FOR THE SIXTH CIRCUIT ____________________
PRINCETON UNIVERSITY PRESS, MACMILLAN,
INC., and ST. MARTIN’S PRESS, INC.,
MICHIGAN DOCUMENT SERVICES, INC.,
and JAMES M. SMITH,
SUPPLEMENTAL EN BANC BRIEF
MICHIGAN DOCUMENT SERVICES, INC., AND
JAMES M. SMITH
Susan M. Kornfield (P41071) David G. Chardavoyne (P27034) Lydia Pallas Loren (P47644) Attorneys for Defendants-Appellants BODMAN, LONGLEY & DAHLING LLP 110 Miller, Suite 300 Ann Arbor, Michigan 48104 (313) 761-3780
May 15, 1996
A. The Phrase “Multiple Copies for Classroom
Use” Places the “Purpose and Character of
the Use” Focus on “Classroom Use” 12
B. The District Court Confused the Identity of
the Defendant With the Identity of the User 13C.The District Court Did Not Understand That MDS
Prints Excerpts. MDS Does Not Publish Anything 14
V. THE “NATURE OF THE WORK” INQUIRY REFLECTS
THE CONSTITUTIONAL BASIS FOR COPYRIGHT 20
VI. A QUANTITATIVE AND QUALITATIVE ANALYSIS CANNOT
BE SIMPLIFIED WITH BRIGHT LINE RULES, PAGE-COUNTING,
OR PERCENTAGES 22
American Geophysical Union v. Texaco, Inc.,
60 F.3d 913 (2d Cir. 1995) 41-42
Basic Books, Inc. v. Kinko’s Graphics Corp.,
758 F.Supp. 1532 (S.D.N.Y. 1991) 47-48
Campbell v. Acuff-Rose, ___ U.S. ___,
114 S.Ct. 1164 (1994) passim
Community for Creative Non-Violence v. Reid,
490 U.S. 730, 109 S.Ct. 2166 (1989) 8, 28
Encyclopedia Britannica Educ. Corp. v. Crooks,
558 F. Supp. 1247 (W.D.N.Y. 1983) 43
Feist Publications, Inc. v. Rural Telephone
Service Co., 499 U.S. 340,
111 S.Ct. 1282 (1991) passim
First Comics, Inc. v. World Color Press, Inc.
884 F.2d 1033 (7th Cir. 1989), cert. denied,
493 U.S. 1075, 110 S.Ct. 1123 (1990) 14
Fogerty v. Fantasy, Inc., __ U.S. __,
114 S.Ct. 1023 (1994) 2, 9, 36-37, 47
Gulf Oil Corp. v. Copp Paving Co.,
419 U.S. 186, 95 S.Ct. 392 (1974) 24
National Rifle Ass’n of America v. Handgun
Control Fed’n, 15 F.3d 559 (6th Cir.),
cert. denied, 115 S.Ct. 71 (1994) 13, 21
Sony Corp. of America v. Universal City
Studios, Inc., 464 U.S. 417,
104 S.Ct. 774 (1984) passim
Stewart v. Abend, 495 U.S. 207,
110 S.Ct. 1750 (1990) 21, 30
Twentieth Century Music Corp. v. Aiken,
422 U.S. 151, 95 S.Ct. 2040 (1975) 9
West Virginia Univ. Hosps., Inc. v. Casey,
499 U.S. 83, 111 S.Ct. 1138 (1991) 24
U.S. Const. art. I, §8, cl.82, 49
17 U.S.C. § 101 28-30
17 U.S.C. § 107passim
1 Stat. 1242
H.R. Rep. No. 1476, 94th Cong., 2d Sess. (1976)
reprinted in 1976 U.S.C.C.A.N. 565910, 25-26
David W. Stowe, Just Do It, Lingua Franca,
December 1995 at 3240
1. Whether a photocopy service provider can be liable for copyright infringement when the copyright owners concede that the copies at issue could be made by the users of the works, namely the students and professors, and further concede that the professors could have made the copies and charged the students the copying costs, and when the record shows that such copying caused no legally cognizable harm to the relevant markets for the works.
2. Whether students and professors may exercise their right of fair use under the Copyright Act, 17 U.S.C. §107, by having a third party provide photocopy services at their request and on their behalf.
3. Whether a court can effectively amend the plain language of 17 U.S.C. §107 by imposing restrictions on the rights of fair users that Congress refused to enact.
4. Whether, in the fourth statutory factor analysis of a fair use case, the willingness of a copyright owner to charge a fee is evidence that the fee must be paid.
5. Whether a district court can grant summary judgment where the moving party has failed to meet its burden of proof; where the district court failed to believe the evidence of the nonmovants and failed to draw all justifiable inferences in favor of the nonmovants; and where the district court weighed the evidence and determined the truth of the matter asserted instead of determining whether there was a genuine issue of material fact for trial.
Relying on the Constitution, the Supreme Court has stated:”The primary objective of copyright is not to reward the labor of authors, but ‘[t]o promote the Progress of Science and useful Arts.'” Fogerty v. Fantasy, Inc., __ U.S. __, 114 S.Ct. 1023, 1030 (1994).
“[C]opyright law ultimately serves the purpose of enriching the general public through access to creative works ….” Id. To achieve the constitutional purpose of copyright, creators of works of original authorship are given certain privileges for a fixed period of time. Those privileges are “intended to motivate the creative activity of authors,” but “are limited in nature and must ultimately serve the public good.” Id. at 1029. One important limitation on those privileges is the guarantee of the right of fair use to the public. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 546-48, 105 S.Ct. 2218, 2223-24 (1985).
Thus, there is a quid pro quo in copyright: in exchange for certain rights, copyright owners are prohibited from controlling certain uses of their works. Fair use is protected by the Constitution, Congress, and the courts because it is “necessary to fulfill copyright’s very purpose” — the promotion of learning. Id. at 1169.[ FN 1 ] As the “guarantee of breathing space within the confines of copyright,” id., fair use is the constitutional counterweight to the rights granted to copyright owners. “Fair uses are affirmatively guaranteed to the public.” (Panel opinion, “Op.” 6). In this case, the use of excerpts by professors and students, assisted by the services of Michigan Document Services, Inc. (“MDS”), is the exercise of that affirmative right.
When Congress codified the doctrine of fair use at 17 U.S.C. §107, it declared that certain uses of copyrighted works are outside the control of the copyright owner and are “not an infringement.” Congress enumerated certain uses that courts had typically found to be fair uses: “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.” 17 U.S.C. §107; see Campbell v. Acuff-Rose, ___ U.S. ___, 114 S.Ct. 1164, 1170 (1994). Those uses were typically fair because they fulfilled the purpose of copyright.
In connection with teaching activities, Congress explicitly authorized the making of multiple copies for classroom use. It did not deem relevant whether the fair users pushed the button on the photocopy machine or paid a third party to do so. Thus, when a panel of this Court held that it was a fair use for MDS to make multiple copies of excerpts for classroom use, where those copies were made at the request of professors for use by their students, the panel applied the plain language of the statute in light of the facts in the record, and in a manner consistent with the purpose of copyright.
The plaintiffs, who claim to own copyrights in the excerpted works, contend that students and professors may not use the services of MDS without paying permission fees to the publishers. During this appeal, the plaintiffs have made several key admissions. They admitted that (1) the students and professors “may be able to claim a fair use here” (Oral Arg. Trans., attached as Exhibit A, 21), (2) the students and professors may make copies of these excerpts without asking permission of or paying any fees to the publishers (Ex.A, 18), (3) the students may be charged the cost of copying if the professors made the copies for them (Ex.A, 18-19), and (4) a company providing the photocopy machines at the university library may charge for copies on a per-page basis (Ex.A, 19). Thus, in circumstances where the copyright owners do not object to the making of multiple copies of excerpts for classroom use by the professors or students, does the Copyright Act prohibit a third party from making the copies for the professors and students if those copies are made at their specific direction and request? Clearly, the answer is no.
The district court failed to recognize the constitutional significance of the limitations on the rights of copyright owners. It acted instead upon instincts appropriate for resolving commercial property disputes but completely inapplicable to copyright law. Although the Supreme Court has repeatedly stated that copyright “law has never recognized an author’s right to absolute control of his work” because “[a]ny individual may reproduce a copyrighted work for a ‘fair use’;” Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 432-33 & n.13, 104 S.Ct. 774, 784 & n.13 (1984), the district court ruled that “[t]he defendant is taking the property of another without right or permission …. There is simply no excuse for this conduct.” (R.100 Order p.5, Joint Appendix (“JA”) 3073.) The district court saw copyright as a property right, and MDS’s photocopying as some sort of theft. It is error to rely on common law concepts of property in a fair use case.
In using these commercial, property-based instincts, the district court incorrectly substituted economic analysis for copyright analysis. This is the type of mistake for which the Supreme Court has previously criticized the federal courts:
- “Making matters worse, these courts developed a new theory to justify the protection of factual compilations . . . the underlying notion was that copyright was a reward for the hard work that went into compiling facts.” Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 352, 111 S.Ct. 1282, 1291 (1991) (rejecting 70 years of lower court copyright protection for books containing unoriginal selection and arrangement of facts).
