The Copyright Act of 1976 long preceded the digital age. One of the most important principles in the act is the first-sale doctrine, also known as the exhaustion doctrine, which limits the control the copyright owner has on his or her printed work once it is sold. The buyer of a book, for instance, can resell, lend, donate, and even destroy it, and the owner of the copyright has no right to interfere. Today, however, the ability to resell and lend digital media is much further reaching. Buyers do not have a regulated way to resell or even lend songs from iTunes or e-books they purchased on their Kindle.

In “Legislating Digital Exhaustion” (Berkeley Technology Law Journal, 2015) and “Digital Exhaustion” (UCLA Law Review, 2011), Professor of Clinical Law Jason Schultz explores not only the effects of digital exhaustion on both the creator and consumer, but touches upon the potential impact on external communities, such as software developers, schools, and libraries. He is an advocate for applying the same exhaustion limits to digital media as exist in traditional media.

Recently, he sat with staffer Christine Perez to discuss the complex implications of his work on digital exhaustion.

In “Legislating Digital Exhaustion,” you suggest a transfer of ownership of digital media purchases that would require the seller to delete all of the copies of the transferred content, which makes a purchase of digital media equivalent to a purchase of traditional media. But how do you envision this could be enforced?

Let’s make this very practical: I buy a song on iTunes. I want to resell this song and somebody says, “Sure, I’d love to buy that for 79 cents versus 99 cents on iTunes.” We do the transaction and I securely transfer the copies to just this person, and then I delete them all. Then a record company decides to come after me and sue me. My defense could be, “I no longer have any copies. All I did was transfer this copy for the purpose of effectuating a first sale, or essentially exhaustion.” End of story. So the way it gets enforced, in a sense, is only if you get sued. If you get sued, all you have to prove is that you, in fact, did transfer in a lawful manner and that you did delete all your products.

How quickly would someone need to delete the files?

It would have to be within a reasonable time after you’ve transferred it. The idea is that there shouldn’t be two copies, there should only be one. Digital technology makes that complicated. You’re not actually transporting them. What you’re doing is making a copy of them for the new owner on her media and destroying your original. Only one person at a time should enjoy this copy. If I want to enjoy it again, I have to buy it again, which means the copyright holder is going to get more money.

Does the current copyright language complicate the issue?

The current language of the Copyright Act says, “The owner of the particular copy….” “Particular” is the problem. But if you say that it’s the owner of a “distinct” copy or an “original” copy or a “single” copy, depending on how you want to phrase it, that basically gets to the point.

It seems as though consumers should already be able to sell or lend digital media.

They should, but the traditional media industries and critics of our proposal are opposed because they worry that digital exhaustion would allow everyone to cheat the system. But the reality is, people are already cheating the system. The average teenager can crack a DVD and have thousands of copies made in a day. This happens on college campuses, in corporate workplaces, and among neighbors and friends. People copy media all the time, and there is no enforcement. So we already live in a “free-for-all” world; our proposal offers a legal and legitimate way forward that balances rewards for copyright owners with reasonable consumer rights.

How does digital exhaustion affect schools?

Digital exhaustion enables educational institutions and organizations to have viable models for reusing the digital media they’ve historically purchased for classroom use. First sale saves schools millions of dollars by allowing them to pass down those resources from class-to-class and student-to-student, instead of forcing them to buy new e-books every single year and triple their budgets. When you create these laws you have to be thinking about the institutions that are going to be able to invest in creating the innovations. If schools know that they can always transfer e-books without permission, they don’t have to go to publishers. They can just move books from class to class. That’s a huge win for them. When you look at technological policy, you’re always trying to create a fair policy where it balances the incentives to create the content in the first place with the rights of users and the ability to innovate or create new technologies that utilize those rights.

In “Digital Exhaustion,” you say “exhaustion supports consumer-driven innovation.” How?

In the technology realm, you often have groups of home hobbyists who innovate, and those changes are fed back to the marketplace. Oftentimes the original manufacturer never thought of these changes. In “Digital Exhaustion,” we cite a lot of research primarily done by Eric Von Hippel at MIT’s business school. Hippel talks about the use of innovation among farmers, who are notorious for tweaking their tractors. They often come up with really creative ways to deal with winter and other kinds of problems. John Deere would then re-appropriate these changes into its next tractor version.

Another example: there is a group of climate-change activists called “eco-modders” or “hyper-milers.” They take newer cars that have software inside them and think, “What if we tweak the algorithm and get 85 miles per gallon instead of 65?” That is not something that Toyota or Honda would be interested in supporting, because it is not necessarily going to be a market advantage for them. But that is a technological innovation that has a profound and beneficial social impact. If it is driven by software modification, that is a copyrighted work. So the legal status of these modifications depends in part on whether or not the car owner is also the owner of the software under first sale. It also matters to repair and custom car shops who might offer this “eco-modding” for people to maximize the efficiency of the car. Some of these car companies are starting to say, “You’re the owner of the physical parts of the car. You’re a licensee of the software in the car.” This is a huge question regarding digital exhaustion for innovation policy makers.

Is this also related to wearable technology?

What if you decide that you want to modify your Fitbit? Or Google Glass? Or Apple Watch? There are even gender politics in this. Some people have written about the fact that Apple’s Health App won’t track menstrual cycles, which is one of the most important things to track about your health if you’re female. That’s one of the things that we’re concerned about. Consumers could be conceding ground to these copyright owners without realizing it.

What digital contentsong, book, video—would you resell or loan to a friend if you could?

All of them! I love sharing with people. I’m a huge Breaking Bad fan—one of the best series ever. It would be great to be able to let people watch that series and enjoy it in the same way that I was able to enjoy it and binge on it.

Originally posted April 24, 2015