No. _______________________
In The Supreme Court of the
United States October Term, 1996
__________________
Michigan Document Services, Inc., and James M. Smith,
Petitioners,
vs.
Princeton University Press, MacMillan, Inc., and St. Martin’s Press, Inc.,
Respondents.
__________________
On Petition For Writ Of Certiorari To The United
States Court Of Appeals For The Sixth Circuit
__________________
PETITION FOR WRIT OF CERTIORARI __________________ Susan M. Kornfield Counsel of Record David G. Chardavoyne James D. Lewis Alan N. Harris Bodman, Longley & Dahling LLP Attorneys for Petitioners 110 Miller, Suite 300 Ann Arbor, Michigan 48104 (313) 761-3780
Questions Presented A. Where the Copyright Act identifies the fair use of a copyrighted work as including the making of “multiple copies for classroom use” for teaching purposes, do teachers and students lose their rights of fair use when they ask a commercial copyshop to make their classroom copies for them, as held by a closely-divided, en banc U.S. Court of Appeals for the Sixth Circuit? B. Is a copyright owner legally injured when it does not receive permission fees it demands for certain uses of a work, including fair uses, as held by a closely-divided, en banc U.S. Court of Appeals for the Sixth Circuit? Parties to the Proceedings The parties to the proceedings are those identified in the caption. Petitioner Michigan Document Services, Inc. is wholly-owned by Petitioner James M. Smith, and has no related business entities. Table of Contents Page Questions Presented i List of Parties and Rule 29.6 List ii Table of Contents iii Table of Authorities v Opinions Below 1 Statement of Jurisdiction 1 Constitutional and Statutory Provisions Involved 1 Statement of the Case 3 Professors’ Creation of Coursepacks 4 Nationwide Impact of Kinko’s 6 The Decisions Below 7 Reasons for Granting the Writ 9 A. The Sixth Circuit’s Theory Of Market Harm Departs From This Court’s Decisions And The Plain Language Of The Copyright Act 11 B. The Sixth Circuit Limited Congress’ Grant Of Fair Use By Identifying The Named Defendant As The Only Relevant User. 16 C. The Sixth Circuit Applied Commercial Presumptions That Virtually Eliminate Educational Fair Use. 20 D. The Sixth Circuit Established Kinko’s As The Definitive Statement Of Educational Fair Use 23 Conclusion 26 Appendices: Appendix A: Opinion of the United States Court of Appeals for the Sixth Circuit, En Banc, Filed November 8, 1996 1a Appendix B: Panel Opinion of the United States Court of Appeals for the Sixth Circuit, Filed February 12, 1996 75a Appendix C: Opinion of the United States District Court for the Eastern District of Michigan, Filed June 9, 1994 108a Appendix D: Affidavits of Professors Who Selected the Excerpts at Issue 127a
Table of Authorities Cases: American Geophysical Union v. Texaco Inc., 60 F.3d 913 (2d Cir. 1995) 16 Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991) passim Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994) passim Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989) 12 Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) 9, 14, 25 Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) 9, 25 Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) passim Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) passim Stewart v. Abend, 495 U.S. 207 (1990) 14 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) 10, 11 Constitution: U.S. Const. art. I, � 8, cl. 8 passim Statutes: 17 U.S.C. � 106 passim 17 U.S.C. � 107 passim Other References: Pierre N. Leval, Campbell v. Acuff-Rose: Justice Souter’s Rescue of Fair Use, 13 Cardozo Arts & Ent. L.J. 19 (1994) 23 Pierre N. Leval, Toward A Fair Use Standard, 103 Harv. L. Rev. 1105 (1990) 22, 25
PETITION FOR WRIT OF CERTIORARI Petitioners Michigan Document Services, Inc. and James M. Smith respectfully petition for a writ of certiorari to review the judgment of the United States Court of Appeals for the Sixth Circuit. Opinions Below The district court opinion is reported at 855 F. Supp. 905 (E.D. Mich. 1994) and reproduced in Appendix C, 108a – 126a. The opinion of the en banc U.S. Court of Appeals for the Sixth Circuit is reported at 99 F.3d 1381 (6th Cir. 1996) and reproduced in Appendix A, 1a – 74a. The original panel opinion of the Court of Appeals was reported at 74 F.3d 1512 (6th Cir. 1996), has been withdrawn, and is reproduced in Appendix B, 75a – 107a. Statement of Jurisdiction The United States Court of Appeals for the Sixth Circuit issued its en banc opinion on November 8, 1996. No rehearing was sought. This Court’s jurisdiction is based upon 28 U.S.C. � 1254(1). Constitutional and Statutory Provisions Involved U.S. Const. art. I, � 8, cl. 8 states: The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. Sections 106 and 107 of the Copyright Act of 1976, 17 U.S.C. �� 106 and 107, state: � 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; * * * � 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. * * * Statement of the Case Petitioner Michigan Document Services, Inc. (“MDS”) provides photocopying services to professors and students. Petitioner James M. Smith is the sole shareholder and president of MDS. Respondents are publishers who own copyrights in the six works at issue. Excerpts of those six works were selected by three University of Michigan professors who assigned them to their students as classroom reading materials. The professors brought the reading