As discussed below, the district court committed reversible error by allowing the publishers to control fair use. It applied an incorrect legal framework for a copyright case and ignored the rules concerning motions for summary judgment. This Court should hold that in light of the facts in the record MDS may copy excerpts for those who may do it for themselves, should reverse the district court and should enter summary judgment for MDS.
The underlying facts in this case are not in dispute. In 1992, three University of Michigan professors selected certain educational materials for use by students enrolled in their classes,[ FN 2 ] “Black Americans and the Political System” taught by Professor Dawson, “American Political Processes: Public Opinion and Democratic Ideals” taught by Professor Kinder, and “History of Vietnam Era” taught by Professor Lieberman. (R.61 Ex.A, Decl. Dawson ¶¶2-4; Kinder ¶¶2-3, 6; Lieberman ¶¶3, 5; JA 1231-41, 1251-54). The professors selected books for purchase by the students, and also selected and assigned supplemental course handouts, including the excerpts at issue.[ FN 3 ] They testified that they were never going to assign the works from which the six excerpts were taken, even if the students could not have obtained their own copies of the excerpts from a copyshop. Id. The professors would have put the supplemental course handouts on reserve in the library, where the copying costs are twice those of MDS. Id.
After selecting and organizing the various supplemental readings, the professors brought their course handouts to MDS and requested copies for the students enrolled in their classes.[ FN 4 ] Id. MDS generated a table of contents, made the copies, and bound the readings together with a cover indicating the course title, year, and semester. These readings, which often include journal articles, newspaper articles, course notes, syllabi, sample test questions, and excerpts from books, are called “coursepacks.”
The professors advised their students that they could either obtain the supplemental readings from reserve reading at the library (where they could make a personal copy of the readings), or from MDS. Because it is cheaper and more efficient for the students to have MDS do their copying for them,[ FN 5 ] and because MDS provides additional document organization services, many students pick up their copy of assigned readings from MDS. MDS sells only to the students in the class, not to the public. (R.100 Order p.2, JA 3070). MDS’s price reflects solely the number of pages in the coursepack, regardless of whether the page is blank, contains public domain material, or contains excerpts from a copyrighted work. (R.10 Smith Decl. ¶4,6, JA 276-77). Any readings not sold by the end of the term are thrown away or recycled. Id.
The supplemental readings are then used in the classroom by the students and professors for educational purposes: exposure to theories, facts, ideas, and opinions; contribution to the students’ overall understanding of a discipline; comparison with other assigned readings; maintenance of the currency of materials discussed in the classroom; scholarship; and research. (R.61 Ex.A., Decl. Liker ¶3; Warner ¶3; Squier ¶¶2-3; Dawson ¶¶2-4; Kinder ¶¶2 3,6; Lieberman ¶¶3,5; JA 1218-54). In addition to allowing “timeshifting” of students’ access to the supplemental readings (R.61 Ex.A, Decl. Liken ¶5, Squier ¶5, JA 1219, 1260), coursepacks allow students to take notes in the margins, highlight sections for emphasis, and in general enhance their learning experience. (R.61 Ex.A., Decl. Squire ¶7, JA 1221).
In the past twenty years, university reading assignments were prepared and used throughout the U.S. in the same way they were prepared and used in this case. (R.54 Decl. Ternes ¶2-5, JA 1041 43). No fees or permissions were required, demanded, or paid to publishers for the making of multiple copies for classroom use. Id. In the academic environment, publishers and authors expected that when the professor in charge of a class elected not to assign the book for purchase because only a small portion was to be used, excerpts might be handed out in class, or put on reserve reading for copying by the students; or copies might be delivered to copyshops for the making of multiple copies for classroom use at the request of the users. This use of educational materials was widespread and longstanding among authors, professors (who are also authors), students, publishers, and copyshops. Id., see also R.54 Ex.A, JA 1203-1288.
Because this case involves the proper interpretation and application of a statute, we begin, as did the panel, with the language of §107. Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739, 109 S.Ct. 2166, 2172 (1989). Section 107 states:
“LIMITATIONS ON EXCLUSIVE RIGHTS: FAIR USE.
- Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —
- (1)the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
- (2)the nature of the copyrighted work;
- (3)the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
- (4)the effect of the use upon the potential market for or value of the copyrighted work.
- The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.” 17 U.S.C. §107 (emphasis added).
Section 107 recognizes that fair use is a part of copyright law, not an exception to it. As a “limitation on exclusive rights” of copyright owners, it exists “notwithstanding” their rights because it is outside the scope of rights granted to them by Congress.
As the Supreme Court has repeatedly held, fair use furthers the constitutional policy of the promotion of learning and the First Amendment values of speech, education, and access to information. Campbell, 114 S.Ct. at 1170; Fogerty, 114 S.Ct. at 1029; Sony, 464 U.S. at 450-51; Harper & Row, 471 U.S. at 560; Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2043-44 (1975). Congress recognized that courts have typically found the enumerated uses to be fair: “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.” Yet, both the district court and the panel dissent ignored the first half of §107.
This error caused them to disregard the fact that Congress declared that “multiple copies for classroom use” is a use typically found to be fair, that such a use furthers the constitutional purpose of copyright, and that the “making of multiple copies” is statutorily related to “classroom use.” Once they failed to apply the plain language of the statute, they lost sight of the purpose of copyright and the role of fair use, and were left only with an inappropriate focus on money.[ FN 6 ]
When Congress authorized the copying of a work as a part of fair use, it did not prohibit the fair user from using the services of a third party to perform the ministerial act of making the copies.[ FN 7 ] Yet, the publishers urge this Court to interpret the Copyright Act so as to add the following restriction: “provided that no fair user may use the services of a third party to make the multiple copies for classroom use.” The interpretation they suggest violates the rules of statutory construction as it fails to apply the plain meaning of the words chosen by Congress, adds restrictions not intended by the language of the Act, and defeats the purpose of that portion of the statute.
The district court granted the publishers’ wish, holding that MDS’s provision of services to the fair users was an infringement, (R.100 Order p.12, JA 3080) and putting an artificial roadblock between fair use and the fair user. This is contrary to the plain language of the Act, the purpose of copyright, and the history of fair use adjudication.
After the initial inquiry as to whether the use falls within one of the enumerated fair uses, the next step is the analysis of the four statutory factors. The panel properly recognized that the factors in §107 are not exclusive and are not weighted, each case must be considered on its own unique set of facts, and a variety of facts may be considered in analyzing a fair use case. Campbell, 114 S.Ct. at 1170-71; Sony, 464 U.S. at 448 & n.31. The panel recognized that there is no “bright-line” approach to determining whether a particular use is fair. Instead, a “sensitive balancing of interests” is required. Campbell, 114 S.Ct. at 1174 (quoting Sony, 464 U.S. at 455 n.40).
Since the four statutory factors “are to be explored, and the results weighed together, in light of the purposes of copyright,” id. at 1171, this Court must decide whether the purpose of copyright is served by a judicially-created limitation on fair use rights: the denial of photocopying services to students and professors and the insistence that they make their own copies at twice the price at the library, go without their copies, or pay illegal fees demanded by the publishers and assessed at other copy shops. There is nothing “fair” about such a burden upon fair use.
The first factor inquiry is “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C. §107(1).
To analyze the “purpose and character of the use” the Court must identify the “use” to be analyzed. Congress could not have made more explicit that for “purposes … such as teaching” the “use” was “classroom use.” 17 U.S.C. §107. Congress also could not have made more clear that, to ensure that all of the members of a class could use a work, Congress would permit the making of multiple copies for such classroom use. Thus, the statutory language “for purposes such as … teaching (including multiple copies for classroom use)” precisely identifies the activity taking place in this case: the professors and the students use the excerpts in connection with course assignments. The purpose and character of the use is thus nonprofit and educational. MDS makes the copies for their use.
The making of the copies is only a ministerial activity resulting in access to, and thus use of, the work. The panel recognized the interplay between copying and use when it held that “the copying in this case is not a use unto itself” but was a part of the teaching activity. (Op. 12). For purposes of the first factor, in the context of teaching, Congress distinguished between the use of the work and the making of the copies, and made the activity of the user the relevant inquiry.
The district court and the panel dissent failed to see that the use was in connection with the classroom and thus failed to understand the difference between the user and the copier. They disregarded the phrase “classroom use” in the statutory phrase “multiple copies for classroom use” and focused exclusively on the words “multiple copies.” The statute does not merely say “multiple copies;” it says “multiple copies for classroom use.”
The district court and the dissent allowed their analyses of the identity of the user of the work to be limited by the publishers’ procedural maneuver of naming as the sole defendant the entity that made the copies. The panel dissent stated “the use of the materials by the students is not the use that the plaintiff publishers are challenging,” (Op. 22), and the district court stated that the only use it should be concerned with was the use by the “alleged infringer.” (R.100 Order p.8, JA 3076.) Of course the publishers are not challenging the use by the students; that tactic would have exposed exactly what is going on here — the publishers are trying to limit fair use by attacking the mechanism by which the use is exercised.
