Amicus Curiae Brief Follett Corp

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT


No. 94-1778


PRINCETON UNIVERSITY PRESS, MACMILLAN, INC.,
and ST. MARTIN’S PRESS, INCORPORATED,

Plaintiffs-Appellees

vs.

MICHICAN DOCUMENT SERVICES, INC.,
and JAMES M. SMITH,

Defendents-Appellants.


ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN


BRIEF OF AMICUS CURIAE FOLLETT CORPORATION


 

COUNSEL FOR AMICUS CURIAE FOLLETT CORPORATION:

Raymond J. Kelly
Bart A. Lazar
Joshua R. Rich
Seyfarth, Shaw, Fairweather & Geraldson
55 E. Monroe, Suite 4200
Chicago, Illinois 60603
(312) 269-8986

May 17, 1996


TABLE OF CONTENTS

TABLE OF AUTHORITIES
CERTIFICATE OF INTERESTED PERSONS AND
CORPORATE DISCLOSURE STATEMENT
INTERESTS OF THE AMICUS CURIAE
IMPORTANCE OF THE DECISION IN THIS CASE
ARGUMENTS
I. ALLOWING MICHIGAN DOCUMENT SERVICES AND OTHERS
TO PUBLISH SUBSTANTIAL EXCERPTS FROM COPYRIGHTED
WORKSWITHOUT PERMISSION WILL ELIMINATE THE
INCENTIVE TO CREATE NEW WORKS
II. COURSEPACK PUBLICATION IS A COMMERCIAL USE
III. CONCLUSION: EQUITY REQUIRES A FINDING OF INFRINGEMENT

TABLE OF AUTHORITIES

FEDERAL CASES

Fox Film Corporation v. Doyal,
286 U. S. 123 (1932) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
Harper & Row, Publishers, Inc v. Nation Enterprises,
471 U.S. 539 (1985) . . . . . . . . . . . . . . . . . . . . . . . Page 8
Mazer v. Stein,
347 U.S. 201(1954) . . . . . . . . . . . . . . . . . . . . . .Page 6
Princeton Univ. Press v. Michigan Document Servs., Inc.,
855 F. Supp. 905 (E. D. Mich. 1994) . . . . . . . . . . . . . . . . . . . . . . . Page 7
Sony Corp. v. Universal City Studios. Inc.,
464 U.S. 417 (1984) . . . . . . . . . . . . . . . . . . . . . . . . Page 7
Weissmann v. Freeman,
868 F. 2d 1313 (2d Cir.), cert. denied , 493 U. S. 883
(1989) . . . . . . . . . Page 8

STATUTES

U. S. Const. Art. I, § 8, cl. 8. . . . . . . . . . . . . . . . . . . . . . . . . Page 6

CERTIFICATE OF INTERESTED PERSONS AND
CORPORATE DISCLOSURE STATEMENT

Amicus curiae Follett Corporation is a privately held Illinois corporation. Follett has several divisions, each of which provides educational goods and services to libraries, elementary schools, high schools, colleges and universities. One of its divisions, Custom Academic Publishing Company, is engaged, inter alia, in the production of academic coursepacks, for which it seeks and obtains permission from copyright owners. Other Follett divisions purchase and sell textbooks, and publish and distribute educational software. Follett’s only subsidiary, Follett College Stores Corporation, owns and operates college bookstores and also engages in custom coursepack distribution. Follett is not a subsidiary or affiliate of a publicly-owned corporation.

INTERESTS OF THE AMICUS CURIAE

Follett Corporation (“Follett”) is a privately held Illinois corporation which has one subsidiary and a number of divisions providing goods and services to educational (Kindergarten through 12th grade and College) markets. Follett’s only subsidiary, Follett College Stores Corporation (“Follett College Stores”), owns and operates bookstores located on or near college and university campuses. Each of the campuses at which Follett College Stores operates has its own photocopying facilities, viriually all of which prepare academic coursepacks. The bookstores operated by Follett College Stores (over 500) have sold coursepacks for at least ten years, making Follett College Stores one of the largest distributors of coursepacks to higher education in the United States.

Follett’s divisions are engaged in producing and disseminating a wide variety of educational materials. One division, Custom Academic Publishing Company (“CAPCO”), specializes in creating and publishing coursepacks. CAPCO works with professors at colleges and universities around the country in compiling, preparing, requesting and obtaining permissions from copyright owners, paying licensing fees and reproducing copyrighted materials for coursepacks. CAPCO has published coursepacks for over five years and is one of the largest publishers of coursepacks in the United States. CAPCO and Follett College Stores are in the same publication and distribution business as Michigan Document Services.

