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No. 12-16616
IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT ADOBE SYSTEMS INCORPORATED, Plaintiff-Appellee, v. ANTHONY KORNRUMPF and HOOPS ENTERPRISE, LLC, Defendants-Appellants. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA CASE NO. 10-CV-02769-CW (HON. CLAUDIA WILKEN) BRIEF OF AMICUS CURIAE THE COPYRIGHT ALLIANCE IN SUPPORT OF AFFIRMANCE

Sandra Aistars Executive Director Copyright Alliance 1224 M. Street, NW, Suite 101 Washington, D.C. 20005 (202) 540-2247

Laura W. Brill Gabriel D. Miller Kendall Brill & Klieger LLP 10100 Santa Monica Blvd, Suite 1725 Los Angeles, California 90067 Tel: (310) 556-2700 Fax: (310) 556-2705 Email: lbrill@kbkfirm.com gmiller@kbkfirm.com

Counsel for Amicus Curiae The Copyright Alliance

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CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, amicus curiae the Copyright Alliance states that it does not have a parent corporation and that no publicly held corporation owns 10% or more of amicus stock.

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TABLE OF CONTENTS Page I. II. INTEREST OF AMICUS CURIAE ................................................................. 1 ARGUMENT ................................................................................................... 3 A. B. COPYRIGHT PROMOTES CREATIVITY AND INNOVATION ...................................................................................... 3 LICENSING HAS EMERGED IN THE DIGITAL AGE AS A PRINCIPAL MODE OF DISTRIBUTION FOR A WIDE ARRAY OF CREATIVE WORKS ...................................................... 5 1. 2. 3. 4. C. Digital Music............................................................................... 6 Film And Television ................................................................. 10 Digital Books And Magazines (eBooks)............................... 13 Digital Photography .................................................................. 16

CONSUMERS BENEFIT GREATLY FROM DIGITAL LICENSING ........................................................................................ 17 1. 2. 3. Much Greater Consumer Choice .............................................. 18 Greater Accessibility ................................................................. 20 More Content ............................................................................ 23

D. III.

VERNOR CONTROLS THE OUTCOME OF THIS CASE .............. 25

CONCLUSION.............................................................................................. 28

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TABLE OF AUTHORITIES Page CASES Adobe Systems Inc. v. Hoops Enterprise LLC, 2012 WL 29873 (N.D. Cal. Feb. 1, 2012) .....................................................10 Apple Inc. v. Psystar Corp., 658 F.3d 1150 (9th Cir. 2011) .......................................................................27 Capitol Records, LLC v. ReDigi Inc., --- F. Supp. 2d ---, 2013 WL 1286134 (S.D.N.Y. Mar. 30, 2013) ................10 Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020 (9th Cir. 2013) .................................................................. 4, 20 Deacon v. Pandora Media, Inc., 901 F. Supp. 2d 1166 (N.D. Cal. 2012) .........................................................28 F.B.T. Productions, LLC v. Aftermath Records, 621 F.3d 958 (9th Cir. 2010) ...........................................................................8 Grant v. Raymond, 31 U.S. 218 (1832)...........................................................................................4 Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985).................................................................................. 4, 19 Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013)...................................................................... 25, 26, 27 MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511 (9th Cir. 1993) ...........................................................................5 National Car Rental Systems, Inc. v. Computer Associates International, 991 F.2d 426 (8th Cir. 1993) ...........................................................................5 UMG Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir. 2011) ................................................................ 27, 28 Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010) ................................................................ 25, 27 STATUTES 17 U.S.C. 106 ................................................................................................... 4, 27 17 U.S.C. 109 ................................................................................................. 26, 27

ii

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17 U.S.C. 602 ........................................................................................................25 OTHER AUTHORITIES Grace K. Chan, Downstream Alteration of Copyrighted Works in A World of Licensed, Digital Distribution, 36 Colum. J.L. & Arts 261, 268 (2013)...........................................................8 John P. Uetz, The Same Song and Dance: F.B.T. Productions, LLC v. Aftermath Records and the Role of Licenses in the Digital Age of Copyright Law, 57 Vill. L. Rev. 177 .......................................................................... 17, 22, 23 Legal Music Services, Pro Music Website.................................................................6 Sage Vanden Heuvel, Fighting the First Sale Doctrine: Strategies for A Struggling Film Industry, 18 Mich. Telecomm. & Tech. L. Rev. 661 (2012). .......................................21 The Nielsen Company & Billboards 2012 Music Industry Report, Business Wire (Jan. 4, 2013, 7:12 AM) ..........................................................6 United States Constitution Article I, Section 8, Clause 8 ..........................................3 Urs Gasser & Gabriela Ruiz Begue, iTunes: Some Observations After 500 Million Downloaded Songs, Berkman Ctr. for Internet & Socy at Harv. L. Sch. (2005)............................8 RULES Federal Rule of Appellate Procedure 29 ....................................................................1

iii

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Pursuant to Federal Rule of Appellate Procedure 29(b), amicus curiae the Copyright Alliance respectfully submits this brief in support of Appellee Adobe Systems Incorporated.1 All parties have consented to the filing of this amicus brief. See Fed. R. App. P. 29(a). I. INTEREST OF AMICUS CURIAE

