potential of user-generated content online is often hampered by the censorship of platform providers who are governed by the DMCA notice-and-takedown system. Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 237 in a democratic society and, in that way, books have enjoyed a deep and long-lasting influence on people’s entire lives. Individuals’ literacy is enhanced as a result of their interaction with books, regardless of whether their literacy was gained through formal or non-formal education or through meaningful conversations with other readers. Consequently, reading books has served as a prerequisite for individuals to participate in meaning-making processes, politically as well as culturally. As Madhavi Sunder points out, “Participatory culture is instrumentally and intrinsically related to promoting freedom, engendering equality, and fostering human and economic development.”88 The core values promoted by cultural democracy are synonymous with the values emphasized by participatory culture advocates. Based on liberal political theories, the notion of cultural democracy provides a theoretical explanation of why participation matters. Not all types of cultural activities are directly attributable to books (or ebooks). Nonetheless, literacy and education that enable citizens to participate in activities all stem from the fact that books (or ebooks) play a significant role in furthering a participatory culture. Indeed, it is impossible to imagine active and meaningful discussions in classrooms, cafes, book clubs and elsewhere without the mediation of books. The Harry Potter Alliance is a good example of how people actively interact with cultural works in a meaningful way. The organization was established in order to bring positive changes to society by encouraging readers of the Harry Potter book series to become engaged with societal issues, such as human rights, equality and literacy. Madhavi Sunder notes, “Through the Alliance children are coming together to form an army of young citizens dedicated to upholding the Potter books’ values of being kind, having the courage to question authority and cultural norms, and fighting for justice in the real world.”89 Among the tasks accomplished so far are the shipment of life-saving supplies to Haiti, the donation of books to build community libraries, the partnering with public advocacy groups such as Public Knowledge to raise public awareness of important social issues like network neutrality, the initiation of public campaigns, and the establishment of funds to support people who are suffering in Sudan and Burma.90 The creation of creative works usually requires access to existing works and interaction with those works. Creators, including writers, need to quote something or borrow characters or narrative structures from previous novels, plays, or folktales. This is particularly true in the 88 Id. at 64. Id. at 69. 90 See http://thehpalliance.org/what-we-do/success-stories. 89 Downloaded by [Howard University] at 12:43 19 April 2016 238 Y. SANG case of fan-fiction writers. A large portion of fan and user-generated content is created based on existing cultural works. On the Internet, memes are generated by adding brief and humorous phrases to preexisting videos or images and circulated to share cultural ideas or messages.91 Digital mashups are also made by mixing two or more preexisting cultural works to create new digital works.92 One notable example of digital mashup is The Grey Album by Brian Burton which combined a portion of the Beatles’ The White Album with hip-hop musician Jay-Z’s The Black Album.93 Later, Laurent Fauchere and Antoine Tinguely created The Grey Video by integrating a portion of The Grey Album with some parts taken from the Beatles’ movie, A Hard Day’s Night, and a video performance by Jay-Z.94 Another example is Radiohead, who teamed with iTunes and GarageBand to allow its fans to remix the band’s musical tunes.95 These digital mashups allow people to rework preexisting cultural works; some creators like to share their remixes with others under Creative Commons licenses.96 Much of this culturally meaningful user-generated content exists in a legal gray area.97 To be creators, people need to access, as much as possible, preexisting creative works. This is also true for writers. To promote cultural progress, it is critical that access to creative works is assured. Under the current copyright law, it is not clear to what extent remixes, mashups, and derivative works fit within the copyright law. A BRIEF OVERVIEW OF THE FIRST SALE DOCTRINE Section 109(a) of the Copyright Act states that “the owner of a particular copy or phonorecord lawfully made under this title . . