Basic Books, Inc. v. Kinko'S Graphics Corporation
758 F. Supp. 1522
Basic Books, Inc., Harper & Row Publishers, Inc., John Wiley
& Sons, Inc., Mcgraw-Hill, Inc., Penguin Books Usa, Inc., Prentice-Hall,
Inc., Richard D. Irwin, Inc., And William Morrow & Co., Inc.,
Plaintiffs, v. Kinko'S Graphics Corporation, Defendant
United States District Court for the Southern District
of New York
March 28, 1991
Ronald S. Rauchberg, Esq., Charles S. Sims, Esq., Herman L.
Goldsmith, Esq., Jon A. Baumgarten, Esq., Proskauer, Rose, Goetz
& Mendelsohn, New York, New York, Attorneys for Plaintiffs.
Dean A. Olds, Esq., Jeffery A. Handelman, Esq., Thomas A. Schmidt,
Esq., Kevin J. McDevitt, Esq., Willian, Brinks, Olds, Hofer,
Gilson & Lione, Chicago, Illinois, John S. Siffert, Esq., Lankler,
Siffert & Wohl, New York, New York, Attorneys for Defendant.
Opinion By Constance Baker Motley, United
States District Judge
Plaintiffs, all major publishing houses in New York City, brought
this suit against Kinko's alleging copyright infringement pursuant
to the Copyright Act of 1976. 17 U.S.C. @ 101, et seq. More
specifically, plaintiffs allege that Kinko's infringed their
copyrights when Kinko's copied excerpts from books, whose rights
are held by the plaintiffs, without permission and without payment
of required fees and sold the copies for a profit. Plaintiffs
request relief in the form of statutory damages, injunction,
declaratory judgment and attorney's fees and costs.
Kinko's admits that it copied the excerpts in suit without permission,
compiled them into course "packets," and sold them to college
students. It defends on four grounds. First, Kinko's claims
their use of the excerpts was a "fair use," specifically provided
for in @ 107 of the Copyright Act. Second, Kinko's alleges that
plaintiffs misused their copyrights by trying to create an industry
standard beyond that established by congressional mandate and
which impermissibly precludes all use of plaintiffs' works without
permission and royalty. Third, Kinko's claims that plaintiffs
are estopped from complaining of the copying because they have
known for a long time about Kinko's 20-year practice of selling
course packets and did nothing about it and Kinko's detrimentally
relied upon their silence. Fourth, Kinko's argues that, with
respect to two of the alleged infringements, plaintiffs failed
to record their copyrights before filing this complaint and,
therefore, this court lacks jurisdiction with respect to those
This court finds and concludes that defendant did violate the
Copyright Act, that plaintiffs did not misuse their copyrights
nor are they estopped from asserting their rights under the
copyrights. With regard to the copyrights that were not recorded
before filing the complaint, this court finds them to be validly
asserted. Finally, Kinko's has not convincingly shown that the
excerpts it appropriated without seeking permission were a fair
use of the works in question. This court hereby awards plaintiffs
injunctive relief, as well as statutory damages in the amount
of $ 510,000, attorneys fees and costs.
There are 12 instances of copyright infringement alleged in
this case. The 12 excerpts, which vary in length from 14 to
110 pages, were copied from books previously published by the
plaintiffs, compiled in five numbered packets ("anthologies")
with excerpts from other books and distributed by Kinko's. Kinko's
neither sought nor obtained permission to copy any of these
works. There are two stores from which Kinko's sold the excerpts
included in this suit: one at 24 E. 12th Street (which services,
among others, students at New York University and the New School
for Social Research) and a second at 2872 Broadway (which services
Columbia University students). Below is a list of the 5 packets,
by number and title, and a list of the titles of the works copied.
Next to the latter title is the total number of pages copied,
the approximate percentage of the entire book that was copied
and whether the work was in- or out- of print.
PACKET #1: "WORK AND COMMUNITY". (PX 16)
This packet included 388 pages of copied work [FN
1] taken from 25 books. This course was taught at the New
School for Social Research by Professor Hoffman; 3 students
were enrolled. This packet was sold for $ 24.00: $ 21.75 for
copying and $ 2.25 for binding.
1. Understanding Capitalism (PX 5) 22 pp. [5%], in-print, by
Samuel Bowles & Richard Edwards.
Pages 62-83 (all of chapter 4) of this 15-chapter book was copied.
The book has 419 pages of text in addition to 11 pages of introductory
material. It was published in 1985. The amount copied which
encompasses an entire chapter of Bowles and Edwards' relatively
recent book weighs against defendant. [FN 2]
2. Community: A Critical Response (PX 4) 23pp. [18-21%], out-of-print,
by Joseph Gusfield.
Pages 1-22 (all of chapter 1) of this 4-chapter book was copied.
The book is 120 pages. The soft-cover version exhibited at trial
has a price of $ 3.95. The book was published in 1975. This
book was out-of-print and is relatively old, however, the amount
copied weighs heavily against defendant.
3. Work and Community in the West (PX 2) 34pp. [22-24%], out-of-print.
An anthology with contributions from six authors, edited by
Pages 1-33 (chapter 1) of this 6-chapter book was copied. The
book totals 146 pages. The soft-cover version exhibited at trial
has a price of $ 2.95. It was published in 1973. This book was
out-of-print and is relatively old, however, the amount copied
weighs heavily against defendant.
4. The Deindustrialization of America (PX 1) 53pp. [16-20%],
in-print, by Barry Bluestone & Bennett Harrison.
Pages 3-21 (chapter 1) and pages 231-64 (chapter 8) were copied
from this 8-chapter book. The book is 323 pages. The book was
published in 1982. The amount copied weighs against defendant.
5. All Our Kin: Strategies for Survival in a Black Community
(PX 3); 14pp. [8-11%], in-print, by Carol Stack.
This book has 175 pages in addition to 21 pages of introductory
material. The pages copied were pages 32-45, one of the 8 chapters
in the book. The exhibited copy of the hardcover book has a
price of $ 7.95. It was published in 1974. The amount copied
weighs against defendant.
6. A Lesser Life (PX 12) 37pp. [8-9%], in-print, by Sylvia Ann
Pages 11-47 of this book were copied; they include the Introduction
and one additional chapter. The book has 461 pages. The exhibited
hardcopy has a price of $ 17.95. It was published in 1986. The
amount copied weighs against defendant.
PACKET #7: "ART THERAPY WITH GROUPS". (PX 15)
This packet included 383 pages taken from 43 sources. The course
was taught at New York University by Professor Haeseler; 10
students were enrolled. This packet sold for $ 20.07.
7. Group Dynamics: The Psychology of Small Group Behavior (PX
8) 40pp. [7-8%], in-print, by Marvin Shaw.
Kinko's copied the following pages from this book: pages 1-17
(chapter 1), 342-45, 224, 225, 238-39, 256-61, and pages 306-13
of this 531-page book. The book has 12 chapters. It was published
in 1971. The amount copied weighs against defendant.
8. Art Psychotherapy (PX 7) 20pp. [6%], in-print, by Harriet
Pages 236-55 were copied (less than half of chapter 19 of this
book). The book is 352 pages in addition to 23 pages of introductory
material. The soft-cover version exhibited at trial has a price
of $ 17.95. This book was published in 1980. The amount copied
weighs against defendant.
PACKET #34: untitled. (PX 18)
This packet includes 324 pages taken from 23 sources. This course
was taught at Columbia University by Professor Ichniowski. Thirty-three
students were enrolled. This packet was sold for $ 21.50: $
16.98 for copying, $ 1.50 for binding, and $ 1.50 for royalty
9. Business Ethics (PX 10) 22pp. [14%], in-print, by Norman
Pages 17-38 (all of chapter 2) of this book were copied. The
book has 7 chapters, 159 pages of text and index, and 13 pages
of introductory material. This book was published in 1982. The
amount copied weighs against defendant.
PACKET #36: "INTERNATIONAL AFFAIRS". (PX 19)
This packet included 292 pages taken from 22 sources. This course
was taught at Columbia University by Professor Lissakers; 48
students were enrolled. The packet sold for $ 17.75: $ 14.90
for copying, and $ 1.50 for binding.
10. The Money Market (PX 11) 100pp. [13-14%], in-print, by Marcia
This book contains 728 pages of text (20 chapters) and 23 pages
of introductory material. Pages 7-43 and 129-191 of the book
were copied. This represented chapters 2, 3 and 6. This book
was published in 1978 and reprinted in 1983. The amount copied
weighs against defendant.
11. The Money Bazaars (PX 9) 65pp. [17-18%], out-of-print, by
Pages 177-241 were copied. The pages covered Chapters 7 and
8, and part of 9. The 12 chapters and index in the book total
376 pages. The paperback book sells for $ 4.95. It was published
in 1984. The amount copied, despite the fact that this book
was out-of-print, weighs heavily against defendant.
PACKET # 70: "U.S. SINCE 1945". (PX 17)
This packet included copies of 212 pages of materials taken
from 7 sources. This course was taught by Professor Freeman
at Columbia University. It enrolled 132 students. This packet
was sold for $ 11.00: $ 8.66 for copying, and $ 1.50 for binding.
12. Lyndon Johnson and the American Dream (PX 6), 110pp. [25-28%],
in-print, out-of-stock, by Doris Kearns.
Chapters 7, 8 and 10 of this 12-chapter book were copied. The
pages copied were 177-219, 220-62, and 300-23. The book has
over 400 pages, including preface, prologue, epilogue, author's
postscript, endnotes, and index. It was published in 1976. The
amount copied weighs heavily against defendant, despite the
fact that the book was out-of-stock.
Each packet has a cover page, printed with the Kinko's logo,
"Kinko's Copies: Professor Publishing," the name of the course
and professor, the designated packet number, and a price listing.
There is a space on the price listing to designate the royalty
charges included. Only one packet lists a charge for royalty
fees. On the inside cover of three of the five packets is a
sheet entitled "Education and Fair Use: The Federal Copyright
Law." It lists the @ 107 fair use factors and displays the Professor
Publishing logo and course information. None of the excerpts
carries a copyright creditline as required by copyright law.
