Hillary Schaub

[Commentary] The first sale doctrine as it exists today can most easily be understood in the context of books. Suppose someone walks into a bookstore and buys a brand new paperback book. After she reads the book, she could decide to lend it to a friend who lives down the street or donate it to the local library. Under the first sale doctrine, these actions are legal because she is the owner of that particular copy.

This proves difficult with digital versions of creative works. No longer are copyrighted works like CDs or books transferred physically from person to person. The transfers are occurring electronically and a new copy of the work is created at the destination of the transfer. The first sale doctrine does not allow the digital purchaser to electronically transfer their files to someone else pursuant to a loan or sale.

Although Villasenor states that if this first sale doctrine was changed to include digital works, the change would be exploited and would open up a Pandora’s Box of unintended consequences:

• Short duration loans of digital works could be facilitated by web-based services that would match listeners and owners whose copies of requested songs were sitting unused on hard drives. In this situation, the recording artist would only sell a small number of copies to the web-based services as opposed to selling copies to every listener. This would dramatically reduce the market for digital music sales.
• Normally, used printed books, CDs, and DVDs are less valuable than their brand new counterparts. On the other hand, a digital representation of a work can be transferred countless times and stay exactly the same with no wear-and-tear. “Used” digital copies never become less valuable and this would cause the market to behave differently.

Policy recommendations to support the IP Transition:

• Government leaders need to speed up lengthy rulemaking procedures.
• Regulators need to be open to new business models and applications with the potential to improve consumer communications and commerce.
• During the IP Transition, a critical priority is to protect vulnerable populations. To ensure the IP Transition has a soft landing, the elderly, disabled, and those residing in rural areas must be provided the same or better service than they are currently receiving.
• Increase the number of experiments to gauge the impact of these transitions, to assess costs and benefits. Using the information from these trials to enact data-driven regulation. Regulations can use data to match the needs and responsibilities of the public sector with the innovation capacity of the private sector.
• With the insatiable demand for larger amounts and faster content delivery, we need to build a next generation digital infrastructure. This new infrastructure should support innovation in commerce, health care, education, transportation, and energy.

Barriers to Innovation:

• Reskilling current workers for new technologies is critical for future success. Current methods include partnering with local universities and using MOOCs to reskill workers for new technologies, but transforming a mathematics expert into a big data scientist is a difficult and timely process.
• The telecommunications industry needs more spectrum.
• Adaptation is vital to the ever evolving telecom industry. Some television networks have successfully transformed from a content creator to a content distributor.
• There is tremendous competition to hire the qualified tech engineers. The STEM pipeline must be improved.