Brief filed by the Association of American Publishers

     CORPORATE DISCLOSURE STATEMENT

The following chart sets forth, with respect to those plaintiffs to

whom Rule 26.1 of the Federal Rules of Appellate Procedure is

applicable, any parent companies, subsidiaries, affiliates or

successors in interest that have issued shares to the public.

                        Parent Companies, Subsidiaries,

                        Affiliates or Successors in

                        Interest That Have Issued

Plaintiff               Shares to the Public

Academic Press          General Cinema Corporation;

                        The Neiman-Marcus Group, Inc.

Alan R. Liss, Inc.      John Wiley & Sons, Inc.

Aspen Publishers, Inc.  Wolters Kluwer N.V.

Birkhauser Boston       Springer Verlag New York, Inc.

Butterworth & Co.       Elsevier N.V., Amsterdam;

(Publishers) Ltd.       Reed International P.L.C., London 

CRC Press, Inc.         The Times Mirror Company

The C.V. Mosby          The Times Mirror Company

Company

Elsevier Science        Elsevier N.V., Amsterdam;

Publishing Co., Inc.    Reed International P.L.C., London

Grune & Stratton, Inc.  W.B. Saunders Company;

                        General Cinema Corporation;

                        The Neiman-Marcus Group, Inc.

Harcourt Brace          General Cinema Corporation;

Jovanovich Limited      The Neiman-Marcus Group, Inc.

Human Sciences Press    Plenum Publishing Corp.

J. Schweitzer Verlag    H. Luchterhand Verlag GmbH & Co.;

                        Wolters Kluwer N.V., Netherlands

John Wiley & Sons       John Wiley & Sons, Inc.;

Limited                 Wiley Heyden Ltd.

Little, Brown &         Time, Inc.; Time Warner, Inc.

Company

Pergamon Press, Ltd.    Elsevier N.V., Amsterdam;

                        Reed International P.L.C., London

Raven Press             Wolters Kluwer N.V.

Scripta Technica, Inc.  John Wiley & Sons, Inc.

Van Nostrand Reinhold   Thomson Publishing Corporation

VCH Publishers, Inc.    VCH Verlagsgesellschaft GmbH,

                        Weinheim, Germany

VNU Business            Pittway Corp.

Publications Inc.

Walter De Gruyter, Inc. Walter De Gruyter & Company,

                        Berlin, Germany

Warren Gorham &

Lamont                  Research Institute of America, Inc.;

                        The Thomson Publishing Corporation

Williams & Wilkins      Waverly, Inc.

Wolters Kluwer          Wolters Kluwer N.V.

Academic Publishers

B.V.

                    Table of Contents

                                                           Page

Corporate Disclosure Statement . . . . . . . . . . .          i

Table of Authorities . . . . . . . . . . . . . . . .       viii

Guide to Abbreviations . . . . . . . . . . . . . .        xviii

PRELIMINARY STATEMENT. . . . . . . . . . . . . . . .          1

QUESTIONS PRESENTED AND

QUESTIONS NOT PRESENTED. . . . . . . . . . . . . . .          5

STATEMENT OF THE CASE. . . . . . . . . . . . . . . .          7

      A.   The Litigants and Interested Third Parties         7

      B.   The Fair Use Proceedings and Trial Record          8

      C.   The Decisions Below . . . . . . . . . . .          9

STATEMENT OF FACTS . . . . . . . . . . . . . . . . .         10

      A.   Texaco Engages In Its Research Activities

           (An Integral Part of Which Is the Systematic

           Photocopying of Journal Articles) for the Sole

           Purpose of Making a Profit. . . . . . . .         10

      B.   The Vital Economic Importance to Texaco of

           Its Researchers Having Timely Access to

           Journal Articles. . . . . . . . . . . . .         11

      C.   The Methods by Which Research Personnel at

           Texaco and Other For-Profit Corporations

           Regularly Learn About and Obtain

           Photocopies of Entire Journal Articles. .         12

                Circulation of Journals. . . . . . .         12

                Literature Searches. . . . . . . . .         13

                Other Methods. . . . . . . . . . . .         13

                Library Copying. . . . . . . . . . .         14

      D.   The Importance to Research Personnel of

           Speedy Circulation of Journals and How

           Photocopying Reduces the Number of

           Subscriptions Needed to Maintain Speedy

           Circulation . . . . . . . . . . . . . . .         14

      E.   Dr. Chickering's Representative

           Photocopying. . . . . . . . . . . . . . .         16

      F.   The Economic Benefits to Texaco and Other

           For-Profit Industrial Corporations of Research

           Scientists Using Photocopy Duplicates

           in Their Work . . . . . . . . . . . . . .         17

      G.   There Are a Number of Readily Available

           Ways to Provide Researchers with Access to

           Journal Articles Other Than Unauthorized

           Photocopying. . . . . . . . . . . . . . .         18

      H.   Unauthorized Photocopies Supersede Original

           Articles and Authorized Photocopies . . .         19

      I.   Academic Press and Its Important Role in the

           Dissemination of Scientific Information .         21

      J.   The Economic and Other Benefits to Scientist

           Authors From Having Articles Published in

           Journals. . . . . . . . . . . . . . . . .         24

      K.   The Copyright Clearance Center and the

           Success of Its Photocopying Authorization

           Services. . . . . . . . . . . . . . . . .         25

           1.   The Successful Development of CCC's

                Photocopying Authorization Services.         25

           2.   The Substantial and Growing

                Photocopying Authorizations Market .         30

      L.   Bell Labs' Successful Program Since 1978 of

           Providing Journal Articles to its

           Research Personnel Without Unauthorized

           Photocopying. . . . . . . . . . . . . . .         31

      M.   Texaco's Unauthorized Photocopying Is Not a

           Reasonable and Customary Practice . . . .         32

      N.   The Adverse Economic Effects on Copyright

           Owners If the Widespread Photocopying

           Practices Exemplified by Texaco Were

           Permitted as Fair Use . . . . . . . . . .         34

ARGUMENT . . . . . . . . . . . . . . . . . . . . . .         36

I.   THE PROPER STANDARD OF APPELLATE

      REVIEW AND TEXACO'S ERRONEOUS

      VERSION OF THE FACTS . . . . . . . . . . . . .         36

      A.   The Proper Standard of Appellate Review Is

           Customary Deference to the Factual Findings

           of the Trial Court in Accordance with the

           "Clearly Erroneous" Rule and De Novo

           Review of Its Conclusion Concerning Fair Use .    36

      B.   Texaco Presents an Erroneous Version of the

           Facts . . . . . . . . . . . . . . . . . .         38

           1.   Profit-Motivated Commercial Purpose.         39

           2.   Texaco's Superseding, Non-

                transformative Multiplication of Copies

                of Original Journal Articles . . . .         40

           3.   There are a Number of Reasonable and

                Practical Alternatives to Free

                Unauthorized Photocopying of CCC-

                Registered Journal Articles. . . . .         40

           4.   Harm, Including Lost Subscription Sales      41

           5.   Reasonable and Customary Practices .         42

II.  STATUTORY FOUR FACTOR ANALYSIS AND

      RELEVANT EQUITABLE CONSIDERATIONS

      COMPEL REJECTION OF TEXACO'S FAIR USE

      DEFENSE. . . . . . . . . . . . . . . . . . . .         42

      A.   The First Factor. . . . . . . . . . . . .         45

           1.   A Commercial Use For a Profit-

                Motivated Purpose Disfavors Fair Use         45

           2.   A For-Profit Research Use or Purpose

                Does Not Favor Fair Use. . . . . . .         47

           3.   Commercial Use in First Factor

                Analysis Does Not Require The Sale or

                Distribution of Copies . . . . . . .         51

           4.   Sony and Williams & Wilkins Do Not

                Support Texaco's Position. . . . . .         52

           5.   If, As Is Doubtful, Legislative History

                Concerning Section 108 Has Any

                Bearing On Fair Use Under Section

                107, It Disfavors Fair Use In This Case      53

           6.   Texaco's Photocopying Is A Non-

                Transformative, Non-Productive,

                Superseding Use That Very Strongly

                Weighs Against Fair Use. . . . . . .         54

           7.   Texaco's Position Is Not Supported By

                Any Claimed "Reasonable and

                Customary Practice" of For-Profit

                Research-Oriented Companies To

                Engage In Free In-House Photocopying

                Of Copyrighted Journal Articles. . .         56

      B.   The Second Factor . . . . . . . . . . . .         57

      C.   The Third Factor. . . . . . . . . . . . .         59

      D.   The Fourth Factor . . . . . . . . . . . .         62

           1.   Judge Leval's Determinations Are In

                Full Accord With Well-Established

                Principles Of Fourth Factor Analysis         62

                a.    Loss of Additional Subscription

                      Sales. . . . . . . . . . . . .         65

                b.    Loss of Licensing Revenues . .         65

           2.   Texaco's Many Contentions Concerning

                The Fourth Factor And The CCC Are

                Entirely Without Merit . . . . . . .         68

                a.    Scope of the Harm. . . . . . .         68

                b.    Potential Loss of Additional

                      Subscription Sales . . . . . .         68

                c.    Loss of Licensing Revenues . .         69

                d.    The CCC. . . . . . . . . . . .         71

CONCLUSION . . . . . . . . . . . . . . . . . . . . .         72

STATUTORY APPENDIX . . . . . . . . . . . . . . . . .         A1

                  Table of Authorities

Cases                                               Page

                 Guide to Abbreviations

Abbreviation        Reference

A ______            Appendix, with referenced page number.

LA 73-142           Judge Leval's Opinion and Order rejecting

                    Texaco's fair use defense, as amended and 

                    supplemented, with referenced page

                    number in Appendix.

LA 143-149          Judge Leval's Order of Certification under

                    28 U.S.C. 1292(b), with referenced page

                    number in Appendix.

T Br. _____         Brief of defendant-appellant Texaco Inc.,

                    with referenced page number.

AA Br. _____        Amicus Curiae brief on behalf of the

                    American Automobile Manufacturers

                    Association and the Chemical

                    Manufacturers Association, with

                    referenced page number.

AL Br. _____        Amicus Curiae brief on behalf of the

                    American Library Association, with

                    referenced page number.

AR Br. _____        Amicus Curiae brief on behalf of the

                    Association of Research Libraries,

                    American Association of Law Libraries,

                    Special Libraries Association, Medical

                    Library Association, American Council of

                    Learned Societies, National Humanities

                    Alliance and Association of Academic

                    Health Sciences Library Directors, with

                    referenced page number.

Academic Press      Academic Press, Inc., one of the plaintiffs

                    and the publisher of the Journal of

                    Catalysis.

Catalysis           Journal of Catalysis

CCC                 Copyright Clearance Center.

Texaco              Defendant-Appellant Texaco Inc.

Pollart Cross       Cross Examination Testimony of Dale F.

                    Pollart, included in the trial record, with

                    referenced page number.

PX ___              Plaintiffs' Trial Exhibit Number, included

                    in the trial record.

TX ___              Texaco's Trial Exhibit Number, included

                    in the trial record.

              BRIEF OF PLAINTIFFS-APPELLEES

                  PRELIMINARY STATEMENT

      On a massive trial record studied with great care, Judge

Leval's extensive findings of fact fully support his legal

conclusion that there is no basis and justification for allowing

Texaco as part of its profit-motivated research activities to engage

in free unauthorized photocopying of entire copyrighted articles

published in scientific and technical journals registered with the

Copyright Clearance Center ("CCC").  His decision sets forth

with great clarity the many affirmative factual and legal reasons

in this case for upholding the copyright owners' exclusive rights

granted in Section 106 of the Copyright Act to reproduce or

authorize the reproduction of the copyrighted works, and for not

permitting those rights to be defeated by the "privilege" or

"limited exception" to those rights contained in the fair use

provisions of Section 107 of the Act.

      Judge Leval engages in sound analysis of the four statutory

guidelines of Section 107 and other relevant considerations in

reaching the conclusion that the limited fair use privilege should

not be extended to the practices of Dr. Chickering, "a typical

Texaco researcher," in photocopying entire copyrighted journal

articles as part of his research work for Texaco.  Judge Leval

followed a fact-intensive and scholarly approach in deciding that

the first fair use factor strongly favors plaintiffs because of

Texaco's superseding use of the original copyrighted work for a

profit-making commercial purpose; certain aspects of the second

factor favor plaintiffs although that factor tips in favor of Texaco

because of the factual content of the copyrighted works; the third

factor clearly favors plaintiffs because entire copyrighted works

are being photocopied; and the fourth factor powerfully favors

plaintiffs because journal publishers would suffer great immediate

and future economic harm by the loss of substantial actual and

future revenues if Texaco and other similar for-profit research-

oriented companies were permitted to engage in unauthorized free

in-house photocopying of entire copyrighted journal articles.

      Judge Leval also found other relevant considerations that

strongly favor plaintiffs, particularly the success and efficacy of

the CCC, which was formed in 1978 by publishers, authors and

users in response to Congress's recommendation that an efficient

mechanism be established to license photocopying.  As Judge

Leval found, the CCC is in large part responsible for creating an

actual photocopy licensing market producing millions of dollars

of revenues, that enables for-profit research-oriented companies to

obtain advance authorization to photocopy copyrighted articles in

CCC-registered journals using convenient and reasonably priced

procedures.

      Texaco criticizes many aspects of Judge Leval's decision

without any legitimate basis.  Stripping away Texaco's mis-

statements and mischaracterizations of that decision and the trial

evidentiary record, its argument really boils down to only three

major points.  First, the widespread practice of photocopying

journal articles, an integral element of Texaco's research and

essential to its efficiency and success, deserves the shelter of fair

use simply because it serves the salutary purpose of advancing

that research, albeit profit-oriented.  Second, free unauthorized

photocopying should be accorded fair use immunity because it is

supposedly "reasonable and customary."  Third, this Court should

utterly disregard as irrelevant, and give no consideration in the

fair use analysis to the indisputable loss of present and future

revenues that plaintiffs will suffer if the fair use defense were

sustained; plaintiffs' willingness to license photocopying of

copyrighted journal articles; and the existence and success of the

CCC.

      Judge Leval's rejection of each of these points is fully

supported factually and legally.  As he found, research at Texaco

and similar for-profit companies would not be impeded or harmed

if they were unable to obtain "free" in-house photocopies of

journal articles since they can obtain and use authorized

photocopies of such articles through reasonable CCC-licensing

and other available means.  As Judge Leval said, precious little

would be left of copyright protection under Section 106 of the

Copyright Act for scientific and educational material if all that

fair use required were that the copying was done for research or

educational purposes, and granting a fair use privilege would

have the reverse effect of impeding science by diminishing the

market incentives to publish such scientific material.

      Extending fair use to this case would mean, Judge Leval

found, the loss to plaintiffs of substantial present and future

revenues from several existing sources:  licensing by the CCC;

bilateral licensing agreements; royalties from the sale of

authorized photocopies by document delivery services; and the

sale of additional subscriptions by journal publishers.  Such harm,

predicated on the existence of actual licensing and subscription

markets, is properly cognizable in fair use analysis, as Judge

Leval concluded, in making the required fourth factor evaluation

concerning the effect of unauthorized photocopying on "the

potential market for or value of the copyrighted work."

      As for the claim that Texaco's photocopying should be

declared fair use because it is "reasonable and customary," there

is neither legal nor factual support for such a claim.  No

American case and only a 230 year old English case, never

followed, has ever sustained fair use on that basis.  There is, in

any event, as Judge Leval found, no factual basis for the claim,

as the past and current practices of many for-profit research-

oriented companies in obtaining and using only authorized

photocopies of entire copyrighted journal articles prove that free

in-house photocopying of such articles by Texaco is neither

reasonable nor customary.

      Contrary to the contentions of Texaco and the amici, there

is nothing improper or "circular" in fourth factor analysis in

considering the consequences of plaintiffs' willingness to license

the copying of their copyrighted works, and in many prior fair

use cases, the Supreme Court, this Court and other courts have

properly considered the actual or potential licensing markets that

such willingness to license has created or would create.  On the

facts of this case, the willingness of copyright owners to license,

together with the willingness of corporate photocopy users to

enter into licensing arrangements, have resulted in the creation of

actual licensing mechanisms and markets (through the CCC,

bilateral agreements and authorized document delivery services). 

Those mechanisms and markets would be destroyed if Texaco's

typical photocopying practices were found by the courts to be fair

use.  Destruction of those markets would immediately diminish

the value of plaintiffs' copyrights.  It is therefore nonsense for

Texaco to argue that plaintiffs' willingness to license, and the

licensing markets that have resulted, should be disregarded in

fourth factor analysis of the adverse effect of Texaco's

photocopying practices on "the potential market for or value of

the copyright."

      Plaintiffs' willingness to license, and the steps they and the

CCC have taken to make such licensing efficient and effective,

are also pertinent, as Judge Leval found, in refuting Texaco's

argument that the dissemination and use of information in journal

articles will be impeded, and therefore the progress of science

will be impeded, if free unauthorized in-house photocopying were

prohibited.  Indeed, that argument rests on the false premise,

directly contrary to the fact, of an unwillingness by the publishers

to license photocopying of journal articles, and therefore an

unwillingness to allow broad dissemination and use of copies of

those articles.  Moreover, the trial evidence concerning the

research, photocopying and licensing practices of many for-profit

research-oriented companies proves beyond any possible doubt

that such companies can successfully conduct their research

activities without impediment, and without harm to science, while

paying for permission to photocopy, just as they pay for all of the

other costs of that research.  Texaco is no different.

      At bottom, what this case is really all about is the desire of

Texaco, General Motors, Ford, Chrysler and the other corporate

amicus curiae to take a free ride " to obtain what they

acknowledge are valuable intellectual property rights without

paying anything for them.  What they seek is the opportunity to

engage in free in-house photocopying of copyrighted journal

articles on a regular and widespread basis without in any way

compensating the copyright owner publishers through any of the

available methods.  Those available methods of copyright

compliance are currently being utilized by 11 of Texaco's major

oil company competitors, and many other research-oriented

American companies, to obtain the important benefits of

photocopying entire journal articles and, at the same time, respect

the statutory rights of the copyright owners to authorize such

photocopying.

      The record shows that in earning billions of dollars

annually Texaco spends upwards of $89 million annually to cover

all of the salary, equipment and other costs of engaging in its

profit motivated research activities, except they seek immunity

from the cost of paying the copyright owner publishers for the

right to photocopy journal articles.  There is, therefore, no

conceivable reason for permitting Texaco to avoid paying the

publishers the expense of obtaining authorized copies of journal

articles that Texaco considers are integral to the conduct of its

research and valuable to it in conducting that research.  Indeed,

the fact that such photocopying enhances the efficiency and

success, and therefore the  profitability, of that research, is an

additional reason for requiring Texaco to pay for the privilege,

just as it pays for all other necessary research expenses.  Thus,

there is no conceivable justification for requiring the publishers to

subsidize Texaco's profit-directed research activities, by depriving

those publishers of revenues they are currently receiving and

would receive from the exercise of their exclusive rights to

authorize copying.

