Re: A serials pricing issue

From: Buford Terrell <terrell[_at_]sugar.neosoft.com>
Date: Tue, 6 Dec 1994 13:35:41 -0600

>Mark Lemley writes:
>>If we let them [copyright owners] avoid copyright law by contract, what is
>>the point of having copyright rules such as fair use, first sale, etc. in
>>the first place? Are all copyright statutes just default rules to be
>>applied in the unlikely case that the copyright owner does not require
>>buyers to sign a contract? Why not explicitly say "the copyright owner
>>has the exclusive right to his work, and other parties have to bargain
>>for any rights they want."
>
>There are a number of situations where the law has provided "default"
>settings for transactions. The UCC comes most immediately and strongly to
>mind (Uniform Commercial Code for non-lawyer and non-US folks). The UCC
>provides a statutory framework for a number of different types of
>commercial transactions. The parties are free (within limits such as
>contracts of adhesion, etc.) to change these rules by contract. This seems
>to provide a fairly decent balance between fairness and flexibility and is
>a good way to minimize transaction costs.
>
>I don't have any hard figures but my gut tells me that 90+% of all
>copyright materials that change hands does so without benefit of a signed
>contract (books, shareware, videos, albums, etc.). Even if you consider
>shrinkwrap licenses as a contract that number probably doesn't go below
>80+%. It's been my experience that only in a *very* limited number of
>circumstances will people go to the effort of changing the rules of
>copyright with a written contract.
>
>The change you suggest would drastically increase the transaction costs for
>all of those situations where fair use and the like are important but other
>issues did not already justify the cost of an agreement.
>
>It seems to me that the scenario where we set the basic ground rules and
>then allow the players to change them within reasonable limits is a good
>one that works well for the most part. Granted, some of those ground rules
>could use a good overhaul (bringing them at least into the '80's) but the
>system itself works pretty well. (OK, OK, so I'm a hopelessly optimistic
>dreamer.)
>
>Nic Herriges
>nic[_at_]analogy.com

There is a very real difference between the UCC situation and the copyright situation. The UCC deals only with private contracts between the parties and, except for some instances like warranties and some consumer matters, does not deal with public issues. In this circumstance, the UCC can easily operate as a default changeable by the parties as they wish.

However, copyright is different. It deals with a specific monopoly created by the constitution and statute that bestows on the holder only those rights created by the statute, reserving all other value in the creation to the public. The holder of that limited monopoly should not be able to increase its size through a private transaction with a third party, praticularly to the detriment of the public as a whole.

If we look at the fair use and library copying provisions, fair use allows me as a scholar to incorporate parts of other works in my work for the enlightenment of the public, and library copying increase dissemination to the public. Private contract should not be allowed to decrease this spread of knowledge.

On a more technical ground, contract law is probably preempted if it tries to create greater rights in the copyright holder or decrease the rights of the purchaser than are established in the federal statute.

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 Buford C. Terrell                             Knowing ignorance
 Professor of Law                                is strength
 South Texas College of Law                    Ignoring knowledge
 1303 San Jacinto, Houston, TX 77002             is sickness
 (713)646-1857   terrell[_at_]sam.neosoft.com          --Dao De Jing
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