Settlement of Texaco Case

     On May 16, 1995 the Texaco Corporation announced a settlement
of a long-standing copyright infringement suit brought in 1985 by
six publishers against Texaco.  Individual scientists had
photocopied articles from scientific journals, to which Texaco
subscribed, and had not paid royalties to the publishers for the
copying.  The suit was decided by a federal district court in 1992,
holding that companies in the for-profit sector which make copies
of copyrighted scientific and technical journal articles violate
fair use under the Copyright Act of 1976.  Unfortunately for
researchers and libraries, the settlement means that the fair use
issues raised by the case will not be resolved by the U.S. Supreme
Court.
A coalition of library and information associations filed a
friend of the court brief in support of Texaco in its appeal to the
U. S. Court of Appeals for the Second Circuit.  On October 28, 1994
the Second Circuit handed down its decision in American Geophysical
Union v. Texaco, 37 F.3d 882 (2d Cir. 1994), affirming the lower
court's holding rejecting Texaco's claim of fair use but setting
forth different reasons.
On April 24, 1995 Texaco filed its petition before the U. S.
Supreme Court, and the library and information associations planned
to petition the court to allow them to file a friend of the court
brief in support of Texaco.  Before this could occur, Texaco
entered into settlement discussions with the publishers and agreed
to pay "slightly more than $1 million, plus a retroactive licensing
fee to the Copyright Clearance Center.  Texaco will also sign a
five-year licensing agreement with the center."  Texaco asked the
courts to delay further action pending the approval of the group of
83 publishers, now a party to the suit.  The court must approve the
settlement.
Without a ruling by the U.S. Supreme Court, users of
copyrighted materials are left with the unfortunate reasoning of
the Second Circuit on the first fair use factor, the purpose and
character of the use.  It is probable that the holding of the
Texaco case will become a model for other circuits facing similar
questions.
The broad issue of whether making a single copy of scientific
journal articles for personal use and archiving is considered fair
use, was not before the Second Circuit.  Instead, the issue before
the court was whether the copies of the eight articles at issue
under the specific facts of this case was fair use.
In its fair-use analysis the court held that: (1) the for-
profit motive of the company is still a relevant consideration in
the analysis of the purpose of the use, although the court
recognized that the focus should be on the use of the material and
not on the user.  The predominant "archival purpose" (the copied
articles were placed in the scientist's files for use as needed and
thus were non-transformative) tipped the scales against fair use.
(2) On the second factor, the nature of the work, the court found
for Texaco because the articles were primarily scientific.  (3) In
determining the third factor, the amount of the work copied, the
court noted that the entire article was copied rather than focusing
on an article as a portion of a volume of the journal and, thus,
found against Texaco on this factor.  (4) Finally, the court found
that the publisher had not lost subscriptions but had lost the
right to license the work for reproduction.  Because of the
existence of the Copyright Clearance Center (CCC), Texaco could
have acquired a license; therefore, the market was affected.
The dissent noted that the researcher's purpose of science is
one of the enumerated categories listed in the preamble to Section
107 of the Copyright Act of 1976.  The dissent concluded that the
existence of the CCC is an irrelevant consideration in determining
whether a given use is fair and is an unworkable method of
obtaining and paying for authorization to copy.  The CCC does not
represent all publishers nor is it able to authorize copying for
all publications of all publishers.
The court left many issues unresolved, for example: 
(1)  The court failed to differentiate between a direct
commercial use and an indirect relation to a commercial
activity.
(2)  The court failed to specify whether it saw any
difference for researchers funded on grants from
government agencies and those funded by grants from
commercial companies.
(3)  The court failed to discern a difference between
government research laboratories (nonprofit) which are
encouraged to develop public/private partnerships and
scientists in the for-profit sector.
(4)  The court failed to provide guidance on copying to the
general public by state supported institutions when that
copying might be used to enhance profit for an individual
or a business.
(5)  The court failed to recognize a difference between 
copying in health sciences libraries or medical schools
which serve a combination of doctors in the commercial
sector and residents in the educational sector.
The case does not apply to the following:
-    copying done in nonprofit educational institutions for
educational purposes;
-    copying done by libraries and archives under section 108
of the Copyright Act of 1976.
For-profit institutions directly affected should think about
how they wish to handle licenses for copying that exceeds fair use.
Permission to copy may be obtained directly from publishers,
document delivery services whose fees include royalty payments may
provide another avenue for paying royalties, or organizations may
choose to join the CCC and other licensing agencies.
prepared by Sarah K. Wiant, SLA
June 1995