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).