assignments to MDS and requested copies for their students. The students picked up their personal copies from MDS and paid a per-page copying charge. Respondents filed a copyright infringement action against Petitioners in February, 1992, claiming that Petitioners could not photocopy the six excerpts on behalf of professors and students without first asking permission of Respondents and paying fees to Respondents. Petitioners responded that their actions were protected by the fair use provision of the Copyright Act, which identifies the fair use of a copyrighted work to include the making of “multiple copies for classroom use” for “teaching” purposes. MDS’s photocopying services simply assisted the professors and students in their educational use of the excerpts. Professors’ Creation of Coursepacks Although Respondents brought this suit in 1992, the practice they challenge has been longstanding and widespread among university professors and students � the use of commercial photocopying services to make copies of their classroom materials without the payment of permission fees. Professors are responsible for determining the classroom reading materials for their courses. When they believe books are appropriate, they assign books for purchase by their students. JA 1231-85.FN1 They also may assign supplemental reading materials, such as journal and newspaper articles, course notes, syllabi, sample test questions, and excerpts from books. JA 1218, 1259, 3070. For example, Professor Michael Dawson, who selected an excerpt at issue in this case, selected nine books and 30 excerpts from a wide variety of disciplines for his course “Black Americans and the Political System.” JA 1232. Excerpts are used to develop students’ interest in a particular aspect of the subject matter, expose them to a variety of ideas, provide depth in a particular discipline, and keep course materials current. JA 1218-56. After professors select and organize the supplemental materials, they deliver them to a copyshop, such as MDS, and request copies for their students. At the professors’ direction, the copyshop makes the copies and binds them together with a table of contents into a “coursepack.” JA 3070. Coursepacks are not books. They are the semester’s assigned supplemental readings, bound together for the convenience of the students.FN2 These readings are unique, representing personal selections by a particular professor for use by students enrolled in a specific course. The excerpts in this case were selected and used in just this way. Three University of Michigan professors brought MDS the classroom reading materials they selected, including the excerpts at issue, and requested copies for their students. MDS made the copies per the professors’ instructions. The students picked up their coursepacks and paid MDS for its copying services. The students could have copied the excerpts themselves at the library’s reserve reading room, but at twice the per-page price of MDS. The publishers charge no permission fees when students do their own copying at the library. MDS did not select the coursepack materials and did not offer the professors any economic incentive to choose its photocopying service. JA 1214. MDS did not sell coursepacks to the public. App. C at 110a. Thus, the relationship among the professors, MDS, and the students was a closed loop � the professors and students simply requested that MDS perform the copying they otherwise would have done themselves. Nationwide Impact of Kinko’s In 1991, a district court decision cast doubt upon the longstanding practice of copyshops providing printing services to professors and students. Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991) (“Kinko’s”) held that a copyshop violated publishers’ copyrights when it made copies of course materials without paying fees to the publishers. Based on that district court decision, Respondents’ trade group warned colleges and copyshops throughout the country that copyright law prohibits the making of coursepacks for students and professors unless the publishers first give permission (on whatever terms they choose), and unless copying fees are paid (at whatever rates they demand). As a result, nonprofit educational institutions nationwide, as well as copyshops and their student-customers, now pay significant sums to publishers under systems established to charge for the photocopying of excerpts for classroom use. For example, MDS’s total copying charges for the three coursepacks containing the excerpts at issue was $107.35; yet the coursepacks would have cost $703.95 under Respondent MacMillan’s permission fee system. Some excerpts would not have been available at any price because MacMillan would have refused permission. App. A at 14a. Believing Kinko’s to be inconsistent with this Court’s decisions and the Copyright Act, Petitioner Jim Smith refused to charge students and professors the fees demanded by Respondents.FN3 Consequently, he was sued. The Decisions Below In June, 1994, the District Court for the Eastern District of Michigan granted Respondents’ motion for summary judgment as to willful copyright infringement. The court awarded Respondents $30,000 in damages and, by a later order, $326,000 in attorneys’ fees. The court enjoined Petitioners from copying any portion of Respondents’ current or future copyrighted publications. App. C. On appeal, a panel of the Sixth Circuit Court of Appeals