The only chance the publishers had of convincing a court that they should be able to control the making of multiple copies for classroom use, and thereby limit fair use, was to sue the party making the copies (and charging a copying cost), not the parties using the copies. Their tactic worked in the district court, but did not survive the panel’s analysis.
Had the National Rifle Association sued the copyshop that made copies of the list that was distributed by the NRA’s rival, Handgun Control Federation, this Court still would have focused on the educational and First Amendment uses of the list in the hands of the HCF and its members. National Rifle Ass’n of America v. Handgun Control Fed’n, 15 F.3d 559, 561-62 (6th Cir.), cert. denied, 115 S.Ct. 71 (1994). In the Campbell case, had the copyright owner of the song “Pretty Woman” sued the company that manufactured the albums containing the parody version, the Supreme Court still would have examined whether the use of “Pretty Woman” by the parodist was a fair use — not whether the manufacturing of the album was commercial. Indeed, in Sony, the Supreme Court refused to have its fair use analysis directed away from the users of the works, even though the users were not named as defendants. In a fair use case, the court may not ignore the user and focus on the party only providing mechanical assistance to the user.
Would this Court really analyze this case differently if the copies were made by the professors’ secretaries, who then charged the students a fee for copying? Or if MDS incorporated as a nonprofit corporation, a form of business entity that would still allow Mr. Smith to be paid the same wages he makes now at MDS? Will this case turn on the employer of the person who pushes the button on the copying machine, or on whether the use is fair?
MDS is a printer, not a publisher. MDS does not select materials to be included in a publication; control content through selection or editing; select authors; specify format or illustrations; arrange for the printing, distribution, or advertising of the completed work; or set the publication schedule. See, First Comics, Inc. v. World Color Press, Inc., 884 F.2d 1033 (7th Cir. 1989), cert. denied, 493 U.S. 1075, 110 S.Ct. 1123 (1990) (discussing difference between printers and publishers). The professors have complete control over all decisions relevant to the materials assigned to the students — including which works should be assigned for purchase, which should be excerpted, the length of an excerpt, the other materials to be provided to the students along with that excerpt, and the order of the educational materials.
MDS merely receives the materials created and supplied by the professors and provides paper, ink, glue, and labor.[ FN 8 ] MDS’s activities are the provision of services for a fee. Its charges to the students are based solely upon the number of pages copied and the binding costs. (R.10 Smith Decl. ¶4, JA 276). Its business is the utilization of photocopy technologies, “not the exploitation of copyrighted, creative materials.” (Op. 13).
One means by which the publishers attempt to control the fair use market is to make it look as though the parties are competitors. If they can get the Court to believe that MDS’s revenues from service fees must somehow belong to them, they will be able to point to those revenues and demand a share of them, or demand that the services cease. This is difficult to accomplish directly, since the publishers have admitted that professors and students cannot obtain coursepacks from them (Hearing before Magistrate Judge Carlson at TR 7, “Hearing,” JA 3701). So the publishers attempt to do it indirectly — they complain that MDS “competes” with copyshops who pay the fees the publishers demand for the fair use market.
Their argument must be rejected for several reasons. First, it is obviously not the copyshop that pays the fees, it is the students (the ones that the publishers have admitted may copy these excerpts without paying permission fees), since the fees are added to the price of the coursepack. Second, the argument has, as its premise, the very issue the publishers must prove — namely, that there is an obligation to pay the fees. Third, since the inception of coursepacks, the “customary fee” for the use of excerpts in coursepacks was zero. (R.54 Decl. Ternes ¶2-5, JA 1041-43). The argument that MDS is unfairly competing by not paying the “customary fee” is simply false. Fourth, that other copyshops now charge the fair users a fee and remit that fee to the publishers to avoid financial ruin does not establish that the fee must be paid. (Id. at ¶6-10, JA 1043-46).
MDS is the means by which the professors ensure access by their students to the course handouts, thus fulfilling their fair use rights and copyright’s First Amendment values of speech, and dissemination of information and opinion. This Court would not hold a printer of a newspaper to be a copyright infringer simply because the printer is commercial (i.e., charging a fee for printing services) without analyzing whether the publisher of the newspaper (i.e., the one who selected the content) was an infringer. Likewise, this Court cannot hold MDS to be an infringer simply because it charges a fee for its printing services without analyzing whether the professors and students are infringers. Here, the publishers have admitted that they do not challenge the use by the students or the professors, even where a copying fee is charged by the professors.[ FN 9 ]
Once the district court lost sight of the students and professors, it saw only the money MDS charged for its printing services and concluded that MDS must be making a commercial use of the works. It compounded this error by making the same error made by this Court in Campbell — it declared that a commercial use was presumptively an unfair use. (Op. 23; R.100 Order p.10, JA 3078). This is reversible error. Campbell, 114 S.Ct at 1777.
In Campbell, the Supreme Court reversed this Court for relying on this so-called presumption. Id. at 1174, 1177. The Supreme Court held that not only does no such presumption exist (unless the entire work is copied verbatim), but that a commercial use may certainly be a fair use. Commerciality “is only one element of the first factor enquiry.” Id. at 1171. “If, indeed, commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in … §107.” Id.
The publishers chose to make the for-profit status of MDS the pivotal issue in this litigation. They conceded that they do not challenge the copying or use by the students or professors, or copying by the professors for which the students are charged the copying costs. (Ex.A, 18-19). They do not challenge the commerciality of the self-service photocopying operations at the library, which cost twice what MDS charges (and provide no document organization services). The money the students pay for copying at the library is not different money than the money paid to MDS — it’s just twice as much. The finger-pointing at MDS is a red herring; however the copies are made, someone makes money.
A proper fair use analysis may consider whether the copier charges an extra fee based on the content of the material copied, whether it sells to the public, or whether it participates in the selection and arrangement of the materials, because this will determine whether the copier is merely providing printing services or whether it is a publisher. However, a copyshop that is merely providing printing services at the direction and request of the users cannot be examined apart from those for whom it copies.[ FN 10 ]
“Transformative use” focuses on a particular aspect of the first statutory factor. One way to see whether a new work merely supersedes the purpose of the original is to see whether the new work “adds something new, with a further purpose or different character ….” Campbell, at 1171. The more the use furthers the creation of new works, the more likely it is to be fair. Id.
However, as noted by the panel (Op. 11), the Supreme Court declared that the “obvious exception” to any focus on “transformative use” is the “straight reproduction of multiple copies for classroom use.” Id. at 1171 n.11. Disregarding the Supreme Court’s statement, the district court expected MDS not to copy the excerpts but somehow to “transform” or “rearrange” them, holding that such “failure” counted against MDS. (R.100 Order p.8, JA 3076).[ FN 11 ]
The panel, having kept its focus on the use of the excerpts themselves (and not just the copying), noted that there is a transformative value to the use of the works when the excerpts are used together in connection with classroom activities. Such use gives students exposure to a broad spectrum of opinion and information; enhances their learning experience by analyzing, comparing, and critiquing all of the materials selected by their professors, (R.61 Ex.A, Decl. Dawson ¶2-4, Lieberman ¶2-5, Kinder ¶2-3, JA 1231-39, 1251-52) (Op. 11-12); and permits the students to highlight portions, write comments in the margins, underline, and enhance their ability to comprehend and understand the material. (R.61 Ex.A, Decl. Squier ¶7, JA 1221).
Good faith of the alleged infringer is also a relevant inquiry in determining the “character of the use.” See Harper & Row, 471 U.S. at 562-563. Defendant Jim Smith, the owner of MDS, undertook extraordinary efforts to understand the Copyright Act and fair use. (R.54 Decl. Smith, JA 1049-72). In the twenty years that Mr. Smith has been involved in or associated with the coursepack business, he has believed in good faith that the reproduction of excerpts of materials in connection with the production of coursepacks was fair use under the Copyright Act. (Id. at ¶43, JA 1070), and the publishers have conceded his subjective good faith belief in the propriety of his actions. He sought advice of copyright counsel in 1991 so as to better understand the legal environment for the making of multiple copies of materials at the request of professors for classroom use by students. (Id. at ¶22-25, JA 1059-61). Mr. Smith understood the publishers’ legal position and after extensive investigation he concluded that it was wrong and that MDS’s coursepacks were fair use.[ FN 12 ] He is in very good company. See Amici Curiae Brief of Concerned Professors of Copyright Law. Because he sought to educate others about their fair use rights, the publishers targeted him for suit. (See Defendants’ Appeal Brief, p.9). Mr. Smith’s good faith is unparalleled in copyright adjudication. The first factor is unquestionably in favor of MDS.
