of materials that would benefit from CDL, there is not a functioning market in place to be harmed.
- 1.The “First Sale” Market Effect
The “market harm” analysis is tied closely together with assessment of the purpose of the use under the first factor, informing how courts should view the market purportedly being harmed in connection with the one(s) a copyright owner intends to enter and has a right to control. For example, the Copyright Act does not grant a copyright owner the right to control negative commentary or criticism of its work,[1] uses favored under the first factor. If criticism results in lost sales, is not the type of harm recognized under the fourth fair use factor.
The first sale doctrine itself is intended as a limit on the scope of markets that rightsholders can control. After the “first sale” of the work, rightsholders may no longer place controls on resale, lending, or other restraints on alienation of copies transferred.[2] So, while CDL may have some effect on a potential market for the work—a user may theoretically borrow a digital copy that is derived from one purchased in print by a library rather than pursue the rightsholder to purchase a digital license—such uses are within the balance of use rights granted to owners of copies. Thus, CDL does not negatively affect the market any differently than the uses already permitted by libraries when lending books physically.
The six controls identified in the CDL Statement identify specifically the ways in which CDL achieves the same market effect that physical “first sale” transactions do. The first two controls are that libraries should (1) “ensure that original works are acquired lawfully,” and (2) “apply CDL only to works that are owned and not licensed” meaning that books must have been lawfully acquired and not subject to additional restrictions, just as a library would be required to lawfully acquire a physical book—typically, through a purchase in which the rightsholder is compensated—so would a library engaging in CDL be required to ensure the same.
- ↑ Campbell, 510 U.S. at 590.
- ↑ See, e.g., Disney Enterprises, Inc. v. Redbox Automated Retail, LLC, CV 17-08655 DDP (AGRx), 2018 WL 1942139, at *6 (C.D. Cal. Feb. 20, 2018) (“Disney’s copyrights do not give it the power to prevent consumers from selling or otherwise transferring the Blu-ray discs and DVDs contained within Combo Packs. Disney does not contend otherwise. Nevertheless, the terms of both digital download services’ license agreements purport to give Disney a power specifically denied to copyright holders by § 109(a). RedeemDigitalMovies requires redeemers to represent that they are currently “the owner of the physical product that accompanied the digital code at the time of purchase,” while the Movies Anywhere terms of use only allow registered members to “enter authorized … Digital Copy codes from a Digital Copy enabled … physical product that is owned by [that member].”).