reversed the district court, finding MDS’s photocopying services to professors and students to be part of a fair use, and ordering that summary judgment be entered for Petitioners. App. B. The panel majority held that the use of the excerpts was a “classroom use” under � 107 of the Copyright Act because students and professors used the excerpts, while MDS efficiently assisted the users by performing only the ministerial act of copying assigned classroom readings. Id. at 88a-90a. The panel stressed that Respondents never challenged the students’ and professors’ rights to make copies of the excerpts at issue. Id. at 89a. Respondents neither alleged nor demonstrated any harm to the market for the original works or for derivative works. Id. at 94a-95a. Respondents’ sole claim of injury was that they did not receive the fees they desired to charge MDS for copying classroom readings for students and professors. The panel rejected that claim as circular, determining that the entitlement (or not) to such fees was precisely the issue to be decided by the court. Id. at 95a. The panel also noted that use of excerpts promoted access to works without harming markets for the works, increased authors’ incentives to create new works, and benefitted authors, students, professors, and publishers. Id. at 96a-97a. The Court of Appeals subsequently granted Respondents’ motion for reconsideration and rehearing en banc, and ruled 8-5 against fair use. The majority found the selection of the excerpts by the professors and the classroom use by the students to be irrelevant to the fair use inquiry because the professors and students were not named as defendants. App. A at 8a. It adopted a theory of market harm under which a copyright owner is “injured” when it is not paid for uses for which it wishes to charge, even though it can show no harm to the market for the original work or derivative works. Id. at 11a-14a. The five judges dissenting from the en banc decision agreed with the original panel of the Court of Appeals that MDS’s photocopying services could not be analyzed apart from the classroom use by the professors and students, and was a fair use. The en banc majority reversed the district court’s finding of willfulness, noting that with one appellate victory, five dissenting en banc judges, and three dissenting opinions, Petitioners were not willful infringers. The Court of Appeals vacated the award of damages and remanded for re-determination in light of the absence of willfulness, and affirmed entry of a permanent injunction against Petitioners. Id. at 23a-25a. Reasons For Granting The Writ Fair use is a constitutional counterweight to the privileges granted to copyright owners. Article I, � 8, cl. 8 of the Constitution grants Congress the power to enact copyright law but requires that copyright serve the public interest. Fogerty v. Fantasy, Inc., 510 U.S. 517, 526 (1994). One way in which the Copyright Act fulfills this constitutional purpose is through the right of fair use. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 549-50 (1985). This case squarely presents the most fundamental questions in a copyright fair use case. Whose use of a copyrighted work is the proper subject of a court’s fair use inquiry? May fair users ask a commercial enterprise to make their copies without losing their right of fair use? Is a copyright owner harmed when it does not receive fees it demands for certain uses, including fair uses? The analysis used by the en banc majority to answer these questions cannot be reconciled with the plain language of the Copyright Act or this Court’s copyright jurisprudence. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994); Fogerty, supra; Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991); Harper & Row, supra; Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). The en banc majority’s fair use analysis eliminates fair use where owners decide to charge for such uses and commercial enterprises assist the users. This departure from this Court’s precedents jeopardizes the “First Amendment protections” embodied in the Copyright Act. Harper & Row, 471 U.S. at 559-60. This Court has noted that fair use embodies First Amendment protections necessary to an educated and informed society. Id. The enumerated fair uses in � 107 � “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship or research” � reflect these First Amendment values. This case has generated seven opinions, with four in favor of fair use. There is profound disagreement as to how to identify the user of the work, the legal relevance of the students’ and professors’ use of commercial printing services, and the relevance of the publishers’ desire to charge fees for the making of multiple copies for classroom use. In its closely-divided decision, the en banc court characterized fair use as “one of the most unsettled areas of the law,” and acknowledged that the strong dissents demonstrated “[t]he potential for reasonable disagreement.” App. A at 24a. Indeed, over twenty years ago this Court split 4-4 in a fair use case rejecting similar demands by copyright owners for fees for the photocopying of scholarly articles for researchers. 