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”98 The first sale doctrine is a safety valve recognized by the Copyright Act of 1976. Other safety valves include the fair use doctrine and the idea/expression dichotomy.99 U.S. legal scholars have justified the first sale doctrine primarily because of its socially desirable outcomes. The doctrine prohibits copyright 91 See http://www.merriam-webster.com/dictionary/meme (defining “meme” as “an idea, behavior, or style that spreads from person to person within a culture”). 92 See Fisher, supra note 81, at 1418. 93 See id. 94 See id. at 1418-19. 95 See SUNDER, supra note 10, at 57. 96 See id. at 57. 97 See id. at 35. 98 17 U.S.C. §109(a) (2012). 99 See PAUL GOLDSTEIN, COPYRIGHT’S HIGHWAY: FROM GUTENBERG TO THE CELESTIAL JUKEBOX 170 (1994). Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 239 owners from controlling downstream distributions of copyrighted works by exhausting their exclusive distribution rights with regard to those copies after their initial sale. Therefore, it enables those who cannot afford to buy original copies of copyrighted works to access those works at a lower price through secondary markets. The first sale doctrine also enables libraries to lend books and other cultural works to patrons free from copyright liability.100 In the United States, the doctrine, which is rooted in common law, has been developed mostly by court decisions. In 1894, it was recognized by the United States Court of Appeals for the Second Circuit in Harrison v. Maynard, Merrill & Co.101 Some commentators argue that this early case provided grounds for a wider application of the first sale doctrine.102 More than a decade later, the Supreme Court in BobbsMerrill Co. v. Straus103 affirmed the doctrine, which was codified in the Copyright Act of 1909. In Bobbs-Merrill, the plaintiffs argued that the booksellers impinged on their right by selling copies of a novel entitled The Castaway for eighty-nine cents. A price-restriction notice was attached to each copy of the book, which read: “The price of this book at retail is $1 net. No dealer is licensed to sell it at a less price, and a sale at a less price will be treated as an infringement of the copyright.”104 The Supreme Court ruled that the “sole right to vend” clause of copyright law did not grant the copyright owner the right to limit or restrict the copyrighted work’s future sales by imposing price-related restrictions.105 In 2013, the Court in Kirtsaeng v. John Wiley & Sons, Inc.106 ruled that the first sale doctrine is applied to imported textbooks manufactured outside the United States, as long as they are non-infringing copies. The Kirtsaeng case, however, did not extend to the resale of digital goods. In recent years, the issue of digital first sale has received increased attention, and, in 2013, the Department of Commerce requested public comment on digital first sale.107 100 See CARRIE RUSSELL, COMPLETE COPYRIGHT: AN EVERYDAY GUIDE FOR LIBRARIANS 43 (2004). 101 61 F. 689 (2d Cir. 1894). 102 See Aaron Perzanowski & Jason Schultz, Digital Exhaustion, 58 UCLA L. REV. 889, 913 (2011). 103 210 U.S. 339 (1908). 104 Id. at 341. 105 Id. at 351. 106 133 S.Ct. 1351 (2013). 107 Request for Comments on Department of Commerce Green Paper, Copyright Policy, Creativity, and Innovation in the Digital Economy, 78 Fed. Reg. 61337 (Oct. 3, 2013). Downloaded by [Howard University] at 12:43 19 April 2016 240 Y. SANG Opponents of digital first sale have argued that the ease of making copies in digital format, the longevity of digital content, and nondegradability of digital content will negatively affect markets for the original copy. Another argument against digital first sale is that transmitting a digital file necessarily involves a reproduction of the original copy, which can be considered as infringing the copyright owner’s reproduction right.108 Relying on the economic efficiency framework, some commentators oppose digital first sale, saying that if the first sale is applied in a digital environment, content creators are unlikely to be incentivized to generate creative works.109 When considering the effects of digital first sale on the digital content market, pointing out that digital goods do not degrade over time, some worry about the possibility that retailers will raise prices of their digital content.110 Many scholars have called for a broader application of copyright’s first sale doctrine in the digital context.111 Those who are in support of digital first sale basically agree that socially beneficial outcomes of the first sale doctrine should be applied to a lawfully owned copyrighted work, regardless of that work’s embodiment (that is, physical state v. digital state). There is little doubt that changing copyright law to extend the first sale doctrine to digital goods would be the most direct option in terms of adopting a digital first sale. In light of the difficulties associated with a revision of the Copyright Act, to refute arguments against digital first sale, some commentators have considered technical approaches or 108 See Lucy Holmes Plovnick, Will the U.S. First Sale Doctrine Go Digital?, INTELL. PROP. MAG., http://msk2.inherent.com/images/cms/file/LHP%20ReDigi% 20article-March 2012.pdf . 