It is undisputed that Kinko's markets and provides its copying
services directly to university professors and students. At
trial, Kinko's presented marketing brochures produced by the
company which are distributed by their marketing representatives
to university professors and used as the subject of follow-up
visits. These brochures openly solicit from the professors lists
of readings they plan to use in their courses. Kinko's then
copies excerpts, some quite large, and sells them in bound form
with excerpts copied from other books as well. Unaudited financial
statements of Kinko's Graphics Corporation for the years 1988
and 1989 show revenue of $ 42 million and $ 54 million, respectively,
and net profit of $ 200,000 and $ 3 million, respectively. Its
assets totalled $ 12 million in 1988 and $ 15 million in 1989.
(PX 25a). Appropriately, plaintiffs refer to this bound packet
as an "anthology." [FN 4] Plaintiffs derive
a significant part of their income from textbook sales and permissions
fees. Kinko's has conducted its Professor Publishing business
at least since the mid-1980's.
I. FAIR USE.
Coined as an "equitable rule of reason," the fair use doctrine
has existed for as long as the copyright law. It was codified
in @ 107 of the Copyright
Act of 1976, Article 17 of the United States Code. The Section
reads in its entirety:
Notwithstanding the provisions of section 106, the fair use
of a copyrighted work, including such use by reproduction in
copies or phonorecords or by any other means specified by that
section, for purposes such as criticism, comment, news reporting,
teaching (including multiple copies for classroom use), scholarship,
or research, is not an infringement of copyright. In determining
whether the use made of a work in any particular case is a fair
use the factors to be considered shall include --
(1) the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit educational
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation
to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value
of the copyrighted work.
17 U.S.C. @ 107 (1976) (emphasis added).
The codification was intended to "restate the present judicial
doctrine of fair use, not to change, narrow, or enlarge it in
any way." H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 66 (1976);
S. Rep. No. 94-473, 94th Cong., 1st Sess. 62 (1975). Therefore,
thorough analysis of the caselaw is necessary.
For almost 300 years, American law has protected intellectual
property rights through the copyright law. The protection derives
from the English Statute of Anne (8 Anne c. 19, 1710), the first
statute to recognize the rights of authors. Section 106 of the
1976 Copyright Act provides that "subject to Section 107 .
. . the owner of copyright under this title has the exclusive
rights . . . to reproduce the copyrighted work." 17 U.S.C. @
106. In Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass. 1841) (No.
4901), Justice Story set forth the meaning of fair use to which
we adhere today. "In short, we must often . . . look to the
nature and objects of the selections made, the quantity and
value of the materials used, and the degree in which the use
may prejudice the sale, or diminish the profits, or supersede
the objects, of the original work." Id. at 348.
Fair use more currently has been defined as the "privilege in
others than the owner of a copyright to use the copyrighted
material in a reasonable manner without his consent, notwithstanding
the monopoly granted to the owner. . . ." Rosemont Enterprises,
Inc. v. Random House, Inc., 366 F.2d 303, 306 (2d Cir. 1966),
cert. denied, 385 U.S. 1009, 87 S. Ct. 714, 17 L. Ed. 2d 546,
152 U.S.P.Q. (BNA) 844 (1967). The copyright law, through the
fair use doctrine, has promoted the goal of encouraging creative
expression and integrity by ensuring that those who produce
intellectual works may benefit from them. See Iowa State University
Research Foundation, Inc. v. American Broadcasting Cos., Inc.,
621 F.2d 57, 60 (2d Cir. 1980).
Courts and commentators disagree on the interpretation and application
of the four factors, topics of current debate. See, e.g., Leval,
Toward A Fair Use Standard, 103 Harv. L. Rev. 1105 (1990); Weinreb,
Fair's Fair: A Comment on the Fair Use Doctrine, 103 Harv. L.
Rev. 1137 (1990); Fisher, Reconstructing the Fair Use Doctrine,
101 Harv. L. Rev. 1661 (1988). The search for a coherent, predictable
interpretation applicable to all cases remains elusive. This
is so particularly because any common law interpretation proceeds
on a case-by-case basis. The two Supreme Court precedents on
the issue of fair use, Sony Corp. v. Universal City Studios,
Inc., 464 U.S. 417, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984)
and Harper & Row v. Nation Enterprises, 471 U.S. 539, 105 S.
Ct. 2218, 85 L. Ed. 2d 588 (1985), were both overturned at each
level of review.
This case is distinctive in many respects from those which have
come before it. It involves multiple copying. The copying was
conducted by a commercial enterprise which claims an educational
purpose for the materials. The copying was just that -- copying
-- and did not "transform" the works in suit, that is, interpret
them or add any value to the material copied, as would a biographer's
or critic's use of a copyrighted quotation or excerpt. Because
plaintiffs specifically allege violation of both, this court
has the task of evaluating the copying under fair use doctrine
and the "Agreement on Guidelines for Classroom Copying in Not-For-Profit
Educational Institutions" ("Classroom Guidelines").
A. The 4 Factors of Fair Use.
Purpose and Character of the Use.
Section 107 specifically provides that under this factor we
consider "whether [the] use is of a commercial nature or is
for nonprofit educational purposes." 17 U.S.C. @ 107; see also
Marcus v. Rowley, 695 F.2d 1171, 1175 (9th Cir. 1983). The Supreme
Court has held that "commercial use of copyrighted material
is presumptively an unfair exploitation of the monopoly privilege
that belongs to the owner of the copyright." Sony Corp., 464
U.S. at 451. Additionally, the Supreme Court has found that
"the distinction between 'productive' and 'unproductive' uses
may be helpful in calibrating the balance [of interests]." Id.
at 455 n. 40. While both are significant considerations, neither
of these is determinative.
It has been argued that the essence of "character and purpose"
is the transformative value, that is, productive use, of the
secondary work compared to the original. District Court Judge
Leval has noted that, "the use . . . must employ the quoted
matter in a different manner or for a different purpose from
the original. A quotation of copyrighted material that merely
repackages or republishes the original is unlikely to pass the
test." Leval, Toward a Fair Use Standard, 103 Harv. L. Rev.
1105, 1111 (1990) (suggesting a balancing between the justification
for and the extent of the taking). Kinko's work cannot be categorized
as anything other than a mere repackaging.
Most contested instances of copyright infringement are those
in which the infringer has copied small portions, quotations
or excerpts of works and represents them in another form, for
example, a biography, criticism, news article or other commentary.
See, e.g., Harper & Row v. Nation Enterprises, 471 U.S. 539,
85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985); New Era Publications
v. Carol Publishing, 904 F.2d 152, 14 U.S.P.Q.2D (BNA) 2030
(2d Cir.), cert. denied, 498 U.S. 921, 111 S. Ct. 297, 112 L.
Ed. 2d 251 (1990); Salinger v. Random House, Inc., 811 F.2d
90 (2d Cir.), cert. denied, 484 U.S. 890, 108 S. Ct. 213, 98
L. Ed. 2d 177 (1987); Wright v. Warner Books, Inc., 748 F. Supp.
105, 16 U.S.P.Q.2D (BNA) 1356 (S.D.N.Y. 1990). In this case,
there was absolutely no literary effort made by Kinko's to expand
upon or contextualize the materials copied. See Pacific & Southern
Co. v. Duncan, 744 F.2d 1490, 1496 (11th Cir.), cert. denied,
471 U.S. 1004, 105 S. Ct. 1867, 85 L. Ed. 2d 161 (1985) (finding
infringement by a defendant who neither "analyze[d] . . . [nor]
improve[d]" the work, noting that "the preamble to Section 107
indicate[s] [that] fair uses are those that contribute in some
way to the public welfare."). [FN 5] The
excerpts in suit were merely copied, bound into a new form,
and sold. The plaintiffs refer to this process as "anthologizing."
The copying in suit had productive value only to the extent
that it put an entire semester's resources in one bound volume
for students. It required the judgment of the professors to
compile it, though none of Kinko's.
The use of the Kinko's packets, in the hands of the students,
was no doubt educational. However, the use in the hands of Kinko's
employees is commercial. Kinko's claims that its copying was
educational and, therefore, qualifies as a fair use. Kinko's
fails to persuade us of this distinction.
Kinko's has not disputed that it receives a profit component
from the revenue it collects for its anthologies. The amount
of that profit is unclear; [FN 6] however,
we need only find that Kinko's had the intention of making profits.
Its Professor Publishing promotional materials clearly indicate
that Kinko's recognized and sought a segment of a profitable
market, admitting that "tremendous sales and profit potential
arise from this program." Kinko's Policies and Procedures Manual,
chapter 9, at 1 (PX 11) (further noting that "these orders can
be the easiest to run, and the most profitable." Id.).
Although Kinko's tries to impress this court with its purportedly
altruistic motives, the facts show that Kinko's copying had
"the intended purpose of supplanting the copyright holder's
commercially valuable right." See Harper & Row, 471 U.S. at
562 (original emphasis). Kinko's promotional literature compares
its "prompt" service to the "ineffectiveness of traditional
publishing to meet the changing needs of faculty and students."
"The Professor Publishing Newsletter, Fall 1984" (DTX C-D).
In Pacific & Southern Co. v. Duncan, supra, the Eleventh Circuit
denied the fair use defense to a company which videotaped and
sold copyrighted portions of a television news show to the featured
subject. Noting that "every commercial exchange of goods and
services involves both the giving of the good or service and
the taking of the purchase price," the court found character
and use against the defendant since "the fact that TV News Clips
focuses on the giving rather than the taking cannot hide the
fact that profit is its primary motive for making the exchange."
Id. at 1496. The same holds true for Kinko's.
Kinko's offers a 10% discount if professors get in their orders
early, emphasizes student savings, convenience, and service
-- all "at no cost to your department." Kinko's shows that it
is keenly aware of students' and professors' preoccupation with
educational costs and provides additional services to get their
business: offering campus pick-up and delivery and free copyright
permission assistance. See "Campus Rep Marketing Materials 1988"
(PX 17). The extent of its insistence that theirs are educational
concerns and not profitmaking ones boggles the mind.
Kinko's has periodically asserted that it acted at the instruction
of the educational institution, that is, as the agent of the
colleges and is without responsibility. Yet, Kinko's promotional
materials belie this contention particularly because Kinko's
takes responsibility for obtaining copyright permission while
touting the expertise of its copyright permissions staff (a
"service [which] is provided at no charge to all Kinko's customers.").
"Copyright Information Letter to Faculty Members," in Kinko's
Copyright and Professor Publishing Handbook, at 40.
