Case No. 92-9341 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT AMERICAN GEOPHYSICAL UNION; ELSEVIER SCIENCE PUBLISHING CO.; PERGAMON PRESS, LTD.; SPRINGER-VERLAG, GMBH & CO., K.G.; JOHN WILEY & SONS, INC. and WILEY HEYDEN, LTD., on behalf of themselves and others similarly situated, Plaintiffs and Counter-Claim Defendants - Appllees, - v. - TEXACO INC., Defendant-Counter-Claim- Plaintiff-Appellant. IN RE TEXACO INC., TEXACO CAPITAL INC., TEXACO CAPITAL N.V., Reorganized Debtors. ACADEMIC PRESS, INC.; ALAN R. LISS, INC.; ALLERTON PRESS INC.; AMBIENT PRESS LTD.; AMERICAN ASSOCIATION FOR THE ADVANCEMENT (Caption continued on inside front cover) ON APPEAL FROM AN INTERLOCUTORY ORDER OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK BRIEF FOR THE AMERICAN LIBRARY ASSOCIATION, AMICUS CURIAE, IN SUPPORT OF REVERSAL OF THE DISTRICT COURT'S DECISION Of Counsel: INGERSOLL AND BLOCH, CHARTERED Sherman House Susan G. Braden 1401 Sixteenth Street, N.W. Reuben B. Roberston Washington, D.C. 20036 (202) 232-1015 Attorneys for the Amercian Library Association Dated: March 4, 1993 (CONTINUATION OF CAPTION FROM PREVIOUS PAGE) OF SCIENCE; AMERICAN ASSOCIATION OF COST ENGINEERS, INC.; AMERICAN CHEMICAL SOCIETY; AMERICAN CONFERENCE OF GOVERNMENTAL INDUSTRIAL HYGIENISTS; AMERICAN INSTITUTE OF PHYSICS; AMERICAN MATHEMATICAL SOCIETY; AMERICAN MEDICAL ASSOCIATION; AMERICAN SOCIETY FOR BIOCHEMISTRY AND MOLECULAR BIOLOGY, INC.; AMERICAN SOCIETY FOR MICROBIOLOGY; ASPEN PUBLISHERS, INC.; ASSOCIATION FOR SYMBOLIC LOGIC; BIRKHAUSER BOSTON; BLACKWELL SCIENTIFIC PUBLICATIONS, LTD.; BUREAU OF NATIONAL AFFAIRS, INC.; BUSINESS MONTH CORPORATION; BUSINESS PUBLISHERS, INC.; BUTTERWORTH & CO. (PUBLISHERS) LTD.; C.V. MOSBEY COMPANY; CANNING PUBLICATIONS, INC.; CENTER FOR COMPUTER/LAW; CORNELL UNIVERSITY; CRC PRESS, INC.; DATA PROCESSING MANAGEMENT ASSOCIATION, INC.; EDITIONS SCIENTIFIQUES ELSEVIERS; ELSEVIER SCIENCE PUBLISHERS B.V.; ELSEVIER SEQUOIA SA; FEDERATION OF SOCIETIES FOR COATING TECHNOLOGY; GROVE & STRATTON, INC.; HARCOURT BRACE JOVANOVICH LIMITED (FORMERLY ACADEMIC PRESS INC. (LONDON) LTD.); HEMISPHERE PUBLISHING CO.; THE INFORMATION STORE, INC.; INSTITUTION OF ELECTRICAL ENGINEERS/PETER PEREGRINUS LTD.; INTERNATIONAL ACADEMY AT SANTA BARBARA, INC.; J. SCHWEITZER VERLAG; JOHN WILEY & SONS LIMITED; KENNETH MASON PUBLICATIONS LTD.; THE LAUX COMPANY; LAW & TECHNOLOGY PRESS; LITTLE, BROWN & COMPANY; MARCEL DEKKER, INC.; MASSACHUSETTS MEDICAL SOCIETY; MBR PRESS, INC.; MIT PRESS; MUNKSGAARD INTERNATIONAL PUBLISHERS LTD.; MULTI- SCIENCE PUBLISHING CO. LTD; OPEN-APPLE; PHYSOLOGIA PLANTARUM; PJD PUBLICATIONS LTD.; PRINCETON UNIVERSITY PRESS; RAVEN PRESS; ROYAL AUSTRALASIAN ORNITHOLOGIST'S UNION, SCANNING MICROSCOPY INTERNATIONAL, INC.; SCRIPTA TECHNICA, INC.; SKY PUBLISHING CORPORATION; SOCIETY OF NAVAL ARCHITECTS AND MARINE ENGINEERS; SPRINGER-VERLAG NEW YORK INC.; TECHNICAL CONFERENCES, also known as T/C Press; TECHNOMIC PUBLISHING CO., INC.; TISSUE CULTURE ASSOCIATION, INC.; TRANSACTION PUBLISHERS; VAN NOSRTRAND REINHOLD; VCH PUBLISHERS, INC.; VNU BUSINESS PUBLICATIONS INC.; W.B. SAUNDERS COMPANY; WALTER DE GRUYTER, INC.; WARREN GORHAM & LAMONT, INC.; WASHINGTON REGULATORY REPORTING ASSOC.; WILLIAMS & WILKINS, INC.; WOLTERS KLUWER ACADEMIC PUBLISHERS B.V.; AMERICAN GEOPHYSICAL UNION; ELSEVIER SCIENCE PUBLISHING CO., INC.; PERGAMON PRESS, LTD.; SPRINGER-VERLAG, GMBH & CO., K.G.; JOHN WILEY & SONS, INCORPORATED; WILEY HEYDEN, LTD.; HUMAN SCIENCES PRESS INC. PUBLISHING CORPORATION AND PLENUM PUBLISHING CORPORATION, Petitioners - Appellees, - v. - TEXACO INC., Respondent - Appellant. TABLE OF CONTENTS Page INTEREST OF THE AMERICAN LIBRARY ASSOCIATION . . . . . . . . . . . . . 1 A. Libraries Have Had a Special Historical Role in Disseminating Published Works . . . . . . . . . . . . . 2 B. The American Library Association Has Been at the Forefront of the Development of the Fair Use Doctrine . . . . . . . . . . . . . . . . . . . . 4 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 I.THE SCOPE OF COPYRIGHT IS LIMITED BY THE CONSTITUTION AND THE DOCTRINE OF FAIR USE. . . . . . . . . . . . . . . . 7 II.THE DISTRICT COURT'S ANALYSIS IS UNSOUND AND UNSUPPORTED BY THE RECORD. . . . . . . . . . . . . . . . . . . . . . . . 9 A. The District Court Incorrectly Analyzed the Purpose and Character of Texaco's Use. . . . . . . . . . . . . . . 10 B. The Nature of the Copyrighted Work Fully Supports A Finding of Fair Use . . . . . . . . . . . . . . . . . 13 C. The District Court Erred in Applying the Amount and Substantiality Test . . . . . . . . . . . . . . . . . . 14 D. The District Court Failed to Make a Coherent Analysis of the Effect on the Market for the Copyrighted Work . . . . . . . . . . . . . . . . . . . . . . . . . 