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). Fifteen years later, Kinko’s held that publishers may demand fees for the copying of classroom reading materials, a decision found persuasive by the district court below. App. C at 121a. This Court’s subsequent decision in Campbell soundly repudiated the Kinko’s analysis. See infra at 24. The Sixth Circuit panel found Campbell directly applicable, ruling that MDS’s services to students and professors were part of a fair use. Notwithstanding Campbell, the en banc majority adopted the Kinko’s analysis and ruled against fair use.FN4 In short, the lower courts are uncertain as to Campbell’s relevance to educational fair use, and as to the meaning of the phrase “multiple copies for classroom use” in the Copyright Act. Although judges are deeply divided, the effect of the en banc decision on educational fair use is certain. Because the decision cements the district court ruling in Kinko’s, it effectively decides the issue left unresolved by this Court in Williams & Wilkins. Thus, the educational community will treat it as an authoritative statement of the limits of educational fair use. The “broad consequences,” App. A at 29a (Merritt, J., dissenting), of the en banc decision will “hinder scholastic progress nationwide.” Id. at 28a (Martin, C.J., dissenting). This Court’s review is necessary to resolve fundamental questions of copyright law and to affirm the vitality of educational fair use. A. The Sixth Circuit’s Theory Of Market Harm Departs From This Court’s Decisions And The Plain Language Of The Copyright Act. The en banc majority held that copyright owners are legally injured when they do not receive fees they wish to charge for the copying of excerpts for classroom use, even though the use of the excerpts does not harm the markets for the original work or derivative works, and the owner alleges no harm to those markets. App. A at 11a-14a. This ruling radically departs from this Court’s precedents, the plain language of the Copyright Act, and the purpose of copyright law. Congress granted copyright owners certain rights. 17 U.S.C. � 106. Those rights are limited in nature, purely statutory, and subject to the right of fair use. Sony, 464 U.S. at 432-33. Certain uses of works are outside the rights of owners; in particular, no owner may control fair use. Id. at 433. This balance between owners and users ensures that copyright fulfills its constitutional purpose to benefit the public. Campbell, 510 U.S. at 575. This statutory balance should not be recalibrated by courts; rather, “[s]trict adherence to the language and structure of the [Copyright] Act is particularly appropriate where, as here, a statute is the result of a series of carefully crafted compromises.” Community for Creative Non-Violence v. Reid, 490 U.S. 730, 748 n.14 (1989). The Copyright Act declares that a fair use is “not an infringement of copyright,” and gives guidance to owners, users, and courts as to the types of uses that are likely to further the purpose of copyright law. 17 U.S.C. � 107. Such fair uses of copyrighted works include “reproduction in copies . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship or research.” Id. The public benefit purpose of copyright is evident from these enumerated uses, and is fostered by students’ and professors’ ability to readily obtain their fair use copies. Section 107 creates no presumptions of fair use or infringement. Instead, it directs courts to consider a number of factors in deciding whether a particular use of a copyrighted work is fair. One factor requires courts to “assess[] the likelihood of significant market harm,” Campbell, 510 U.S. at 590, by considering “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. � 107(4). The plain language of � 107 dictates that the making of multiple copies for classroom use sometimes will be a fair use. In such cases, a demand for fees is irrelevant to a market harm analysis because “[i]f the use is otherwise fair, then no permission need be sought or granted.” Campbell, 510 U.S. at 585 n.18. Thus, the mere demand for copying fees can never be dispositive as to whether owners are entitled to charge such fees. If it were, owners could claim entitlement to charge for “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship or research.” � 107. This Court has stated that the proper markets to consider in a market harm analysis are the markets for the original work and for derivative works. Campbell, 510 U.S. at 590-92; Harper & Row, 471 U.S. at 568. These markets flow from the rights granted by Congress to copyright owners � the rights to reproduce the work and to prepare derivative works. 17 U.S.C. � 106(1) and (2). The en banc majority did not confine its market harm analysis to this statutory framework. It found, instead, that owners also control the market for making multiple copies of excerpts for classroom use, and that owners are legally harmed when they do not receive fees they demand for such uses. The court reached this conclusion by characterizing the photocopying services of MDS as a “potential market” for copyright owners, and using � 107’s reference to “the potential market for . . . the copyrighted work” as a source of rights of owners. App. A at 10a, 13a. In short, the en banc majority took language from a statutory limitation on copyright owners, � 107, and created an exclusive right of owners not granted to them by Congress in � 106. While the photocopying of an excerpt in some circumstances could harm the market for the original work or for derivative works, this case presents neither allegations nor proof of such harm. The en banc court’s market harm analysis rested