Settlement of Texaco Case

     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


     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


     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


     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


     (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