Michigan Document Services Case & Coursepacks

					Susan M. Kornfield (P41071)
					David G. Chardavoyne (P27034)
					Lydia Pallas Loren (P47644)
					Attorneys for Defendants-Appellants
					BODMAN, LONGLEY & DAHLING LLP
					110 Miller, Suite 300
					Ann Arbor, Michigan  48104
					(313) 761-3780

STATEMENT OF ISSUES 1

OVERVIEW 2

I. PROFESSORS AND STUDENTS EXERCISE THEIR FAIR
USE RIGHTS BY USING THE SERVICES OF COPY SHOPS 5

II. STATUTORY INTERPRETATION REQUIRES ANALYSIS OF
EACH WORD OF THE RELEVANT SECTION AND PROHIBITS
JUDICIAL AMENDMENT 8

A. Making Multiple Copies For Classroom Use
For Teaching Purposes is a Statutorily
Designated Fair Use 8

B. Congress Imposed No Restrictions Upon Who
Could Make the Fair Use Copies 10

IV. THE EXCERPTS WERE USED FOR NONPROFIT
EDUCATIONAL PURPOSES, AND WERE TRANSFORMED BY
THE PROFESSORS AND STUDENTS 11

A. The Phrase "Multiple Copies for Classroom
Use" Places the "Purpose and Character of
the Use" Focus on "Classroom Use" 12
B. The District Court Confused the Identity of
the Defendant With the Identity of the User 13

C.The District Court Did Not Understand That MDS
Prints Excerpts. MDS Does Not Publish Anything 14

1. MDS is a printer, not a publisher. The
parties are not competitors 14

2. MDS, like a printing press, is the means
by which fair users exercise their rights 16

D. The Use in This Case is Not Commercial 17

E. No Transformative Use is Required for the Making
of Multiple Copies For Classroom Use, Yet Academic
Use is Transformative 18

F. The Good Faith of Jim Smith is Unparalleled 19

A. The Amount Used Was Reasonable. The Supreme
Court Rejects Any Attempt to Use Formulas to
Analyze the Third Factor 22

B.The Court Should Apply What Congress Enacted 23

C. Congress Valued Fair Use as One of the Most
Important Limitations on the Rights of
Copyright Holders and Chose Not to Enact
Any Page-Counting Rules 25

D. The Guidelines Limit the Rights of Publishers.
If Used as Anything Other Than as a Safe Harbor,
They Are Unlawful 26

A. The Only Legally Relevant Markets are the Markets
for the Original Work and For Derivative Works 29

B. The Making of Multiple Copies For Classroom Use
is a Fair Use, Not a Derivative Work 31

C. The Publishers May Not Control the Fair Use
Market 32

D. "Lost" Permission Fees is Circular 33

E. Accepting Permission Fees as Relevant Will
Destroy Fair Use 35

F. The Willingness to Charge Theory is Incorrect,
Even if Adopted By the Second Circuit 41

G.Regardless of Who Has the Burden of Proof, the
Fourth Factor Favors Defendants 42

IX. THE DISTRICT COURT COMMITTED REVERSIBLE ERROR 47

A.The District Court Incorrectly Chose to Follow
"Kinko's" Over Binding Supreme Court Precedent 47
B. The District Court Failed to Apply
Summary Judgment Standards 49

American Geophysical Union v. Texaco, Inc.,
60 F.3d 913 (2d Cir. 1995) 41-42

Basic Books, Inc. v. Kinko's Graphics Corp.,
758 F.Supp. 1532 (S.D.N.Y. 1991) 47-48

Campbell v. Acuff-Rose, ___ U.S. ___,
114 S.Ct. 1164 (1994) passim

Community for Creative Non-Violence v. Reid,
490 U.S. 730, 109 S.Ct. 2166 (1989) 8, 28

Encyclopedia Britannica Educ. Corp. v. Crooks,
558 F. Supp. 1247 (W.D.N.Y. 1983) 43

Feist Publications, Inc. v. Rural Telephone
Service Co., 499 U.S. 340,
111 S.Ct. 1282 (1991) passim

First Comics, Inc. v. World Color Press, Inc.
884 F.2d 1033 (7th Cir. 1989), cert. denied,
493 U.S. 1075, 110 S.Ct. 1123 (1990) 14

Fogerty v. Fantasy, Inc., __ U.S. __,
114 S.Ct. 1023 (1994) 2, 9, 36-37, 47

Gulf Oil Corp. v. Copp Paving Co.,
419 U.S. 186, 95 S.Ct. 392 (1974) 24

Harper & Row Publishers, Inc. v. Nation
Enterprises, 471 U.S. 539,
105 S.Ct. 2218 (1985) passim