solely on Respondents’ demand for copying fees. Without allegations or proof of harm, however, those fees are irrelevant to legal injury, as were the licensing fees for the use of telephone listings in Feist, the parody licensing revenues in Campbell, and the fees for home videotaping in Sony.FN5 This Court recognizes that licensing fees for the “potential market” are relevant to market harm only when the license is for a derivative work. See, e.g., Harper & Row, 471 U.S. at 567-68 (serialization rights of a book); Stewart v. Abend, 495 U.S. 207, 228-30 (1990) (television, motion picture, and dramatic adaptations of a literary work); Campbell, 510 U.S. at 590 (nonparody, “rap” adaptation of a musical work). Thus, an owner cannot control a use simply by characterizing that use as a “potential market” and deciding to charge for it. This Court routinely rejects attempts by owners to expand the scope of their exclusive rights. Sony, 464 U.S. at 431 (“The judiciary’s reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme.”). The dissenting en banc judges criticized the majority’s acceptance of the publishers’ argument that they are “harmed” when they do not receive the very fees at issue. “[W]e should not validate that practice by now using the income derived from it to justify further imposition of fees.” App. A at 36a (Merritt, J). The publishers’ argument was flawed and circular because it assumed, as its premise, the conclusion that the publishers were entitled to the fees they sought. Such an argument would “always yield a conclusion that the market had been harmed because any fees that a copyright holder could extract from a user” could be claimed to be “lost” regardless of whether the use were fair or infringing. Id. at 63a (Ryan, J.). The dissenting judges understood that the issue was not whether the publishers had set up a system to charge for classroom copying, or how well or poorly it functioned, but whether the publishers were legally entitled to control the challenged use. The fair use analysis of the en banc majority shifts the focus from the allocation of rights in the Copyright Act to an inquiry as to whether the owner desires to charge for the use at issue. It converts the right to make a fair use of a copyrighted work � a right reserved by Congress to the public � into a prohibition against such use without prior permission and payment of fees. Lower courts have applied this flawed market harm analysis and will find further encouragement in the decision below. Thus, lower courts need direction from this Court as to how they should identify the markets for which permission fees are the lawful province of owners and those markets which are outside their control. Without this guidance, courts will regard an owner’s permission system as dispositive evidence of legal injury, thereby defeating the congressional grant of fair use and preventing the Copyright Act from fulfilling its constitutional purpose. B. The Sixth Circuit Limited Congress’ Grant Of Fair Use By Identifying The Named Defendant As The Only Relevant User. At the outset of any fair use inquiry a court must correctly identify the user of the copyrighted work at issue. The user is central to a proper analysis of “the purpose and character of the use,” “the amount and substantiality of the portion used,” and “the effect of the use upon the potential market for . . . the copyrighted work.” 17 U.S.C. � 107 (emphasis added). The en banc majority confused the identity of the defendant with the identity of the user, thus shifting the fair use analysis FN6 away from the true user and dramatically restricting the congressional grant of fair use. Section 107 identifies the making of “multiple copies for classroom use” for “teaching” purposes as typical of fair use. By directly linking the use of the excerpts with the classroom and teaching activities, the plain language of the Copyright Act directs a court’s fair use inquiry to the activities of the students and professors. However, the en banc majority did not analyze the use of the excerpts by the students and professors because “the use of the materials by the students is not the use that the publishers are challenging.” App. A at 8a. Thus, the majority’s fair use analysis was dictated by Respondents’ strategic selection of the commercial copyshop as the named defendant. Once the en banc majority isolated the mechanical activity of making copies from the actual use of those copies, it saw only a company making money by copying pages of books. Id. Yet “[n]either the language of section 107 nor simple common sense warrant examining the production of multiple copies in a vacuum and ignoring their educational use.” App. A at 47a (Ryan, J., dissenting). “[MDS] does not `use’ the material independent of the university professors’ and students’ use; it is a participant in their use and its profits are derived only from photoreproduction services the students pay it to perform.” Id. at 50a. By recognizing the professors and students as the true users, Judge Ryan correctly saw the use at issue as nonprofit and educational. “[T]he use that is to be evaluated for fairness in this case is the use to which the protected substantive text is put, not the mechanical process of copying it.” Id. at 47a (Ryan, J., dissenting). “The professors and students clearly do use” Respondents’ copyrighted material, but do so for a nonprofit purpose expressly recognized