TABLE OF CONTENTS
Page
A. Plaintiffs' Circular Premise. . . . . . . . . . . . . . . 1
B. The Irrelevance of the Alleged "Benefit" to Texaco. . . . 3
C. Plaintiffs' Unique View of the Appellate Process. . . . . 5
D. Plaintiffs' Disregard of the Stipulated Scope of the
Trial . . . . . . . . . . . . . . . . . . . . . . . . . . 6
E. The Statutory Fair Use Factors. . . . . . . . . . . . . . 8
1. Purpose and Character of the Use . . . . . . . . . . 8
a. That Texaco Is a For-Profit User Does Not
Deprive It of Fair Use Credit for the
Scientific Research Purpose of
Dr. Chickering's Use. . . . . . . . . . . . . . 9
b. Non-Superseding Use . . . . . . . . . . . . . . 16
c. Reasonable and Customary Practice . . . . . . . 19
d. Plaintiffs' Remaining Arguments . . . . . . . . 21
2. Nature of the Work . . . . . . . . . . . . . . . . . 23
3. Amount and Substantiality of the Portion Used. . . . 23
4. Effect of the Use. . . . . . . . . . . . . . . . . . 24
a. The Sony Presumption Dicta. . . . . . . . . . . 24
b. The Irrelevance of Any Harm to Other Works
or Publishers.. . . . . . . . . . . . . . . . . 26
c. The Alleged Loss of Subscriptions.. . . . . . . 27
d. Document Delivery Services. . . . . . . . . . . 30
F. In All Events, the CCC Licenses Do Not Provide a Fair
or Efficient System for Collecting Photocopying
Royalty Payments. . . . . . . . . . . . . . . . . . . . . 32
.1. The TRS. . . . . . . . . . . . . . . . . . . . . . . 33
2. The AAS.. . . . . . . . . . . . . . . . . . . . . . . 37
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . 40
TABLE OF AUTHORITIES
Cases Page
Allen-Myland, Inc. v. IBM Corp., 746 F. Supp. 520
(E.D. Pa. 1990). . . . . . . . . . . . . . . . . . . 14
Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38 (2d
Cir. 1986), cert. denied, 479 U.S. 1088 (1987) . . . 32
Arica Institute, Inc. v. Palmer, 970 F.2d 1067 (2d
Cir. 1992) . . . . . . . . . . . . . . . . . . . . . 5
Basic Books, Inc. v. Kinko's Graphics Corp., 758
F. Supp. 1522 (S.D.N.Y. 1991). . . . . . . . . . . . 3, 14
Berlin v. E.C. Publications, Inc., 329 F.2d 541
(2d Cir. 1964) . . . . . . . . . . . . . . . . . . . 11, 12
Consumers Union of U.S., Inc. v. General Signal
Corp., 724 F.2d 1044 (2d Cir. 1983), cert. denied,
469 U.S. 823 (1984) . . . . . . . . . . . . . . . . 11, 21-22,
26
Copyright Clearance Center v. Commissioner,
79 T.C. 793 (1982) . . . . . . . . . . . . . . . . . 32-33
Craft v. Kobler, 667 F. Supp. 120 (S.D.N.Y. 1987). . . 3
DC Comics Inc. v. Reel Fantasy, Inc., 696 F.2d 24
(2d Cir. 1982) . . . . . . . . . . . . . . . . . . . 2
DC Comics, Inc. v. Unlimited Monkey Business, Inc.,
598 F. Supp. 110 (N.D. Ga. 1984) . . . . . . . . . . 3
Elsmere Music, Inc. v. National Broadcasting Co.,
623 F.2d 252 (2d Cir. 1980) . . . . . . . . . . . . 11, 12
Feist Publications, Inc. v. Rural Telephone Service
Co., 111 S. Ct. 1282 (1991). . . . . . . . . . . . . 23
Financial Information, Inc. v. Moody's Investor
Service, Inc., 751 F.2d 501 (2d Cir. 1984),
cert. denied, 484 U.S. 820 (1987). . . . . . . . . . 2
Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass.
1841) . . . . . . . . . . . . . . . . . . . . . . .. 2, 23
Harper & Row Publishers, Inc. v. Nation Enterprises,
471 U.S. 539 (1985). . . . . . . . . . . . . . . . . 2, 10-11,
14, 19,
24-25
Hi-Tech Video Product, Inc. v. Capital Cities/ABC
Inc., 804 F. Supp. 950 (W.D. Mich. 1992) . . . . . . 3
Maxtone-Graham v. Burtchaell, 803 F.2d 1253
(2d Cir. 1986), cert. denied, 481 U.S.
1059 (1987). . . . . . . . . . . . . . . . . . . . . 9-11, 25
Meeropol v. Nizer, 560 F.2d 1061 (2d Cir. 1977),
cert. denied, 434 U.S. 1013 (1978) . . . . . . . . . 2-3
New Era Publications Int'l v. Carol Publishing
Group, 904 F.2d 152 (2d Cir.), cert. denied,
498 U.S. 921 (1990). . . . . . . . . . . . . . . . . 5, 6, 11,
12, 23
New Era Publications Int'l v. Henry Holt Co., 884
F.2d 657 (2d Cir. 1989), cert. denied, 493 U.S.
1094 (1990). . . . . . . . . . . . . . . . . . . . . 21-22
Richard Anderson Photography v. Brown, 1990 U.S.
Dist. LEXIS 19846 (W.D. Va. 1990) . . . . . . . . .. 3
Rosemont Enterprises, Inc. v. Random House, Inc.,
366 F.2d 303 (2d Cir. 1966), cert. denied,
385 U.S. 1009 (1967) . . . . . . . . . . . . . . . . 11, 12,
19-20
S & H Computer Systems, Inc. v. SAS Institute, Inc.,
568 F. Supp. 416 (M.D. Tenn. 1983) . . . . . . . . . 35
Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir.),
cert. denied, 484 U.S. 890 (1987) . . . . . . . . .. 6
Schnapper v. Foley, 667 F.2d 102 (D.C. Cir. 1981),
cert. denied, 455 U.S. 948 (1982). . . . . . . . . . 35
Sega Enterprise Ltd. v. Accolade, Inc., 977
F.2d 1510 (9th Cir. 1992). . . . . . . . . . . . . . 14
Sony Corp. v. Universal City Studios, Inc.,
464 U.S. 417 (1984) . . . . . . . . . . . . . . . .. 10, 11,
22, 24,
25-26
Stewart v. Abend, 495 U.S. 207 (1990). . . . . . . . . 2
Telerate System, Inc. v. Caro, 689 F. Supp. 221
(S.D.N.Y. 1988). . . . . . . . . . . . . . . . . . . 3
Triangle Publications, Inc. v. Knight-Ridder
Newspapers, Inc., 626 F.2d 1171 (5th Cir. 1980). . . 20
United Telephone Co. v. Johnson Publishing Co.,
855 F.2d 604 (8th Cir. 1988) . . . . . . . . . . . . 3
United States Lighterage & Towing Corp. v.
Petterson Lighterage & Towing Corp., 142
F.2d 197 (2d Cir. 1944). . . . . . . . . . . . . . . 27
Williams & Wilkins Co. v. United States, 487 F.2d
1345 (Ct. Cl. 1973), aff'd by equally divided Court,
420 U.S. 376 (1975) . . . . . . . . . . . . . . . . 20, 22,
24, 27
Wright v. Warner Books, Inc., 953 F.2d 731
(2d Cir. 1991) . . . . . . . . . . . . . . . . . . . 1
Statutes
The Copyright Act:
Section 102, 17 U.S.C. 102 . . . . . . . . . . . . 23
Section 105, 17 U.S.C. 105 . . . . . . . . . . . . 35
Section 107, 17 U.S.C. 107 . . . . . . . . . . . passim
Section 108, 17 U.S.C. 108 . . . . . . . . . . .. 21
Section 411, 17 U.S.C. 411 . . . . . . . . . . . . 24
Treatises
C. Wright & A. Miller, 5 Federal Prac. & Proc.
(1990) . . . . . . . . . . . . . . . . . . . . . . . 5-6
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
92-9341
AMERICAN GEOPHYSICAL UNION, et al.,
Plaintiffs-Counter-
Claim-Defendants-Appellees,
v.
TEXACO INC.,
Defendant-Counterclaim-
Plaintiff-Appellant.