109 This is a legitimate concern that requires further research supported by economic analyses. At this stage, given that digital first sale does not apply to digital content, it is not easy to predict how digital first sale will affect the overall public welfare. Arguably, this concern led the U.S. Copyright Office, in its DMCA Section 104 Report released in 2001, to take a wait-and-see approach to digital first sale. See also Keith Kupferschmid, Lost in Cyberspace: The Digital Demise of the First-Sale Doctrine, 16 J. MARSHALL J. COMPUTER & INFO. L. 825 (1998). 110 See Michael Mattioli, Cooling-Off & Secondary Markets: Consumer Choice in the Digital Domain, 15 VA. J. L. & TECH. 227, 247 (2010) (“While this possibility should be a cause for concern, it is helpful to consider economic forces that would likely push retail prices in the opposite direction. For example, a used digital media market could benefit distributors and copyright holders by promoting increased sales in the primary market. A consumer who would not have downloaded a twenty dollar movie in the past might make the purchase if the option to easily resell the work existed.”). 111 See, e.g., Clark D. Asay, Kirtsaeng and the First-Sale Doctrine’s Digital Problem, 66 STAN. L. REV. 17 (2013); Victor F. Calaba, Quibbles ‘n Bits: Making a Digital First Sale Doctrine Feasible, 9 MICH. TELECOMM. & TECH. L. REV. 1 (2002); Evan Hess, Code-ifying Copyright: An Architectural Solution to Digitally Expanding the First Sale Doctrine, 81 FORDHAM L. REV. 1965 (2013); Mattioli, supra note 110; Perzanowski & Schultz, supra note 102; Reis, supra note 51; Theodore Serra, Rebalancing at Resale: ReDigi, Royalties, and the Digital Secondary Market, 93 B.U. L. REV. 1753 (2013); Eurie Hayes Smith IV, Digital First Sale: Friend or Foe?, 22 CARDOZO ARTS & ENT. L. J. 853 (2005). Downloaded by [Howard University] at 12:43 19 April 2016 DIGITAL FIRST SALE DOCTRINE 241 policy recommendations, such as relying on contemporary technological developments that make digital files degrade over time, resorting to so-called “forward-and-delete” technology that allows one to transfer a particular copy to another without leaving that particular copy on his or her computer, or adopting a middle ground solution (that is, a resale royalty scheme).112 Arguably, those approaches did not pay adequate attention to a normative framework that can guide us to reevaluate the current copyright law within a broader context. In Capitol Records, LLC v. ReDigi Inc.,113 a federal district court in New York considered the issue of the digital first sale doctrine when addressing the legality of reselling MP3 files. ReDigi, an online marketplace for pre-owned digital music files, provided a technology that allowed users to resell their legally purchased digital music files through its server. In response to the major record labels’ copyright infringement suit, ReDigi defended its service based on the first sale and fair use doctrines. The ReDigi court did not accept the arguments, finding that the fair use defense did not apply because ReDigi was a commercial service that can harm the market of plaintiff record labels. The court also rejected ReDigi’s first sale defense on grounds that the first sale doctrine cannot serve as a successful defense with regard to allegedly infringing copies made on ReDigi’s server and the buyer’s computer. Focusing on the fact that the first sale doctrine can be used only as a defense against infringement of the distribution right, the ReDigi court ruled that ReDigi’s service constituted a copyright infringement by reproducing a new copy when transferring digital music files. The ReDigi case shows that the comprehensive discussion of a digital first sale requires addressing relevant legal issues together, such as the issue of temporary reproductions and licensing. 112 See Hess, supra note 111 at 2006-11; Reis, supra note 51, at 205; Serra, supra note 111, at 1787-1801; Adam W. Sikich, Buyer Beware: The Threat to the First Sale Doctrine in the Digital Age, 14 J. OF INTERNET L. 19, 22 (2011) (“Because the file would no longer be within the sender’s possession following the transmission, proponents of implementing forward and delete argue that this is the legal equivalent of giving, lending, or selling a material copy in a fixed form.”). See also Benefit Authors Without Limiting Advancement or Net Consumer Expectations (BALANCE) Act of 2003, H.R. 1066, 108th Cong. (2003). The proposed BALANCE Act included a provision that legalizes the resale of digital goods and failed at the subcommittee level. Under the proposed bill, Section 109 of Copyright Act is amended by adding the following: “(f) The privileges prescribed by subsections (a) and (c) apply in a case in which the owner of a particular copy or phonorecord of a work in a digital or other nonanalog format, or any person authorized by such owner, sells or otherwise disposes of the work by means of a transmission to a single recipient, if the owner does not retain the copy or phonorecord in a retrievable form and the work is so sold or otherwise disposed of in its original format.”). 