                          QUESTIONS PRESENTED AND

                          QUESTIONS NOT PRESENTED

      As the parties, the court below and the amici curiae all

recognize, the broad question presented in this test case is whether

for-profit research-oriented corporations, as exemplified by Texaco

and one of its typical researchers, can engage in free unauthorized

in-house photocopying of entire copyrighted articles published in

scientific and technical journals registered with the CCC (LA 148). 

The trial focused on the practices of that typical researcher, Dr.

Chickering, in making or obtaining photocopies of the entirety of

each of 8 copyrighted articles published in Catalysis in furtherance

of his research activities for Texaco.  In determining that fair use

question, there are a number of subsidiary issues to be resolved,

including whether each of the four statutory guidelines, and any

other relevant considerations, favors plaintiffs or Texaco, and the

weight to be given to each of those factors in reaching an overall

conclusion on the fair use question.

      In making those fair use determinations on this appeal, the

many factual findings made by the court below are to be accepted

as true in all respects because, with a few unsupported exceptions

that we discuss later, Texaco does not contend that those factual

findings are clearly erroneous or lack evidentiary basis.  Thus, no

genuine issues on this appeal concern the facts as found by the

court below.  (As discussed later, Texaco wrongly argues otherwise,

contending that Judge Leval's decision is in all respects open to de

novo appellate review and that his post-trial findings of fact are not

to be given the normal deference and are not subject to the clearly

erroneous rule.)

      Nor are there any factual or fair use issues presented on this

appeal concerning the activities and photocopying practices of non-

profit scientific research institutions, universities, government

agencies, hospitals, museums, news organizations, law firms, the

judiciary, law libraries, public and court libraries, and other entities

in which most of the membership of many of the amici curiae carry

on their activities.  There is no evidentiary record concerning those

activities and practices, and Judge Leval made no finding or

determinations concerning them.  He confined his analysis and

rulings to the trial record, which focused on the research and

photocopying practices of Texaco and other profit-motivated

research-oriented industrial companies, and the publication, sale,

licensing and use of scientific and technical journals including those

registered with the CCC and articles appearing in such journals.

      There is also no issue on this appeal concerning Section 108

of the Copyright Act, except to the extent that Texaco and the amici

claim that the legislative history of that section sheds light on fair

use (T Br.19; AR Br. 13-14, 44-47).  As Texaco acknowledges (T

Br. 19), its separate 108 defense was not part of the trial below

and remains for future adjudication as to copies made by the Texaco

library.  We agree with the library amici curiae that this Court

should make clear that nothing in its decision on the fair use issues

decides any possible future issues under Section 108 concerning

library copying.  (AR Br. 7 n.1; AL Br. 2 n.3.)

                  STATEMENT OF THE CASE

A.    The Litigants and Interested Third Parties

      Plaintiffs in this action are 83 publishers of scientific and

technical journals, among which are 20 non-profit learned societies

and educational institutions that publish such journals, including the

American Association for the Advancement of Science, American

Chemical Society, American Geophysical Union, American Institute

of Physics, American Medical Association, Cornell University,

Massachusetts Medical Society, MIT Press, and Princeton

University Press. Texaco, the defendant in this test case, is

supported on its appeal by the American Automobile Manufacturers

Association (whose members are General Motors, Ford and

Chrysler), the Chemical Manufacturers Association (whose members

include Texaco) and two other amicus curiae groups consisting of

various library and related associations.

      The result in this case will affect not only the plaintiff

publishers, the CCC, authorized document delivery services, Texaco

and its corporate supporters, but also the many industrial companies

that have entered into annual CCC and other photocopying licenses. 

As of time of trial, there were 110 CCC corporate licensees,

including Exxon, Mobil, ARCO and eight other major petroleum

company competitors of Texaco, and such other well-known for-

profit research-oriented corporations as Allied Signal, AT&T and its

Bell Labs division, Dow Corning, DuPont, Eastman Kodak, General

Electric, IBM, Monsanto, Olin, PPG, Polaroid, Texas Instruments,

3M, Union Carbide, United Technologies, and USX (LA 87;

A 272-73).

B.    The Fair Use Proceedings and Trial Record

      Plaintiffs' complaint, filed in 1985, alleged copyright

infringement by Texaco with respect to articles published in journals

registered with the CCC (A 12-33).  Texaco's answer pleaded a host

of technical copyright defenses concerning transfer, ownership and

registration of copyrights, copyrightability, and a 108 library

copying privilege, together with a defense and counterclaim of fair

use under 107 of the Act (A 34-47).  The proceedings were

subsequently stayed due to the filing of Texaco's Chapter 11

petition.  After the stay was lifted, proceedings resumed in earnest

in late 1989, and in accordance with the parties' agreement and the

court's approval, were limited to the issue of fair use, the core of

Texaco's defense in this case.  (LA 78; A 150.)

      From the 400 to 500 research scientists employed by Texaco,

plaintiffs examined the files of ten randomly selected scientists at

Texaco's nearby Beacon, New York research center.  Those ten files

contained more than 1,000 photocopies of articles from journals

registered with the CCC, including, from Dr. Chickering's files, 25

photocopies of articles published in Catalysis and 30 photocopies of

articles from other journals.  Photocopies of eight of those Catalysis

articles were ultimately selected as the exemplars to be used in the

fair use trial, a procedure the parties adopted in their court-ordered

stipulation for convenience and to avoid untoward discovery

expenses with respect to largely duplicative matters.  (LA 78, 145,

147.)  Plaintiffs stipulated that the complaint would be dismissed in

its entirety if the fair use defense were upheld as to each of those

articles.  (LA 75, 78 & n.1, 79, 110 n.14; A 150.)

      The trial proceedings, as a result of agreement between the

parties with the concurrence and support of Judge Leval, consisted

of four successive and alternating evidentiary submissions.  Each of

these submissions included the written testimony of trial witnesses,

excerpts from the testimony of a number of deposition witnesses,

and scores of documentary exhibits and interrogatory answers. 

Cross-examination of the trial witnesses, originally scheduled for the

courtroom, was conducted, to the extent each of the parties elected

to do so, at their attorneys' offices, and the written transcripts of

such cross-examination were submitted as part of the trial record.

      The trial record consists of the testimony of 14 trial

witnesses, 7 of whom were cross-examined; extracts from the

testimony of 20 deposition witnesses; and 527 exhibits (including

8 interrogatory answers).  Those witnesses included a number of

Texaco executives and research and library personnel, senior

executives of Academic Press, the CCC and the Bell Labs division

of AT&T, and two experts, one called by each side.  The 31-

volume trial record has been reduced for the purposes of this appeal

to a 7-volume Appendix.

C.    The Decisions Below

      Judge Leval made extensive findings of fact throughout his

67-page opinion (LA 73-142; 802 F. Supp. at 1-28) that led to his

determinations that three of the four statutory factors and the

important equitable considerations weighed heavily and strongly

against fair use in this case (LA 94-106, 109, 110, 111-15, 120-36,

141).  Taking all of these matters into account, and applying

relevant legal principles, Judge Leval concluded that there was no

basis for Texaco's affirmative defense of fair use under Section 107

of the Copyright Act as to the representative eight articles

photocopied by Dr. Chickering.

      Granting certification under 1292(b), Judge Leval perceived,

as did the parties, a strong public interest in immediate appellate

review of the "issue of fair use, as to the practices of a

representative Texaco researcher" because "photocopying of

copyrighted scientific material is extremely widespread in

commercial research-oriented profit-motivated companies."  (LA

147-48; 802 F. Supp. at 28-30.)

                   STATEMENT OF FACTS

A.    Texaco Engages In Its Research Activities

      (An Integral Part of Which Is the Systematic

      Photocopying of Journal Articles) for the Sole

      Purpose of Making a Profit

      Texaco, whose revenues and profits run in the billions of

dollars (A 2834; see also A 2730-2833), conducts profit-motivated

scientific research at six facilities in the United States (including the

Beacon, New York research center) where it employs about 400-500

scientists.  (LA 75; A 2271-72, 2277.)  Texaco spends about $89

million annually on that scientific research, not as an "exercise in

philanthropy," but, as Judge Leval found, "solely for [its own]

commercial advantage."  (LA 75, 136 & n.24; A 2273-74, 2278-79;

see 932, 906, 945-47.)  Those expenditures cover every element of

Texaco's research activities, including salaries of the scientists and

support staff, and the expenses of equipment, chemicals, offices,

laboratories, journal subscriptions, information services, photocopy

machines, paper and other photocopying supplies.  The sole

exception is that Texaco seeks to be relieved of the expense of

obtaining permission to photocopy copyrighted journal articles.  As

Judge Leval found, and the parties agree, photocopying such journal

articles is fostered and maintained by Texaco as a regular practice

by its research and library personnel, and is an integral part, and

very helpful to the more efficient and successful conduct, of

Texaco's research activities.  (LA 76-77; A 935, 469-70; see also

A 1336, 730-32.)

      The research conducted for Texaco by Dr. Chickering and his

colleagues is aimed solely at making money for Texaco.  This is a

crucial fact Texaco seeks to ignore and obscure (T Br. 6-7).  As

Texaco's former Director of Petroleum Research put it, the purpose

of the research is "to maintain our competitive position and

maximize Texaco's profitability."  (A 2223.)  The target of its

research activities, as Texaco's 1988 Annual Report said, is "on

enhancing profitability" (A 2373) and as the 1987 Annual Report

expressed it:

      Texaco's research activities are geared to a profit-

      center concept: developing new products responsive to

      the demands of the marketplace; cost-reducing

      manufacturing process improvements; and technology

      to operate oil fields more efficiently.

(A 2369.)

      On the basis of this and an overwhelming body of other

evidence in the trial record (A 932, 934, 938-45, 2223, 2239-40,

2369, 2373, 2376), it is indisputable, as Judge Leval found, that

Texaco conducts its scientific research activities (of which, as has

been mentioned and which we discuss later, the regular and

widespread practice of photocopying entire journal articles is an

integral part) solely "for commercial gain" and "to improve

Texaco's commercial performance," "for the purpose of producing

profits."  (LA 105, 106; see also his many related findings at

LA 75, 105, 122 and 136.)

B.    The Vital Economic Importance to Texaco of Its

      Researchers Having Timely Access to Journal Articles

      Equally indisputable are Judge Leval's findings that scientific

and technical journal articles play an essential role in the research

programs of companies such as Texaco by disseminating the results

of scientific research being conducted elsewhere.  (LA 76, 111,

114.)  Journal articles are the primary and sometimes only source

of new scientific information on the narrowly focused, highly

specialized topics commercial research scientists deal with.  (A 726-

27, 742-45, 746-50, 1036-37, 1056, 4244, 1119, 1143, 456, 905,

1333-34.)  They are essential because, as the former head of

Texaco's Beacon research center emphasized,

      1.   Without awareness of new developments, our

           people could continue to pursue work already

           conducted and reported by others.  In

           reinventing the wheel, we would waste time,

           manpower and money repeating work already

           patented by someone else, rather than using the

           reported work as a springboard to novel

           developments that would be the property of

           Texaco.

      2.   Unless our technical people continue to educate

           themselves about new developments in their

           fields, they rapidly become obsolete and of

           reduced value to the Company.

(A 2239-40; accord A 2223.)

      In such circumstances, as Judge Leval found, it is "of great

importance for scientists doing research to keep abreast of the

publication of such articles" in order to take advantage of new ideas

and developments and to avoid duplicating work already done or

demonstrated to be fruitless.  (LA 76.)

C.    The Methods by Which Research Personnel at

      Texaco and Other For-Profit Corporations

      Regularly Learn About and Obtain Photocopies

      of Entire Journal Articles

      As Judge Leval found (LA 76, 77, 80, 130-31; see LA 111-

12 n.14), and as is undisputed (T Br. 7), it is the regular and

systematic practice of research scientists at for-profit industrial

corporations such as Texaco, as exemplified by Dr. Chickering, to

learn about journal articles and then make or obtain photocopies of

those articles and create files of photocopies for use in their work. 

(A 727, 739, 746-47, 753, 1334, 949-52, 457-58, 594, 809-11.) 

This occurs in several ways:

      Circulation of Journals.  Researchers primarily learn of

journal articles by having their companies circulate journals to them. 

(LA 76-77, 80, 114; A 751; see A 949, 905, 457, 372-73, 374-75,

638-40, 675-77, 823.)  Typically, a researcher is on the routing list

for a number of journals of special pertinence to that researcher's

work " in Dr. Chickering's case eight such journals including

Catalysis.  (A 905, 457, 372-73, 374-75, 638-40, 675-77, 823, 949,

831-32, 848-49, 2239-40, 1515, 549; see A 366, 1505-1508, 1509-

1511.)  It is the systematic practice of researchers at Texaco and

other research-motivated companies to photocopy articles from the

circulation issues before passing them on (LA 76-77, 80, 104, 114;

A 949, 457-58, 548, 551-53, 557-58, 562-63, 587-88, 594-95, 367,

395-96, 401-02, 403-06, 652-54, 667-68, 693-94, 695-98, 700-701,

703-04, 751, 1334), and this practice is economically very beneficial

to Texaco, as is more fully discussed later.

      Literature Searches.  It is also the widespread practice for

research scientists at Texaco and other similar companies to have

specially trained information service professionals in the company

library perform computerized literature searches and automatic

updates of such searches in connection with particular projects or

experiments.  These literature searches and updates generate

bibliographic lists of journal articles and other materials, from

which the researchers regularly request photocopies of articles. 

(A 993-1006, 1008-10, 806-08, 815-18, 822-26, 858-59, 2111,

2260-63, 2264, 950, 445-46, 541-47, 601-05, 611-15, 641, 642-47,

670-72, 673-74, 679-81, 746-47, 751-52, 1367-68, 912-15.)

      Other Methods.  Researchers at Texaco and other for-profit

industrial corporations also learn about and then make or obtain

photocopies of journal articles as the result of seeing references to

them in published abstracts of journal articles and Current Contents

(a compendium of journal tables of contents) circulated by their

companies to alert them to new journal articles, and in other journal

articles or in patents.  Researchers also provide each other with

references or photocopies of journal articles, and route photocopies

to a number of other colleagues.  (A 1841-1979, 752, 850-56, 857,

659-60, 678, 683, 688) (LA 76-77; A 1368, 949-50, 568, 595, 649-

50, 704-05, 707, 714.)

      Library Copying.  Personnel at Texaco's Beacon library

regularly make photocopies of journal articles in response to

individual requests by Texaco research scientists.  In addition, the

Beacon library makes photocopies of articles to satisfy requests

made at several other Texaco libraries, and those libraries provide

photocopies to Beacon upon request.  (LA 77; A 463, 469, 810-11,

812-13; see A 814, 817-19, 824, 439-41.)

D.    The Importance to Research Personnel of Speedy

      Circulation of Journals and How Photocopying

      Reduces the Number of Subscriptions Needed to

      Maintain Speedy Circulation

      Instead of purchasing separate subscriptions for each of its

research personnel, Texaco routinely circulates an original journal

issue among groups of 15 or more research scientists.  The Journal

of Catalysis routing list, for example, has ranged from 15 to 38

researchers including Dr. Chickering.  (A 549, 1515, 905, 457, 372-

75, 638-40, 675-77, 949, 823-26, 831-32, 848-49, 2239-40; see

A 1505-08, 1509-11, 366.)

      "It is important," as Judge Leval found, "that scientific and

technical journals be promptly circulated so that research scientists

are made promptly aware of new published studies in the areas of

their work."  (LA 114; A 456-57, 554-56, 569-70, 581-83, 584-86,

668-69, 726-27, 731-32, 742-44, 754-55, 1333-34, 1056, 4244, 924,

925-26, 927-29, 1516, 1515, 2223, 2239-40, 2265, 1530; see also

A 746-48.)  As Texaco's former Director of Petroleum Research

wrote, when there is "very slow circulation and loss in timeliness .

. . [a]n inestimable penalty is incurred because technical persons

cannot effectively avail themselves of new developments in current

literature."  (A 1530.)

      Rapid circulation with a minimum number of subscriptions

is made possible by in-house photocopying.  As Judge Leval found,

photocopying "permits the scientists to defer reading [the circulation

copy], and to keep possession of an additional copy without

hoarding the original issue of the journal, so that the original can

circulate without delay among colleagues (each of whom may do

likewise), or return to the library where all colleagues will have

access to it."  (LA 104; see related findings at LA 76-77, 80, 114;

A 754-55, 367, 395-96, 668.)  Thus, "the principal feature of the

photocopying is its capacity to give numerous Texaco scientists

their own copy based on Texaco's purchase of an original."  (LA

102.)  This practice is widespread and prevails in other for-profit

industrial corporations as well.  (LA 76-77, 80; A 949, 457-58, 548,

551-53, 557-58, 562-63, 587-88, 594-95, 367, 395-96, 401-02, 403-

06, 652-54, 667-68, 693-94, 695-98, 700-01, 703-04, 751, 754-55,

1334.)

      Even with the use and benefits of photocopying, Texaco

increased its subscriptions to Catalysis from 1 to 2 in 1983, and

then to 3 in 1989, as Judge Leval found, "in order to speed up the

circulation process."  (LA 114; A 803, 1516-28, 2222-28, 569-70.)

      This and the other evidence discussed clearly supports Judge

Leval's factual finding that in the absence of photocopying, Texaco

"would increase the number of subscriptions somewhat" to maintain

the speedy circulation of journals (LA 114):

      The evidence shows that scientists will make a

      photocopy of an article in order not to slow down the

      circulation process.  If that photocopying stopped, the

      circulation would slow down; scientists would hold

      onto an issue for a longer time before continuing its

      routing.  To speed up the circulation, it seems likely

      that Texaco would add at least a modest number of

      subscriptions to Catalysis which would increase

      Academic Press' revenues.

There is, therefore, no basis for Texaco's and the amici's contention

(T Br. 31, 32, 34; AR Br. 34-35) that the evidence does not support

Judge Leval's factual finding that Texaco's unauthorized

photocopying reduces the number of subscriptions Texaco would

otherwise purchase if it elected not to obtain authorized photocopies

of journal articles through CCC and other available means.

E.    Dr. Chickering's Representative Photocopying

      A total of 55 photocopies of copyrighted journal articles made

by or for Dr. Chickering for use in his work for Texaco were found

in his files, including the eight Catalysis articles selected as a

representative test sample for this fair use test case (the "Eight

Articles").  (See LA 79; PX-1016-1089; A 450, 457-69, 536-81,

594-95.)  These were just the photocopies he had made over the

years at Texaco and had not discarded by the time his files were

reviewed in 1989.  (See LA 110 n.14.)