The second statutory factor, the “nature of the work,” contemplates a continuum on which all copyrightable works reside. At one end are primarily factual, albeit copyrightable works, such as encyclopedias. At the other end are purely fictional works, such as the movie “Star Wars.” This continuum was recognized by the Supreme Court in Stewart v. Abend, 495 U.S. 207, 237-238, 110 S.Ct. 1750, 1768-69 (1990) (contrasting fictional short story with factual works), Harper & Row, 471 U.S. at 563-564 (contrasting a memoir with a published speech), Sony, 464 U.S. at 455 n.40 (contrasting motion pictures with news broadcasts), and Feist, 499 U.S. at 348-351 (contrasting creative works with factual compilations). Campbell, 114 S.Ct. at 1175. Works near the “core” of copyright protection are those of fiction and fantasy. See id.
The works at issue qualify for copyright protection; however, because they are “historical or educational and not fictional,” (R.100 Order p.9, JA 3077), they are on the factual side of the “nature of the work” continuum. The scope of copyright protection for factual works is narrower than the scope of copyright protection for works of fiction or fantasy. See National Rifle Ass’n, 15 F.3d at 562. In a fair use analysis, the more the work is on the factual side of the continuum the more that work may be used and still be fair. See Harper & Row, 471 U.S. at 563-64.
The district court confused the standard for copyrightability with the “nature of the work” continuum and erroneously held that the second factor favored the publishers. Merely because a work is copyrightable does not mean that the second factor is in favor of the copyright holder. If it did, the second factor would have no meaning, since a work containing no copyrightable authorship is not protected by copyright law and can be used freely by anyone for any purpose. Feist, 499 U.S. at 364.
The second statutory factor also examines whether a work is published or unpublished. Here, all of these works were published, a factor in favor of fair use. Harper & Row, 471 U.S. at 564. Additionally, because fair use favors access, the scope of the fair use right is greater if the work is inaccessible. Id. at 553. (“If the work is ‘out of print’ and unavailable for purchase through normal channels, the user may have more justification for reproducing it.”). Two of the works were taken out of print by plaintiff MacMillan (Hearing TR 66, 76-77, JA 3760, 3770-71).
Thus, in light of the considerations of the historical, analytical, and factual nature of the works, none of them being unpublished, and two of them being unavailable for purchase, the second factor favors MDS.
The third statutory factor examines the amount and substantiality of the work used. The analysis of this factor is set forth in Campbell, 114 S.Ct. 1164. First, a court must refer back to the first statutory factor, because the extent of permissible copying varies with the purpose and character of the use, id. at 1175, and the extent of permissible copying may even include using the “heart” of a work. Id. at 1175-77. Second, where the use is a type that the courts have typically found to be fair, a greater amount of the copyrighted work can be used and be fair. See id. Third, this factor must be analyzed without reference to any rigid formula, because “the [t]ask is not to be simplified with bright line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis.” Id. at 1170. The Court “emphasized the need for a ‘sensitive balancing of interests'” and “noted that Congress has ‘eschewed a rigid, bright-line approach to fair use’ …. ” Id. at 1174 (quoting Sony, 464 U.S. at 455 n.40, 449 n.31).
In this case, only so much was copied as was necessary for the purpose for which they were used — teaching (R.61 Ex.A, Decl. Dawson ¶4, Lieberman ¶5, Kinder ¶3, JA 1233, 1238-39, 1252) — and there was no “heart” of these educational works. Id. The excerpts were “truly ‘excerpts,’ and do not purport to be replacements for the original works.” (R.100 Order p.9, JA 3077). Indeed, the publishers have lost no book sales.
The district court erred in analyzing the third factor by creating a new standard for “amount and substantiality” and by disregarding the facts in the record. The court concluded that MDS copied too much because the excerpts chosen by the professors were “not insubstantial or incidental,” (R.100 Order p.9, JA 3077),[ FN 13 ] criteria based upon a property view of copyright and found nowhere in the law. The court did not engage in a “sensitive balancing,” or a “rule of reason.”
While the publishers do not contend that too much of any work was excerpted by the professors or used by the students (Ex.A, 18 19), they contend that MDS copied “too much” when it made the copies requested by the users. Their sole support is the legislative history of the Copyright Act, not the Act itself. Their contention is fatally flawed for several reasons. First, legislative history may not be used to amend the plain language of a statute. Second, the legislative history of the Copyright Act, if it were to be used by the Court, only supports MDS’s position in this case. Third, the classroom guidelines were created as a limitation on the rights of publishers to sue educators, they were not created as a limitation upon fair use. Fourth, the guidelines contain restrictions inconsistent with fair use adjudication.
As the panel recognized (Op. 10), a court “may not permit the statutory text enacted by both Houses of Congress ‘to be expanded or contracted by the statements of individual legislators or committees during the course of the enactment process.’ West Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 98-99, 111 S.Ct. 1138 (1991).”
- “[A] committee report cannot serve as an independent statutory source having the force of law. . . .
- ‘[I]t [is] plainly wrong as a general matter … to regard committee reports as drafted more meticulously and as reflecting the congressional will more accurately than the statutory text itself. Committee reports, we remind, do not embody the law. Congress, as Judge [now Justice] Scalia recently noted, votes on the statutory words, not on different expressions packaged in committee reports.'”
International Bhd. of Elec. Workers v. NLRB, 814 F.2d 697, 712 (D.C. Cir. 1987) (emphasis original) (footnotes and citations omitted).
The fact that Congress did not enact a portion of the legislative history “‘strongly militates against a judgment that Congress intended a result that it expressly declined to enact.'” Id. at 711 (quoting Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 200, 95 S.Ct. 392, 401 (1974)).
- Important Limitations on the Rights of Copyright
- Holders and Chose Not to Enact Any Page-Counting Rules.
To the extent the Court considers legislative history relevant to this case, a full review of the legislative history reveals four significant themes. First, Congress placed a high value on fair use as “one of the most important and well-established limitations on the exclusive right of copyright owners.” H.R. Rep. No. 1476, 94th Cong., 2d Sess. p.65 (1976) reprinted in 1976 U.S.C.C.A.N. 5659, 5679-80. Second, Congress declared that the codification of fair use did not narrow fair use in any way. Id. at 66. Third, Congress retained for the courts a flexible approach to a fair use analysis, describing fair use as “an equitable rule of reason [where] no generally applicable definition is possible, and each case raising the question must be decided on its own facts,” id. at 65, and stating:
- “[b]eyond a very broad statutory explanation of what fair use is and some of the criteria applicable to it, the courts must be free to adapt the doctrine to particular situations on a case-by-case basis.” Id. at 66.
Congress concluded that “the endless variety of situations and combinations of circumstances that can arise in particular cases preclude the formulation of exact rules in the statute,” id., and refused to enact any page-counting, word-counting, or any specific limitation upon the amount and substantiality used. Fourth, Congress said that the phrase “multiple copies for classroom use” in §107 meant “multiple copies for members of a class” and contemplated the use of photocopy technology. Id. The specific wording of §107 was the result of a long series of debates and “a process of accretion.” Id. at 66. Thus, if the legislative history is the voice of Congress, it resoundingly supports MDS.
The guidelines relied upon by the publishers were drawn up by an ad hoc group of industry representatives to provide “greater protection for teachers” from lawsuits by publishers. H.R. Rep. p.72 (1976). The guidelines identify circumstances under which educators will not be sued — a safe harbor. Id. at 67, 72. Representatives of the American Association of University Professors and the American Association of Law Schools strongly objected to including the guidelines in the committee report, fearing they would be read as a limitation upon fair use. Id. at 72. The committee reassured educators that the guidelines were only a minimum standard of fair use, and that uses could fall outside the rigid criteria of the guidelines and be fair. Id. With these express caveats, the safe harbor guidelines were included in the committee’s report.[ FN 14 ]
Consistent with their limited purpose, the guidelines themselves state that they are “not intended to limit the types of copying permitted under the standards of fair use.” Id. at 68. They limit the rights of publishers to sue educators. They are thus not relevant to this case.
While both the committee report and the guidelines themselves state that the guidelines are only a minimum standard of educational fair use, the publishers interpret the word “minimum” to mean “the extent of fair use for purposes of education.” (Ex.A., 18). That statement, false as a matter of law and legislative history, was appropriately disregarded by the panel.[ FN 15 ]
If used as anything other than a “safe harbor,” the limitations in the guidelines are inconsistent with the Copyright Act. For example, where both Congress and the Supreme Court have rejected any bright-line, word-counting approach, the guidelines specify 250 words here, 1000 words there, as the measurement of use within the “safe harbor.” The guidelines contain arbitrary provisions penalizing professors who plan their lessons ahead of time (because “spontaneity” is a requirement of the guidelines), who use the same selection twice, or who hand out materials that are bound together for convenience. Nothing in the Copyright Act, the legislative history, or Supreme Court case law makes these considerations relevant to fair use.[ FN 16 ]
Since the guidelines purport to prohibit anthologies, the publishers call coursepacks “anthologies” and declare them unlawful. These coursepacks, however, are not anthologies because they do not meet the statutory requirements for being an anthology; specifically, there is no testimony that there was any authorship or originality in the selection and arrangement of the course handouts (they are typically arranged simply according to the class syllabus). 17 U.S.C. §101 (definition of “collective work”). The testimony is to the contrary — the excerpts were selected for their theories, ideas, and concepts. See 17 U.S.C. §102(b). Nothing in the Copyright Act transforms the semester’s reading assignments into infringement by binding them together.