_____________
ON APPEAL FROM AN INTERLOCUTORY ORDER OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
_______________ * ______________
REPLY BRIEF OF APPELLANT TEXACO INC.
_____________
A. Plaintiffs' Circular Premise
Plaintiffs' fundamental premise is that their "willing-
ness to license the copying" of articles through the CCC makes
the copying unfair when Texaco declines to pay the demanded
price. (Plaintiffs' Brief ("Pl. Br.") 3). This erroneous
premise was squarely rejected in Wright v. Warner Books, Inc.,
953 F.2d 731, 737 (2d Cir. 1991), where this Court held that a
claim that the defendant's "failure to get plaintiff's permission
to use" the copyrighted work rendered the use unfair is
"meritless" because, as the Wright district judge put it, the
claim "only begs the question: if [the defendant's] paraphrased
use of the letters is fair, then permission was not necessary."
(See Texaco's Brief ("Tex. Br.") 40).
Nor do plaintiffs address the 150-year old principle
established in Folsom v. Marsh that the fair use focus on the
issue of injury is whether, if the practice in question were not
enjoined, the value of the original would be diminished, not on
whether the value might be increased by licensing the use in
question. (See Tex. Br. 37). Otherwise, the copyright owner's
willingness to license would make every use unfair; and, by a
parity of reasoning, the making of single copies of articles
publishers refuse to license would invariably be fair use.
Plaintiffs' sole attempt to deal with the circularity
of their argument -- that their willingness to take Texaco's
money gives them the right to collect it -- is a string of cases
cited for the proposition that "fourth factor harm was recognized
to include the loss or potential loss of revenues from licensing
or the sale of rights that would occur if the unauthorized use
were permitted as fair use." (Pl. Br. 66-67). Each of these
inapposite decisions concerned a defendant that was in
competition with the plaintiff or had sold copies of portions or
excerpts of the plaintiff's work or of a work derived from the
copyrighted material -- circumstances totally absent here.
Proclamations that plaintiffs are "subsidizing" Texaco,
that they have "marketable rights," or that Texaco is attempting
to "take a free ride" on their "valuable intellectual property
rights" (Pl. Br. 4, 46), do not create such rights, the existence
of which is the issue to be decided -- not assumed -- on this
appeal. The CCC mechanism for collecting royalties is, thus,
irrelevant.
B. The Irrelevance of the Alleged "Benefit" to Texaco
Plaintiffs assert that photocopying "produces immediate
economic benefits by saving Texaco money in a number of ways that
enhance Texaco's profitability." (Pl. Br. 17). But they notably
fail to cite any authority in which the benefit to the defendant
was deemed relevant to fair use analysis. Nor did Judge Leval
rely on the alleged benefit to Texaco in finding Dr. Chickering's
copying not fair use -- and for good reason. That Texaco obtains
some benefit from the use in question cannot be disabling, for
all fair uses provide a benefit to the user who, otherwise, would
not engage in the practice. 107(4) directs the Court to
analyze "the effect of the use upon the potential market for or
value of the copyrighted work," not the effect on the user.
Related to plaintiffs' ill-founded "benefit" argument
is their contention that Texaco can "afford" to "pay for permis-
sion to copy." (Pl. Br. 43). The issue, however, is not whether
Texaco can afford to pay but, rather, whether Dr. Chickering's
copying was fair use for which royalties need not be paid. In
any event, the record is plain that, just as Texaco can "afford"
to pay, Academic Press, with its far higher rate of profits and
its ever increasing financial success during the very time that
photocopying, in Judge Leval's words, became "extremely
widespread" (A. 148), can equally "afford" not to be paid.
(Compare Pl. Br. 22 n.9 with A. 1105-06, 3802, 4230, 4320-21,
4363-69).
C. Plaintiffs' Unique View of the Appellate Process
Plaintiffs devote large portions of their brief to
chastising Texaco for disagreeing with Judge Leval. That, of
course, is why Texaco appealed. Nor is it any answer to Texaco's
complaint with Judge Leval's departures from the record for
plaintiffs repeatedly to cite the district court's opinion
instead of the evidence that plaintiffs believe supports it.
(See Pl. Br. 38-42). Contrary to plaintiffs' wishful thinking,
the "truth is [not] established beyond dispute by Judge Leval's
findings" (Pl. Br. 66); the "truth" is established by the
evidence.
As for plaintiffs' assertion that Judge Leval's
"findings" are subject to the clearly erroneous standard, this
Court has held precisely to the contrary -- that "the district
court's conclusion . . . is open to full review on appeal" and
that this Court "review[s] de novo this mixed question of fact
and law." New Era Publications Int'l v. Carol Publishing Group,
904 F.2d 152, 155 (2d Cir.), cert. denied, 498 U.S. 921 (1990);
Arica Inst., Inc. v. Palmer, 970 F.2d 1067, 1077 (2d Cir. 1992).
Plaintiffs cite no support for their suggestion that this Court
adopt the standard of review for trademark cases, which is
contrary to this Court's rulings in New Era and Arica.
Regardless of the standard of review, and regardless of
whether Judge Leval's statements are viewed as conclusions or as
"findings," the district court was in error. This Court in
Salinger and New Era reversed Judge Leval's fair use conclusions
without once mentioning the clearly erroneous rule or burden of
proof; the decision below should be reversed here as well. It is
for this Court to determine what is fair in what plaintiffs
accurately state is "a very important test case, with significant
public interest."
D. Plaintiffs' Disregard of the Stipulated Scope of the Trial
Plaintiffs devote much of their brief to arguing about
matters not at issue on this appeal. The parties stipulated, and
the district court ordered, that the sole issue at the fair use
trial was "whether the photocopying by or on behalf of Donald
Chickering, during his employment by Texaco Inc., of the follow-
ing [eight] articles, selected by plaintiffs, was a fair use."
(A. 150). Plaintiffs further stipulated that they "have not
attempted at this stage of the case to determine quantitatively
how much photocopying of copyrighted material, if any, has taken
place" at Texaco. (A. 188). Thus, there is no evidence in this
record of the volume of photocopies of copyrighted articles made
at Texaco. Nor is there any dispute that the record contains "no
evidence that Texaco ever copied the same article more than
once." (Tex. Br. 3 n.1).
Having expressly limited the fair use trial to
Dr. Chickering's single copies of eight articles, and having
eschewed any attempt to establish the number of copyrighted
articles Texaco photocopied, plaintiffs cannot be heard to argue
that this record supports their claim of "systematic" photo-
copying. Indeed, given their stipulations and Judge Leval's
failure to use the word "systematic," plaintiffs' assertion that
the district court "found" -- indeed, that it was "undisputed" --
that copying by Texaco scientists is "systematic" (Pl. Br. 12) is
simply incredible.
Contrary to plaintiffs' ipse dixit, the record reveals
that the copying done by Dr. Chickering was isolated and
spontaneous and was not part of any systematic effort by Texaco
to substitute copies for subscriptions. Dr. Chickering's copying
was neither planned nor coordinated with efforts of others or the
Texaco library to reduce or avoid multiple subscriptions to
Catalysis, and did not have that effect. Rather, it was done
spontaneously after he reviewed an article and decided he wanted
a copy for his research. (See Tex. Br. 9-11). As for plain-
tiffs' attempt to justify their claim that Dr. Chickering's
copying was "systematic" because there were copies of 55 other
articles in his files (Pl. Br. 16) (including 25 from Catalysis,
which amounts to far less than 1% of the articles published in
Catalysis during the relevant period) -- that is hardly evidence
that if copying were unlawful Texaco would likely purchase an
additional $900/year subscription for Dr. Chickering. (See TEX-
59A).
Nor does this case have anything to do with (i) photo-
copies made as a result of "literature searches" or of "seeing
references to [articles] in published abstracts" or "tables of
contents," (ii) copies that a scientist may "circulate" to other
researchers, or (iii) copies that are received from other libra-
ries. (See Pl. Br. 13, 14, 21). Once again, if plaintiffs, who
unilaterally selected the eight articles, wanted to prosecute a
case involving copies made as a result of these activities, they
should have done so, instead of choosing the eight articles, none
of which was copied in this manner.