      Dr. Chickering's photocopying practices are illustrative of the

systematic practices of researchers at Texaco and other for-profit

industrial corporations.  (LA 111 n.14, 147.)  He regularly makes

or obtains photocopies of entire journal articles in most of the ways

described above, retains them in his photocopy files, and refers to

them from time to time in connection with his work.  (A 594-95,

536-40, 457-58.)  In particular, with respect to the Eight Articles,

Dr. Chickering made or had someone make copies of six of the

articles when the original issues of Catalysis containing those

articles were circulated to him.  (A 458-62, 464-67, 1443, 1459,

1463, 1474, 1479, 1487.)  He obtained the other two from the

Texaco Library after seeing a reference to them elsewhere.  (A 463-

64, 469, 1470, 1498.)

      As Judge Leval found (LA 81), Dr. Chickering made or

obtained the photocopies of the Eight Articles for use in his work

for Texaco.  (A 449, 457-69, 594-95, 536-40.)  Nothing suggests

that he made or obtained the photocopies for his "personal use" in

the sense that his photocopying was in some way not related to his

work for Texaco.  (LA 81, 122.)

      Moreover, as later discussed, using photocopies saved

Dr. Chickering time and increased his productivity, thereby

immediately saving Texaco the cost of that time, in turn improving

Texaco's profitability.  (A 457-58, 459-67, 581-83, 584-91.)

F.    The Economic Benefits to Texaco and Other For-Profit

      Industrial Corporations of Research Scientists Using

      Photocopy Duplicates in Their Work

      Photocopying, whether free or not, produces a number of

economic benefits in the research activities of a for-profit research-

oriented company such as Texaco.  It produces immediate economic

benefits by saving Texaco money in a number of ways that enhance

Texaco's profitability.  First, it saves researchers' time, and saving

researchers' time saves Texaco money, thereby improving its

profitability.  Every hour saved is money saved by Texaco.  Dr.

Chickering, for example, who, at the time of his testimony, was

paid a salary of about $58,000 for about 2000 hours of work per

year, cost Texaco about $29 per hour.  (A 2291.)  Other researchers

were paid salaries up to $149,000 per year.  (A 2295.)

      Judge Leval found, and the parties agree, that making and

using photocopies saves the time of Texaco's researchers in several

ways:  it saves the time they would otherwise have to spend

locating articles or going to the library to read articles, because

photocopies retained in their photocopy files are immediately at

hand; it saves the time they would otherwise have to spend

repeating experiments or dealing with poor results because of errors

made in taking notes of articles (including complex equations,

diagrams and other data); it saves the time they would otherwise

have to spend taking notes of the articles, instead of more easily

annotating or highlighting material in photocopies; and it saves time

because it is quicker for researchers to assist colleagues by

providing them with photocopies rather than just references to those

articles.  (See LA 77-78; A 459-60, 461, 462, 584-87, 595, 935,

954-58, 727-32, 739-42, 754-55, 757-60, 1333-35.)  The time that

is saved means the saving of the cost of that time, and it becomes

time that researchers can otherwise spend doing more valuable work

for their companies.  (A 955, 757; see A 582-83.)

      The value to Texaco of the time of its researchers was

highlighted in several internal Texaco memoranda concerning the

adverse economic consequences to Texaco of researchers having to

spend time going to the library to read journal articles " just that

one additional cost would be "over $58,000 per year."  (A 1515,

2240, 2223.)  As a corollary to this, internal Texaco memoranda

highlight the inestimable penalty that Texaco would suffer from its

researchers becoming obsolete as the result of the reluctance of

many of those researchers to spend time traveling to the Texaco

Beacon library to read articles.  (A 2240, 1515; see A 731-32, 759-

60.)

      Texaco also derives economic benefits from researchers using

photocopies in the laboratory, for in that way they avoid damaging

or destroying the original, and  Texaco is saved the cost it would

otherwise incur of replacing the damaged originals.  (A 727-28,

729-30, 740-41, 1335-36; see A 463.)

G.    There Are a Number of Readily Available Ways to

      Provide Researchers with Access to Journal Articles

      Other Than Unauthorized Photocopying

      Judge Leval found that there are a number of convenient

ways that research personnel can be provided with ready access to

journal articles other than by making unauthorized in-house

photocopies.  (LA 112-15, 127-29, 131-32.)  He found that these

include the purchase of some additional subscriptions to maintain

speedy circulation (LA 114), and that authorized photocopies of

journal articles are readily available by obtaining advance

permission to photocopy through the CCC or pursuant to

agreements directly with publishers, or by purchasing photocopies

from document delivery services that have obtained photocopying

authorization either through CCC or directly from publishers.  (LA

112-115, 128-29, 131-32.)

      These methods of providing research personnel with ready

access to journal articles without engaging in unauthorized

photocopying are illustrated in the practices of AT&T Bell

Laboratories ("Bell Labs"), which are described later.  Texaco itself

has obtained permission to photocopy directly from publishers, has

purchased additional subscriptions, and has purchased photocopies

from document delivery services.  (A 803, 820-21, 860-62, 917-18,

1514-15, 2111, TEX-032.)  Texaco ignores Judge Leval's finding

(LA 113) and the record evidence when it claims (T Br. 31, 36) that

document delivery services are not a viable alternative.  Whatever

brief time lag may exist in obtaining the photocopies, there is no

evidence that it interferes with research efforts.  In addition to

Texaco's own purchases of photocopies from authorized document

delivery services, Bell Labs' purchase of photocopies from such

services demonstrates that purchasing photocopies in that manner

does not interfere with research activities.  (A 1423H.)

      Texaco and the amici are also wrong in contending (T Br. 40

n.21; AA Br. 10) that there was no evidence to support Judge

Leval's finding that obtaining permissions directly from publishers

is a viable option.  As Judge Leval found (LA 128), Bell Labs

exemplifies a research-intensive corporation that has obtained

photocopying permission directly from many publishers as one

component of its program to provide its research personnel with

ready access to journal articles without claiming a privilege of free

photocopying.  Bell Labs has entered into about 206 agreements

with publishers covering about 350 journals that are not registered

with CCC.  (LA 128; A 1423E.)

H.    Unauthorized Photocopies Supersede Original Articles

      and Authorized Photocopies

      As part of its research activities, "Texaco simply makes

mechanical photocopies of the entirety of relevant articles."  (LA

99.)  These copies of the original are not "employed as part of a

larger whole for some new purpose." (LA 99.)  As Judge Leval

found:

      The principal purpose of Texaco's copies is to

      supersede the original and permit duplication, indeed, 

      multiplication.  A scientist can make a copy, to be read

      subsequently and kept for future reference, without

      preventing the circulation of the journal among co-

      workers.  This kind of copying contributes nothing

      new or different to the original copyrighted work.  It

      multiplies the number of copies.

(LA 99-100; LA 104.)

      As Judge Leval also found,

      [W]here three subscriptions to Catalysis are serving the

      needs of hundreds of scientists, the principal feature of

      the photocopying is its capacity to give numerous

      Texaco scientists their own copy based on Texaco's

      purchase of an original.  The most prominent feature

      of this copying is that the copies supersede the original

      and multiply its presence.  Thus even if some

      transformative purpose was present in transferring the

      article from its journal into a slender photocopy, that

      use is overshadowed by the primary aspect of the

      copying, which is to multiply copies.

(LA 102.)

      That free in-house photocopies are substitutes for originals

and authorized photocopies of journal articles is conclusively

demonstrated by the fact that researchers at Texaco and other for-

profit industrial corporations use the unauthorized photocopies for

the same purpose that originals or authorized photocopies are used

" to obtain and use the information for their work.  (A 584, 952-

53, 954, 753-55, 667-68; see also A 1513.)

      As Judge Leval found, researchers read photocopies rather

than originals to obtain the information in the article for their work;

they take photocopies rather than originals into the laboratory to

refer to the article in the course of experiments in order to avoid

damaging the original; they photocopy articles for later reading and

use, rather than hoarding the original, to speed the circulation of the

original journal issue; they make notes on and highlight

photocopies, rather than doing so on the originals; they circulate

photocopies rather than originals to their colleagues in order to

share work-related information; and they retain photocopies rather

than originals in their files for later use and re-use in their work. 

(LA 77-78, 80, 104, 114).

      Originals, however, can serve the very same purposes.  While

research personnel might prefer to take a photocopy rather than the

original into the laboratory in order to avoid damaging the original,

or prefer to highlight or make notes on a photocopy rather than

marking up the original, the original can be used in those very same

ways.  Similarly, the original journal article, clipped from the issue

in which it appeared, could just as easily be kept in the researchers'

files as a photocopy.  The only difference would be that it would

cost companies such as Texaco a great deal more money to provide

each researcher with originals, or to replenish originals as they were

damaged or used.  Texaco is thus wrong when it claims (T Br. 23-

24) that its photocopy duplicates of journal articles are a non-

superseding use of the original.

      Furthermore, it is undisputed that an authorized photocopy is

identical in all respects to an unauthorized photocopy, and therefore

use of unauthorized photocopies supersedes the use of authorized

photocopies.

I.    Academic Press and Its Important Role in the

      Dissemination of Scientific Information

      Academic Press, the publisher of Catalysis, is a major for-

profit publisher of scientific, technical and medical journals. 

(A 1035-36.)  It currently publishes 105 journals, and since 1965

has created 70 new journals in response to the needs of the

scientific community, a testament to the important role publishers

play in the advancement of science.  (LA 81, 107, 135; A 1036,

1050, 1057.)

      Catalysis, published since 1962, contains highly technical

Articles, Notes and Letters to the Editors (collectively "articles") on

experimental studies in various types of catalysis and chemical

reactions at surfaces.  (LA 81-82; A 1046-48, 1061; see A 1443-

1458, 1459-1462, 1463-69, 1470-73, 1474-78, 1479-86, 1487-97,

1498-1504.)  The subscription rate for institutions ranged from

$112.00 in 1972 to $828.00 in 1989, while the discounted

subscription rate for individuals has been about one-half of the

institutional rate.  (LA 82-83; A 1048, 4248-49, 1545, 1207-09.)

      In addition to subscription sales, Academic Press receives

revenue from granting permission to photocopy copyrighted journal

articles: (a) TRS and AAS photocopying permissions fees paid to

CCC, and (b) royalties paid by a document-delivery service that has

an agreement with Academic Press authorizing it to sell photocopies

of copyrighted articles.  (A 254, 263, 1051-52, 4242-43, 4244,

4300, 1796, 2317.)  Revenue information for Academic Press and

Catalysis is set forth in A 4242-44, 4300.

      Publishers such as Academic Press play an important role in

creating scientific and technical journals, in ensuring the scientific

importance and accuracy of the published information, and in

getting the journals distributed to the research community as quickly

as possible.  Academic Press establishes the criteria that govern the

publication of the articles, chooses the scientific editors who make

publication decisions based on those criteria, and monitors the

journals' performance through discussions with members of the

scientific community.  In this way Academic Press ensures that the

journals are meeting the needs of the scientific community and are

disseminating scientifically correct and important new information. 

(A 1036, 4244, 1056-58, 1059-60, 1061, 1062, 1063-64, 1066,

1067-68, 1073-74, 726-27, 742-45, 456-57, 1333-34.)

      Academic Press also undertakes the financial risk of

publishing the journals.  It generally takes five to ten years before

a scientific or technical journal first earns an annual profit, if ever,

and even then it takes many years to recoup the losses incurred

during the unprofitable period.  (A 4245-46, 1128-30, 1016, 3802.) 

This is confirmed by the experience of Catalysis.  (A 4246, 3802.) 

Currently 20 of Academic Press's journals are unprofitable, and 15

have been published between two and twelve years.  (A 4245.) 

There is therefore no room for Texaco's spurious contention (T Br.

5 n.2) that there is no evidentiary basis for Judge Leval's well-

founded factual finding that "the publication of scientific journals

requires a large investment and a long period of losses endured in

the hope of reaching eventual profitability."  (A 135.)

      Publishers such as Academic Press, by creating the vehicles

that have allowed scientific authors to have their work widely

disseminated, have been instrumental in causing articles to be

written.  (A 726-27, 744-45, 1036-37, 4244, 1056, 1060, 1061; see

A 1337-38, 1374.)  As Judge Leval found:

      [W]ithout publishers prepared to take the financial risk

      of publishing and disseminating such articles, there

      would be no reason for authors to write them; even if

      they did, the articles would fail to achieve distribution

      that promoted the progress of science.

(LA 107; see LA 135.)

J.    The Economic and Other Benefits to Scientist Authors

      From Having Articles Published in Journals

      Virtually all articles in Academic Press journals result from

unsolicited manuscripts submitted by scientists.  The journals are

able to obtain unsolicited manuscripts because of their reputations

for quality and the benefits to researchers from having articles

published in such journals.  (A 726, 743-45, 766, 1061-62, 932-33,

1333, 1337-38, 669.)

      Judge Leval found (LA 133) that even though authors are

generally not paid for articles, they "have a substantial economic

motivation as well as other interests in having their studies

published in prestigious journals."  This is because "such

publication enhances their professional reputations in a manner that

translates itself into remuneration.  The remuneration is achieved

through growth of prestige and a consequent ability to demand

greater salaries or more prestigious and powerful positions."  (LA

133; A 726, 743-45, 766, 1061-62, 932-33, 1333, 1337-38, 669.) 

In particular, for-profit industrial corporations such as Texaco take

publication into account in granting raises and promotions, and

grant awards to their employees for having articles published. 

(A 766.)

K.    The Copyright Clearance Center and the Success of

      Its Photocopying Authorization Services

      As Judge Leval found (LA 83-84), CCC is a non-profit

central clearing-house established in 1977 by publishers, authors and

photocopy users in response to a congressional recommendation that

an efficient mechanism be established to license photocopying.  Its

Board of Directors is comprised of representatives of publishers,

authors and photocopy users.  (A 257, 259-60, 261; see A 1980-90.) 

At the time of trial, approximately 8,000 publishers (including

Academic Press and the other 82 plaintiffs) had registered

approximately 1.5 million publications with CCC.  (A 1052, 268-69,

254; see A 2102, 3699-3727.)

      Judge Leval made extensive findings of fact (LA 83-88, 113-

15, 127-29, 131-32) regarding CCC's photocopying authorization

services, which he found to be "reasonable" and "efficient" (LA

115, 127), and which he found "would also satisfy the needs of

Texaco's scientists for photocopies at a reasonable cost and burden

to Texaco."  (LA 114-15, 129).  As the U.S. Register of Copyrights

also stated, CCC's photocopying authorizations services are

"straightforward and effective."  (PX-1672 at C000467.)  Judge

Leval found there is an actual, existing, substantial market in which

major research-oriented for-profit corporations pay millions of

dollars annually for permission to photocopy (LA 87-88), which

would be destroyed if Texaco's fair use claim is upheld by the

courts.

      1.   The Successful Development of CCC's Photocopying

Authorization Services.  CCC currently offers two services " the

TRS and the AAS " by which users obtain blanket advance

permission to photocopy copyrighted material in publications

registered with CCC, thus eliminating the need to obtain permission

on an article-by-article basis before copying.  Under both

services, publishers individually set fees for the photocopying of

copyrighted material in their CCC-registered publications.  The

photocopying permissions fees vary from publisher to publisher;

Academic Press's fees for Catalysis are $2.00 or $3.00 per article,

depending upon publication date.  (LA 84, 87; A 261-63, 1051-52,

1306, 1319.)

      CCC developed the TRS in 1977 with substantial assistance

from the Manager of Information Services at Exxon, who was a

member of CCC's Board of Directors.  (A 252-53, 4302.)  The TRS

gives photocopy users advance permission to photocopy, for their

internal use or for the internal use of specific clients, any

copyrighted material in CCC-registered publications, provided they

subsequently report and pay for such photocopying.  The

straightforward TRS reporting methods are described in A 252-53,

261-62, 278.  (LA 84-86.)  The user decides for itself whether a

photocopying transaction need not be reported because, for example,

the copied material is in the public domain.  (A 2436-37, 306-07,

320-28.)  To make the TRS more attractive to users, in 1983 CCC

eliminated the requirement that specific articles be identified

because photocopy users were concerned that such an identification

might reveal their research activities.  (LA 85; A 2079-80, 2353-54;

see A 2311-14, 2448-51.)

      Texaco's contention (T Br. 40-41, 12) that under the TRS

users are charged for photocopying articles in which the publishers

do not own the copyrights is thus incorrect since, under the TRS, it

is the user who determines whether the copying needs to be

reported.  Moreover, Judge Leval properly rejected Texaco's

assertion that publishers are improperly claiming ownership of

copyrights in certain articles, finding there was no evidence

supporting Texaco's "remote and conjectural claim" and that such

claims were not properly the subject of the fair use trial.  (LA 137-

138.)  Indeed, the evidence submitted by plaintiffs showing that

Texaco's contentions are meritless amply supports Judge Leval's

finding.  (A 1090-93, 1013-15, 1427-28, 866-68, 291-92, 628A-

628N, 447A-447C.)

      Participation in the TRS increased over its first four years of

operation, but by 1982 CCC decided to create an alternative service

for major corporations.  Many companies had told CCC they were

unwilling to set up the administrative systems necessary for full

compliance with the TRS (LA 86), while others expressed a

willingness to pay for their photocopying under a licensing service

that would eliminate the need to report individual transactions. 

(A 266-67, 2031-32, 2044, 2048, 2055, 2060-62.)

      Judge Leval found that the unwillingness expressed by certain

companies to implement the TRS's administrative requirements did

not mean those requirements were unreasonable or that those

companies would not have used the TRS if CCC were unwilling to

offer an alternative.  (LA 132 and n.23.)  "Considering the features

of the TRS objectively," Judge Leval found that the TRS was "a

reasonable practicable solution for the industrial user community,"

and that users who declared their unwillingness were using their

bargaining power to negotiate for something they liked better. 

(LA 132.)

      Texaco and the amici's argument that the TRS is supposedly

administratively too burdensome (T Br. 11; AA Br. 32-33) was

factually rejected by Judge Leval, who found "[t]he evidence shows

that the administrative burdens for a user complying with TRS are

modest and manageable."  (LA 132 & n.23.)  The relative ease with

which users can report copying under the TRS is amply shown by

the trial record evidence.  (A 278-79, 301-02, 1053-54, 2425, 2431-

34, 2450-51, 1443, 1549.)  That the TRS is neither impracticable

nor unduly burdensome is further proved by the fact that Bell Labs

pioneered the successful use of a TRS reporting system in 1978 and

has continued to use it to the present time.  (See pp. 31-32.)  Other

companies, such as General Electric, Exxon, DuPont, Procter &

Gamble, Atlantic Richfield and IBM have also successfully used the

TRS.  (A 2054.)