Other Follett divisions produce, distribute and sell a variety of educational materials. Follett Library Resources distributes library books for grade schools and high schools; Follett Campus Resources distributes and sells used textbooks; and Follett Software Company develops and sells educational software for use by libraries and educational institutions. In publishing and distributing these new and used textbooks and other educational materials Follett is both a customer of and competitor with textbook publishers, including members of the American Association of Publishers (the “AAP”). Follett is not a member of the AAP.

Coursepacks are not mere reproductions qf pre-existing materials, but are organized, edited and packaged in accordance with a professor’s instructions. For example, a coursepack usually has a table of contents, is separated into separate chapters, and presents material in a specific order to correspond with the syllabus for the course. Because of the convenience of combining a number of materials under one cover to serve as a textbook or a supplement to textbooks, coursepacks have become increasingly popular during the past ten years, and Follett’s coursepack publishing and distribution business has increased as well. Like Michigan Document Services, Follett produces and distributes coursepacks which in some cases are used by professors instead of textbooks–thus, Follett believes that in some cases coursepacks actually replace textbooks. Follett believes the practice of selling coursepacks as replacements for textbooks is growing rapidly.

Follett is a leader in the coursepack publishing business, and has a significant financial interest in allowing coursepacks to be created without licensing fees. Nevertheless, Follett respects the rights of copyright owners and believes that permissions to publish can be sought and fees paid without delaying the delivery of the coursepack or making the coursepack cost-prohibitive for students, who purchase substantial quantities of coursepacks from Follett.

Follett has a frrm policy of respecting the rights of copyright holders and paying permission fees. Follett has an overriding concern for the protection of copyrighted works and believes that third parties should not “reap where they have not sown” by profiting from the use of copyrighted materials without rewarding the author of the work.

Follett believes that by allowing the excerpting of copyrighted material without the payment of permission fees, the creation, publication, distribution and sale of academic works is likely to be materially and adversely impaired. As a wholesaler and distributor of textbooks, Follett is concerned that fewer authors will want to write textbooks and fewer publishers will want to publish textbooks if wholesale excerpting of academic works by companies like Michigan Document Services is legalized. This will cause the market for textbooks to decline.

While academics now must “publish or perish”, there is,no requirement that academics must contribute to textbooks, or other scholarly materials. With a diminished financial incentive to publish, Follett is concerned that our scholars, academic institutions and publishers will not continue to freely and actively create and publish new information and express new ideas. If such valuable information and expression may be appropriated without reasonable compensation being paid, Follett believes that academic publishing as we now know it may indeed perish.

For the foregoing reasons, Follett respectfiilly submits its brief in favor of granting summary judgment in favor of Princeton University Press, Macmillan, Inc. and St. Martin’s Press, Incorporated and against Michigan Document Service, in that its conduct is not “fair use” under the Copyright Act, but copyright infringement.

IMPORTANCE OF THE DECISION IN THIS CASE

This case is vitally important, because this Court’s decision involves the balance of power between the copyright owners and the users of copyrighted materials. Follett is a participant in the coursepack and textbook markets and believes that allowing the sale of substantial excerpts of copyrighted materials as “fair use” will have a material adverse impact on, inter alia, the dissemination of ideas generally and the textbook market in particular. Academic authors and publishers will be less willing to create textbooks and other educational materials if there is no financial incentive. To stifle such activity would disserve the Constitutional mandate to promote science and the progress of useful arts through copyright protection.

Coursepack publishing is a rapidly growing business. More and more frequently, coursepacks are replacing textbooks. Michigan Document Services, for example, advertises that coursepacks can be used to replace a conventional textbook. (R. 41, Ex. 22). A market and legal analysis demonstrates that a for-profit publisher of coursepacks copying relatively substantial portions of copyrighted works without obtaining the permission of copyright owners does not constitute fair use.

ARGUMENT

I. ALLOWING MICHIGAN DOCUMENT SERVICES AND OTHERS TO PUBLISH
SUBSTANTIAL EXCERPTS FROM COPYRIGHTED WORKS WITHOUT
PERMISSION WILL ELIMINATE THE INCENTIVE TO CREATE NEW WORKS

Coursepack publishers reproduce excerpts from copyrighted materials, thus coursepacks are derivative works based on the underlying publishing works. Coursepack publishers such as Follett, who respect the rights of copyright owners, pay fees to publishers for the right to use the copyrighted material as part of its coursepacks. Princeton Univ. Press v. Michigan Document Servs., Inc. 855 F.Supp. 905,911 (EDMich. 1994). Thus, a market has been established for the commercial exploitation of the right to excerpt from copyrighted works, and the authors and publishers directly and indirectly benefit from the payment of those fees.