A fair use analysis “‘involves a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society’s competing interest in the free flow of ideas, information, and commerce on the other hand.'” (Op. 10 (quoting Sony, 464 U.S. at 429)). It may be tempting to seek guidance from something entitled “guidelines” in an area of law that requires the difficult balancing of many factors, but the Copyright Act and the Supreme Court reject bright lines and mandate a case-by-case analysis. If used as anything other than a safe harbor, the guidelines preclude a court from engaging in such an analysis.
The publishers are determined to get from this Court what Congress refused to give them: bright lines and page-counting. Using quotas, however, would be an abdication of a court’s responsibility to engage in the sometimes difficult balancing required by copyright law. “Strict adherence to the language and structure of the [Copyright] Act is particularly appropriate where, as here, a statute is the result of a series of carefully crafted compromises.” Community for Creative Non-Violence, 490 U.S. at 748 n.14.
The fourth statutory fair use factor is “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. §107(4).[ FN 17 ] Only two types of harm, however, are legally cognizable under this factor: harm to the market for the original work and harm to the market for derivative works. Campbell, 114 S.Ct. at 1177-78. To prevail, the publishers must show either that they have lost sales of the underlying works, or that they have lost licensing revenues from derivative works. The publishers have failed to show any harm to either market.
Notwithstanding extensive discovery, the publishers failed to show that the making of multiple copies for classroom use of the excerpts caused the lost sale of even one copy of one work. They argue only that they were harmed by not receiving the copying fees they were willing to charge. (Ex.A, 23-24).
The publishers also failed to show that the making of multiple copies for classroom use caused harm to the market for any derivative works (and failed even to allege such harm). A “derivative work” is created when an original work is transformed into a different work by adding new authorship. 17 U.S.C. §101. Supreme Court cases illustrate the type of harm to markets for derivative works cognizable in a fourth factor harm analysis. In Harper & Row, 471 U.S. 539, the market injured by the publication of portions of a stolen, unpublished manuscript was the market for serialization rights. In Stewart v. Abend, 495 U.S. 207, the market injured was for a motion picture version of a book. In Campbell, 114 S.Ct. 1164, the relevant market was a nonparody, “rap” adaptation of a musical work.
The publishers failed to allege or prove injury to any market for serializations, motion pictures, musical arrangements, foreign translations, condensations, or any other derivative work market. See 17 U.S.C. §101. The panel correctly noted that “[t]he plaintiffs did not demonstrate that the coursepacks affected the market for the original copyrighted works or the potential market for derivative works, such as published anthologies…” (Op. 18).[ FN 18 ] Even the cases on which the publishers rely recognize entitlement to licensing fees only for harm to the market for derivative works. The publishers cannot prevail on this factor. To the contrary, the uncontradicted evidence shows that the inclusion of excerpts in coursepacks actually increases the sale of books. Some students purchase more books by the author of the excerpted work, some purchase more books on the subject discussed in the excerpt, and some purchase the original work. (R.61 Ex.A, Decl. Wellman ¶3, Squier ¶4, Mandl ¶3, Liken ¶4, JA 1208, 1218, 1224, 1260). This factor is unquestionably in MDS’s favor.
With all of the evidence on the fourth factor in favor of MDS, the publishers offer the proposition that copies of course handouts, when delivered with other materials, lose their identity as course handouts and magically become a derivative work. They rely on four devices. First, they call the bound materials anthologies (since anthologies are a type of derivative work). Second, they charge for fair use and call the copying fees they wish to assess “licensing fees” or “permission fees,” the same words they use for true derivative works. Third, they place their fair use permissions department into their real departments for licensing derivative works (or outsource it to other business entities like the Copyright Clearance Center), and call their fees “longstanding.”[ FN 19 ] Fourth, they call the excerpts “potential uses” of a work and claim entitlement to control all potential uses.
The panel knew the difference between a derivative work and a stack of course handouts, and found that the plaintiffs failed to show any harm to the market for derivative works. (Op. 18). This mirrors the Supreme Court’s recognition that the straight photocopying of multiple copies for classroom use does not involve the addition of new authorship, Campbell, 114 S.Ct. at 1171 n.11, and could thus never meet the definition of a derivative work.
The panel dissent, however, accepted the characterization of excerpts as “potential uses,” which would pave the way for the publishers to control the making of multiple copies for classroom use. This confuses the Supreme Court’s reference to the “potential market” (i.e. derivative works) with the publishers’ language of “potential uses.” The Copyright Act does not protect all “potential uses,” since that phrase includes all fair uses. The panel recognized that licensing revenues are relevant to fourth factor harm, but only for the legally relevant markets.
A copyright owner does not have the right to control all uses of its work, even if it is willing to charge for such uses: “All reproductions of the work, however, are not within the exclusive domain of the copyright owner….” Sony, 464 U.S. at 433. If a use is not within the domain of the copyright owner, there is no right to charge a permission fee for that use. “Any individual may reproduce a copyrighted work for a ‘fair use’; the copyright owner does not possess the exclusive right to such a use.” Id.
In Campbell, the Supreme Court remanded for evidence on the derivative work market — the non-parody rap market. Id. at 1177-79. The Court would not consider any claim for “lost” revenues from the fair use market (the parody market), and stated that any consideration of the harm to the market for the claimed fair use was error. Id. at 1178. The plaintiffs want this Court to do just that — consider the “harm” to the “market” for the claimed fair use. The Court may not consider fees the publishers wish to charge for the making of multiple copies for classroom use without committing reversible error.
The publishers’ greatest accomplishment below was convincing the district court that since they were not paid the fees they demanded, they were legally injured. This was error because in Campbell the Court made clear that the permission market for the claimed fair use must not be considered, and was error because the claim of lost revenues for such markets is illogical. The panel recognized the inherent circularity in the publishers’ argument:
- “Evidence of lost permission fees does not bear on market effect. The right to permission fees is precisely what is at issue here. It is circular to argue that a use is unfair, and a fee therefore required, on the basis that the publisher is otherwise deprived of a fee. The publishers must demonstrate a likelihood that MDS’s use of the excerpts replaces or affects the value of the copyrighted works, not just that MDS’s failure to pay fees causes a loss of fees, to which the plaintiffs may or may not have been entitled in the first instance.” (Op. 18).
The argument that “lost” permission fees are proof of fourth factor harm has as its premise the legal conclusion that the use at issue is not a fair use and, therefore, the owner is allowed to charge permission fees. If the publishers called their permissions system “the department for charging fees for criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship and research” then their attempt to control fair use would be more obvious. Their argument cannot aid in determining whether a use is a fair use because no fees are required unless the use is not a fair use. Campbell, 114 S.Ct. at 1173-1174 & n.18. (“If the use is otherwise fair, then no permission need be sought or granted.”)
It has been recognized for twenty years that there can be no claim for permission fees unless the use would otherwise be an infringement:
- “It is wrong to measure the detriment to plaintiff by loss of presumed royalty income — a standard which necessarily assumes that plaintiff had a right to issue licenses. That would be true, of course, only if it were first decided that the defendant’s practices did not constitute ‘fair use.’ In determining whether the company has been sufficiently hurt to cause these practices to become ‘unfair,’ one cannot assume at the start the merit of the plaintiff’s position, i.e., that plaintiff had the right to license. That conclusion results only if it is first determined that the photocopying is ‘unfair.'” Williams & Wilkins Co. v. United States, 487 F.2d 1345, 1357 n.19, aff’d by an equally divided court, 420 U.S. 376, 95 S.Ct. 1344 (1975).
Further proof of the circularity of the publishers’ argument is that the panel dissent faulted defendants for not providing evidence that permission fees would have deterred the professors from assigning the excerpts. (Op. 24-25). The dissent concluded that because there was no testimony from the professors that they would not have assigned these excerpts if it meant their students would have had to pay permission fees, it was possible that the professors might have assigned the excerpts even if their students had to pay permission fees, so the publishers may have been injured by not having received those fees the students might have paid. The dissent did not inquire whether there was a legal obligation to pay, but only whether some users might have paid the fees just to be allowed access to the work. This makes the fair use inquiry turn on whether the user is resigned to do without access to, or use of, the work. It destroys the very purpose of fair use — access and use — and shows the circularity of the publishers’ argument: a “fair use” inquiry becomes an inquiry into the point of “nonuse.”
This analysis is not permitted by §107 or authoritative case law, and such a proof requirement merely substitutes the “willingness of publishers to charge” argument for its mirror image, equally circular — the “unwillingness of users to pay.” It precludes a court from ever being able to gauge the harm to the legally-cognizable markets.
There are disastrous consequences to accepting the “lost permissions fees” argument. First, the fourth factor analysis is eliminated. Acceptance of the publishers’ “I-am-willing-to-charge so-you-must-pay” argument reads the fourth factor out of the statute. If a court permits a copyright owner to “prove” fourth factor harm by simply informing the Court it has set up a system to charge for certain uses, the Court has effectively amended §107 to include all “potential uses” as within the exclusive control of the copyright owner.