The Copyright Alliance is a nonprofit, nonpartisan 501(c)(4) membership organization dedicated to promoting and protecting the ability of creative professionals to earn a living from their creativity. It represents the interests of individual authors from a diverse range of creative industriesincluding, for example, writers, musical composers, recording artists, journalists, documentarians, filmmakers, graphic and visual artists, photographers, and software developersand the small businesses that are affected by the unauthorized use of their works. The Copyright Alliances membership encompasses these individual artists and creators, creative union workers, and small businesses in the creative industry, as well as the organizations and corporations that support and invest in them. The Copyright Alliance encourages the development of new technologies that may be used to bring licensed works to the public in new ways, even if those Pursuant to Federal Rule of Appellate Procedure 29(c)(5), no counsel for any party authored this brief in whole or in part, and no party or counsel for any party made a monetary contribution intended to fund the preparation or submission of this brief. 1
1

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new ways disrupt traditional business models. However, regardless of the ways in which technology and business evolve, the Copyright Alliances primary dedication is to ensuring that the policies in the Constitution and Congress directions in the Copyright Act continue to provide meaningful protections to authors and creators whose works are licensed to be distributed or reproduced consistent with the express terms of licensing agreements and to the investments made to commercialize those works. Individual creators are the engines of creativity, jobs, and growth in the United States. In California, Copyright Alliance members include or employ countless journalists, recording artists, photographers, software developers, filmmakers, authors, and other creative professionals. For example, Copyright Alliance member Professional Photographers of America (PPA) represents approximately 5000 direct and indirect members through its national organization and thirteen California state and local affiliates, and member American Society of Composers, Authors and Publishers (ASCAP) has over 100,000 members in California alone. By providing these authors, creators, developers, and artists the exclusive right to control whether and how others may reproduce and publicly distribute their works, the copyright laws enable these individuals to reap the economic rewards that spur even greater creativity to societys benefit in the form of a larger and more diverse range of educational, cultural, and scientific works.

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The Copyright Alliance submits this brief to help the Court appreciate the enormous benefits consumers have obtained through the use of licensing arrangements to provide broad and flexible access to a broad array of creative works and how Judge Wilkens principled decision is consistent with the policies of the copyright law. The Copyright Alliance also submits this brief to help the Court understand the potential negative impacts reversal could have on all of those who rely on the use of licenses in connection with the distribution of digital media, including companies and consumers alike. II. A. ARGUMENT

COPYRIGHT PROMOTES CREATIVITY AND INNOVATION Our nations copyright laws are premised on the principle that providing

individual authors and creators protections and control over their works is critical to developing societys rich cultural heritage, scientific knowledge, and technological progress, as well as to fostering and promoting free expression. As copyright is fundamental to our nations values, the Constitution empowers Congress to promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. U.S. Const. art. I, 8, cl. 8. These basic principles are just as true today as they were in the earliest days of the Republic. Copyright protection provides creators with the incentives

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necessary to ensure contributions to the arts and sciences, while also benefiting society at large. See Columbia Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1037 (9th Cir. 2013) ([C]opyright laws ultimate aim is to stimulate artistic creativity for the general public good. (quotation and ellipsis omitted)); Grant v. Raymond, 31 U.S. 218, 241 (1832) (To promote the progress of useful arts, is the interest and policy of every enlightened government.). Indeed, the Framers intended copyright itself to be the engine of free expression. By establishing a marketable right to the use of ones expression, copyright supplies the economic incentive to create and disseminate ideas. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 558 (1985). By providing contributors to the store of knowledge a fair return for their labors, id. at 546, the copyright laws in turn ensure that the public has continued access to a rich and diverse range of works. The Copyright Act accomplishes these goals by bestowing upon copyright holders a bundle of broadly-defined exclusive rights, including the rights to reproduce, prepare derivative works of, perform, display, and distribute copyrighted works. See 17 U.S.C. 106; Harper & Row, 471 U.S. at 54647 (Section 106 of the Copyright Act confers a bundle of exclusive rights to the owner of the copyright. Under the Copyright Act, these rightsto publish, copy, and distribute the authors workvest in the author of an original work from the time of its creation.).

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The last of these exclusive rightsthe right of a copyright holder to control the distribution of copies of his copyrighted worksis central to this case, because, as explained below, the right to control distribution is integral to protecting copyrights in the digital age. Cf. MAI Sys. Corp. v. Peak Computer, Inc., 991 F.2d 511, 519 (9th Cir. 1993) (Among the exclusive rights given to the owner of a copyrighted work is the right to distribute copies of the work by lending. Therefore, [defendant]s loaning of [plaintiffs] software, if established, would constitute a violation of the Copyright Act.); Natl Car Rental Sys., Inc. v. Computer Assocs. Intl, 991 F.2d 426, 430 (8th Cir. 1993) (The exclusive right to lease a copyrighted work is derivative of the right . . . to distribute copies.). B. LICENSING HAS EMERGED IN THE DIGITAL AGE AS A PRINCIPAL MODE OF DISTRIBUTION FOR A WIDE ARRAY OF CREATIVE WORKS Licensing models for the distribution of digital media works have provided enormous benefits to consumers. The following examples illustrate some of the many ways that consumers can now obtain both at-home and mobile access to whole libraries of works. Without licensing models, such access would be beyond the reach of most individuals if not technologically impossible or commercially infeasible.

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1.