International Bhd. of Elec. Workers v. NLRB,
814 F.2d 697 (D.C. Cir. 1987) 24

Los Angeles News Service v. Tullo,
973 F.2d 791 (9th Cir. 1992) 15

MacMillan Co. v. King, 223 F. 862
(D. Mass. 1914) 43

Marcus v. Rowley, 695 F.2d 1171
(9th Cir. 1983) 43

National Rifle Ass'n of America v. Handgun
Control Fed'n, 15 F.3d 559 (6th Cir.),
cert. denied, 115 S.Ct. 71 (1994) 13, 21

Sony Corp. of America v. Universal City
Studios, Inc., 464 U.S. 417,
104 S.Ct. 774 (1984) passim

Stewart v. Abend, 495 U.S. 207,
110 S.Ct. 1750 (1990) 21, 30

Twentieth Century Music Corp. v. Aiken,
422 U.S. 151, 95 S.Ct. 2040 (1975) 9

West Virginia Univ. Hosps., Inc. v. Casey,
499 U.S. 83, 111 S.Ct. 1138 (1991) 24

Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962) 43

Williams & Wilkins Co. v. United States,
487 F.2d 1345, aff'd by an equally divided
court, 420 U.S. 376, 95 S.Ct. 1344 (1975) 34

Constitution

U.S. Const. art. I, §8, cl.82, 49

Statutes

[COPYRIGHT ACT OF 1976, AS AMENDED (1994)]

17 U.S.C. § 101 28-30

17 U.S.C. § 102(b) 28

17 U.S.C. § 106 35

17 U.S.C. § 107passim

1 Stat. 1242

Legislative History

H.R. Rep. No. 1476, 94th Cong., 2d Sess. (1976)
reprinted in 1976 U.S.C.C.A.N. 565910, 25-26

Other

David W. Stowe, Just Do It, Lingua Franca,
December 1995 at 3240

Relying on the Constitution, the Supreme Court has stated:

"The primary objective of copyright is not to reward the labor of authors, but '[t]o promote the Progress of Science and useful Arts.'" Fogerty v. Fantasy, Inc., __ U.S. __, 114 S.Ct. 1023, 1030 (1994).

"Making matters worse, these courts developed a new theory to justify the protection of factual compilations . . . the underlying notion was that copyright was a reward for the hard work that went into compiling facts." Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 352, 111 S.Ct. 1282, 1291 (1991) (rejecting 70 years of lower court copyright protection for books containing unoriginal selection and arrangement of facts).

II.STATUTORY INTERPRETATION REQUIRES ANALYSIS OF EACH WORD OF THE RELEVANT SECTION AND PROHIBITS JUDICIAL AMENDMENT.



A.Making Multiple Copies For Classroom Use For Teaching Purposes is a Statutorily Designated Fair Use.

Because this case involves the proper interpretation and application of a statute, we begin, as did the panel, with the language of §107. Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739, 109 S.Ct. 2166, 2172 (1989). Section 107 states:

"LIMITATIONS ON EXCLUSIVE RIGHTS: FAIR USE.

Notwithstanding the provisions of sections 106 and 106A, 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 purposes;

(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.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors." 17 U.S.C. §107 (emphasis added).

"Transformative use" focuses on a particular aspect of the first statutory factor. One way to see whether a new work merely supersedes the purpose of the original is to see whether the new work "adds something new, with a further purpose or different character ...." Campbell, at 1171. The more the use furthers the creation of new works, the more likely it is to be fair. Id.

However, as noted by the panel (Op. 11), the Supreme Court declared that the "obvious exception" to any focus on "transformative use" is the "straight reproduction of multiple copies for classroom use." Id. at 1171 n.11. Disregarding the Supreme Court's statement, the district court expected MDS not to copy the excerpts but somehow to "transform" or "rearrange" them, holding that such "failure" counted against MDS. (R.100 Order p.8, JA 3076).[ FN 11 ]

The panel, having kept its focus on the use of the excerpts themselves (and not just the copying), noted that there is a transformative value to the use of the works when the excerpts are used together in connection with classroom activities. Such use gives students exposure to a broad spectrum of opinion and information; enhances their learning experience by analyzing, comparing, and critiquing all of the materials selected by their professors, (R.61 Ex.A, Decl. Dawson ¶2-4, Lieberman ¶2-5, Kinder ¶2-3, JA 1231-39, 1251-52) (Op. 11-12); and permits the students to highlight portions, write comments in the margins, underline, and enhance their ability to comprehend and understand the material. (R.61 Ex.A, Decl. Squier ¶7, JA 1221).

