On May 16, 1995 the Texaco Corporation announced a settlement of a long-standing copyright infringement suit brought in 1985 by six publishers against Texaco. Individual scientists had photocopied articles from scientific journals, to which Texaco subscribed, and had not paid royalties to the publishers for the copying. The suit was decided by a federal district court in 1992, holding that companies in the for-profit sector which make copies of copyrighted scientific and technical journal articles violate fair use under the Copyright Act of 1976. Unfortunately for researchers and libraries, the settlement means that the fair use issues raised by the case will not be resolved by the U.S. Supreme Court. A coalition of library and information associations filed a friend of the court brief in support of Texaco in its appeal to the U. S. Court of Appeals for the Second Circuit. On October 28, 1994 the Second Circuit handed down its decision in American Geophysical Union v. Texaco, 37 F.3d 882 (2d Cir. 1994), affirming the lower court's holding rejecting Texaco's claim of fair use but setting forth different reasons. On April 24, 1995 Texaco filed its petition before the U. S. Supreme Court, and the library and information associations planned to petition the court to allow them to file a friend of the court brief in support of Texaco. Before this could occur, Texaco entered into settlement discussions with the publishers and agreed to pay "slightly more than $1 million, plus a retroactive licensing fee to the Copyright Clearance Center. Texaco will also sign a five-year licensing agreement with the center." Texaco asked the courts to delay further action pending the approval of the group of 83 publishers, now a party to the suit. The court must approve the settlement. Without a ruling by the U.S. Supreme Court, users of copyrighted materials are left with the unfortunate reasoning of the Second Circuit on the first fair use factor, the purpose and character of the use. It is probable that the holding of the Texaco case will become a model for other circuits facing similar questions. The broad issue of whether making a single copy of scientific journal articles for personal use and archiving is considered fair use, was not before the Second Circuit. Instead, the issue before the court was whether the copies of the eight articles at issue under the specific facts of this case was fair use. In its fair-use analysis the court held that: (1) the for- profit motive of the company is still a relevant consideration in the analysis of the purpose of the use, although the court recognized that the focus should be on the use of the material and not on the user. The predominant "archival purpose" (the copied articles were placed in the scientist's files for use as needed and thus were non-transformative) tipped the scales against fair use. (2) On the second factor, the nature of the work, the court found for Texaco because the articles were primarily scientific. (3) In determining the third factor, the amount of the work copied, the court noted that the entire article was copied rather than focusing on an article as a portion of a volume of the journal and, thus, found against Texaco on this factor. (4) Finally, the court found that the publisher had not lost subscriptions but had lost the right to license the work for reproduction. Because of the existence of the Copyright Clearance Center (CCC), Texaco could have acquired a license; therefore, the market was affected. The dissent noted that the researcher's purpose of science is one of the enumerated categories listed in the preamble to Section 107 of the Copyright Act of 1976. The dissent concluded that the existence of the CCC is an irrelevant consideration in determining whether a given use is fair and is an unworkable method of obtaining and paying for authorization to copy. The CCC does not represent all publishers nor is it able to authorize copying for all publications of all publishers. The court left many issues unresolved, for example: (1) The court failed to differentiate between a direct commercial use and an indirect relation to a commercial activity. (2) The court failed to specify whether it saw any difference for researchers funded on grants from government agencies and those funded by grants from commercial companies. (3) The court failed to discern a difference between government research laboratories (nonprofit) which are encouraged to develop public/private partnerships and scientists in the for-profit sector. (4) The court failed to provide guidance on copying to the general public by state supported institutions when that copying might be used to enhance profit for an individual or a business. (5) The court failed to recognize a difference between copying in health sciences libraries or medical schools which serve a combination of doctors in the commercial sector and residents in the educational sector. The case does not apply to the following: - copying done in nonprofit educational institutions for educational purposes; - copying done by libraries and archives under section 108 of the Copyright Act of 1976. For-profit institutions directly affected should think about how they wish to handle licenses for copying that exceeds fair use. Permission to copy may be obtained directly from publishers, document delivery services whose fees include royalty payments may provide another avenue for paying royalties, or organizations may choose to join the CCC and other licensing agencies. prepared by Sarah K. Wiant, SLA June 1995