Zediva recently captured the attention of copyright commentators with its new streaming movie service. Zediva Streams New Releases Through Copyright Loophole, by Ryan Singel, captures the essence of what the service is about. As soon as a movie is released on DVD, Zediva buys it, then rents it and a DVD player to you. The DVD and DVD player remain in Zediva’s data center and the movie is streamed to you over the Internet so that you can see it on PC, Mac or Google TV devices with Adobe Flash. You can’t download or copy the DVD – that’s a violation of Zediva’s Terms of Use. The service is designed to allow movie watchers to see DVD releases sooner than they could on Nexflix, which has agreed not to rent out movies in the first month they are available on DVD. According to Singel, Zediva doesn’t have any licensing agreements with the studios and does not intend to seek any.
Zediva’s FAQs draw analogies between its service and brick and mortar DVD rental stores. Perhaps Zediva’s founders and attorneys think Zediva’s service is noninfringing for the same reason a brick and mortar store’s service is noninfringing. The first sale doctrine (17 USC §109) allows the owner of a particular copy of a copyrighted work to sell or dispose of that particular copy without regard to the copyright owner. That is why lending libraries and DVD rental stores are noninfringing uses of works. Section 109 specifically excludes sound recordings and computer programs from the first sale doctrine and that is why you can’t rent a music CD or a computer program. A software license can seem like a rental, but it is not. You get a license because the copyright holder or someone authorized by the copyright holder grants you one. With a rental, a third party rents something to you without the authorization of the copyright holder.
James Grimmelmann argues against Zediva’s success in That Zediva Thing? It’s So Not Going to Work. Grimmelmann makes the point that the first sale doctrine is a defense only to distribution and display rights and is irrelevant to a performance right claim. The Copyright Act gives the copyright owner the right to perform the copyrighted work publicly.
To perform or display a work “publicly” means —
(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or
(2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.
17 USC §101
Grimmelmann compares two cases, Columbia Pictures Industries v. Redd Horne and Cartoon Network LP, LLLP v. CSC Holdings, Inc. In Redd Horne, a video store rented video tapes together with private viewing rooms where its customers could view the videos. The court held that was a public performance that could be prohibited by movie studio copyright owners. In Cartoon Network, Cablevision offered a “cloud” DVR service in which a customer could record a TV show to a remote DVR system and have it played back to her TV set later on. The court in Cartoon Network held that this was not a public performance.
Grimmelmann explains that the distinguishing factor in the two cases is that in Cartoon Network, each customer viewed a distinct copy, whereas in Redd Horne, the video store owner kept showing the same copy over and over again to different people. So long as the customer views her own distinct copy, it is not a public performance. There is certainly support for this interpretation in the Copyright Act, in which members of the public can “receive it [the performance] in the same place or in separate places and at the same time or at different times.” Grimmelmann also thinks it’s significant that Zediva keeps physical control of its DVDs at all times, just as the video store in Redd Horne kept physical control of the videos at all times. The customers in Cartoon Network controlled their viewing times. Netflix and video store customers physically control the DVDs they rent.
Can Zediva get around these distinct copy and viewing in different places at different times predicaments? A unique feature of the Zediva service is that once a customer starts watching a movie, that particular DVD of the movie is not available for other customers to use. Zediva buys its DVDs and does not copy them. A Zediva customer has up to two weeks to finish watching her movie. She can even watch the movie again during those two weeks. If she wants to stop in the middle and continue the next day at the same place in the movie, she can. Are these differences enough to take Zediva from the Redd Horne result to the Cartoon Network result?
Even if Zediva clears the above hurdles, lack of control over the end users could turn a streamed DVD into an unauthorized public performance of that DVD. How will Zediva police its users so that they do not publicly perform the streamed movies by playing them on screens in places open to the public, such as bars or other retail establishments? Zediva’s Terms & Conditions of Use indicate that “public performance of any kind” is not allowed, but does not define “public performance.” That language seems inadequate for anyone trying to prevent unauthorized public performances.
Finally, could this be the same kind of streaming as the illegal streaming that was targeted by the Obama Administration’s white paper and was the subject of last week’s post? No, it could not. Criminal streaming under the Copyright Act requires that the infringement occur after the motion picture has been released and before “copies for sale to the general public in the United States in a format intended to permit viewing outside a motion picture exhibition facility” are made available. 17 USC §506(a)(3)(B). Zediva streams DVDs it purchases after the movie has been released on DVD.
