Licenses, prices, fair use and GSU

When the trial of the Georgia State copyright infringement lawsuit closed last month, the Judge asked both sides to file post-trial briefs, outlining their proposals for findings of fact and conclusions of law that they think the court should make.  They are extensive documents, representing the last chance each side has to make its arguments, and they are now available on the Justia website (docket numbers 409 through 411, with responsive arguments from each side at 414 and 415).  More about these documents in just a moment.

Before these documents were filed, however, there was an interesting contrast set up by a couple of unrelated publications.  First, Tom Allen of the Association of American Publishers (one of the groups paying the plaintiff’s legal fees) published an opinion piece in Publisher’s Weekly arguing that the Annual Academic Copyright License that the publishers say is a solution to the infringement they allege would only cost GSU $114,000, or about $3.75 per student (there are replies to this assertion here and here).  Second, there was a news story and much comment about the price increase being imposed on Canadian universities for their copyright licenses from Access Copyright, which is going up from a few dollars per student to $45/FTE.  The juxtaposition of these stories prompted the question of why it was costing so much more in Canada to license copying of protected works.

I think there are two answers to the question of why the Canadian license costs so much more.  The first is that the $3.75/student number for the CCC license does not strike me as realistic; it is certainly much less than my university, with a smaller student body, was quoted.  I suspect it is a “first year” discounted rate that would rise very quickly, which is the model we were presented with.  But the more important reason for the difference is that the Canadian license is a compulsory one, created by the Copyright Board of Canada, and therefore comprehensive.  Regardless of what you think about the price, when a university buys a license from Access Copyright, it covers pretty much all of the copying of educational material done on campus.  By contrast, the Annual Academic Copyright License from the Copyright Clearance Center is very far from comprehensive; only a relatively small percentage of publishers license their works this way.  Not all the publishers that license through the CCC, and not even all the plaintiffs in the GSU case, allow their works to be used under this blanket license; Cambridge University Press was forced to admit during trial that their material would not have been covered even if GSU had purchased the AACL.  So the price difference becomes explicable – you pay less to get less.

By the way, this claim about how cheap the AACL is elicited a very telling question from Andrew Albanese of Publisher’s Weekly, who asked if these three publishers had really decided to sue 4 million dollar per year customers for only $114,000.  The answer clearly is that they expect much greater profits if they win.

Now let’s go back to the last set of filings.  Reading the plaintiffs’ brief, I was struck forcefully by the realization that they are asking the Judge to eliminate fair use virtually entirely for academia and instead substitute a compulsory license.  This is especially clear when you see in their proposed injunction a requirement that permission be obtained for 90% of the readings in any course, regardless of whether or not some or all of that 90% could be considered fair use (under the extremely restrictive definition provided in the proposal).  This is essentially asking the court to force a license even where the law – under anyone’s interpretation — does not require it.  So it begs the question, can the AACL function as a compulsory license?  I think three observations should be made.

1. For the AACL to function as a compulsory license, it needs much broader coverage.  It cannot play the role that the GSU plaintiffs would assign to it until everyone, or nearly everyone, licenses their materials through it.  If the Judge were to agree to the plaintiffs’ injunction, she would have to order those three publishers, at least, to license their work comprehensively through the AACL.
2. The example of Access Copyright shows us that the price for the AACL will inevitably go up if it moves towards a role as a compulsory license.  In fact, you can find a list of Canadian universities that have decided to forgo the Access Copyright license because of its huge price increase here.  So the rhetoric about what a good deal it is, already suspect, would become irrelevant.
3. Compulsory licenses nearly always require continuing judicial oversight due to the threat of monopolistic pricing and anti-trust concerns.  Sometimes a government board plays that oversight role, as with Access Copyright in Canada or the Copyright Royalty Board and cable rebroadcast in the US, and sometimes a judge does it, as in the oversight of ASCAP.  Is Judge Evans prepared to pull the CCC before her and keep them there in order to ensure a functional licensing scheme?

Of course, all of this speculation is irrelevant if the Judge accepts the fair use argument that is advanced by the defendants.  Their brief states that argument very compellingly, in my opinion.  Two points struck me with particular force.

First, the defendants address the frequent claim made by publishers that the Supreme Court, in Campbell v. Acuff Rose Music, has limited fair use to situations that are transformative and that copies for educational purposes are not transformative.  The defendants proposed Conclusions of Law point out that Campbell itself expressly renounced this claim in two ways.  First, it explicitly noted that “transformative use is not absolutely necessary for a finding of fair use.”  Then, in a footnote (number 11), the Campbell Court stated that “The obvious statutory exception to this focus on transformative uses is the straight reproduction of multiple copies for classroom distribution.”  You seldom get such devastating language to direct against one of your opponent’s central contentions.

The second really important aspect of the defendants’ proposed Conclusions of Law is this simple (if grammatically awkward) statement, which ought to be repeated like a mantra whenever fair use is discussed, because it is so obviously right: “The fair use defense would mean nothing if it addressed only those uses that plaintiffs have not developed a mechanism by which to charge for such portions of the work.”

Fair use is frequently described as flexible and as an “equitable rule of reason.”  The value of defendants’ arguments in this case is that they aim to defend this reasoned flexibility and ask the judge to avoid both of the common, and mistaken, constrictions of fair use – to either only those cases where an original is transformed or only cases where a “market failure” has occurred.  Both of these conceptions would reduce fair use to a mechanical test that would contradict its avowed intent and application over the past 170 years.