E. The Statutory Fair Use Factors
1. Purpose and Character of the Use
Plaintiffs repeatedly and emphatically urge that Texaco
deserves no fair use credit for the scientific research purpose
of Dr. Chickering's use because he "engage[d] in unauthorized
copying for [Texaco's] own commercial interests, and [Texaco]
stands to profit from such copying without paying the customary
price." (Pl. Br. 46). But when the focus is placed, as it prop-
erly should be, on the purpose and character of the use, rather
than on that of the user, it is plain that Dr. Chickering's
copying deserves fair use credit under the first factor because
it was for a scientific research purpose and did not involve
commercial exploitation of the copies.
a. That Texaco Is a For-Profit User Does Not Deprive
It of Fair Use Credit for the Scientific Research
Purpose of Dr. Chickering's Use
Reduced to its essentials, plaintiffs' argument is that
because Texaco does not engage in scientific research for eleemo-
synary purposes, it deserves no credit for the research purpose
of the challenged copying. Notwithstanding this Court's express
statement that it does not "read Section 107(1) as requiring us
to make a clear-cut choice between two polar characterizations,
'commercial' and 'non-profit,'" Maxtone-Graham v. Burtchaell, 803
F.2d 1253, 1262 (2d Cir. 1986), cert. denied, 481 U.S. 1059
(1987), plaintiffs urge the Court to do just that. They contend
that Texaco should lose all credit for the scientific research
purpose and benefit of the making of single copies of the eight
articles at issue because Texaco is a for-profit company. That
approach has been squarely and soundly rejected by this Circuit.
If plaintiffs' simplistic view were the law, "fair use would be
virtually obliterated, for '[a]ll publications presumably are
operated for profit . . . .'" Maxtone, 803 F.2d at 1262
(citation omitted).
In Maxtone, Judge Kaufman "address[ed] the Supreme
Court's recent pronouncements [in Sony and Harper & Row] to show
why appellant's suggestion that any income-producing use is
unfair virtually by definition falls wide of the mark." 803 F.2d
at 1262. After quoting the High Court's statement in Sony that
"every commercial use of copyrighted material is presumptively
. . . unfair," this Court stated: "Appellant makes much of the
last sentence, but we do not read it as altering the traditional
multi-factor fair use inquiry." Id. Judge Kaufman went on to
note that Sony itself "relied on a House report which states that
the statutory language requiring consideration of 'whether such
use is of a commercial nature or is for nonprofit educational
purposes'" was
not intended to be interpreted as any sort of
not-for-profit limitation on educational uses
of copyrighted works. It is an express
recognition that, as under the present law,
the commercial or non-profit character of an
activity, while not conclusive with respect
to fair use, can and should be weighed along
with other factors in fair use decisions.
Id. at 1262 (quoting 464 U.S. at 449 n.32 (quoting House Report
at 66, 5 U.S. Code Cong. & Ad. News 5679 (1976)) (emphasis
added).
According to this Court in Maxtone, "[t]his understand-
ing was reflected [by the Supreme Court] in Harper & Row," where
the Court noted that "'[t]he fact that a publication was commer-
cial as opposed to non-profit is a separate factor that tends to
weigh against a finding of fair use.'" 803 F.2d at 1262 (quoting
Harper & Row, 471 U.S. at 562; emphasis in original). This Court
found that "[o]nly an unduly narrow reading of the language in
Sony Corp. and an inattention to the context could lead to the
conclusion that the Court intended to attach heightened signifi-
cance to the element of commerciality . . . . The commercial
nature of a use is a matter of degree, not an absolute." Id. at
1262 (emphasis added).
Indeed, if the test for fair use were, as plaintiffs
would have it, whether "[defendant] engages in unauthorized
copying for its own commercial interests, and stands to profit
from such copying" (Pl. Br. 46), then Maxtone, New Era (904 F.2d
at 152), Consumers Union (724 F.2d at 1049), Elsmere (623 F.2d at
253), Rosemont (366 F.2d at 307), Berlin (329 F.2d at 543-44),
and a host of other cases holding uses by for-profit entities to
be fair, were all wrongly decided. The simple fact is that the
overwhelming majority of cases decided by this Court in which the
use was held to be fair have involved for-profit users.
When, as the statute requires, the focus is placed on
the "purpose and character of the use," not on that of the user,
it is plain that the scientific research purpose and character of
Dr. Chickering's use far outweighed its commercial aspects. It
is indisputable that Dr. Chickering did not make copies of the
articles to sell or distribute them; nor can it seriously be
contended that his copies bore any direct, or even indirect,
relationship to the commercial exploitation of any product,
process or service by Texaco. Indeed, it is undisputed that, as
is often the case given the hit or miss nature of scientific
research, Dr. Chickering's research yielded no commercially
exploitable product or services for Texaco, but rather produced
knowledge, which Texaco shared with the scientific community. In
short, Dr. Chickering's use of the single copies of eight
articles for scientific research was far less commercial and
exploitative than the typical fair use pattern in which the
copying creates the very product being sold and is directly
exploited commercially -- such as a biographer's use of his sub-
ject's published letters in a biography (New Era, Rosemont) or a
parodist's use of the parodied work in a song (Elsmere, Berlin).
While some of the eight copies assisted Dr. Chickering in his
research (which had the potential to contribute to the develop-
ment of a product or process which might in turn ultimately earn
Texaco a profit), Texaco plainly did not commercially exploit the
copies in any direct fashion.
Plaintiffs' suggestion that the very same copying that
Dr. Chickering did at Texaco would be lawful had he been at a
non-profit institution (Pl. Br. 48 n.27) makes no sense. As
noted in our opening brief (Tex. Br. 6), there is a great deal of
overlap between research done by scientists who work at for-pro-
fit entities and that done at universities and other non-profit
institutions. Scientists from private companies and from academ-
ia share their research results and often work together on
research sponsored by for-profit companies. Moreover, many
scientists conduct similar research while working at for-profit
companies and universities. It is also the case that universi-
ties often profit from such research by patenting products or
processes. Indeed, The Wall Street Journal recently reported
that "Japanese and German car companies are eagerly testing
technology" developed by Dr. Schwarz (the author of one of the
eight articles) at Syracuse University pursuant to a U.S.
government grant. (Wall St. J., February 17, 1993, at B3).
Articles that appear in Catalysis are written by scientists at
for-profit institutions as well as those in academia, many of
whom, like Dr. Schwarz, doubtless used unauthorized photocopies
in writing their articles -- which Academic Press sells for a
profit. The issue of fair use cannot turn on the for-profit
status of the employer since the photocopies in neither case bear
any direct relationship to a commercial activity.
The very cases on which plaintiffs rely (Pl. Br. 49 &
n.28), far from supporting the contention that Dr. Chickering's
making of a single copy of eight articles was "a commercial use,"
underscore that it was not. In each case where copying by a for-
profit user was held unfair, the use in question competed
directly with plaintiffs or otherwise unfairly deprived them of a
sale of their copyrighted works. As for plaintiffs' contention
that an internal use can be commercial (Pl. Br. 51-52), the only
case they cite that involved actual internal use was decided in
the copier's favor; each of the others involved copying for
more than internal use.
Apparently recognizing that their hyperbole with
respect to Texaco's for-profit status would eviscerate the fair
use doctrine for all but charities, plaintiffs are forced to
acknowledge that "a commercial use for a profit-motivated purpose
is not, ipso facto, disqualified from fair use protection." (Pl.
Br. 46). But despite this brief concession to reality, they
resolutely refuse to analyze the scientific purpose and character
of Dr. Chickering's use, arguing instead in wholly conclusory
terms that it was commercial. But no matter how many times
plaintiffs mischaracterize the copying at issue as "a commercial
use for a profit-motivated purpose" (Pl. Br. 45-46), they cannot
avoid the undisputed fact that the eight single copies were made
for internal scientific research purposes and bore an extremely
remote relationship to any commercial exploitation by Texaco.
As for plaintiff's contention that the copying itself
provides economic benefits to Texaco, that is not the test of
fair use. (See pp. , supra). Nor does it advance the ball to
assert that Texaco did not pay the "customary" price (Pl. Br.
46), for that is the issue to be decided on this appeal. In all
events, when Dr. Chickering made the single copies, the CCC
believed it was receiving royalties for less than 5% of such
copying in the nation; and with the majority of companies
indisputably still not reporting copies, there is no such thing
as a "customary" price. (A. 336, 340, 2031).