Digital Music

Perhaps no industry has been more revolutionized by the advent of the digital age than the music industry. Revenues from digital music now account for more than half of the total annual revenues generated by the U.S. music industry. See The Nielsen Company & Billboards 2012 Music Industry Report, Business Wire (Jan. 4, 2013, 7:12 AM) (Digital share of the total business . . . was 55.9% in 2012.).2 This is not surprising, given the proliferation of digital music services in the marketplace. In the U.S. alone, there are dozens of services that offer consumers digital music for download. See Legal Music Services, Pro Music.3 These include well-known services such as iTunes and Google Play. In addition, there are numerous subscription services offered in the U.S.4 These services offer consumers the ability to pay a modest fee to enjoy access to vast libraries of music for specified periods of time; Rhapsody and Spotify are well-known examples of such digital music subscription services. All told, [t]here are now more than 500 licensed digital music services operating worldwide, offering 30 million tracks to consumers. See An Industry on the Road to Recovery: Facts and Figures,

Available at http://www.businesswire.com/news/home/20130104005149/ en/Nielsen-Company-Billboard%E2%80%99s-2012-Music-Industry-Report (last visited July 3, 2013). Available at http://pro-music.org/legal-music-services-north-america.php (last visited July 3, 2013) (select USA and All Services for a listing).
4 3

See note 3, supra. 6

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International Federation of the Phonographic Industry (IFPI) Digital Music Report 2013, at 6.5 As the digital music file has supplanted the compact disc as the standard medium for delivering music to consumers, artists and record labels have developed new ways and new channels by which to distribute their products. As a result, digital music services have increasingly turned to licensing digital copies of music to consumersor granting consumers licenses to listen to such copies for specified periods of timerather than simply selling copies of the copyrighted works outright, as was the norm during the era of brick and mortar record stores. For example, since Apples iTunes platform launched in 2003, customers have downloaded over 25 billion songs through its service, making it by far the worlds most popular music store. See Press Release, Apple, iTunes Store Sets New Record with 25 Billion Songs Sold (Feb. 6, 2013).6 In exchange for obtaining access to a huge number of songs and albums at reasonable prices, Apple users agree, for example, to make only personal, non-commercial use of the music Available at http://www.ifpi.org/content/library/dmr2013.pdf (last visited July 3, 2013). For a list of the more than 500 digital music services available worldwide, listed by the services available in each country, see Legal Music Services, supra note 3. Available at http://www.apple.com/pr/library/2013/02/06iTunes-StoreSets-New-Record-with-25-Billion-Songs-Sold.html (last visited July 3, 2013) (Averaging over 15,000 songs downloaded per minute, . . . . [t]he iTunes Store is the worlds most popular music store with a catalog of over 26 million songs and over 25 billion songs downloaded, and is available in 119 countries.). 7
6 5

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they download. See iTunes Store Terms and Conditions, Apple.7 Rhapsody is another popular digital music distribution platform. Like iTunes, Rhapsody offers individual songs for download, but Rhapsody also provides a subscription service, which offers customers unlimited access to its sixteen-million track library in exchange for a small monthly payment. See Rhapsodys Company Info About Us webpage.8 Not surprisingly, Rhapsody also utilizes licenses in its transactions with customers. However Rhapsodys licensesand thus the terms governing customers use of its digital contentare different from those of iTunes. Most notably, while a Rhapsody user can download songs, if she cancels her membership, she can no longer listen to the songs that she downloaded. Millions of users choose and value this arrangement Available at http://www.apple.com/legal/internet-services/itunes/us/terms .html#SERVICE (last visited July 3, 2013) (describing use restrictions among other terms); see also Software License Agreement for iTunes, available at http:// www.apple.com/legal/sla/docs/iTunes.pdf (last visited July 3, 2013); Grace K. Chan, Downstream Alteration of Copyrighted Works in A World of Licensed, Digital Distribution, 36 Colum. J.L. & Arts 261, 268 (2013) (iTunes users do not purchase a copy of a song or album; instead, they purchase a limited use license to play the song or album for personal, noncommercial use. (internal quotation marks omitted)); Urs Gasser & Gabriela Ruiz Begue, iTunes: Some Observations After 500 Million Downloaded Songs, Berkman Ctr. for Internet & Socy at Harv. L. Sch. (2005), available at http://cyber.law.harvard.edu/BerkmanPress/iTunes _August_update_final%5B1%5D.pdf (last visited July 3, 2013) (explaining that iTunes relies on license agreements with its consumers to support its business model); cf. F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 958, 964 (9th Cir. 2010) (holding that music label had licensed, not sold, its recordings to iTunes). Available at http://www.rhapsody.com/about/index.html (last visited July 3, 2013). 8
8 7

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because it offers access to a virtually unlimited number of songs for a low monthly fee. See Rhapsody Service Terms of Use 2(g), 8.9 Because of the different licensing terms employed by iTunes and Rhapsody, customers have multiple options from which to choose in deciding which service best suits their needsand that is just between these two distributors. Moreover, iTunes and Rhapsody are not alone, as there are numerous other examples of digital music platforms that utilize licenses in providing their service options to customers. These include, for example, Spotify (offering paid and unpaid streaming services, as well as paid downloads), Pandora (offering paid and unpaid streaming services), Google Play (offering musicas well as movies, television shows, magazines, books, apps, and video gamesfor download at various price points, and also offering unlimited downloads for a monthly fee), and Amazons MP3 Store (offering songs and albums for download at various price points), just to name a few. See Spotify Terms and Conditions of Use;10 Pandora Terms of Use;11 Google Play Terms of Service;12 Amazon MP3 Store: Terms of Use.13

Available at http://www.rhapsody.com/terms_of_use (last visited July 3, 2013) ([T]racks offered for download are offered for license, not purchase or sale, and are subject to this Agreement and any other license terms and conditions applicable to the content . . . . All licenses to download are personal to the customer.). Available at https://www.spotify.com/us/legal/end-user-agreement/#s4 (last visited July 3, 2013) (The Spotify Service and the content provided through it are the property of Spotify or Spotifys licensors, and we grant you a limited, 9
10

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2.