113 934 F. Supp. 2d 640 (S.D.N.Y. 2013). 242 Y. SANG LINKS BETWEEN CULTURAL DEMOCRACY AND THE FIRST SALE DOCTRINE Downloaded by [Howard University] at 12:43 19 April 2016 Drawing on the notion of cultural democracy would more fully achieve the goals of copyright legislation (balancing competing legitimate interests between copyright holders and users of copyrighted material, promoting advancement in science and useful arts, for example). The desired effects of the first sale doctrine include ensuring greater access to informative, scientific and cultural works; protecting consumer welfare and privacy; and promoting market innovation. Those are the motivations that originally prompted enactment of the doctrine. Availability Copyright owners may want to limit access to their copyrighted works for a variety of reasons. One possible scenario is that copyright owners may allow their books to go out of print when they think printing those books is not economically viable.114 More than 97% of books published in the United States between 1927 and 1946 were “commercially dormant and inaccessible” in the early 2000s.115 In addition, creators and copyright owners sometimes change their views on their works and want to suppress the distribution of those works.116 A similar example exists in the movie industry. Tony Kaye, a British film director, attempted to remove his name from his film American History X and even tried to impede the success of the film.117 To counter limitations on availability, secondary markets allow people to access out-of-print books or other creative works. In a similar way, digital resale markets could help digital works be more easily accessible and make it difficult for copyright holders to completely control the availability of their works.118 Previous studies have shown that among the most common reasons people download copyrighted material are cost and availability.119 For example, official ebook versions of the Harry Potter series were not available until early 2012 when the author of the books, J.K. Rowling, 114 See Hess, supra note 111, at 1973. Id. at 1973 (“Similarly, of the 157, 068 titles listed in the Turner Classic Movies’ database, fewer than 4 percent are available on home video.”). 116 See Ruth A. Reese, The First Sale Doctrine in the Era of Digital Networks, 44 B. C. L. REV. 577 (2003). 117 See Hess, supra note 111, at 1974 (“Moreover, copyright owners may wish to suppress their work because their views on it have changed. For example, on his deathbed, Virgil asked that The Aeneid be burned.”). 118 See Reis, supra note 51, at 194. 119 See Michael Kozlowski, Ebook Pirates: The Reasons Why People Do It, GOODREADER, Jan. 26, 2012, http://goodereader.com/blog/e-book-news/ ebook-pirates-the-reasons-why-people-do-it. See also Yoonmo Sang, Jeong-Ki Lee, 115 DIGITAL FIRST SALE DOCTRINE 243 Downloaded by [Howard University] at 12:43 19 April 2016 started Pottermore as the official Web site to sell ebook versions of the novels.120 Before those ebooks were officially available, the Harry Potter series was “the most pirated book of all time.”121 However, the release of official ebooks resulted in an increase in sales of the print books and a decrease in piracy.122 The connection between piracy and the potential effects of digital secondary markets has yet to garner the attention it deserves.123 By having digital secondary markets that are more affordable and accessible, piracy of digital goods may decrease given that previous studies have reported that people tend to illegally download content when they cannot find legitimate and affordable routes to purchase digital goods. Affordability As Elizabeth McKenzie notes, “Libraries and second-hand markets serve as crucial, low-cost sources of knowledge for many underprivileged or undereducated individuals, and we should not justify a policy that would inhibit their growth in the digital age.”124 The existence of a digital resale market would promote retail price competition, which, in turn, would benefit consumers. In a market where consumers can purchase secondary digital goods that are no different from the originals in terms of quality, secondary digital markets would provide more affordable options as well as facilitate the exchange of used digital works due to the availability of fast, effortless and cost-free transactions around Yeora Kim & Hyung-Jin Woo, Understanding the Intentions Behind Illegal Downloading: A Comparative Study of American and Korean College Students, 32 TELEMATICS AND INFORMATICS 333 (2015). 