In sum, since Dr. Chickering's use was at most indi-
rectly commercial, under Maxtone the Sony presumption is not
entitled to any weight, and the proper focus should be on the
research purpose and character of Dr. Chickering's copying.
b. Non-Superseding Use
Plaintiffs erect a straw man by asserting that "Texaco
stretches fair use doctrine out of shape in contending that it is
entitled to engage in the unauthorized in-house photocopying of
entire copyrighted journal articles simply because such copying
is done for the salutary purpose of conducting scientific
research," an argument that, according to plaintiffs, means that
"precious little copyright protection would remain for any
scientific and educational material." (Pl. Br. 47). That, of
course, is not Texaco's position.
Texaco recognizes that a scientific research purpose,
standing alone, should not automatically resolve the first fair
use factor in favor of the user any more than an ultimate for-
profit purpose, standing alone, should automatically resolve it
against a for-profit user. Rather, it is Texaco's position that
Dr. Chickering's scientific purpose in making a single copy of
eight articles outweighs any ultimate profit motive on Texaco's
part because the copies were not sold or distributed in
competition with the originals and did not supersede their use.
While plaintiffs attempt to make much of the fact that
the copies were non-transformative (Pl. Br. 54-56), they ignore
the square holding of Sony that uses need not be transformative
to be fair. (See Tex. Br. 22-23). As we also pointed out (Tex.
Br. 16), if Congress had intended to outlaw non-transformative
uses, it is curious indeed that it expressly included in 107's
definition of fair use a reference to "reproduction in copies"
for, inter alia, "research." To be sure, the non-transformative
test may be helpful in determining whether a work sold in
competition with the copyrighted work is unfairly competing with
it and depriving it of sales. But where the copy is not sold or
distributed in competition with the original, but (as here) is
merely used by the copier for study, notation and bringing into a
laboratory, the non-transformative use does not indicate that the
original use has been superseded.
Here, the copies were not sold in competition with the
original and fulfilled a different function. As Judge Leval
acknowledged (A. 112), Dr. Chickering wanted a copy, not the
original, to take to the laboratory, to mark up, to place in his
files or to time shift use. While plaintiffs argue that origi-
nals can serve the same purpose as the photocopy, they cite no
evidence to support this assertion. (Pl. Br. 21). That is not
surprising, for their own witness, Dr. Elliott, admitted that in
the days before the advent of the modern photocopy machine,
scientists did not use originals in the way copies are used today
(A. 780, 794), and Judge Leval made no finding that copies serve
the same purpose as originals. Indeed, if that were the case,
the publishers doubtless would seek to enjoin photocopying
altogether on the theory that scientists would increase their
subscriptions and use originals in the same way as they use
photocopies.
Plaintiffs do not even seek to defend Judge Leval's
conclusion that, although there is "some merit" to Texaco's
contention that the copies serve a different function than the
original, that contention would be convincing only if the copying
had been done to transfer text on to a different material, such
as microfilm to preserve space. (A. 101-02). While plaintiffs
cite with approval Judge Leval's statement that "the three
subscriptions to Catalysis are serving the needs of hundreds of
scientists" and thus "the principal feature of the photocopying
is its capacity to give numerous scientists their own copy based
on Texaco's purchase of an original," they once again cite no
evidence to support this statement or the district court's
related -- and equally unsupported -- conclusion that Texaco's
"transformative use" is "overshadowed by the primary aspect for
the copying, which is to multiply copies." (Pl. Br. 20, 40; see
Tex. Br. 24-25). No such evidence exists.
As pointed out in our opening brief, the only record
evidence is that Dr. Chickering copied to further his scientific
research, not to multiply copies, and there is no evidence that
hundreds of Texaco scientists were using one copy of Catalysis
and making copies from it in order to avoid ordering more
subscriptions. To the contrary, plaintiffs stipulated that they
had made no attempt to quantify the amount of photocopying at
Texaco and made no effort to do so with respect to Catalysis.
(See pp. __, supra). It is further undisputed that Texaco
increased its subscriptions from one to three during the time in
question, and the publisher of Catalysis could point to no other
company that had as many subscriptions as Texaco.
c. Reasonable and Customary Practice
Although the district judge, citing Harper & Row (471
U.S. at 550), acknowledged that "Texaco's strongest arguments may
be that photocopying has become 'reasonable and customary'" (A.
129) (emphasis added), plaintiffs contend that "none of the
courts in the American cases cited by Texaco . . . actually
considered evidence of alleged industry custom in determining
whether the use was a fair use." (Pl. Br. 57). Plaintiffs are
simply wrong.
Not only was Justice O'Connor's opinion in Harper & Row
heavily influenced by the fact that it customarily had not been
an accepted practice to quote or copy from unpublished works (471
U.S. at 550-51), but in Rosemont this Court explicitly consid-
ered, in determining that the use in question was fair, the fact
that "it is both reasonable and customary for biographers to
refer to and utilize earlier works dealing with the subject of
the work and occasionally to quote directly from such works."
366 F.2d at 307 (emphasis added). This Court went on to note
that "[t]his practice is permitted because of the public benefit
in encouraging the development of historical and biographical
works and their public distribution." Id. at 307 (emphasis
added). Similarly, in Williams & Wilkins the Court of Claims was
influenced, in determining that the photocopying at issue was
fair use, by the fact that the making of single copies of
articles by scientists and others was a long-standing and
customary one. 487 F.2d at 1353, 1355-56. See also, e.g.,
Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc.,
626 F.2d 1171, 1176 (5th Cir. 1980); Tex. Br. 26 n.11. Given
these Supreme Court and Circuit decisions, plaintiffs' reliance
(Pl. Br. 57) on some district court opinions rejecting reliance
on industry custom is hardly persuasive, particularly in light of
the courts' expressed skepticism in some of the cited cases that
the custom, in fact, existed.
Equally mistaken is plaintiffs' assertion (Pl. Br. 56)
that Judge Leval found there is "no such reasonable and customary
practice." The district court found that there was such a prac-
tice and that it provided Texaco with its strongest argument, but
discounted its significance in light of the existence today of
the CCC. (A. 129-30). But what is reasonable and customary does
not become unreasonable simply because some publishers wish to
change it and are seeking to use this test case to effectuate
such a change.
d. Plaintiffs' Remaining Arguments
(1) While Judge Leval rejected Texaco's 108 argu-
ments on the ground that Dr. Chickering's copying was for direct
or indirect commercial advantage and Texaco had made more than
one copy (A. 136-37), plaintiffs make no attempt to defend his
reasoning in this regard. (See Tex. Br. 18-19). Rather, they
acknowledge that some copying by libraries in for-profit institu-
tions would be lawful under 108 because the statute is con-
cerned with the immediate commercial motivation behind the
reproduction or distribution itself, and not the ultimate profit-
making motivation of the company in which the library is located.
Nonetheless, plaintiffs contend that 108 -- which was enacted
simultaneously with 107 -- has no bearing on the issue here
because the copying was "systematic." As explained above, that
is demonstrably not the case. (See pp. ___, supra).
(2) Plaintiffs assert that Dr. Chickering's purpose in
copying to replicate accurately the complex equations, charts,
graphics and the like in the articles, is not entitled to fair
use credit under Consumers Union because that decision is "not
good law." (Pl. Br. 55). But even Judge Leval agreed that
Consumers Union is still a viable precedent. (A. 102-03).
Plaintiffs rely merely on the opinion of four judges supporting
denial of rehearing en banc in New Era, 884 F.2d at 661, ignoring
the fact that four other judges, in a separate opinion,
reaffirmed the validity of Consumers Union on this precise point
(id. at 663).
(3) Plaintiffs do not explain why the copying for an
entertainment purpose in Sony, resulting in an untold number of
unlicensed copies of entire copyrighted shows for which the
producers would be willing to collect licensing fees, is more
deserving of fair use than the single copy of eight articles for
scientific research purposes here, particularly when there has
been no adverse effect on sale of the original work. (See Tex.
Br. 35-36, 41).
(4) As for Williams & Wilkins, plaintiffs' argument
boils down to the assertion that the copies there were made by
non-profit governmental entities. (Pl. Br. 53). But the
point (which Texaco did assert below in its trial brief) is that
Texaco no more sought to gain commercially from the reproduction
of copies than did the scientists and doctors who received copies
in Williams & Wilkins, many of whom worked for drug companies or,
as practicing doctors, made a handsome living. The focus of the
Court of Claims' opinion was, as it should have been, on the
purpose and character of the use, and not on the purpose and
character of the user.