Film And Television

While the film and television industries started providing digital content over the Internet later than the music industry, the digital distribution of film and non-exclusive, revocable licence to make personal, non-commercial . . . use of the Spotify Service . . . .). Available at http://www.pandora.com/legal (last visited July 3, 2013) (Pandora grants to you a limited, non-exclusive, non-transferable license to access and use the Pandora Services . . . for personal non-commercial purposes only . . . .). Notably, Pandora streams music to a users device; it does not permit digital files to be downloaded. Thus, while its streaming business model is evidence of the prevalence of licensing agreements in the digital marketplace, its digital content would not be subject to the first-sale doctrine, because it involves a public performance right to which the first-sale doctrine generally does not apply. See 17 U.S.C. 109; id. 109(e) (narrow exception for certain audiovisual games). Similarly, the first sale doctrine does not grant even the owner of a physical copy the right to make additional copies. See Capitol Records, LLC v. ReDigi Inc., --- F. Supp. 2d ---, 2013 WL 1286134 (S.D.N.Y. Mar. 30, 2013). For this reason, even if Defendants here were the outright owners of physical disks on which software were stored, such a conclusion would not in any manner authorize copying or sales by those who obtain access to content without owning a physical copy, as in many of the models for disseminating creative works. Defendants argument here that they do own their disks outright derive from an end-user license agreement (EULA). However, as the district court correctly held, whether the first-sale doctrine applies in the instant case depends on the OEM license agreement. See Adobe Sys. Inc. v. Hoops Enter. LLC, 2012 WL 298732, at *5 (N.D. Cal. Feb. 1, 2012). Available at https://play.google.com/about/play-terms.html (last visited July 3, 2013) ([Y]ou will have the non-exclusive right, for the period selected by you in the case of a purchase for a rental period, and in other cases for as long as Google and the applicable copyright holder have rights to provide you that Product, to download or stream, in each case, . . . copies of the applicable Product to your Devices, and to view, use, and display the Product on your Devices . . . .). Available at http://www.amazon.com/gp/dmusic/tou/mp3.html/ref=dm_dp _eula?ie=UTF8&%20pop-up=1 (last visited July 3, 2013) ([W]e grant you a nonexclusive, non-transferable right to use the Music Content only for your personal, non-commercial, entertainment use, subject to the Agreement.). 10
13 12 11

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television content has grown exponentially in recent years. And like the music industry, there are many examples of film and television distributors that license, rather than sell, their digital products and services. Amazons Instant Video service is a prime example. Through this service, Amazon offers customers the option of either renting a film or television show for a short period of time (the customer has thirty days to start watching the video, and once she starts watching it, she has a forty-eight-hour viewing window) or acquiring a license to view it indefinitely.14 A customer must pay a higher price for the latter option, and with either option, videos are immediately downloadable by a customer via the Internet, but in neither case does Amazon sell the video file to the customer outright. Instead, Amazon offers a license to the customer allowing her to view the video consistent with the terms applicable to her specific distribution choice. See Amazon Instant Video Terms of Use, Amazon.15 Netflix provides yet another example of licensing being used to market digital film and television content. Unlike Amazon, Netflix is an online

See Amazon Instant Video, Amazon, http://www.amazon.com/InstantVideo/b/ref=sa_menu_aiv_vid?ie= UTF8&node=2858778011 (last visited July 3, 2013). Available at https://www.amazon.com/gp/video/terms (last visited July 3, 2013) (Amazon grants you a non-exclusive, non-transferable, non-sublicensable, limited right and license, during the applicable Viewing Period, to access, view, use and display the Digital Content in accordance with the Usage Rules, for NonCommercial, Private Use.). 11
15

14

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subscription service, which, for a monthly fee, provides its members with access to motion pictures, television and other audio visual entertainment . . . streaming over the Internet. See Terms of Use, Netflix.16 Like Amazon, Netflix does not sell copies of films and television shows to its customers; rather, it grants customers a license to view digital content. See id. Also like Amazon, Netflix offers its customers more than one subscription option: customers can obtain a license to view Netflixs content on two devices, or they can select the four-device option for a higher fee.17 In addition to Amazon and Netflix, there are many other services that allow customers to download or stream film and television content via the Internet, and that use licenses to do so. Walmarts Video on Demand (by VUDU), Barnes & Nobles Nook Video, iTuness video store, and Google Play are popular examples of such services, and all of themlike Amazon and Netflixoffer their customers more than one option for accessing the content. See Walmarts Video On Demand by VUDU (offering customers short-term renting and indefinite licensing

Available at https://signup.netflix.com/TermsOfUse (last visited July 3, 2013) ([A]ny content viewed through our service [is] for your personal and noncommercial use only and we grant you a limited, non exclusive, non transferable, license to access the Netflix service for that purpose.). Note that Netflix, like Pandora, discussed supra, note 11, does not permit users to download content to their devices.
17