F.The Good Faith of Jim Smith is Unparalleled.

Good faith of the alleged infringer is also a relevant inquiry in determining the "character of the use." See Harper & Row, 471 U.S. at 562-563. Defendant Jim Smith, the owner of MDS, undertook extraordinary efforts to understand the Copyright Act and fair use. (R.54 Decl. Smith, JA 1049-72). In the twenty years that Mr. Smith has been involved in or associated with the coursepack business, he has believed in good faith that the reproduction of excerpts of materials in connection with the production of coursepacks was fair use under the Copyright Act. (Id. at ¶43, JA 1070), and the publishers have conceded his subjective good faith belief in the propriety of his actions. He sought advice of copyright counsel in 1991 so as to better understand the legal environment for the making of multiple copies of materials at the request of professors for classroom use by students. (Id. at ¶22-25, JA 1059-61). Mr. Smith understood the publishers' legal position and after extensive investigation he concluded that it was wrong and that MDS's coursepacks were fair use.[ FN 12 ] He is in very good company. See Amici Curiae Brief of Concerned Professors of Copyright Law. Because he sought to educate others about their fair use rights, the publishers targeted him for suit. (See Defendants' Appeal Brief, p.9). Mr. Smith's good faith is unparalleled in copyright adjudication. The first factor is unquestionably in favor of MDS.

V.THE "NATURE OF THE WORK" INQUIRY REFLECTS THE CONSTITUTIONAL BASIS FOR COPYRIGHT.

The second statutory factor, the "nature of the work," contemplates a continuum on which all copyrightable works reside. At one end are primarily factual, albeit copyrightable works, such as encyclopedias. At the other end are purely fictional works, such as the movie "Star Wars." This continuum was recognized by the Supreme Court in Stewart v. Abend, 495 U.S. 207, 237-238, 110 S.Ct. 1750, 1768-69 (1990) (contrasting fictional short story with factual works), Harper & Row, 471 U.S. at 563-564 (contrasting a memoir with a published speech), Sony, 464 U.S. at 455 n.40 (contrasting motion pictures with news broadcasts), and Feist, 499 U.S. at 348-351 (contrasting creative works with factual compilations). Campbell, 114 S.Ct. at 1175. Works near the "core" of copyright protection are those of fiction and fantasy. See id.

The works at issue qualify for copyright protection; however, because they are "historical or educational and not fictional," (R.100 Order p.9, JA 3077), they are on the factual side of the "nature of the work" continuum. The scope of copyright protection for factual works is narrower than the scope of copyright protection for works of fiction or fantasy. See National Rifle Ass'n, 15 F.3d at 562. In a fair use analysis, the more the work is on the factual side of the continuum the more that work may be used and still be fair. See Harper & Row, 471 U.S. at 563-64.

The district court confused the standard for copyrightability with the "nature of the work" continuum and erroneously held that the second factor favored the publishers. Merely because a work is copyrightable does not mean that the second factor is in favor of the copyright holder. If it did, the second factor would have no meaning, since a work containing no copyrightable authorship is not protected by copyright law and can be used freely by anyone for any purpose. Feist, 499 U.S. at 364.

The second statutory factor also examines whether a work is published or unpublished. Here, all of these works were published, a factor in favor of fair use. Harper & Row, 471 U.S. at 564. Additionally, because fair use favors access, the scope of the fair use right is greater if the work is inaccessible. Id. at 553. ("If the work is 'out of print' and unavailable for purchase through normal channels, the user may have more justification for reproducing it."). Two of the works were taken out of print by plaintiff MacMillan (Hearing TR 66, 76-77, JA 3760, 3770-71).

Thus, in light of the considerations of the historical, analytical, and factual nature of the works, none of them being unpublished, and two of them being unavailable for purchase, the second factor favors MDS.

VI.A QUANTITATIVE AND QUALITATIVE ANALYSIS CANNOT BE SIMPLIFIED WITH BRIGHT LINE RULES, PAGE-COUNTING, OR PERCENTAGES.

A.The Amount Used Was Reasonable. The Supreme Court Rejects Any Attempt to Use Formulas to Analyze the Third Factor.

