Summary of Texaco Decision


TO:          Duane E. Webster

             Executive Director

             Association of Research Libraries

             Paul Peters


             Coalition For Networked Information

FROM:        Ritchie T. Thomas, Esq.

             Susan Neuberger Weller, Esq.

             Squire, Sanders & Dempsey

DATE:        September 9, 1992

RE:          American Geophysical Union v. Texaco, Inc.

             85 Civ. 3446 (PNL) (S.D.N.Y. July 24, 1992) 

[N.B.:  The following electronic version omits two footnotes

which exist in the printed version.]

This memorandum briefly describes and assesses the recent decision 

in American Geophysical Union v. Texaco, Inc., which, as described 

by publishers' counsel in widely circulated reports, has caused 

concern in the library community.  In the Texaco case, the U.S. 

District Court for the Southern District of New York found that 

the fair use provisions of Section 107 of the Copyright Act did 

not apply to Texaco's practice of making (or permitting the making 

of) unauthorized copies of articles from scientific and technical 

journals for scientists at its technical centers.  Although the 

decision has a number of troubling aspects, it is our general 

conclusion that it should not change what should be standard 

procedures at ARL and other non-profit libraries, for the 

following reasons:

1.     The case involved copying by a for-profit enterprise, and 

several elements of the Court's decision relied heavily on that 


2.     The case was decided under a stipulation that limited the 

Court's consideration to the fair use provisions of Section 107 of 

the Copyright Act.

3.     Although the Court also considered the application of the 

library photocopying provisions of Section 108 of the Copyright 

Act, its very brief discussion of those provisions so clearly 

misapprehends the statute that it is of no persuasive force and 

therefore of little concern.

The Texaco case was decided on a very specific set of facts that 

do not have general application to all instances in which 

materials are used for scholarship, research or teaching. The 

court phrased the issue before it narrowly as involving "whether 

it is lawful under the U.S. Copyright Act, 17 U.S.C. {J101, et 

seq., for a profit-seeking company to make unauthorized copies of 

copyrighted articles published in scientific and technical 

journals for use by the company's scientists employed in 

scientific research" (emphasis added).  Contrary to Plaintiffs' 

lawyers' representations, the Court did not hold generally that 

"the making of single copies of articles (including "Notes" and 

"Letters to the Editors") from the STM journals registered with 

the CCC is not fair use."  Its holding was much more narrow than 


In rendering its decision, the Court purported to apply the 

specific facts of the Texaco case to the four fair use factors 

delineated in Section 107.  It found in favor of the plaintiff 

publishers on three of the four and concluded that Texaco's 

practices were outside the protection of Section 107. 

Specifically, it held that the copying of individual articles 

(including Notes and Letters to the Editor) from scientific and 

technical journals by scientists employed by a profit-seeking 

company, to be used in pursuit of their company-sponsored research 

responsibilities, was not a fair use.  The Court based this 

holding on the grounds that (1) the use of the copyrighted works 

(i.e., Texaco's reproduction) was neither transformative nor non-

commercial, (2) the scientists copied the entire copyrighted work 

(e.g., the entire article, note or letter), and (3) the Court 

considered that Texaco's copying, rather than purchasing or 

licensing copies, of the copyrighted material caused substantial 

harm to the value of the publishing copyrights.  The Court found 

in Texaco's favor on the remaining "nature of the work" factor, 

because the works copied were factual rather than fictional.  Such 

works are generally more readily subject to a fair use defense.

In several respects, the Court's analysis is troubling. For 

example, its examination of the purpose and character of the use 

gives virtually no weight to the fact that the research purpose of 

the use is specifically listed as a fair use purpose by the 

statute.  The Court's analysis of the purpose and character of the 

use assumed that, where the use was "commercial," it could be a 

fair use only if it was "transformative."  Essentially, it took no 

account of the research purpose of the use, even as a factor in 

its analysis. In this, the Court seems to have disregarded the 

statute and relevant authority.  However, the Court did not go so 

far as to assert, as claimed by AAP's counsel, "that 'research' 

(and, by implication, 'teaching') activities (even if not for 

profit, but market impairing) are not entitled to special claims 

to free use of copyrighted materialJ.J.J.J."  The Court stated 

only that it did not believe the statute singled out the listed 

uses as presumptively fair.  Even if no legal presumption is 

raised, the Supreme Court has held that, if the purpose of the use 

is one listed in the statute, such as research or scholarship, it 

is a factor to be considered in the fair use calculus.  And the 

Texaco Court said (and implied) nothing whatsoever about 

noncommercial uses.

In addition, in considering the effect of the use upon the 

potential market for and value of the copyrighted works, the Court 

ignored the fact that the works concerned were transferred to the 

publisher without compensation; declared that the publisher's high 

profits are irrelevant; and concentrated almost exclusively on 

whether Texaco's unauthorized copying likely reduced the 

publisher's royalties from the Copyright Clearance Center.

The opinion of the Court was largely limited to an analysis of the 

facts under Section 107.  However, the Court did briefly address 

and reject Texaco's assertion that its activities should qualify 

under Section 108 as library photocopying.  Its rejection was 

based on two findings.  First, the Court stated that since Section 

108 was applicable only to reproductions made "without any purpose 

of direct or indirect commercial advantage", Texaco's clearly 

commercial purpose disqualified it from relying on Section 108.  

Second, the Court stated that, as the copying authorized by 

Section 108 is limited to the making of one copy, Texaco has no 

method in place to prevent more than one copy from being made of 

the articles in the journals, and "in all likelihood" Texaco's 

employees and its library made many more than one copy of the 

articles in question, Section 108 was, again, inapplicable.