      In response to the concerns expressed by large corporate

users, CCC (with the assistance of two expert econometricians from

MIT and Harvard and the cooperation of certain major industrial

corporations) developed the AAS and began offering it in 1983. 

(LA 86, 127.)  The AAS gives the corporate user an annual blanket

license to make unlimited numbers of photocopies, for internal use,

of copyrighted material in the 1.5 million publications registered

with the CCC.  No reporting is required, except during limited

photocopying surveys, and the licensee may select one of three

methods for calculating the license fee, all based on the publishers'

individually set photocopying fees.  (LA 86-89; A 252-53, 262,

267-68, 280-86, 294-99; see A 1991, 1995.)  CCC has continued to

refine the AAS over the years.  (A 267-68, 280-83, 294-99, 2046-

47, 2069.)  As of time of trial, an average annual corporate AAS

license fee was $75,000.  (A 269-70, 4298-99.)

      Texaco's contention (T Br. 40-41, 12) that the manner in

which the AAS license fee is calculated is unfair because, in

calculating the amount of the fee, articles in which publishers

allegedly own no rights are included, is another of Texaco's myriad

arguments below that was properly rejected by Judge Leval. 

(LA 138; see pp. 26-27.)  Judge Leval found that the AAS provides

a workable and effective mechanism for conveying permission to

photocopy.  (LA 127-28.)  Texaco has introduced no evidence that

the method by which the AAS license fee is calculated has rendered

the AAS in any way ineffective or unworkable.  To the contrary,

Judge Leval's finding that the AAS was "reasonable" and

"effective" is based on the trial evidence, including the fact that 110

major for-profit industrial corporations (including eleven of

Texaco's competitors) have voluntarily taken AAS licenses, with

their fees being calculated in the manner attacked by Texaco, and

there is no evidence that any of them have complained that there

was anything unfair or improper about the manner in which the fee

was calculated.  Moreover, neither Texaco nor anyone else is

compelled to take an AAS license if they do not want to.  They can

report their photocopying under the TRS, under which they decide

whether to report the photocopying of a particular article.

      Each of the three methods for calculating the AAS license fee

(A 280-84, 294-96) attempts to calculate the fee in a practicable

way on the basis of the prospective licensee's anticipated

photocopying of material in CCC-registered publications.  The

individual articles being photocopied during the limited

photocopying surveys are not identified because CCC

accommodated photocopy users' objections to disclosing that

information.  (A 296.)  Although photocopies from all

copyrighted publications are reported during the survey, only the

photocopying from CCC-registered publications is used in

calculating the license fee.  (A 281.)

      Because the license fee is based on survey data that does not

identify individual articles, it is possible that there may be articles

copied for which permission would not be needed, for example, a

public domain article.  Any potential over-inclusiveness is merely

a necessary tradeoff by photocopy users using the AAS (rather than

the TRS) in exchange for avoiding the costs associated with having

to report each photocopying transaction.  (See also p. 71.)

      Judge Leval found that the AAS and TRS services provide a

reasonable, practicable, and efficient method of licensing

photocopying (LA 113, 114-5, 127-29, 131-32), and that "Texaco

could conveniently, and without undue administrative burden, retain

the benefits of photocopying at will, simply by complying with one

of the CCC's licensing systems."  (LA 129.)

      2.   The Substantial and Growing Photocopying

Authorizations Market.  CCC's development of the photocopying

authorizations market through its TRS and AAS services has

resulted in user payments (through 1989) of almost $28 million in

fees for permissions and licenses to photocopy " almost $9.7

million under the TRS and over $18.2 million under the AAS.  As

of March 1990 CCC had distributed over $9.3 million to publishers,

and is obligated to distribute the remainder of the fees received (less

an average service charge of 30%) which it has deferred distributing

(with the agreement of the copyright owners) to cover start-up and

certain other costs.  (LA 88; A 1993, 4299-4300, 285.)  CCC's

revenues and distributions to publishers have increased each year. 

(LA 88; A 270, 4298-4300.)

      At the end of 1989, there were approximately 400 users

reporting under the TRS.  As of September 1990, there were 110

AAS licensees, including eleven of Texaco's major petroleum

company competitors and many other major research-oriented

corporations.  (LA 87-88; A 269-70, 4298, 272-73; see p. 7.)

L.    Bell Labs' Successful Program Since 1978 of Providing

      Journal Articles to its Research Personnel Without

      Unauthorized Photocopying

      AT&T Bell Laboratories is a prime example of a major

industrial research institution that, in sharp contrast to Texaco, has

implemented a system enabling its research personnel to have ready

access to journal articles without engaging in unauthorized

photocopying.

      Like Texaco, Bell Labs maintains large collections of

scientific and technical journals in a number of libraries and

individual departments.  (A 1423C.)  In 1978, the year in which the

1976 Copyright Act took effect, Bell Labs implemented uniform

procedures governing the photocopying of copyrighted material,

whether done at library photocopying centers, at self-service

machines in libraries, departments and hallways, or at special

microform printers in the libraries.  (A 1423D-I.)

      Bell Labs initially obtained advance permission to photocopy

through the TRS and by entering into direct photocopying

permissions agreements with publishers of non-CCC-registered

publications.  It currently has about 206 direct agreements with

publishers covering about 350 journals.  (LA 128; A 1423E.)  Bell

Labs became an AAS licensee in 1986, and since then has also

continued to use the TRS for photocopies that are not for its internal

use and therefore not covered by the AAS license.  (A 1423B.)

      When its employees need a copy of material for which Bell

Labs does not have advance permission to photocopy, it either

obtains photocopying permission from the publisher or, if it cannot

do so, purchases an authorized photocopy of the article from a

document delivery service.  Thus, Bell Labs has never had to resort

to unauthorized photocopying, even when it was unable to obtain

permission to photocopy.  (A 1423H-I.)

      The unchallenged evidence concerning Bell Labs' program

since 1978 proves beyond question that it is possible for a research-

intensive corporation to provide its employees with complete and

useful access to journal articles through licensing from CCC and a

combination of other methods without any resort to free or

unauthorized photocopying.

M.    Texaco's Unauthorized Photocopying Is Not a

      Reasonable and Customary Practice

      The trial record evidence shows that a number of readily

available, reasonably priced and effective means exist, other than

unauthorized in-house photocopying, for providing research

personnel at companies such as Texaco with additional originals or

photocopies of copyrighted journal articles (including the TRS and

AAS services of the CCC, blanket license agreements with

individual publishers and purchasing photocopies from authorized

document delivery services).  (See pp. 18-19.)  It also shows that a

substantial number of major for-profit research-oriented companies

have been successfully employing one or more of those means for

many years to provide their research personnel with ready access to

journal articles (pp. 25-31).

      On the basis of that trial record evidence, much of which we

have reviewed in the prior pages of this brief, Judge Leval rejected

Texaco's contention that its unauthorized photocopying of entire

copyrighted journal articles was a "reasonable and customary

practice."  (LA 125-32.)  He found that such practices were not

"reasonable" because of the readily available alternatives to

unauthorized photocopying and that they were not "customary"

because many large corporations (including 11 of Texaco's

competitors) have been using the CCC's licensing services and one

or more of the other alternatives to free photocopying to provide

their research personnel with ready access to journal articles.  (LA

125-32).

      Moreover, since the advent of modern photocopying

technology in the early 1960's (see T Br. 21), publishers of

scientific and technical journals have consistently opposed the

notion that unauthorized photocopying of copyrighted works was an

acceptable norm.  During the 10 years of legislative deliberations

preceding passage of the Copyright Act of 1976, publishers

consistently voiced their objections about photocopying without

permission and made efforts, ultimately successful in Section

106(1), to make clear that the copyright owner had the exclusive

right to reproduce or authorize the reproduction of the copyrighted

work (thus eliminating the ambiguity perceived and relied on by the

majority in Williams & Wilkins Co. v. United States, 487 F.2d 1345,

1350-52 (Ct. Cl. 1973, aff'd by an equally divided Court, 420 U.S.

376 (1975) majority).  Indeed, that Congress did not view free

unauthorized photocopying as fair use is reflected in its

recommendation that an efficient mechanism be established to

license photocopying, which resulted in the formation of CCC.  (LA

83-84.)

N.    The Adverse Economic Effects on Copyright Owners If

      the Widespread Photocopying Practices Exemplified by

      Texaco Were Permitted as Fair Use

      There is an enormous demand among researchers at for-profit

industrial corporations such as Texaco for access to journal articles. 

(LA 111; pp. 11-15.)  That demand is being fulfilled in large part

by the widespread and systematic practice of making in-house

photocopies of journal articles (LA 126; pp. 12-15), a practice that

generates substantial economic and other benefits for the company

(pp. 17-18).

      Judge Leval found that free in-house photocopying of

copyrighted journal articles by and for researchers at industrial

corporations such as Texaco deprives publishers of significant

revenue (LA 111-15):

      It is clear that, if the making of unauthorized

      photocopies is found not to be fair use, Texaco will

      nonetheless continue to provide its scientists with

      copies, so long as there exists a means of doing so that

      is not excessively expensive or burdensome.  The

      publishers have persuasively shown that there exist

      convenient and reasonably priced procedures by which

      Texaco could obtain the necessary additional copies for

      its scientists.  If court rulings established that the

      existing practice of making photocopies violates

      plaintiffs' copyright, Texaco would resort to one or

      more of these procedures to provide its scientists with

      copies that are necessary for their research, and

      Texaco's doing so would add significantly to the

      plaintiffs' revenues and the value of its copyrights.

(LA 111-12.)

      In the same vein, Judge Leval said that he

      finds that if Texaco stopped making "free"

      photocopies, it would fill this gap through some

      combination of the methods discussed and, in doing so,

      would add significant value to the publishers'

      copyrights.  It is impossible to predict which of the

      possible procedures Texaco would employ to achieve

      speed and efficiency, to avoid administrative burden

      and to control expense.  But it is clear that whatever

      combination of procedures Texaco used, the

      publishers' revenues would grow significantly.

(LA 115.)  Specifically, he found that, absent such free copying,

Texaco would do any one or more of (a) purchasing some

additional subscriptions to maintain needed rapid circulation of

journals, (b) obtaining permission to photocopy under CCC's TRS

or AAS services, (c) ordering photocopies from document delivery

services that pay royalties to the publishers, and (d) entering into

blanket licenses with individual publishers.  (LA 113-15.)

      With respect to subscriptions, Judge Leval found (A 114) that

rapid circulation of journals is essential to researchers' work, and

that free in-house photocopying plays a major role in maintaining

rapid circulation.  If this photocopying stopped, circulation would

slow down, and Texaco would add at least some subscriptions to

speed up circulation, as it did in the past when it increased its

subscriptions to Catalysis to speed up circulation.  (LA 114; pp. 14-

15.)

                        ARGUMENT

I.   THE PROPER STANDARD OF APPELLATE REVIEW

AND TEXACO'S ERRONEOUS VERSION OF THE FACTS

A.    The Proper Standard of Appellate Review Is Customary

      Deference to the Factual Findings of the Trial Court

      in Accordance with the "Clearly Erroneous" Rule and

      De Novo Review of Its Conclusion Concerning Fair Use

      Texaco is wrong in arguing that fair use trial decisions are

open to full or de novo appellate review, that the usual clearly

erroneous rule does not apply and that this Court need not accord

normal deference to the district court's trial findings (T Br. 15).  It

is correct, in accordance with Harper & Row Pub., Inc. v. Nation

Enters., 471 U.S. 539, 560 (1985), and this Court's decisions in

New Era Pub. Int'l ApS v. Carol Pub. Group, 904 F.2d 152, 155

(2d Cir.), cert. denied, 498 U.S. 921 (1990), and Arica Inst., Inc. v.

Palmer, 970 F.2d 1067, 1077 (2d Cir. 1992) (see T Br. 15), that the

district court's ultimate conclusion concerning whether a particular

use is a fair use under 107 is a mixed question of law and fact,

and therefore that conclusion is subject to full or de novo appellate

review.  However, as Texaco fails to point out, the trial court's

findings of fact in a fair use case, just as in any other case, are

subject to the "clearly erroneous" standard of review set forth in

Rule 52(a) of the FRCP.  As this Court has said, "[t]he four factors

listed in Section 107 raise essentially factual issues" and thus the

fair use defense turns on "an examination of the facts in each

case".

      Here, as in Weissmann v. Freeman, 868 F.2d 1313, 1324-25

(2d Cir.), cert. denied, 493 U.S. 883 (1989), the clearly erroneous

standard is to be applied with respect to the statutory fair use

factors.  Analogously, the issue of "likelihood of confusion" in

Lanham Act trademark infringement cases requires the examination

and balancing of eight factors, and as to that, this Court has also

recently held that findings of fact of the district court "are subject

to reversal only if they are clearly erroneous, while the ultimate

balancing of the factors is reviewed de novo by our Court."  Nikon,

Inc. v. Ikon Corp., No. 92-9356, slip op. at 1603 (2d Cir. Jan. 20,

1993); Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d

1033, 1043-44 (2d Cir. 1992).

      In addition, under Rule 52(a) the clearly erroneous standard

applies to factual findings whether based directly on the evidence

or made as inferences drawn from the evidence.  Anderson v. City

of Bessemer City, 470 U.S. 564, 574 (1985); Hygrade Envelope

Corp. v. Gibraltar Factors Corp., 366 F.2d 584, 588 (2d Cir. 1966)

(Friendly, J.).  That Judge Leval made his factual findings on the

basis of a written record also does not alter the application of the

"clearly erroneous" standard.  FRCP 52(a) ("Findings of fact,

whether based on oral or documentary evidence, shall not be set

aside unless clearly erroneous...."); see Anderson v. City of

Bessemer City, 470 U.S. at 573-74; Bristol-Myers Squibb Co. v.

McNeil - P.P.C., Inc., 973 F.2d at 1043 (2d Cir.); Allied Chem. Int'l

Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476,

481 (2d Cir. 1985), cert. denied, 475 U.S. 1099 (1986); Weissmann

v. Freeman, 868 F.2d at 1322 (2d Cir.).  It is the function of the

district court to review and study the entire trial record, which Judge

Leval did.  It is not the function of this appellate court, as Texaco

intimates, to duplicate that effort by reviewing the trial record de

novo, or to act as a fact finder, except to resolve a contention that

a finding of fact was clearly erroneous.  See Harper & Row, 471

U.S. at 560; Anderson v. City of Bessemer City, 470 U.S. at 573-74;

Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714 (1986); cf.

Amadeo v. Zant, 486 U.S. 214, 228 (1988) ("no excuse for the

Court of Appeals to ignore the dictates of Rule 52(a) and engage in

impermissible appellate fact finding.")

      Texaco is also wrong when it claims (T Br. 15 n.7) that

plaintiffs have the burden of proving that Texaco's use was not fair. 

Fair use is an affirmative defense on which the defendant bears the

burden of proof.  To that effect see, e.g., Harper & Row, 471 U.S.

at 562; Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1255 (2d

Cir. 1986), cert. denied, 481 U.S. 1059 (1987); Wainwright Sec.,

Inc. v. Wall St. Transcript Corp., 558 F.2d 91, 97 (2d Cir. 1977),

cert. denied, 434 U.S. 1014 (1978); Rubin v. Boston Mag. Co., 645

F.2d 80, 85 (1st Cir. 1981).

B.    Texaco Presents an Erroneous Version of the Facts

      Disregarding the proper standard of appellate review, Texaco

disputes, mischaracterizes or ignores many of Judge Leval's

important factual findings.  In essence, it presents a rehash of its

version of the facts, often based on snippets of evidence, that it

submitted in its post-trial briefing to Judge Leval, and which he

rejected.  Texaco makes no contention that any of Judge Leval's

factual findings lack evidentiary support, except in those instances

that we have discussed elsewhere and refuted.   Moreover, Texaco's

baseless contention that Judge Leval failed to analyze the

circumstances surrounding the copying by Dr. Chickering of the

eight sample articles, and its astonishing insinuation that Judge

Leval failed to base his findings and determinations on the extensive

trial record, are contradicted by the face of Judge Leval's 67-

page decision and his 1292(b) certification order.  Here we review

several, but by no means all, of the many instances where Texaco

wrongly attempts in this Court to recast and reargue the facts.

      1.   Profit-Motivated Commercial Purpose.  Judge Leval

found, and Texaco acknowledges, that it is the regular practice of

Texaco's scientists, as typified by Dr. Chickering, to make and use

photocopies of entire copyrighted journal articles in the conduct of

their research for Texaco.  (LA 76, 77, 80, 130-131.)  Texaco,

however, contends  here, as it did below, that such photocopying "is

done for the purpose of advancing science, rather than for

commercial gain."  (LA 104-05; T Br. 6-7, 16-21.)  This flies in the

face of Judge Leval's explicit rejection of that factual contention

(LA 105) and his findings that such research, in which the use of

photocopies of journal articles is an integral and important element

that is fostered and maintained by Texaco, is solely for Texaco's

"own commercial gain," and that such photocopying "was carried

on in a commercial context for the purpose of producing

profits. . . ."  (LA 75, 105, 106, 122, 136.)  Texaco and the amici

also misstate those findings in saying that Judge Leval found a

"commercial purpose" simply because Texaco "is a for-profit

entity."  (T Br. 16, 20-21; AR Br. 11-12; AA Br. 22-24.) 

Moreover, Judge Leval rejected (LA 105) Texaco's contention (T

Br. 6-7) concerning the purported altruistic purposes of Texaco

scientists' speaking and writing activities, a contention that was

refuted by Texaco's own General Manager of Research and

Development, who testified that such activities were sanctioned and

motivated purely by Texaco's self-interest (A 932-34).