16

Plus, Netflix still offers customers a number of options for renting DVDs. 12

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options);18 Barnes & Nobles Nook Video (offering same);19 iTunes (offering same);20 and Google Play (offering same).21 Other services, such as UltraViolet, allow users to store audio-visual content in the cloud and offer rights to download copies of movies, stream them, or create physical disks.22 3. Digital Books And Magazines (eBooks)

The prevalence of licensing is also evident in the distribution of digital books and magazines (often referred to as eBooks). While digital readers, such as Amazons Kindle and Barnes & Nobles Nook, as well as tablets such as the Apple iPad and the Google Nexus, have helped bring eBooks into the mainstream, eBook distributors have followed the lead of other digital media industries by

See Terms of Service, VUDU, Inc., available at http://www.vudu.com/ termsofservice.html (last visited July 3, 2013) (All Content is licensed, not sold, transferred or assigned to you. You have a limited right in the Content for personal, non-commercial use only on VUDU Devices. You may not edit, modify, copy, distribute, transmit, download, display, perform, reproduce, publish, license, translate, create derivative works from, transfer, alter, adapt, sell, rent, lease or sublicense any Content, or facilitate any of the foregoing.). See NOOK HD/HD+ - Terms of Service, Barnes & Noble, available at http://www.barnesandnoble.com/u/Terms-of-Service-NOOK-HD-HD-Plus/ 379003804/ (last visited July 5, 2013). See iTunes Store Terms and Conditions, Apple, available at http://www. apple.com/legal/internet-services/itunes/us/terms.html#SERVICE (last visited July 3, 2013). See Google Play Terms of Service, Google Play, available at http://play. google.com/intl/en_us/about/play-terms.html (last visited July 5, 2013). See UltraViolet Offer Details, UltraViolet, http://www.uvvu.com/uv-offerdetails.php (describing UltraViolet services) (last visited July 1, 2013). 13
22 21 20 19

18

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utilizing licenses to bring greater flexibility, functionality, and content to their customers. For example, Amazon, which is one of the most popular eBook vendors, distributes its digital content by way of license agreements with its customers. Those licenses confer upon Amazons customers the right to view, use, and display digital books and magazines, subject to certain restrictions. See Kindle Store Terms of Use, Amazon.23 Amazon also offers different pricing options to its customers, depending on the number of books and magazines a customer wants to read in a given timeframe. See id. Like Amazon, Sony, which markets eBooks for its Reader device, as well as other devices, distributes its content via license agreements. Those agreements, like Amazons, confer upon customers the right to download, read, listen to, and view the digital content, but Sony does not sell content outright. See Terms of Service, Sony ReaderStore 2.1, 7.7.24 Two of the other major eBook vendors,

Available at http://www.amazon.com/gp/help/customer/display.html/ ref=hp_200699130_storeTOU1?nodeId=201014950 (last visited July 3, 2013) (granting a non-exclusive right to view, use, and display digital content solely for . . . personal, non-commercial use; stating Kindle Content is licensed, not sold; stating that user may not sell, rent, lease, distribute, broadcast, sublicense, or otherwise assign any rights to the content). Available at https://ebookstore.sony.com/termsofservice.html (last visited July 3, 2013) (granting non-exclusive, non-transferable, non-sublicensable, limited right to use the Service solely for the purposes of downloading, reading, listening to, and viewing Content). 14
24

23

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Kobo and Barnes & Noble, employ licensing models similar to those of Amazon and Sony. See Terms of Use, Kobo;25 Terms and Conditions of Use, Barnes & Noble.26 In addition, some companies specialize in offering audiobooks for download via the Internet, whichnot surprisinglyalso use licensing models for distributing their content to customers. Audible.com and Audiobooks.com are two popular examples, and both offer multiple licensing and membership options at different price points to serve the varied demands of their customers, but neither sells content outright. See The Audible Service Conditions of Use, Audible.com;27 Terms of Use, Audiobooks.com.28
25

Available at http://www.kobobooks.com/termsofuse (last visited July 3, 2013) ([Y]ou are granted a limited license to access the Service and the Site Content and to download or print a copy of any portion of the Site Content to which you have properly gained access solely for your personal, non-commercial use . . . .). Available at http://www.barnesandnoble.com/include/terms_of_use.asp (last visited July 3, 2013) (granting a limited, nonexclusive, revocable license to access and make personal, non-commercial use of digital content, such as eBooks, digital magazines, digital newspapers, digital journals and other periodicals). Available at http://www.audible.com/conditions-of-use/ref=mn_anonh_f6_cou (last visited July 3, 2013) (Audible or its content providers grant you a limited, non-exclusive, non-transferable, non-sublicensable license to access and make personal and non-commercial use of the Audible Service. . . . This license does not include any resale or commercial use of the Audible Service or its contents . . . .). Available at http://www.audiobooks.com/terms (last visited July 3, 2013) (When you purchase Audiobooks.com content, Audiobooks.com grants you a 15
28 27 26

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4.