17 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 INTEREST OF THE AMERICAN LIBRARY ASSOCIATION The American Library Association ("ALA") is a non-profit organization with more than 55,000 members, including libraries, information specialists, library users, trustees, educators and friends of libraries. Founded in 1876, ALA is the oldest and largest national library association in the world. ALA provides leadership for the development, promotion and improvement of library and information services. ALA also furthers the work of librarians by its defense of intellectual freedom and support for widespread access to information to expand knowledge. The district court decision in this case, American Geophysical Union v. Texaco, 802 F. Supp. 1 (S.D.N.Y. 1992) ("Texaco"), misapplies and significantly erodes the fair use doctrine, a judicially created defense to copyright infringement that Congress enacted into law in 1976, which permits the copying of copyrighted works if certain conditions are met. While Congress has provided public and special libraries with specific protection for photocopying of copyrighted materials in Section 108 of the Copyright Revision Act of 1976 ("the Act"), the scope of the fair use doctrine conveys far broader and more important protection. If allowed to stand, the district court's decision will significantly impair libraries from fulfilling historic and constitutionally protected obligations and potentially will require them to assume substantial costs and burdens. In the end, it is the public's interest in the advancement of learning and expansion of knowledge that will be injured the most; that loss will be irreparable. Therefore, ALA respectfully files as amicus to urge reversal of the decision of the district court. A. Libraries Have Had a Special Historical Role in Disseminating Published Works When our nation was founded, an individual's personal library was an important measure of one's wealth and standing in society. R. A. Rutland, "Madison's Bookish Habits," 37 Quarterly Journal of the Library of Congress No. 2, 176 (Spring 1980). Libraries open to the public were virtually nonexistent. James Madison, known as "the father of the Constitution," thought a great deal about the importance of and how to make the scarce published works of the day available to promote the quality of public knowledge and debate. See generally, A. Koch, "James Madison and the Library of Congress," 37 Quarterly Journal of the Library of Congress, No. 2, 159 (Spring 1980). Towards that end, while serving as a member of the Constitutional Congress, Madison prepared a list of over 1300 volumes "proper for the use of Congress," which included histories, political discourse, philosophy, law and literature. Rutland, supra at 181. Many of these works were copyrighted. Ibid. When he became President, Madison authorized the acquisition of Thomas Jefferson's library, perhaps the finest and most complete collection in the country at that time, to replace the books and publications that were destroyed when the British burned the U.S. Capitol during the War of 1812. He also ordered construction of a building, now part of the Library of Congress, in which to house this priceless acquisition. Madison wanted this library to be the principal national repository of copyrighted works and a model for other libraries. Madison further envisioned libraries as essential for the dissemination of published works to foster the free flow of ideas necessary to keep a democracy vibrant. His words to that effect remain inscribed on the Library of Congress' Madison Memorial Hall: Learned institutions ought to be favorite objects with every free people. They throw that light over the public mind which is the best security against crafty and dangerous encroachments on the public liberty. Letter from James Madison to W.T. Barry, Lieutenant Governor of Kentucky (Aug. 4, 1822). While the public today has greater overall access to information sources than existed in Madison's time, access to academic, scientific and scholarly publications continues to exist primarily through libraries. B. The American Library Association Has Been at the Forefront of the Development of the Fair Use Doctrine Because of the special role of libraries in our nation's heritage, ALA has been at the forefront of development of the fair use doctrine in the courts, as well as the Congress. In 1972, ALA participated as an amicus curiae before the United States Court of Claims, the predecessor of the Federal Circuit, in the ground- breaking case of Williams & Wilkins Company v. United States, 487 F.2d 1345 (Ct. Cl. 1973), aff'd per curiam by an equally divided Court, 420 U.S. 376 (1975) ("Williams & Wilkins"). ALA argued in that case that not-for-profit academic, research and public libraries should not be liable for copyright infringement under the fair use doctrine where single photocopies of portions of copyrighted works were made for scientific and scholarly research. ALA also was concerned that an adverse holding in that case would quickly embroil libraries and librarians in negotiations, administrative matters and legal actions, the prospects or net effect of which will force the cessation of traditional library photocopying and the consequent denial of this important means of access to recorded knowledge to scientists, researchers and scholars. Brief for Amicus ALA at 3, Williams & Wilkins Co. v. United States, No. 73-68 (Ct. Cl. 1973). The Court of Claims was persuaded by ALA's argument that research and scholarship were the primary ends served rather than commercial exploitation. Accordingly, it held that copying done by employees