Kinko's is paid directly by students who come into its stores
to purchase the packets. Professors do not pay a fee; in fact,
Kinko's provides incentives to professors for choosing their
copy center over others. See "Kinko's Copyright and Professor
Publishing Handbook" (1988) (as advice on how to avoid delays,
the manual suggests that employees "offer an incentive or discount
to professors who submit their materials to Kinko's several
weeks before classes start." Id. at 8.); id. at 42 (Kinko's
Sales Call Follow Up letter which is sent by campus representatives
reads, "I have enclosed your Kinko's Faculty Club card, which
entitles you to a 10% discount on all goods and services at
any Kinko's nationwide.").
While financial gain "will not preclude [the] use from being
a fair use," New York Times Co. v. Roxbury Data Interface, Inc.,
434 F. Supp. 217, 221 (D.N.J. 1977), consideration of the commercial
use is an important one.
"The crux of the profit/nonprofit
distinction is not whether the sole motive of the use is monetary
gain but whether the user stands to profit from exploitation
of the copyrighted material without paying the customary price."
Harper & Row, 471 U.S. at 562. This is precisely the concern
here and why this factor weighs so strongly in favor of plaintiffs.
Courts' consideration of the profit factor usually arises because
the alleged infringing work competes in the same market as the
copyrighted work, thus making the "commerciality" more harmful
to the copyright holder. See Marcus v. Rowley, 695 F.2d at 1175;
Haberman v. Hustler Magazine, Inc., 626 F. Supp. 201, 211 (D.
Mass. 1986). In cases in which a defendant is claiming fair
use for a criticism, commentary or other scholarly research,
the courts are more likely to find fair use under this factor.
In New Era Publications v. Carol Publishing, 904 F.2d at 156,
the Second Circuit found fair use under the character and use
factor since the publication in suit was not an economic exploitation
of the original work but a legitimate critical biography. In
that case, a critic and biographer of L. Ron Hubbard and the
Church of Scientology defended his use of quotes from 48 of
A potentially widespread use which was notably non-commercial
has been held to be a fair use. In Sony Corp. v. Universal City
Studios, 464 U.S. 417, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984),
television viewers taped plaintiffs' television programs on
home video recorders, doing nothing to enhance the program --
simply copying them in order to view them later. The Court decided
this "time-shifting" was fair use and placed emphasis on the
fact that the viewers were not selling their copies of these
programs for profit. Id. at 454-55.
Nature of the Copyrighted Work.
The second factor concerns the nature of the copyrighted work.
Courts generally hold that "the scope of fair use is greater
with respect to factual than non-factual works." New Era Publications
v. Carol Publishing Group, 904 F.2d at 157. Factual works, such
as biographies, reviews, criticism and commentary, are believed
to have a greater public value and, therefore, uses of them
may be better tolerated by the copyright law. See Salinger v.
Random House, Inc., 811 F.2d at 96. Works containing information
in the public interest may require less protection. See Consumers
Union v. General Signal Corp., 724 F.2d 1044, 1049 (2d Cir.
1983), cert. denied, 469 U.S. 823, 105 S. Ct. 100, 83 L. Ed.
2d 45, 224 U.S.P.Q. (BNA) 61 (1984). Fictional works, on the
other hand, are often based closely on the author's subjective
impressions and, therefore, require more protection. These are
general rules of thumb. The books infringed in suit were factual
in nature. This factor weighs in favor of defendant.
3. The Amount and Substantiality of the Portion Used.
"There are no absolute rules as to how much of a copyrighted
work may be copied and still be considered a fair use." Maxtone-Graham
v. Burtchaell, 803 F.2d 1253 (2d Cir.), cert. denied, 481 U.S.
1059, 107 S. Ct. 2201, 95 L. Ed. 2d 856 (1987). This third factor
considers not only the percentage of the original used but also
the "substantiality" of that portion to the whole of the work;
that is, courts must evaluate the qualitative aspects as well
as the quantity of material copied. See New Era Publications
Int'l v. Carol Publishing Group, 904 F.2d at 158. A short piece
which is "the heart of" a work may not be fair use and a longer
piece which is pedestrian in nature may be fair use. The balancing
of the four factors must be complete, relying solely upon no
one factor. The purpose of the use may be balanced against the
amount and substantiality of the use. For example, "even substantial
quotations might qualify as fair use in a review of a published
work." See Harper & Row, 471 U.S. at 564-65.
Courts have found relatively small quantitative uses to be fair
use. See, e.g., New Era Publications, 904 F.2d at 158 (court
found as fair that defendant used a "minuscule" amount of 25
works: 5-6% of 12 works, 8% or more of 11 works "each of the
11 being only a few pages in length."); Iowa State University
Research Found., Inc. v. Am. Broadcasting Cos., Inc., 621 F.2d
at 61-62 (court found unfair copying of 8% of videotape never
before broadcast); Maxtone-Graham, 803 F.2d at 1263 (inclusion
of 4.3% of work was fair); Salinger, 811 F.2d at 98-99 (finding
this factor weighed "heavily" in favor of Salinger, the court
found no fair use of quotation and paraphrasing totalling one-third
of 17 letters, and 10% of 42 letters); Harper & Row, 471 U.S.
at 564-65 (the 300 copyrighted words appropriated to the Times
article were an insubstantial portion of the work but "'essentially
the heart of the book.'").
Additionally, "reference to a work's availability is appropriate."
Wright v. Warner Books, Inc., 748 F. Supp. at 112. Therefore,
longer portions copied from an out-of-print book may be fair
use because the book is no longer available. (This has been
thought to be true because, presumably, there is little market
effect produced by the copying. However, plaintiffs in this
case convincingly argue that damage to out-of-print works may
in fact be greater since permissions fees may be the only income
for authors and copyright owners.).
This court finds and concludes that the portions copied were
critical parts of the books copied, since that is the likely
reason the college professors used them in their classes. cf.
Harper & Row, 471 U.S. at 565 ("the fact that a substantial
portion of the infringing work was copied verbatim is evidence
of the qualitative value of the copied material."). While it
may be impossible to determine, as the Court did in Harper &
Row, that the quoted material was "essentially the heart of"
the copyrighted material, Id. at 565, it may be inferred that
they were important parts.
This factor, amount and substantiality of the portions appropriated,
weighs against defendant. In this case, the passages copied
ranged from 14 to 110 pages, representing 5.2% to 25.1% of the
works. See Findings of Fact, supra, for discussion of amount
copied. In one case Kinko's copied 110 pages of someone's work
and sold it to 132 students. Even for an out-of-print book,
this amount is grossly out of line with accepted fair use principles.
In almost every case, defendant copied at least an entire chapter
of a plaintiff's book. This is substantial because they are
obviously meant to stand alone, that is, as a complete representation
of the concept explored in the chapter. This indicates that
these excerpts are not material supplemental to the assigned
course material but the assignment. Therefore, the excerpts,
in addition to being quantitatively substantial, are qualitatively
4. The Effect of the Use on Potential
Markets for or Value of the Copyrighted Work.
The fourth factor, market effect, also fails the defendant.
This factor has been held to be "undoubtedly the single most
important element of fair use." Harper & Row, 471 U.S. at 566.
"To negate fair use one need only show that if the challenged
use 'should become widespread, it would adversely affect the
potential market for the copyrighted work.'" Id. at 568 (quoting
Sony Corp., 464 U.S. at 451, emphasis added).
Kinko's confirms that it has 200 stores nationwide, servicing
hundreds of colleges and universities which enroll thousands
of students. The potential for widespread copyright infringement
by defendant and other commercial copiers is great. In this
case, Kinko's has admitted [FN 7] that its
market for these anthologies or packets is college students.
The packets were compiled as a result of orders placed by professors
at Columbia University, New York University and the New School
for Social Research as to what readings they needed to supply
their courses. [FN 8] In this case, the competition
for "student dollars" is easily won by Kinko's which produced
300 to 400-page packets including substantial portions of copyrighted
books at a cost of $ 24 to the student. Packet #34 contained
excerpts from 20 different books, totalled 324 pages, and cost
$ 21.50. (PX 18). While it is possible that reading the packets
whets the appetite of students for more information from the
authors, it is more likely that purchase of the packets obviates
purchase of the full texts. This court has found that plaintiffs
derive a significant part of their income from textbook sales
and permissions. This court further finds that Kinko's copying
unfavorably impacts upon plaintiffs' sales of their books and
collections of permissions fees. This impact is more powerfully
felt by authors and copyright owners of the out-of-print books,
for whom permissions fees constitute a significant source of
income. This factor weighs heavily against defendant.
5. Other Factors.
In this case an important additional factor is the fact that
defendant has effectively created a new nationwide business
allied to the publishing industry by usurping plaintiffs' copyrights
and profits. This cannot be sustained by this court as its result
is complete frustration of the intent of the copyright law which
has been the protection of intellectual property and, more importantly,
the encouragement of creative expression. Because of the vastness
and transitory nature of its business (Kinko's has 200 stores
nationwide which are typically located near colleges), it has
become difficult for plaintiffs to challenge defendant.
Additionally, the Classroom Guidelines express a specific prohibition
of anthologies. The fact that these excerpts were compiled and
sold in anthologies weighs against defendant.
Kinko's claims that "the evidence shows that course packets
are of tremendous importance to teaching and learning, and are
the subject of widespread and extensive use in schools throughout
the country" and that "an injunction against the educational
photocopying at issue would pose a serious threat to teaching
and the welfare of education." Defendant's Proposed Conclusions
of Law, at 23. This appears to be a "fair use by reason of necessity"
argument. Kinko's has failed to prove this central contention
which is that enjoining them from pirating plaintiffs' copyrights
would halt the educational process.
Kinko's did not produce any professor to testify that he or
she uses course packets and would be disabled from teaching
effectively if Kinko's could not copy without paying permissions
fees. Defendant did produce a witness, Dr. Bruce Johnson, who
testified to the results of a survey he conducted which showed
the widespread use of course packets by college professors and
the reasons for this use. [FN 9] (DTX L-Z).
Notwithstanding professors' complaints of costly original materials,
rapid change in course subject matter, and inadequate current
offerings -- which are all good reasons for desiring anthologies
-- defendant's witnesses did not produce evidence which would
explain why they could not seek and pay for permission to create
these anthologies. Dr. Johnson's survey fails to do so. This
argument also fails.