in � 107. Id. at 51a-52a. A focus on the defendant rather than the user allows a copyright owner to strategically name as a defendant only the commercial service provider assisting in the fair use (typically a printer or manufacturer of tangible media, such as audiotapes, videotapes, or compact discs). As a result, a court will misperceive even an educational, nonprofit use as a commercial use. This Court rejected such a strategy in Sony, where it examined the use of the work by the home viewers even though they were not before the Court. Sony, 464 U.S. at 422 n.2, 434. This Court’s most recent fair use decision illustrates the danger of limiting the fair use inquiry to the named defendant. Suppose the copyright owner in Campbell had sued only the record manufacturer of the “Pretty Woman” parody, and not the user of the work, 2 Live Crew. Under the formulation of the en banc majority, a court would disregard the parodic purpose and transformative nature of the use and focus solely on the mechanical act of reproducing the records, which had only a commercial purpose. MDS provides the users of the excerpts the same mechanical reproduction services as did the record manufacturer for 2 Live Crew. Campbell shows that the correct focus is on the use of the excerpts by the professors and students. A failure to correctly identify the user precipitates other serious analytical flaws in all fair use cases involving duplication. For example, once the en banc majority isolated the act of copying the excerpts from their educational use, it declared that photocopying was not a “productive” use. Yet this Court has recognized that copying can be productive in the context of education: “A teacher who copies to prepare lecture notes is clearly productive. But so is a teacher who copies for the sake of broadening his personal understanding of his specialty.” Sony, 464 U.S. at 455 n.40. The productive nature of a use is not evident if the copying is viewed in isolation. Moreover, by insisting that a fair use go beyond reproduction of printed matter, the en banc majority disregarded this Court’s express instruction that “[t]he obvious statutory exception to this focus on transformative uses is the straight reproduction of multiple copies for classroom distribution.” Campbell, 510 U.S. at 579 n.11. Indeed, � 107 expressly declares that photocopying for educational purposes can be a part of a fair use of a copyrighted work. Correct identification of the user also is central to a proper analysis of the third statutory factor � “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” 17 U.S.C. � 107(3). Using “reasonableness” as the touchstone, this Court stated that a �107(3) analysis must be performed in light of the other � 107 factors. Campbell, 510 U.S. at 586-87.FN7 The en banc majority, however, did not look to the purpose for which the excerpts were used (teaching), the character of the use (educational), the market effect (no harm to the market for the work or for derivative works), or the amount used (no more than was necessary to accomplish the teaching purpose). Instead, it adopted two bright-line rules from Kinko’s � first, whatever was selected for copying must be the “heart” of the work and thus too much to fairly use; and second, any copying beyond a safe harbor in the legislative history weighed against fair use. App. A at 18a, 20a. The majority’s identification of the defendant as the only relevant user will be the thumb on the scales against fair use every time the named defendant happens to make money, threatening to “swallow nearly all of the illustrative uses listed in . . . � 107.” Campbell, 510 U.S. at 584. It severely impairs the exercise of fair use rights, since few users have their own manufacturing or photocopying equipment. It imposes a requirement on fair users that Congress did not impose � they must manufacture their own fair use copies. It shifts the court’s inquiry from the “purpose and character of the use” to whether money changes hands. The majority’s focus on the defendant rather than the user of the copyrighted work is a “profound indication that its approach is misguided.” App. A at 28a. (Martin, C.J., dissenting). C. The Sixth Circuit Applied Commercial Presumptions That Virtually Eliminate Educational Fair Use. In Campbell, this Court reversed the Sixth Circuit for, among other things, holding that a commercial use is presumptively unfair. 510 U.S. at 583-84. The Sixth Circuit repeated its mistake here and then compounded its mistake by employing a new presumption: money that copyright owners are willing to charge for a use is “lost” when they do not receive it, even if the use may be a fair use. The en banc majority viewed the money paid by the students for MDS’s photocopying services as establishing a commercial use. It then found that “[t]here is a presumption of unfairness here.” App. A at 10a (emphasis in original). Such a presumption is reversible error. Campbell, 510 U.S. at 584. No such presumption exists unless the entire work is copied verbatim for commercial use. Id. at 591. Commerciality “is only one element of the first factor enquiry,” and even a commercial use may be a fair use. Id. at 584. The en banc majority also found that Respondents had established legal injury because they had set up systems to charge for the making of multiple copies for classroom use, other copyshops were paying the fees demanded, and MDS was