The third statutory factor examines the amount and substantiality of the work used. The analysis of this factor is set forth in Campbell, 114 S.Ct. 1164. First, a court must refer back to the first statutory factor, because the extent of permissible copying varies with the purpose and character of the use, id. at 1175, and the extent of permissible copying may even include using the "heart" of a work. Id. at 1175-77. Second, where the use is a type that the courts have typically found to be fair, a greater amount of the copyrighted work can be used and be fair. See id. Third, this factor must be analyzed without reference to any rigid formula, because "the [t]ask is not to be simplified with bright line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis." Id. at 1170. The Court "emphasized the need for a 'sensitive balancing of interests'" and "noted that Congress has 'eschewed a rigid, bright-line approach to fair use' .... " Id. at 1174 (quoting Sony, 464 U.S. at 455 n.40, 449 n.31).

In this case, only so much was copied as was necessary for the purpose for which they were used -- teaching (R.61 Ex.A, Decl. Dawson ¶4, Lieberman ¶5, Kinder ¶3, JA 1233, 1238-39, 1252) -- and there was no "heart" of these educational works. Id. The excerpts were "truly 'excerpts,' and do not purport to be replacements for the original works." (R.100 Order p.9, JA 3077). Indeed, the publishers have lost no book sales.

The district court erred in analyzing the third factor by creating a new standard for "amount and substantiality" and by disregarding the facts in the record. The court concluded that MDS copied too much because the excerpts chosen by the professors were "not insubstantial or incidental," (R.100 Order p.9, JA 3077),[ FN 13 ] criteria based upon a property view of copyright and found nowhere in the law. The court did not engage in a "sensitive balancing," or a "rule of reason."

B.The Court Should Apply What Congress Enacted.

While the publishers do not contend that too much of any work was excerpted by the professors or used by the students (Ex.A, 18 19), they contend that MDS copied "too much" when it made the copies requested by the users. Their sole support is the legislative history of the Copyright Act, not the Act itself. Their contention is fatally flawed for several reasons. First, legislative history may not be used to amend the plain language of a statute. Second, the legislative history of the Copyright Act, if it were to be used by the Court, only supports MDS's position in this case. Third, the classroom guidelines were created as a limitation on the rights of publishers to sue educators, they were not created as a limitation upon fair use. Fourth, the guidelines contain restrictions inconsistent with fair use adjudication.

As the panel recognized (Op. 10), a court "may not permit the statutory text enacted by both Houses of Congress 'to be expanded or contracted by the statements of individual legislators or committees during the course of the enactment process.' West Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 98-99, 111 S.Ct. 1138 (1991)."

"[A] committee report cannot serve as an independent statutory source having the force of law. . . .

'[I]t [is] plainly wrong as a general matter ... to regard committee reports as drafted more meticulously and as reflecting the congressional will more accurately than the statutory text itself. Committee reports, we remind, do not embody the law. Congress, as Judge [now Justice] Scalia recently noted, votes on the statutory words, not on different expressions packaged in committee reports.'"

International Bhd. of Elec. Workers v. NLRB, 814 F.2d 697, 712 (D.C. Cir. 1987) (emphasis original) (footnotes and citations omitted).

Important Limitations on the Rights of Copyright

Holders and Chose Not to Enact Any Page-Counting Rules.

"[b]eyond a very broad statutory explanation of what fair use is and some of the criteria applicable to it, the courts must be free to adapt the doctrine to particular situations on a case-by-case basis." Id. at 66.

The guidelines relied upon by the publishers were drawn up by an ad hoc group of industry representatives to provide "greater protection for teachers" from lawsuits by publishers. H.R. Rep. p.72 (1976). The guidelines identify circumstances under which educators will not be sued -- a safe harbor. Id. at 67, 72. Representatives of the American Association of University Professors and the American Association of Law Schools strongly objected to including the guidelines in the committee report, fearing they would be read as a limitation upon fair use. Id. at 72. The committee reassured educators that the guidelines were only a minimum standard of fair use, and that uses could fall outside the rigid criteria of the guidelines and be fair. Id. With these express caveats, the safe harbor guidelines were included in the committee's report.[ FN 14 ]

Consistent with their limited purpose, the guidelines themselves state that they are "not intended to limit the types of copying permitted under the standards of fair use." Id. at 68. They limit the rights of publishers to sue educators. They are thus not relevant to this case.