of the National Institute of Health, a nonprofit quasi- governmental entity, qualified for fair use protection because it served to advance science. Williams & Wilkins, 487 F.2d at 1354. The Supreme Court affirmed Williams & Wilkins without an opinion, in the absence of a majority. ALA then turned to the Congress, which codified the fair use doctrine in Section 107 of the Act. The Supreme Court first considered the statutory contours of fair use in Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984) ("Sony"). Participating as amicus curiae, ALA successfully argued for reversal of the Ninth Circuit's decision to deny copied video recordings the safe harbor of fair use, even when the copies were made without any commercial motivation and did not diminish the value of the owner's copyright. Brief for Amicus ALA, Sony, No. 81-1687 (Sup. Ct. 1984). In particular, ALA argued against the Ninth Circuit's misguided holding that "intrinsic" uses of copyrighted materials were not fair use, since that would profoundly affect the ability of librarians to serve their patrons effectively [as] [l]ibraries are the critical link in bringing new information technologies to the public at large. . . . If the decision of the Court of Appeals is not reversed, libraries could be accused of making, or of aiding and abetting unfair "intrinsic" uses of copyrighted materials. Id. at 2. ARGUMENT Many of the same concerns presented in Williams & Wilkins and Sony as to the scope and viability of the fair use doctrine and the potential impact of the copyright law on libraries throughout the nation compel ALA to appear before this Court as an amicus in this case. Held to the specific stipulated facts in which the instant case arises, the Texaco decision can be read narrowly as simply denying for-profit corporations and their employees the legal defense of fair use when single copies are made of eight different scientific articles in their entirety. As explained more fully below, rather than applying this Circuit's precedent to the facts presented by this case, the district court has used this "test case" to advance its perception of what the law should be. See generally, Leval, "Toward a Fair Use Standard," 103 Harv. L. Rev. 1105 (1990). In doing so, the district court has exceeded its jurisdiction and issued an ill-considered decision that must not be allowed to stand. I. THE SCOPE OF COPYRIGHT IS LIMITED BY THE CONSTITUTION AND THE DOCTRINE OF FAIR USE Many of the deficiencies in the district court's fair use analysis are derived from a central misperception about the constitutional limits and purpose of the copyright law. The district court opined that The copyright law celebrates the profit motive . . . The profit motive is the engine that ensures the progress of science . . . The result is the progress of science; the means is the profit motive, which is underwritten by the law of copyright. Texaco, 802 F. Supp. at 27 (emphasis in original). The Constitution and the courts, which initially created the fair use doctrine, however, approach copyright from a far different perspective than that of the district court in this case. The Constitution empowers Congress only 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. U.S. CONST., Art. I, 8, cl. 8 (emphasis added). Copyright thus is a privilege, which extends no further than necessary to provide a qualified incentive for an individual to commit ideas into public expression that may then be read, examined, and used by others to expand on the existing body of knowledge. As the Supreme Court articulated in Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975): The limited scope of the copyright holder's statutory monopoly, like the limited copyright duration required by the Constitution, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad availability of literature, music and the other arts. Id. at 156 (emphasis added). Justice Stevens, writing for the Court more recently in Sony, likewise observed that under the Constitution, The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. 464 U.S. at 429. The Sony opinion further underscored this important historical point, quoting former Chief Justice Hughes in Fox Film Corp. v. Doyal, 286 U.S. 123, 127 (1932), as follows: "The sole interest of the United States and the primary object in conferring the monopoly lie in the general benefits derived by the public from the labors of authors." 464 U.S. at 429. In Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303 (2d Cir. 1966), cert. denied, 385 U.S. 1009 (1967) ("Rosemont Enterprises), this Circuit defined the doctrine of fair use as a "privilege in others than the owner of a copyright to use the copyrighted material in a reasonable manner without his consent, notwithstanding the monopoly granted to the owner" . . . The fundamental justification for the privilege lies in the constitutional purpose in granting copyright protection in the first instance . . . . To serve that purpose, "courts in passing upon particular claims of infringement must occasionally subordinate the copyright holder's interest in a maximum financial return to the greater public interest in the development of art, science and industry." Berlin v. E.C. Publication, Inc., 329 F.2d 541, 544 (2d Cir. 1964). Whether the privilege may justifiably be applied to particular materials turns initially on the nature of the materials, e.g., whether their distribution would serve the public interest in the free dissemination of information and whether their preparation requires some use of prior materials dealing with the same subject matter. 