120 Laura Owen, You Can Buy the Harry Potter eBooks Now: Here’s What You Need to Know, GIGAOM, Mar. 27, 2012, https://gigaom.com/2012/03/27/419-you-can-buy-theharry-potter-e-books-now. 121 Kozlowski, supra note 119, at para. 7. 122 See Mike Masnick, Ebook Sales of Harry Potter Lead to Increased Physical Sales As Well, TECHDIRT, May 7, 2012, https://www.techdirt.com/articles/20120507/ 04142118804/ebook-sales-harry-potter-lead-to-increased-physical-sales-as-well. shtml. 123 See Asay, supra note 111, at 22 (“Certainly some cases of piracy would still occur . . . but the possibility of piracy in the physical world has never been justification enough to eliminate first-sale rights there. Nor should it be in the digital world. A digital first-sale might also reduce piracy as consumers rely on legitimate secondary markets instead of piracy. Secondary markets might also result in increased sales of other copyrighted works because secondary markets expose consumers to a broader spectrum of copyrighted works, which often leads them to purchase complementary goods.”). 124 Elizabeth McKenzie, A Book by Any Other Name: E-books and the First Sale Doctrine, 12 CHI.-KENT J. INTELL. PROP. 57, 70 (2013). Downloaded by [Howard University] at 12:43 19 April 2016 244 Y. SANG the globe.125 More importantly, the first sale doctrine as applied to digital content would allow consumers to choose between two-tier markets through the mechanism of price differentiation, thereby granting consumers more affordability. It may be argued that consumers end up paying even higher prices for the purchase of digital goods because digital goods do not degrade (as far as we know) over time, which may lead producers to increase retail prices. Although that possibility does merit concern, it is unlikely to be the case. Publishers can, after all, employ a price differentiation strategy. College students also can benefit from digital resale. Textbooks are expensive in the United States. The average U.S. college student pays approximately $655 per year to purchase textbooks and supplies, while, after financial aid, the average student attending a four-year public college pays about $2,900 for annual tuition.126 The Bureau of Labor Statistics has released data that show, as of 2013, the cost of course materials has increased more than 800% since 1978, while the same data indicate a 325% increase in home prices, a 250% increase in consumer price index, and a 575% increase in medical services.127 At semester’s end, college students often resell their textbooks to help offset those costs. As long as the first sale doctrine is not applicable to ebooks, physical textbooks carry economic advantages because students can resell their paper textbooks and recoup their previous investment so that the prohibition of resale of digital copies may serve as a barrier to the wider adoption of ebooks in higher education.128 Libraries face additional problems with regard to ebooks. Publishers put restrictions on which ebooks are available at certain libraries and control the ways in which library patrons consume ebooks.129 Harper Collins and other publishers do not allow a library to lend ebooks more than twenty-six times without the repurchase of a license. Libraries had to pay $74.85 to buy Sheryl Sandberg’s best-selling ebook titled Lean In, released in 2013, while consumers could purchase it for $12.99.130 By imposing enough restrictive language when providing libraries access to ebooks through licensing, copyright holders can foreclose the legitimate 125 See Mattioli, supra note 110, at 246-48. See Jordan Weissmann, Why Are College Textbooks So Absurdly Expensive?, THE ATLANTIC, Jan. 3, 2013, available at http://www.theatlantic.com/business/archive/2013/ 01/why-are-college-textbooks-so-absurdly-expensive/266801/. 127 See id. 128 See Mattioli, supra note 110, at 247. 129 See Adam Vaccaro, Why It’s Difficult for Your Library to Lend Ebooks, BOSTON.COM, June 27, 2014, http://www.boston.com/business/technology/2014/06/27/ why-difficult-for-your-library-stock-ebooks/rrl464TPxDaYmDnJewOmzH/story.html. 130 See id. 126 DIGITAL FIRST SALE DOCTRINE 245 Downloaded by [Howard University] at 12:43 19 April 2016 rights of purchasers and libraries. However, a digital first sale doctrine would allow libraries to purchase secondary ebooks at low prices. This would doubtless allow people who could not otherwise afford to buy ebooks to enjoy them through libraries. The broader argument is that for those who cannot afford to purchase new ebooks, secondary markets for ebooks could provide a way to fulfill their needs: Many pensioners and people who faced life changing disabilities are downloading and pirating ebooks. They simply are in a position where their monthly income is not enough to sustain their entertainment