DVD Consumer Rights

DVD warning notices, displayed on both the product packaging of commercial DVDs and on screen when the content is played, often notify buyers that certain uses of the DVD are prohibited under copyright law. But a recent legal case has shown that these warnings may sometimes describe what the copyright holder would like the law to be, rather than what the relevant legislation and case law suggests it actually is. This page seeks to offer a neutral summary of the rights of consumers in the United States and Europe who buy or rent DVDs.

ummary of rights of DVD buyers

The following summary covers people who buy a DVD through normal retail outlets in the jurisdictions below. It may not cover those who have bought grey-market imports, imported DVDs personally, or received free or promotional DVDs.

The full text of the article explains and expands the summary.

"Notes to table"

1. Provided not in the course of a business or for direct or indirect economic or commercial advantage.

2. Provided not through an establishment accessible to the public.

3. Provided the original is not subsequently sold, exchanged, rented or lent.

4. More information required on this point.

Example warning texts displayed by copyright owners

An example of a copyright warning displayed on playing the content a DVD is:

Warning: The copyright proprietor has licensed the programme (including, without limitation, its soundtrack) contained in this video cassette or Digital Versatile Disc for private home use only. Unless otherwise expressly licensed by the copyright proprietor, all other rights are reserved. Use in other locations such as airlines, clubs, coaches, hospitals, hotels, oil rigs, prisons, schools and ships is prohibited unless expressly authorized by the copyright proprietor. Any unauthorized copying, editing, exhibition, renting, hiring, exchanging, lending, public performances, diffusion and/or broadcast, in whole or in part, is strictly prohibited. Any such action establishes liability for a civil action and may give rise to criminal prosecution. [ [http://uk.youtube.com/watch?v=LpzsaxEouII|A YouTube video showing how this notice appears when a DVD is viewed] ]

An example text from DVD packaging is:

WARNING: All rights of the producer and of the owner of the work reproduced reserved. Unauthorised copying, hiring, lending, public performance, radio or TV broadcasting of this DVD prohibited. [Text taken from [http://www.amazon.com/Kill-Mockingbird-Collectors-Gregory-Peck/dp/0783225857|DVD on sale at Amazon.com] ]

Legislative background

Although European and American jurisdictions differ, one of the granted to copyright owners by law in many OECD countries is an exclusive "distribution right", meaning the right to stop others from distributing copies of the owner's work – such as by reprinting a book, showing a movie to a roomful of paying spectators, or playing music from a CD in the public rooms of a hotel.

But this exclusive "distribution right" is limited by what is known in the United States as the first-sale doctrine, and in Europe as exhaustion of rights. This is the notion that once the copyright holders have made money from selling a copy of the work to a customer, they cannot stop the customer from selling or disposing of the copy. Libraries, used booksellers and record stores, video rental shops and CD-swapping communities are all examples of businesses that could not exist without the first sale or exhaustion of rights doctrines.

Copyright owners have tried for many years to fight back against the first-sale doctrine, and have had some success. In 1984, music sales were hit by a growing trend, starting in Japan, where record shops would sell customers a record and a blank tape, and then allow the record to be returned the next day. The record companies then lobbied Congress to pass the Record Rental Amendments [See full text of [http://law.copyrightdata.com/amendments.php Record Rental Amendments to Copyright Act] ] to the US Copyright Act in 1984, which outlawed the renting of "phonorecords" for commercial gain. The software industry received similar protection in 1990, when the Computer Software Amendments to the US Copyright Act [Check box on page to see full text of [http://law.copyrightdata.com/amendments.php Computer Software Rental Amendments Act of 1990] ] prohibited owners of copies of computer programs from renting onwards or leasing the software to someone else "for direct or indirect commercial advantage".

In addition to seeking protective legislation, copyright holders have also tried to characterize the transaction with their customers as a "license", not a "sale" -- which, when supported by the courts, removes the buyer's first-sale protections.

In a prominent recent case, however, judges have thrown out the claim that a transaction where the buyer gets the product over the counter for a one-time payment, and does not have to return the goods afterwards or to make rental payments during the period of use, can be viewed as the sale of a license. A notable example is the case of "Timothy Vernor v. Autodesk, Inc" [Full PDF text of the [http://www.citizen.org/documents/vernororder.pdf Vernor vs. Autodesk, Inc judgment] ] , in which a software company interfered with a trader who had been buying used copies of its AutoCAD package and reselling them on eBay, and the trader successfully obtained a declaratory judgment from the US District Court that he was within his rights to do so -- a position endorsed by William Patry, author of a leading treatise on copyright law, [See Patry's comments on the case in his now-defunct [ http://williampatry.blogspot.com/2008/05/first-sale-victory-in-vernor.html copyright blog] ] .