B. The Classroom Guidelines.
The Classroom Guidelines, entitled the "Agreement on Guidelines
for Classroom Copying in Not-For-Profit Educational Institutions,"
are a part of the legislative history of the Copyright Act of
1976. H.R. Rep. No. 1476, 94th Cong., 2d Sess. 68 (1976). These
Guidelines were the result of negotiation and agreement among
the Ad Hoc Committee of Educational Institutions and Organizations
on Copyright Law Revision, the Authors League of America, Inc.,
and the Association of American Publishers. [FN
10] Id. at 67. One commentator confirms the Guidelines as
an act of compromise which "was necessitated by the widespread
availability of reprographic technology which eliminated much
of the copyright owner's control over the reproduction of his
work." Patry, The Fair Use Privilege in Copyright Law at viii
(1985). The legislative history acknowledges "the long controversy
over the related problems of fair use and the reproduction (mostly
by photocopying) of copyrighted material for educational and
scholarly purposes." House Report, at 66. This indicates that
Congress saw the maelstrom beginning to churn and sought to
clarify, through broad mandate, its intentions.
For a proper analysis, there must be initial consideration given
to the issue of what comprises educational copying and whether
Kinko's status as a for-profit corporation, and its profitmaking
intent, renders it outside of a Guidelines review. We believe
that it does.
Kinko's contends that it serves an important function in the
educational process -- providing prompt, cost-effective service
to educational institutions. If they did not provide this service
to colleges and universities, they claim, these institutions
and their students would suffer educationally and financially.
However, Kinko's is in the business of providing copying services
for whomever is willing to pay for them and, as evidenced in
this case, students of colleges and universities are willing
to pay for them.
This commercial copying can be contrasted to library copying.
In Williams & Wilkins Co. v. United States, 203 Ct. Cl. 74,
487 F.2d 1345, 180 U.S.P.Q. (BNA) 49 (Ct. Cl. 1974), aff'd,
420 U.S. 376, 95 S. Ct. 1344, 43 L. Ed. 2d 264, 184 U.S.P.Q.
(BNA) 705 (1975), the court found library copying to be a fair
use. In that case, the Department of Health, Education and Welfare,
through the National Institutes of Health (NIH) and the National
Library of Medicine (NLM) copied articles from medical journals
and disseminated them to researchers and personnel who requested
them. The libraries established rules regarding page limitations,
frequency and number of copies, and they did not charge a copying
fee. See id. at 1347-49. The NLM reproduced each copy with a
statement saying: "'This is a single photostatic copy made by
the National Library of Medicine for purposes of study or research
in lieu of lending the original.'" 487 F.2d at 1348. Classroom
and library copying are viewed more sympathetically "since they
generally involve no commercial exploitation and . . . [have]
socially useful objectives. . . . This is not true of photocopy
shops, which reproduce for profit." Nimmer, @ 13.05[E], at 13-93
-- 13-94, & n. 69.
This court finds and concludes that even if Kinko's copying
warranted review under the Classroom Guidelines, it is excessive
and in violation of the Guidelines requirements. [FN
There is dispute as to whether the Guidelines represent a maximum
or minimum of allowable copying. The Guidelines assert its intended
meaning thusly: "the purpose of the following guidelines is
to state the minimum and not the maximum standards of educational
fair use under Section 107 of H.R. 2223." Id. at 68. The Guidelines
clearly state that notwithstanding their promulgation, fair
use standards may be more or less permissive [FN
12] -- depending upon the circumstances and based upon equitable
considerations. See also Nimmer, @ 13.05[E], at 13-96 (courts
may decide whether a use which exceeds the Guidelines may be
fair use and whether a use which is within the Guidelines may
exceed fair use; courts must balance the interests involved).
This court finds that the copying in suit clearly deviates from
the letter and spirit of the Guidelines.
Under the section "Multiple Copies for Classroom Use," the stated
premise is that "multiple copies (not to exceed in any event
more than one copy per pupil in a course) may be made by or
for the teacher giving the course for classroom use or discussion.
. . ." H.R. Rep. No. 1476, at 68 (emphasis supplied). [FN
13] The Guidelines provide that a teacher may make multiple
copies of copyrighted material if the copying meets the tests
of brevity, spontaneity, and cumulative effect and so long as
"each copy includes a notice of copyright." Id. at 68. It has
already been found that Kinko's failed to include copyright
notices on any of the works in suit.
Brevity, in prose, is defined as "a complete article, story
or essay of less than 2,500 words," or an excerpt of "not more
than 1,000 words or 10% of the work, whichever is less." Id.
Defendant does not meet this requirement.
Spontaneity requires that "the inspiration and decision to use
the work and the moment of its use for maximum teaching effectiveness
[be] so close in time that it would be unreasonable to expect
a timely reply to a request for permission." Id. at 69. Because
Kinko's copying coincided with the start of each semester and
was prompted by Kinko's obtaining a list of course materials
from professors, we find that the copying in suit cannot be
considered spontaneous. The anthologies were created to last
the full semester, or at least for several weeks, since they
averaged 200 to 400 pages per course packet.
Additionally, while it is true that modern teaching methods
present copyright dilemmas by requiring frequent updating of
information from varied sources, the excerpts in suit were not
copied from current publications. The most recent publication
date among the books in suit was 1985.
Cumulative effect proscribes any more than "nine instances of
multiple copying for one course during one class term," limits
the copied material to one course only, and to no more than
one piece of work per author. House Report, at 69. Defendants
fail this requirement. Of the five course packets containing
7, 22, 23, 25, and 43 instances of multiple copying, four of
them clearly exceed the nine permissible instances.
Anthologies. In addition to these tests, most of which defendant
has failed, Kinko's conduct appears to violate a specific mandate
of the Classroom Guidelines:
III. Prohibitions as to I and II Above. Notwithstanding any
of the above, the following shall be prohibited:
(A) Copying shall not be used to create or to replace or substitute
for anthologies, compilations or collective works . . . .
(C) Copying shall not: (a) substitute for the purchase of books,
publishers' reprints or periodicals.
(D) No charge shall be made to the student beyond the actual
cost of the photocopying.
Id. at 69-70 (emphasis added). Plaintiffs argue that, notwithstanding
the "safe harbor" provided in the spontaneity, brevity and cumulative
effect requirements of Parts I and II, Part III of the Guidelines
"flatly and unequivocally prohibit[s]" copying of the sort in
suit. Plaintiffs' Post-Trial Memorandum of Law, at 21 ["Plaintiffs'
Post-Trial Memo"]. Defendant urges the court to seek a less
rigid view of the meaning of the Guidelines. We are convinced
that this is the more prudent path than a bright line pronouncement
and refuse to hold that all unconsented anthologies are prohibited
without a fair use analysis. However, the fact that these excerpts
were placed in anthologies weighs significantly against defendant.
Lastly, plaintiffs argue that "even without examining the Classroom
Guidelines, @ 107, itself, read in the light of the legislative
history, clearly renders unauthorized anthologizing (especially
when undertaken for profit) outside the bounds of fair use."
Plaintiffs' Post-Trial Memo, at 21. This court is not prepared
to so hold. While we agree that Congress did manifest a specific
apprehension of the use of anthologies, it is not clear that
Congress intended strict application of this prohibition without
fair use balancing.
II. COPYRIGHT MISUSE AND
Kinko's alleges that the plaintiff publishers have collectively
attempted to "impede and prohibit educational copying for classroom
use as carried out by Kinko's on behalf of professors" and have
"combined with each other to promulgate as a purported 'industry
standard' with respect to photocopying a version of 'fair use'
that is inimical to Section 107 of the Copyright Act as enacted
by Congress." Defendant's Proposed Conclusions of Law, at 34-35.
The defense of copyright misuse through violation of the antitrust
laws has generally been held not to exist. See Nimmer, @ 13.09[A],
at 13-142.1 -- 13-143; see also Orth-O-Vision, Inc. v. Home
Box Office, 474 F. Supp. 672, 686 (S.D.N.Y. 1979) (violation
of antitrust laws is no defense to copyright infringement);
Peter Pan Fabrics, Inc. v. Candy Frocks, Inc., 187 F. Supp.
334, 336 (S.D.N.Y. 1960) (same).
In many cases, the claim has been recognized but not upheld.
See, e.g., Supermarket of Homes, et. al. v. San Fernando Valley
Board of Regents, 786 F.2d 1400 (9th Cir. 1986) (allegedly discriminatory
conduct failed to establish copyright misuse); Broadcast Music,
Inc. v. CBS, [1983-2] Trade Cas. (CCH) P 65,551 (S.D.N.Y. 1983)
(copyright misuse defense is unlikely to succeed on the merits).
However, some courts have held that "misuse of a copyright,
in violation of the antitrust laws, may be asserted as a defense
in copyright infringement cases." United Telephone Co. of Missouri
v. Johnson Pub. Co., 855 F.2d 604, 611 (8th Cir. 1988). The
defense of patent misuse has been recognized as a defense to
patent infringement if the patent is being used to restrain
competition, particularly through "tying clauses" which require
that, in order to get a license for one product, the purchaser
must buy another also. See United States v. Loew's, Inc., 371
U.S. 38, 83 S. Ct. 97, 9 L. Ed. 2d 11 (1962); United States
v. Paramount Pictures, Inc., 334 U.S. 131, 68 S. Ct. 915, 92
L. Ed. 1260 (1948); Morton Salt Co. v. G.S. Suppiger Co., 314
U.S. 488, 62 S. Ct. 402, 86 L. Ed. 363 (1942). Patent misuse
doctrine is "an extension of the equitable doctrine of 'unclean
hands' to the patent field." U.S. Gypsum Co. v. National Gypsum
Co., 352 U.S. 457, 77 S. Ct. 490, 1 L. Ed. 2d 465 (1957). Patent
and copyright doctrine can be compared on this point.
It has proven difficult to convince courts of the misuse defense.
In CBS v. American Society of Composers, 400 F. Supp. 737 (S.D.N.Y.
