Source: https://lawshelf.com/courseware/entry/exclusive-rights-granted-under-title-17-section-106
Timestamp: 2018-11-15 02:23:32
Document Index: 730045566

Matched Legal Cases: ['§106', '§106', '§107', '§122', '§106', '§107', '§106', '§102', '§102', '§106', '§117', '§115', '§115', '§115', '§106', '§115', '§115', '§115', '§106', '§106', '§106', '§106', '§106', '§106', '§109', '§109', '§109', '§106', '§109', '§106', '§602', '§501', '§106', '§106', '§106', '§101', '§106', '§106', '§106', '§106', '§110', '§110']

Exclusive Rights Granted Under Title 17, Section 106 - LawShelf Educational Media
Exclusive Rights Granted Under Title 17, Section 106
These are the costs involved in any transaction which do not relate to the actual commodities, goods, rights, etc. being transferred. For example, “closing costs” for a home purchase are transaction costs, as they are not costs related to the value of the home itself.
These are goods which, though authentic, are procured from improper sources. Many gray market good in the U.S. are products which are packaged and intended for sale in other countries.
Thus far we have primarily been discussing what types of works can be copyrighted, although we have occasionally drifted into the actual rights which therefore attach. With our analysis of Title 17, §106 we directly address the rights endowed by copyright law.
The original §106 enumerated five distinct, exclusive rights, and in 1995, the sixth was added. Each right is independent of the others. If any one of these is violated, the copyright owner may sue for infringement. Similarly, each right can be transferred by contract without effect on the others.
Beginning with §107 through the end of Chapter 1 (§122) are numerous limitations on the §106 rights. Of course, we will not be able to cover all of these, but will certainly touch upon some of the highlights and will discuss some, such as the §107 “fair use” privilege, in detail.
Exclusive Right of Reproduction §106(1)
Earlier, we discussed the varying positions of author, musician, and producer in the context of §102’s coverage of sound recordings. While §102 tells us that these are covered by copyright law, it is §106 which tells us which rights are bestowed upon the copyright holder. The right granted by this subsection, however, applies to any copyrighted work, not merely sound recordings. The author of a book, the creator of a computer program, the sculptor of a statue; they all have the exclusive right to reproduce their original work.
We have already mentioned the exceptions related to computer programs in §117, and have alluded to royalties and the compulsory license for sound recordings under §115. Everyone reading this chapter, whether you know it or not, has heard innumerable songs which were made possible only by §115.
The §115 compulsory license exception to the otherwise exclusive right granted by §106 works something like this:
EXAMPLE: In 1965 Ray Ravies writes “You Never Got Me,” which he thinks would be a great song for his friend’s band, the Rinks, to play. In 1966 the Rinks record the song, with Ravies’ permission. In 1985 Freddie von Hogan decides he would like to play and record a “cover” version of the song. After complying with the §115 notice requirements, Freddy is free to cut his own version of the song. Royalties, which Freddy must pay to Ravies, are determined by the statute. The Rinks get nothing from this newest use of the song they helped make famous.
So long as the cover song is based on a recording which was authorized by the underlying work’s copyright holder, nobody can stop the new song from being recorded and used as Freddy sees fit.
As a practical matter, §115 is not actually employed very often. However, many songs owe their existence to this section. Recall that songs based on someone else’s copyrighted material require permission of the copyright holder, but Section 115 permits use of this underlying material even if it is against the copyright owner’s wishes. Because copyright owners know that, (thanks to Section 115), they will ultimately be unable to prevent others from using their material. They prefer to permit such use through a license than have such use legitimized by Section 115. So Section 115, even when not applied, still aids artists in creating new works based on previously copyrighted works...it gives the copyright owner a significant incentive to license his work (rather than permit the compulsory license). Most significantly, the Harry Fox Agency is the premier agency through which copyright owners license their works. This helps reduce transactions costs and helps everyone avoid §115.
Exclusive Right to Prepare Derivative Works §106(2)
Nobody can create a derivative work (covered in Chapter 2) without the author’s permission, as this right is granted exclusively to the author in §106(2). For written works, this would include derivative works in the nature of a play or movie based on the book.
EXAMPLE: George Cantstandya has been struggling to earn a living for years. He had had a host of jobs, including one which he refused to leave even when his office was emptied of furniture and the door sealed shut! Finally, abandoning all hope of finding meaningful employment, and distressed at having to once again return to live with his parents, he begins to write a suicide note. Having said what he felt was necessary, but still unable to bring himself to take action, he sits down to write some more. Within 6 months he finds he has written hundreds of pages, and begins to think it may make a good book. Within a year the book, “I Am an Architect,” is published and George is famous. Soon thereafter, Rocko Gramer writes a play based on the novel. The play, “Architect,” opens to rave reviews, despite Gramer’s ineptitude at producing and directing.
Why should Gramer be able to ride on George’s coat-tails? This subsection grants George the exclusive right to create such a play, and Gramer’s derivative work is a clear case of copyright infringement.
Exclusive Right to Distribute Copies to the Public §106(3)
While the other rights granted by §106 focus on making copies of an original work, this subsection focuses on what is done with copies which have already been made.
