We've Got Hollywood Covered

Supreme Court Copyright Decision May Spur Congress to Revise Laws

Congress was already looking at U.S. copyright statutes and Tuesday's Supreme Court decision may accelerate that process

A day after a U.S. Supreme Court decision allowed books and movies bought legally abroad to be resold in the U.S., members of House Judiciary Committee on Wednesday raised the possibility that the decision's biggest impact could be to spur Congress to revamp the nation’s copyright laws.

Already examining those laws because of concerns that digital technology has left them  badly outdated, members of the House Intellectual Property and Internet Subcommittee suggested the high court decision provides one more reason to act.

“Yesterday’s opinion raises some concerns,” said Rep. Doug Collins, R-Ga.

Rep. George Holding, R-N.C., repeatedly questioned Registrar of Copyrights Maria Pallante about the effect of the court decision.

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Meanwhile, an aide to the subcommittee’s chairman, Rep. Howard Coble, R-N.C.,  left, told TheWrap the committee would hold a hearing to look more closely at the issues raised by Tuesday's Supreme Court decision. The aide said the hearing would be scheduled sometime in the next few weeks.

Even before the high court decision, Pallente was urging Congress to revise the nation’s copyright law.

Testifying Wednesday to the subcommittee she said a combination of technological developments and conflicting court decisions in appellate courts have made copyright rights and responsibilities difficult to understand.

“The law is showing the strain of its age and requires your attention,” she said. “The public is very confused. It is very difficult to tell people the state of the law.”

Even when copyright law is clear, both Pallente and several congressmen said the law isn’t always logical.

They pointed  to how copyright law treats violations involving streaming of live events –as at most copyright misdemeanors — even as violators illegally distributing other kinds of content face far more stringent criminal penalties.

“There are many gaps in the current laws,” said Pallente, below right.

The subcommittee’s ranking Democrat Rep. Mel Watt, D-N.C., said changes are needed to address imbalances that have developed in the digital environment.

“We must make sure whether through legislation, education or stakeholders negotiations that the core purpose of copyright is reinforced by enabling all artists to forge a livelihood from the new distribution channels through which consumers increasingly enjoy their creations,” he said.

Tuesday’s 6-3 high court decision involved works licensed for overseas sale that are brought into the U.S. and resold.

In three separate opinions, the court majority ruled that Supang Kirtsaeng, a former Thai citizen who moved to the United States, could import into the U.S. English language textbooks bought legally in Thailand. Kirtsaeng, started importing English language text books while a Cornell University student, selling them on E-bay. The texts were priced in accordance with other books in that Southeast Asian country, which made the books much cheaper than buying the same texts at U.S. prices. The high court ruled the books could be resold in the U.S. without violating U.S. copyright laws.

Movie studios and book publishers blasted the decision, while consumer groups praised it.

“We believe today’s Supreme Court decision will hinder American businesses’ ability to compete overseas to the detriment of the long-term economic interests of the United States, and particularly its creative industries,” Howard Gantman, an MPAA spokesman, told TheWrap. “We plan to study the decision further before determining the most appropriate action for us to take.”

Tom Allen, president-CEO of the Association of Business Publishers, in a statement said the ruling “ignores broader issues critical to American’s ability to compete in the global marketplace.

In unsuccessfully arguing the case, book publisher John Wiley & Co., maintained that the resale of its textbooks for a profit in the United State violated its rights.

Book publishers who often set the local price of books based on local rates, suggested that the result of the decision could be to reduce the availability of American books worldwide.

If publishers could face significant losses of U.S. revenues if they sell products more cheaply overseas, the result could well be to withhold a product’s availability overseas.

“We are disappointed.  It is a loss for the U.S. economy, and students and authors in the U.S. and around the world,” John Wiley & Co. said in a statement.

While there is concern that the decision could cause problems for software, movie and music publishers, all of whom signed on to friend of the court briefs in the publishers’ case, the implications aren’t fully clear.

Some software and movie DVDs have geographical encryption codes that can limit their use on U.S. devices. In addition, the sale of CDs containing music is a far smaller part of the music business than when the case was originally filed nearly a decade ago.

Consumer groups, however, praised the ruling.

“This is a big win for the public interest, students, libraries, retailers, and consumers of all sorts who will be protected by this decision,” said  Sherwin Siy, vice president of legal affairs for the consumer group Public Knowledge in a statement.

Consumer Electronics Association president-CEO Gary Shapiro, writing on Forbes.com on Wednesday compared the impact of the high court’s decision to that of 1984 “fair use” decision in the Sony Betamax case. That decision allowed consumers to videotape and replay shows for their own use.

“Almost 30 years ago, the Consumer Electronics Association fought and won a similar battle to preserve the first-sale doctrine from legislation that would have choked off the market for movie rental and would have impeded the development of innovative devices,” wrote Shapiro. “We took on Hollywood, and we won.”

Shapiro called the latest decision “a major victory for American consumers” saying it will allow them to shop worldwide for content. He suggested it could have implications for consumer purchases of products overseas, whether for books, health care or for other purposes.

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