1975), CBS defended a copyright infringement claim by assailing
ASCAP's and BMI's blanket licensing arrangements as copyright
misuse. The court held that CBS failed to prove copyright misuse
because it did not show that the defendants had "refused or
would refuse to license their compositions . . . or [had] otherwise
used their collective leverage to compel CBS to license rights
to music which it did not wish to license." 400 F. Supp. at
782. In F.E.L. Publications, Ltd. v. Catholic Bishop, 506 F.
Supp. 1127 (N.D. Ill. 1981), rev'd on other grounds, 214 U.S.P.Q.
(BNA) 409 (7th Cir.), cert. denied, 459 U.S. 859, 74 L. Ed.
2d 113, 103 S. Ct. 131 (1982), the Circuit Court reversed the
District Court and held that plaintiff's licensing agreement,
which required licensees to pay for all 1,400 songs in its hymnal
regardless of how many songs were actually copied, was no violation
of the Sherman Act. Id. at 413-16. In United Telephone, supra,
defendant increased its licensing fee 500% to 49 cents, but
only after it had offered plaintiff the opportunity to license
its telephone listings at 10 cents per entry. The court denied
defendant's copyright misuse defense since defendant initially
had been offered the lower price and because defendant had not
shown that plaintiff's telephone list was a monopoly since defendant
could canvass the city and develop its own list. 855 F.2d at
Kinko's asserts that plaintiffs have misused their copyrights
by impermissibly "broaden[ing] or extend[ing] the monopoly of
[their] copyright in an effort to restrain competition." Defendant's
Proposed Conclusions of Law, at 33-34. However, the facts of
this case do not support a legal finding of copyright abuse.
They show no agreement among plaintiffs to advocate any industry
standard in excess of fair use. Plaintiffs' efforts to restrain
competition by Kinko's is simultaneously an effort to stop Kinko's
from infringing their copyrights. Plaintiffs have acted reasonably
in so doing, not collusively for some illegal, monopolistic
purpose. Consequently, Kinko's contentions fail.
Defendant posits other arguments in favor of copyright misuse.
They contend that plaintiffs "arbitrarily and capriciously refused
to grant permission to Kinko's" while granting it to others,
plaintiffs understaffed their permissions departments in order
to delay processing and, in some cases, failed to process them
Kinko's first contention is barred since it failed to request
permission for any of the excerpts in suit.
Kinko's fails to establish its second contention in two respects.
Plaintiffs convincingly assert that they are in this business
to make money and want to collect permissions fees. Therefore,
it is unlikely that plaintiffs, in an attempt to spite Kinko's,
are intentionally delaying their permissions process. Further,
this court is unconvinced that a slow or backlogged permissions
department constitutes a misuse of copyright. [FN
15] Kinko's alleges that, not only the timing, but the cost
of obtaining these permissions presents obstacles for the copiers
and universities. Kinko's failed to prove this as well. [FN
Similarly, Kinko's fails in its unclean hands defense. Defendant
unconvincingly reasserts its "anticompetitive scheme" argument
to support this defense.
III. ESTOPPEL AND
The Ninth Circuit court in Hampton v. Paramount Pictures Corp.,
279 F.2d 100 (9th Cir.), cert. denied, 364 U.S. 882, 81 S. Ct.
170, 5 L. Ed. 2d 103, 127 U.S.P.Q. (BNA) 555 (1960), stated
the elements of the estoppel defense. Plaintiff must know of
the defendant's infringing conduct; plaintiff must intend that
his conduct be acted on or must act in a way that the party
asserting the estoppel had a right to believe it was so intended;
defendant must be ignorant of the true facts; and defendant
must rely on plaintiff's conduct to his detriment. Id. at 104.
These four elements were adopted in Lottie Joplin Thomas Trust
v. Crown Publishers, Inc., 456 F. Supp. 531 (S.D.N.Y. 1977),
aff'd, 592 F.2d 651 (2d Cir. 1978); Rohauer v. Killiam Shows,
Inc., 379 F. Supp. 723 (S.D.N.Y.), rev'd on other grounds, 551
F.2d 484 (2d Cir. 1977).
Plaintiff may be estopped from asserting its rights under a
copyright if plaintiff has aided the defendant in infringing
or otherwise induced them to infringe or has committed covert
acts such as "holding out . . . by silence or inaction." Nimmer,
@ 13.07, at 13-134 (acknowledging that such passive acts are
rarely so held). "The plaintiff's acquiescence in the defendant's
infringing acts may, if continued for a sufficient period of
time and if manifested by overt acts, result in an abandonment
of copyright." Id. at 13-135. In such a case, the estoppel "destroys
the right asserted" and will be a defense for all acts occurring
after the acquiescence. Id.
In New Era Publications Int'l. v. Henry Holt & Co., 873 F.2d
576 (2d Cir. 1989), cert. denied, 493 U.S. 1094, 110 S. Ct.
1168, 107 L. Ed. 2d 1071 (1990), the court denied plaintiff's
request for permanent injunction on the grounds of laches. Before
suing for an injunction, plaintiff waited two years after protesting
to the defendant and drawing a flat refusal to cooperate. By
this time, 12,000 copies of defendant's book, the subject of
the suit, had been printed, packed and shipped to stores. The
court found an "unconscionable delay" which would work a hardship
on the defendant resulting in severe prejudice. Id. at 584-85.
Defendant cites the testimony of one of plaintiff's witnesses
in which he admits to continuous knowledge of Kinko's anthologizing
since 1984 [FN 17] and his "general" perception
that Kinko's copying constituted infringement. See Testimony
of Richard Rudick, Senior Vice President and General Counsel
of John Wiley & Sons, Tr. 96-101. Kinko's argues that "the continued
and open expansion of Kinko's educational photocopying without
protest by plaintiffs created Kinko's detrimental reliance."
Defendant's Proposed Conclusions of Law, at 33. Kinko's convincingly
asserts that it has expended much time and energy in its Professor
Publishing business and "has continued to expand its educational
photocopying . . . over the years in line with its [own] policies
and procedures. . . ." Id. at 32. However, this does not reach
the level of detrimental reliance.
Plaintiffs argue they had no knowledge Kinko's was infringing,
only that they were copying. Once they realized Kinko's was
copying without permission, they complained and demanded fees.
[FN 18] Plaintiffs urge that only through
discovery did they realize the extent of Kinko's copying without
permission. Defendant has not supplied any proof to the contrary.
Additionally, Kinko's has not shown that plaintiffs intended
their inaction to be interpreted as a "license" to infringe
its works nor that any action of plaintiffs' gave Kinko's the
right to believe it had such a license. Plaintiffs have denied
any such intent.
Lastly, the extent of the harm experienced by Kinko's works
no substantial prejudice against it. Its detriment is that it
will have to request permission the next time it wishes to copy
and publish its Professor Publishing anthologies.
IV. PLAINTIFFS' FAILURE TO RECORD TRANSFER INSTRUMENTS.
Pursuant to 17 U.S.C. @ 205 (d), Kinko's challenges the court's
jurisdiction of two of the works involved in this case: Lyndon
Johnson and the American Dream and The Money Market. Plaintiffs
Harper & Row and Jones-Irwin assert that they hold valid copyrights
on these works. Defendant argues that plaintiffs' failure to
record the instruments of transfer as to these two works prior
to filing their original complaint on April 25, 1989, bars them
from bringing suit.
Section 205 (d) requires recordation of copyrighted works before
institution of any suit thereon. [FN 19]
At the beginning of trial, during initial argument on this matter,
this court ruled that the filing of a supplemental complaint
would cure the jurisdictional defect caused by late recordation.
See Tr. 3-11; Fed. R. Civ. P. 15 (d). Plaintiffs recorded the
instruments on June 26, 1990 and August 23, 1989, months after
filing the original complaint. Plaintiffs filed a supplemental
complaint pursuant to that ruling. Plaintiffs now argue that
any jurisdictional defect is cured by its filing of its supplemental
complaint. Plaintiffs' Post-Trial Memorandum of Law, at 15,
Defendant argues that "the law is well-settled that a litigant
cannot cure a jurisdictional defect by alleging facts that occurred
only after the action was brought." Defendant's Proposed Conclusions
of Law, at 30-31 (original emphasis). Defendant is misguided.
While recognizing that proper recordation is a jurisdictional
prerequisite to instituting a copyright infringement suit, defendant
fails to see that plaintiffs' recordation problem was cured
by its supplemental filing which was allowed by this court pursuant
to Fed. R. Civ. P. 15 (d). Courts have held this to be proper
procedure. "There is no question that leave to serve a supplemental
pleading should be granted if it cures a jurisdictional defect."
Dan-Dee Imports, Inc. v. Well-Made Toy Mfg. Corp., 524 F. Supp.
615, 619 (E.D.N.Y. 1981) (citing Mathews v. Diaz, 426 U.S. 67,
96 S. Ct. 1883, 48 L. Ed. 2d 478 (1976)).
Filing a supplemental complaint, pursuant to Fed. R. Civ. P.
15 (d), may relate back to the original filing so as to cure
a jurisdictional defect. See, e.g., Security Insurance Co. of
New Haven v. United States, 338 F.2d 444, 449 (9th Cir. 1964)
(supplemental complaint related back so as not to bar suit by
statute of limitations even though supplement was filed more
than a year after original suit); Dan-Dee Imports, Inc. v. Well-Made
Toy Mfg. Corp., 524 F. Supp. at 619-20 (amended and supplemental
complaint accepted for filing when no prejudice shown to defendant).
See also Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc., 690
F. Supp. 298, 302 (S.D.N.Y. 1988) (plaintiff who recorded 8
months after beginning suit was not precluded from asserting
rights because he filed before hearing); Wales Industrial Inc.
v. Hasbro Bradley, Inc., 612 F. Supp. 510, 514-15 (S.D.N.Y.
1985) (recordation 5 weeks after filing the complaint cured
any jurisdictional defect because recordation occurred before
the hearing on the motion); Meta-Film Associates, Inc. v. MCA,
Inc., 586 F. Supp. 1346, 1351-52 (C.D.Ca. 1984) (subsequent
filing of assignment cured jurisdictional defect and related
back); Co-Opportunities, Inc. v. National Broadcasting Co.,
510 F. Supp. 43, 49 (N.D.Ca. 1981) (subsequent recordation allowed
to relate back).
Although plaintiffs filed their supplemental complaint after
the start of trial, plaintiffs had recorded their transfer instruments
months before. Defendant could not prove any prejudice, even
if it had alleged it, since they had ample notice of plaintiffs'
allegations with respect to the two books to conduct discovery.
