How balanced is the balancing test?

December 29, 2010 Kevin Smith, J.D. 1 Comment

Fair use, we know, is a balancing test. What that means, fundamentally, is that whereas all of the other exceptions to copyright’s exclusive rights have a set of requirements or circumstances that must be fulfilled for the exception to apply, the four fair use factors work differently. They are not a list of requirements, such that every fair use must fulfill some standard in regard to each factor. Rather, the four factors describe “an equitable rule of reason” where these factors, and others, are balanced to help a court determine if the specific use in question is, given all of its particular circumstances, fair.

The question of how the factors relate to each other is persistent. If we view them, as I think we should, as inquiries that direct courts to examine pertinent circumstances, they will obviously overlap and interrelate. But courts often apply the factors quite mechanically, with the result that there are quite a few 2 to 2 “ties.” In those situations, and at other times, courts will sometimes suggest that one factor or another has more weight or importance than the others. Thus the balancing test can become unbalanced.

One case — Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985) — has been particularly pernicious in its impact. In regard to two factors, readings of this case have contributed to a misconception of the fair use factors.

First, the case was often cited for the proposition that one could not make a fair use of an unpublished work (although it does not quite say this). Such a rule would give the second fair use factor determinative weight when unpublished works were being analyzed. Congress address this problem shortly after the case was decided by amending the fair use provision to specifically say that fair use could apply to unpublished works if the equities favored that use.

The second way in which the Harper & Row case impacted fair use was through its assertion that the fourth fair use factor — the impact of the use on the potential market for and value of the work — was “the single most important element of fair use.” In its recent report on “Fair Use Challenges in Academic and research Libraries” a research team associated with the Association of Research Libraries reported on interviews regarding fair use with 65 librarians and identified as one of the common “misconceptions” the belief that the fourth factor was dominant, especially in regard to video. Since the language quoted above from Harper & Row is still out there as part of a Supreme Court precedent, it is worth asking why this belief is, at least sometimes, misleading.

One reason is that even the Supreme Court changes its mind. In its more recent fair use reasoning, the Court focused on the transformative nature of a new use, and emphasized that when a use is transformative, the market analysis is less important. In the well-known “Pretty Woman” case, the court reasoned that transformative uses like parody simply do not occupy the same market space as the original work, so consideration of impact on the market is not as important.

If we generalize this reasoning a bit, it has two important results. First, it reminds us that the factors interrelate in such a way that the importance of one factor may be influenced by facts uncovered as part of the analysis of another factor. That is how fair use ought to work, IMO. Also, the Pretty Woman case, and the transformative analysis in general, is an example of how fair use prevents a plaintiff from using copyright to stifle free speech about the original work. If parody or criticism were subject to an absolute rule about market impact, a critical book review could be enjoined because its quotations from the original, combined with a negative judgment on that original, would inhibit sales and should not, therefore, be judged fair use. We should never allow copyright to work that way, and the flexibility of fair use is a safety valve against should restraints on speech.

Another factor that sometimes gets out of hand is the third one — the amount and substantiality of the portion used. The ARL Report identifies as another misconception the idea that fair use can only apply to a small portion of a work. In fact, many cases that find in favor of fair use, especially cases involving transformations, allow the use of quite large portions of an original. As this blog post reports, a law professor has recently filed an amicus brief in a copyright case making exactly this point, that even using an entire article does nor preclude fair use if the other factors support it. As the brief points out, if there were an absolute rule against using an entire work, fair use would become “an inflexible, one-factor test.”

The lesson from all this, that a fair use analysis must plod through all the factors in light of the specific circumstances and is never subject to “short cuts,” may not be welcome news for all. But it is, nevertheless, good news, since it reminds us that fair use exists to permit uses that are socially valuable but which cannot be anticipated or encompassed within definitive rules laid down in advance.

A book you will never read

December 22, 2010 Kevin Smith, J.D. 1 Comment

The American Library Association, along with other groups including booksellers and major publishers, make quite a big deal about Banned Books Week each year. Each year they showcase books that were subject to challenges from people who do not believe those titles belong on the shelves of, usually, public and school libraries.

One of the books that is frequently challenged, especially in schools, and just as frequently defended on free speech grounds, is J.D. Salinger’s Catcher in the Rye; it is in the top twenty most challenged books on lists from the past two decades from ALA. So there is a very heavy irony in the fact that Salinger himself and, after his death earlier this year, his estate have been successful in permanently banning a book that tried to update the story of Catcher.

I have told the ongoing story of this controversy with posts here, here and here. Basically, Salinger presented a very weak case that the new book, called “Sixty Years Later; Coming through the Rye,” infringed the copyright in the original. Amazingly, the District Court accepted the argument and granted a preliminary injunction. There was a quick appeal, in which the American Library Association and many others joined. The appeal cited procedural flaws in the preliminary injunction as well as the inadequate and incorrect copyright analysis, which clearly conflicts with the free speech values fair use is supposed to protect. The preliminary injunction was overturned on procedural grounds and sent back to the lower court. Unfortunately, the appellate court punted on the free speech issue entirely, and agreed, in a very cursory fashion, with the copyright analysis from the district court; the ruling on that appeal is here, and there is a comment from Will Cross here.