2. Nature of the Work
Plaintiffs cannot dispute that "the scope of fair use
is greater with respect to factual than non-factual works" (New
Era, 904 F.2d at 157) and that the eight articles are factual.
(See Tex. Br. 28). Instead, in criticizing Judge Leval's award
of this factor to Texaco, plaintiffs argue that Academic Press'
investment of time in the publication of Catalysis and the
alleged risk that it undertook in publishing the journal weighs
in their favor. (Pl. Br. 57-58). Not only is there no probative
evidence to support this contention (see Tex. Br. 3-4), but the
Supreme Court has authoritatively rejected it in holding that a
"'sweat of the brow' doctrine flouted basic copyright princi-
ples." Feist Publications, Inc. v. Rural Tel. Serv. Co., 111 S.
Ct. 1282, 1291-92 (1991). As for the "new theories, new
hypotheses, and new solutions to difficult problems" that plain-
tiffs identify as the "highly original, creative and imaginative"
element of scientific and technical articles (Pl. Br. 58), they
are not subject to copyright protection, any more than are the
mathematical formulas, theorems and calculations contained in
such articles. (See, e.g., 17 U.S.C. 102 (a)-(b)).
3. Amount and Substantiality of the Portion Used
Plaintiffs do not discuss -- let alone distinguish --
the decisions (including Folsom) that, by analogy, demonstrate
why the eight articles should be viewed as portions of the issue,
journal or the subscription volumes in which they appear. (See
Tex. Br. 29 n.14). Nor do plaintiffs dispute the minuscule
portion that the articles comprise of these larger universes,
that Academic Press does not offer the articles for sale
separately from the journal subscriptions, or that it registers
only the "collective copyrights" it owns in the journal issues in
which the articles were published.
In all events, even if the articles are viewed as
separate works, the record demonstrates, just as in Sony and
Williams & Wilkins, that the use of the entire works was fair.
For where, as here, an article is not being sold or distributed
in competition with the original and does not substitute for it,
copying the entire article no more displaces the originals than
copying a page or two from it.
4. Effect of the Use
a. The Sony Presumption Dicta. In Sony, the Supreme
Court stated that "[i]f the intended use is for commercial gain
[the] likelihood [of injury to the market for the copyrighted
work] may be presumed." 464 U.S. at 451. In Harper & Row,
however, where the Court held that the defendant had the
"intended purpose of supplanting the copyright holder's
commercially valuable right of first publication," the Court did
not rely on any Sony "presumption." 471 U.S. at 562, 566-69
(emphasis in original). "Instead," as explained in Maxtone, the
Court in Harper & Row "focused its inquiry on actual damages and
assessed the likelihood of future harm." 803 F.2d at 1264
(emphasis in original). Maxtone went on to hold that this Court
did not have to decide whether, given the obvious tension between
the language in Sony and the analysis of Harper & Row, the Sony
dicta created an evidentiary presumption of injury, "for whether
we presume harm, or search for proof of it, it is abundantly
clear that [defendant's work] poses no more than an insignificant
threat of economic damage" to the plaintiff. Id. In asking this
Court to do what it refused to do in Maxtone, plaintiffs ignore
the Maxtone analysis. What is more, they fail to cite any case
in which a court relied on the Sony dicta to hold that, because a
defendant's use was "commercial," it would, without any proof of
actual injury or competition with the plaintiff, be presumed that
the plaintiff was injured. (See Pl. Br. 63). The fact remains
that, on this record, there is no evidence that by making a
single copy of eight articles Dr. Chickering "'materially
impair[ed] the marketability of the work which is copied.'"
Harper & Row, 471 U.S. at 567 (emphasis added). Put another way,
any Sony presumption has, on this record, been effectively
rebutted.
b. The Irrelevance of Any Harm to Other Works or
Publishers. A basic premise of plaintiffs' argument is that
Academic Press can aggregate the injury to all publishers from
the photocopying of all scientific and technical articles to
support its injury claim with respect to the eight articles at
issue. (See, e.g., Pl. Br. 63-64, 68, 72). But, as the fourth
statutory factor expressly provides, what is at issue is the
"effect of the use upon the potential market for or value of the
copyrighted work." Whether the works of publishers other than
Academic Press are being injured by photocopying is no more
relevant in this case than would alleged harm to other authors'
letters be relevant to J.D. Salinger's infringement claim based
on Random House's publication of his letters. (See Tex. Br. 36).
Similarly, whether the value of works of Academic Press
other than the eight articles is affected is irrelevant since it
is the injury or potential injury to the "copyrighted work" in
suit -- not injury to the copyright owner -- that is the sole
concern of 107(4). Not surprisingly, given the total absence
of authority for plaintiffs' claim as to alleged injury to other
publishers or other works, they do not even attempt to support
it. As for this Court's unequivocal rejection in Consumers Union
of the argument that the injury caused by the use of a magazine
article could be measured by alleged loss to "possible future
issues of Consumer Reports (724 F.2d at 1051; emphasis added),
plaintiffs simply assert, in classic ipse dixit, that this
Court's decision and another decision Texaco cited "do not
support [Texaco's] contention." (Pl. Br. 68). Why this is so
plaintiffs do not -- and cannot -- say.
c. The Alleged Loss of Subscriptions. As demon-
strated in our main brief (Tex. Br. 35-36), if, as plaintiffs
argue, the "work" at issue is the article not the journal volumes
contained in a yearly subscription, it follows that any alleged
injury should be based on injury to the article, not to the
larger work in which it appears. Plaintiffs make no effort to
reply to this point.
But even if the Court addresses plaintiffs' claim as to
a potential loss of subscriptions, it is apparent that Judge
Leval's speculation that, if photocopying were barred, "it seems
likely that Texaco would add at least a modest number of sub-
scriptions to Catalysis" (A. 114) is based on an "unrealistic"
"hypothesis" that is belied by the record. Williams & Wilkins,
487 F.2d at 1357, 1358. Indeed, it is indicative of the
dearth of supporting evidence that one must deconstruct
plaintiffs' brief just to locate the record cites they contend
support their bald assertion that "[c]ertainly" photocopying
"supplants" the originals of the articles "and in that important
sense free photocopying competes with plaintiffs' efforts to sell
subscriptions." (Compare Pl. Br. 65, 52 with Tex. Br. 31-35 and
Pl. Br. 68 citing Pl. Br. 14-15).
(1) Plaintiffs state that journals are circulated at
Beacon and that some scientists, as did Dr. Chickering, make
copies of some of the articles "before passing . . . on" the
journal. (Pl. Br. 13). Of course, lawyers and others in the
business and academic world -- including the plaintiff publishers
here (Tex. Br. 9 & n.3; see, e.g., A. 877-81, 898-99) -- do
exactly the same thing. This is hardly evidence that
Dr. Chickering's copying either sped up circulation of Catalysis,
or thereby eliminated the need for subscriptions.
(2) Plaintiffs assert that "[r]apid circulation with a
minimum number of subscriptions is made possible by photocopy-
ing." (Pl. Br. 14). None of the evidence plaintiffs cite, how-
ever, relates to Catalysis, which is not surprising since it is
undisputed that the Beacon facility increased its subscriptions
from one to three. By comparison, most subscribers have only one
subscription, and plaintiffs could not identify even one sub-
scriber who had more subscriptions than Texaco. (See Tex. Br. 9-
10, 34). Nor does the evidence establish that Texaco used
photocopies to speed up circulation of other journals and thereby
reduce subscriptions. Plaintiffs compound their distortion of
the record by asserting that the Catalysis routing list "has
ranged from 15 to 38 researchers" (Pl. Br. 14), when, in fact,
two originals were circulated to the researchers on the list.
(A. 831-33, 848-49).
(3) Plaintiffs allege that "[e]ven with the use and
benefits of photocopying, Texaco increased its subscriptions to
Catalysis . . ., as Judge Leval found, 'in order to speed up the
circulation process.'" (Pl. Br. 15) (emphasis added). This
statement supports Texaco's position that it is subscriptions,
not photocopying, that speed circulation of journals. It still
remains undisputed on this appeal that "the record is devoid of
any evidence that Texaco took the amount of photocopying into
account in determining the number of subscriptions to order [to
Catalysis]." (Tex. Br. 34).
