The Law of Anime Part IV: New Laws to Watch Out For

by Sean Thordsen, Esq., Mar 8th 2013


About the Author: Mr. Sean Thordsen is a general practice attorney located in Orange County, California where he specializes in intellectual property and entertainment law. He represents clients in obtaining copyrights and trademarks as well as successfully defending those accused of violating them in federal court. His additional areas of practice include corporate law, employment law, and wills & trusts. He earned his undergraduate degree from Vanderbilt University in Nashville, Tennessee. He earned his legal degree from Chapman University School of Law in Orange, California where he earned distinction in Copyright and Trademarks at Chapman School of Law in Entertainment Law and Working with Film Makers Legal Clinic. Mr. Thordsen is a member of the California and Nevada Bar Associations. Additionally, Mr. Thordsen has been an invited speaker at SMU on tax incentives in the video game industry at the “Games Business Law Legal Summit.” Sean Thordsen may be reached at the Thordsen Law Offices located in Santa Ana, California.

SESSION 4: NEW LAWS TO WATCH OUT FOR

In our final session we will look at recent and present cases and legislation that could, or will impact the anime community at large. Keep in mind that in the sections below that much of this legislation is still pending and the impact is entirely speculation.

First Sale Doctrine

The doctrine of first sale is a right that purchases of property possess that allows them the right to resell things they legitimately purchased. This is how businesses such as used book-stores make a living and how people can legally sell their belongings at garage sales or eBay without raising red flags to the copyright holder as a violation of their right of distribution and sale.

Currently before the United States Supreme Court is the case of Kirtsaeng v. John Wiley & Sons. At issue is “the first sale doctrine” and precisely what a person who legally purchases a product has a right to resell without the permission of the original copyright holder. Up until now this generally has not been an issue as stores such as WalMart and Gamestop sell used items that are copyrighted in the United States or items that are imported into the country under the authority of the original rights holder. This is the crux of the case that could potentially impact the anime merchandise and DVD industry in the United States.

Specifically, Kirtsaeng involves the resale of copyrighted items that are imported from another country but were not released locally. The defendant in the case was a United States citizen whose family (living in Asia) purchased text books, sent them to their son who resold them in the United States making a sizable profit in the process. These same books were already being sold in the United States by another publisher who sued Kirtsaeng claiming that the First Sale Doctrine does not apply to items that are manufactured outside the United States. The lower court has already ruled on the case stating that products that are manufactured outside of the United States cannot be resold under the First Sale Doctrine. As stated, the case is on appeal to the United States Supreme Court and no ruling has yet been made as of the time of this writing.

So what does this mean for anime fans? Based on my interpretation of the case and facts, if the Supreme Court rules to uphold the lower court's ruling then items that are copyrighted but manufactured outside the United States MAY NOT be resold under the first sale doctrine. Considering that a major draw at anime conventions is always the exhibit hall/dealer's room this could have huge repercussions on the mom & pop businesses that make their living moving from convention to convention to sell imported goods they either purchased from a reseller/wholesaler or purchased on a trip to Japan.

To be clear, this will NOT affect domestic DVDs as they are manufactured in the United States and the rights are held for the purposes of sale by a United States company (unless the Supreme Court makes the ruling extremely broad which could mean that the discs made in China or Mexico are not subject to the first sale doctrine but this is an unlikely worst case scenario). What it does impact is the ability to purchase Japanese produced figures, merchandise, imported video games, imported manga and DVDs and virtually anything else exclusively sold in Japan. The businesses that sell these products at anime conventions could no longer have the right to resell the items they purchased should the Supreme Court upholds the lower court ruling as the items are not manufactured here and additionally, the rights to the product aren't even held by any local company.

This would not likely be a risk to the consumer who could freely purchase the merchandise should somebody be willing to sell it as First Sale Doctrine protects the seller but has no bearing on the purchase of the property. But the question would remain as to how many businesses would continue to risk being sued for selling their wares as they would not be afforded the protection they once were for selling items that they legally purchased?

