There is an old story about Judge Fergusson (d.1827), a Scottish judge who did not like the sentence his colleagues had handed down in a homicide case.  It turns out that a young man had killed a drinking companion.  After waxing rhetorical on the friendly bonds formed during the excessive consumption of alcohol, the judge dissented on the lenient sentence given on the basis that “We are told that there was no malice, and that the prisoner must have been in liquor. … Good god my laards, if he will do this when he’s drunk, what will he not do when he’s sober?” 

But I had the exact same reaction to the business plan initially proposed by bopaboo.com. I am suggesting, however, that there would be some serious questions about legally, how such a site can continue to operate (or operate at all) without incurring massive liability.  After the initial press reports came out (such as this one, this one, or this one), the owners scrubbed the web site and took it into “private beta” testing.  Prior to its scrubbing, however, you could upload mp3 inventory into your “store” by merely signing up for an account. I wondered exactly what kind of activity the site’s founders thought was illegal.

Bopapoo’s now-hypothetical business model works like this: users upload their mp3’s of copyrighted recordings to their own individual “stores.”  These are offered on the assumption that the seller no longer “wants” these recordings, and is free to dispose of them by selling them once.  Bopaboo then takes a cut of the sales price.  It’s the same thing, according to the company, as selling a used book.

Uh, actually, it’s not.  Even. Close.

There are three relevant provisions in the copyright act: section 106, section 107, and section 109.

Section 106 grants the copyright owner the exclusive right to do and to authorize to do two things of immediate relevance: (1) reproduce copyrighted works in copies, and (2) distribute copies.  Section 109, in turn, exhausts the distribution right under the following terms:

Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

There’s two really important things about this section.  First, it doesn’t apply to the act of reproduction: the sale of a copy of a film to you does not entitle you to make a copy of your own.  Second, to the extent that you’re allowed to pass along the copy that you bought, the right applies only to that copy.  In this case, multiple copies have been made—one from the CD to the computer, and another by the seller for purposes of selling.  So the issue in this case is not whether the First Sale doctrine applies (it doesn’t), but whether some other provision might render that activity legally permissible.

The most logical choice would be fair use.  It’s copyright’s rule of reason, requiring that courts examine (1) the purpose and character of the use; (2) the nature of the work; (3) the amount and substantiality of the portion used; and (4) the effect of the use on the actual and potential market.  We can cut through (2) and (3) quickly: an mp3 uses the whole work, and the nature of the plaintiff’s activity is by and large creative.  These factors therefore cut against bopaboo, but they’re rarely dispositive.

The real fight is over factors (1) and (4).  The more that a use is “transformative”, the less likely it is likely to have an effect on the market for the work.  There is already a market for the exact same mp3 (e.g., iTunes, amazon.com, Napster (now-legit).  But this is really more common sense. The simple point of fact is that most of the works for sale on this network would be infringing.  Take a CD library.  Suppose that one ripped the a CD, had no intent ever to use the CD again, and then disposed of the tracks that they no longer wanted. Does anyone seriously think that time-shifting would have been OK in the Betamax case if the facts simply showed that consumers were selling their copies after the time-shifting was over? 

Bopapoo.com’s short-lived [?] venture is not the first to try to make milk with someone else’s cow, and not likely to be the last.  It is a useful study, though, for pointing out the general parameters of how to (or not to) structure a business dependent on the use of someone else’s content.