This court holds that plaintiffs' supplemental complaint relates
back to the original complaint which is sufficient to comply
with @ 205 (d). Plaintiffs' causes with regard to these two
books stand and jurisdiction is properly within this court.
A plaintiff must show liability and the threat of continuing
violation to be entitled to an injunction. Universal City Studios,
Inc. v. Sony Corp. of America, 659 F.2d 963, 976 (9th Cir. 1981),
rev'd on other grounds, 464 U.S. 417, 78 L. Ed. 2d 574, 104
S. Ct. 774 (1984); Nimmer, @ 14.06[B]. "Injunction is not the
automatic consequence of infringement" but the result of equitable
consideration. New Era Publications Int'l v. Henry Holt Co.,
884 F.2d at 661 (2d Cir. 1989).
The Copyright Act places discretion in the court to "grant temporary
and final injunctions on such terms as it may deem reasonable
to prevent or restrain infringement of a copyright." 17 U.S.C.
@ 502 (a). This discretion is generally believed to extend to
enjoining infringement which may occur of works "which may in
the future be owned by the plaintiff." Nimmer, @ 14.06, at 14-61.
This possibility creates two questions before the court.
First, are plaintiffs entitled to injunction against future
infringement of the works in suit. Second, are plaintiffs entitled
to injunction against future infringement of works which may
not now be copyrighted or even in existence but, in the future,
may be copied by defendant.
We answer both questions in the affirmative. When liability
has been determined, and a history of continuing infringement
and a significant threat of future infringement exists, a court
must enjoin infringement of future copyrighted works. Orth-O-Vision,
Inc. v. Home Box Office, 474 F. Supp. at 685-86 (infringement
persisted from 1974 until 1978 when Orth-O-Vision filed suit
alleging antitrust violations); see also Wainwright Securities,
Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 94 (2d Cir.),
cert. denied, 434 U.S. 1014, 98 S. Ct. 730, 54 L. Ed. 2d 759,
196 U.S.P.Q. (BNA) 864 (1978) (preliminary injunction affirmed
upon a finding that irreparable injury may be presumed when
copyright is infringed).
In this case, liability has been determined and there remains
a significant threat that Kinko's will continue to infringe
plaintiffs' copyrights given the nature of Professor Publishing
and Kinko's historic willful blindness to the copyright law.
Although there is little history established on the record of
Kinko's infringing these publishers' copyrights prior to 1989,
this court has found that Kinko's has conducted its Professor
Publishing business at least since the mid-1980's. The nature
of Professor Publishing makes it particularly susceptible to
infringement because of the large volume of copying it conducts
and the added threat created by anthologizing. Additionally,
the willfulness defendant exhibited in this case persuades this
court that "there is a strong possibility that defendant will
engage in continuing copyright violations unless an injunction
is issued." Encyclopaedia Britannica Educational Corp. v. Crooks,
542 F. Supp. 1156, 1187 (W.D.N.Y. 1982). For these reasons,
this court thinks it prudent and equitable to grant plaintiffs'
request for injunction and will enjoin defendant from future
anthologizing and copying of plaintiffs' works without permission
and prepayment of fees in the manner shown violative of the
concept of fair use as proved in this case, and including similar
works not currently existing but which may in the future be
owned by plaintiffs and as to which plaintiffs have not consented.
Plaintiffs request an injunction against all unconsented anthologizing.
This court refuses to do so for the simple reason that some
anthologizing may fall within fair use requirements. This court
is not in the position, for example, to enjoin uses which are
fair as determined by the Guidelines and set out in the Copyright
B. Declaratory Judgment.
Plaintiffs request this court to declare "that Kinko's infringes
when it copies, anthologizes, and sells excerpts of plaintiffs'
works without permission." Plaintiffs' Post-trial Memorandum
of Law, at 54.
For declaratory judgment, a controversy must be "of a justiciable
nature, thus excluding an advisory decree upon a hypothetical
state of facts." Ashwander v. Tennessee Valley Authority, 297
U.S. 288, 325, 56 S. Ct. 466, 473, 80 L. Ed. 688, 699 (1936).
Title 28 of the U.S. Code requires that there be an "actual
controversy." 28 U.S.C. @ 2201. "The existence of another adequate
remedy does not preclude a judgment for declaratory relief in
cases where it is appropriate." Fed. R. Civ. P. 57. The test
for determining when an actual controversy exists was set forth
by the Supreme Court in Maryland Casualty Co. v. Pacific Coal
& Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510, 512, 85 L. Ed.
Basically, the question in each case is whether the facts alleged,
under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests,
of sufficient immediacy and reality to warrant the issuance
of a declaratory judgment.
Id.; see also Salomon Bros., Inc. v. Carey, 556 F. Supp. 499,
501 (S.D.N.Y. 1983).
The Second Circuit has held that:
"'The two principal
criteria guiding the policy in favor of rendering declaratory
judgments are (1) when the judgment will serve a useful purpose
in clarifying and settling the legal relations in issue, and
(2) when it will terminate and afford relief from the uncertainty,
insecurity, and controversy giving rise to proceeding.' . .
. If either of these objectives can be achieved the action should
be entertained and the failure to do so error."
Broadview Chemical Corp. v. Loctite Corp., 417 F.2d 998, 1001
(2d Cir.), cert. denied, 397 U.S. 1064, 90 S. Ct. 1502, 25 L.
Ed. 2d 686, 165 U.S.P.Q. (BNA) 353 (1970) (quoting Borchard,
Declaratory Judgments 294, 299 (2d ed. 1941)). Lastly, it is
within the court's discretion to determine when declaratory
judgment is appropriate; equitable principles govern this discretion.
Declaratory judgment is inappropriate in this case.
Plaintiffs say they are entitled to declaratory judgment as
to any and all instances of copying or "anthologizing" without
the author's permission. This is not so. The fact that Congress
has set forth a statement in its Classroom Guidelines that anthologizing
is prohibited does not require this court to paint with the
broad brush plaintiffs suggest. Declaring that all anthologies
published without permission is infringement would preclude
fair use analysis of any excerpt included in an anthology. If
Congress meant for anthologizing to nullify a fair use analysis,
it would have expressly said so. The Guidelines state that some
instances of copying which exceed its boundaries may in fact
"be permitted under the criteria of fair use." House Report,
at 68. Declaratory judgment is denied.
1. Statutory damages.
A copyright owner may elect to recover statutory damages instead
of actual damages and profits. 17 U.S.C. @ 504 (c)(1). Plaintiffs
have made that election. Once the plaintiff elects statutory
damages, that remedy is generally exclusive. Oboler v. Goldin,
714 F.2d 211, 213 (2d Cir. 1983).
Title 17 of the United States Code, Section 504 (c)(2) provides
for statutory damages of up to $ 100,000 for each infringement
when an infringement is willful. Plaintiffs have the burden
of showing defendant's "willfulness" in order to receive statutory
damages. Plaintiffs may show willfulness by showing that defendant
recklessly disregarded plaintiffs' rights. Wow & Flutter Music
v. Len's Tom Jones Tavern, Inc., 606 F. Supp. 554, 556 (W.D.N.Y.
1985); Lauratex Textile Corp. v. Allton Knitting Mills, 519
F. Supp. 730, 733 (S.D.N.Y. 1981). Plaintiffs also sustain their
burden by showing defendant knew or "should have known" it infringed
their copyrights. Fallaci v. New Gazette Literary Corp., 568
F. Supp. 1172, 1173 (S.D.N.Y. 1983). Willful does not mean "malicious,"
rather, it means "with knowledge," whether actual or constructive.
See Fitzgerald Publishing Co., Inc. v. Baylor Publishing Co.,
Inc., 807 F.2d 1110, 1115 (2d Cir. 1986), aff'd, 862 F.2d 304
(1988) ("a defendant's actual or constructive knowledge proves
In Fallaci, the court found that the publisher of a copyrighted
newspaper should have been aware "that its unauthorized republication
of a Washington Post article constituted copyright infringement."
568 F. Supp. at 1173; see also Warner Bros., Inc. v. Dae Rim
Trading, Inc., 677 F. Supp. 740, 764 (S.D.N.Y. 1988), aff'd
in part, rev'd in part, 877 F.2d 1120 (2d Cir. 1989) (defendant's
actions not willful when they "'were not aware and had no reason
to believe that his or her acts constituted an infringement
of copyright'."). Similarly, in Engel v. Wild Oats, Inc., 644
F. Supp. 1089 (S.D.N.Y. 1986), the court found that the defendant
willfully copied a photograph when the art director "knew or
should have known that the unauthorized reprinting of a photograph
was a copyright violation." Id. at 1092. Although the court
could not find evidence of actual knowledge, it found that the
defendant had a reckless disregard for the plaintiff's rights.
In deciding an award of statutory damages the court should take
a number of factors into consideration. Courts in the past have
used a wide array of criteria: fair market value of the rights
infringed, Quinto v. Legal Times of Washington, 511 F. Supp.
579, 582 (D.D.C. 1981); revenue lost by the plaintiff and profits
gained by the defendant, Boz Scaggs Music v. KND Corp., 491
F. Supp. 908, 914 (D. Conn. 1980); the infringer's state of
mind, Id.; and deterrence of future infringement. See Fallaci
v. New Gazette Literary Corp., 568 F. Supp. at 1174 (doubling
the fair market value of the infringed right to arrive at an
amount sufficient to deter a willful infringer because "[a]
willful infringer . . . should be liable for a substantial amount
over and above the market value of a legitimate license.");
Lauratex Textile Corp. v. Allton Knitting Mills, 519 F. Supp.
730, 733 (S.D.N.Y. 1981) (court arrived at $ 40,000 statutory
damage figure based on $ 5,000 actual revenue to the infringer
and defendant's willfulness); Lauratex Textile Corp. v. Allton
Knitting Mills, 517 F. Supp. 900, 903-04 (deterrence needed
in case where there was evidence of numerous suits in which
Allton's president was a defendant and negative inference drawn
from his refusal to testify).
Kinko's maintains that, if at all, it is an innocent infringer.