Digital Photography

License agreements areand have long beencommonly used in the distribution of photographs (or stock photos) and other visual works. Shutterstock and Getty Images are two of the most popular digital photograph vendors on the Internet. Each offers millions of photos, illustrations, and other images to customers who agree to pay a small fee in exchange for being able to download the images and put them to use. The uses available to any given customer for any given image varies depending on the bundle of use rights for which the customer agrees to pay. Shutterstock, for example, offers Standard License and Enhanced License plansthe latter permits a customer to use an image in connection with a commercial product, subject to certain restrictions, but the former does not. See Standard vs. Enhanced License, Shutterstock.29 Getty Images offers a similar service and multiple licensing options for its images. See License Information, Getty Images.30 The size, placement, and display permitted for any downloaded image is governed by the specific terms of the license acquired

limited, revocable, non-exclusive, non-transferable license to download or stream Audiobooks.com content to your device(s) solely for your personal noncommercial use.). Available at http://www.shutterstock.com/license_comparison.mhtml ?hsb=1 (last visited July 3, 2013) (comparing different licensing options). Available at http://www.gettyimages.com/Corporate/LicenseInfo.aspx (last visited July 3, 2013) (summarizing various licensing options and linking to different license agreements). 16
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by the customer for use of that image. Id. Notably, licensing has been utilized by photographers and visual artists for many years as a principal method of distribution. Thus, the use of licensing by distributors of digital photographs and other visual works has been a natural evolution in these industries, and if this Court were to cast doubt on the use of licensing, it would threaten not just distribution of creative works through new business models but also established business models that promote the wide dissemination of visual works for the benefit of society. C. CONSUMERS BENEFIT GREATLY FROM DIGITAL LICENSING The recent explosion in the number of companies and platforms that distribute their digital content to consumers under licensing arrangements demonstrates that consumers are gravitating towards these new distribution models. See John P. Uetz, The Same Song and Dance: F.B.T. Productions, LLC v. Aftermath Records and the Role of Licenses in the Digital Age of Copyright Law, 57 Vill. L. Rev. 177, 196 (The enormous popularity of services and products like Netflix, Amazons e-books for the Kindle, and Spotify show[s] that consumers are embracing the licensing model and may in fact prefer it to the sales model for digital versions of copyrighted works.). Indeed, digital licensing provides numerous advantages to consumers compared to traditional sale models.

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1.

Much Greater Consumer Choice

Perhaps the greatest benefit to consumers of the licensing model is that it enables distributors to give customers many more options for accessing and using digital content. For example, as explained above, instead of purchasing a DVD outright, Amazons Internet Video service allows a user to pay a small fee to rent a video for thirty daysduring which time she can either download or stream the video and watch it within any forty-eight-hour period during those thirty days. Alternatively, she can pay a higher fee and earn the right to download or stream the video as many times as she wishes indefinitely. Likewise, Spotify offers customers multiple licenses from which to choose when accessing its digital music service: a free option, which allows users to stream an unlimited number of songs on their computers, but the content contains advertisements; an Unlimited option, which also allows unlimited streaming but without advertisements; and a Premium option, which allows unlimited streaming and unlimited downloads to a number of users devices.31 Similarly, Rhapsody offers different licenses depending on the number of devices on which a customer wants to download or stream his music.32 Spotifys and Rhapsodys

See Music for every moment, Spotify, https://www.spotify.com/us/ (last visited July 3, 2013). See Discover RhapsodyGet Rhapsody, Rhapsody, http://www.rhapsody. com/what-is-rhapsody/get.html (last visited July 3, 2013). 18
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offerings are just some of the examples of the fact that [t]he recording industry has licensed a range of services that are now operating around the world, offering consumers increasingly sophisticated ways to experience music.33 In addition, as previously noted, most if not all of the digital photography distributors offer customers multiple options with respect to the use of the photographs licensed. For example, Getty Images offers a Rights Manage License, which provides for a single use; a Royalty Free License, which provides for unlimited use; and an Editorial license, which allows a use relating to events that are newsworthy or of public interest.34 Similarly, Shutterstock offers Standard and Enhanced licensing options, each with different price points and use restrictions.35 Distributors would not be able to offer all of these options to customers if licenses were not used in the digital marketplace, as customers would have only one option: to purchase content outright. Of course, purchasing DVDs, CDs, and paperbacks the traditional way remains an option, but now consumers have exponentially more optionsand encouraging the creation and offering of a greater selection of products in the marketplace is not merely an abstract societal benefit, it is a principal goal of copyright law. See Harper & Row, 471 U.S. at 558
33 34 35

See note 5, supra. See note 30, supra. See note 29, supra. 19

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(By establishing a marketable right to the use of ones expression, copyright supplies the economic incentive to create and disseminate ideas.); Columbia Pictures, 710 F.3d at 1037 ([C]opyright laws ultimate aim is to stimulate artistic creativity for the general public good. (quotations and ellipsis omitted)). Moreover, because licenses enable content distributors to offer a variety of different terms, it is much easier for one distributor to distinguish its offerings from those of a competitor or to offer a range of customized options. This, in turn, leads to greater consumer satisfaction and increases competition among distributors, which also has substantial benefits for consumers. Rather than all fitting into a rigid sales model, consumers now have the choice whether to buy a physical copy of a work or obtain access through terms that can give greater flexibility. In short, licensing allows the management of relationships among copyright owners, distributors, and consumers on a very granular level, which permits customization of terms and use in a manner not possible in sale-only relationship. 2. Greater Accessibility

Another significant benefit that the licensing model bestows upon consumers of digital products is greater accessibility. In this connection, many of the distribution platforms in the digital media marketplace allow customers to download or stream a single media file to multiple devices. By being able to download a given song, film, or eBook to multiple devices, a customer can access