While both the committee report and the guidelines themselves state that the guidelines are only a minimum standard of educational fair use, the publishers interpret the word "minimum" to mean "the extent of fair use for purposes of education." (Ex.A., 18). That statement, false as a matter of law and legislative history, was appropriately disregarded by the panel.[ FN 15 ]

If used as anything other than a "safe harbor," the limitations in the guidelines are inconsistent with the Copyright Act. For example, where both Congress and the Supreme Court have rejected any bright-line, word-counting approach, the guidelines specify 250 words here, 1000 words there, as the measurement of use within the "safe harbor." The guidelines contain arbitrary provisions penalizing professors who plan their lessons ahead of time (because "spontaneity" is a requirement of the guidelines), who use the same selection twice, or who hand out materials that are bound together for convenience. Nothing in the Copyright Act, the legislative history, or Supreme Court case law makes these considerations relevant to fair use.[ FN 16 ]

Since the guidelines purport to prohibit anthologies, the publishers call coursepacks "anthologies" and declare them unlawful. These coursepacks, however, are not anthologies because they do not meet the statutory requirements for being an anthology; specifically, there is no testimony that there was any authorship or originality in the selection and arrangement of the course handouts (they are typically arranged simply according to the class syllabus). 17 U.S.C. §101 (definition of "collective work"). The testimony is to the contrary -- the excerpts were selected for their theories, ideas, and concepts. See 17 U.S.C. §102(b). Nothing in the Copyright Act transforms the semester's reading assignments into infringement by binding them together.

A fair use analysis "'involves a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other hand.'" (Op. 10 (quoting Sony, 464 U.S. at 429)). It may be tempting to seek guidance from something entitled "guidelines" in an area of law that requires the difficult balancing of many factors, but the Copyright Act and the Supreme Court reject bright lines and mandate a case-by-case analysis. If used as anything other than a safe harbor, the guidelines preclude a court from engaging in such an analysis.

The publishers are determined to get from this Court what Congress refused to give them: bright lines and page-counting. Using quotas, however, would be an abdication of a court's responsibility to engage in the sometimes difficult balancing required by copyright law. "Strict adherence to the language and structure of the [Copyright] Act is particularly appropriate where, as here, a statute is the result of a series of carefully crafted compromises." Community for Creative Non-Violence, 490 U.S. at 748 n.14.

VII.NO COPYRIGHT OWNER MAY MEET THE REQUIREMENTS OF THE FOURTH FACTOR BY SETTING UP A SYSTEM TO CHARGE FOR FAIR USE.

A. The Only Legally Relevant Markets are the Markets For the Original Work and For Derivative Works.

The fourth statutory fair use factor is "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. §107(4).[ FN 17 ] Only two types of harm, however, are legally cognizable under this factor: harm to the market for the original work and harm to the market for derivative works. Campbell, 114 S.Ct. at 1177-78. To prevail, the publishers must show either that they have lost sales of the underlying works, or that they have lost licensing revenues from derivative works. The publishers have failed to show any harm to either market.

Notwithstanding extensive discovery, the publishers failed to show that the making of multiple copies for classroom use of the excerpts caused the lost sale of even one copy of one work. They argue only that they were harmed by not receiving the copying fees they were willing to charge. (Ex.A, 23-24).

The publishers also failed to show that the making of multiple copies for classroom use caused harm to the market for any derivative works (and failed even to allege such harm). A "derivative work" is created when an original work is transformed into a different work by adding new authorship. 17 U.S.C. §101. Supreme Court cases illustrate the type of harm to markets for derivative works cognizable in a fourth factor harm analysis. In Harper & Row, 471 U.S. 539, the market injured by the publication of portions of a stolen, unpublished manuscript was the market for serialization rights. In Stewart v. Abend, 495 U.S. 207, the market injured was for a motion picture version of a book. In Campbell, 114 S.Ct. 1164, the relevant market was a nonparody, "rap" adaptation of a musical work.

The publishers failed to allege or prove injury to any market for serializations, motion pictures, musical arrangements, foreign translations, condensations, or any other derivative work market. See 17 U.S.C. §101. The panel correctly noted that "[t]he plaintiffs did not demonstrate that the coursepacks affected the market for the original copyrighted works or the potential market for derivative works, such as published anthologies..." (Op. 18).[ FN 18 ] Even the cases on which the publishers rely recognize entitlement to licensing fees only for harm to the market for derivative works. The publishers cannot prevail on this factor. To the contrary, the uncontradicted evidence shows that the inclusion of excerpts in coursepacks actually increases the sale of books. Some students purchase more books by the author of the excerpted work, some purchase more books on the subject discussed in the excerpt, and some purchase the original work. (R.61 Ex.A, Decl. Wellman ¶3, Squier ¶4, Mandl ¶3, Liken ¶4, JA 1208, 1218, 1224, 1260). This factor is unquestionably in MDS's favor.