366 F.2d at 306-7 (citations omitted, emphasis added). However, the First Amendment further constrains Article I, Section 8, Clause 8. This tension has been resolved by application of the equitable doctrine of fair use, as reflected in Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91, (2d Cir. 1977), cert. denied, 434 U.S. 1014 (1978): [c]onflicts between interests protected by the first amendment and the copyright law thus far have been resolved by application of the fair use doctrine. Id. at 95. See also, New Era Publications International, ApS v. Henry Holt, & Co., 873 F.2d 576, 584 (2d Cir. 1989), cert. denied, 110 S. Ct. 1168 (1990) ("New Era I"). Therefore, copyright conveyed by Article I, Section 8, Clause 8 of the U.S. Constitution is limited not only by its own terms, but by the First Amendment and the doctrine of fair use, as it has developed in the case law and by congressional mandate. II. THE DISTRICT COURT'S ANALYSIS IS UNSOUND AND UNSUPPORTED BY THE RECORD ALA's brief examines each of the four factors enumerated in 17 U.S.C. 107, which this Court's de novo review must consider. In Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) ("Nation"), the Supreme Court instructed the lower courts that fair use must be analyzed on a case-by-case basis because it is not susceptible to a single, uniform definition: "[S]ince the doctrine is an equitable rule of reason, no generally applicable definition is possible, and each case raising the question must be decided on its own facts." Id. at 560, quoting H. R. Rep. No. 1476, 94th Cong., 2d Sess. 65, reprinted in U.S. Code Cong. & Admin. News 1976, 5659, 5679. This examination must also include consideration of the overall public policy considerations inherent in application of an equitable doctrine. See, e.g., New Era I, 873 F.2d at 589; Weissmann v. Freeman, 868 F.2d 1313, 1323 (2d Cir. 1989); Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1260 (2d Cir. 1986), cert. denied, 481 U.S. 1059 (1987) ("Maxtone-Graham"); accord, Sony, 464 U.S. at 448 & n. 31, 454-56. A. The District Court Incorrectly Analyzed the Purpose and Character of Texaco's Use It has long been recognized in this Circuit that whether an author or publisher has a commercial motive . . . is irrelevant to a determination of whether a particular use of copyrighted material in a work which offers some benefit to the public constitutes a fair use. Rosemont Enterprises, 366 F.2d at 307. See also, Consumers Union of U.S. v. General Signal Corp., 724 F.2d 1044, 1049 (2d Cir. 1983), cert. denied, 469 U.S. 823 (1984) ("Consumers Union"). The mere fact that Texaco potentially may derive some remote indirect commercial gain from its scientists' copying of articles from The Journal of Catalysis ("Catalysis") does not compel an adverse finding under 17 U.S.C. 107(1), since Texaco had no interest in "supplanting" the "right of first" publication. Nation, 471 U.S. at 562. See also, Maxtone-Graham, 803 F.2d at 1260-62. Accord, Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510, 1522-23 (9th Cir. 1992) ("Sega"). The district court erroneously concluded that because the use within Texaco's commercial environment was not "transformative," it could not qualify as fair use. Texaco, 802 F. Supp. at 11-13. The district court's reasoning, however, was based on the flawed premise that the courts consistently [express] preference for secondary uses that [do] not merely copy and offer themselves as substitutes for the original copyrighted text, but that used the matter taken from the copyrighted work for some new objective or purpose. Id. at 11. It is not surprising that the district court cites no authority for this proposition. Id. No such extrajudicial value judgment is found in the case law because the plain language of 17 U.S.C. 107(1) does not speak of "transformative" uses, and the courts must first and foremost be guided by the language that Congress used to describe this requisite element of fair use. Accord, Sony, 464 U.S. at 431 ("The judiciary [should be reluctant] to expand the protections afforded by the copyright without explicit legislative guidance"). Since the articles copied by one of Texaco's researchers consisted primarily of published scientific research, that use fits closer to the use approved in Williams & Wilkins than the commercial exploitation of unpublished works disfavored in Nation. See 17 U.S.C. 107 ("research" is a specific category authorized in 17 U.S.C. 107 as fair use). Even when commercial gain is conferred, this Circuit requires that the overall public benefit resulting from a particular use be considered. MCA Inc. v. Wilson, 677 F.2d 180, 182 (2d Cir. 1981). The Ninth Circuit recently has strongly endorsed a similar approach in Sega, 977 F.2d at 1523 ("Public benefit need not be direct or tangible, but may arise because the challenged use serves a public interest.") The purpose of the copied Catalysis articles in this case was for accuracy and personal convenience, akin to note taking -- a use approved of by this Circuit in Consumers Union: where accurate reporting requires use of verbatim quotations, fair use will be liberally applied. 