When is Making Temporary, Intermediate Copies a Fair Use?

Last time, we discussed whether ReDigi could avail itself of the “essential step defense,” on the theory that making intermediate copies of the music files was necessary for ReDigi to carry out its (assumed*) right to re-sell the files under the first-sale doctrine. I concluded that the essential step defense probably doesn’t apply because, even if digital content qualified as a “computer program,” the defense is limited to “utilization” of computer programs “in conjunction with a machine,” and I thought utilization was probably limited to executing a program and couldn’t be stretched to cover re-selling the “program.”

* As we discussed here, this is by no means conclusive. We’re assuming the first-sale doctrine applies for purposes of this discussion.

So, there’s no specific right under the Copyright Act to make temporary, intermediate copies of a work as necessary to exercise some other right in connection with that work. But the idea is appealing. If you have the right to do X, a technicality of copyright law shouldn’t prevent you from doing so, right?

Copyright Legal Technicalities and Fair Use Revisited

This causes us to revisit two of the basic concepts we discussed way back here. First, copyright law is a technical law, not a moral one. Technicalities matter. But the big exception to that rule is fair use, which is sometimes regarded as a kind of safety valve that relieves the pressure of absurd or unjust results. Technical laws frequently have unintended and unhappy consequences and are sometimes hard to square with broader values, like (for instance) free expression, so it’s good to have a squishier legal doctrines to address these problems.

But fair use is, as I’ve said, “like unto a religious mystery.” It’s nearly impossible to apply it in any sort of principled way, so predicting how a court will rule on a fair-use issue is a bit of a mug’s game. This is one reason why I started the Is it Fair Use? series. This isn’t a criticism of the courts. We’re asking courts to apply broad societal values against the sometimes contradictory purposes of copyright. There’s lots of room for reasonable minds to differ.

There are, however, a few principles of fair use on which we can reasonably rely because they come up frequently enough that the Supreme Court or Courts of Appeal have ruled on them. In those cases, we can at least compare the facts at hand with the facts in the authoritative or persuasive decisions and make a reasonable attempt to guess how a court might rule.

The Sega Decision: Intermediate Copying Is Sometimes OK

In ReDigi’s case, there is an important precedent: Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1992). In that case, Accolade wanted to make game cartridges that were compatible with Sega’s console-game system. To do so, Accolade decompiled Sega’s object code so it study how to make its games compatible. But the process of decompiling required making intermediate copies of Sega’s program. Sega sued on grounds that those intermediate copies infringed on its copyright.

The Ninth Circuit–the same court that decided Vernor and MAI*–held that making these intermediate copies was a fair use. It based this holding on three overarching themes.  First, Accolade wasn’t making copies in order to pirate the work but to understand the functionality of Sega’s programs. In other words, Accolade wasn’t interested in the actual expression embodied in Sega’s code, but in its ideas, and ideas are not subject to copyright. Second, Accolade wanted to make Sega-compatible computer games, and those games might or might not compete with Sega’s own games. The addition of non-Sega games was generally a good thing for consumers, though, so all things being equal, the court leaned in Accolade’s favor on this issue. Third, computer programs aren’t deserving of maximum copyright protection because they contain so many non-protectable functional elements.

* Which held that loading a copy of a program into RAM constituted a copyright violation–a major, major victory for software developers.

Sega* is usually cited for the principle that reverse engineering is generally considered a fair use. But it could have a broader application. It could stand for the proposition that it is a fair use to make temporary, intermediate copies to the extent necessary to exercise some other right. One way to read Sega is that Accolade had a right to study the functionality of Sega’s code because it was unprotected by copyright and, therefore, in a public domain. To the extent Accolade had to make temporary, intermediate copies of Sega’s code in order to exercise this right, such reproductions were fair use. I emphasize, however, that Sega never explicitly states such a general rule.

* Along with Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832 (Fed. Cir. 1992) and Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000). 

ReDigi’s Best Argument: No Control of Unprotectable Uses

ReDigi’s best argument, then, is to read Sega as standing for the general proposition that temporary, intermediate copies of a work are OK so long as they are necessary to exercise a right with respect to that work. ReDigi might find some support in a well-known decision written by one of our most influential jurists, Richard Posner, who is known for his economic analyses. Assessment Technologies of Wisc., LLC v. WIREdata, Inc., 350 F.3d 640 (7th Cir. 2003).

In that case, the copyright holder published a computer program that compiled real-estate data gathered by government assessors. The defendant wished to access that data, which was unprotectable by copyright because it’s just facts, but had to install and use the computer program to do so, which infringed the copyright in the computer program. The copyright holder sued, but Judge Posner held that the use was fair. He gave Sega an economic gloss, saying it “held that this ‘intermediate copying’ of the operating system was a fair use, since the only effect of enjoining it would be to give Sega control over noninfringing products, namely Accolade’s games.” He held that the defendant in WIREdata had a similar right, since the only purpose of making the intermediate copy was to extract non-protectable facts.

ReDigi could argue, then, that under the first-sale doctrine*, the rights-holders have no right to control re-sale of copies of their works. If they could prevent the making of the temporary, intermediate copies necessary to effect re-sale of the copies, then they would be, in effect, giving them control over an otherwise non-infringing use (re-sale under the first-sale doctrine), which both Sega and especially WIREdata would seem to prohibit.

* Remember, we’re assuming this applies for purposes of our discussion.

But it’s Not Just “Digital Content,” it’s Music We’re Talking About

But there are a few important issues that could distinguish ReDigi from Sega and WIREdata. First, Sega and WIREdata dealt with works that included both protectable and non-protectable elements. ReDigi is dealing with music files, which are 100% protectable, and not only that, are deserving of the highest level of protection. Recall that, in the Sega case, the court based its decision in part on the lower level of protection afforded software.

Second, ReDigi can’t pretend that the creation of a secondary market for digital content will have no effect on the primary market. (As we discussed previously, though, the effect includes upward, as well as downward, price pressures.) Recall that, in Sega, the court based its decision in part on the additive nature of Accolade’s products, i.e., Accolade was just going to add to the total number of Sega-compatible games available to the public. Here, the effect will arguably be the opposite.

As for the argument that prohibiting temporary, intermediate copies of the song files would gut the first-sale doctrine as applied to digital content, the rights holders would simply argue that it is not the job of fair use to fix apparent flaws in the way copyright law regulates behavior. That job belongs to Congress. Until then, it’ll just be impossible* to efficiently create secondary markets for digital content.

* Well, very, very difficult. In theory (and again assuming the first-sale doctrine applies), one could sell the medium on which the song was stored with the song file still on it, if one simultaneously deleted all traces of the song from all of one’s devices. But that’s just not very practical.

Parting Questions

Should it be a general rule that making temporary, intermediate copies of a work are a fair use when doing so is reasonably necessary to carry out some other right related to the work? Can you think of a set of facts where such a rule would have a patently unfair result?

Can you come up with a better argument against fair-use that the rights holders could make that doesn’t re-hash the first-sale arguments?

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.