(4) The reason there is no evidence to support the
allegation that if photocopying were unlawful Texaco would
increase subscriptions is that it is not true. Simply put,
notwithstanding plaintiffs' suggestion to the contrary -- in a
paragraph which is most notable for its absence of citation to
the record (Pl. Br. 21) -- originals are not substitutes for
photocopies. (See pp. , supra; Tex Br. 7-8). As
Dr. Chickering testified -- testimony plaintiffs neither
challenge nor refer to -- regardless of the number of subscrip-
tions Beacon had to Catalysis, he still would have copied the
eight articles. (See Tex. Br. 32).
The proof of the pudding is that plaintiffs do not
attempt to explain why, if in fact photocopying were depriving
Academic Press of significant subscription revenues to Catalysis,
it is not seeking an injunction to stop it and earn almost $900
per subscription instead of attempting to collect three dollars
for a copy of an article. The reason plaintiffs desire only an
order of specific performance of the CCC transactional license
instead of an injunction (see A. 14) is that photocopies are not
substitutes for subscriptions and that they would not gain
additional subscriptions if copying were enjoined, but only would
"lose" the license fees they could obtain with a court order's
threat of contempt.
d. Document Delivery Services. Plaintiffs' sole
response to their own witness' testimony as to the delay in
receiving copies from document delivery services is their asser-
tion that the delay is not significant. (Compare Tex. Br. 36
with Pl. Br. 19). Yet the premise of plaintiffs' argument and
Judge Leval's decision is that promptness matters to scientists.
(Pl. Br. 14, quoting A. 114). There is no reason to believe that
a scientist who needs a copy to work with in the laboratory or to
take home at night is any more likely to tolerate the delay
required to wait for a copy from a document delivery service than
a lawyer or judge writing a brief or opinion would wait for
delivery of a copy of a case or law review article.
* * *
The dearth of evidence to support plaintiffs' claim of
injury is all the more significant given the "massive" "31-volume
trial record," and plaintiffs' access to the documents and
witnesses of the eighty-four plaintiff publishers and to the
"photocopying surveys" and "two expert econometricians" of the
CCC. (Pl. Br. 1, 9, 28). Indeed, throughout the time photocopy-
ing was increasing, neither Academic Press nor its parent in
their securities filings or day-to-day business ever expressed
any concern about photocopying, let alone asserted that the
practice was having any adverse business effect. (See TEX-227 to
TEX-244; A. 1187, 1219-24, 1227-28, 1237-39, 1247, 1318-18A). In
short, this is a classic example of the dog that didn't bark. As
this Court explained in an antitrust case in affirming summary
judgment rejecting the plaintiff's claim of injury:
The failure of a business' management to note
at the time what is later claimed by its
lawyers to have been a mortal commercial
wound weighs heavily against such a claim.
Argus, Inc. v. Eastman Kodak Co., 801 F.2d 38, 42 (2d Cir. 1986),
cert. denied, 479 U.S. 1088 (1987).
F. In All Events, the CCC Licenses Do Not Provide a Fair or
Efficient System for Collecting Photocopying Royalty
Payments
As noted, plaintiffs' reliance on the CCC's existence
is irrelevant to this case, and the district court's analysis
premised on the CCC is circular. In addition, Judge Leval's
factual predicate is not supported by the evidence. The plain
fact is that the CCC is not a fair and efficient mechanism for
collecting license payments.
Plaintiffs contend the CCC was established "in response
to a Congressional recommendation that an efficient mechanism be
established to license photocopying." (Pl. Br. 25). In fact, at
most a committee of Congress encouraged "those affected [to] join
together in an effort to establish a continuing understanding as
to what constitutes mutually acceptable [photocopying] practices,
and to work out means by which permissions for uses beyond fair
use can be obtained easily, quickly, and at reasonable fees."
(A. 1987). In holding the CCC not exempt from income taxation,
the Tax Court found "[w]e are not faced here with a truly joint
undertaking of all parties -- publishers, copyright owners,
users, and governmental agency -- concerned with proper enforce-
ment of the copyright laws, in which efforts are focused on
meeting the needs and objectives of all involved." Copyright
Clearance Center v. Commissioner, 79 T.C. 793, 805 (1982).
Rather, the CCC "was organized by a segment of [The American
Association of Publishers] and there is little persuasive
evidence that [the CCC's] founders had interests of any substance
beyond the creation of a device to protect their copyright
ownership and collect license fees." Id. "[T]he potential for a
substantial private profit was the driving force behind the
organization and operation of the [CCC]." Id. at 807 (emphasis
added).
Given the CCC's goal of advancing the financial
interests of publishers, the record demonstrates, not
surprisingly, that it is neither fair to users nor efficient.
1. The TRS. The CCC's own documents and the testimony of
its officials are the best evidence of whether the TRS is
reasonable and efficient, not the trial court's speculations (A.
132) which are unhinged from any record support.
According to the CCC, as of 1983, it was receiving
reports of no more than 5% of the photocopying occurring in
corporations; and the TRS "was not effectively meeting the needs
of substantial segments of both the user and copyright owner
communities" and even by 1985 had "not yielded significant
amounts of royalties." (A. 336, 340-41, 2031 (emphasis added),
2044; see also A. 2035-43). Mr. Alen testified that companies
"resisted universally the administrative superstructure and
corporate-wide operational burdens required by a 100%
transaction-based record keeping and reporting system." (A. 337,
2031). The administrative burdens were described by the CCC as
an "enormous undertaking" requiring "expenditure of manpower
[that] results in no economic gain for either the photocopy user
or the copyright owner." (A. 2060-61).
Moreover, it is undisputed that the TRS did not cover
anywhere near all scientific and technical publications used by
large research corporations. As of 1985-86, for example, the CCC
covered only 27.3% of titles copied at Exxon, 30.5% at Mobil, and
26.4% at Amoco. (A. 4329; see also A. 311-12, 2021, 3807).
Because the TRS provided 30% or less coverage for the type of
articles Texaco and others use, it utterly failed to eliminate
the burdensome transaction costs that Judge Leval himself
acknowledged are associated with negotiating individual licenses.
(A. 125-26; see also A. 2001). Not surprisingly, given these
undisputed facts, the CCC concluded that the TRS was not suited
to large corporations like Texaco. (A. 2054-55, 2061, 3848).
By its inherent design, the TRS also required users to
pay for all copies of articles even though, as the publishers
admit (Pl. Br. 26), they often do not own the copyright in every
piece appearing in a given journal. (See also A. 1032-33, 1437-
41). The CCC, however, registers journals, not articles, and
it has no information identifying those articles in which
publishers claim copyright and those in which they do not. (A.
313-17, 330, 333-34). Thus, the CCC cannot inform users as to
which articles should be reported to the CCC, but rather refers
its customers to the masthead statements in the CCC-registered
publication. (A. 322-24; see, e.g., A. 3702, 3869, 3887).
However, the masthead statements of scientific and technical
journals typically fail to advise users that the publishers do
not claim rights in all articles in the publication. In fact,
they often state the opposite. Thus, for example, the masthead
statement in Catalysis warns that "[n]o part of this publication
may be reproduced . . . by any means, . . . including
photocopying." (A. 1053, 1549). Similarly, other CCC-registered
journals claim that "[a]ll articles published in this journal are
protected by copyright." (A. 3871; see A. 1433-36 (emphasis
added)).
While plaintiffs contend that users can decide for
themselves whether articles need to be reported, and emphasize
that the affiliation of the author is listed in the article (Pl.
Br. 26, 27 n.11), that information hardly provides a basis for
deciding whether a report is necessary. Many articles, for
example, are written by government employees or pursuant to
government grant, which are unlikely to be covered by copyright,
yet the publishers take the position that they own a valid
copyright in such articles and should be paid. (A. 1437-41; see,
e.g., A. 3872, 3880, 3888, 3924, 3939, 3969). Indeed, three of
the articles copied by Dr. Chickering were written pursuant to
NSF grants that gave the recipient organization -- not the author
who signed the transfer to Academic Press -- the right to
copyright them. (A. 505, 510, 518, TEX-29). It would be
difficult for a user to attempt to decide on the basis of
employer or government affiliation whether to pay, because the
issue of whether a particular article is subject to copyright is
a complex one. (A. 1437-41, 330-32; see, e.g., A. 3872, 3880,
3888, 3924, 3939, 3969).
