01 January 2017

Software-enabled consumer products and US copyright

he US Copyright Office last week released a report titled Software-Enabled Consumer Products: a report of the register of copyrights december 2016 responding to a request by Senators Grassley and Leahy that noted
the ubiquity of software and how it plays an ever- increasing role in our lives. ... the expanding presence of software embedded in everyday products requires careful evaluation of copyright's role in shaping interactions with the devices we own.
The report
details how copyright law applies to software-enabled consumer products and enables creative expression and innovation in the software industry. For many innovators, copyright's incentive system is the engine that drives creation and innovation. But the spread of copyrighted software also raises particular concerns about consumers' right to make legitimate use of those works-including resale, repair, and security research. ... 
the Office believes that the proper application of existing copyright doctrines to software embedded in everyday products should allow users to engage in these and other legitimate uses of works, while maintaining the strength and stability of the copyright system. The Office thus is not recommending any legislative changes at this time.
The Executive Summary states
U.S. copyright laws have protected computer software for many years, and today that regime of legal protection supports an industry that is a major engine of economic growth. In the last quarter century, the software industry has added millions of jobs and increased the U.S. gross domestic product by hundreds of billions of dollars. Software has transformed our way of life, paving the way for personal computers, video games, digital photography, the internet, music and movie streaming services, smartphones, the Internet of Things, cryptocurrencies, and self-driving cars. In the near future, software will be behind even more innovations, like artificial intelligence and advanced robotics. In short, as one software entrepreneur famously put it, “software is eating the world.”  One result of the spread of software is that consumers now routinely use software- enabled products for everything from adjusting the thermostats in their homes, to driving to work, to getting a midnight snack from the fridge. This near-ubiquity has led some to question whether current copyright laws provide adequate guidance regarding the sometimes complex copyright issues arising in relation to software embedded in consumer products. These concerns span a wide range of uses, including resale, repair, research, and beyond. For example, to the extent that repairing a software-enabled device requires copying or altering a copyrighted computer program, does the law limit consumers’ right to engage in such activity? How might consumers’ ability to sell or convey such a device be affected if the embedded software is subject to a licensing agreement?
In light of these and other concerns, in October 2015, Chairman Chuck Grassley and Ranking Member Patrick Leahy of the Senate Judiciary Committee (the “Committee”) requested that the Copyright Office provide its expert advice, in “an effort to better understand and evaluate how our copyright laws enable creative expression, foster innovative business models, and allow legitimate uses in this software-enabled environment.” Among other issues, the Committee requested that the Office study and report on:
(1) the provisions of the copyright law that are implicated by the ubiquity of copyrighted software in everyday products; 
(2) the law’s effect on the design, distribution, and legitimate uses of such products, as well as on innovative services related thereto; 
(3) the effects that statutory changes in this area could have on stakeholder interests and business models; and 
(4) the intersection of copyright provisions with other areas of law in this context.
The Committee also asked the Office to make appropriate legislative or other recommendations, if it believed changes were necessary.
The Committee’s request was limited to embedded software in everyday products. The Committee did not ask the Office to review copyright law as applied to software and computer programs generally. Accordingly, a foundational issue in this Report is how to define the specific subset of software that is the subject of this study. As discussed in Part II, the Office found a general consensus that it would be a mistake to statutorily distinguish between software in everyday products and other kinds of software. At the same time, there is no question that the spread of software in everyday products raises unique issues. These products share certain common characteristics, and since the Office’s focus is on products with these shared traits, the Office does not analyze software generally.
The Copyright Office endeavored to examine how existing copyright law doctrines might address the particular issues that arise with respect to these products. In Part III, the Report describes the relevant copyright law doctrines potentially operating in the context of software-enabled consumer products. In addition, the Report briefly identifies some of the complex issues outside of copyright—including privacy and cybersecurity—that have arisen in this context. These issues are being investigated by a number of other components of the federal government, including the Federal Trade Commission, the Department of Homeland Security, and the Department of Commerce. The Copyright Office’s analysis is thus limited to the copyright issues presented by the spread of software-enabled consumer products.
Part IV then addresses how software-enabled consumer products can be resold, repaired or improved, researched for security flaws, or made to interoperate with other products or software. In each case, the Office finds that faithful application of existing copyright law doctrines should provide no barrier to legitimate uses.
In short:
• 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.
The Copyright Office also examined the reach and scope of licensing practices for embedded software, an issue that implicates several subsidiary issues, including: the relationship of the Copyright Act to state contract law; whether, and in what circumstances, violations of the terms of software licenses would constitute copyright infringement; and confusion among consumers regarding licensing terms for embedded software. 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 acknowledges that relying on flexible doctrines like merger, scènes à faire, and fair use brings less certainty than bright-line legislative fixes would; in some cases, clarification may only come after litigation. But formal application of copyright law to software-enabled consumer products is still relatively recent. In the context of the technologically driven products at issue in this Report, legislation carries its own risks, including that it might address the technologies of today but may fail to anticipate the different technologies—and distinct concerns—of tomorrow. In that respect, established copyright doctrines benefit from the ability to adapt more deftly to specific situations. As this Report demonstrates, copyright doctrines such as fair use, merger, and scènes à faire have regularly been extended and applied to new technologies as they have developed. And the Office offers this Report as a roadmap of sorts for those seeking to make legitimate use of embedded software.
In sum, the Copyright Office believes that existing copyright law is, at least at this time, well-suited to handle this new age of embedded software, so that innovators can continue to improve our lives and revolutionize our world.