Two cases that could shape copyright

Two interesting cases were reported in the past weeks by Zohar Efroni, a non-resident fellow at Stanford’s Center for Internet and Society.  One could have significant impact on the shape of US copyright law, especially as it serves to encourage or hamper technological innovation, and the other suggests, to me at least, an interesting international model that could help mold US thinking about fair use.

The first case, decided in August by the Second Circuit and recently appealed to the Supreme Court, involves the legality of the remote storage digital video recording (RS-VDR) services that large cable companies want to offer to their customers.  In Cartoon Network v. Cablevision, the 2d Circuit reversed a lower court’s ruling and injunction, and held that Cablevision was not directly infringing the copyrights held by television companies when it allowed consumers to select programs that would be recorded and stored remotely, on servers owned by Cablevision, for playback to the specific consumer when they request it.

The RS-VDR argument raises once again the Sony Betamax case, in which the Supreme Court held that a substantial non-infringing use of a video cassette recorder — the fair use by consumers for “time-shifting” TV programs recorded for the personal viewing — meant that the device manufacturer was not guilty of copyright infringement, even though it was acknowledged that there were potential infringing uses of the VCR.  This was a landmark case that made possible a great deal of technological innovation, since it removed the chilling effect that would have inhibited the invention of any new device or service that might be used to infringe a copyright.  The Grokster case about filesharing software gave the Court a second look at the Sony ruling, and opinions differ, even on the Court, about how much that doctrine was changed.  In Grokster, the Court ruled against a technology that did have potential non-infringing use because its actual use was overwhelmingly infringing and its marketing actively and knowingly encouraged infringement.  Now the Supreme Court might once again revisit the fair use underpinnings of so much technical innovation if they elect to hear an appeal of the Cablevision case; Efroni’s comments on the arguments asking the Court to intervene are here.

The other case is one from German and involves music sampling.  The judge in this case, reported by Efroni here, found that sampling does not infringe the copyright in the original music.  The result that is much more sensible than similar approaches to the issue in the US, although it has several “catches” attached to it, as Efroni notes.  It is one of those catches, in fact, which captured my attention.  The decision is based on a provision of the German copyright law translated as “free use” (freie Benutzung), which is not the same as fair use in the US.  Efroni suggests that we think of free use in Germany as “an extreme version of the transformativeness element familiar from the U.S. fair use analysis.”  Since one of the problems with any discussion fair use is separating the notion of transformativeness (which is not a defined element of fair use) from the exclusive right granted to copyright holders to authorize derivative works, I was struck by the possibility of separating transformative uses (under this category of “free use”) from the four-factor analysis.  The many recent decisions upholding transformative uses as fair use have pretty well jettisoned the four factor approach in any case; once they decide that the purpose of the use is transformative, things like commercial versus non-commercial, the nature of the original and the amount used are usually held to be irrelevant.  Impact on the market for the original is also usually discounted, since courts hold that the market for a transformative use does not compete with that for the original.

This transformative approach to fair use has been extraordinarily fruitful, supporting all kinds of scholarship and creativity.  But it threatens to swallow up the fair use analysis as it has been carried out for almost two centuries and as it was codified in section 107, automatically dismissing as an infringement any use at all that is not transformative and struggling to find transformation in any use that a court wants to allow.  So I think it might be worth considering adopting a provision like free use, that would allow an uncompensated use of a prior work to create something new under a set of conditions more appropriate to that situation than are the four fair use factors.  Then fair use could be left in place to permit those socially beneficial uses that do not meet the standard of transformativeness but still serve the fundamental purpose of copyright law to encourage and protect creativity and innovation.