724 F.2d at 1050. See also, Nation, 471 U.S. at 563; Wright v. Warner Books, Inc., 953 F.2d 731, 740 (2d Cir. 1991) ("Wright"); Lish v. Harper's Magazine Foundation, 807 F. Supp. 1090, 1095 (S.D.N.Y. 1992) ("Lish") ("where the original text will best report the facts, copying the original words may be permissible because the quotation of the factual statement may involve no expressive content whatsoever"), citing, Newman, "Not the End of History: The Second Circuit Struggles with Fair Use," 37 J. Copyright Soc'y 12 (1990). Justice O'Connor, writing for the Court in Nation, carefully made the point that The crux of the profit/non-profit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price. 471 U.S. at 562. See also, Roy Export Co. Establishment v. Columbia Broadcasting System, Inc., 672 F.2d 1095, 1104 (2d Cir.), cert. denied, 459 U.S. 826 (1982). In light of Texaco's increased purchases of Catalysis subscriptions, it cannot credibly be argued that consumer demand was diminished in any significant or meaningful manner or that Texaco sought to avoid paying "the customary price." In this regard, the district court erred by failing to give due credit to the propriety of Texaco's conduct. See e.g., Salinger v. Random House, Inc., 811 F.2d 90, 96 (2d Cir.), cert. denied, 484 U.S. 890 (1987) ("Salinger"); Maxtone - Graham, 803 F.2d at 1264; Lish, 807 F. Supp. at 1096-1101. Since Texaco was a subscriber to Catalysis, and indeed increased its subscriptions from one to three at the higher $828 per subscription institutional rate, the purpose and character of its researcher's copying individual articles thereof does not exhibit bad faith. Thus, the equities reflect that the purpose and character of Texaco's use was not unfair. The district court's finding otherwise should be reversed. B. The Nature of the Copyrighted Work Fully Supports A Finding of Fair Use The district court properly concluded that, because the material copied by Texaco was essentially factual in nature, "the nature of the copyrighted work" element supported a finding of fair use. Texaco, 802 F. Supp. at 16-17. While ALA concurs with this conclusion, certain assumptions in the district court's reasoning must be addressed. Without publishers being willing to assume financial risks of publication and dissemination, the district court assumes that "there would be no reason for authors to write [scientific articles]; even if they did, the articles would fail to achieve distribution that promoted the progress of science." Id. at 16. Here, the district court ignored credible and undisputed evidence that authors of scholarly articles in scientific journals such as Catalysis are primarily motivated to prepare and submit such works in order to make a contribution to learning and gain peer acceptance for their ideas rather than to generate copyright royalties. See, Schwartz Trial Testimony at pp. 8-9. Moreover, it is well known that university faculty members typically give away such research for nominal or even no royalties in order to publish works which will qualify for tenure or simply promote their ideas. See generally, S. Bennett and N. Matheson, "Scholarly Articles: Valuable Commodities for Universities," Chronicle of Higher Education 1 (May 27, 1992). Ironically, university libraries in particular are the largest purchasers of scientific journals and make up the primary market for such research and scholarship. Ibid. Therefore, libraries and library users, particularly those in the academic community, should certainly be among the prime beneficiaries of the fair use doctrine, in light of the "nature of the copyrighted work." C. The District Court Erred in Applying the Amount and Substantiality Test The Supreme Court has held that even copying a copyrighted work in its entirety does not preclude a finding of fair use. See Sony, 464 U.S at 449-50. This Circuit in Maxtone-Graham held that There are no absolute rules as to how much of a copyrighted work may be copied and still be considered fair use. 803 F.2d at 1263. See also, Wright, 953 F.2d at 738; accord, Sega, 977 F.2d at 1526. This Circuit has acknowledged that this factor has "both a quantitative and a qualitative component." New Era Publications International v. Carol Publishing Group, 904 F.2d 152, 158 (2d. Cir. 1990). Although Catalysis' publisher registered entire issues with the U.S. Copyright Office, the record reflects that the individual articles contained therein were not registered. Without citation to any evidence or authority, however, the district court concluded that "Each article, note or letter published in Catalysis is a separately authored work, protected by a copyright." Texaco, 802 F. Supp. at 17 (emphasis added). Catalysis, however, clearly is a "collective work," which is defined in the Act as a periodical issue. . ., in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole. 