B. The Making of Multiple Copies For Classroom Use is a Fair Use, Not a Derivative Work.

With all of the evidence on the fourth factor in favor of MDS, the publishers offer the proposition that copies of course handouts, when delivered with other materials, lose their identity as course handouts and magically become a derivative work. They rely on four devices. First, they call the bound materials anthologies (since anthologies are a type of derivative work). Second, they charge for fair use and call the copying fees they wish to assess "licensing fees" or "permission fees," the same words they use for true derivative works. Third, they place their fair use permissions department into their real departments for licensing derivative works (or outsource it to other business entities like the Copyright Clearance Center), and call their fees "longstanding."[ FN 19 ] Fourth, they call the excerpts "potential uses" of a work and claim entitlement to control all potential uses.

The panel knew the difference between a derivative work and a stack of course handouts, and found that the plaintiffs failed to show any harm to the market for derivative works. (Op. 18). This mirrors the Supreme Court's recognition that the straight photocopying of multiple copies for classroom use does not involve the addition of new authorship, Campbell, 114 S.Ct. at 1171 n.11, and could thus never meet the definition of a derivative work.

The panel dissent, however, accepted the characterization of excerpts as "potential uses," which would pave the way for the publishers to control the making of multiple copies for classroom use. This confuses the Supreme Court's reference to the "potential market" (i.e. derivative works) with the publishers' language of "potential uses." The Copyright Act does not protect all "potential uses," since that phrase includes all fair uses. The panel recognized that licensing revenues are relevant to fourth factor harm, but only for the legally relevant markets.

C. The Publishers May Not Control the Fair Use Market.

A copyright owner does not have the right to control all uses of its work, even if it is willing to charge for such uses: "All reproductions of the work, however, are not within the exclusive domain of the copyright owner...." Sony, 464 U.S. at 433. If a use is not within the domain of the copyright owner, there is no right to charge a permission fee for that use. "Any individual may reproduce a copyrighted work for a 'fair use'; the copyright owner does not possess the exclusive right to such a use." Id.

In Campbell, the Supreme Court remanded for evidence on the derivative work market -- the non-parody rap market. Id. at 1177-79. The Court would not consider any claim for "lost" revenues from the fair use market (the parody market), and stated that any consideration of the harm to the market for the claimed fair use was error. Id. at 1178. The plaintiffs want this Court to do just that -- consider the "harm" to the "market" for the claimed fair use. The Court may not consider fees the publishers wish to charge for the making of multiple copies for classroom use without committing reversible error.

D."Lost" Permission Fees is Circular.

The publishers' greatest accomplishment below was convincing the district court that since they were not paid the fees they demanded, they were legally injured. This was error because in Campbell the Court made clear that the permission market for the claimed fair use must not be considered, and was error because the claim of lost revenues for such markets is illogical. The panel recognized the inherent circularity in the publishers' argument:

"Evidence of lost permission fees does not bear on market effect. The right to permission fees is precisely what is at issue here. It is circular to argue that a use is unfair, and a fee therefore required, on the basis that the publisher is otherwise deprived of a fee. The publishers must demonstrate a likelihood that MDS's use of the excerpts replaces or affects the value of the copyrighted works, not just that MDS's failure to pay fees causes a loss of fees, to which the plaintiffs may or may not have been entitled in the first instance." (Op. 18).

"It is wrong to measure the detriment to plaintiff by loss of presumed royalty income -- a standard which necessarily assumes that plaintiff had a right to issue licenses. That would be true, of course, only if it were first decided that the defendant's practices did not constitute 'fair use.' In determining whether the company has been sufficiently hurt to cause these practices to become 'unfair,' one cannot assume at the start the merit of the plaintiff's position, i.e., that plaintiff had the right to license. That conclusion results only if it is first determined that the photocopying is 'unfair.'" Williams & Wilkins Co. v. United States, 487 F.2d 1345, 1357 n.19, aff'd by an equally divided court, 420 U.S. 376, 95 S.Ct. 1344 (1975).

"While the law has never recognized an author's right to absolute control of his work, the natural tendency of legal rights to express themselves in absolute terms to the exclusion of all else is particularly pronounced in the history of the constitutionally sanctioned monopolies of the copyright and the patent." Sony, 464 U.S. at 432-433 and n.13. (emphasis added).

"[the use of the fruit of another's labor] is not 'some unforeseen byproduct of a statutory scheme.' It is, rather, 'the essence of copyright,' and a constitutional requirement. The primary objective of copyright is not to reward the labor of authors, but '[t]o promote the Progress of Science and useful Arts.'" Feist, 499 U.S. at 349 (citations omitted).