Second, Congress and the courts will have no role in balancing the rights of users and owners. When Congress enacted the Copyright Act, it made the rights of copyright owners “subject to” the rights of fair users. 17 U.S.C. §106. It codified fair use as a right that existed “notwithstanding the rights” granted to copyright owners. 17 U.S.C. §107. In light of the importance of promoting access to, and fair use of, copyrighted works, it identified certain uses as those typically found to be fair and declared that fair uses “are not an infringement of copyright.” 17 U.S.C. §107. Courts may not create restrictions upon fair use not found in the Copyright Act.
“The judiciary’s reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme.” Sony, 464 U.S. at 431. Such judicial activism usurps the role of Congress in defining the rights of authors. Recognizing that the role of the Court is not to create the law but to enforce it, the Supreme Court has refused repeated attempts by copyright owners to use the courts to expand their rights beyond those provided by Congress and the Constitution. Sony, 464 U.S. at 431. This Court should rule upon the evidence and the language of the statute, not the publishers’ vision of the copyright law that they wish had been enacted.
Third, copyright becomes an absolute, not a limited, right. If “lost” permission fees are relevant, owners can then control all uses of their works. This violates the law:
- “While the law has never recognized an author’s right to absolute control of his work, the natural tendency of legal rights to express themselves in absolute terms to the exclusion of all else is particularly pronounced in the history of the constitutionally sanctioned monopolies of the copyright and the patent.” Sony, 464 U.S. at 432-433 and n.13. (emphasis added).
The Court will have transformed the “limited scope of the copyright holder’s statutory monopoly,” Fogerty, 114 S.Ct. at 1029 (emphasis added), into an absolute monopoly. This fits with the publishers’ true agenda, which is to benefit from the “monopoly” element of the limited, statutory monopoly granted by Congress, and have the courts eliminate the “limited” part of it.
Fourth, copyright is robbed of its public interest. We again recognize the unique attribute of copyright: someone other than the copyright owner has the right to use the authorship and the labor embodied in the copyrighted work. This is no accident:
- “[the use of the fruit of another’s labor] is not ‘some unforeseen byproduct of a statutory scheme.’ It is, rather, ‘the essence of copyright,’ and a constitutional requirement. The primary objective of copyright is not to reward the labor of authors, but ‘[t]o promote the Progress of Science and useful Arts.'” Feist, 499 U.S. at 349 (citations omitted).
Copyright law is vested with a public interest. This public interest, embodied in fair use, is the source of Congress’ power to enact copyright. Depriving the public of its right to make fair uses by recognizing systems to charge for them strips the public interest from copyright and would be unconstitutional.
Fifth, money becomes the critical inquiry. If the fourth factor only examines a willingness to charge and the establishment of permissions departments, the framework for balancing interests disappears and is replaced with the private economic interests of copyright holders. This exact argument has been rejected by the Supreme Court. Fogerty, 114 S.Ct at 1029 (economic rewards to copyright owners are not the primary objective of copyright). This does not mean that rewards to authors do not serve a purpose; it means that those rewards are not the pivotal point in a fair use analysis. Instead, the rewards to copyright owners are carefully balanced against the public benefits of fair use: access to works, dissemination of information, and the promotion of learning through access to a variety of classroom handouts.
This case shows that fair use is a “win-win” situation. The uncontradicted evidence shows that the copying of these excerpts caused no harm to the market for the works or any derivative works. The selection of excerpts by professors and the use by students actually increases the sale of books. It also provides access to information and opinions; benefits authors, students, professors, publishers, and copyshops; increases learning and scholarship; and provides incentives for authors to create new works. The uncontradicted testimony of hundreds of authors (including the author of one of the works at issue), professors, and students proves that fair use, as it has been implemented in coursepacks over the past twenty years, serves the purpose of copyright and rewards authors.
The publishers contend that it was “basic error” of the panel to consider the testimony of authors, because the authors have transferred their copyright as a condition of publication. (Plaintiffs’ Petition for Rehearing, p.12). However, the testimony of authors, not publishers, is relevant because it is authors who the Constitution seeks to encourage to create the works of original authorship. Harper & Row, 471 U.S. at 550-51. The authors’ and professors’ testimony shows that the unconstitutional scheme created by the publishing industry only a few years ago causes harm to authors, students, professors, publishers, copyshops, and the public.
The publishers’ view of copyright as a private, economic property right is echoed by their amici, and those briefs suffer from the same failing. In addition to containing statements that are unsworn, not subject to cross examination, contrary to the evidence in the record, and inconsistent with controlling case law and the plain language of the Copyright Act, they do not recognize the limitations upon the rights of copyright owners.
The “authors groups” plead with the Court to assist them in making as much money as possible from every use of their works. They blame the panel for making worse “the bleak reality facing authors,” apparently forgetting that it is the publishers who took away their copyrights and who dictate their compensation for the publication of the work (terms to which the authors agreed).[ FN 20 ] Like the brief of the “amicus” publishers, it fails to recognize that there exists a right of others to use their works, provides no insight as to how to engage in the sensitive balancing required by the law, and fails to explain how they survived until 1991 (the beginning of charging for fair use). The complaints of the amici are misdirected and should be disregarded.
Sixth, copyright owners will have the tool to “permission” fair use out of existence, and thus the power of censorship. Acceptance of the “lost” permission fees argument permits copyright owners to eliminate all fair uses, because fair use simply becomes that use for which the copyright owner declines to charge. However, fair uses are not some leftover from the copyright buffet after the publishers are through eating; they “are affirmatively guaranteed to the public.” (Op. 6).
If permissions become the focus of the Court’s inquiry (and not harm to the relevant markets), a “fair use” analysis becomes only an economic analysis about the transaction costs associated with capturing fees for uses. Such an analysis trivializes the constitutional purpose of copyright law, which is fulfilled by fair use rights. Allowing copyright owners to prove economic harm by claiming “lost” permission fees allows “permission” to become a code word for “censorship.” If the copyright owner has the exclusive right to grant permission, it has the power to deny the right to report, comment, criticize, teach, study, and research the work at issue. This is already happening in scholarship. David W. Stowe, Just Do It, Lingua Franca, December 1995 at 32, 35 (attached as Exhibit B). Such an interpretation of the Copyright Act violates the First Amendment, because the Act will have become a tool of absolute control over access to, and dissemination of, the printed word.
In Harper & Row, 471 U.S. 539, a defendant published an excerpt from a stolen manuscript about a public figure, deprived the author of his right of first publication, and caused the termination of his contract to serialize the original manuscript. The defendant referenced the “newsworthiness” of the material taken, relying upon the First Amendment. The Court noted that copyright applied to works about public figures, too, and the claim to “newsworthiness” would not excuse “a use that would ordinarily not pass muster as a fair use.” Id. at 556. This means that the First Amendment, alone, may not save a defendant from liability for infringement where its actions do not pass a fair use analysis. A proper fair use analysis, however, will take into consideration issues of access, speech, ideas, and dissemination of information and opinion, and thus avoid conflict with the First Amendment. Here, the Court would violate the First Amendment if it held that the willingness to charge for the making of multiple copies for classroom use permits the control over such use.[ FN 21 ]
F.The Willingness to Charge Theory is Incorrect, Even if Adopted By the Second Circuit. The publishers urge this Court to adopt the “willingness-to charge” theory because they were able to convince the Second Circuit to do so. American Geophysical Union v. Texaco, Inc., 60 F.3d 913 (2d Cir. 1995) (“Texaco“). This is not persuasive because
the Texaco court violated the rules of statutory construction and disregarded controlling Supreme Court case law.
Texaco accepted the publishers’ creation of a “market” for photocopy licenses and disregarded the required focus on the legally cognizable markets, contrary to the holding in Campbell. This happened because the Texaco court made the focal point of its analysis the inquiry into what would motivate publishers. Not surprisingly, it concluded that money would motivate publishers: “[u]ltimately the monopoly privileges conferred by copyright protection and the potential financial rewards … serve to motivate publishers …” Id. at 927. Accordingly, the court permitted copying revenues for the use at issue to be considered as fourth factor harm. This consideration of the “willingness to charge” market theory is without basis in the Constitution, the Copyright Act, or authoritative case law.
Once the Second Circuit accepted the “willingness to charge” argument, the conclusion was foregone. It never confronted the circularity of its reasoning.[ FN 22 ] Although the court attempted to circumscribe the application of its ruling to cases involving the copying of entire articles by employees of a for-profit corporation for archiving purposes (and not for personal use) in furtherance of the profit-making research activities of the employer, the publishers have done exactly what the Texaco court feared they would do: use Texaco as authority for limiting the fair use rights of professors. See id. at 916. There is nothing persuasive, either analytically or logically, about Texaco’s analysis of the fourth factor.