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that song, film, or eBook from virtually anywhere at anytime, which would not be the case if the customer had purchased a CD, DVD, or paperback book. Also, licensing enables distributors to offer multiple tiers of access, thereby providing flexibility in pricing options for customers. Likewise, if a customer wants to download or stream these products, it is much quicker and more efficient to license them from a digital media service than to purchase them from a brick and mortar retailer. There is a reason consumers have been moving away from physical media and towards digital streaming services such as Netflix, Video on Demand, and Amazon Instant Video: digital content is simply more convenient. Sage Vanden Heuvel, Fighting the First Sale Doctrine: Strategies for A Struggling Film Industry, 18 Mich. Telecomm. & Tech. L. Rev. 661, 68788 (2012). What is more, greater convenience does not mean a higher price tag. In fact, the opposite is true. Because a tailored set of rights can be offered, movies, television shows, music, and books that are licensed are generally less expensive than copies that can be bought outright. The cost difference is even more remarkable if one accounts for the savings customers enjoy by being able to secure a license for the particular song, television episode, or chapter they want, rather than having to buy the whole record album, the entire season of the television show, or the entire book. In fact, the ability of consumers to pay only for the

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specific content that they want is one of the principal reasons iTunesand the other digital distribution platforms that have used a similar modelhas been so successful. One commentator explained: The iTunes model also increases the affordability and availability of copyrighted works. iTunes allows consumers to download one song at a time for about one dollar. Before iTunes, consumers were generally forced to buy full-length albums in order to access the one song they really wanted. Now, consumers can save money by purchasing a license to the individual songs they want, rather than being forced to buy full-length albums. This allows consumers to spend the saved money on more music, thereby increasing the availability of music to consumers. Uetz, 57 Vill. L. Rev. at 206 (citations omitted). Similarly, iTunes offers a service called Complete My Album, which gives a customer who owns one or more songs from a given music album the option of securing a license to the remaining songs from the album without paying the entire album price or the price of accessing each of the remaining songs individually. Instead, a customers cost is capped at the price of the album.36 Likewise for photography, the digital marketplace expands on long-existing business models through which visual artists license their work for particular uses, encouraging flexibility in pricing and other terms depending on the nature of the intended audience. Without licensing models, the ability of artists to offer less

See iTunes Store: Complete My Album Frequently Asked Questions (FAQ), Apple, http://support.apple.com/kb/ht1849 (last visited July 4, 2013). 22

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expensive or other flexible terms for non-commercial, personal, or non-profit educational use would be seriously compromised. In short, the cost savings and added convenience made possible by the use of licensing models in the digital marketplace confers substantial benefits on consumers. While some of these benefits might be possible without licensing, the flexibility afforded by the licensing model ensures that there will be numerous options for accessing copyrighted content and allows each customer to seek out the most convenient and appropriate option to suit her needs. 3. More Content

Another major benefit to consumers of utilizing licensing schemes in the digital marketplace is that there is a much larger volume of content from which to choose. This is due to at least three factors. First, because digital content can be instantly downloaded or streamed great distances at the press of a button or click of a mouse, the selection of music, movies, and eBooks available to a consumer is no longer limited by the number of CDs, DVDs, or paperbacks that can fit on a shelf or in a storeroom. Thus, while retail stores may have hundreds of titles from which to choose, those available from digital platforms number in the millions. See Uetz, 57 Vill. L. Rev. at 20506 (For example, Spotify and Netflix make huge libraries of content available to consumers through licenses. The vast majority of people could not afford to purchase every song on Spotify or every movie on Netflix, but

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individuals can access all of that content for a relatively low monthly fee. (citations omitted)). Second, without the restrictions against copying, selling, or re-distributing content that licenses impose, fewer copyright holderssuch as authors, artists, record labels, software and video game developers, and film studioswould be willing to license their works to digital media vendors in the first place, which would decrease the selection of content available to consumers and increase its cost. Third, the rapid evolution of technology generally has made it much easier and more affordable to create content. No longer is it necessary to secure a deal with a major record label, film studio, or publishing house to develop works and introduce them into the market. Lower barriers to market entry naturally increase the supply of digital contentand as noted above, an increased supply of content is a principal goal of copyright law. * * *

As the foregoing examples make clear, the current prevailing practice in all the major digital media industries is to offer consumers a wide variety of options when it comes to distributing content in the digital marketplace, options that bestow significant benefits on consumers and copyright owners alike. These

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benefits, however, could be lost if the Court accepts appellants arguments in the instant case. D. VERNOR CONTROLS THE OUTCOME OF THIS CASE Using licenses to distribute digital contentas Adobe did herenot only offers consumers numerous benefits as described above, but using a licensing model is a well-settled and acceptable practice under Ninth Circuit law. In this connection, there can be little doubt that the Ninth Circuits decision in Vernor v. Autodesk, Inc., 621 F.3d 1102 (9th Cir. 2010), is controlling in the instant case. There is no dispute that Adobe exclusively licenses its software rather than selling it outright, and for reasons explained in detail in Adobes answering brief, it is clear that the three Vernor factors were satisfied here. Therefore, the district court did not err in granting summary judgment in Adobes favor. Appellant tries to avoid Vernor by arguing that the Supreme Courts recent decision in Kirtsaeng v. John Wiley & Sons, Inc., 133 S. Ct. 1351 (2013), renders Vernor inapplicable because one of the motivating factors for Adobe in using license agreements is that it wanted to distribute its products to different groups of consumers with different terms. See Op. Br. at 12. But Appellant is plainly wrong. In Kirtsaeng, the question at issue was whether copyrighted works manufactured outside the United States can be lawfully made under the Copyright Act, as that phrase appears in section 109 of the Act, such that