"[b]ecause copyright law ultimately serves the purpose of enriching the general public through access to creative works, it is peculiarly important that the law's boundaries be demarcated as clearly as possible." Id. at 1025.

Footnotes

Footnote 2 The record in this case also contains over 500 declarations from professors and students about how they use their copies of excerpts in connection with their coursework. (R.69 Ex.B, Ex.C; R.61 Ex.A; R.62-R.64).

Footnote 3 Prof. Dawson assigned nine books and 29 excerpts for students enrolled in his course on "Black Americans and the Political System." Prof. Dawson stated that Black politics is a recent discipline; to understand it, students must understand aspects of psychology, sociology, anthropology, economics, philosophy, law, political science, and other disciplines. Prof. Dawson could not find everything his students needed in a textbook and used excerpts in addition to the nine required books to provide the theoretical framework and facts needed to develop students' critical thinking skills, and to allow them to compare various points of view. (R.61 Ex.A., Decl. Dawson 2-4, JA 1231-35).

Footnote 4 The professors received no compensation for bringing their materials to MDS. (R.100 Order p.2, JA 3070); (R.61 Ex.A., Decl. Dawson 5, Kinder 4, Lieberman 6, JA 1233-34, 1239, 1253).

Footnote 5 The reserve reading room does not facilitate access to the course materials. Library materials are often torn, cut out, or stolen. (R.61 Ex.A, Decl. Squier 7, JA 1220-21; R.69 Ex.B, Decl. Barrows Supp. Comments p.2, JA 2610). Even if the material has not been mutilated, students must make repeated trips until the reading materials are available, and then the materials can be checked out for only a few hours. The students must waste their time making their own personal copy, at twice the price charged by MDS, with a poorer quality copy than they would have received at MDS, resulting in their being less prepared and informed. (See R.61 Ex.A, Decl. Squier 5-7, Liken 5-8, and Mandl 4-6, JA 1219-21, 1224-25, 1260-62). Some libraries even refuse to allow materials to be placed on reserve due to the "intimidation tactics of publishers." (R.61 Ex.A, Decl. Lofland 5, JA 1285).

Footnote 6 Indeed, the panel dissent began its analysis of this case by focusing on the factor dealing with economic issues. (Op. 21).

Footnote 7 Congress knew about photocopying technology and of outside service providers who copied material at the request of others, H.R. Rep. 1476, 94th Cong., 2d Sess. (1976), p.66. The wording of 107 "is mainly intended to make clear that the doctrine has as much application to photocopying...as to older forms of use." Id.

Footnote 8 The plaintiffs also try to compare this case to Los Angeles News Service v. Tullo, 973 F.2d 791 (9th Cir. 1992), where the defendant systematically recorded programs in the hope that some day he would sell the recordings to "interested individuals and businesses." In Tullo, there were no fair users and no requests for services. The MDS case is completely different. The professors and students are central to the use in this case.

Footnote 9 The panel dissent incorrectly equated MDS's services with the publisher of The Nation magazine, instead of the company that performed the ministerial act of printing the magazine. The publisher of The Nation, and not the printer, created and selected the content, publicly distributed copies, and intended to profit from its authorship activities. See Harper & Row, 471 U.S. 539. MDS engaged in no such activities.

Footnote 10 The panel found that the commercial aspect of charging for a service did not outweigh the educational use, and thus the first factor was in favor of MDS. (Op. 12-13). Even if MDS "used" the work within the meaning of 17 U.S.C. 107(1), this Court cannot find MDS to be an infringer without committing the same error it made in Campbell -- making commerciality dispositive.

Footnote 11 The court did not just ignore this important point from Campbell, a unanimous fair use decision that had been handed down by the Supreme Court a few weeks earlier, but ignored the entire opinion, even though the parties had separately briefed it.

Footnote 12 Mr. Smith spent hundreds of hours in the University of Michigan Law Library reading cases, treatises, and law review articles on copyright and fair use. He read the sources cited in the Kinko's decision, and read several hundred recent copyright cases. He discussed copyright and fair use with copyshop owners, authors, professors, lawyers (copyright experts and nonexperts), students, and copyright scholars. (R.54 Decl. Smith, JA 1049-72).

Footnote 13 The largest excerpt copied was 20% of the work. Plaintiffs claim that MDS copied "30%" of the work by Ms. Weiss, but improperly included in their figure pages in which they do not own copyright (pages of public domain data, a two-page poem by Langston Hughes, photographs, cartoons, direct quotations, and substantial paraphrasing of third-party materials). (See R.41 Weiss excerpt, JA 381-428). This "20% vs. 30%" debate shows the danger of the page-counting approach of the publishers, instead of the Supreme Court approach: examining the amount used in relation to the purpose of the use. Campbell, 114 S.Ct. at 1175.