Because the use of the work in this case is noncommercial, plaintiffs were required to prove, by a preponderance of the evidence, that there was some meaningful likelihood of future harm to the market for the original copyrighted work or derivative works. Sony, 464 U.S. at 451. Plaintiffs have failed completely to meet their burden. Their fallback position is merely to reiterate their willingness to charge fees for the making of multiple copies for classroom use. Even if the use of the works in this case were considered by this Court to be commercial, defendants have come forward with “favorable evidence about relevant markets,” Campbell, 114 S.Ct. at 1177. As the majority recognized, “plaintiffs limited their allegations and demonstrations of ‘market effect’ to evidence of lost permission fees resulting from defendants’ refusal to seek permission and pay fees for the copying and selling of excerpts from copyrighted works.” (Op. 18). Plaintiffs do not allege harm to any recognized derivative market. Therefore, defendants presented favorable evidence about the only relevant market — the market for the original work. The uncontradicted evidence is that the markets for the original works were not harmed by the use of six excerpts at issue.
Finally, even if MDS “used” the work in a fair use sense, and even if its status as a for-profit company were considered to be a “commercial” use, the Supreme Court has held that it is reversible error for a court to engage in any presumption that a commercial use is not a fair use, and it is reversible error to use commerciality as evidence of fourth factor harm.
The publishers declare that a determination of fair use in this case would stand for the proposition that anything can be copied so long as the mantle of “education” is thrown around it.[ FN 23 ] Defendants have never made that argument and they have expressly denied it. (Ex.A, 5). Such a conclusion could never be inferred from the panel opinion. The publishers’ straw man is a device to invite ridicule for the panel opinion and contempt for MDS’s arguments. MDS’s arguments are supported in the record by uncontradicted evidence, and its analysis is supported by eleven copyright scholars (“Brief of Concerned Professors of Copyright Law,” dated October 11, 1994); a library association comprised of 119 of the largest research libraries in North America; hundreds of authors, professors, and students; the Attorney General for the State of Georgia; and an expert who testified about the history of coursepacks.
Perhaps the plaintiffs wish they had deposed the professors who testified that only so much of the work was used as was necessary to accomplish the educational purpose for which it was selected, and who testified the original work was never going to be assigned for purchase; or wish they had deposed the authors who testified that the authors desired their works be excerpted, and who regarded the publishers’ tactics in this case to be a disincentive to create more works; or wish they had deposed the students, who testified that using coursepacks results in the purchase of more books; or somehow found a basis to show they were injured by the use in this case. They failed to do so. They never presented evidence to support the arguments they make now and never introduced evidence to contradict that of MDS. With the enormous resources at their disposal and their extensive litigation experience in fair use cases, they had the ability to discover and introduce such evidence if it existed. It does not. They now try to defeat through rhetoric and hysteria what MDS has accomplished through evidence and analysis.
The publishers’ predictions, however, were sufficiently dire to cause the panel dissent to express concern that a ruling of fair use would harm the creation of scholarly works. That concern was based upon “suspicions,” “assumptions,” and “fears.”[ FN 24 ] It overlooked the uncontroverted facts in the record to the contrary. The district court, likewise, chose commercial instincts over evidence and dismissed MDS’s facts by characterizing them as “arguments” (“Defendants’ argument, that the increased exposure of the copyrighted works through the excerpts should actually increase the sales of the original works, is unpersuasive.”). (R.100 Order pp.10 11, JA 3078-79).
The adoption of the publishers’ dire predictions over the evidence in the record has been rejected by the Supreme Court. In an amicus brief filed with the Supreme Court in Sony, the trade group funding and directing this litigation against MDS asserted that if home videotaping were found to be a fair use, the emerging market for video sales and rentals would be destroyed.[ FN 25 ] The Supreme Court, unmoved by the doomsday rhetoric, Sony, 464 U.S. at 453-55, held that home videotaping was a fair use. Today the $14 billion video market in the U.S. is alive and well.
This Court should reject scare tactics and unsubstantiated assertions. A judgment in favor of fair use will be shaped by the allegations and evidence in the record, the admissions of the publishers, the plain language of the Copyright Act, and controlling Supreme Court case law. Here, the panel ruled that where a statute authorizes the making of multiple copies for classroom use for purposes such as teaching, and where multiple copies are made for classroom use at the request of the professors for use by students, and where the uncontradicted evidence shows that (1) the entity making the copies did not select or arrange the excerpts but charged a copying fee, only, (2) the works excerpted are primarily factual and historical, and the excerpts were not provided to the general public, (3) only so much was used as to accomplish the teaching purpose, (4) there were no lost sales of the original works, and no harm was alleged or shown to have occurred to any market for derivative works, (5) excerpting of works is an incentive for authors to create new works, authors desire that their works be excerpted by professors for use by students and object to litigation such as this that deprives professors and students from efficient access to such excerpts, and (6) the excerpting of works actually increases the sale of books — THEN the use is fair and not an infringement. The panel’s analysis is a careful application of the Copyright Act to the evidence and arguments in the record. The only people who could claim this narrow ruling permits “unrestrained” or “unfettered” copying are the publishers and their amici, who are concerned not with copyright but with money and control.
In the past twenty years that copyshops have been assisting fair users in exercising their rights, no statute or authoritative case law has restricted fair use rights or has expanded the rights of owners; indeed, the Supreme Court has made even more clear the limits upon the claims of copyright owners. Campbell, 114 S.Ct. 1164, held there is no presumption that a commercial use is not a fair use, that no permission need be sought from the copyright owner to make a fair use, and that commercial use without permission of the copyright owner is not evidence of economic injury to the copyright owner. Fogerty, 114 S.Ct. 1023, held that:
- “[b]ecause copyright law ultimately serves the purpose of enriching the general public through access to creative works, it is peculiarly important that the law’s boundaries be demarcated as clearly as possible.” Id. at 1025.
Fogerty also held that meritorious defenses are as important to copyright law as meritorious claims. Id. Feist, 499 U.S. 340, held that there is no copyright for publishers’ books of information that lack originality, and that there is a constitutional right to use uncopyrightable material. Sony, 464 U.S. 417, held that the home videotaping of 100% of copyrighted broadcasts are a fair use that copyright owners may not control, even where some owners demand the right to control such use and predict catastrophic economic damage if they are not permitted to control that use.
The only barrier to the students’ and professors’ exercise of their fair use rights by use of the services of a copy shop has not come from the Supreme Court or Congress, but from these publishers. In Basic Books, Inc. v. Kinko’s Graphics Corp., 758 F.Supp. 1532 (S.D.N.Y. 1991) (“Kinko’s“), they were able to get a district court to amend the Copyright Act by judicial fiat. Kinko’s, an isolated opinion from a district court in New York, was then declared by the publishers to be the law of the land.
The Supreme Court, however, does not share the view of copyright law held by the publishers, or Kinko’s, or the district court in this case, and has soundly repudiated their arguments and analyses. Where Kinko’s and the district court relied upon a presumption that every commercial use is unfair, the Supreme Court held that there is no such presumption, and that to rely on such a presumption was reversible error. Campbell, 114 S.Ct. at 1173-74. Where Kinko’s and the district court found that a “transformative use” of a work is needed for a use to be fair, even in the making of multiple copies for classroom use, the Supreme Court declared that the “obvious exception” to any focus on “transformative use” is the “straight reproduction of multiple copies for classroom use.” Id. at 1171 n.11. Where Kinko’s and the district court relied upon the old “heart of the work” cliche for concluding that an excerpt contained too much of the underlying work, the Supreme Court said that the proper inquiry looks at the amount used in relation to the purpose for which it was used, and that a fair use may use the heart of a work. Id. at 1175-77. Finally, where Kinko’s and the district court permitted the willingness to charge for the fair use market to be relevant to whether the publishers were economically injured, the Supreme Court has held that a fourth factor analysis may not include claimed injury to the fair use market. See id. at 1177-79. The publishers urge that this Court follow the lead of the district court and adopt the discredited Kinko’s framework. MDS urges this Court to follow the Copyright Act and Supreme Court precedent.
The district court Order reflects a failure to understand copyright law, fair use, and summary judgment standards. The court failed to apply the standards of statutory interpretation, relied on presumptions that have been overruled by the Supreme Court, disregarded the evidence before it, adopted a view of copyright as property instead of a limited statutory right, and entered an injunction that violates the U.S. Constitution. (See Defendants’ Appeal Brief, pp.48-49). The court cited Supreme Court pronouncements regarding the constitutional purpose of copyright, yet never once inquired into whether the use in this case furthered the promotion of “the Progress of Science and the Useful Arts,” U.S. Const. art.1, §8, cl.8, or why Congress identified certain types of uses as typically fair.
The constitutional purpose of copyright is not a platitude to be dutifully recited and then ignored in favor of something concrete, like money. It is an affirmative right guaranteed to the public. The court’s resistance to fair use is best demonstrated by the conclusion that no reasonable person could hold the view of copyright asserted by MDS. (R.100 Order at pp. 13-15, JA 3081-83.) However, each member of the panel agreed that, as a matter of law, MDS could never be a willful infringer. (See Defendants’ Appeal Brief pp. 46-48, and Reply Brief pp. 20-24 for discussion of legal analysis of willful infringement issue.)
