Contracting Away Fair Use Rights: Amazon's MP3 Store, Lucasfilms and Blanket Licensing

By Pete Salsich III

It used to be pretty simple.  You went to a record store (or mailed in your record-club form), bought an album or CD, and you owned it.  As the owner, you had certain rights--under the First Sale and Fair Use doctrines, you could make a copy for your own personal use, give it away,  share it, even sell it.  Easy, right?

Well, the times they are a'changin'.  Like many people, I haven't bought a new CD in a long time -- I have all my music on my iPod and download it from iTunes (legally, of course).  Now I'm excited about's new MP3 Store, which promises cheaper music downloads, better sound, and--most importantly--the music is DRM-free, meaning I can play it on any device.  Great! 

But not so fast . . .


As Cory Doctorow at Boing Boing points out, Amazon's user agreement -- which is a contract you must accept in order to use the service -- expressly takes away your right to "redistribute, transmit, assign, sell, broadcast, rent, share, lend, modify, adapt, edit, sub-license or otherwise transfer or use" the digital music you have just purchased.  In other words, you have to contract away your First Sale and Fair Use rights in order to buy the music. 

This has lead to an interesting discussion about whether Amazon is evil or good -- is it giving DRM-free music with its right hand and taking away legal rights with its left, or is this nothing more than the restrictions that are listed on the back of every CD so we should just be happy that the music is DRM-free?  (The comments to Cory's post play this out nicely -- see herehere and here for examples).  However, I don't think that's really the issue.

Leaving aside whether such a user agreement is truly enforceable in every instance, it is a contract, which makes it legally different than the copyright notice on the back of a CD.  As others such as Groklaw and Professor Seltzer have pointed out, the copyright notices on CDs (or at the start of a movie or DVD, or during the broadcast of a baseball game) often grossly mis-state the way copyright law actually works, because they ignore Fair Use rights entirely.  More importantly in this context, you don't have to sign an agreement saying you agree with the record company's version of copyright law as a condition to purchasing the CD in the store. 

I think this is just the latest example of contract law -- and consumer convenience -- stealthily working its way, and potentially wreaking some havoc on, traditional confines of copyright law.  It may be easy to use Amazon's new service, and you may not be planning on committing piracy so what's the big deal, but you are signing away some significant rights.

Another example of this trend is Lucasfilm's program for permitting fans to use Star Wars video in mash-ups with their own creative work.  Fellow Fair Use blogger Geoff Gerber has a great post about Lucasfilm's forward-thinking approach.  Many have praised George Lucas' vision for seeing a way to embrace fans and make money off of their infringing efforts, but as Professor Lessig has warned, these fans sign away all their rights in order to do so.  Another example of trading convenience (and access) for rights, via contract. 

In a different context, but I think in the same vein, earlier this year the Copyright Clearance Center began offering a new "Annual Copyright License" for educational institutions.  A college or university can purchase this blanket license to use a wide variety of content without having to worry about having to obtain permissions, etc.  Of course, under Fair Use principles, academic institutions already have the right to use such content for free, but the threat of a lawsuit or uncertainty about how these principles are applied makes the blanket license appear so much more convenient.  As Professor Sag points out, however, this could end up having the effect of creating a market for such licenses, ultimately eroding the very Fair Use rights the blanket license supposedly makes it more convenient to exercise.

First-year law school teaches that contracts are very powerful things, and that the courts don't protect you from making a bad deal.  In our increasingly consumer-convenience driven world, we may be making a lot more bad deals than we realize.