The statute provides a damage amount of $ 200.00 if a defendant
shows that it was not aware and had no reason to know it was
infringing. 17 U.S.C. @ 504 (c)(2). The defendant shoulders
the burden of proving this good faith and that its belief was
a reasonable one. Nimmer on Copyright @ 14.04[B], at 14-40.1
- 14.40.2. See also Peer International Corp. v. Pausa Records,
909 F.2d 1332, 1336, 15 U.S.P.Q.2D (BNA) 1530 (9th Cir. 1990),
cert. denied, 498 U.S. 1109, 111 S. Ct. 1019, 112 L. Ed. 2d
1100 (1991) (defendant must show reasonable good faith belief
to refute evidence of willful infringement). The minimum damage
figure is mandatory, not discretionary, upon the court finding
good faith. Id. at 14-40.2 -- 14-40.3. Kinko's has failed to
prove it was an innocent infringer by failing to show its good
faith. Kinko's should have known that it was infringing plaintiffs'
One method of assessing Kinko's willfulness is through the training
Kinko's provided its employees regarding fair use requirements.
At trial, defendant produced Kinko's "Policies and Procedures"
manual (Exhibit K), its "Copyright and Professor Publishing
Handbook" (Exhibit H), [FN 20] its "Co-worker
Handbook" (Exhibit B), and a "Transcript of Kinko's Copyright
Training Video" (Exhibit A-S (1)). These documents show that
Kinko's intentionally and as a market strategy targeted college
buyers and aggressively pursued their business through its Professor
In the "Classroom Guidelines" section of the Handbook, it provides:
The guidelines state the minimum, but not the maximum, amount
of photocopying permissible under fair use with regard to copies
for classroom use. The guidelines . . . do not assist a person
whose materials reach beyond the stated limits. Since almost
every case of college or university level copying will reach
beyond the scope of the limits, the guidelines have little application
for the college and university classroom situations. Handbook,
page 14. In so stating, Kinko's appears to have exempted itself
from the purview of the Guidelines altogether. To the contrary,
being beyond the scope of the Guidelines, to this court, still
renders Kinko's subject to fair use law. Kinko's never acknowledges
that its role as a commercial enterprise may in any way affect
the fair use determination even though @ 107 expressly provides
that commercial use is to be considered and Supreme Court precedent
states that it is "presumptively . . . unfair." See Sony Corp.,
464 U.S. at 451. [FN 21]
Kinko's instructions to its workers possessed little of the
nuance of the copyright law. They provided no hypothetical situations
nor any factual summary of the state of the law presently. There
was no mention of the facts of the Sony case, the Salinger case,
the Harper & Row case or others which may illustrate some of
the complexities of this doctrine. This can hardly be considered
a "good faith" effort on Kinko's part to educate their employees.
To the contrary, it appears more to be a way to "cover" themselves
while Kinko's remained willfully blind to the consequences of
This court also finds and concludes that substantial damages
are necessary to deter Kinko's from repeating the conduct proved
in this case. As noted above, Kinko's has substantial income
and assets: in 1989, net income of $ 3 million and assets of
$ 15 million. All of the instances of copying were conducted
with the same motive and intent. Therefore, this court will
assess statutory damages in the amount of $ 50,000 for nine
of the 12 infringements, and $ 20,000 for three [FN
22] of the infringements for a total of $ 510,000. Here
we are not attempting to measure the financial loss to the plaintiff
but to deter the defendant from future infringing copying.
Defendant claims it acted as the agent of the educational institutions
when it copied the excerpts in suit. Section 504 (c) provides
that the court "shall remit statutory damages . . . where an
infringer believed and had reasonable grounds for believing
that his or her use of the copyrighted work was a fair use .
. ., if the infringer was (i) an employee or agent of a nonprofit
educational institution . . . ." 17 U.S.C. @ 504 (c)(2). Kinko's
claims to demonstrate its role as an agent through several factors:
the professor selects the works to be copied, directs Kinko's
to copy, and seeks permission to copy on behalf of the professor.
Additionally, the professor signs an order form which states:
The materials to be copied . . . are for classroom use of no
more than one copy per student, constitute only a small part
of the entire work, and are to be solely for non-profit, non-commercial
educational purposes in teaching activities. If such copies
were not available, I would not require students to purchase
Defendant's Proposed Conclusions of Law, at 38-39. Defendant
cites no caselaw in support of its position that this constitutes
an agency relationship.
Since the Act does not define "agent," we will use state law
to guide us on this issue. Three elements are required to establish
an agency. First, there must be a manifestation by the principal
that the agent shall act for him. Second, the agent must accept
the undertaking. Lastly, there must be an understanding between
the parties that the principal is to be in control of the undertaking.
S.E.C. v. American Bd. of Trade, Inc., 654 F. Supp. 361, 366
(S.D.N.Y.), aff'd in part, dism'd in part, 830 F.2d 431 (2d
Cir. 1987) (citing Restatement (Second) of Agency @ 1 comment
b (1977)). New York common law principles provide that agency
is a fiduciary relationship "which results from a manifestation
of consent by one person to another that the other shall act
on his behalf and subject to his control, and the consent by
the other to act." Meese v. Miller, 436 N.Y.S.2d 496, 499, 79
A.D.2d 237 (App. Div. 4th Dept. 1981). "There can be no agency
relationship where the alleged principal has no right of control
over the alleged agent." Mazart v. State, 441 N.Y.S.2d 600,
605, 109 Misc. 2d 1092 (N.Y. Ct.Cl. 1981). However, every detail
need not be determined by the alleged principal. An agency may
exist where the principal retains the right "to make management
and policy decisions affecting the agent." Id.
This court has confirmed the soundness of these principles.
See Ahn v. Rooney, Pace Inc., 624 F. Supp. 368, 370-71 (S.D.N.Y.
1985) (element of "subservience" is essential to agency). The
Second Circuit is in accord. In In re Shulman Transport Enterprises,
Inc., 744 F.2d 293 (2d Cir. 1984), the court stated the essential
elements of an agency relationship are direction and control.
Id. at 295 (citing Restatement (Second) of Agency @ 1 (1) comment
b, @ 14 (1958)).
Plaintiffs assert that Kinko's presented no testimony at trial
from the universities involved that there was any agency relationship
to demonstrate the requisite element of direction and control.
Because Kinko's has not shown that the professors exerted a
sufficient level of control over the relationship, we agree
with plaintiffs that this defense is not available to Kinko's.
Even if Kinko's could show an agency relationship, it has not
shown that its behavior was the kind anticipated by Congress
and excused under section 504 (c). [FN 23]
Implicit in section 504 (c) is some showing that the defendant
was an innocent actor. The agency relationship requires that
the defendant lack control over its actions. This kind of actor,
understandably, should be protected. Kinko's was no such innocent
Kinko's had control over the permissions process: determination
whether a passage required permission or was fair use; whether
permission was sought after the fair use determination; and
when and how permission was pursued. The professors merely handed
in the signed form, claiming responsibility, but in actuality
relinquished several key aspects of control to Kinko's. Therefore,
Kinko's has failed to show that it should receive remitted damages.
We will not here discuss whether it was reasonable for Kinko's
to believe its copying was a fair use, since a finding of no
agency relationship precludes a determination for remission
of damages under the statute.
Fees and Costs.
Attorneys fees and costs may be awarded pursuant to 17 U.S.C.
@ 505. "Fees and costs in copyright infringement cases, like
statutory damages, are matters assigned to the court's discretion,
to be awarded with an eye toward encouraging the pursuit of
colorable copyright claims and deterring further infringement."
Engel v. Wild Oats, Inc., 644 F. Supp. 1089, 1093 (S.D.N.Y.
1986). See also Oboler v. Goldin, 714 F.2d at 213 ("Such an
award assures equal access to courts, provides an economic incentive
to challenge infringements, and penalizes the losing party.").
"Because Section 505 is intended in part to encourage the assertion
of colorable copyright claims and to deter infringement, fees
are generally awarded to prevailing plaintiffs." Diamond v.
Am-Law Publishing Corp., 745 F.2d 142, 148 (2d Cir. 1984). See
also Whimsicality, Inc. v. Rubie's Costume Co., Inc., 891 F.2d
452, 457 (2d Cir. 1989) ("Plaintiffs who prevail are awarded
fees as a matter of course."); Roth v. Pritikin, 787 F.2d 54,
57 (2d Cir. 1986) (prevailing plaintiff is generally entitled
to fees). [FN 24] In addition "because the
award of fees has a statutory basis, a finding of subjective
bad faith is not necessary." Diamond, 745 F.2d at 148.
Nimmer states that, even though the law does not require a finding
of culpability, "the mere fact that the plaintiff has won at
trial means that the defendant has been adjudged 'guilty of
infringement.' That finding, even absent a further finding of
'deliberate infringement,' establishes a blameworthiness of
sorts on the defendant's part." Nimmer, @ 14.10[D], at 14-84.10.
Accordingly, we are awarding plaintiff's attorneys fees and
Some courts have required some evidence of willfulness. In Fallaci,
the court found that defendant's "willful" infringement was
a deciding factor in allowing attorney's fees. 568 F. Supp.
at 1174. Further, in Bourne Co. v. MPL Communications, Inc.,
678 F. Supp. 70, 72 (S.D.N.Y. 1988), the court refused to award
fees to the plaintiff's attorney because of the novelty of the
issues involved in the case and the lack of bad faith on the
part of the defendant.
As discussed infra, the issues involved in this case bear some
degree of novelty. Though settlement agreements have been entered,
there has been no judicial determination of a copyshop case
before now. See PX. 59, 60, 61. The copying conducted in previous
cases has involved library or telephone directory copying. However,
fair use doctrine itself is no novelty. Koenig's testimony regarding
fair use failed to acknowledge the kind of critical analysis
required in making these evaluations. It showed no evidence
of Kinko's having wrestled with the determinations of the excerpts
in suit. As a result, Kinko's copying has been found by this
court to be willful. Given these circumstances, this court finds
it reasonable to award attorney's fees and costs to plaintiffs.
This court finds the excerpts copied by defendant Kinko's are
not a fair use of plaintiffs' copyrights and, therefore, constitute
infringement. Further, Kinko's defenses of copyright misuse,
unclean hands, and estoppel fail. Plaintiff is granted statutory
damages, injunctive relief and attorneys' fees and costs. Submit
order on 15 days notice to defendant.
