Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Digital Millennium Copyright Act: A Potent New Weapon in the Aftermarket Wars

By Paul Dennis Connuck
September 02, 2004

For more than a century, original equipment manufacturers (“OEMs”) have sought, with only limited success, the aid of the courts to enforce restrictions against competitors' sales of products designed to complement or replace components of their proprietary technologies. At stake in each of these cases was a lucrative aftermarket for products directed to the OEM's patented technology and a “razor-and-blades” business model by which the OEM strove to attain a large installed user base for its equipment in hopes of “locking-in” customers to that aftermarket.

The products involved in these commercial skirmishes have been many and varied, and the restrictions at issue have been similarly diverse. See, e.g., Aro Mfg. Co. v. Convertible Top Co., 365 U.S. 336 (1961) (prohibitions of the repair or replacement of perishable components); Hewlett-Packard Co. v. Repeat-O-Type Stencil Mfg. Corp., 123 F.3d 1445 (Fed. Cir. 1997), cert. denied, 523 U.S. 1022 (1998) (single-use requirements); Surfco Hawaii v. Fin Control Sys. Pty, Ltd., 264 F.3d 1062 (Fed. Cir. 2001) (bars against modification or replacement of unused parts). Almost invariably, however, the OEM's claim of right arose under the patent laws, the notable exception being, in more recent years, the assertion of software copyrights to block the sale of competitors' compatible playback equipment, platforms or other interoperable products. See, e.g., Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999).

Although the 1988 Patent Misuse Reform Act permits a broad range of patent-leveraging practices, including the right to “condition [ ] the license of any rights to the patent or the sale of the patented product on the … purchase of a separate product,” 35 U.S.C. '271(d)(5), the ability of OEMs to compel adherence to lawful product tie-in conditions has remained spotty, at best. This circumstance is attributable to three principal factors: 1) unrestricted sales and the associated doctrines of patent exhaustion, implied license and right of repair; 2) the defenses of copyright fair use and misuse; and 3) the tendency of consumers to “cheat” on license restrictions by purchasing lower-cost or value-enhancing third-party components.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Major Differences In UK, U.S. Copyright Laws Image

This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.

The Article 8 Opt In Image

The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.

Strategy vs. Tactics: Two Sides of a Difficult Coin Image

With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.

Legal Possession: What Does It Mean? Image

Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.

The Anti-Assignment Override Provisions Image

UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?