      2.   Texaco's Superseding, Non-transformative

Multiplication of Copies of Original Journal Articles.  Although

Texaco acknowledges (T Br. 22-23), as Judge Leval found (LA 99-

102, 104, 106), that photocopying by Dr. Chickering and his

colleagues merely produces exact duplicates of original journal

articles and is not a transformative use, Texaco nevertheless

contends on this appeal that those copies do not supersede or

perform the same functions as the originals.  (T Br. 7-8, 24)  Those

same contentions were advanced by Texaco in the court below and

rejected by Judge Leval.  (LA 99-100, 102; see pp. 19-21.)  He

found that "the principal purpose of Texaco's copies is to supersede

the original, and permit duplication"; "the major purpose of such

photocopying has been multiplication of copies . . . so that the

original can circulate without delay"; "the principal feature of the

photocopying is its capacity to give numerous Texaco scientists

their own copy based on Texaco's purchase of an original"; and

"the most prominent feature of this copying is that the copies

supersede the original and multiply its presence."  (LA 99-100, 102)

      3.   There are a Number of Reasonable and Practical

Alternatives to Free Unauthorized Photocopying of CCC-

Registered Journal Articles.  Texaco renews (T Br. 11-12, 31, 36,

40-41) the many contentions that it made, and which were rejected

in the court below (LA 111-15, 127-32), that there are no realistic

alternatives to free unauthorized photocopying.  It makes a number

of contentions, as it did below, that the CCC permissions and

licensing services (the TRS and AAS) are ineffective, unfair and

unworkable (T Br. 11-12, 40-43), entirely disregarding Judge

Leval's rejection of those contentions and his many detailed

findings that the services administered by the CCC are reasonably

priced, convenient and effective.  (LA 113-115, 127-129, 131-132.) 

Texaco contends here, as it did below, that document delivery

services are an ineffective method of obtaining authorized

photocopies of journal articles, again disregarding the evidence

concerning its own use of such services and Judge Leval's findings

that such services are effective (LA 112-14, 128).  It also contends

here, as it did below, that bilateral agreements or blanket licenses

with individual publishers of journals are not an effective means of

obtaining permission to photocopy journal articles, when Judge

Leval rejected those contentions, and instead found that such

agreements or licenses, like document delivery services, are a

relatively inexpensive and prompt means for obtaining working

copies of journal articles.  (LA 112-13, 128.)

      4.   Harm, Including Lost Subscription Sales.  Judge

Leval found that if Texaco's practice of making unauthorized

photocopies were not permitted, it would nonetheless continue to

provide its scientists with copies so long as there are available

means to obtain such copies that are not excessively expensive or

burdensome.  He found that a number of those available means

actually exist, including CCC licensing systems, bilateral or blanket

licensing agreements and the purchase of copies from authorized

document delivery services.  Also, as Judge Leval found, if

photocopying stopped or were not permitted, Texaco would

purchase a modest number of additional subscriptions to assure the

needed prompt circulation of journals.  Although, as Judge Leval

said, it would be impossible to predict which one or more of those

possible procedures Texaco would employ as the means of

providing copies of journal articles to its scientists, he found that

Texaco would use some combination of those methods and "it is

clear that whatever combination of procedures Texaco used, the

publishers' revenues would grow significantly."  (LA 115; 111-15,

127-32)  (emphasis added)

      Here, Texaco does not contest Judge Leval's factual findings

concerning the great harm plaintiffs would suffer from loss of CCC

and other licensing revenues, and instead contends as a legal matter,

wrongly as we discuss later, that such harm should not be

considered in fourth factor analysis.  As to subscription sales,

however, Texaco contends here, as it did below, that from a factual

standpoint plaintiffs would not suffer cognizable harm from the loss

of potential sales of additional subscriptions if photocopying stopped

or were not permitted, a contention that Judge Leval rejected based

on that evidence.  (LA 114; see pp. 14-15.)  Similarly, Texaco

renews its contention here (T Br. 31, 36), which Judge Leval

rejected, that plaintiffs would not suffer harm from the loss of

revenues resulting from the activities of authorized document

delivery services.  (LA 113.)

      5.   Reasonable and Customary Practices.  Texaco again

contends, as it did below, (T Br. 2, 7-9, 26-28; see AR Br. 5, 6, 36-

40), that free unauthorized photocopying of entire copyrighted

journal articles by Texaco and other for-profit research-oriented

companies is a "reasonable and customary" practice.  Judge Leval

rejected those contentions.  He found that, whatever may have been

the case prior to 1978, the  development and use since that time of

CCC and other licensing procedures undercuts any basis for finding

that such free unauthorized in-house photocopying by Texaco and

other for-profit research-oriented companies is either "reasonable"

or "customary."  He based those findings on the existence of readily

available, reasonably priced, efficient means of obtaining authorized

photocopies or additional originals and the use of such means by a

substantial number of research-oriented profit-motivated companies. 

(LA 125-32.)

II.  STATUTORY FOUR FACTOR ANALYSIS AND

RELEVANT EQUITABLE CONSIDERATIONS COMPEL

REJECTION OF TEXACO'S FAIR USE DEFENSE

      Section 106(1) of the Copyright Act of 1976 grants the

copyright owner, subject to fair use under 107, the exclusive rights

"to reproduce the copyrighted work in copies" and to authorize

others to reproduce the copyrighted work (thus clearing up an

ambiguity that existed under the 1909 Act (see LA 123)).  By

granting such exclusive rights, and thus establishing marketable

rights in accordance with the constitutional concept (see LA 89), the

copyright protection offered under 106 "supplies the economic

incentive to create and disseminate ideas."  Harper & Row, 471

U.S. at 558; Mazer v. Stein, 347 U.S. 201, 219 (1954).

      In contrast, fair use under 107, as the Supreme Court and

this Court have held, is a "privilege" allowing the abridgement or

copying of copyrighted material in special circumstances without

obtaining permission of or compensating the copyright owner that

deprives that owner of the usual benefits of copyright protection

under 106.  As such, fair use is a "limited exception" to the

property rights conferred by the Copyright Act.  Maxtone-Graham

v. Burtchaell, 803 F.2d at 1255 (2d Cir.).

      The fair use doctrine is simply an effort "to prevent rigid

application of the Copyright Act" when it would unreasonably

prevent the dissemination of information or stifle creativity. 

Nothing in the record remotely suggests that dissemination of

information would be impaired, or creativity in research would be

stifled, if Texaco's claim of fair use were disallowed.  To the

contrary, access to the information is readily available through use

of originals and authorized photocopies.

       In addition, the fair use doctrine, as this Court has observed,

is "not a license for corporate theft, empowering a court to ignore

a copyright whenever it determines the underlying work contains

material of possible public importance."  Iowa State Univ. Research

Found., Inc. v. ABC, Inc., 621 F.2d 57, 61 (2d Cir. 1980).  In

essence, this is Texaco's principal argument " that research is of

public importance and therefore for that reason alone fair use should

be allowed.  (This subject is also later discussed.)

      Moreover, fair use is not a haven for copiers who can afford

to pay for permission to copy.  It would be "fundamentally at odds

with the scheme of copyright" to permit fair use as a means of

"depriving copyright owners of their right in the property precisely

when they encounter those users who could afford to pay for it." 

Harper & Row, 471 U.S. at 559.  Texaco, General Motors,

Chrysler, Ford and the members of the Chemical Manufacturers

Association are precisely the type of companies that can afford to

pay for their use of others' intellectual property, just as, at the time

of trial, 110 AAS licensees were paying for that use.

      In the end, fair use is an equitable doctrine " an equitable

rule of reason developed by the courts that was codified in the 1976

Act (LA 120).  And, as this Court has instructed, even before

undertaking the traditional four factor analysis, "the equitable

considerations that exist in the case at bar" must be considered. 

Weissmann v. Freeman, 868 F.2d at 1324 (2d Cir.).

      Here, as Judge Leval found, there are no equitable or other

reasons why Texaco should be allowed to engage in systematic in-

house photocopying of copyrighted articles in CCC-registered

journals, without paying for permission to make those photocopies. 

(LA 120-21.)  There is no reason why publishers of scientific and

technical journals should be compelled to subsidize the research

activities that Texaco engages in solely for its own "commercial

gain", and this is doubly true since Texaco pays for all of the other

costs necessary to carry on those research activities.  Rejecting

Texaco's claim of fair use will not harm scientific research because

plaintiffs are not seeking to prohibit or limit the photocopying of

journal articles, or to deny Texaco and other companies access to or

the use of original journal articles.  On the other hand, if the courts

were to accept Texaco's claim of fair use, it would mean the

destruction of the multi-million-dollar photocopying licensing

market that has been built up through great effort over the last 15

years at the recommendation of Congress.

      Texaco retains every option and may proceed in any way it

chooses.  It can pay for photocopying CCC-registered journal

articles through the TRS (see LA 129 n.22), or obtain an AAS

blanket annual CCC license; it can buy authorized photocopies from

authorized document delivery services as it has done in the past

(A 860-62, 917-18); it can, as it has done, purchase additional

subscriptions to maintain speedy circulation of journals (LA 110-

111); or, it can decide to do none of these things, and revert to

practices it and others followed before the modern age of low-cost

photocopying.  (A 957.)  The issue is solely one of economics.

      Judge Leval's straightforward statutory four factor analysis

confirms the lack of any justification for Texaco's defense of fair

use and clearly supports his rejection of Texaco's contentions.

A.    The First Factor

      The many factual findings made and discussed by Judge

Leval that Texaco's copying is a commercial use for a profit-

motivated purpose, and that it is a superseding use which is neither

transformative nor productive, led inexorably to his conclusion that

the first factor strongly disfavors fair use.  (LA 96-106, 136.)

      1.   A Commercial Use For a Profit-Motivated Purpose

Disfavors Fair Use.  The authorities are unanimous that a

commercial use for a profit-motivated purpose is presumptively

unfair.  Sony, 464 U.S. at 451; Harper & Row, 471 U.S. at 562

(quoting Sony); Stewart v. Abend, 495 U.S. 207, 237 (1990); Rogers

v. Koons, 960 F.2d 301, 309 (2d Cir.), cert. denied, 113 S. Ct. 365

(1992); Association of Am. Med. Coll. v. Cuomo, 928 F.2d at 525

(2d Cir.).

      This principle simply executes the explicit first factor

statutory command that in each particular case the court must

consider the "purpose and character of the use, including whether

such use is of a commercial character or is for non-profit

educational purposes."  Thus, as this Court stated last year, the

first factor "asks whether the original was copied in good faith to

benefit the public or primarily for the commercial interests of the

infringer."  Rogers v. Koons, 960 F.2d at 309 (2d Cir.); accord

MCA, Inc. v. Wilson, 677 F.2d 180, 182 (2d Cir. 1981); Pacific &

Southern Co. v. Duncan, 744 F.2d 1490, 1496 (11th Cir. 1984),

cert. denied, 471 U.S. 1004 (1985).  As the Supreme Court

expressed the point in authoritative fashion, "the crux of the

profit/non-profit distinction [made by Section 107(1)] is . . . whether

the user stands to profit from exploitation of the copyrighted

material without paying the customary price."  Harper & Row, 471

U.S. at 562; Rogers v. Koons, 960 F.2d at 309 (2d Cir.) (same). 

In whichever way the test is articulated, Texaco engages in

unauthorized copying for its own commercial interests, and stands

to profit from such copying without paying the customary price.

      Applying these principles, Texaco's commercial use of copies

of the copyrighted work for a profit-motivated purpose strongly

disfavors the claim of fair use, and its contentions otherwise (T Br.

17-21) are without merit.  This is doubly true here because the

copying itself adds to Texaco's profitability by increasing research

efficiency and saving time and effort, and thus saving the financial

cost of such additional time and effort.

      Of course, a commercial use for a profit-motivated purpose

is not, ipso facto, disqualified from fair use protection.  A court "

in reaching its ultimate conclusion whether a particular use is or is

not a fair use " must consider and weigh all of the facts pertaining

to this and the other interrelated statutory factors and to equitable

considerations.  (LA 93.)  Thus, there may be easy illustrations of

a commercial for-profit use of an insubstantial portion of a

copyrighted work where the copyright owner will not suffer any

cognizable actual or potential harm, that would qualify as fair use. 

Here, however, there is no semblance of any such circumstances. 

Accordingly, Texaco's commercial for-profit copying strikes

decisively against fair use in first factor analysis.

      2.   A For-Profit Research Use or Purpose Does Not

Favor Fair Use.  Texaco stretches fair use doctrine out of shape in

contending that it is entitled to engage in free unauthorized in-house

photocopying of entire copyrighted journal articles simply because

such copying is done for the salutary purpose of conducting

scientific research.  Judge Leval properly rejected any such

contention, since precious little copyright protection would remain

for any scientific or educational material if that were sufficient to

warrant fair use.  (LA 100-01.)  Similarly, the Supreme Court

rejected Texaco's argument, in a different context, when it held in

Harper & Row that the court below had erred in concluding that the

unauthorized use of the copyrighted material "was excused by the

public's interest" in the subject matter of that material.  471 U.S. at

569; id. at 555-59.  As the Supreme Court emphasized in Harper &

Row,

      It is fundamentally at odds with the scheme of

      copyright to accord lesser rights in those works that

      are of greatest importance to the public.  

471 U.S. at 559.

      There is additionally a significant difference for fair use

purposes between non-profit research and commercial profit-

motivated research, as pointed out by the U.S. Register of

Copyrights in his 1983 Report:

      [R]esearch in applied physics, for example, performed

      by an employee of an aerospace firm, and similar

      research by a graduate student in a university, may

      both involve the photocopying of the same scholarly

      articles but the copyright consequences are different:

      the former copying is of a clearly commercial nature,

      and less likely to be fair use.

Report of the Register of Copyrights - Library Reproduction of

Copyrighted Works (17 U.S.C. 108) 85 (1983).  A leading

commentator has made the same point, as applied to first factor

analysis, and the statutory dichotomy between for-profit and non-

profit purposes, when he observed:

      It is sometimes alleged that commercial entities such

      as drug, chemical, or manufacturing corporations are

      engaged in "research" within the meaning of Section

      107. . . .  Such entities are engaged in for-profit

      activities; and . . . under normal circumstances, for-

      profit "research" is not eleemosynary or altruistic and

      thus should be considered a presumptively unfair

      commercial use.

W. Patry, The Fair Use Privilege in Copyright Law 416-17 (1985)

("Patry, Fair Use").

      The first sentence of Section 107 non-inclusively identifies

criticism, comment, news reporting, teaching, scholarship or

research as possible purposes qualifying for fair use treatment.  The

text of that sentence does not say, and does not mean, that any

unauthorized copying of copyrighted material for any of those

purposes is fair use.  In that respect, the Supreme Court has

declared authoritatively that this enumeration merely provides

several examples of the kind of uses that may, in a given case, be

found to be fair use after a full four factor analysis, and none of

which is presumptively a fair use:  "This [statutory] listing was not

intended to be exhaustive, or to single out any particular use as

presumptively a "fair" use."  Harper & Row, 471 U.S. at 561

(citations omitted).  Moreover, the text of the first factor requires

consideration and weighing of "the commercial or nonprofit

character" of the activity Sony, 464 U.S. at 449; Harper & Row,

471 U.S. at 562 ("the profit/nonprofit distinction").

      Accordingly, and observing the statutory distinction between

non-profit and for-profit uses, the Supreme Court and appellate and

district courts on many occasions have determined, based on the

particular facts involved, that the unauthorized copying of

copyrighted material for "news reporting" or for educational

purposes (two of the purposes explicitly mentioned in the first

sentence of Section 107) were "commercial uses" weighing against

fair use in first factor analysis.  Indeed, this Court in Weissmann

gave no weight to the fact that the purpose of the use was for

"teaching", "scholarship" and "research" and awarded the first factor

to the copyright owner because that use was superseding, non-

productive and motivated by professional advancement.  868 F.2d

at 1324 (see LA 141).

      Thus, the outcome of first factor analysis does not rest on

whether the unauthorized copying was done for one of the purposes

enumerated in the first sentence of Section 107.  Although this

Court has indicated that if the unauthorized copying falls into one

of those categories there is a strong, but not irrebuttable

presumption that the first factor favors fair use, that presumption,

even assuming it applies to for-profit research, has been rebutted

here by the clearly commercial, superseding nature of Texaco's use. 

Furthermore, in each of the three recent cases in which that

suggestion was made, the factual circumstances were altogether

different from those involved here.  None of those cases involved

for-profit scientific purposes or the superseding copying of the

entirety of the copyrighted work.  Each of those cases involved non-

superseding copying of a small portion of a copyrighted work. 

Also, unlike the present case, the allegedly infringing work in each

of those cases was a new work into which the plaintiff's work had

been incorporated, and the kind of use in question had historically

been held by courts to be a fair use.  See Arica Inst., Inc. v. Palmer,

970 F.2d at 1077-78 (2d Cir.) (a minor portion of plaintiff's work

included in defendant's book " a work of criticism, comment,

scholarship and research); Wright v. Warner Books, Inc., 953 F.2d

731, 736, 738 (2d Cir. 1991) (quotations and paraphrases of a very

small portion of the original work included in defendant's

biography); New Era v. Carol Pub., 904 F.2d at 156 (2d Cir.) (a

small number of selected quotations included in defendant's

biography).  See also Judge Leval's discussion of these decisions,

and their possible impact here.  He concludes that this Court did not

intend to adopt a categorical test for the first factor, and that

plaintiffs should in any event prevail in this case as the result of the

overall inquiry, because of the decisive effect in their favor of the

third and fourth factors and equitable considerations.  (LA 140-41).

      Also, neither Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d

1510 (9th Cir. 1992), amended, 1993 U.S. App. LEXIS 78 (9th Cir.

1993) nor Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d

832 (Fed. Cir. 1992), supports Texaco's position that the research

purpose of Dr. Chickering's copying favors fair use for first factor

purposes.  (See T Br. 17; AR Br. 11-12, 16; AA Br. 22-23.)  Those

cases involved entirely different circumstances.  In both, the courts

were being asked to prohibit reverse engineering of unreadable

computer object codes where access to unprotected ideas and

functional elements was physically impossible in the absence of the

copying inherent in the reverse engineering.  Sega, 977 F.2d at

1514, 1518, 1520, 1526; Atari, 975 F.2d at 843-44.  Thus, in Sega

the court stressed repeatedly that it was finding fair use only

because "disassembly provides the only means of access to those

elements of the code that are not protected by copyright. . . ."  977

F.2d at 1518; id. at 1514, 1520, 1526; accord Atari, 975 F.2d at

843-44.  In stark contrast to those circumstances, Texaco cannot

make any claim that unauthorized in-house photocopying of entire

journal articles is the only possible means of access to unprotected

ideas and information contained in journal articles.  Texaco's

research personnel have ready access to all of the ideas and

information contained in the journal articles simply by reading

original journal issues or reading authorized photocopies obtained

by any of the readily available means.

      For these and the other reasons discussed by Judge Leval, he

was correct in rejecting Texaco's contentions that the research

purpose of its unauthorized photocopying favored fair use in first

factor analysis or that such research purpose ipso facto rendered that

copying fair use.