The publishers ask this Court to hold that in this Circuit, restrictions are imposed on fair use that are not stated in the Copyright Act; the user of the work in a fair use case is irrelevant and only the named defendant will be considered; limitations in industry guidelines prevail over the language of the Copyright Act; fair use becomes infringement if materials that are otherwise fair are bound together; and the copyright owners decide what uses are fair by deciding the uses for which they are willing to charge. Thus, a use will be fair if it is incidental, inconvenient, and expensive. Fair use will mean non-use.
BODMAN, LONGLEY & DAHLING LLP
Susan M. Kornfield (P41071)
David G. Chardavoyne (P27034)
Lydia Pallas Loren (P47644)
May 15, 1996 Attorneys for Defendants-Appellants
Footnote 2 The record in this case also contains over 500 declarations from professors and students about how they use their copies of excerpts in connection with their coursework. (R.69 Ex.B, Ex.C; R.61 Ex.A; R.62-R.64).
Footnote 3 Prof. Dawson assigned nine books and 29 excerpts for students enrolled in his course on “Black Americans and the Political System.” Prof. Dawson stated that Black politics is a recent discipline; to understand it, students must understand aspects of psychology, sociology, anthropology, economics, philosophy, law, political science, and other disciplines. Prof. Dawson could not find everything his students needed in a textbook and used excerpts in addition to the nine required books to provide the theoretical framework and facts needed to develop students’ critical thinking skills, and to allow them to compare various points of view. (R.61 Ex.A., Decl. Dawson 2-4, JA 1231-35).
Footnote 5 The reserve reading room does not facilitate access to the course materials. Library materials are often torn, cut out, or stolen. (R.61 Ex.A, Decl. Squier 7, JA 1220-21; R.69 Ex.B, Decl. Barrows Supp. Comments p.2, JA 2610). Even if the material has not been mutilated, students must make repeated trips until the reading materials are available, and then the materials can be checked out for only a few hours. The students must waste their time making their own personal copy, at twice the price charged by MDS, with a poorer quality copy than they would have received at MDS, resulting in their being less prepared and informed. (See R.61 Ex.A, Decl. Squier 5-7, Liken 5-8, and Mandl 4-6, JA 1219-21, 1224-25, 1260-62). Some libraries even refuse to allow materials to be placed on reserve due to the “intimidation tactics of publishers.” (R.61 Ex.A, Decl. Lofland 5, JA 1285).
Footnote 7 Congress knew about photocopying technology and of outside service providers who copied material at the request of others, H.R. Rep. 1476, 94th Cong., 2d Sess. (1976), p.66. The wording of 107 “is mainly intended to make clear that the doctrine has as much application to photocopying…as to older forms of use.” Id.
Footnote 8 The plaintiffs also try to compare this case to Los Angeles News Service v. Tullo, 973 F.2d 791 (9th Cir. 1992), where the defendant systematically recorded programs in the hope that some day he would sell the recordings to “interested individuals and businesses.” In Tullo, there were no fair users and no requests for services. The MDS case is completely different. The professors and students are central to the use in this case.
Footnote 9 The panel dissent incorrectly equated MDS’s services with the publisher of The Nation magazine, instead of the company that performed the ministerial act of printing the magazine. The publisher of The Nation, and not the printer, created and selected the content, publicly distributed copies, and intended to profit from its authorship activities. See Harper & Row, 471 U.S. 539. MDS engaged in no such activities.
Footnote 10 The panel found that the commercial aspect of charging for a service did not outweigh the educational use, and thus the first factor was in favor of MDS. (Op. 12-13). Even if MDS “used” the work within the meaning of 17 U.S.C. 107(1), this Court cannot find MDS to be an infringer without committing the same error it made in Campbell — making commerciality dispositive.
Footnote 11 The court did not just ignore this important point from Campbell, a unanimous fair use decision that had been handed down by the Supreme Court a few weeks earlier, but ignored the entire opinion, even though the parties had separately briefed it.
Footnote 12 Mr. Smith spent hundreds of hours in the University of Michigan Law Library reading cases, treatises, and law review articles on copyright and fair use. He read the sources cited in the Kinko’s decision, and read several hundred recent copyright cases. He discussed copyright and fair use with copyshop owners, authors, professors, lawyers (copyright experts and nonexperts), students, and copyright scholars. (R.54 Decl. Smith, JA 1049-72).
Footnote 13 The largest excerpt copied was 20% of the work. Plaintiffs claim that MDS copied “30%” of the work by Ms. Weiss, but improperly included in their figure pages in which they do not own copyright (pages of public domain data, a two-page poem by Langston Hughes, photographs, cartoons, direct quotations, and substantial paraphrasing of third-party materials). (See R.41 Weiss excerpt, JA 381-428). This “20% vs. 30%” debate shows the danger of the page-counting approach of the publishers, instead of the Supreme Court approach: examining the amount used in relation to the purpose of the use. Campbell, 114 S.Ct. at 1175.
Footnote 14 August W. Steinhilber, a member of the ad hoc committee that negotiated the guidelines, testified that the publishers are attempting to use the guidelines to limit fair use — contrary to the purpose for which they were created, which was as a safe harbor for educators. (R.54 Steinhilber Decl., JA 1077-81).
Footnote 15 As with the guidelines, the Court should review carefully the publishers’ references to the “legislative history.” Many of the statements quoted were actually made by publishing industry representatives, not members of Congress.
Footnote 16 The publishers, ever on the lookout for support for their word-counting theory, cite Harper & Row, 471 U.S. 539, and declare that the Supreme Court has determined that the use of 300 words is an infringement. On the contrary, Harper & Row held that if one acquires a stolen manuscript, publishes key portions for the purpose of “scooping” the copyright owner’s valuable right of first publication, and causes the copyright owner to lose a valuable contract right, the claim of fair use will likely be rejected.
Footnote 17 While previously described as the “most important factor,” the Supreme Court’s analysis in Campbell, 114 S.Ct. 1164, does not place such emphasis on this factor. It holds, instead, that all of the factors are to be considered and weighed together. Id.
Footnote 19 The CCC system for charging for fair use, actually called the “Academic Permissions System,” did not exist until the Kinko’s court adopted the publishers’ new theory for market harm in 1991. Feist, 111 S. Ct. at 1291, rejects the adoption of such “new theories” to control uses of materials that the public has a right to use.
Footnote 20 The brief purporting to represent authors has no statements from authors, but merely assertions from authors’ agents. The representatives do not speak to the reasons for which authors write: to make greater contributions to their disciplines, to receive feedback from their colleagues, and to enhance their professional reputations and career opportunities. (R.61 Ex.A, Decl. Dawson 7, Kinder 6, Lieberman 8, JA 1234-41, 1253-54). The agents participate as brokers of financial deals, not as creators of new works of authorship, or as users of such works.
Footnote 21 While the court erred as a matter of law in finding the publishers’ permission system relevant at all, it also erred, as a matter of fact, when it found the system “clear and relatively simple.” (R.100 Order p.4, JA 3072). Defendants submitted hundreds of affidavits showing that the publishers’ system is a disaster: requests are ignored and not responded to in a timely manner, fees assessed are unreasonable and unrelated to the number of copies made, persons requesting permission are treated unequally, permission for the same work must be repeatedly requested semester after semester, and unreasonable and unnecessary conditions are attached to the granting of permission. (R.54 Decl. Ternes 8, JA 1045, R.61 Ex.A and Ex.P, JA 1203-88, 1443-46). The scheme has driven companies out of business (R.54 Decl. Ternes 7-9, JA 1044-45), and even Kinko’s — the company most likely to have the economies of scale necessary to comply with even an unreasonable system — got out of the business of reproducing coursepacks. (Hearing TR 43, JA 3737). Thus, at a minimum, a material issue of fact exists as to the workability of publishers’ licensing scheme.
Footnote 22 The Second Circuit has previously created economic doctrine as a substitute for copyright law, extending the protections of copyright owners beyond their constitutional limits. The Second Circuit was the source of the “sweat of the brow” doctrine unanimously rejected in Feist, 114 S.Ct. at 1291-95.
Footnote 23 The cases on which the publishers rely as support for their contention that courts have never upheld fair use in the educational environment, in fact, support MDS. Those cases show that when the copyright owner demonstrates that a use harms the market for the original work or for derivative works, the user may not prevail on the fourth factor. Marcus v. Rowley, 695 F.2d 1171 (9th Cir. 1983), Encyclopedia Britannica Educ. Corp. v. Crooks, 558 F. Supp. 1247 (W.D.N.Y. 1983), Wihtol v. Crow, 309 F.2d 777 (8th Cir. 1962), and MacMillan Co. v. King, 223 F. 862 (D. Mass. 1914). They do not stand for the proposition that one may not make multiple copies for classroom use.
Footnote 24 For example, “One suspects that the profitability of at least some of the other books at issue here is marginal;” and “it seems likely that some academics will find it harder to get their books published;” and “I assume that these competitors can still perform the copying on a more cost-effective basis than the professors or students can.” (Op. 26, 29) (emphasis added).