Significantly, the production director of plaintiff
Springer-Verlag, Mr. Van Dyck, could not say, when shown specific
articles written by government employees and others, whether a
CCC fee need be paid. (A. 1437-41). In an apparent attempt to
excuse Mr. Van Dyck's failure in this regard, plaintiffs elicited
testimony that the witness was not an attorney and had never
taken any courses in copyright law! (A. 1442). That, of course,
is precisely the point. It is lay people who have to decide
whether to report under the TRS, and the masthead statements in
the journals create the false impression that all copies must be
paid for. Moreover, while the General Counsel of plaintiff John
Wiley & Sons, Inc. testified that his company does not claim
copyright in "a U.S. Government work," he acknowledged that John
Wiley nevertheless places a CCC code on such works even though it
does not expect users to pay for them. (A. 1028-29). How the
user is supposed to work his way through this maze, one is only
left to wonder.
2. The AAS. The AAS is no more a fair or efficient
licensing system than the TRS. When the AAS was first
established, the CCC covered only 25% to 30% of photocopying done
by large corporations. (See pp. ___, supra). As the CCC
acknowledged, "coverage of publications for any given user was
too low to justify their entering into agreements with the CCC,"
and the CCC's efforts to increase its rate of participation by
publishers were "disappointingly low." (A. 3728-73, 3850; see
also A. 353-54, 2019-21, 4304-05, 4325-29, 4337). Today, the CCC
no longer keeps track of coverage rates, but it acknowledges that
it does not provide 100% coverage. (A. 348-49, 350-51). Indeed,
the CCC has admitted that full coverage is not a realistic
possibility under the "current purely voluntary system" because
of, inter alia, the "lack of clarity regarding ownership of
reprographic rights" and because of the "unwillingness or indif-
ference of some publishers to provide access to their works under
a collective system." (A. 2021).
Thus, even under the AAS, users cannot escape the
administrative burdens associated with negotiating individual
licenses and making individual reports of copying to publishers
not registered with the CCC. Users must either copy without
permission a significant number of titles or negotiate individual
licenses with a large number of publishers not in the CCC --
assuming such publishers are willing to license a copy to be made
-- and institute a system to keep track of and report non-CCC
covered copying. Moreover, even if a user registers under the
AAS, it may still be necessary for it to take a TRS license as
well "to the extent that . . . photocopying [i]s not covered by
its AAS license." (See A. 1423B).
The AAS is fundamentally unfair since it requires users
to pay for copies of articles in which the publishers indisputa-
bly do not own rights. As plaintiffs acknowledge (Pl. Br. 28-
29), in calculating the annual license fee, the CCC counts every
article copied from a CCC-registered publication regardless of
whether the publisher has a copyright in it. (A. 295-96, 342-
43). While they claim that this is a "necessary tradeoff" (Pl.
Br. 30), they nowhere explain why their econometricians could not
survey to identify articles in the public domain and in which the
publishers do not own rights, so that the AAS accurately and
fairly reflects the amounts actually due the publishers. This is
not an insignificant issue, since the vast majority of articles
published in Catalysis between 1978 and 1988 were written in
circumstances raising work made for hire, government employee or
government grant issues of copyrightability and ownership. (A.
3696-97).
As if all of this were not enough, at the heart of
Judge Leval's decision is his belief that the CCC license is
"reasonably" priced. (A. 129). Whatever the merit of that view
today, one can rest assured that if this Court grants plaintiffs
the right to condition photocopying upon prices they set without
the benefits of a competitive marketplace or government regula-
tion, prices inevitably will rise and the courts likely will
become enmeshed in future fair use litigations over the "reasona-
bleness" of plaintiffs' mandated prices -- an inquiry for which
the judiciary is particularly ill-equipped. (See Tex. Br. 42).
Respectfully, such decisions and the evaluation of
whether particular licensing regimes and mechanisms should
convert heretofore "fair" use into "unfair" use are, in the first
instance, legislative, not judicial. (See Tex. Br. 41-43).
CONCLUSION
The parties agree, as did the court below, that the
making of single copies of articles by scientists for use in
their research is a widespread and extensive practice that plays
an important role in the advancement of scientific knowledge.
For almost three decades, since the advent of the modern photo-
copy machine, scientists have made single copies to facilitate
their research and writing, from which everyone benefits. During
this same time, Academic Press and other publishers have flour-
ished, with the number of journals and articles steadily
increasing. Plainly, the status quo provides ample incentives
for the creation of scientific articles, and the practice of
making single copies, if not enjoined, will not diminish sales of
originals. This reasonable and customary practice provides a
proper balance between publishers' rights to exploit their
copyrights and users' rights to utilize them fairly. It should
not be altered simply because the publishers have banded together
and, through the mechanism of this test case, seek to be paid for
a practice that causes them no real world injury.
For all of the foregoing reasons, the Order below
should be reversed and remanded with directions that the District
Court determine plaintiffs' proofs of claim in Texaco's favor.
Dated: May 10, 1993
New York, New York
Respectfully submitted,
KAYE, SCHOLER, FIERMAN,
HAYS & HANDLER
425 Park Avenue
Of Counsel: New York, New York 10022
(212) 836-8000
Milton J. Schubin
Thomas A. Smart JOSEPH P. FOLEY
Michael Malina Texaco Inc.
Richard A. De Sevo 2000 Westchester Avenue
Karin Segall White Plains, New York 10650
(914) 253-4000
Attorneys for Appellant
Texaco Inc.
FOOTNOTES
1. See Harper & Row Publishers, Inc. v. Nation Enters., 471
U.S. 539, 566-67 (1985) (defendant, in competition with
plaintiff, sold excerpts of plaintiff's work); Stewart v.
Abend, 495 U.S. 207, 238 (1990) (sale of film derived from
plaintiff's short story); Financial Information, Inc. v.
Moody's Investor Serv., Inc., 751 F.2d 501 (2d Cir. 1984)
(defendant copied and sold part of plaintiff's work), cert.
denied, 484 U.S. 820 (1987); DC Comics Inc. v. Reel Fantasy,
Inc., 696 F.2d 24, 28 (2d Cir. 1982) (use of copyrighted
figures in advertising flyer); Meeropol v. Nizer, 560 F.2d
1061, 1070 (2d Cir. 1977) (defendant copied plaintiff's
unpublished letters and used them in book it sold), cert.
denied, 434 U.S. 1013 (1978); United Tel. Co. v. Johnson
Publishing Co., 855 F.2d 604 (8th Cir. 1988) (defendant
copied plaintiff's work to update own competing work); Hi-
Tech Video Prod., Inc. v. Capital Cities/ABC Inc., 804 F.
Supp. 950, 955 (W.D. Mich. 1992) (ABC copied and broadcast
plaintiff's work from which it "stood to profit"); Basic
Books, Inc. v. Kinko's Graphics Corp., 758 F. Supp. 1522,
1532 (S.D.N.Y. 1991) (sale of photocopies of excerpts from
plaintiffs' works); Richard Anderson Photography v. Brown,
1990 U.S. Dist. LEXIS 19846 at 5 (W.D. Va. 1990) (use of
plaintiff's copyrighted work in brochure soliciting money);
Telerate Sys., Inc. v. Caro, 689 F. Supp. 221, 229-30
(S.D.N.Y. 1988) (defendant sold computer software in
competition with plaintiff that permitted user to copy and
use plaintiff's work); Craft v. Kobler, 667 F. Supp. 120,
129 (S.D.N.Y. 1987) (use of plaintiff's work in book to be
sold "in potential competition with plaintiff's work"); DC
Comics, Inc. v. Unlimited Monkey Business, Inc., 598 F.
Supp. 110 (N.D. Ga. 1984) (defendant performed, for profit,
singing telegrams of plaintiff's copyrighted cartoon
figures). Equally distinguishable are the examples
plaintiffs provide on the preceding page of their brief (Pl.
Br. 66), which involve defendants who "sold," "publish[ed],"
"serialize[d]," "rented," "perform[ed]" or "print[ed]" an
infringing work.
2. Moreover, while plaintiffs quote from internal 1983 Texaco
memoranda in which an attempt was made to estimate the cost
of eliminating the circulation of journals and requiring
Beacon scientists to go to the library every time they
wanted to read an article (Pl. Br. 18), those memoranda do
not constitute an attempt to quantify any cost savings
resulting from the making of single photocopies of the type
done by Dr. Chickering.