not. App. A at 11a. In so doing, the court employed an irrebuttable presumption of legal harm and relied upon that presumption as a basis to find against fair use. Yet, in Campbell, this Court held that parody (i.e., a fair use) “does not produce a harm cognizable under the Copyright Act.” Campbell, 510 U.S. at 592. Since fair use is outside the rights of copyright owners, owners may not control fair use simply by setting up systems to charge for it. Thus, the en banc majority committed reversible error as to the existence of market harm. This improper reliance on presumptions flows from the majority’s view of the relevance of money. While the majority acknowledged that Campbell viewed no single fair use factor as paramount, the majority nevertheless found the fourth factor to be “at least primus inter pares,” App. A at 8a, and the others “considerably less important.” Id. at 15a. Accordingly, it began with a fourth factor market harm analysis, having not yet determined the purpose or character of the use, the nature of the work used, or the amount used.FN8 The en banc majority assumed that money made by MDS belonged to Respondents. The majority’s analysis failed to recognize that a copying service must acquire expensive equipment and service contracts, purchase supplies, and pay wages, rent, taxes, and other expenses. The majority disregarded that MDS’s copying charge depends solely on the number of pages, not the content of the pages. The dissenting judges saw the distinction between a printer and the user of the work, and saw the copying costs for what they were � payment for services rendered. “The students paid the copyshop solely for the time, effort and materials that each student would otherwise have expended in copying the material himself or herself. The money paid is not money that would otherwise go to the publishers.” App. A at 33a (Merritt, J., dissenting). In short, even a commercial defendant can be a part of a nonprofit use of a work. Through its use of presumptions, the majority disregarded the fundamental fair use inquiry � “Where should the author’s exclusivity stop in order to best serve the[] overall objectives of the copyright law?” Pierre N. Leval, Campbell v. Acuff-Rose: Justice Souter’s Rescue of Fair Use, 13 Cardozo Arts & Ent. L.J. 19, 22 (1994). Instead, it focused on “commercial motivation [which] is virtually ubiquitous in publishing.” Id. at 21. The en banc majority upheld Respondents’ demand for copying fees because Petitioners had not shown that payment of fees would eliminate educational use of excerpts. App. A at 14a-16a. This reduces the “fair use” inquiry to an inquiry into the point of “nonuse.” If fair use had to be “rescued” by this Court in Campbell, as Judge Leval suggests, it will have to be resuscitated after this 8-5 decision. The en banc majority’s analysis turns an educational use into a commercial use, finds a commercial use to be presumptively unfair, and finds harm where there is only a demand for fees. Such an approach warrants this Court’s review. D. The Sixth Circuit Established Kinko’s As The Definitive Statement Of Educational Fair Use. For a generation, professors and students used the services of copyshops to make copies of their classroom materials, including excerpts of copyrighted works. Copyshops provided this service to professors and students with the understanding that they were participants in the making of “multiple copies for classroom use” under � 107 of the Copyright Act. The district court decision in Kinko’s, however, coupled with threats of lawsuits from publishers, led many copyshops to seek permission and pay the fees demanded by publishers. App. A at 4a. The en banc decision, if left standing, will establish Kinko’s as the de facto law of the land in the eyes of publishers, authors, universities, students, libraries, and copyshops. This nationwide impact of a lone district court decision is especially troubling in light of the fact that Kinko’s was decided three years before this Court’s decision in Campbell, which soundly repudiates the Kinko’s analysis. Kinko’s held every commercial use to be presumptively unfair, 758 F. Supp. at 1530, which this Court held was reversible error. Campbell, 510 U.S. at 584. Kinko’s required that a use be transformative in order to be fair. 758 F. Supp at 1530-31. Campbell noted that “[t]he obvious statutory exception to this focus on transformative uses is the straight reproduction of multiple copies for classroom distribution.” 510 U.S. at 579 n.11. Kinko’s invoked the tautology that anything selected for copying must have been the “heart of the work” and thus too much to fairly copy. 758 F. Supp. at 1533. Campbell held that the proper inquiry examines the amount used in relation to the purpose for the use and the effect of the use on the market for the work, and that a fair use may include the heart of a work. 510 U.S. at 586-88. Finally, Kinko’s held that the publishers’ permission system for classroom use was relevant to market harm. 758 F. Supp. at 1534. In contrast, Campbell looked to the rights granted by Congress in � 106 as the source of the markets over which copyright owners may assert control, and held that a fourth factor analysis may not include claimed injury to the fair use market. 