      3.   Commercial Use in First Factor Analysis Does Not

Require The Sale or Distribution of Copies.  There is no basis for

Texaco's contention that a commercial use for a profit-motivated

purpose requires the sale or distribution of unauthorized copies of

the copyrighted work by the alleged infringer.  This ignores the

ordinary meaning of the words used in the statutory first factor, the

"profit/non-profit" distinction made in that text, the absence of any

such purported requirement in the statute, and prior judicial

authority establishing for first factor purposes that an internal use

can be "commercial."  E.g., Sega Enters. Ltd. v. Accolade, 977 F.2d

at 1522-23; Allen-Myland, Inc. v. IBM Corp., 746 F. Supp. at 534;

Telerate Sys., Inc. v. Caro, 689 F. Supp. at 229; Schuchart &

Assocs. Pro. Eng., Inc. v. Solo Serve Corp., 220 U.S.P.Q. 170, 181-

82 (W.D. Tex. 1983); Aitken, Hazen, Hoffman, Miller, P.C. v.

Empire Constr. Co., 542 F. Supp. 252, 260 (D. Neb. 1982).  See

also Herbert v. Shanley Co., 242 U.S. 591, 594-95 (1917).

      Texaco repeatedly contends that its unauthorized in-house

photocopying does not compete with plaintiffs' copyrighted work. 

Certainly the unauthorized in-house copying of journal articles by

Texaco and other for-profit research-oriented companies supplants

the great existing and future demand to obtain authorized

photocopies or additional originals of those articles through any one

or more of the readily available means, and in that important sense

free photocopying competes with plaintiffs' efforts to sell journal

subscriptions and license photocopying of journal articles. 

(LA 113-14.)  See Weissmann, 868 F.2d at 1326 (2nd Cir.).

      4.   Sony and Williams & Wilkins Do Not Support

Texaco's Position.  In his decision, Judge Leval at some length

discusses and correctly analyzes the Sony and Williams & Wilkins

decisions and the pertinent distinctions between those cases and the

facts of this one (LA 121-25, 127, 129), including among many

other things, in both those cases, the non-profit non-commercial

purposes of the copying and the absence of harm to the copyright

owners.  In light of that, we need not discuss those matters further,

except to address one new contention Texaco has advanced here,

that it did not make below, concerning Williams & Wilkins.

      Texaco is wrong (T Br. 20) in now attempting to equate the

facts here to the facts in Williams & Wilkins Co. v. United States,

487 F.2d 1345 (Ct. Cl. 1973), aff'd by an equally divided Court,

420 U.S. 376 (1975).  In Williams & Wilkins, as the majority

emphasized, the hallmark of the entire duplicating enterprise was

"untainted" by commercial or profit-making purpose on the part of

the two government agencies making the photocopies, the National

Institutes of Health ("NIH") and the National Library of Medicine

("NLM") (487 F.2d at 1354; LA 99).  Nevertheless, purportedly

showing that the copying was being done for a commercial profit-

motivated purpose, Texaco refers to the distribution of photocopies

by the NLM and NIH of medical journal articles to scientists at

drug companies and to practicing doctors.  First, this is wrong

because the copying (the alleged infringing acts) was not being done

by the drug companies or doctors, but by non-profit government

agencies solely, as the majority in Williams & Wilkins concluded,

for non-profit/non-commercial purposes.  See Los Angeles News

Serv. v. Tullo, 973 F.2d 791, 797 (9th Cir. 1992).  Second, only

12% of the copies were distributed to drug company scientists or

doctors, 487 F.2d at 1349, 1374, a fact referred to by the Williams

& Wilkins minority as one of many facts they considered as support

for their view that the copying was not fair use.  487 F.2d at 1366-

67, 1374.  Here, of course, Texaco's photocopying is entirely for a

commercial profit-motivated purpose.

      5.   If, As Is Doubtful, Legislative History Concerning

Section 108 Has Any Bearing On Fair Use Under Section 107,

It Disfavors Fair Use In This Case.  As we have pointed out, and

as Texaco acknowledges (T Br. 19), as to library copying, its 108

defense has not been tried or adjudicated and therefore no Section

108 issues are involved in this appeal.  However, Texaco argues

wrongly that the legislative history concerning Section 108 helps

show that Texaco's unauthorized photocopying of journal articles is

not a "commercial use" under the first fair use factor of 107.  (T

Br. 18-19; see AR Br. 13-14, 44-47.)

      As Judge Leval correctly pointed out, Section 108 explicitly

provides that none of its provisions "in any way affects the right of

fair use".  (LA 137; 108(f)(4).)  Also, the language in 108(a)(1)

concerning "direct or indirect commercial advantage" does not

appear in 107; it does appear in 110(4) and the legislative history

of that section makes clear that such phrase covers activities "in

connection with any commercial or profit making enterprise." 

S. Rep. No. 94-473 at 77; H.R. Rep. No. 94-1476 at 85.

      In advancing its contentions on this subject, Texaco relies on

selected quotations in the House Report on 108 (T Br. 19), but

fails to refer to a very important point made in the same House

Report, and completely fails to discuss relevant portions of the

Senate and Conference reports.  See H.R. Report No. 94-1476 at 74-

75 (it is only "[i]solated, spontaneous making of single photocopies

by a library in a for-profit organization, without any systematic

effort to substitute photocopying for subscriptions or purchases.

. . ." that should not be considered copying for "indirect or direct

commercial advantage"); S. Rep. No. 94-473 at 67 (indicating that

a "commercial organization should purchase the number of copies

of a work that it requires [for its employees], or obtain the consent

of the copyright owner to the making of photocopies"); id. at 70

(the systematic reproduction of copies of "articles or other

contributions to copyrighted collections or periodicals . . . whether

or not multiple copies are reproduced" is not authorized); H.R.

Conf. Rep. No. 94-1733, 94th Cong., 2d Sess. at 73-74 (1976) ("the

isolated, spontaneous making of single photocopies by a library . . .

in a for-profit  organization without any commercial motivation . . .

would come within the scope of Section 108").

      Clearly, the evidence establishes that Texaco's systematic,

profit motivated, unauthorized photocopying practices that have an

immediate commercial motivation and economic benefit are not the

"isolated," "spontaneous" and "without any commercial motivation"

practices referred to in the legislative history (pp. 17-18). 

Accordingly, if and to the extent the legislative history concerning

Section 108 is relevant, it adds to the reasons for disfavoring fair

use in this case.

      6.   Texaco's Photocopying Is A Non-Transformative,

Non-Productive, Superseding Use That Very Strongly Weighs

Against Fair Use.  Judge Leval's discussion of this subject, on the

facts of this case, leads inexorably to the conclusion that the first

statutory factor concerning purpose and use very strongly disfavors

fair use.  (LA 93-96, 99-104.)  Indeed, where copies duplicate and

supersede the original, as a general rule fair use is precluded. 

Harper & Row, 471 U.S. at 550 ("the fair use doctrine has always

precluded a use that "supersede[s] the use of the original""); United

Tel. Co. v. Johnson Pub. Co., 855 F.2d 604, 610 (8th Cir. 1988)

(same); Folsom v. Marsh, 9 F. Cas. 342, 345 (C.C. Mass. 1841);

Basic Books, Inc. v. Kinko's Graphics Corp., 758 F. Supp. at 1530

(copying "that merely repackages or republishes the original is

unlikely to pass the test" under the first factor); 3 M. Nimmer & D.

Nimmer, Nimmer on Copyright 13.05[B], at 13-102.28(12) (1992)

("[i]f both plaintiff's and defendant's works are used for the same

purpose, then . . . the defense of fair use should not be available. . .

.") (emphasis omitted); id. at 13-102.28(21); see also Wainwright

Sec., Inc. v. Wall St. Transcript Corp., 558 F.2d 91, 96 (2d Cir.

1977), cert. denied, 434 U.S. 1014 (1978); Marcus v. Rowley, 695

F.2d 1171, 1175 (9th Cir. 1983).

      Texaco's contention (T Br. 25-26; AL Br. 11-12), made in

reliance on Consumers Union of U.S., Inc. v. General Signal Corp.,

724 F.2d 1044 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984),

that Dr. Chickering made the photocopies supposedly to duplicate

accurately certain material in the articles and this favors fair use, is

entirely misplaced.  On this point Consumers Union is not good

law, as Texaco fails to point out.  See New Era Pub. Int'l ApS v.

Henry Holt Co., 884 F.2d 659, 661 (2d Cir. 1989), cert. denied, 493

U.S. 1094 (1990) (the language in Consumers Union indicating that

verbatim copying for accurate reporting favors fair use is "an

incorrect statement of the law. . . .")  Moreover, in Consumers

Union, the court found the copying in question " 29 words out of

an article of 2100 words " to be "insubstantial", 724 F.2d at 1050,

and its discussion of concern for accuracy was not a part of its first

factor analysis, 724 F.2d at 1049.  In addition, in Consumers Union

and the other cases cited in the ALA brief (p. 12), the courts were

concerned with the copier's need to report facts accurately to the

public, and emphasized the modest, minimal or limited amount

copied.  (See LA 103-04.)

      As to Texaco's contention that its use of unauthorized

photocopies is ipso facto "productive" because it is part of scientific

research, we need not reiterate what we have said earlier in

commenting on Judge Leval's determination that such use is not

"productive", as that term is understood in fair use doctrine.  Nor

need we reiterate what was said before (pp. 19-21, 40) concerning

the lack of any basis for Texaco's contention (T Br. 23-24) that its

use of photocopies is not a superseding use because researchers

prefer to work with photocopies rather than originals.  As to

Texaco's contention (T Br. 16) based on the reference in 107 "to

fair use by reproduction in copies," the comments made in the

House and Senate Reports concerning 107 provide a complete

refutation.  That reference is "not intended to give those kinds of

reproduction any special status under the fair use provision or to

sanction any reproduction beyond the normal and reasonable limits

of fair use."  H. R. Rep. No. 94-1476 at 66; S. Rep. No. 94-473 at

62.  Copying of the entirety of a copyrighted work, as occurred

here, is ordinarily not fair use.  See authorities cited in n.32.  There

is, in the end, no genuine argument that can be advanced by Texaco

that its use of photocopies is anything other than superseding, non-

productive and non-transformative.

      7.   Texaco's Position Is Not Supported By Any Claimed

"Reasonable and Customary Practice" of For-Profit Research-

Oriented Companies To Engage In Free In-House Photocopying

Of Copyrighted Journal Articles.  Judge Leval's factual finding

that there is no such "reasonable and customary" practice ends the

matter.  (LA 129-30.)  In any event, there is no basis for any claim

that the concept of "reasonable and customary practices" plays a

role in fair use adjudication.

      No American case has ever found fair use based on the

existence of a customary practice of quotation, abridgment, or any

other form of unauthorized copying.  The only decision to that

effect, and on which Texaco relies (T Br. 26-27), is one rendered

more than two centuries ago in England, Dodsley v. Kinnersley, 27

Eng. Rep. 270, 271 (Ch. 1761).  Its approach has not been followed

by American courts.  In fact, American courts that have considered

the question have rejected any contention, similar to the one Texaco

advances, that custom or practice plays any role in fair use

adjudication.  See Bellsouth Adv. & Pub. Corp. v. Donnelley Info.

Pub., Inc., 719 F. Supp. 1551, 1561 (S.D. Fla. 1988), aff'd, 933

F.2d 952 (11th Cir. 1991), vac'd & reh'g en banc granted, 977 F.2d

1435 (11th Cir. 1992) (industry practice "is not relevant to the fair

use defense"); Maxtone-Graham v. Burtchaell, 631 F. Supp. 1432,

1436 (S.D.N.Y.), aff'd, 803 F.2d 1253 (2d Cir. 1986), cert. denied,

481 U.S. 1059 (1987) (whether or not a custom existed was

irrelevant); Meeropol v. Nizer, 417 F. Supp. 1201, 1210 (S.D.N.Y.

1976), rev'd on other grounds, 560 F.2d 1061 (2d Cir.), cert.

denied, 434 U.S. 1013 (1977) ("Fair use is a legal question to be

determined by the court not by alleged industry practices"); see

also, Walter v. Steinkopff, 3 Ch. D. 489 (1892) (in which the

custom of newspapers to copy from each other was no justification

for infringement).  Moreover, none of the courts in the American

cases cited by Texaco (T Br. 26 n.11) actually considered evidence

of alleged industry custom in determining whether the use was a

fair use, or indicated that any such evidence should be considered.

                      *     *     *

      In every respect, first factor analysis disfavors fair use, in our

judgment, conclusively.

B.    The Second Factor

      In considering the "the nature of the copyrighted work,"

Judge Leval determined that "the aspect" that favors plaintiffs is

that the articles are created and published with the purpose and

intention of benefitting from copyright protection and that the

copyright law in implementing the constitutional objective was

intended to provide such protection in factual circumstances such as

those presented here.  (LA 106.)  Moreover, when the copyrighted

work "represents an investment of time in anticipation of a financial

return," that fact weighs against fair use in second factor analysis. 

Rogers v. Koons, 960 F.2d 301, 310 (2d Cir.), cert. denied, 113 S.

Ct. 365 (1992); accord MCA, Inc. v. Wilson, 677 F.2d 180, 182 (2d

Cir. 1981).  And as Judge Leval found specifically with respect to

Catalysis, and comparable journals:

      [c]opyright protection is vitally necessary to the

      dissemination of scientific articles . . . .  Copyright

      protection is essential to finance the publications that

      distribute them. . . .  If cheap photoduplications could

      be freely made and sold at a fraction of the

      subscription price, Catalysis would not sell many

      subscriptions; it could not sustain itself, and articles of

      this sort would simply not be published.  And without

      publishers prepared to take the financial risk of

      publishing and disseminating such articles, there would

      be no reason for authors to write them; even if they

      did, the articles would fail to achieve distribution that

      promoted the progress of science.

(LA 107).  See Harper & Row, 471 U.S. at 558 ("By establishing

a marketable right . . . copyright supplies the economic incentive to

create and disseminate ideas.").

      Nevertheless, Judge Leval concluded that the second factor

favors Texaco because of the factual content of such articles and

prior decisions indicating that ""the scope of fair use is greater with

respect to factual rather than nonfactual works"." (LA 107-08; New

Era Pub. v. Carol Pub., 904 F.2d at 157 (2d Cir.).)  However,

notwithstanding their factual content, the journal articles are

expressions of highly original, creative and imaginative thinking,

containing new theories, new hypotheses, and new solutions to

difficult problems.  They are as much or more creative than other

works containing factual information that have been found by this

and other courts to be creative.  See Association of Am. Med.

Coll. v. Cuomo, 928 F.2d at 524 (2d Cir.) (Medical Colleges

Admission Test is a "creative, imaginative, and original" work);

College Entrance Exam. Bd. v. Cuomo, 788 F. Supp. 134, 141

(N.D.N.Y. 1992) (various graduate school entrance tests); Allen-

Myland, Inc. v. IBM Corp., 746 F. Supp. at 534 (computer

microcode was a creative work because it was the product of

substantial creative effort); Hi-Tech Video Prod., Inc. v. Capital

Cities/ABC, Inc., 804 F. Supp. 950, 956 (W.D. Mich. 1992) (video

travelogue).  Moreover, the public interest in not restraining the free

flow of factual information, see Harper & Row, 471 U.S. at 563, is

not implicated here because journal articles remain freely available.

      Although we believe that consideration of all these matters

should have led Judge Leval to award the second factor to plaintiffs,

in our judgment the rejection of the fair use defense based on

consideration and weighing of all the four statutory factors and

other equitable considerations is not affected even if second factor

analysis favors Texaco.

C.    The Third Factor

      Because copying an entire copyrighted work ordinarily

militates against a finding of fair use, Judge Leval correctly

concluded that "[t]his factor clearly favors the plaintiffs, as

Chickering has copied the entirety of the [eight] copyrighted articles

in question."  (LA 109.)

      The copying here is substantial not only from a quantitative

standpoint, but from a qualitative one as well.  "[T]he fact that a

substantial portion of the infringing work was copied verbatim is

evidence of the qualitative value of the copied material. . . ." 

Harper & Row, 471 U.S. at 656.  Accord Cable/Home Comm. Corp.

v. Network Prods., Inc., 902 F.2d 829, 845 (11th Cir. 1990).  Here,

Dr. Chickering and the other Texaco research personnel make or

obtain copies of entire articles, thus conclusively showing that these

articles are qualitatively significant.  Only in an unusual exceptional

case like Sony or Williams & Wilkins, neither of which are

appropriate to the facts presented here (see LA 121; those cases are

at "the remote extremities" of fair use), has copying an entire work

been held to be fair use.

      Texaco does not dispute the fact that entire articles were

copied and it ignores the explicit text of the third statutory factor

that commands consideration of "the amount and substantiality of

the portion used in relation to the copyrighted work as a whole"

(emphasis supplied).  Instead, Texaco advances the same baseless

argument that Judge Leval rejected below (LA 109-10), that

copying the entirety of a copyrighted journal article is not a

quantitatively or qualitatively substantial taking because each article

is published in a larger copyrighted work " the journal issue.  (T

Br. 28-29.)

      There can be no doubt that each article is a separate

copyrighted work.  As Judge Leval found, an individual article

becomes a copyrighted work long before it is published in a

particular journal, since copyright inheres in all original, fixed

"works of authorship" from the moment of creation (LA 110).  17

U.S.C.A. 102(a), 302(a) (West 1977 & Supp. 1992).  Moreover,

the provisions of the Copyright Act covering collective works make

it abundantly clear that a journal article is a copyrighted work in

and of itself, apart from the other articles and the journal

collectively.  See 17 U.S.C.A. 101 (West 1977) (defining

"collective work" as an assemblage of "separate and independent

works"); id. 201(c) ("Copyright in each separate contribution to a

collective work is distinct from copyright in the collective work as

a whole. . . .").

      It makes no difference that Academic Press, for reasons of

convenience and economy (LA 110), simultaneously registers both

the individual articles and the issue of Catalysis in a manner

prescribed by the Copyright Office.  The manner of registration

simply has nothing to do with whether each article is a separate

copyrighted work.

      A number of decisions confirm Judge Leval's conclusion that

the "copyrighted work" against which the copying is measured is

the article, not the larger publication in which it may appear.  See

Consumers Union of U.S., Inc. v. General Signal Corp., 724 F.2d

at 1050 (2d Cir.); Weissmann v. Freeman, 868 F.2d at 1325 (2d

Cir.); Hustler Mag., Inc. v. Moral Majority, Inc., 796 F.2d at 1154-

55; Pacific & Southern Co. v. Duncan, 744 F.2d at 1497; Quinto v.

Legal Times of Wash., Inc., 506 F. Supp. 554, 560 (D.D.C. 1981). 

Even the Williams & Wilkins majority recognized that photocopying

an entire article was copying an entire copyrighted work, for it felt

obliged to go to some effort to reject the established legal principle

that copying the entire work generally cannot be fair use.  487 F.2d

at 1353; see id. at 1366 (Cowen, C.J., dissenting).

      Texaco's contentions concerning the third factor are baseless

and misleading.  Judge Leval correctly awarded the third factor to

plaintiffs.