The Court's analysis of Section 108 issues is totally wrong and 

reflects an astonishing ignorance of the statute and its 

legislative history.  Texaco's commercial purpose does not 

preclude it from enjoying Section 108 rights, if its collections 

are open to the public or specialized researchers as required by 

Section 108(a)(2).  The legislative history of Section 108 makes 

clear that:

Isolated, spontaneous making of single photocopies by a library in 

a for-profit organization, without any systematic effort to 

substitute photocopying for subscriptions or purchases, would be 

covered by section 108, even through the copies are furnished to 

the employees of the organization for use in their work.

H.R. Rep. 1476, 94th Cong., 2d Sess. (1976).  The Court also did 

not understand the "single copy" provisions of Section 108, which 

expressly state that the rights of reproduction and distribution 

under Section 108 "extend to the isolated and unrelated 

reproduction or distribution of a single copy or photorecord of 

the same material on separate occasions."  Thus, the mere making 

of multiple copies of the same copyrighted work is not a 

disqualifying factor under Section 108, if the copying occurs in 

isolated and unrelated transactions.  In addition, the Court 

inappropriately treated Texaco, Inc. as if it were the library 

"user" referred to in Section 108(d).

Ultimately, the Court questioned whether the issue of lawful 

copying under Section 108 was properly before it for decision, 

because the parties had limited the trial by stipulation to the 

issue of fair use under Section 107.  This may explain the Court's 

confused and error-laden discussion of the applicability of 

Section 108.

As previously noted, there also are several elements of the 

Court's Section 107 analysis that are highly disputable. This 

brief outline is not the place to discuss them.  We note, however, 

that we found unconvincing the Court's effort to denigrate the 

precedential value of the Williams & Wilkins case, in which the 

Court of Claims upheld as fair use the photocopying practices of 

the National Institutes of Health and the National Library of 


From the standpoint of ARL members and other non-profit libraries, 

the Texaco decision can have no conceivable effect on their 

interlibrary loan and other reproduction and distribution 

activities conducted under Section 108 and within the CONTU 

guidelines.  As long as they are complying with the statute's and 

guidelines' provisions, there is no reason to consider a change in 

established practices as a result of the Texaco decision.

However, if a library relies on Section 108 to protect "systematic 

reproduction or distribution" of photocopies of copyrighted works 

in excess of the CONTU guidelines, several aspects of the Texaco 

decision should be noted.  For example, the CONTU guidelines 

establish a safe harbor for "systematic reproduction or 

distribution" of articles from current journals in quantities 

conclusively presumed not to be "such aggregate quantities as to 

substitute for a subscription to or purchase of such work."  The 

guidelines do not specify what level of reproduction and 

distribution in excess of the guidelines would be affirmatively 

regarded as substituting for a subscription. The Texaco Court, 

with little apparent basis, concludes that arrangements like 

Texaco's do substitute for additional subscriptions.  While the 

Court's reasoning is unpersuasive, its conclusion warrants 


In addition, any library that relies on the general fair use 

concepts of Section 107, rather than the specific authority 

provided by Section 108, to protect it from liability for certain 

reproduction and distribution practices should be aware that, as 

the Texaco Court held, the copying of individual articles (and 

individually copyrighted Notes and Letters) constituted a copying 

of an entire copyrighted work, not copying of a portion of a 

copyrighted work.  This is not new law.

The original owner of a copyright is the author of the individual 

work, e.g., an article.  In the Texaco case, the authors of the 

articles copied assigned their copyrights in the individual 

articles to the journal publishers.  It is our understanding that 

this is standard practice in the field of technical and scholarly 

journals.  Upon assignment, the publishers then owned separate and 

individual copyrights in each article in each journal, in addition 

to owning a separate copyright in the journal as a compilation.  

Thus, by copying an individual article, Texaco copied an entire 

copyrighted work, not a portion of a copyrighted work.  Under 

factor three of Section 107, copying of an entire work will 

usually militate against a finding of fair use.  However, this one 

factor alone will not be dispositive of whether fair use exists.

The Texaco decision is of limited significance to non-profit 

educational libraries, even to the extent that they may rely on 

general fair use principals as authorization for certain 

activities.  The Texaco Court focused heavily on the ultimate 

commercial use to which the copied materials were to be put by 

Texaco.  Texaco's commercial orientation not only decided the 

issue in the publishers' favor with respect to the fairness factor 

that addresses the purpose and character of the use, it colored 

the Court's analysis of the other factors.  Even the Court's 

analysis of the effect of the use on the potential market for and 

value of the work was influenced (inappropriately) by the for-

profit nature of Texaco.  A non-profit or noncommercial use of 

copied material may not be sufficient, standing alone, to protect 

the copying of an entire copyrighted work under Section 107.  

Indeed, any institution relying on Section 107 should assure 

itself that, if challenged, it could prevail on additional Section 

107 fairness factors.  Nevertheless, a non-profit use represents 

an important distinguishing feature from the Texaco case.

Finally, the Texaco case represents a holding by a single district 

court judge, which has not been considered by an appellate court.  

As such, it is entitled to substantially less weight than Williams 

& Wilkins.  One of Texaco's attorneys recently was quoted as 

saying that Texaco would seek to appeal the decision.  Whether or 

not Texaco will be able to take an appeal at this stage of the 

proceedings is not clear, because the fair use issue was addressed 

by special stipulation of the parties and the Court has not yet 

addressed and disposed of other issues in the case.

Counsel for the publishers has opined that the Court's decision 

will give journal publishers substantially greater bargaining 

power in negotiations with journal subscribers regarding 

photocopying practices.  In fact, for the reasons discussed above, 

the decision is far less significant than publishers' 

representatives are inclined to claim.  This is particularly true 

with respect to its implications for non-profit, academic 


We hope this memorandum has been useful to you and your members.  

Please let us know if you have any additional questions or