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importation without authority would not violate the copyright owners rights under 17 U.S.C. section 602(a)(1). See Kirtsaeng, 133 S. Ct. at 1355 (The copies at issue here were manufactured abroad. That fact is important because 109(a) says that the first sale doctrine applies to a particular copy or phonorecord lawfully made under this title. And we must decide here whether the five words, lawfully made under this title, make a critical legal difference. (emphasis in original)). The case-specific statutory construction that the Court engaged in as to a lawful owners importation did nothing to undermine the differences between owners and licensees or to restrict the right of copyright owners to distribute their works through licensing arrangements rather than selling them outright. There was no dispute in Kirtsaeng, for example, that the copies at issue were lawfully owned by the petitioners friends and family members, not merely licensed, before being imported into the United States. See id. ([W]e ask whether the first sale doctrine applies to protect a buyer or other lawful owner of a copy (of a copyrighted work) lawfully manufactured abroad.). The Court therefore did not consider the many benefits that licensing arrangements can offer to consumers, much less rule that the first-sale doctrine somehow limits the rights of copyright owners to enter licensing arrangements as a means of distributing their works. In fact, the Court expressly recognized that Congress intended the first-sale doctrine to apply only to owners of copyrighted works and not to licensees, bailees, lessees,

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and other non-owners. See id. at 1361 (Section 109(a) now makes clear that a lessee of a copy will not receive first sale protection but one who owns a copy will receive first sale protection, provided, of course, that the copy was lawfully made. (emphases in original)); id. at 1370 ([F]ull ownership of a lawfully-made copy authorizes its owner to dispose of it freely. (emphasis added) (quoting Copyright Law Revision, 1964 Revision Bill with Discussions and Comments, 89th Cong., 1st Sess., pt. 5, p. 66 (Comm. Print 1965))); see also 17 U.S.C. 109(d) (The privileges prescribed by subsections (a) and (c) do not, unless authorized by the copyright owner, extend to any person who has acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it.).37 Thus, Kirtsaeng does nothing to undermine this Circuits sound and binding decision in Vernor that [t]he first sale doctrine does not apply to a person who possesses a copy of the copyrighted work without owning it, such as a licensee. 621 F.3d at 1107; see also Apple Inc. v. Psystar Corp., 658 F.3d 1150, 1156 (9th Cir. 2011) (noting that licensing model has allowed software industry to flourish: In addition, the first-sale doctrine is only a defense for distributing a particular copy of a copyrighted work that has been sold lawfullyit does not permit a consumer to reproduce the work. See 17 U.S.C. 109 (specifically referencing section 106(3), which provides an exclusive distribution right to copyright holders). While the exclusive right to reproduce is not at issue in the instant case, such right would be at issue in a case involving the transfer of digital content from one consumer to another over the Internet or other digital medium. 27
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[t]he distinction [between a sale and a license] is well established in this circuit); UMG Recordings, Inc. v. Augusto, 628 F.3d 1175, 1180 (9th Cir. 2011) ([W]e have recognized that copyright owners may create licensing arrangements so that users acquire only a license to use the particular copy of software and do not acquire title that permits further transfer or sale of that copy without the permission of the copyright owner.);38 cf. Deacon v. Pandora Media, Inc., 901 F. Supp. 2d 1166, 117374 (N.D. Cal. 2012) (holding that terms of use of Internet music service governed consumers use of such service). III. CONCLUSION

For the foregoing reasons, the Court should affirm the district courts order. Dated: July 5, 2013 By: Respectfully submitted, s/ Laura W. Brill Laura W. Brill Gabriel D. Miller KENDALL BRILL & KLIEGER LLP 10100 Santa Monica Blvd, Suite 1725 Los Angeles, California 90067 Tel: (310) 556-2700 Fax: (310) 556-2705 Email: lbrill@kbkfirm.com gmiller@kbkfirm.com Counsel for Amicus Curiae The Copyright Alliance

UMG, unlike the models described above, involved unsolicited transfers of physical copies, not distribution pursuant to agreed terms. 28

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CERTIFICATE OF COMPLIANCE REGARDING FRAP 32(a)(7) Pursuant to Federal Rules of Appellate Procedure 29(d) and 32(a)(7)(B)(C) and Ninth Circuit Rule 32-1, I, the undersigned counsel of record for Amicus Curiae Copyright Alliance, certify that this Brief in Support of Affirmance complies with the applicable Type-Volume Limitation, Typeface Requirements, and Type-Style Requirements, as the brief contains 6,873 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii), and it is proportionally spaced using a Microsoft Word Times New Roman typeface of 14 points or more. Dated: July 5, 2013 By: Respectfully submitted, s/ Laura W. Brill Laura W. Brill Gabriel D. Miller KENDALL BRILL & KLIEGER LLP 10100 Santa Monica Blvd, Suite 1725 Los Angeles, California 90067 Tel: (310) 556-2700 Fax: (310) 556-2705 Email: lbrill@kbkfirm.com gmiller@kbkfirm.com Counsel for Amicus Curiae The Copyright Alliance

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