Footnote 1 Kinko's uses double-sided
pages. This means that, in this instance, Kinko's used 194 pages
of copy paper to reproduce 388 pages of material. In this instance,
as well as most others involved, Kinko's was also able to copy
2 pages of copyrighted material per side of paper. Therefore,
for example, 10 pages of copy paper could potentially infringe
40 pages of copyrighted material.
2 This assessment is based upon the amount and substantiality
factor in fair use analysis, see infra.
3 These charges, which do not add up correctly, are reflected
as on the packet itself.
4 An anthology, according to Webster's Third New International
Dictionary (unabridged), is a "representative collection of
selected literary pieces or passages or of selected pieces in
any art form." (1967)
But see Weinreb, Fair's Fair: A Comment on the Fair Use Doctrine,
103 Harv. L. Rev. 1137, 1143 (1990) (arguing that the usefulness
of "transformative" value as a criterion is overstated and posits
that "[a] use may serve an important, socially useful purpose
without being transformative, simply by making the copied material
He further states:
One may wonder whether the publication of material in a new
"package" may not itself constitute a transformative use. For
example, the publication of a volume of Salinger's letters would
have a purpose entirely different from that which prompted Salinger
to write and send the letters contained in the volume. Preparing
the collection involves effort and, perhaps, judgment of a kind
that often is enough to sustain a copyright.
Id. at 1143, n. 29. He rejects Judge Leval's emphasis of transformative
use as nothing more than a "limiting test, apt for uses that
demonstrably serve neither a public purpose nor a socially recognized
private purpose" which limits evaluation of other relevant factors.
Id. at 1144. The effort utilized in this case was questionable
at best and the level of judgment practically non-existent.
Footnote 6 This is true because
Kinko's financial statements do not break out the Professor
Publishing segment of the business apart from its other revenues.
However, the statements show that the company made a substantial
profit in 1988 and 1989, respectively: $ 27 million and $ 35
million gross profit (before operating expenses) and $ 200,000
and $ 3 million net profit. (PX 25a).
7 In Defendant's Proposed Findings of Fact, Kinko's admits that:
As part of its service to the educational community, Kinko's
operates a program identified as "Professor Publishing." Under
the Professor Publishing program, Kinko's photocopies excerpts
of selected materials at the request of college professors and
teachers for educational use in the classroom. Kinko's has been
operating its Professor Publishing program for nearly 20 years.
Defendant's Proposed Findings of Fact, at 2.
8 "Instead of reproducing the material himself or herself and
distributing it to the class, the professor brings the material
to Kinko's or has it picked up. Kinko's then photocopies the
material . . . and sells it directly to the students. . . ."
The professor is the one to determine which materials will be
copied. Defendant's Proposed Findings of Fact, paras. 4, 6,
Footnote 9 This telephone
survey of 81 faculty members at the University of California,
Santa Barbara, was conducted in August 1990. It showed that:
52% of the total provided "customized" packets for their students;
98% of them did so because there was no adequate book available;
29% did so because it would be too costly for students to buy
all of the sources; and 95% did so because they claimed their
field was changing rapidly and they needed up-to-date materials.
"Survey of University Professors Regarding Customized Packages"
at 15, Economic Analysis Corporation (1990).
10 There was testimony introduced at trial by Professor Peter
Jaszi that the Guidelines was no compromise but in fact a concession
forced on educators. Tr. 837-39. This testimony was admitted
but, for the reasons stated here, this court places limited
reliance on it. This is a likely claim by any party to a compromise.
A compromise is just that, one side gives up some of its demands
in exchange for concessions of the other party. This court is
in no position to retrospectively evaluate the quality of debate
and parsing of privileges and responsibilities during Congress'
or these groups' deliberations. The congressional record must
speak for itself.
Footnote 11 We
have evaluated Kinko's acts pursuant to Guidelines requirements
because we find the circumstance of copying for college students
to be particularly compelling in this case, even though Kinko's
is not a teacher or other educational institution and we have
found no agency relationship between Kinko's and the college
professors involved. See agency discussion infra.
Footnote 12 "There may be instances in which
copying which does not fall within the guidelines stated below
may nonetheless be permitted under the criteria of fair use."
H.R. Rep. No. 1476, at 68.
13 Expressly, the decision of this court does not consider copying
performed by students, libraries, nor on-campus copyshops, whether
conducted for-profit or not.
14 The 1966 House Report noted: "education is the textbook publishers'
only market, and . . . many authors receive their main income
from licensing reprints in anthologies and textbooks; if an
unlimited number of teachers could prepare and reproduce their
own anthologies, the cumulative effect would be disastrous."
H.R. Rep. No. 2237, 89th Cong., 2d Sess. at 62 (1966).
Footnote 15 Defendants allege that the
publishers' failure to respond promptly "creates serious problems
for both teachers and students, causing considerable disruption
and interference with the educational process." Defendant's
Proposed Findings of Fact, at 20. Yet, Defendants did not produce
any such testimony from a teacher or student. At a meeting of
the National Association of College Stores, Kurt Koenig delivered
a slide presentation addressing "the well-known problem of unreasonable
delays and the response time" of permissions requests. In preparation
for that meeting, Koenig was alleged to have run "pencil" tabulations
on the same but the computer records of them were since "destroyed."
(PX 352). Anecdotal testimony Kinko's claimed it would present
at trial never materialized. Kinko's did supply deposition testimony
of personnel from Plaintiffs' permissions departments regarding
their permissions response times. At McGraw-Hill, turnaround
averaged 3 to 4 weeks or 2 to 3 months if there was a backlog
(DTX J-H, at 18-19); Morrow had one-month turnaround with some
backlogged requests remaining in November 1989 from March 1989
(DTX I-W, at 24-28); Penquin averaged 1 week to 2 months (DTX
I-Z, at 32); and Wiley averaged 2 to 4 weeks or 5 to 6 weeks
if backlogged (DTX I-T, at 17-19).
16 Evidence presented at trial shows fees Kinko's paid Harper
& Row for permission to copy its works. The royalties ranged
from 50 cents to $ 5.00 per copy cost to the student, before
copying costs (usually approximately 4 cents per page). (PX.
357). Those permissions which cost $ 5.00 per copy, rather than
50 cents, generally included a greater number of pages copied
-- 200 to 300 or 500 pages -- or perhaps an entire book. A cursory
analysis of the exhibit shows that the permissions price is
often a multiple of the number of copies requested, i.e. the
number of students supplied. For example, 40 copies of an excerpt
from the book Living With Change: The Semantics of Coping by
Wendell Johnson and Dorothy Moeller brought a permissions price
of $ 120.00. That particular request included 214 pages from
this book (there was no notation stating whether this was the
entire book). By comparison, 20 copies of an excerpt from History
of African Civilization by E. Jefferson Murphy brought a permissions
price of $ 80. This request included 400 pages, the entire work.
While there is no set formula evidenced by these or other examples,
there is also no evidence of exorbitant pricing nor discriminatory
Footnote 17 In a memorandum
dated September 1984, a copy of a Kinko's newsletter was sent
to Richard Rudick of Wiley. The newsletter promoted Kinko's
"On-Demand Publishing" service to college users and characterized
the traditional publishing industry as "ineffective." (DTX C-D).
In December 1984, the president of the Association of American
Publishers, Inc., wrote a letter to Paul Orfalea, president
of Kinko's Graphics Corporation, "express[ing] . . . concern
regarding misleading statements and omissions concerning copyright
matters in Kinko's promotional material." (PX 52). Specifically,
Townsend criticized Kinko's cavalier description of its responsibility
pursuant to the copyright law and the Classroom Guidelines,
and their inappropriate characterization of publishers as "uncooperative
or inefficient." Id.
For example, in August 1988, McGraw-Hill complained to Kinko's
about a 23-page excerpt copied from one of its books for a class
of 96 students. Kinko's paid McGraw-Hill $ 2,000.00 in settlement
of the dispute. Kurt Koenig, in a letter accompanying the check,
commented that McGraw-Hill's permissions department had "provide[d]
excellent service in the past." (PX. 62).
19 When the 1988 amendment of @ 205 (d) became effective March
1, 1989, the Berne Convention effectively eliminated the prior
recordation requirement. However, the public law which then
came into effect provides that "any cause of action arising
under title 17 . . . before [March 1, 1989] shall be governed
by the provisions of such title as in effect when the cause
of action arose." Pub. L. 100-568, @ 13(b) (1988) (emphasis
added). This public law reactivates the prior recordation requirement
for the instances in suit.
20 Kinko's Copyright and Professor Publishing Handbook ("Handbook")
provides that "[a] copyright notice and credit line should appear
on the first page of every copyrighted work reproduced in a
Professor Publishing packet, regardless of whether or not permission
was obtained or a royalty fee was required." Page 10. It is
questionable how seriously Kinko's took its own procedures since
this credit line appeared in none of the five packets produced
Footnote 21 In his capacity
as legal counsel to Kinko's, at trial Kurt Koenig was qualified
as an expert for the purpose of testifying on the issue of fair
use. He explained each of the four factors and his understanding
of their application. He testified at length on the company's
policy on fair use and his training of Kinko's employees. Tr.
330-541. However, Koenig admitted that, given a hypothetical
situation, he had no way of knowing the fair use analysis a
Kinko's employee would apply. Tr. 604.
22 This court awards a lesser amount of damages for the infringements
of Understanding Capitalism, A Lesser Life, and Group Dynamics:
The Psychology of Small Group Behavior because the copying was
Footnote 23 By analogy, Section
108 of the House Report, entitled "Reproduction by Libraries
and Archives," provides that: it would not be possible for a
non-profit institution, by means of contractual arrangements
with a commercial copying enterprise, to authorize the enterprise
to carry out copying and distribution functions that would be
exempt if conducted by the non-profit institution itself.
H.R. Rep. No. 94-1476, 94th Cong., 2d Sess. 74 (1976). This
comes as close to approximating the present circumstance as
anything plainly stated in the legislative history and supports
persuasively plaintiffs' argument that Congress did not intend
to permit Kinko's to act as an agent of the colleges to conduct
the volume of copying shown in this suit.
24 Other circuits have held that attorney's fees should not
be awarded as a matter of course in every case. See Annotation,
Award of attorney's fees under @@ 101 et seq. of Copyright Act,
17 USCS @ 505 -- Modern Cases, 85 ALR Fed. 435, @ 3[b], at 455