D.    The Fourth Factor

      The fourth factor requires an examination of the facts to

determine "the effect of the use on the potential market for or value

of the copyrighted work," an inquiry which Judge Leval conducted. 

As a result he made a series of factual findings that the actual and

potential markets for the copyrighted work would be greatly

harmed, and the value of those copyrighted works would be very

substantially diminished by the unauthorized copying of those

works, as exemplified by Dr. Chickering.  (LA 111, 120, 125.)  On

this basis, Judge Leval concluded that the evidence "powerfully

demonstrated" plaintiffs' entitlement to prevail as to the fourth

factor (LA 111), giving "strong support to the conclusion that this

copying is not a fair use."  (LA 120.)

      1.   Judge Leval's Determinations Are In Full Accord

With Well-Established Principles Of Fourth Factor Analysis. 

The fourth factor "is undoubtedly the single most important element

of fair use."  Harper & Row, 471 U.S. at 566; Rogers v. Koons, 960

F.2d at 311 (2d Cir.); Weissmann v. Freeman, 868 F.2d at 1325 (2d

Cir.).  This is true because the underlying concept of constitutional

and statutory copyright protection is to create marketable rights that

supply economic incentives to create and disseminate ideas in

published works.  Thus, in the overall weighing process involved in

making a fair use determination, the greater the economic harm

caused by the unauthorized use, the more a fair use will be

disfavored, because of the greater adverse effect on those economic

incentives.  Conversely, the absence of economic harm caused by

the unauthorized use strongly favors a fair use, because no

economic incentive would be adversely affected.  Rogers v. Koons,

960 F.2d at 312 (2d Cir.).

      Nevertheless, in traditional fourth factor analysis relatively

little need be shown by the copyright owner concerning harm to

prevail on the fourth factor.  "Actual present harm need not be

shown" and it is not "necessary to show with certainty that future

harm will result" from the use.  Sony, 464 U.S. at 451.  See, e.g.,

Salinger v. Random House, Inc., 811 F.2d 90, 99 (2d Cir. 1984),

cert. denied, 484 U.S. 890 (1987); Meeropol v. Nizer, 560 F.2d at

1070 (2d Cir.).

      Sony went on to formulate an additional concept, particularly

favorable to copyright owners in commercial settings, when it

declared that although it is necessary in the case of non-commercial

unauthorized use to show "by a preponderance of the evidence that

some meaningful likelihood of future harm exists," in the case of a

commercial unauthorized use, the likelihood of meaningful future

harm should be "presumed."  Sony, 464 U.S. at 451.  Accord

Rogers v. Koons, 960 F.2d at 312 (2d Cir.); Association of Am.

Med. Coll. v. Cuomo, 928 F. 2d at 525 (2d Cir.); Financial Info.,

Inc. v. Moody's Investors Serv., Inc., 751 F. 2d 501, 510 (2d Cir.

1984), cert. denied, 484 U.S. 820 (1987).

      This "commercial use" presumption of harm disfavoring a fair

use under the fourth factor is thus interrelated with the "commercial

use" presumption disfavoring a fair use under the first factor.  Sony,

464 U.S. at 451; Association of Am. Med. Coll. v. Cuomo, 928 F.2d

at 525 (2d Cir.); Financial Info., Inc. v. Moody's Investors Serv.,

Inc., 751 F.2d at 510 (2d Cir.); Narell v. Freeman, 872 F.2d 907,

914 (9th Cir. 1989).  It can be presumed that if the copier is making

a commercial use of the copyrighted work (first factor), the copier

would be willing to pay an economically reasonable amount for that

use, and therefore it can be presumed that failure to pay causes

harm to the copyright owner (fourth factor).  As a matter of

economics, and as actual experience with the CCC and other

available licensing means has proved, the profit-motivated copier

will be willing to pay to the copyright owner an amount equal to or

less than the economic value to that copier of making that use.

      Fourth factor actual or potential harm is not simply the harm

caused by the particular unauthorized use being considered (here,

Dr. Chickering's unauthorized copying of eight Catalysis articles),

which itself may be sufficient, but also the harm, often more

important, that would flow from widespread conduct of the kind

engaged in by defendant (here, the unauthorized photocopying of

journal articles by personnel at Texaco and other profit-motivated

companies).  See Sony 464 U.S. at 451; Harper & Row, 471 U.S.

at 568 (quoting Sony); Rogers v. Koons, 960 F.2d at 312 (2d Cir.);

H.R. Rep. No. 90-83, 90th Cong., 1st Sess. 35 (1967) ("Isolated

instances of minor infringements, when multiplied many times,

become in the aggregate a major inroad on copyright that must be

prevented."); 3 Nimmer on Copyright 13.05[A][4] at 13-102.26

(the question is not "the extent of damages to plaintiff caused by the

particular activities of the defendant," but rather "whether

unrestricted and widespread conduct of the sort engaged in by the

defendant would result in a substantially adverse impact on the

potential market" for plaintiff's work.).  Judge Leval, therefore,

correctly concluded that fourth factor harm is not determined solely

on the basis of what Academic Press lost as the result of Dr.

Chickering's copying of the Eight Articles, but "[i]n appraising the

effect of Texaco's photocopying on the values of the publishers'

copyrights, Chickering's eight copies are considered as

representative, and not as the universe of alleged infringement." 

(LA 110 n.14.)

      On the basis of what has been said, Judge Leval's findings

and the trial evidence make clear that the widespread unauthorized

photocopying of the kind typified by Dr. Chickering, if permitted

as fair use, would cause great actual economic harm to the existing

and potential markets for the copyrighted works, and thereby greatly

diminish the value of those copyrights.  The factual and

evidentiary showing of such harm here is so real and great "

including the loss and dismantling of existing CCC and other

journal licensing mechanisms " there is no need, as has often

occurred in other cases where fair use defenses have been rejected,

to theorize about potential future harm, or to invoke evidentiary or

substantive presumptions disfavoring fair use.  Indeed, no prior fair

use case has ever involved a greater showing of such clear and

irrefutable actual and potential harm.  Fourth factor considerations,

therefore, powerfully disfavor Texaco's fair use defense.

      As Judge Leval found, there is a great need in conducting

profit-motivated research to obtain and use photocopies of

copyrighted journal articles and if Texaco stopped making ""free"

photocopies" it would fulfill that need through some combination

of the readily available methods (LA 111-12).  In doing that, the

publishers' revenues would grow significantly and the value of their

copyrights would be enhanced (LA 112, 113, 115).  Thus, as Judge

Leval found, if Texaco's free unauthorized in-house photocopying

were permitted, the markets for and the values of the copyrights

would be substantially diminished (LA 120).  As Judge Leval

found, there are two readily demonstrable types of harm that

plaintiffs have and will suffer.

      a.   Loss of Additional Subscription Sales.  If unautho-

rized photocopying were not permitted and a company such as

Texaco elected not to make or obtain authorized photocopies of

journal articles, it is clear, as Judge Leval found (LA 114), that a

company such as Texaco would purchase a modest number of addi-

tional subscriptions to assure the necessary prompt circulation of

journal issues to researchers. That is needed to avoid the many

penalties of decreased efficiency, difficulties in research and adverse

effects on profitability if circulation of those journals were delayed. 

Since, for example, the cost of an annual subscription to Catalysis

is about $825 (A 1545), even one or two additional subscriptions

purchased by each of the many petroleum and chemical companies

interested in that field would add many thousands of dollars of

revenue.

      b.   Loss of Licensing Revenues.  Massive actual harm

would be suffered by the copyright owners from the unauthorized

photocopying of the type typified by Dr. Chickering in the loss of

its existing and future revenues resulting from the permissions and

licensing programs administered by the CCC.  Additional actual

harm would also result from the loss of existing and future licensing

revenues from bilateral or blanket license agreements and from the

loss of royalties from authorized document delivery services that

sell authorized copies of journal articles.

      None of this is theorizing.  The truth is established beyond

dispute by Judge Leval's findings based on the evidence concerning

the CCC and the other available means of obtaining authorized

copies or additional originals, and the evidence concerning the

practices of many companies which avail themselves of such means

to conduct their research successfully by using authorized copies

and compensating the copyright owners for that use.

      The loss of actual or potential revenues from licensing the

copyrighted work is, of course, cognizable under conventional

fourth factor analysis, and Texaco's contentions otherwise, which

we discuss later, are entirely unfounded.  The exclusive rights to

reproduce or authorize the reproduction of the copyrighted work are

marketable rights that can be exploited in different ways.  A

copyrighted book may be sold in as many copies as are published

and purchased; the copyright owner may also exploit the copyright

by licensing paperback rights, or by licensing a newspaper or

magazine to publish a chapter or serialize the entire book.  A

copyrighted film may be rented to theater owners or may be

licensed to home video distributors and licensed for pay-per-view,

cable and broadcast television presentation or other use.  Theater

plays or musicals may be licensed for performance and print.  In the

music field, records or tapes may be sold, and performances are

regularly licensed through ASCAP, BMI or other means.  In the

computer field, multiple copies of programs are sold or a single

copy is licensed for multiple reproduction and use.  Thus among the

means by which marketable rights afforded by copyright protection

are exploited by copyright owners, licensing often figures most

prominently.

      For example, in both Harper & Row and Stewart v. Abend,

the loss of potential licensing revenues due to the unauthorized use

adversely affected the value of the copyrighted work and therefore,

for purposes of fourth factor analysis, fair use was disfavored.  471

U.S. at 568 (quoting 3 Nimmer on Copyright 13.05[B], at [13-

102.28(4) (1992)]; 495 U.S. 207 (1990).  As the Supreme Court

explained, there is harm under the fourth factor if there is an

adverse effect upon "the value of any of the rights in the

copyrighted work. . . ."  Harper & Row, 471 U.S. at 568.  In

Harper & Row, the harm was the loss of a portion of the fee the

copyright owner was to receive for granting a pre-publication

license to Time Magazine for permitting the publication of a small

portion of President Ford's memoirs.  In Stewart v. Abend the loss

which would have occurred if the unauthorized use were permitted

was the opportunity to license rights in the story to other film

makers.

      There are many other cases in this and other courts where

fourth factor harm was recognized to include the loss or potential

loss of revenues from licensing or the sale of rights that would

occur if the unauthorized use were permitted as fair use.  Financial

Info., Inc. v. Moody's Investor Serv., Inc., 751 F.2d at 509-10 (2d

Cir.) ("[I]f Moody's were unable to copy from [plaintiff's works,

plaintiff] might be in a position to license that use for a fee"); DC

Comics, Inc. v. Reel Fantasy, Inc., 696 F.2d at 28 (2d Cir.) ("one

of the benefits of ownership of copyrighted material is the right to

license its use for a fee."); Meeropol v. Nizer, 560 F.2d at 1070 (2d

Cir.) (harm to letters because the "market . . . for the sale of motion

picture rights might be affected"); United Tel. Co. v. Johnson Pub.

Co., 855 F.2d at 610 (permitting defendant to use plaintiff's

copyrighted data would defeat plaintiff's "market in licensing" that

data); Hi-Tech Video Prod., Inc. v. Capital Cities/ABC Inc., 804 F.

Supp. at 955 ("deprivation of a would-be licensing fee . . .

constitutes sufficient harm"); Basic Books, Inc. v. Kinko's Graphics

Corp., 758 F. Supp. at 1534 (loss of permissions fees for granting

permission to photocopy portions of plaintiff's copyrighted works

weighed heavily against fair use); Richard Anderson Photography

v. Brown, 1990 U.S. Dist. LEXIS 19846 at 5 (W.D. Va. 1990) (loss

of potential licensing fees "clearly affects the value of the

copyrighted work"); Telerate Sys., Inc. v. Caro, 689 F. Supp. at

229-30 (defendant's use deprived plaintiff of the "opportunity to

charge for the privilege of copying"); Craft v. Kobler, 667 F. Supp.

120, 129 (S.D.N.Y. 1987) (possibility of future lost license fees);

D.C. Comics, Inc. v. Unlimited Monkey Bus., Inc., 598 F. Supp.

110, 113, 118 (N.D. Ga. 1984) (defendant's use caused harm to

plaintiff's business of licensing use of "SUPERMAN" name,

character, costumes and images).

      Accordingly, in statutory fourth factor analysis, the courts

have consistently and correctly considered the adverse effects of the

unauthorized use of actual and potential licensing markets for the

copyrighted work and thus on the value of that work.

      2.   Texaco's Many Contentions Concerning The Fourth

Factor And The CCC Are Entirely Without Merit.  Texaco

advances a multitude of contentions in a vain attempt to show that

no actual or potential harm will occur under fourth factor analysis

if Dr. Chickering's unauthorized use of copyrighted works were

permitted as fair use.

      a.   Scope of the Harm.  For the reasons previously

discussed (pp. 63-64), Texaco is wrong in contending that

consideration of harm must be limited to what Academic Press lost

by reason of Dr. Chickering's photocopying of the eight articles

(T Br. 35-36), and the two cases it cites do not support its

contention.

      b.   Potential Loss of Additional Subscription Sales. 

Texaco does not challenge consideration of lost subscription sales

under fourth factor analysis, but instead contends wrongly (T Br.

32-35), as has been previously shown (pp. 14-15), that Judge

Leval's "factual inferences" concerning lost additional subscription

sales lack basis in and are contrary to the record.

      c.   Loss of Licensing Revenues.  Texaco does not dispute

that if the unauthorized copying typified by Dr. Chickering were

permitted as fair use, substantial harm would be suffered by loss of

CCC and other licensing revenues, thus diminishing the value of the

copyrights.  Instead, Texaco argues, as it did unsuccessfully below,

that this harm should be ignored and disregarded in fourth factor

analysis.  That argument, in whatever form it takes, is groundless

in view of the authorities and reasons previously discussed,

establishing that the loss of licensing revenues is harm to be

considered under fourth factor analysis.

      Texaco ignores all of that well grounded authority and

wrongly relies on the unsound reasoning of Williams & Wilkins

footnote 19, which has never been followed by any court. 

Fourth factor analysis does not, in and of itself, decide the ultimate

issue of fair use as that footnote presumes.  Rather, as the footnote

overlooks, fourth factor analysis requires evaluation of the "effect

of the use upon the potential market for or value of the copyrighted

work" as one of the elements, albeit an important one, to be

weighed in the over-all determination of fair use.  It is therefore

necessary to determine what would happen economically if Dr.

Chickering's unauthorized use, and widespread unauthorized use of

the same type, were permitted, and it is clear that the effect would

be that the copyright owners would lose the substantial licensing

revenues they would otherwise earn if the use were not permitted. 

Under the flawed reasoning of footnote 19, the defendant would

always claim that whatever harm plaintiff has suffered, whether lost

sales or lost licensing revenues, such harm should not be considered

because if the defendant's use is a fair use, the plaintiff would not

be entitled to the lost revenues.  That would read the statutory

fourth factor out of fair use analysis.  Moreover, in Williams &

Wilkins there was only claimed theoretical lost future royalty

income and no demonstrable lost licensing revenues, as here.

      Texaco's contention based on Sony (T Br. 38-39) is

groundless because in that case there was no evidence, as here, that

users actually paid or were prepared to pay license fees.  Texaco's

further contention that fair use analysis cannot consider the

willingness of a copyright owner to grant a license is also wrong. 

The need for photocopies of journal articles, plaintiffs' willingness

to license photocopying through CCC and other means, and users'

willingness to pay for the right to make or obtain authorized

photocopies, have together created an actual licensing market that

would be adversely affected, indeed destroyed, if unauthorized

photocopying was permitted.  Also, as a result of plaintiffs'

willingness to license, there is no basis for any claim that the

progress of science will be impeded, since for-profit research-

oriented companies, such as Texaco, are afforded the opportunity to

obtain authorized photocopies of journal articles through reasonably

available means.

      Texaco's contention (T Br. 41) that consideration of licensing

income for fourth factor analysis involves a "quintessentially

legislative judgment" is inexplicable.  In the 1976 Act, codifying the

fair use doctrine, Congress has commanded the courts in the fourth

factor to continue to consider the economic effects of the

unauthorized use in determining whether that use is a fair use.

      d.   The CCC.  Texaco makes a number of factual

contentions, which Judge Leval rejected and which have been

previously discussed, concerning the TRS and AAS permissions and

licensing services administered by the CCC.  In addition, Texaco

contends that because the AAS license fee is calculated in an

allegedly unfair manner (a factual contention also rejected by Judge

Leval), the AAS constitutes copyright misuse.  That argument was

advanced below by Texaco, together with a number of other

arguments, that Judge Leval rejected in saying at the conclusion of

his decision that "Texaco's other points are without merit."  (LA

138.)  In any event, it is questionable whether a defense of

copyright misuse exists, and even if it did, it would constitute a

separate defense for future adjudication, since a claim of misuse has

never been considered as an element of the fair use inquiry. 

Moreover, the Supreme Court and this Court have made

unmistakably clear that a blanket annual license, such as the AAS,

is an appropriate method of granting and obtaining permission to

copy from specified copyrighted works; is a practical means of

accommodating the needs of users for rapid access to the repertory

of copyrighted works and the copyright owners' right to be

compensated; and eliminates the burdens and costs of individual

reporting by users.  Broadcast Music, Inc. v. Columbia

Broadcasting Sys., Inc., 441 U.S. 1, 20-22 (1979); Buffalo

Broadcasting Co. v. American Soc'y of Composers, Authors & Pub.,

744 F.2d 919, 927 (2d Cir. 1984), cert. denied, 469 U.S. 1211

(1985).  As Judge Leval found, the AAS annual license service

accomplishes these three goals for copyrighted articles published in

CCC-registered journals (LA 113-15, 127-29).

      Texaco's various other contentions concerning the purported

inadequacy or inefficiency of the CCC were rejected by Judge Leval

who concluded, based on all of the evidence that it was an efficient

and workable mechanism.  (LA 115, 127.)

      In the end, there is nothing to Texaco's many contentions

concerning the fourth factor.  On the facts and on the law, there

cannot be the slightest doubt that great harm would be inflicted on

the copyright owners if the unauthorized use were permitted and

there is no justification for permitting Texaco and others like it to

inflict that harm.

                       CONCLUSION

      There is not a single good reason to sustain Texaco's defense

of fair use and there are many good reasons to reject it.  Judge

Leval's decision should therefore be affirmed, with costs pursuant

to 28 U.S.C. 1912.