The copyright laws of the United States are derived from the United States Constitution, which provides that “The Congress shall have Power… [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors.. .the exclusive Right to their respective Writings.” U.S. Const. art. I, � 8, cl. 8. The Supreme Court has determined that this clause was intended to foster creativity, by providing authors with limited monopolies in exchange for bringing their creative works to the public. The “primary object in conferring the [copyright] monopoly lie in the general benefits derived by the public from the labors of authors.” Fox Film Corporation v. Doyal 286 U.S. 123, 127(1932).

The economic philosophy behind the copyright clause is to encourage individual effort through personal gain as the best way to advance public welfare through the talents of authors Mazer v Stein 347 U.S. 201, 219 (1954). In recognition of this theory, Follett and the majority of other coursepack publishers pay permission fees. Follett firmly believes that the market for permission fees supports the publication of textbooks and other educational materials. If permission fees are not paid, there will be less incentive for publishers to publish textbooks and for authors to write them. The only equitable decision is to reward authors for their contribution to Michigan Document Services’ profit making enterprise.

II. COURSEPACK PUBLICATION IS A COMMERCIAL USE

The panel majority erred when it equated the creation of coursepacks with the photocopying engaged in by students for personal use. By doing so, the majority ignored the commercial aspects of coursepack publishing. There is no question that the coursepack publication business constitutes its own market. The record indicates that there are at least ten companies engaged in the business of coursepack publishing at the University of Michigan alone, (R. 72 Ex. A), and there are over 3,000 colleges and universities among the country. Follett is engaged in coursepack publishing on a national basis and knows the market is substantial and competitive, generating substantial fees for coursepack publishers.

As a matter of law, there are substantive differences between students copying for personal use and entities which copy for the purpose of sales to others. CAPCO, Follett College Stores and Michigan Document Services profit from publishing and distributing coursepacks. The Supreme Court noted such a difference in holding that individuals may make personal copies of copyrighted material for home viewing, when selling that video to others would constitute infringement. Sony Corp. .v. Universal Studios, Inc. 464 U.S. 417, 433 (1984) Similarly, it would not be “fair use” for a student to reproduce, distribute and sell private copies of copyrighted materials a student originally made for research purposes. Therefore, Michigan Document Services’ publishing of coursepacks should not be considered to be “fair use”.

III. CONCLUSION: EOUITY REOUIRES A FINDING OF INFRINGEMENT

In reviewing the record in this case, Follett respectfiilly suggests that this Court bear in mind that the “fair use” defense is an equitable defense. Harper & Row Publishers Inc. v. Nation Enterises 471 U.S. 539, 560(1985). Michigan Document Services’ conduct simply does not comport with one who is entitled to seek equity in this case. See Weissmann v. Freeman, 868 F.2d 1313, 124(2nd Cir.), cert. denied 493 U.S. 883(1989)(professor not entitled to avail itself of the fair use defense where permission to use a colleague’s scientific work was not sought, obtained or credited).

The record demonstrates that Michigan Document Services is a “maverick” who proceeded with its activities against industry practice and the warning of counsel.

Follett believes that Michigan Document Services has not “done” equity and thus is not entitled to the defense. Follett believes that equity dictates that the publishers of coursepacks pay permission fees for publishing substantive excerpts of copyrighted material. It is equitable that authors receive compensation for use of their works. Moreover, it is constitutionally mandated that authors should derive financial benefit as an incentive to create. Finally, Michigan Document Services is a commercial enterprise which should have sought permission to publish substantive excerpts of copyrighted material.

For the foregoing reasons, Follett believes that granting summary judgment in favor of Princeton University Press, MacMillan, Inc. and St. Martin’s Press, Incorporated and against Michigan Document Service is (i) the only fair and equitable result, and (ii) the result mandated by Federal Copyright law.

Dated: May 16, 1996
Chicago, Illinois

Respectfully submitted,
_____________________________________
Raymond J. Kelly
Bart A. Lazar
Joshua R. Rich
Seyfarth, Shaw, Fairweather & Geraldson
55 East Monroe, Suite 4200
Chicago, Illinois 60603
Attorneys for AMICUS CURIAE FOLLETT CORPORATION

CERTIFICATE OF SERVICE

The undersigned counsel certifies that he caused copies of the foregoing FOLLETT CORPORATION’S APPELLATE BRIEF AS AMICUS CURIAE to be served upon:

___________________________________
Bart A. Lazar