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Q: Renting DVDs you already own ( Answered 4 out of 5 stars,   2 Comments )
Subject: Renting DVDs you already own
Category: Business and Money > eCommerce
Asked by: peterch-ga
List Price: $11.00
Posted: 16 Dec 2002 14:07 PST
Expires: 15 Jan 2003 14:07 PST
Question ID: 125596
I'd like to know if it's illegal, or in any way unauthorized to charge
a fee to rent DVDs that I own?  If it's illegal I'd like to know the
law or statute that this activity violates.  If it's unauthorized I'd
like to know which parties need to authorize one to rent DVDs.

Request for Question Clarification by scriptor-ga on 16 Dec 2002 14:09 PST
Dear peterch,

In which country of the world are you resident?


Request for Question Clarification by revbrenda1st-ga on 16 Dec 2002 15:14 PST
Hi peterch,

I don't think you'll find that it's illegal to rent out DVDs (unless
the content is against pornography laws, etc.). I do know, since I
owned and operated an unincorporated video rental business for over a
decade, that you need to have a business license, the cost for which
would be determined by the municipality in which you live. You'd also
be required to charge sales tax where applicable (and/or GST if in
Canada), thus necessitating getting a tax remittance number (again
from the appropriate government department.) The upside of the tax
number is that your purchases on the DVDs become tax exempt if bought
from a wholesale supplier, and the cost of your inventory becomes tax
deductible, off-setting your net income when you declare the income as
earnings on your income tax.

Are you planning on doing this as a business? If you simply would like
to recoup some of the original outlay cost of your personal DVDs in
question -- i.e. a fee, rather than free 'lending' to neighbours,
friends, and family -- you might consider suggesting in a
straight-forward, no 'beating-around-the bush' way, that they cough up
a 'donation' to keep the supply available and up-dated.


Request for Question Clarification by ragingacademic-ga on 16 Dec 2002 15:26 PST
peterch -

I know for a fact that it is illegal.
When you buy a copy of media, whether be it a CD, DVD, book or
whatever - you are only paying for your own personal use.  You could
invite a small number of friends over to watch with you, or you could
lend your copy to someone for free, but in order to start a DVD rental
business you need to acquire distribution rights.

I spent a few minutes trying to find the specific legal restriction
online but could not; don't have time now to dig deeper - perhaps
another researcher will be able to pick up the ball.


Clarification of Question by peterch-ga on 16 Dec 2002 15:32 PST
I am a resident of the US.  I wish an answer to this question in the
context of the US.  I do not care about non US markets for now.
Subject: Re: Renting DVDs you already own
Answered By: kutsavi-ga on 16 Dec 2002 16:26 PST
Rated:4 out of 5 stars
It is definitly an infringment of Federal Copyright laws to rent DVD's
you own.

Section 106-3
Exclusive rights in copyrighted works

Subject to sections 107 through 121, the owner of copyright under this
title has the exclusive rights to do and to authorize any of the

#3:  to distribute copies or phonorecords of the copyrighted work to
the public by sale or other transfer of ownership, or by rental,
lease, or lending;

More information can be found:
What Copyright Protects
Copyright protects expression. The Copyright Act of 1976 states that
the items of expression can include literary, dramatic, and musical
works; pantomimes and choreography; pictorial, graphic and sculptural
works; audio-visual works; sound recordings; and architectural works.
An original expression is eligible for copyright protection as soon as
it is fixed in a tangible form.

Consequently, almost any original expression that is fixed in a
tangible form is protected as soon as it is expressed. For example, a
graphic created in Photoshop is protected as soon as the file is saved
to disk. This Web page was protected as soon as I stopped typing and
saved the .html file. As you can see, most of the items that you are
likely to encounter on the net are eligible for copyright protection,
including the text of web pages, ASCII text documents, contents of
email and Usenet messages, sound files, graphics files, executable
computer programs and computer program listings.

What Copyright does not Protect
However, not absolutely everything is eligible for copyright. These
are items that by their very nature are not eligible for copyright

Short phrases 
Blank forms

Copyright exists for three basic reasons; to reward authors for their
original work; encourage availability of the works to the public; and
to facilitate access and use of copyrighted works by the public in
certain instances.

The first copyright laws were in acted in 1790 with their latest
revisions occurring in 1976. Copyright grants copyright owners
specific rights for a specific amount of time. These rights are not
all-encompassing; educators and libraries are granted certain

Copyright grants to Copyright Holders

The right to reproduce or copy work.
The right to prepare derivative work.
The right to distribute copies of their work to the public.
The right to perform or display their work in public.

