MEMORANDUM
TO: Duane E. Webster
Executive Director
Association of Research Libraries
Paul Peters
Director
Coalition For Networked Information
FROM: Ritchie T. Thomas, Esq.
Susan Neuberger Weller, Esq.
Squire, Sanders & Dempsey
DATE: September 9, 1992
RE: American Geophysical Union v. Texaco, Inc.
85 Civ. 3446 (PNL) (S.D.N.Y. July 24, 1992)
[N.B.: The following electronic version omits two footnotes
which exist in the printed version.]
This memorandum briefly describes and assesses the recent decision
in American Geophysical Union v. Texaco, Inc., which, as described
by publishers' counsel in widely circulated reports, has caused
concern in the library community. In the Texaco case, the U.S.
District Court for the Southern District of New York found that
the fair use provisions of Section 107 of the Copyright Act did
not apply to Texaco's practice of making (or permitting the making
of) unauthorized copies of articles from scientific and technical
journals for scientists at its technical centers. Although the
decision has a number of troubling aspects, it is our general
conclusion that it should not change what should be standard
procedures at ARL and other non-profit libraries, for the
following reasons:
1. The case involved copying by a for-profit enterprise, and
several elements of the Court's decision relied heavily on that
fact.
2. The case was decided under a stipulation that limited the
Court's consideration to the fair use provisions of Section 107 of
the Copyright Act.
3. Although the Court also considered the application of the
library photocopying provisions of Section 108 of the Copyright
Act, its very brief discussion of those provisions so clearly
misapprehends the statute that it is of no persuasive force and
therefore of little concern.
The Texaco case was decided on a very specific set of facts that
do not have general application to all instances in which
materials are used for scholarship, research or teaching. The
court phrased the issue before it narrowly as involving "whether
it is lawful under the U.S. Copyright Act, 17 U.S.C. {J101, et
seq., for a profit-seeking company to make unauthorized copies of
copyrighted articles published in scientific and technical
journals for use by the company's scientists employed in
scientific research" (emphasis added). Contrary to Plaintiffs'
lawyers' representations, the Court did not hold generally that
"the making of single copies of articles (including "Notes" and
"Letters to the Editors") from the STM journals registered with
the CCC is not fair use." Its holding was much more narrow than
that.
In rendering its decision, the Court purported to apply the
specific facts of the Texaco case to the four fair use factors
delineated in Section 107. It found in favor of the plaintiff
publishers on three of the four and concluded that Texaco's
practices were outside the protection of Section 107.
Specifically, it held that the copying of individual articles
(including Notes and Letters to the Editor) from scientific and
technical journals by scientists employed by a profit-seeking
company, to be used in pursuit of their company-sponsored research
responsibilities, was not a fair use. The Court based this
holding on the grounds that (1) the use of the copyrighted works
(i.e., Texaco's reproduction) was neither transformative nor non-
commercial, (2) the scientists copied the entire copyrighted work
(e.g., the entire article, note or letter), and (3) the Court
considered that Texaco's copying, rather than purchasing or
licensing copies, of the copyrighted material caused substantial
harm to the value of the publishing copyrights. The Court found
in Texaco's favor on the remaining "nature of the work" factor,
because the works copied were factual rather than fictional. Such
works are generally more readily subject to a fair use defense.
In several respects, the Court's analysis is troubling. For
example, its examination of the purpose and character of the use
gives virtually no weight to the fact that the research purpose of
the use is specifically listed as a fair use purpose by the
statute. The Court's analysis of the purpose and character of the
use assumed that, where the use was "commercial," it could be a
fair use only if it was "transformative." Essentially, it took no
account of the research purpose of the use, even as a factor in
its analysis. In this, the Court seems to have disregarded the
statute and relevant authority. However, the Court did not go so
far as to assert, as claimed by AAP's counsel, "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 materialJ.J.J.J." The Court stated
only that it did not believe the statute singled out the listed
uses as presumptively fair. Even if no legal presumption is
raised, the Supreme Court has held that, if the purpose of the use
is one listed in the statute, such as research or scholarship, it
is a factor to be considered in the fair use calculus. And the
Texaco Court said (and implied) nothing whatsoever about
noncommercial uses.
In addition, in considering the effect of the use upon the
potential market for and value of the copyrighted works, the Court
ignored the fact that the works concerned were transferred to the
publisher without compensation; declared that the publisher's high
profits are irrelevant; and concentrated almost exclusively on
whether Texaco's unauthorized copying likely reduced the
publisher's royalties from the Copyright Clearance Center.
The opinion of the Court was largely limited to an analysis of the
facts under Section 107. However, the Court did briefly address
and reject Texaco's assertion that its activities should qualify
under Section 108 as library photocopying. Its rejection was
based on two findings. First, the Court stated that since Section
108 was applicable only to reproductions made "without any purpose
of direct or indirect commercial advantage", Texaco's clearly
commercial purpose disqualified it from relying on Section 108.
Second, the Court stated that, as the copying authorized by
Section 108 is limited to the making of one copy, Texaco has no
method in place to prevent more than one copy from being made of
the articles in the journals, and "in all likelihood" Texaco's
employees and its library made many more than one copy of the
articles in question, Section 108 was, again, inapplicable.
