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While the U.S. Copyright Office Puzzles Over the First Sale Doctrine's Place in the Digital Millenium Act, the Law Itself Is Coming Under Increased Fire <BR> By SETH GOLDSTEIN

20 Jun, 2001 By: Seth Goldstein

The U.S. Copyright Office had better snap to it. While it puzzles over the First Sale Doctrine's placein the Digital Millenium Copyright Act (DMCA), the law itself is coming under increased fire.

A year ago, computer hackers invoked the First Amendment in an unsuccessful legal effort to overturn DMCA's prohibitions against breaking the DVD anticopying code. That decision is before aFederal Appeals Court in New York. Observers think there's a fair chance the lower court ruling supporting DMCA could be overturned.

Earlier this month, the Act got knocked about in a lawsuit the Electronic Frontier Foundation brought with a team of academics who want to publish research that shows how to break a musicwatermarking scheme  -- an audio analog to the DVD action.

Hollywood has restricted its courtroom activities to packaged goods like DVD, but the studios are adamant that First Sale isn't applicable to digitized movies downloaded at retail. The DMCA, they maintain, doesn't permit unauthorized sale or rental of, say, a DVD copied from a data file.

The Copyright Office was supposed to issue its opinion on this very issue in a report to Congress May 1. Congress is still waiting.

Unfortunately the calendar won't wait and at least one studio is already moving against a digitized genre, the movie trailer. The matter of Buena Vista Home Entertainment and Video Pipeline Inc. could set a precedent since it appears to strike at the very core of First Sale practice.

For 13 years, VPI had permission to supply retail clients with VHS copies of Buena Vista trailers for in-store viewing that reached tens of millions of consumers. Buena Vista owned the previews, considered integral to the sale and rental of its movies, which Buena Vista did not own.

Two years ago, VPI began offering digitized versions to a few accounts for their Web sites. About 1 million viewers stream Buena Vista and other studio titles every month, says VPI president JedHorovitz.

After the service was launched, Buena Vista said it had never given Horovitz the go-ahead he claims to have received and that its trailers would have to be yanked. Preview delivery ceased; VPI went to court and Buena Vista countersued, asking for damages of $111 million and change. That works out to $150,000 for each of more than 700 alleged violations. "It would put us out of business instantly,"Horovitz states.

Buena Vista's language in its counterclaim is about what you'd expect from a studio whose boss, Michael Eisner, said last year that he wants to go direct to the consumer and dispense with middlemen. VPI has been "expressly prohibited," it acted "in defiance of [Buena Vista's] express instructions," it has used "deceptive means," the case contends.

These are fighting words to VPI. But the company might agree, in Buena Vista’s words, that this controversy [is] ripe for resolution in court. Where else can you go if the Copyright Office isn'thelping?

Comments? Contact Seth directly at:SGoldstein@Advanstar.com

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