White Paper on Remixes, First Sale, and Statutory Damages
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White Paper on Remixes, First Sale, and Statutory Damages Copyright Policy, Creativity, and Innovation in the Digital Economy THE DEPARTMENT OF COMMERCE INTERNET POLICY TASK FORCE January 2016 Message from Secretary Penny Pritzker Since the founding of our nation, the United States has recognized the importance of copyright in encouraging creative expression by incentivizing people to produce and share the works that contribute to America’s leading role as a cultural and economic powerhouse. Our copyright system plays a critical role in promoting and disseminating works of authorship and provides diverse benefits for large and small businesses, consumers, authors, artists, and workers in the information, entertainment, and technology sectors. A healthy copyright system strikes important balances between rights and exceptions— delineating what is protectable and what is not, determining which types of uses require permission or payment, and establishing appropriate frameworks to effectively protect rights and foster creativity and innovation. These balances must be reviewed regularly to ensure they continue to function well as a foundation for America’s culture and economy. The Internet has transformed the world by introducing new ways for people to communicate, create, innovate, and conduct business in the global digital economy. The goals of our national copyright policy and our global Internet policy should work in tandem. The U.S. Department of Commerce has played a key role in addressing Internet policy-related issues since it launched the Internet Policy Task Force in April 2010. Two years ago, the Task Force published a Green Paper on Copyright Policy, Creativity and Innovation in the Digital Economy—the most comprehensive assessment of digital copyright policy issued by any Administration since 1995. The review process that culminated in this White Paper serves as a testament to the importance the Administration has placed on the development of updated and balanced copyright law in the digital environment. We hope the White Paper will stimulate discussion and lead to adoption of our recommendations. We continue to recognize the importance that copyright law plays in the digital environment and why it is necessary to achieve a result that takes into account the interests of all stakeholders. We will remain engaged and monitor these and other areas of copyright policy to ensure that our copyright system continues to adapt and thrive, furthering the Constitutional goal of “promot[ing] the Progress of Science and useful Arts.” Penny Pritzker U.S. Secretary of Commerce i ii FOREWORD This White Paper by the U.S. Department of Commerce’s Internet Policy Task Force addresses important issues at the intersection of copyright law and Internet policy. It is the result of a comprehensive, multi-year review of three key topics: 1) the legal framework for the creation of remixes; 2) the relevance and scope of the first sale doctrine in the digital environment; and 3) the application of statutory damages in the context of individual file-sharers and secondary liability for large-scale online infringement. Led by the U.S. Patent and Trademark Office (USPTO) and the National Telecommunications and Information Administration (NTIA), the Internet Policy Task Force conducted a public meeting at USPTO headquarters; received and reviewed dozens of comments from a range of stakeholders including rights holder organizations, Internet-based companies, public interest groups, libraries, academics, and individual authors and artists; and held roundtables around the country to create a record upon which to analyze those issues.The input we received over the last two years has further underscored the importance that copyright law continues to play in the digital environment. Each section of the White Paper provides recommendations based on the stakeholder input received.In some areas, we believe now is the right time to consider legislative solutions.In others, we recommend bringing stakeholders together to develop best practices. We also recognize that the changing nature of market conditions and technology may call for future re- evaluation of some of our conclusions. This White Paper reflects indispensable contributions from members of our staffs who organized the consultation processes and engaged in the tasks of analysis and writing. At USPTO, the project was led by Shira Perlmutter, Chief Policy Officer and Director for International Affairs, working with a team including David Carson, Susan Allen, Ann Chaitovitz, and Ben Golant. The NTIA team was led by John Morris, Associate Administrator, working with Winter Casey, Camille Fischer, and Luis Zambrano Ramos. We appreciate the contributions of other agencies in the Administration that reviewed the White Paper and whose comments greatly improved the final draft. We are also grateful to the United States Copyright Office, and in particular to Associate Registers Karyn Temple Claggett, Director of Policy and International Affairs, and Jacqueline Charlesworth, General Counsel, for their participation in a number of our public discussions and for their valuable input on the Copyright Office initiatives mentioned in the White Paper. Effective and balanced copyright protection is critical in today’s digital environment. We are confident that the recommendations outlined in the White Paper will help advance copyright policy and ensure that the United States' creative and innovative industries can continue to strengthen our nation's culture and economy. Michelle K. Lee Lawrence E. Strickling Under Secretary of Commerce for Assistant Secretary of Commerce and Intellectual Property and Director, Administrator, National U.S. Patent and Trademark Office Telecommunications and Information Administration iii iv TABLE OF CONTENTS I. INTRODUCTION ..................................................................................................................... 1 II. OVERVIEW OF CONCLUSIONS AND RECOMMENDATIONS .................................. 4 A. REMIXES ............................................................................................................................... 4 B. FIRST SALE ........................................................................................................................... 4 C. STATUTORY DAMAGES ......................................................................................................... 5 III. THE LEGAL FRAMEWORK FOR THE CREATION OF REMIX ............................... 6 A. INTRODUCTION ..................................................................................................................... 6 B. STAKEHOLDER VIEWS ........................................................................................................... 6 1. The Different Worlds of Remix ....................................................................................... 6 2. Legal Doctrines .............................................................................................................. 10 a. Fair Use....................................................................................................................... 10 b. Guidelines and Best Practices ..................................................................................... 11 c. Possible Changes in the Law ...................................................................................... 17 3. Current and Developing Licensing Mechanisms ........................................................... 19 4. The Relationship between Licensing and Fair Use ........................................................ 22 C. CONCLUSIONS AND RECOMMENDATIONS ............................................................................ 23 1. Overview ........................................................................................................................ 23 2. Recommendations .......................................................................................................... 24 a. Provide Greater Clarity for Fair Use: Guidelines and Best Practices ......................... 27 b. Improve Voluntary Licensing Options ....................................................................... 29 i. Micro-Licensing ...................................................................................................... 31 ii. Collective Licensing ............................................................................................... 32 iii. Intermediary Licensing ........................................................................................... 32 c. Sharing of Revenues Generated by Remixes ............................................................. 33 3. Relationship to Other Task Force Recommendations .................................................... 33 IV. FIRST SALE DOCTRINE AND DIGITAL TRANSMISSIONS .................................... 35 A. INTRODUCTION ................................................................................................................... 35 B. STAKEHOLDER VIEWS ......................................................................................................... 36 1. Benefits of the First Sale Doctrine ................................................................................. 36 a. Resale or Gift .............................................................................................................. 36 b. Lending or Rental ......................................................................................................