Copyright and Contract Law: Regulating User Contracts: the Ts Ate of the Art and a Research Agenda Estelle Derclaye

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Copyright and Contract Law: Regulating User Contracts: the Ts Ate of the Art and a Research Agenda Estelle Derclaye Journal of Intellectual Property Law Volume 18 | Issue 1 Article 4 October 2010 Copyright and Contract Law: Regulating User Contracts: The tS ate of the Art and a Research Agenda Estelle Derclaye Marcella Favale Follow this and additional works at: https://digitalcommons.law.uga.edu/jipl Part of the Comparative and Foreign Law Commons, Contracts Commons, and the Intellectual Property Law Commons Recommended Citation Estelle Derclaye & Marcella Favale, Copyright and Contract Law: Regulating User Contracts: The State of the Art and a Research Agenda, 18 J. Intell. Prop. L. 65 (2010). Available at: https://digitalcommons.law.uga.edu/jipl/vol18/iss1/4 This Article is brought to you for free and open access by Digital Commons @ Georgia Law. It has been accepted for inclusion in Journal of Intellectual Property Law by an authorized editor of Digital Commons @ Georgia Law. Please share how you have benefited from this access For more information, please contact [email protected]. Derclaye and Favale: Copyright and Contract Law: Regulating User Contracts: The State COPYRIGHT AND CONTRACT LAW: REGULATING USER CONTRACTS: THE STATE OF THE ART AND A RESEARCH AGENDA* Estelle Derclaye* & Marcella Favale*" TABLE OF CONTENTS I. INTRO D UCTIO N ........................................................................................ 67 II. THE LIMITS OF COPYRIGHT LAW...........................................................68 A. THE LIMITED EFFECT OF COPYRIGHT LIMITS ON CONTRACTING OUT OF COPYRIGHT.......................................68 B. COMPARATIVE REVIEW OF COPYRIGHT LIMITS IN VARIOUS CO UN TRIES .......................................................................................... 71 III. THE UNITED STATES .............................................................. 72 IV. THE EUROPEAN UNION.......................................................................... 74 A. THE UNITED KINGDOM....................................................................79 B. BELGIUM ............................................................................................... 83 C. IRELA N D ............................................................................................... 87 D. PORTUGAL .................................................. 89 E. CON CLUSION ...................................................................................... 91 V. ACADEMIC COMMENTARY ................. ........................ 92 A. CONTRACTS OVERRIDE USERS' FREEDOMS ................................... 92 B. CONTRACTS ARE MORE EFFICIENT THAN COPYRIGHT..............96 C. COPYRIGHT AND CONTRACTS ARE INDEPENDENT.....................98 The authors would like to thank Professor Severine Dusollier (Belgium), Dr. Patricia Akester (Portugal) and Dr. John Cahir (Ireland) for the information they provided on the legal situation in their respective countries. Unless otherwise stated, this Article exclusively summarises the statutory law, the case law, and the literature and does not reflect the views of the authors. - Dr. Estelle Derclaye, Associate Professor and Reader in Intellectual Property Law, University of Nottingham (http://www.nottingham.ac.uk/law). Author may be reached at [email protected]. - Dr. Marcella Favale, Visiting Research Fellow at the Centre for Intellectual Property Policy at Bournemouth University (http://www.cippm.org.uk) and consultant at the law firm De Arcangelis, http://www.slida.it. Author may be reached at [email protected]. 65 Published by Digital Commons @ Georgia Law, 2010 1 Journal of Intellectual Property Law, Vol. 18, Iss. 1 [2010], Art. 4 66 J. INTELL PROP. L [Vol. 18:65 D. COPYRIGHT WORKS AND THEIR COMMERCIALISATION ............ 99 1. Consumers .............................. ........ 100 a. The Enforceabiity of Electronic Contracts....... ........ 102 b. The Terms of the Electronic Licences......................................... 105 2. Librariesand EducationalInstitutions..............................................106 3. Com m ercial Users............................................................................. 110 E. DOCTRINAL ANALYSIS OF CONTRACT LIMITS ................................ 110 1. Unconscionability and Good Faith.................................................... 111 2. Limits to ContractsSet by Copyright Law: The Doctrine of Preemp tion........................................................................................ 114 3. The Doctrines ofMisuse andAbuse of Rights................................... 118 4. Other Limits to Contracts:Public Poky ........................................... 120 5. ConsumerProtection................................ 