Dated:  New York, New York

        April 19, 1993

                           Respectfully submitted,

                           PROSKAUER ROSE GOETZ

                             & MENDELSOHN

Of Counsel:                1585 Broadway

                           New York, New York 10036

   Stephen Rackow Kaye     (212) 969-3000

   Jon A. Baumgarten

   James F. Parver         Attorneys for Appellees

   Christopher A. Meyer

   Karen E. Clarke

   Susan L. Hochman

                   STATUTORY APPENDIX

The full text of Section 106 of the Copyright Act, 17 U.S.C. 106,

is as follows:

      106.Exclusive rights in copyrighted works

           Subject to sections 107 through 120, the owner

      of copyright under this title has the exclusive rights to

      do and to authorize any of the following:

           (1)  to reproduce the copyrighted work in copies

      or phonorecords;

           (2)  to prepare derivative works based upon the

      copyrighted work;

           (3)  to distribute copies or phonorecords of the

      copyrighted work to the public by sale or other transfer

      of ownership, or by rental, lease, or lending;

           (4)  in the case of literary, musical, dramatic,

      and choreographic works, pantomimes, and motion

      pictures and other audiovisual works, to perform the

      copyrighted work publicly; and

           (5)  in the case of literary, musical, dramatic,

      and choreographic works, pantomimes, and pictorial,

      graphic, or sculptural works, including the individual

      images of a motion picture or other audiovisual work,

      to display the copyrighted work publicly.

The full text of Section 107 of the Copyright Act, 17 U.S.C. 107,

as amended October 24, 1992, is as follows:

      107.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.

                        FOOTNOTES

1.    The texts of Sections 106 and 107 are set forth in the

Statutory Appendix to this brief.  See pages 42-43 for the authorities

establishing that fair use under 107 is a privilege and limited

exception to the exclusive rights granted copyright owners in 106.

2.    Texaco's reference to the fact that as of the time of trial only

19% of the Fortune 500 companies were CCC licensees (T Br. 12)

is misleading because a large number of those companies do not

engage in significant scientific and technical research.  Currently, as

we have been advised, there are more than 225 CCC industrial

corporate licensees, who include about 28% of the Fortune 500

companies and 64% of the Fortune 100 companies.

3.    Subject matter jurisdiction of this copyright infringement

action rests on 28 U.S.C. 1331 and 1338(a), and, as to damages,

also on 28 U.S.C. 1334, since in Texaco's Chapter 11 proceedings

the 83 plaintiffs filed proofs of claim for damages, subsequently

transferred to the court below for determination (A 53, 160-72).

4.    As to Texaco's commercial exploitation of the patents

resulting from this research, see A 933-34, 2369, Pollart Cross pp.

19-21; see also A 916.

5.    The five other Texaco researchers deposed in this action all

engaged in the various photocopying practices described above. 

(A 368-69, 376-77, 381-96, 398-404, 407-414, 417-434, 608-09,

614-15, 617-21, 626-28, 646-50, 652-54, 658, 662, 667-68, 674,

682-83, 685-89, 692-95, 699-701, 703-05, 707-713, 715-18; see also

A 751-53, 1367-68.)

6.    The amici are therefore wrong when they suggest that

"personal use" copying is what is involved in this case.  (AR Br. 5,

6, 7, 10.)  Judge Leval made a specific factual finding rejecting that

contention as made by Texaco in the proceedings below.   (LA 81,

122.)

7.    A 377-82, 385-86, 388-89, 395-96, 402, 415-17, 431-33, 459,

461-63, 465, 467, 536-38, 550, 564-66, 578, 609-10, 651, 661, 663-

66, 668, 689-91, 695, 697-98, 703-06, 727-30, 740-41, 746-48, 752-

55, 935-36, 952-54.

8.    There is no evidentiary or other basis for the assertions that

the institutional rate is double the individual rate because journal

issues sent to institutional subscribers are used by and circulated to

many people (T Br. 4-5) or because publishers expect copies to be

made (AL Br. 13 n.6).  The institutional rate is the "proper

subscription rate for the journal" and individual subscriptions are

sold at "a steeply discounted rate" as a "service to the community." 

Often the personal subscription rate either provides no profit or may

not even cover the cost of providing the subscription.  (A 1207-09.)

9.    Texaco mischaracterizes Academic Press's profits as having

been "extraordinary."  (T Br. 5, see A 3802, 4320-21, 4363.)  In

doing that, Texaco also irresponsibly repeats what it did below in

making what Judge Leval called a "demagogic effort to undermine

publishers' rights by tarring them as wealthy profiteers24 [that]

carries no force in copyright analysis, which does not begrudge

copyright profits."  (LA 135-36.)  In note 24, Judge Leval added

that this was "an odd argument . . . to be made by an oil company

that reported over $2.4 billion net income for fiscal 1989 on

revenues of over $34 billion."  (LA 136.)

10.   Users learn that a publication is registered with CCC in a

number of ways: (i) from masthead statements in the front of the

journals, (ii) from catalogs and supplements distributed to TRS

users, and (iii) from Schedule A to the AAS license.  The

information needed to report photocopying under the TRS, in the

case of Academic Press, is found in standardized fee codes at the

bottom of the first page of each copyrighted article and on the

masthead page.  (LA 85 n.5; A 1443, 1459, 1463, 1471, 1474,

1479, 1487, 1499, 1547-1794, 1053-54, 4242, 1069, 278-79.)

11.   AAMA's suggestion (Br. 33) that under the TRS a company

may report and pay for copying an article written by the company's

employee when it should not be required to do so, simply ignores

the fact that it is the company itself that decides whether to report

a particular photocopying transaction.  Moreover, the author's

affiliation is readily apparent from the face of the article.  See, e.g.,

A 1443, 1463, 1479, 1487.

12.   Under all three methods, the annual license fee is determined

on the basis of data derived from limited photocopying surveys,

factored by the licensee's employee population and the copying fees

individually set by the publishers.  (LA 87; A 281-85, 294-95.)

13.   If the licensee photocopies more than what is anticipated or

photocopies more articles with higher photocopy fees than

anticipated, there is no surcharge.

14.   The license fee is calculated on the basis of limited

photocopying surveys designed by outside experts, during which

each employee who makes a photocopy from a copyrighted

publication is required to make an extra copy of the front cover or

title page, and indicate on it the number of pages copied and the

number of copies made.  (A 295-96.)

15.   The automobile manufacturers make a new and unfounded

contention (AAMA Br. 13, 33, 34-35) that, apart from reporting

titles of articles, reporting to the CCC the names of the journals that

were photocopied raises problems of research confidentiality.  There

is no evidence that any company ever had such a problem or ever

made such a claim, or that the CCC conveys that information to any

competitor  or anyone else.  Moreover, companies reporting

photocopying under the TRS or as part of the AAS license surveys

plainly do not find that any such risk exists.

16.   Texaco misstates the record when it claims that only $4.2

million has been distributed to publishers (T Br. 12).

17.   Publishers' photocopying has no bearing on the existence of

the custom Texaco contends exists.  They have little occasion to

photocopy copyrighted materials of other publishers.  A 1251, 1281-

82, 1288-89, 868, 899-901.  Texaco's evidence of publishers'

photocopying consists of only a few isolated instances (T Br. 26)

when a photocopy may have been made.  Texaco has introduced no

evidence that publishers systematically photocopy entire copyrighted

articles without permission, and there is no evidence whatsoever

concerning the nature, purpose and frequency of any such copying.

18.   See Justice Blackmun's reference to the "recent advent of

inexpensive and readily available copying machines" as having

"changed the dimensions of the problem" of harm to the copyright

owner.  Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S.

417, 467 n.16 (1984) (dissent).  A description of the history and

development of modern photocopying is provided in Van Dyk

Research Corp. v. Xerox Corp., 478 F. Supp. 1268, 1272-1279,

1285, 1288-1302 (D.N.J. 1979), aff'd, 631 F.2d 251 (3d Cir. 1980),

cert. denied, 452 U.S. 905 (1981).

19.   See, e.g., 1983 Report of the Register of Copyrights at 160,

161-62, App. IV at 162 (comments by attorney for Academic

Press's parent, HBJ), App. VI at 37, 99-100 (comments regarding

negative impact of photocopying on small publishers of scholarly

works and decline in sales of offprints since 1969); Copyright Law

Revision, 1975:  Hearings Before the House Subcomm. on Courts,

Civil Liberties, and the Administration of Justice, 94th Cong., 1st

Sess. 239, 311 (1975) (Association of American Publishers

testimony regarding attempts to establish a photocopying

permissions clearinghouse and HBJ comments concerning the need

for compensation for photocopying); Copyright Law Revision, 1973: 

Hearings on S. 1361 Before the Senate Subcomm. on Patents,

Trademarks, and Copyrights, 93d Cong., 1st Sess. 127, 129, 131,

139, 149 (1973) (testimony by several publishers in opposition to

a proposed statutory provision permitting photocopying of single

journal articles); Copyright Law Revision, 1967:  Hearings on S.

597 Before the Senate Subcomm. on Patents, Trademarks, and

Copyrights, 90th Cong., 1st Sess. 975 (1967) (testimony on

economic harm to publishers from photocopying); Copyright Law

Revision, 1965:  Hearings Before Subcomm. No. 3 of the House

Comm. on the Judiciary, 1431, 1460, 1513 (1965) (same).

20.   D.C. Comics, Inc. v. Reel Fantasy, Inc., 696 F.2d 24, 28 (2d

Cir. 1982); Meeropol v. Nizer, 560 F.2d 1061, 1068 (2d Cir.), cert.

denied, 434 U.S. 1013 (1977); see Weissmann v. Freeman, 868 F.2d

at 1326 (2d Cir.).

21.   As to these matters, Texaco makes the following statement (T

Br. 12) as its introduction to Judge Leval's decision:

      Without analyzing the circumstances surrounding the

      copying of any of the eight articles and rarely referring

      to any part of the `voluminous submitted record' (A

      146), Judge Leval held that Dr. Chickering's copying

      was not fair use.

22.   Harper & Row, 471 U.S. at 547.  Association of Am. Med.

Coll. v. Cuomo, 928 F.2d 519, 523 (2d Cir.), cert. denied, 112

S. Ct. 184 (1991); Rosemont Enters. v. Random House, Inc., 366

F.2d 303, 306 (2d Cir. 1966), cert. denied, 385 U.S. 1009 (1967).

23.   Consumers Union of U.S., Inc. v. General Signal Corp., 724

F.2d 1044, 1048 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984);

Association of Am. Med. Coll. v. Cuomo, 928 F.2d at 523 (2d Cir.).

24.   See Sony Corp. of Am. v. Universal City Studios, Inc., 464

U.S. 417, 448 (1984); Harper v. Row, 471 U.S. at 560; LA 120-21.

25.   The ordinary meaning of the word "commercial" is an

activity relating to commerce or trade, looking toward financial

profit or having profit as the primary aim.  Webster's New

International Dictionary (2d ed. 1934), (3d ed. 1964); Webster's

New Twentieth Century Dictionary (2d. ed. 1979); Webster's Ninth

New Collegiate Dictionary (1988); Oxford English Dictionary Vol.

II (1978).

26.   See Telerate Sys., Inc. v. Caro, 689 F. Supp. 221, 229

(S.D.N.Y. 1988) ("customary price" was the price normally charged

by the plaintiff); New Line Cinema Corp. v. Bertlesman Music

Group, Inc., 693 F. Supp. 1517, 1526 (S.D.N.Y. 1988) (finding that

defendant "stands to profit financially by using Freddy [the

copyrighted work] without making the usual licensing arrangements.

. . .").  Here, the customary price for obtaining additional original

journal articles or copies of such articles depends on the available

means selected by the user to obtain those originals or copies. 

Thus, the customary price may be the licensing or permission fees

charged through CCC-administered services, the fee under bilateral

or blanket licensing agreements, the cost of purchasing photocopies

from authorized document delivery services, or the cost of

additional subscriptions.

27.   Contrary to the contention made at AR Br. 17-18 & n.7, the

fact that two scientists may carry on the same research, one for a

profit-motivated purpose and one for a non-profit purpose, does not

mean that the fair use result must be the same or that a different

result would be anomalous.

28.   News reporting:  E.g., Harper & Row, 471 U.S. at 562; Iowa

State Univ. Research Found., Inc. v. ABC, Inc., 621 F.2d at 61 (2d

Cir.); Hi-Tech Video Prod., Inc. v. Capital Cities/ABC, Inc., 804 F.

Supp. 950, 955 (W.D. Mich. 1992); Radji v. Khakbaz, 607 F. Supp.

1296, 1300 (D.D.C. 1985); Quinto v. Legal Times of Wash., Inc.,

506 F. Supp. 554, 560 (D.D.C. 1981); Pacific & Southern Co. v.

Duncan, 774 F.2d at 1496.

      Educational purposes:  E.g., Basic Books, Inc. v. Kinko's

Graphic Corp., 758 F. Supp. 1522, 1531-32 (S.D.N.Y. 1991);

Association of Am. Med. Coll. v. Mikaelian, 571 F. Supp. 144, 152-

53 (E.D. Pa. 1983), aff'd, 734 F.2d 3 (3d Cir. 1984); Educational

Testing Servs. v. Katzman, 793 F.2d 533, 543 (3d Cir. 1986); Allen-

Myland, Inc. v. IBM Corp., 746 F. Supp. 520, 534 (E.D. Pa. 1990);

Weissmann v. Freeman, 868 F.2d at 1324 (2d Cir.).  In particular,

the verbatim copying of copyrighted works for use by students has

not been a justification for finding fair use.  Basic Books, Inc. v.

Kinko's Graphics Corp., 758 F. Supp. at 1531; Marcus v. Rowley,

695 F.2d 1171 (9th Cir. 1983); Wihtol v. Crow, 309 F.2d 777 (8th

Cir. 1962); Encyclopaedia Britannica Educ. Corp. v. Crooks, 542

F. Supp. 1156 (W.D.N.Y. 1982); Macmillan Co. v. King, 223 F.

862 (D. Mass. 1914).

29.   These are the kind of cases Congress contemplated would

result in fair use protection.  In legislative reports concerning 107,

it is indicated that "the sort of activities the Courts might regard as

fair use" involve either the taking of a small portion of a

copyrighted work (for example, the "quotation of short passages in

a scholarly or technical work") or the creation of a new work.  H.R.

Rep. No. 94-1476, 94th Cong., 2d Sess. 65 (1976); S. Rep. No. 94-

473, 94th Cong., 2d Sess. 62 (1975).

30.   Wright v. Warner Books, Inc., 953 F.2d at 740 (2d Cir.); Lish

v. Harper's Mag. Found., 807 F. Supp. 1090, 1100 (S.D.N.Y.

1992).

31.   That a work is creative weighs against a finding of fair use

under the second factor.  See Harper & Row, 471 U.S. at 563.

32.   Sony, 464 U.S. at 450: Rogers v. Koons, 960 F.2d at 311 (2d

Cir.); Weissmann v. Freeman, 868 F.2d at 1325 (2d Cir.) (quoting

3 Nimmer on Copyright, 13.05[A][3] at [13-102.24-.25 (1992)];

Hustler Mag., Inc. v. Moral Majority, Inc., 796 F.2d 1148 (9th Cir.

1986); Pacific & Southern Co. v. Duncan, 744 F.2d 1490, 1497

(11th Cir. 1984), cert. denied, 471 U.S. 1004 (1985); Strauss v.

Hearst Corp., 1988 Copyright L. Dec. (CCH)  26,244 at p. 21,721

(S.D.N.Y. 1988).  It is only in an exceptional case like Sony or

Williams & Wilkins that copying an entire work has been found to

be fair use, and in each case the court found that the copying was

done for a non-profit, non-commercial purpose and there was no

harm to the copyright owner. 

33.   Registration of a collective work includes registration of the

copyright in each individual article for which copyright ownership

has been transferred to the registrant, as is made clear in

publications of the Copyright Office, copies of which (Circular 62,

Circular R62, Instructions for Short Form SE) were submitted to

Judge Leval as annexes, with relevant portions marked, to Plaintiffs'

Post-Trial Sur-Reply Memorandum Concerning Fair Use, which is

included in the record on appeal.  See Gordon & Breach, Science

Pubs., Inc. v. Information on Demand, Inc., No. C-88-1695 EFL,

slip. op. at 2-3 (N.D. Cal. Sept. 8, 1989).  Because the eight articles

were properly registered, the jurisdiction and standing arguments

raised by the ALA (AL Br. 15-15 & n.7) are also meritless.

34.   It is undisputed, as Judge Leval found (LA 110 n.14, 148),

that photocopying of entire journal articles is widespread at for-

profit, research-oriented companies.  Furthermore, the "evidence

submitted . . . supports the inference of voluminous photocopying

in the aggregate by Texaco's scientists, that would justify very

substantial license fees if such copying is not fair use."  (LA 110

n.14)

35.   The inference that Judge Leval drew from the facts in

evidence that Texaco would purchase a modest number of additional

subscriptions if it chose not to pay for permission to photocopy is

a correct and permissible inference.  See Schulz v. Pennsylvania

R.R., 350 U.S. 523, 526 (1956) (function of the factfinder is to

reach conclusions based on "proof of circumstances from which

inferences can fairly be drawn"); Sidney Blumenthal & Co. v. Rossie

Velvet Co., 89 F.2d 29, 31 (2d Cir. 1937) (proper for trial judge's

conclusion to be based on inference drawn from proven facts);

United States Lighterage Corp. v. Petterson Lighterage & Towing

Corp., 142 F.2d 197, 199 (2d Cir. 1944) (same).

36.   The decision in Williams & Wilkins has been severely

criticized by copyright scholars, one of whom agreed with a

dissenting judge in that case that it is the "Dred Scott decision of

copyright law" (see LA 123 n.19).

37.   Neither the Supreme Court nor the Second Circuit has ruled

on the question and "[t]he copyright misuse doctrine has been ill

received in the lower courts."  Broadcast Music, Inc. v. Hearst/ABC

Viacom Entertainment Servs., 746 F. Supp. 320, 328 (S.D.N.Y.

1990) (citing cases).  The copyright misuse defense has been

rejected repeatedly; courts have either doubted its validity, or

assumed its validity but found its demanding requirements not met. 

See, e.g., United Tel Co. v. Johnson Pub. Co., 855 F.2d at 611-612

(citing cases); 3 Nimmer on Copyright 13.09[A] at 13-143-44.  It

has been upheld on the merits only rarely, in cases that involved

obvious restraints on competition.  PRC Realty Sys., Inc. v. National

Ass'n of Realtors, 1992 U.S. App. LEXIS 18017 (4th Cir. Aug. 4,

1992); Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 972-73 (4th

Cir. 1990); QAD. Inc. v. ALN Assocs., Inc., 770 F. Supp. 1261

(N.D. Ill. 1991);  M. Whitmark & Sons v. Jensen, 80 F. Supp. 843

(D. Minn. 1948).  Here, calculation of the license fee (which is

based on individually set publishers' fees) is not being used to

restrain competition.