Footnote 14 August W. Steinhilber, a member of the ad hoc committee that negotiated the guidelines, testified that the publishers are attempting to use the guidelines to limit fair use -- contrary to the purpose for which they were created, which was as a safe harbor for educators. (R.54 Steinhilber Decl., JA 1077-81).

Footnote 15 As with the guidelines, the Court should review carefully the publishers' references to the "legislative history." Many of the statements quoted were actually made by publishing industry representatives, not members of Congress.

Footnote 16 The publishers, ever on the lookout for support for their word-counting theory, cite Harper & Row, 471 U.S. 539, and declare that the Supreme Court has determined that the use of 300 words is an infringement. On the contrary, Harper & Row held that if one acquires a stolen manuscript, publishes key portions for the purpose of "scooping" the copyright owner's valuable right of first publication, and causes the copyright owner to lose a valuable contract right, the claim of fair use will likely be rejected.

Footnote 17 While previously described as the "most important factor," the Supreme Court's analysis in Campbell, 114 S.Ct. 1164, does not place such emphasis on this factor. It holds, instead, that all of the factors are to be considered and weighed together. Id.

Footnote 18 Thus, even if this Court found the coursepacks to be anthologies, there is no evidence of harm to the market for published anthologies marketed to the public.

Footnote 19 The CCC system for charging for fair use, actually called the "Academic Permissions System," did not exist until the Kinko's court adopted the publishers' new theory for market harm in 1991. Feist, 111 S. Ct. at 1291, rejects the adoption of such "new theories" to control uses of materials that the public has a right to use.

Footnote 20 The brief purporting to represent authors has no statements from authors, but merely assertions from authors' agents. The representatives do not speak to the reasons for which authors write: to make greater contributions to their disciplines, to receive feedback from their colleagues, and to enhance their professional reputations and career opportunities. (R.61 Ex.A, Decl. Dawson 7, Kinder 6, Lieberman 8, JA 1234-41, 1253-54). The agents participate as brokers of financial deals, not as creators of new works of authorship, or as users of such works.

Footnote 21 While the court erred as a matter of law in finding the publishers' permission system relevant at all, it also erred, as a matter of fact, when it found the system "clear and relatively simple." (R.100 Order p.4, JA 3072). Defendants submitted hundreds of affidavits showing that the publishers' system is a disaster: requests are ignored and not responded to in a timely manner, fees assessed are unreasonable and unrelated to the number of copies made, persons requesting permission are treated unequally, permission for the same work must be repeatedly requested semester after semester, and unreasonable and unnecessary conditions are attached to the granting of permission. (R.54 Decl. Ternes 8, JA 1045, R.61 Ex.A and Ex.P, JA 1203-88, 1443-46). The scheme has driven companies out of business (R.54 Decl. Ternes 7-9, JA 1044-45), and even Kinko's -- the company most likely to have the economies of scale necessary to comply with even an unreasonable system -- got out of the business of reproducing coursepacks. (Hearing TR 43, JA 3737). Thus, at a minimum, a material issue of fact exists as to the workability of publishers' licensing scheme.

Footnote 22 The Second Circuit has previously created economic doctrine as a substitute for copyright law, extending the protections of copyright owners beyond their constitutional limits. The Second Circuit was the source of the "sweat of the brow" doctrine unanimously rejected in Feist, 114 S.Ct. at 1291-95.

Footnote 23 The cases on which the publishers rely as support for their contention that courts have never upheld fair use in the educational environment, in fact, support MDS. Those cases show that when the copyright owner demonstrates that a use harms the market for the original work or for derivative works, the user may not prevail on the fourth factor. Marcus v. Rowley, 695 F.2d 1171 (9th Cir. 1983), Encyclopedia Britannica Educ. Corp. v. Crooks, 558 F. Supp. 1247 (W.D.N.Y. 1983), Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962), and MacMillan Co. v. King, 223 F. 862 (D. Mass. 1914). They do not stand for the proposition that one may not make multiple copies for classroom use.

Footnote 24 For example, "One suspects that the profitability of at least some of the other books at issue here is marginal;" and "it seems likely that some academics will find it harder to get their books published;" and "I assume that these competitors can still perform the copying on a more cost-effective basis than the professors or students can." (Op. 26, 29) (emphasis added).

Footnote 25 Amicus Brief of the Association of American Publishers, available in LEXIS "Genfed"/"Briefs."