17 U.S.C. 101. By law, the copyright for a compilation or collective work extends only to the material contributed by the author of the work, e.g., the collection and assembling of pre- existing materials or data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work. Id. The evidence is undisputed that Texaco copied only unregistered articles, not entire issues of Catalysis. Therefore, plaintiffs do not -- even to this day -- have a properly registered copyright in the material that was actually copied, a prerequisite for bringing an infringement action. While the defective registration may still be curable at this juncture, see e.g., Computer Associates Intern., Inc. v. Altai, Inc., 775 F. Supp. 544, 555-57 (E.D.N.Y. 1991) (Pratt, J.), aff'd in part and rev'd on other grounds, No. 91-7893, Slip op. at 4770 (2d Cir. Dec. 17, 1992), the underlying policy judgment made by the district court in glossing over this statutory requirement is most troubling, since it subsumes substantive jurisdiction and standing. Nevertheless, the district court sua sponte excused the publisher from complying with the statutory registration requirements established by Congress on grounds of presumed burdensomeness it would involve gigantic expense and inconvenience to register separately each of the 20 odd items that appear in an individual issue. Texaco, 802 F. Supp. at 17. The publishers' perceived burden, however, pales beside the one that the district court readily would impose on libraries, particularly non-public ones. To avoid even the potential threat of liability, such libraries either would be required to succumb to the unregulated royalty structure designed and imposed by the Copyright Clearance Center ("CCC") or to assume the burden of ascertaining the employment status and intent of every library user who wishes to make a copy, as well as the ultimate purpose to which the copy would be put. Placing aside the affront to individual constitutional rights, the administrative and financial burdens required to conduct such interrogations would seriously impair the principal work of libraries. The district court's subsumed judgment that libraries rather than publishers should bear these burdens, is patently inconsistent with the underlying purpose of copyright, i.e., to enhance knowledge. For these reasons, the district court's findings as to amount and substantially of copying should be reversed. D. The District Court Failed to Make a Coherent Analysis of the Effect on the Market for the Copyrighted Work The Supreme Court has made it clear that the effect on the market "is undoubtably the single most important element of fair use." Nation, 471 U.S. at 566. This inquiry should focus on whether if the challenged use "should become widespread, it would adversely affect the potential market for the copyrighted work," by diminishing potential sales, interfering with market ability, or usurping the market. Sega, 977 F.2d at 1523, quoting Sony, 464 U.S. at 451. This Circuit also has made it clear that the proper inquiry concerns the potential market for the copyrighted work. Salinger, 811 F.2d at 99. As it also explained in Consumers Union The theory behind the copyright law is that creation will be discouraged if demand can be undercut by copiers. Where the copy does not compete in any way with the original, this concern is absent. 724 F.2d at 1051 (emphasis added). Texaco's copying, however, did not "usurp" the market, as was done in Nation and Salinger, nor did it affect the limited monopoly conveyed by copyright. The district court did not even bother to define the universe of existing Catalysis customers or the scope of that publication's potential market. Absent such analysis, it is impossible to deduce any potential market that may be foreclosed by Texaco's copying or to conclude from the evidence that it had any affect on Catalysis, other than an insignificant or de minimus one. Nevertheless, the district court was persuaded that, but for Texaco's copying, it would "need to provide" its researchers with additional copies of Catalysis which would "substantially supplement the revenues of the copyright owning publishers." Texaco, 802 F. Supp. at 18. Of course, the district court does not reveal the number of additional subscriptions that it would require Texaco to buy in order to avoid liability. The district court also concludes that Texaco would "nonetheless continue to provide its scientists with copies, so long as there exists a means of doing so that is not excessively expensive or burdensome. . . ." Id. Nothing in the record supports that assumption nor does the district court provide any insight as to what it believes "excessive expense" or "burdensome" means. Instead, the district court repeated plaintiffs argument that Texaco could purchase additional subscriptions; it could purchase back issues or back volumes; it could order tear sheets from document delivery services that purchase subscriptions; it could order photocopies from document services that make copies and license agreements with the plaintiff- publishers and pay royalties to the publishers for all copies made; it could negotiate a license directly