3. With respect to the proper placement of the burden of proof,
plaintiffs fail to cite any case that analyzes the issue.
(Compare Pl. Br. 38 with Tex. Br. 15 n.7). The cited two
cases that refer to fair use as an affirmative defense
reflect nothing more than a defendant's proper concern to
insure that plaintiffs are not surprised. See C. Wright &
A. Miller, 5 Federal Prac. & Proc. 1271, at 315-16 (1990).
4. Notice of Motion of Appellees for Permission to File Brief
Exceeding 50 Pages, at p. 2.
5. Plaintiffs' stress in this Court on Texaco's for-profit
status is in marked contrast to their counsel's out-of-court
pronouncement construing the district court's subsequently
added footnote to its decision (A. 140-41) to mean "that
'research' (and, by implication, 'teaching') activities
(even if not for profit, but market-impairing) are not
entitled to special claims to free use of copyrighted
material'" and asserting that the ruling has "much broader
application." (Exhibit J p. 1 to Notice of Motion of
Association of Research Libraries, et al. for Leave to File
an Amicus Curiae Brief in Support of Appellant Texaco Inc.
(emphasis added)). (See also A. 182-83). It is thus not
surprising that plaintiffs fail to contest the extensive
showing in the three briefs of the eighteen amici curiae of
the grave consequences to research generally, and to
universities and research libraries in particular, that
affirmance by this Court would cause.
6. Thus, plaintiffs' citation (Pl. Br. 47-48) to the views of
their former counsel in this case, William Patry, and the
former Register of Copyright, for the proposition that for-
profit research deserves no credit under the first use
factor, is contrary to the law of this Circuit.
7. For example, in Harper & Row, the defendant's infringing use
destroyed the market for the first-serial publication rights
of President Ford's memoirs, and in Basic Books (758 F.
Supp. at 1532), the court found that defendant had copied
plaintiffs' copyrighted works and sold them in direct compe-
tition with the plaintiff publishers.
8. Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1522-23
(9th Cir. 1992), far from deciding that copying for internal
use was a commercial use not deserving of fair use credit
(see Pl. Br. 52), held that, because the copy was not sold
or distributed but merely used indirectly or derivatively to
develop a non-infringing competing copy, and because the
public would benefit from such use, "the presumption of
unfairness has been overcome and the first statutory factor
weighs in favor of Accolade."
9. For example, in Allen-Myland, Inc. v. IBM Corp., 746 F.
Supp. 520, 529, 530, 534-35 (E.D. Pa. 1990), the defendant
had not merely copied IBM's microcode for internal purposes,
but also to reconfigure IBM systems in direct competition
with IBM; and IBM presented evidence that it had lost sales
to the defendant as a result.
10. Indeed, for-profit publishers themselves do not pay any
"customary" price. The vast majority of plaintiffs are not
registered as users with the CCC, and of the twelve non-
plaintiff parents or affiliated companies plaintiffs
identified in their brief (Pl. Br. i), only two are
registered. (See A. 2326, TEX-190). Moreover, that only
19% of Fortune 500 companies are CCC licensees is not
explained by plaintiffs' supposition that the unsigned "do
not engage in significant scientific and technical
research." (Pl. Br. 7 n.2). The unregistered as late as
1989 included such research-oriented companies as General
Dynamics, Lockheed, Textron, B.F. Goodrich, General Signal
and Becton-Dickenson. (Compare A. 2326 with TEX-39).
11. While plaintiffs cite a number of cases that have relied on
the copy's failure to transform the original in rejecting a
claim of fair use (Pl. Br. 55), in each case the unfairness
lay in the fact that the non-transformative copy was sold in
competition with the original, or directly substituted for a
sale, and thus superseded its use.
12. Plaintiffs' argument is particularly inappropriate in light
of the fact that the Association of American Publishers
("AAP"), which has actively supported this suit against
Texaco, submitted an amicus curiae brief to this Court in
Wright in which it relied upon the "tradition[]" of writers
not negotiating payments for fair use. (Amicus Curiae Brief
of AAP, p. 10).
13. In fact, there is no evidence that Texaco ever copied the
same article twice.
14. This approach is inconsistent with plaintiffs' view that it
is the purpose and character of the ultimate user that
determines fair use. Would plaintiffs agree that
Dr. Chickering's copying would be a fair use if he had
received the copies from the government, which made them at
his request?
15. Unable to challenge the facts or the law, plaintiffs contend
that Academic Press' failure to register the individual
articles is excusable because it would be inconvenient and
too expensive for it to obey the law and pay the $10
registration fee (recently increased to $20). (Pl. Br. 61).
The law, however, is to the contrary. Section 411(a) is
unequivocal: "no action for infringement of the copyright
in any work shall be instituted until registration of the
copyright claim has been made." 17 U.S.C. 411(a)
(emphasis added). There is no exception for articles
published in collective works or compilations.
16. Labeling the potential loss of subscription revenue as an
inference (Pl. Br. 68 n.35) does not fill the evidentiary
void for, as one of the decisions that plaintiffs rely upon
states, an inference must be "reasonably derived from the
evidence." United States Lighterage & Towing Corp. v.
Petterson Lighterage & Towing Corp., 142 F.2d 197, 199 (2d
Cir. 1944) (emphasis added).
17. Plaintiffs' remaining record references are to other Texaco
researchers' statements with respect to journals other than
Catalysis, or to their so-called "expert's" belief as to
what researchers at other companies do. (Compare Pl. Br. 14
with A. 754-55). (In fact, there were no expert witnesses
at trial.) They also cite to the off-hand comments of two
researchers (other than Dr. Chickering and not with respect
to Catalysis) that they "may" or "might" copy an article to
move it along. (See Tex. Br. 34 n.16).
18. The record cites to which plaintiffs refer merely reflect
the number of subscriptions that Beacon had to Catalysis (A.
803); a document recommending increased subscriptions, which
makes no reference to photocopying (A. 1516-28); documents
that make no reference to photocopying, relate to journals
other than Catalysis, and relate to a year in which sub-
scriptions to Catalysis were unchanged (A. 2222-28); and
Dr. Chickering's testimony that circulation "sped . . . up"
when the Beacon library instituted a computerized chart for
routing journals (A. 569-70), none of which has anything to
do with photocopying.
19. As for the other evidence cited in Texaco's brief (Tex.
Br. 36), plaintiffs, once again, do not contest it --
including the fact that there is no evidence that any
photocopy of any of the eight articles was ever provided to
any person by any such service and that Academic Press has
never earned any significant revenues from such services.
20. Significantly, the district court relied on law review
articles about the CCC, including one by Joseph Alen, the
CCC's Vice President, but ignored Mr. Alen's testimony and
the CCC's documents, which belie Judge Leval's conclusions.
(A. 84, 86 & n.6).
21. The district court relied on the practice of law firms in
routinely keeping a log of all photocopying done and billing
clients on a per page basis as evidence that the TRS is not
burdensome. (A. 132 n.23). But a law firm need only match
total number of copies to client for each reporting period.
Under the TRS, a user must (1) determine whether the article
is contained in a journal registered with the CCC, (2)
decide whether the publisher is claiming a right to be paid,
(3) if so, whether the publisher has such right (e.g., that
the article is not in the public domain), and (4) then must
record and report to the CCC the journal, the year of
publication, the fee, the number of pages copied and the
number of copies made. (A. 329). Given human nature, it is
unrealistic to believe that users will take the time to
record these detailed minutiae, and none of plaintiffs'
record citations supports their contention that users can
report with "relative ease." (Pl. Br. 27-28).
22. For example, it is black letter law that there is no copy-
right in a work written by a government employee as part of
his or her duties. 17 U.S.C. 105. (See also A. 1032-33).
Similarly, whether articles written pursuant to government
grants are subject to copyright, and who has a right to
claim the copyright, often requires a review of the terms of
the grant. Compare Schnapper v. Foley, 667 F.2d 102, 108-09
(D.C. Cir. 1981), cert. denied, 455 U.S. 948 (1982), with S
& H Computer Sys., Inc. v. SAS Inst., Inc., 568 F. Supp.
416, 418-19 (M.D. Tenn. 1983).