needs, which become more expensive every year. After bills, food, and expenses, there is not enough money left over to entertain yourself. It is easy to feel sympathy towards this demographic of people, but in effect it hurts the entire industry.131 In sum, consumers can benefit from secondary markets because they can more easily obtain copyrighted works at cheaper prices. Libraries will be in a better position if they can purchase pre-owned ebooks through secondary markets when they have to negotiate with publishers. Making more creative works available to more people is critical to the development of culture. As Julie Cohen observes, “[W]ithout the raw materials necessary for social and cultural participation, one cannot participate meaningfully in the development of culture and community.”132 Promoting Innovation The existence of secondary markets leads to product innovation because copyright holders of original products must constantly provide updated products in order to compete with lower-priced products available in secondary markets.133 Innovation can also be accomplished by consumers who creatively interact with cultural works without fear of copyright liability, and innovation can be initiated by secondary market online providers.134 The existence of secondary markets can lead to reducing consumer lock-in by allowing consumers to recover their investments, thereby giving consumers more opportunities to switch 131 Kozlowski, supra note 119, at para. 6 COHEN, supra note 19, at 224. 133 See Perzanowski & Schultz, supra note 102, at 897. 134 See id. at 898. 132 Downloaded by [Howard University] at 12:43 19 April 2016 246 Y. SANG to different platforms.135 Additionally, the existence of secondary markets could facilitate more transactions.136 If consumers could resell their ebooks, the possibility of recouping money spent on ebooks would allow consumers to buy more ebooks. Once secondary markets exist, content providers, platform providers and other pertinent stakeholders would be likelier to consider various ways to enhance their competitiveness in the market. As Stephen McIntyre points out, “[T]he first sale doctrine and competition are intrinsically linked.”137 It is worth noting that interoperability, in most conditions, generally tends to engender innovation, although the relationship between interoperability and innovation is highly complex and context-specific.138 To explore an often assumed causal relationship between interoperability in ICTs and innovation, Urs Gasser and John Palfrey examined three cases in which the issue of interoperability played out: digital rights management in music distribution both offline and online, various forms of digital identity systems, and Web services.139 Based on case studies of the three cases along with in-depth interviews and research workshops, they concluded: “[I]ncreased levels of ICT interoperability generally foster innovation. But interoperability also contributes to other socially desirable outcomes,” such as the positive impact on “consumer choice, ease of use, access to content, and diversity, among other things.”140 Currently, major ebook retailers like Amazon and Apple, operate closed ebook ecosystems that limit customers’ freedom to choose other retailers’ products. Providing access to ebooks has become increasingly a common way to deliver monographs in many libraries, but the lack of standardization in ebooks limit libraries’ ability to serve their patrons. For instance, if a certain digital book is available only through a particular format, libraries must purchase other books that can be read in a different format. 135 See id. at 900 (Consumer lock-in takes place “when the costs of switching to a new vendor or technology platform are sufficient to discourage consumers from adopting an otherwise preferable competitive offering.”). 136 See Mattioli, supra note 110, at 248. 137 Stephen J. McIntyre, Game Over for First Sale, 29 BERK. TECH. L. J. 1, 45 (2014). 138 See Urs Gasser & John Palfrey, Breaking Down Digital Barriers: When and How ICT Interoperability Drives Innovation, at ii., available at https://cyber.law.harvard.edu/interop/pdfs/interop-breaking-barriers.pdf. 139 Id. 140 Id. at 12. DIGITAL FIRST SALE DOCTRINE 247 Downloaded by [Howard University] at 12:43 19 April 2016 Preservation Not surprisingly, copyright holders, while providing users with access to digital copies through restrictive license agreements, are largely silent about facilitating preservation of cultural works. Both individuals and society as a whole benefit from preservation of cultural works because preservation helps people access copyrighted works that may no longer be available through copyright owners.141 Many books are available only in digital format, which in terms of preservation, is problematic. For example, an author of a novel can publish a book as an ebook-only option