with a particular publisher to pay a blanket fee for the right to make photocopies at will; or, alternatively, Texaco could photocopy articles as needed for its scientists by operating under the TRS or AAS licensed services offered by the CCC. Id. None of these options would appear to be a realistic alternative since the copy was made by Texaco's researcher for accuracy, as well as his personal convenience. As the district court even acknowledged, "what a scientist needs is a photocopy," not complete back volumes, back issues and the like. Id. (emphasis in original). Of direct concern to ALA is that Texaco could make a reasonable business judgment and choose to close its in-house library, deciding that the cost of providing 400-500 scientists with secondary research materials in-house was too high. Thus, Texaco's management could require its scientists to obtain any such research from other sources, including public libraries. While the district court at least recognized that this route could be pursued, it does not acknowledge or consider the burden this would shift to libraries. Texaco, 802 F. Supp. at 22. The most revealing defect in the district court's analysis of the effect on the market is its failure to acknowledge that the Constitution does not guarantee publishers profitability; it merely provides authors with a limited incentive to creative in order to serve a larger societal goal -- the enhancement of knowledge. See, U.S. CONST. Art. I, 8, cl. 8. Yet, the district court was not constrained from leaping over this hurdle concluding that the publishers "powerfully demonstrated entitlement" to prevail as to the effect of Texaco's copying on the market for the copyrighted work. Texaco, 802 F. Supp. at 18. For these additional reasons, the district court's conclusion that Catalysis' market was adversely affected by Texaco's copying is incorrect and should be overruled. CONCLUSION In effect, this Circuit has been asked to hold that copying factual research, which ultimately may benefit a commercial entity, is presumptively not fair use. If that holding becomes the law of this Circuit, how do libraries protect themselves from even potential liability other than barring users from copying information, which may even remotely result in a benefit to a for- profit entity? How do libraries conduct this inquiry without a direct assault on constitutionally and statutorily protected rights to privacy? How do libraries pay for this inquiry? Certainly the publishers who will directly profit from such a scheme, including the coalition members listed in the caption of this case, do not propose to reimburse libraries for the direct and indirect costs they would impose. Their objective is to use libraries, which are undoubtably the largest purchasers of copyrighted works, particularly of scientific research, to further increase publisher profits by making libraries accede to the highly questionable CCC arrangement and police library patrons --- goals far from Madison's mind when he looked to libraries to promote learning and expand knowledge to foster democracy. Clearly the continued viability of the fair use doctrine is an essential pre-requisite to our nation's libraries being able to fulfill the unique and important role that the Constitution's author envisioned and intended for libraries in a free society. The wisdom of James Madison's words, written over two hundred years ago, is still valid today. Knowledge Will Forever Govern Ignorance: And A People Who Mean To Be Their Own Governors, Must Arm Themselves With The Power Which Knowledge Gives. Letter from James Madison to W.T. Barry, Lieutenant Governor of Kentucky (August 4, 1822). Texaco's copying of research articles, under the facts as stipulated by parties in this litigation, should be accorded the defense of fair use by this Circuit as the benefits to society from the "use" in this case, far outweigh any remote pecuniary benefit to Texaco, without denigrating or devaluing the limited monopoly that Catalysis enjoys in any way. Because of the scholarship of former Judge Learned Hand this Circuit has long been recognized as one of the leading courts concerning the law of copyright. This Circuit previously has utilized the fair use doctrine to "avoid rigid application of the copyright statute when, on occasion, it could stifle the very creativity which that law is designed to foster." Iowa State Univ. Research Found., Inc. v. American Broadcasting, 621 F.2d 57, 60 (2d Cir. 1980). See also, Consumers Union, 724 F.2d at 1048. It should again do so by applying the fair use doctrine in this case and reverse the district court's opinion. Respectfully submitted, Susan G. Braden INGERSOLL AND BLOCH, CHARTERED 1401 Sixteenth Street, N.W. Washington, D.C. 20036 (202) 232-1015 Attorney for The American Library Association Of Counsel: Reuben B. Robertson INGERSOLL AND BLOCH, CHARTERED 1401 Sixteenth Street, N.W. Washington, D.C. 20036 (202) 232-1015 Attorney for The American Library Association FOOTNOTES 1. Reflecting the diversity of its membership, ALA has eleven functional divisions: American Association of School Libraries; Association of College and Research Libraries; Public Library Association; Association of Specialized and Cooperative Library Agencies; American Library Trustee Association; Association of Library Collections and Technical Services; Association of Library Service to Children; Library Administration and Management Association; Library and Information Technology Association; Reference and Adult Services Division and Young Adult Library Services Association. 