The Internet of Things: U.S. Copyright Office Releases Report on Software Enabled Products

In December of 2016, the U.S. Copyright Office released a 94-page Report on Software Enabled Consumer Products [Report].  The Report is in response to a request for analysis from members of the Senate Judiciary Committee concerning current copyright law and the ubiquitous nature of software.  Notably, the U.S. Copyright Office believes that, at least in the context of copyright law, that there is not a need for new legislation.  The U.S. Copyright Office appears to believe that current flexibilities in the law can accommodate technological change.  In particular, the Report, in part, “examines how software-enabled consumer products can be resold, repaired or improved, researched for security flaws, or made to interoperate with other products or software.”  The Report concludes that:

The Office’s study did not reveal evidence that consumers have been prevented from reselling or otherwise disposing of their software-enabled consumer products.  The Office does not see a current need for legislative change relating to resale, so long as courts properly apply the first-sale right embodied in section 109 of the Copyright Act.  

The Office recognizes the value of allowing the public to freely repair defective consumer products and tinker with products to improve their function.  But establishing a new statutory framework explicitly permitting repair and tinkering does not appear to be necessary at this time.  Properly understood, existing copyright law doctrines—including the idea/expression dichotomy, fair use, merger, scènes à faire, and section 117—should continue to facilitate these types of activities.

Similarly, the Office recognizes the value of allowing the public to engage in good-faith security research of software-enabled consumer products.  Again, however, statutory changes (at least outside the context of the anticircumvention provisions in section 1201) do not appear to be necessary at present.  Existing copyright law doctrines should protect this legitimate activity.

The Office recognizes the significance of preserving the ability to develop products and services that can interoperate with software-enabled consumer products, and the related goal of preserving competition in the marketplace.  While a new statutory framework might help reduce some uncertainty in this area, such action does not appear to be necessary at this time.  Again, faithful application of existing copyright law doctrines can preserve the twin principles of interoperability and competition.

Interestingly, the Copyright Office reviewed licensing practices, particularly resale, and concluded that:

The Office’s study found that, in certain circumstances, such as resale, there is only limited evidence regarding real-world restrictions.  Accordingly, the Office believes that the question of ownership versus licensing, while very important, is one that can be resolved with the proper application of existing case law. 

The Copyright Office further stated that in the context of resale:

Some commenters made the claim that—even if manufacturers of software-enabled products do not currently impose restrictions on resale as part of software licensing agreements—they may do so in the future in an attempt to eliminate secondary markets for software-enabled products.  The Copyright Office agrees that if license agreements in the future interfere with consumers’ ability to resell or otherwise dispose of their software-enabled products, such a practice would be a concern worthy of legislative attention.  One possible solution is YODA, mentioned above, a bill that several commenters supported as a good starting point to resolve concerns regarding the resale or transfer of software-enabled consumer products.  At the same time, there may be reasons to think that this issue is unlikely to arise, including that market forces—such as the efforts of consumer advocacy groups to shed light on abusive practices—are a barrier to engaging in behavior of this sort.