and later decide to eliminate it from the market. In that case, if the book is licensed under, for example, the Kindle Store Terms of Use, there is no way for individuals to legally access the ebook. Libraries are challenged because if they do not purchase a license they cannot preserve cultural works. The issue of making duplicate copies for archival preservation can be addressed in the context of fair use, but the first sale doctrine clearly helps libraries and archives to fulfill their mission of preserving cultural works.142 As Aaron Perzanowski and Jason Schultz point out, “If we wish to preserve the benefits of access, preservation, privacy, transactional clarity, user innovation, and platform competition, we must find a way to reinvigorate [the first sale doctrine] in the face of digital distribution and technological protection measures.”143 CONCLUSION This study demonstrates ways in which the notion of cultural democracy can promote socially beneficial policy effects of the first sale doctrine. These ways include promoting the affordability and availability, preservation and innovation of creative works. The study also addresses the implications of the concept for digital content consumers and their access to creative works. Cultural democracy values individuals’ selfdetermination through active participation in the cultural sphere.144 It also implies a commitment to the decentralization of meaning-making power.145 In addition, the values advocated by cultural democracy are compatible with those of public libraries — public institutions that cannot be fully supported by economic efficiency practices. 141 See Perzanowski & Schultz, supra note 102, at 895. See Reis, supra note 51, at 190. 143 Perzanowski & Schultz, supra note 102, at 945. 144 See Bracha & Syed, supra note 2, at 253-56. 145 See id. at 256. 142 Downloaded by [Howard University] at 12:43 19 April 2016 248 Y. SANG In the digital age, enabled by digital technologies and the Internet, ordinary people are increasingly empowered in terms of their ability to challenge cultural authorities.146 New media technologies lower barriers of entry into the process of cultural production and distribution, although access to technology itself does not guarantee people’s active and critical participation in cultural meaning-making processes.147 What matters now is that even though technological developments have opened opportunities to challenge cultural authorities, the current copyright system is not ready to fully embrace the potential of participatory culture.148 As noted above, mash-ups, remixes and a great deal of usergenerated content are vulnerable to copyright infringement claims either because current copyright law does not clarify their legality or because legal access must be fought on a case-by-case basis. This study shows how the notion of cultural democracy can provide a solid theoretical ground for adopting a digital first sale doctrine to realize the doctrine’s policy implications in the digital environment and for copyright reforms, in general. Normative and positive studies have respective goals and objectives. The purpose of this study lies in providing a normative vision that can guide the shaping of the digital culture, rather than providing evaluations or predictions based on positive analyses with respect to a digital first sale. Future studies, based on economic analyses, need to complement this study by providing a comprehensive picture of the issue of resale of digital goods. Based on the discussion of cultural democracy, this normative study demonstrates that future discussions of copyright reform need to consider fully the role that public libraries play in furthering democratic values in our society. Therefore, it is recommended that Congress adopt a provision that prevents publishers and copyright holders from imposing nonnegotiable licensing terms on libraries. Because of the significant contributions of libraries to society at large, Congress should consider a special exception for digital works that parallels the provisions of Section 108 of Copyright Act. In so doing, technological developments, such as an ever-developing “forward-and-delete” technology and an aging file technology with respect to an implementation of digital resale should be fully considered. Importantly, Congress should bear in mind that the 146 See SUNDER, supra note 10, at 58. It should be noted that those possibilities are often limited by copyright holders who rigorously enforce their copyrights through legal and technological measures. 147 See id. at 48. 148 See JENKINS, supra note 13, at 198. DIGITAL FIRST SALE DOCTRINE 249 Downloaded by [Howard University] at 12:43 19 April 2016 ultimate beneficiary of copyright legislation is the public not the copyright holders when weighing the interests of copyright holders against the interests of digital content consumers.