Copyright duration

Works created prior to January 1, 1978 - 75 years.
Works created after January 1, 1978 - life of author + 50 years.
Anonymous work, work made for hire, "corporate authors" - 75 years
from first publication or 100 years from its creation whichever comes

If you do a search on these terms you can find more:

film copyright
film rental copyright

Let me know if you need further clarification, I will be happy to help

Request for Answer Clarification by peterch-ga on 16 Dec 2002 17:36 PST
Thank you for your research.  I think your research is good and I will
accept it.

I'm not sure that your statement of "It is definitly an infringment of
Federal Copyright laws to rent DVD's you own."  For completeness sake,
and for the benefit of future visitors to the Answers site I've noted
some of my own research here.  Comments welcome.

1) There is no default restriction based on statutory law stating that
says it is illegal to rent our your DVDs.

2) Renting a DVD is not a transfer of ownership of copyrighted
materials, it's a transfer or the license the DVD owner received when
they purchased the DVD.

3) The license the user purchased when they bought the DVD could
restrict the transfer of the license in this way, but would need to
explicitly do so.

4) Copyright law gives the *owners* of a copyrighted material
to do any darn thing they want with it.  They grant a license to use
material when they sell you the DVD.  They are not transferring
ownership, they grant you permission to use it.  Same thing with
software:  I do not *own* MS Office, I have a license to use it.  This
license could be crafted to not be transferable.

A related question is what is the license attached to?  If the license
is attached to the media, then it may move with the media.  If the
license is with the end-user then that may be different.

Clarification of Answer by kutsavi-ga on 16 Dec 2002 21:03 PST
Hi Peterch, 

Google tells us researchers not to post entire web pages as responses,
but in this case I thought it was important to.

The FBI really doesn't like copyright infringement, which is what
renting out your purchased DVD's amounts to.  Here is what they have
to say about copyright infringement and Intellectual Property:


MISSION As the world moves from the industrial age to the information
age, the United States economy is increasingly dependent on the
production and distribution of creative, technical, and intellectual
products. These valuable products, collectively known as "Intellectual
Property" (IP), are the primary fuel of the U.S. economic engine.
Currently, the U.S. leads the world in the creation and export of IP
and IP-related products. The International Anti-Counterfeiting
Coalition recently reported that the combined U.S. copyright
industries and derivative businesses account for more than $433
billion, or 5.68%, of the U.S. Gross National Product, which is more
than any other single manufacturing sector. The Bureau of Labor
Statistics reports that between 1977 and 1996 the growth in the IP
segment of the economy was nearly twice that of the U.S. economy as a
whole. It is also estimated that the software industry alone will
employ more than one million people in the U.S. by the year 2005.

Like any other valuable product, IP is eagerly sought by criminals. IP
theft has grown dramatically in recent years resulting in enormous
economic losses. These losses not only undermine America's leadership
position in IP, but they also pose a significant threat to the health
and viability of the U.S. economy. The International
Anti-Counterfeiting Coalition estimated that U.S. companies lost $200
billion in 1997 due to worldwide copyright, trademark, and trade
secret infringement. The Business Software Alliance estimates that 25%
of all business software programs used by U.S. companies is pirated;
in some countries that figure soars to 99%. The Motion Picture Export
Association of America claims that counterfeited videotapes cost their
industry approximately $750 million a year, while the International
Federation for the Phonographic Industry estimates that piracy of
compact discs (CD) costs their industry hundreds of millions of
dollars a year. The American Society of Industrial Security has
estimated the losses attributable to the theft of trade secrets to be
at least $2 billion a month. On the law enforcement front, the United
States Customs Service reported that it seized more than $70 million
in IP- infringing merchandise intended for sale in America in 1998.

In addition to the economic impact of IP crime, there are broader
concerns. IP crime cheats the U.S. of tax revenues, adds to the
national trade deficit, subjects consumers to health and safety risks,
and leaves consumers without any legal recourse when they are
financially or physically injured by counterfeit products. Counterfeit
products, such as airplane parts, pharmaceuticals, baby formulas and
children's toys, often are manufactured using inferior materials and
rarely undergo any type of quality control. For example, the U.S.
automobile industry, which has estimated sales of counterfeit and
imitation replacement parts to be in excess of $1 billion a year, has
reported a number of incidences of brake failure caused by brake pads
manufactured from wood chips.

In general terms, IP crime can be broken down into three categories:
copyright violations, trademark infringement violations, and theft of
trade secrets. Copyright violations typically involve the piracy and
counterfeiting of computer software, recorded music, and movie videos.
Trademark infringement violations encompass the counterfeiting of
brand name products, such as designer dungarees, well known names in
women's clothing, and expensive wristwatches, to name just a few of
the innumerable items that counterfeiters illegally manufacture and
sell everyday. Theft of trade secret violations involve the theft of
valuable proprietary and sensitive information and includes all types
of industries, from manufacturing to financial services to high
technology. In all three of these categories, the criminals' ultimate
goal is to sell the counterfeited or stolen items for a profit.