First-sale rights in the video and film industry

The video industry has been less successful than the software and music industries in getting Congress to see things its way. In 1983, an amendment to the US Copyright Act was proposed to force video stores to obtain copyright holders' permission before renting out videotapes they had bought. The video stores’ industry association, the Entertainment Merchant Association, lobbied against the proposed change, and it was defeated. Consequently, owners of movie copyrights have been less confident in asserting that they have the right to control how buyers of copies of films dispose of their property after purchase.

In the 2007 case of "HEGB v Weinstein", an independent video rental business owner was annoyed by an exclusive deal that a film company had struck to distribute DVDs exclusively through Blockbuster. To prevent other video stores from buying the DVDs and then renting them, copies were, according to an interview with one of the defendants’ executives, to be branded with a Blockbuster logo, marked "for sale only", and with a notice encouraging consumers to call a toll-free number if they rented the copy. [http://williampatry.blogspot.com/2007/05/first-sale-fandango.html the Patry copyright blog] .] This prompted an independent video rental business to sue, claiming that the labelling amounted to "misleading statements and unfair and deceptive practices". The film company's defense was that "nothing in the alleged product labeling remotely suggests that plaintiffs are actually engaged in any criminal wrongdoing" -- namely, that despite the labelling, the independent video stores competing with Blockbuster were quite entitled to buy the DVDs and then rent them out to customers. The case illustrated the difference between what a DVD can say on the box and the reality of US copyright law.

In Europe, legislators have been more sympathetic. A European Union directive issued in 1992 [ [http://eur-lex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexapi!prod!CELEXnumdoc&lg=en&numdoc=31992L0100&model=guichett Council Directive 92/100/EEC ] ] requires countries in the EU to write national laws giving the owners of film copyrights similar control over rentals to that enjoyed by the music and software industries in the US. But the Directive is worded in a way that more clearly catches business buyers of DVDs than consumers: it gives copyright owners the right to limit rentals only if they are "for direct or indirect economic or commercial advantage", while its translation of that into British law, the Copyright Act 1988, clarifies that rental includes making a copy available "in the course of a business".

The current legal status of DVD owners

A 2007 case in the Sixth Circuit of the US District Court has confirmed that buyers of DVDs can clearly claim the protection from the first-sale doctrine. In a dispute whose principal focus was whether audio books were subject to the same rental-right restrictions as music recordings, the Court cited the report issued by the House of Representatives when the rental-right restrictions were passed, and observed that motion pictures were "specifically excluded" – meaning that all legitimate DVD buyers, business or consumer, are free to exchange, sell, rent or lend them out as they choose, as long as they do not make more copies or exhibit them in public.

In Europe, consumers and businesses clearly have the right to sell or exchange DVDs they have bought. The Directive allows onsumers also to lend out DVDs provided they are not doing so for "direct or indirect economic or commercial advantage" or "through an establishment accessible to the public".

Model neutrally-worded DVD warning notices

Based on the legislation and caselaw described here, a model neutrally-worded warning notice on a DVD package sold in the USA might take the following form:

If you have bought this DVD retail, then you have the right to sell, rent, lend, or exchange it as you wish. You may watch it in any location such as in aircraft, clubs, coaches, hospitals, hotels, oil rigs, prisons, schools and ships. But you may not copy, edit, exhibit, publicly perform, diffuse or broadcast its entire contents without the copyright holder's permission, and you may do so in part only if you benefit from other protections afforded by law, such as fair use or free speech.

Based on the legislation and caselaw described here, a neutrally-worded warning notice on a DVD package sold in the EU might take the following form:

If you have bought this DVD retail, then you have the right to sell or exchange it as you wish. You may not rent it for direct or indirect commercial advantage, nor lend it through an establishment accessible to the public. You may watch it in any location such as in aircraft, clubs, coaches, hospitals, hotels, oil rigs, prisons, schools and ships. But you may not copy, edit, exhibit, publicly perform, diffuse or broadcast its entire contents without the copyright holder's permission, and you may do so in part only if you benefit from other protections afforded by law, such as fair use or free speech.

References