Digital sales and Digital Distribution

Another recent issue in media has been the rise of digital distribution. Already discussed was the prevalence of streaming media through websites such as Crunchyroll and Hulu and how this has made Japanese studios weary of people not purchasing the DVDs and Blu-Rays on sale in Japan. Additionally, websites such as Amazon, Vudu and similar services allow the rental or purchase of digital copies of TV series and movies for home viewing. Even Manga Entertainment recently jumped into the foray as many of their titles are now viewable and purchasable on Xbox through their unique app. Manga companies such as Viz Media, Digital Manga Inc. and Square Enix have begun branching out into digital manga distribution. But how does this affect what the viewer can or cannot do with what they purchased?

When a DVD, software or generally any piece of media is purchased it is purchased subject to a licensing agreement. These are often listed in the terms of service included in the package, on the box or somewhere within the software. These agreements inform the consumer that all they have purchased is a license to access what the owners of the work provide you access to. Although consumers look at purchasing a book or physical product over a download differently, the rights conveyed to the consumer are almost identical. What was purchased was merely a copy and the right to read/view it the original copyright holder retains all rights and is free to limit what they want the buyer to consume.

A purchased product can legally only be viewed in the way it is intended by the owner of the work. Thus a consumer does not have a right to do whatever they please with a purchased product as they are subject to that licensing agreement. If a user objects to this agreement they have the right to return the product and receive a refund for it provided that the item has not yet been used.

However, copying the purchased media, even for personal use is in fact illegal. Courts have repeatedly held that there is no universal right to copy a purchased DVD or game for personal use, even as a backup copy. Additionally, making the copy is a blatant violation of the DMCA as it requires circumventing the copyright protection put in place by the copyright holder. For each of these things a person may be held liable for copyright infringement merely by making a backup copy of a DVD they actually paid for.

This all may soon change however; the European Court of Justice recently ruled that authors of software cannot oppose the resale of used licenses for digitally purchased goods. What this means that is if someone purchases a downloadable video game they still retain the right to resell that game to another person DESPITE what the license otherwise may state. Presently this only affects products published in the European Union and not the United States or Japan. However, if this ruling catches on to other countries then titles sold through systems like Vudu could arguably be sold to another person (technology providing). This does not change that what was purchased was only a LICENSE and thus the purchaser does not own the movie at large, but they do retain the right to resell it just as if they had purchased it from a brick & mortar store.

While one repercussion of this obviously is that it affords the purchaser of a digital copy of Viz Media's Tiger & Bunny through Amazon (provided the ruling is mirrored in the United States) it could have a negative impact for digital distribution of anime. While American distributors have been distributing and simulcasting more and more titles in the United States through Crunchyroll and Hulu, Japanese publishers are noticeably weary and cautious of digital distribution. If United States customers were to retain the right to resell a digital copy of an anime episode they purchased for $2.00 off of iTunes then the Japanese publisher may be less willing to license the rights to digital distribution for fear that those resell rights could affect their domestic sales.

Takeaway

Over the last four sessions it is clear that copyright law can be problematic for anime fans. This is largely in part to the advent of technological advancements in media distribution that the aging copyright law was neither written nor prepared for. Many people have been calling for copyright reform in order to have laws that better reflect the ever-growing effects of digital distribution. Yet there is a constant balance between the rights holders and the consumer that no one has yet found the appropriate balance to effectuate. This dichotomy is what gave rise to the SOPA and PIPA bills which were heavily in favor of the rights holders but potentially disastrous to the consumer. Legislation continues and cases continue to be heard on copyright infringement as publishers and consumers are in a tug-of-war between each other as to who has more rights. In the meantime, all that can be done is to wait and watch and most importantly, be aware of their rights as well as your own.




THE OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE DEPENDING ON LAW AND FACTS. ALL LEGAL ISSUES ARE DISCUSSED ARE EXPRESSLY NOT FOR THE PURPOSE OF HANDLING SPECIFIC CASES AND THE LAW MUST BE INDEPENDENTLY RESEARCHED. THERE ARE THOSE THAT MAY HAVE OPPOSING VIEWPOINTS.

THE INFORMATION HEREIN IS NOT LEGAL ADVICE.

AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.



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