EXAMPLE: Jimmy is tired of his hum-drum job and decides to sell DVDs in his spare time. He goes online and orders 100 copies of a recent movie on DVD from what he (incorrectly) believes to be a legitimate wholesaler of such items. He then stands on the corner and sells the DVDs for a small profit. It turns out the DVDs were illegal “pirated” copies.
Jimmy has not copied any copyrighted work, and therefore has not violated §106(1). He has, however, distributed the work in violation of subsection (3).
§106 must be read in light of the limitations imposed by §109(a), which basically permits the rightful owner of a copy of the work “to sell or otherwise dispose of the possession of that copy or phonorecord.” Further, in 1984 subsection (b) was added which limits the power of a copy owner to “otherwise dispose,” and prevents the unauthorized renting or leasing of copies.
This is just one the many statute-heavy areas of copyright law, the ins and outs of which can only be summarized here. The words “notwithstanding the provisions of…” or “notwithstanding the preceding" appear five times in §109. It has often been said that in the law it is not the rule which is most interesting but the exception to the rule. The §109 elaboration on the simple, single sentence exclusive right granted in §106(3) raises the question of how interesting the exception to the exception’s exception might be!
You should be aware, however, that this is the place to start your research in a “gray market” goods case. In addition, you should know that the “first sale doctrine” is the essence of §109(a): a copyright owner should have control of the first sale of copies of her work, but once ownership of the physical copy has been transferred, the copyright owner has received her economic reward and is not entitled to further control.
At times, these two concepts can combine to produce what might be a counter-intuitive result. In Quality King Distributors, Inc. v. L’Anza Research International, Inc., 523 U.S. 135 (1998) the Supreme Court held that gray market goods do not infringe a copyright holder’s §106(3) right, because the economic benefit has already been received (i.e., when the copies were sold for distribution overseas, the copyright holder was paid). (See also §602 and §501 regarding importing protected copies and phonorecords; Kirtsaeng v. John Wiley & Sons, Inc., 568 U.S. ___ (2013) (a recent Supreme Court case dealing with “gray market” and first-sale doctrines.))
Exclusive Right of Public Performance & Display §106(4) & (5)
§106(4) covers public performance of copyrighted works where appropriate, and §106(5) covers the display of works for which that verb is most appropriate (e.g., paintings). We return to the ever-relevant §101 for definitions of “perform” and “display,” and note most importantly that a “performance” includes everything from a stage production of a copyrighted play to the radio transmission of a recorded song.
EXAMPLE: WKPR is a small radio station with relatively few listeners, one of whom is Chi-Chi, owner of Chi-Chi’s Golf Emporium. When the radio station plays “Plain Jane,” over the airwaves, that constitutes a performance for §106 purposes. If Chi-Chi’s radio is on in the store, for the listening pleasure of his customers, that constitutes a separate performance for §106 purposes.
Note that sound recordings are not covered in §106(4) or §106(5), so there is no exclusive right to perform the recordings. But as covered above, while the artists and producers might have no rights in the recordings, the author may still have rights in the underlying song, and the use must therefore be licensed.
Again, we have a separate section which limits the grants of exclusive rights, and here it is §110, which pertains to both performance rights and display rights. Some of the many limitations of the exclusive right include performance or display for: certain educational uses, religious services, certain nonprofit uses, and several others.
What the Harry Fox Agency is to copies of protected works, ASCAP and BMI are to the performance and display of protected works. The exclusive rights of performance and display would be meaningless to authors unless they had some means for monitoring use of their works and then collecting royalties. The prohibitively high transaction costs are reduced by the formation of “performing rights societies.”
The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) are two performance societies you may have heard of, even if you did not know what they were until now. They work in the following way:
EXAMPLE: Tyler Stephens writes a song called “Walk Away,” and grants ASCAP a non-exclusive right of public performance. He also contractually permits ASCAP to monitor the song’s usage and to file infringement claims when necessary.
Radio stations and others wishing to “perform” recorded version of the song (whether Stephen recorded it or someone else did so as a derivative work of an original recording) contact ASCAP to request a license. Note that even Chi-Chi must request a license, as playing the song over the radio in his shop constitutes a performance and does not fall within any of the §110 exceptions.
The primary reason this reduces transaction costs is because it allows ASCAP the ability to offer a “blanket license” which allows licensees to perform any song for which ASCAP holds a right of performance. In other words, the work of thousands of authors and others who have granted ASCAP a non-exclusive right in their songs would be available to licensees in one fell swoop. Of course, ASCAP does not hold the performance rights to every song, and BMI (along with a third company, SESAC, Inc.) holds a good share of the market. The blanket license cost depends on the licensee’s use; a major New York radio station would pay more than a small Ohio station, and Chi-Chi would pay even less.
This is a nice theory, but the world is not perfect. The system is far better than would be available without a performing rights society, but does every Chi-Chi really pay in? That said, in 1993, according to Gorman, ASCAP and BMI collectively had over 100,000 members and generated “well over $600 million in royalties annually.” Gorman at 515.