121 6. ConstitutionalLimitsto Contracts.................................................... 123 VI. DIGITAL RIGHTS MANAGEMENT (DRM) AND THE ENFORCEMENT OF CONTRACTS.............................................................. 126 A. THE DANGERS OF DIGITAL LOCK-UP .............................................. 126 B. REMEDIES FOR USERS AGAINST "UNFAIR" DRM............................ 130 C. INTERPLAY BETWEEN DRM AND CONTRACT................................. 132 VII. EMPIRICAL AND COMPARATIVE STUDIES OF USER CONTRACTS AND DRM .................. ................................................. 133 A. PROPORTION OF COPYRIGHT MATERIAL DIFFUSED ELECTRON ICALLY ............................................................................... 133 1. Contracts ................................ .......... 133 2 . DR M ............................................................................................... 136 VIII. CONCLUSIONS ......... ................................................................... 138 PA RT II........................................................................... 138 PA RT III.......................................................................................................... 138 PA RT IV .......................................................................................................... 13 8 PA RT V ........................................................................................................... 139 PA RT VI.......................................................................................................... 139 PART VII ........................................................................140 https://digitalcommons.law.uga.edu/jipl/vol18/iss1/4 2 Derclaye and Favale: Copyright and Contract Law: Regulating User Contracts: The State 2010] REGULATING USER CONTRACTS 67 I. INTRODUCTION A number of doctrinal concerns have been expressed regarding user contracts. To what extent do the terms of these licences depart from copyright law? Are the rights they grant to the owner broader or more restrictive? Are the entitlements of users, beneficiaries of copyright limits, hindered in some form? While no comprehensive empirical study has been conducted to analyse the different types of licensing agreements deployed on the market and their impact on copyright limits, a body of theoretical legal literature exists on this issue. This Article provides an overview of the doctrinal debate on this topic, with a particular focus on the United States, the United Kingdom, Belgium, Ireland, and Portugal. The latter three countries are interesting for our discourse because they have enacted legislation protecting copyright limits from contracts by declaring contractual clauses that override some copyright limits null and void. This literature review is not only concerned with copyright exceptions to the exclusive rights of the author, but all of copyright's limits, namely the idea- expression dichotomy, the originality requirement, the first-sale (or exhaustion) doctrine, the extent of the economic rights, and the copyright term. This review of user contracts is organised as follows: Part II examines the nature of copyright limits and their potential impact on the possibility of being contracted out in current licensing practices. It subsequently describes the legislation of the countries examined in this literature review' that define copyright limits and exceptions, especially the provisions restricting freedom of contract. It also reviews any relevant case law. Part III discusses the terms of the debate. The copyright literature is divided among (a) those who believe that contracts override users' "rights," and therefore legislators should render imperative some or all copyright limits, (b) those who believe that contracts are more efficient than copyright law, and therefore we should entrust digital copyright matters to "private ordering," and (c) those who believe the entire question is falsely posed, because contracts and copyright belong to different but complementary worlds that act in useful synergy. Part IV reviews the types of contracts currently utilised by right holders to licence copyright material to users. The analysis is divided by segments of users: (a) consumers (natural persons); (b) libraries and universities; (c) commercial users (broadcasting institutions, leisure-related businesses, audio/video producers, etc.). This section focuses on the enforceability of electronic standard form contracts (shrink-wrap, click-wrap, browse-wrap), as I The UK., the US., Belgium, Portugal, Germany, and Ireland; EU legislation is considered as well. Published by Digital Commons @ Georgia Law, 2010 3 Journal of Intellectual Property Law, Vol. 18, Iss. 1 [2010], Art. 4 68 J. INTELL PROP.L [Vol. 18:65 opposed to arms-length agreements, and on their current and potential impact on users' privileges.
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