Unlike criminals who engage in other types of criminal activity, those
who commit IP crimes can not easily be categorized. Counterfeiters,
software pirates, and trade secret thieves are as different as the
intellectual property they counterfeit, steal, and sell. In general,
software pirates have an acute interest in computers and by extension,
the Internet. Many counterfeiters hail from foreign countries, such as
South Korea, Vietnam, or Russia. They are frequently organized in a
loosely knit network of importers and distributors who use connections
in China, southeast Asia, or Latin America to have their counterfeit
and imitation products made inexpensively by grossly underpaid
laborers. There is also strong evidence that organized criminal groups
have moved into IP crime and that they are using the profits generated
from these crimes to facilitate other illegal activities. There are a
number of reasons for the dramatic increase in IP crime in recent
years. First, many forms of IP can be produced with minimal start-up
costs making IP crimes accessible to large numbers of people; second,
international enforcement of IP laws is virtually nonexistent; and
finally, domestic enforcement of IP laws has been inadequate and
consequently the level of deterrence has been inadequate.

One reason domestic law enforcement has not adequately enforced IP
laws is that modern IP crime is a new and different type of crime that
much of U.S. law enforcement is not yet familiar with. In years past,
most IPR violations involved a laborious process. For example, one
typically had to physically remove a box of blueprints in order to
steal a trade secret. Likewise, one had to manually copy bulky
cassette or video tapes to distribute pirated music or movies. The
computer revolution changed this. Desktop computers with computing and
storage power that was unimaginable ten to fifteen years ago, have
become commonplace. Computerized images, corporate plans and trade
secrets, computer software, and movies can be stored on computer discs
and carried in a shirt pocket. Individuals no longer have to
physically steal a product, they can simply download information or
transmit it electronically to a single accomplice or to tens of
thousands of people in an instant -- and they can do so with total
anonymity. It is hardly surprising that there are so many organized
"hacker" groups engaged in large scale distribution of pirated
products over the Internet or that there are also thousands of
web-sites that exist solely to distribute pirated products when the
money to be made from this type of activity can be significant, and
the risk of being caught so minimal.

Digital products and the Internet have greatly complicated IP
enforcement, and will continue to do so for the foreseeable future.
Digital products can be reproduced almost instantaneously, repeatedly,
and inexpensively. New broad-band technologies will make the Internet
the primary method of conveyance of IP in the near future. Although
the Internet is likely to revolutionize distribution methods for
licensed digital products, as increasing numbers of products are
converted to a digital format, it will also further facilitate global
piracy of digital products on a previously unimaginable scale. All
experts agree that this new technology will continue to spread at an
unprecedented pace, and along with it, the related crimes.


The primary objective of the FBI's IP program is to reduce the
economic loss associated with the counterfeiting and theft of U.S.
intellectual property by criminal conspiracies and other major


In order to accomplish its objective in the area of IP crime, the FBI
will focus on increasing both the quantity and quality of IP
investigations and prosecutions. This will be accomplished by
continuing to work closely with representatives of the IP industry and
educating the industry on the importance of filing criminal referrals
with the FBI whenever they suspect their company, or another company
in the intellectual property community, has been victimized by a
crime. Additionally, the FBI will work to cultivate productive
liaisons with other government agencies that work with the IP industry
and will strongly support other government agency and private sector
initiatives that focus on preventing and detecting IP crime. Another
important piece of the FBI's strategy is to provide its Agents with
more training and guidance in the area of IP crime so to better
prepare them to investigate this type of crime. Finally the FBI will
work closely with the private sector and other government agencies to
educate the general public about the growing problem of IP crime.
peterch-ga rated this answer:4 out of 5 stars

Subject: Re: Renting DVDs you already own
From: kutsavi-ga on 16 Dec 2002 16:47 PST
Sorry, you also asked about how you could become legally able to rent

This is a whitepaper on distribution of digital media:

This is the association that can connect you to independent film
makers and distributors

The distributor is responsible for not only sending films to the
theaters, but creating disks/tapes etc. to send to stores and rental
facilities. You need to establish yourself as a rental facility.

Here is a distributor that can rent you films if you are a video
Home Video Sales

I hope that helps.
Subject: Re: Renting DVDs you already own
From: neilzero-ga on 16 Dec 2002 20:21 PST
My son owned a small video rental store and paid $80 each (wholesale)
for most of the VHS tapes which he rented. Presumedly the $80 included
some royalties for the studio which produced the movie. A much smaller
royalty is included in tapes sold for private viewing. I think DVDs
are handled the same way, so you are cheating the studio out of the
royalties they deserve by renting DVDs which you bought for private
use. There is only a slight probability you will be fined, if you
cheat small scale and quietly.   Neil

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