Can the law ever catch up with the Internet?

The following commentary is from i2Coalition co-founder and board member David Snead cross-posted from the Web Host Industry Review:

The US District Court for the Southern District of New York recently handed down a decision that reflects the difficulty adapting laws designed for the physical age to the Internet era. In Capitol Records LLC v. ReDigi, Inc., the US District Court was asked to rule on the applicability of the “first sale” doctrine to digital music.  The court determined that the first sale doctrine did not apply to digital music. The court’s decision was based on its determination that in the law establishing the first sale doctrine, Congress had made the choice to limit its application to physical goods. Because digital music is not physically converted, the court determined that the law did not apply.

The first sale doctrine is set out in the Copyright Act. Because of the doctrine, once you purchase something, the owner of the copyright cannot control your resale or use of it. This means that the entity holding the copyright in a recording cannot prohibit your giving it to your father. Nor can the holder prohibit you from selling it to a used record store who then resells it. The purpose of the doctrine is to balance the rights of the copyright holder with those of the purchaser.

In ReDigi, the court was called upon to determine whether ReDigi’s business model fell within the first sale doctrine. ReDigi created a service where you uploaded music you had purchased into a digital locker. The service did not discriminate based on whether you had downloaded the music, or purchased it as a CD and ripped it to your computer.  Once you had uploaded the music, it was erased from your hard drive and you could only stream it from ReDigi’s servers. If you wanted, you could offer the music for sale.  Once sold, the purchaser would have access to it, and you would no longer have access to it. In essence, ReDigi created a digitial used record store.

The court, however, felt differently. The court held that when Congress drafted the law, they used words making the doctrine applicable only to tangible items. The court stated that it could not: “of its own accord, condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress itself has declined to take that step.”

In essence, the court determined that in creating the first sale defense, and not including digital copies in the law, Congress made an affirmative determination that the defense should not apply to digital copies. This decision corresponds with the Copyright Office’s interpretation as well.

This decision illustrates the continued struggle courts have using current laws to interpret challenges created by the transition to a digital society. In this case, it is difficult to imagine that Congress had further distribution of digital copies in mind when it last reviewed the Copyright Act. More likely, even if this was a consideration, distribution models had not yet evolved in a sophisticated enough fashion to merit consideration. In this case, it appears that the judge used the “strict construction” legal philosophy to create an outcome he believed best.  This philosophy holds that courts should not attempt to “read outside” the black and white text of a law. While the philosophy has a satisfying intellectual appeal, it creates a legal system unable to adapt to new technologies and challenges.

While I believe the struggle that the courts, and legislatures, continue to have adapting intellectual property law to the digital age is necessary to resolve these issues, the use of philosophies like strict construction will not lead to a resolution of these issues; it will only kick the can further down the road. This delays the ability of Internet businesses to innovate. More importantly, it removes a tool, robust judicial debate of laws, which is necessary to create clarity on these issues for both Internet businesses and intellectual property interests alike.