510 U.S. at 593. The Sixth Circuit’s stamp of approval in this case demonstrates the continuing influence of Kinko’s, despite this Court’s decision in Campbell. Given the nationwide impact of Kinko’s, it is highly unlikely that publishers’ permission fee systems for classroom use will be subject to further legal challenges. Indeed, given the ruinous effect of this protracted litigation, which put MDS into bankruptcy, copyshops will be reluctant to assist the legitimate exercise of fair use rights. Thus, Kinko’s theory of market harm will continue to be invoked by the lower courts. The last time a new theory of market harm was created it lasted over half a century before this Court unanimously rejected it as unconstitutional. See Feist, 499 U.S. at 1290-94. The history of copyright jurisprudence reflects the difficulties experienced by lower courts with fair use and its constitutional relationship to copyright.FN9 Copyright law is based not in economic property rights but in the benefits of an informed and educated society. “Fair use should not be considered a bizarre, occasionally tolerated departure from the grand conception of the copyright monopoly. To the contrary, it is a necessary part of the overall design.” Pierre N. Leval, Toward A Fair Use Standard, 103 Harv. L. Rev. 1105, 1110 (1990). This case squarely presents important copyright fair use issues, and review is timely. Conclusion The Chief Judge of the Sixth Circuit described the en banc decision as “one of the more obvious examples of how laudable societal objectives, recognized by both the Constitution and statute, have been thwarted by a decided lack of judicial prudence.” App. A at 26a (Martin, C.J., dissenting). This decision puts at issue, and at risk, the future of fair use and the purpose of copyright law � “[t]o promote the Progress of Science and useful Arts.” U.S. Const. art. I, � 8, cl. 8. This Court should issue a writ of certiorari to the Court of Appeals for the Sixth Circuit in order to ensure the place of educational fair use in the overall design of copyright law. Respectfully submitted, Susan M. Kornfield Counsel of Record Bodman, Longley & Dahling LLP Attorneys for Petitioners 110 Miller, Suite 300 Ann Arbor, Michigan 48104 (313) 761-3780 Dated: January 30, 1997
Footnotes
{1} All “JA” references are to pages in the Joint Appendix filed with the Sixth Circuit. For the Court’s convenience, the affidavits of the three University of Michigan professors who selected the excerpts at issue are reproduced in Appendix D. {2} Professors find that students who have their own copies of the assigned readings are more likely to read the assignments and are better prepared to discuss the assignments in class. JA 1204. Students with their own copies of the reading assignments are able to annotate relevant portions and study the assignments at a time and place convenient for them. JA 1220-21. {3} This view is shared by the eleven copyright scholars who signed an amicus brief on behalf of Petitioners in the proceedings below. {4} Participation at the appellate level by amici copyright scholars, library associations, the Attorney General of the State of Georgia, school board associations, school administrators, school districts, publishers, authors, and others underscores the importance of this case to the educational community. {5} The system of permission fees at issue here is completely different from licensing systems for public performance rights, such as those administered by organizations such as ASCAP and BMI. Performing rights organizations exist to administer a right expressly granted by Congress to copyright owners in 17 U.S.C. � 106(5). There is no corresponding right to control the copying of excerpts. {6} See, e.g., American Geophysical Union v. Texaco Inc., 60 F.3d 913, 929-31 (2d Cir. 1995); Kinko’s, 758 F. Supp. at 1534. {7} Respondents object to the professors’ selection of chapters from books for inclusion in coursepacks, and contend that such amounts can never be fair. Campbell instructs, however, that the amount must be considered in light of the other factors in � 107. {8} The en banc majority’s revival of the “presumption of unfairness” and its reluctance to believe that photocopying could ever be part of a fair use is exemplified by its approval of a blanket injunction against MDS’s copying for students and professors. This Court has cautioned against the use of injunctions in fair use cases where there is “`a strong public interest'” in the challenged use and where “`the copyright owner’s interest may be adequately protected by an award of damages for whatever infringement is found.'” Campbell, 510 U.S. at 578 n.10 (quoting Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1132 (1990)). As Judge Merritt observed in his dissent, the injunction approved by the en banc majority is “so grossly overbroad that it violates the First Amendment,” App. A at 29a, and is “without any recognition that the doctrine of fair use exists.” Id. at 37a. {9} See Campbell, supra (reversing the Sixth Circuit, which had reversed district court’s finding of fair use); Fogerty, supra (reversing the Ninth Circuit, which had joined the Second and Seventh Circuits in disadvantaging prevailing copyright defendants in the award of attorney’s fees); Feist, supra (reversing Tenth Circuit’s finding of copyright protection for telephone listings); Sony, supra (reversing the Ninth Circuit, which had reversed district court’s finding of fair use); Harper & Row, supra (reversing Second Circuit, which had reversed district court’s finding of infringement).