The Court's analysis of Section 108 issues is totally wrong and
reflects an astonishing ignorance of the statute and its
legislative history. Texaco's commercial purpose does not
preclude it from enjoying Section 108 rights, if its collections
are open to the public or specialized researchers as required by
Section 108(a)(2). The legislative history of Section 108 makes
clear that:
Isolated, spontaneous making of single photocopies by a library in
a for-profit organization, without any systematic effort to
substitute photocopying for subscriptions or purchases, would be
covered by section 108, even through the copies are furnished to
the employees of the organization for use in their work.
H.R. Rep. 1476, 94th Cong., 2d Sess. (1976). The Court also did
not understand the "single copy" provisions of Section 108, which
expressly state that the rights of reproduction and distribution
under Section 108 "extend to the isolated and unrelated
reproduction or distribution of a single copy or photorecord of
the same material on separate occasions." Thus, the mere making
of multiple copies of the same copyrighted work is not a
disqualifying factor under Section 108, if the copying occurs in
isolated and unrelated transactions. In addition, the Court
inappropriately treated Texaco, Inc. as if it were the library
"user" referred to in Section 108(d).
Ultimately, the Court questioned whether the issue of lawful
copying under Section 108 was properly before it for decision,
because the parties had limited the trial by stipulation to the
issue of fair use under Section 107. This may explain the Court's
confused and error-laden discussion of the applicability of
Section 108.
As previously noted, there also are several elements of the
Court's Section 107 analysis that are highly disputable. This
brief outline is not the place to discuss them. We note, however,
that we found unconvincing the Court's effort to denigrate the
precedential value of the Williams & Wilkins case, in which the
Court of Claims upheld as fair use the photocopying practices of
the National Institutes of Health and the National Library of
Medicine.
From the standpoint of ARL members and other non-profit libraries,
the Texaco decision can have no conceivable effect on their
interlibrary loan and other reproduction and distribution
activities conducted under Section 108 and within the CONTU
guidelines. As long as they are complying with the statute's and
guidelines' provisions, there is no reason to consider a change in
established practices as a result of the Texaco decision.
However, if a library relies on Section 108 to protect "systematic
reproduction or distribution" of photocopies of copyrighted works
in excess of the CONTU guidelines, several aspects of the Texaco
decision should be noted. For example, the CONTU guidelines
establish a safe harbor for "systematic reproduction or
distribution" of articles from current journals in quantities
conclusively presumed not to be "such aggregate quantities as to
substitute for a subscription to or purchase of such work." The
guidelines do not specify what level of reproduction and
distribution in excess of the guidelines would be affirmatively
regarded as substituting for a subscription. The Texaco Court,
with little apparent basis, concludes that arrangements like
Texaco's do substitute for additional subscriptions. While the
Court's reasoning is unpersuasive, its conclusion warrants
concern.
In addition, any library that relies on the general fair use
concepts of Section 107, rather than the specific authority
provided by Section 108, to protect it from liability for certain
reproduction and distribution practices should be aware that, as
the Texaco Court held, the copying of individual articles (and
individually copyrighted Notes and Letters) constituted a copying
of an entire copyrighted work, not copying of a portion of a
copyrighted work. This is not new law.
The original owner of a copyright is the author of the individual
work, e.g., an article. In the Texaco case, the authors of the
articles copied assigned their copyrights in the individual
articles to the journal publishers. It is our understanding that
this is standard practice in the field of technical and scholarly
journals. Upon assignment, the publishers then owned separate and
individual copyrights in each article in each journal, in addition
to owning a separate copyright in the journal as a compilation.
Thus, by copying an individual article, Texaco copied an entire
copyrighted work, not a portion of a copyrighted work. Under
factor three of Section 107, copying of an entire work will
usually militate against a finding of fair use. However, this one
factor alone will not be dispositive of whether fair use exists.
The Texaco decision is of limited significance to non-profit
educational libraries, even to the extent that they may rely on
general fair use principals as authorization for certain
activities. The Texaco Court focused heavily on the ultimate
commercial use to which the copied materials were to be put by
Texaco. Texaco's commercial orientation not only decided the
issue in the publishers' favor with respect to the fairness factor
that addresses the purpose and character of the use, it colored
the Court's analysis of the other factors. Even the Court's
analysis of the effect of the use on the potential market for and
value of the work was influenced (inappropriately) by the for-
profit nature of Texaco. A non-profit or noncommercial use of
copied material may not be sufficient, standing alone, to protect
the copying of an entire copyrighted work under Section 107.
Indeed, any institution relying on Section 107 should assure
itself that, if challenged, it could prevail on additional Section
107 fairness factors. Nevertheless, a non-profit use represents
an important distinguishing feature from the Texaco case.
Finally, the Texaco case represents a holding by a single district
court judge, which has not been considered by an appellate court.
As such, it is entitled to substantially less weight than Williams
& Wilkins. One of Texaco's attorneys recently was quoted as
saying that Texaco would seek to appeal the decision. Whether or
not Texaco will be able to take an appeal at this stage of the
proceedings is not clear, because the fair use issue was addressed
by special stipulation of the parties and the Court has not yet
addressed and disposed of other issues in the case.
Counsel for the publishers has opined that the Court's decision
will give journal publishers substantially greater bargaining
power in negotiations with journal subscribers regarding
photocopying practices. In fact, for the reasons discussed above,
the decision is far less significant than publishers'
representatives are inclined to claim. This is particularly true
with respect to its implications for non-profit, academic
libraries.
We hope this memorandum has been useful to you and your members.
Please let us know if you have any additional questions or
comments.
