This article explores how exhaustion and non-exhaustion of certain rights can be more coherently explained using the common law doctrine of implied licence. Exhaustion, as the name suggests, only focuses on the effect of the first sale or other transfer of ownership of the original or the copy of the work on the copyright owner, namely the consumption of the distribution right. Although the consumption is distinctly for the benefit of the transferee of the original or the copy, the provisions in the directives on exhaustion do not reveal the effect of exhaustion on these transferees, nor the policy justifications that drive such consumption. These provisions only provide simplistically that the distribution of goods exhausts, but the provision of services does not. This leads to certain misconceptions that exhaustion cannot occur if the copy of the work is not in a tangible medium and that for all provision of services authorisation is required. The doctrine of implied licence can help address these concerns. Instead of regarding exhaustion as a statutory phenomenon, reframing it as a licence implied by statute changes the focus from the right lost by the copyright owner to the permission gained by the transferee. Further, the doctrine of implied licence is sensitive to the justifications that drive the implication of the licence, addressing the question as to why exhaustion must occur. Therefore, a framework called the Implied Licence Framework for Exhaustion is proposed here, which not only offers a better explanation for exhaustion and nonexhaustion, but also dispels the misconceptions.
Implied licences can serve as a flexible and targeted mechanism to balance competing interests, including those of copyright owners and content users, especially in today’s dynamic technological environment. However, implication as a process is contentious and there are no established principles for implying copyright licences. The resulting uncertainty has led to incoherence, diminishing the value of implied licences in judicial reasoning. This book develops a methodical and transparent way of implying copyright licences, based on three sources: the consent of the copyright owner; an established custom; and state intervention to achieve policy goals. The frameworks proposed are customised separately for implying bare and contractual licences, where relevant. The book goes on to analyse the existing case law methodically in the light of these frameworks to demonstrate how the court’s reasoning can be made transparent. Underscoring the contemporary relevance of implied licences, the book tests and validates the methodology in relation to three essential and ubiquitous functions on the internet—browsing, hyperlinking, and indexing.
This chapter identifies what kind of legal relationship a copyright licence is. It begins by explaining what a ‘licence’ is, because the reliability of the doctrine of implied licence depends on the coherence of the concept of licence. The most widely used definition of a licence (derived from land law) as that which makes an action lawful without which the action would be unlawful reflects the universality of a licence, but it sheds little light on the constituents of a licence. The chapter therefore, turns to Hohfeldian analytics to identify the constituents of a licence that hold good regardless of the diversity of circumstances in which licences arise. The identification of the constituents of a licence helps in understanding the kind of transaction that a licence is. It helps to demonstrate that a licence is not in itself a contract, although a licence can be partly or wholly the consideration that moves from one party to another. This facilitates the distinction between a bare licence and a contractual licence. The distinction is important because a licence within a contract must be assessed as part of the bargain, and. therefore, different considerations go into implying a licence into a contract than if one were to imply a bare licence.
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