2. Pub. L. 94-553, Title I, 101, 17 U.S.C. 101 et seq. (Oct. 19, 1976). Under the statute, the rights of a libraries or archives, or employees thereof acting within the scope of their employment, to reproduce and distribute copies of copyrighted works are limited to "no more than one copy of a work" and are subject to three specific overall conditions: (1) the copying or distribution must be "made without any purpose of direct or indirect commercial advantage"; (2) the collections of the library or archives must be open to the public or available not only to affiliated researchers but also to "other persons doing research in a specialized field"; and (3) "notice of copyright" must be included. 17 U.S.C. 108(a). 3. Should this Court decide to affirm any aspect of the district court's decision, ALA respectfully requests that this Court's decision specifically distinguish any such holding to minimize any potential adverse impact on libraries for the reasons discussed herein. 4. For a detailed historical perspective of ALA's role prior to 1972, particularly in formulating the "Gentlemen's Agreement" of 1935, a policy statement designed to define what constituted fair use of library copying of both copyrighted and non-copyrighted works, see L. C. Tepper, "Copyright Law and Library Photocopying: A Historical Survey," 84 Law Library Journal 341, 346-49 (1992). 5. Section 107 of the Act establishes that the fair use of a copyrighted work is not an infringement and further provides the following guidance: 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 non-profit 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 on the potential market for or value of the copyrighted work. 17 U.S.C. 107 (emphasis added). 6. The district court noted that Catalysis was offered at an institutional rate, which Texaco paid, that was double the price of an individual subscription. Texaco, 802 F. Supp. at 7. The district court's analysis failed to acknowledge that the existence of these two rates in part reflects the publisher's inherent recognition that it is likely that copies will be made of such publications by institutional subscribers, or their users, thereby justifying the substantial differential between institutional and individual subscription rates. 7. The fact that the authors of these articles may have agreed to transfer their rights to the publisher, Texaco, 802 F. Supp. at 6, does not affect the publisher's obligations regarding registration, which remain. Moreover, ALA questions exactly what standing plaintiffs have even to assert the claims that district court adjudicated. Does the district court have the power simply "to assume" critical jurisdictional facts, without opening the door to advisory opinions, not authorized by law? Where is affirmative proof in the record that these authors had proper and exclusive legal authority to transfer their rights? Without such proof, this decision should be vacated as a matter of law. See Lujan v. Defenders of Wildlife, 119 L. Ed. 2d. 351, 364-65 (1992) (the party invoking federal court jurisdiction must establish each element of standing by specific affirmative evidence). 8. Among the most troubling aspects of the district court's decision is its inherent endorsement of CCC and its publisher's set fee structure. Texaco, 802 F. Supp. at 24-26. While some of ALA's members have joined CCC, the majority have not. Even if CCC membership were obtained, libraries and their users would still remain in peril, as not all publications are registered with CCC. Moreover, the "reasonableness" of CCC's unregulated fee structure is far from settled. Before embracing CCC, the district court should bear in mind the warning of the Ninth Circuit in Sega: an attempt to monopolize [a] market by making it impossible for others to compete runs counter to the statutory purpose of promoting creative expression and cannot constitute a strong equitable bases for resisting the invocation of the fair use doctrine. 977 F.2d at 1524. Yet the district court's decision would appear to place libraries at risk if they fail to pay fees demanded by CCC. Texaco, 802 F. Supp. at 13-14 n.13. 9. For example, if Texaco's employee went to a public library, should it require that he disclose his employer, the nature of his research, whether the research is for profit, or whether it is close to fruition? Should that library keep records of the responses? Who has the right to see them? What if the library user were an employee of a public university; of a private university? What if he were employed by a profit-making company, but was conducting his research under a government contract? Public libraries should not be placed in the position of making judgments as to the lawfulness of photocopying based upon their view of the commerciality of the copier's motivations.