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iTunes: How Copyright, Contract, and Technology Shape the Business of Digital Media

iTunes: How Copyright, Contract, and Technology Shape the Business of Digital Media

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Published by Pablo Manriquez
via The Harvard Berkman Center
via The Harvard Berkman Center

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Published by: Pablo Manriquez on Nov 23, 2010
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11/07/2011

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Contents.................................................................................................................................................3
Introduction...........................................................................................................................................6

Abstract.............................................................................................................................................................................6
A. Background.................................................................................................................................................................6
B. Objectives and Scope.................................................................................................................................................7
C. Overview of the iTunes Music Store......................................................................................................................8
1. Pricing......................................................................................................................................................................9
2. Song Catalog.........................................................................................................................................................10
3. Ease of Use...........................................................................................................................................................10
4. Digital Rights Management System..................................................................................................................11
5. Extra Features.......................................................................................................................................................12

Part I: Contract-Copyright Interplay.....................................................................................................13

A. Summary: Where Copyright Permits, Contracts May Prohibit........................................................................13
1. Copyright...............................................................................................................................................................13
2. Contract.................................................................................................................................................................14
B. Effects of Contract versus Copyright Tension on iTunes.................................................................................15
C. Copyright versus Contract in the United States..................................................................................................16
D. Copyright versus Contract in Europe..................................................................................................................19
1. European Union...................................................................................................................................................19
a. Copyright Regulation by the European Union...........................................................................................19
b. Contract Regulation by the European Union............................................................................................20
c. Contractual Modification of Copyright Entitlements in the European Union.....................................23
d. Example: Copyright-Contract Interaction in Germany............................................................................23
2. Summary of Business Impact.............................................................................................................................24
E. Copyright versus Contract in Asian Countries....................................................................................................25
1. Japan.......................................................................................................................................................................25
a. Copyright in Japan...........................................................................................................................................25
b. Contract in Japan............................................................................................................................................26
c. Contractual Modification of Copyright Entitlements in Japan................................................................28
d. Business Impact of Contract and Copyright on iTunes in Japan............................................................29
2. China......................................................................................................................................................................29
a. Copyright in China..........................................................................................................................................29
b. Contract in China............................................................................................................................................31
c. Contractual Modification of Copyright Entitlements in China...............................................................32
d. Business Impact of Contract and Copyright on iTunes in China...........................................................33
F. Conclusion.................................................................................................................................................................33

Part II: Digital Rights Management.....................................................................................................35

A. Introduction..............................................................................................................................................................35
B. How is DRM Protected by Law?...........................................................................................................................35
1. United States.........................................................................................................................................................36
2. European Union...................................................................................................................................................37
3. Asia-Pacific............................................................................................................................................................39
a. Japan..................................................................................................................................................................39

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b. China.................................................................................................................................................................40
3. Future Implementers...........................................................................................................................................40
C. The Interaction Between iTunes DRM and the DMCA...................................................................................40
1. Preventing Piracy..................................................................................................................................................41
2. Reverse Engineering and Interoperability........................................................................................................44
D. Conclusion................................................................................................................................................................48

Part III: Digital First Sale Doctrine......................................................................................................50

A. Introduction..............................................................................................................................................................50
1. “Double Dutch Bus”...........................................................................................................................................50
2. The Exclusive Right of Distribution and its Limitation: First Sale Doctrine.............................................51
B. Potential Effects of the First Sale Doctrine.........................................................................................................52
C. Digital First Sale Doctrine?.....................................................................................................................................55
1. Digital Works........................................................................................................................................................55
2. Digital Dissemination of Works........................................................................................................................56
3. Further Limitations..............................................................................................................................................56
D. International Perspective........................................................................................................................................58
1. WIPO Treaties......................................................................................................................................................58
2. European Union...................................................................................................................................................59
3. Asia-Pacific............................................................................................................................................................62
a. Japan..................................................................................................................................................................62
b. China.................................................................................................................................................................63
E. Summary and Outlook............................................................................................................................................64

Part IV: Fair Use Doctrine....................................................................................................................67

A. Introduction..............................................................................................................................................................67
B. Brief Overview of Fair Use.....................................................................................................................................67
C. How Fair Use might Affect iTunes, its Users, and Copyright Holders...........................................................69
D. Fair Use Laws in Several of the Premiere Global Marketplaces......................................................................71
1. United States.........................................................................................................................................................71
2. Countries of the European Union....................................................................................................................74
a. United Kingdom..............................................................................................................................................75
b. Germany...........................................................................................................................................................76
c. France................................................................................................................................................................78
3. Canada....................................................................................................................................................................78
4. Asia-Pacific............................................................................................................................................................79
a. Japan..................................................................................................................................................................79
b. China.................................................................................................................................................................80
E. Conclusion.................................................................................................................................................................80

Part V: Findings and Tentative Assessment.........................................................................................81

A. Summary....................................................................................................................................................................81
1. Critical Interactions..............................................................................................................................................81
2. Comparative Law Perspective............................................................................................................................82
B. Tentative Assessment..............................................................................................................................................86
1. Impacts on Consumers.......................................................................................................................................86
2. Potential Impacts on Labels...............................................................................................................................88
3. Potential Impacts on Artists...............................................................................................................................89
C. Final Remarks...........................................................................................................................................................89

Appendix International Jurisdiction – The European Example...........................................................91

A. Introduction..............................................................................................................................................................91
B. Why jurisdiction matters.........................................................................................................................................92
C. Brussels Jurisdiction Regulation: Overview and Areas of Uncertainty...........................................................94
1. Introduction..........................................................................................................................................................94
2. The Requirements of Art. 15.1 c) Brussels Jurisdiction Regulation............................................................96
a. What constitutes a “contract”?......................................................................................................................97

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b. Who is a “consumer”?...................................................................................................................................97
c. Who pursues commercial and professional activities?..............................................................................98
d. What does “pursue … in the Member State …” actually mean?............................................................98
e. What does it mean to say “by any means, directs… to”?.........................................................................99
D. Conclusion.............................................................................................................................................................102

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