Now the final chapter has played out, as the District Court has issued, by consent of both parties, a permanent injunction against the publication or distribution of Sixty Years Later. Apparently to avoid a costly and drawn out trial, and faced with a deck stacked against them, the author and publisher decided to cut their losses and forgo publication in the U.S.

So this is a book you will never read, if you live in the US. Reviewers have said that it is not very good, but you will not get to decide. If you teach Catcher, you will not have the opportunity to have your classes look at this updating of the story and see if it rings true or how else it might turn out. Here we have a banned book on a scale no individual challenging Harry Potter or Judy Blume at their public library could hope to achieve. This is a book banned by the government, something we usually believe our Constitution will prevent.

If we have ever needed evidence that our copyright law has expanded beyond all rational bounds and now threatens our most fundamental national values, this case provides it. The claim that the new work is infringing is based on a disregard of many fundamental copyright principles, include the distinction between idea and expression, as well as the proper application of fair use. Most basic, however, is the failure to recognize what our courts have affirmed repeatedly, that fair use is a safeguard for free speech. Where copyright most needs the fair use exception is when a rights holder tries to suppress critical or unwelcome speech from others by asserting copyright claims. L. Ron Hubbard, Stephan James Joyce and the estate of Margaret Mitchell have all been unsuccessful when they tried to do that, but J.D. Salinger has enjoyed an unusual deference from our courts (another example of that deference can be found here).

So perhaps when Banned Books Week next comes around, we should recognize that Salinger uniquely represents both sides of the First Amendment coin — someone whose own works must still be defended at the same time that he and his heirs misuse the copyright law to undermine that very guarantee of free speech.

Is the sky falling on library lending?

December 17, 2010 Kevin Smith, J.D. 2 Comments

“The sky is falling,” Chicken Little cried. I don’t want to emulate that panicky poultry too closely, but recent events have raised some concern in my mind over the continued viability of copyright’s “first sale” doctrine, upon which so much library practice depends.

First sale is the rule that once a lawful copy of a work is sold, the exclusive right to control distribution of that copy is “exhausted.” Therefore libraries can lend books, consumers can resell CDs and NetFlix can rent DVDs through the mail. First sale is not a necessary or automatic part of a copyright law; many countries have different provisions on what is sometimes called “exhaustion,” such as a statutory fee for each library loan of an item. Most importantly, first sale does not apply when a work is licensed rather than sold. Many of the current threats to first sale are controversies over where the boundary between a sale and a licensing transaction really is.

Here is a catalog, quite long I’m afraid, of some of these controversies and, I think, threats to library lending.

First there is the new lawsuit against UCLA over streamed digital video. Part of that suit argues that what seemed like purchases of DVD by UCLA were really licensing situations because terms of use were printed on the purchase orders. The plaintiffs use this claim to argue that UCLA cannot make a fair use argument in defense of their practice, but it is easy to see how such a claim could also restrict practices under first sale. There have been many attempts to use one-sided terms of use to prevent or control resale; the Supreme Court rejected an early attempt to prevent second-hand resale at a lower price in Bobbs-Merrill v Straus back in 1908. If a claim based on terms of use in a purchase order is successful in limiting fair use rights under copyright, it is easy to see how such terms will multiply to restrict library lending under first sale.

By the way, it will be interesting to see if these terms can survive analysis under the Uniform Commercial Code. Article 2 of the UCC governs sales of goods, and its provision about conflicting terms of sale (the “battle of the forms”) might seem to support these terms of use. But two questions occur. First, if the PO terms turn a sale into a licensing transaction, does Article 2 even still apply, since it governs sales? Second, do the terms so materially alter the transaction that they cannot simply be presented on a purchase order and enforced against the purchaser based solely on payment of that invoice?

My second concern comes from the news that a law firm has been sending cease and desist letters to academic libraries demanding that they stop filling ILL requests for scholars and institutions outside of the US. I have not seen a copy of this letter, but the reports suggest that its legal arguments are quite confused. For lending of articles these days, most ILL is governed by the contractual terms under which a database of journals is licensed. If the license permits ILL without territorial restriction, there is no reason to stop following those terms. If the license does not permit such lending, the demand is superfluous. For the lending of physical items, first sale would seem to permit the purchasing library to lend to whomever it wants. But since the lawyer is representing a large group of STM publishers, this letter does remind us that there is a strong desire in the content community to place new and radical limits on long-accepted library practice.

Other threats to first sale do not directly involve libraries, but clearly have potential impact on them. In Vernor v. Autodesk the Ninth Circuit Court of Appeals upheld the claim that a piece of software was not really sold but only licensed, such that the purchaser could not resell the physical discs he had bought in reliance on first sale. Here again, there are obvious implications for library practice if much of what we think we are buying turns out to have only been licensed.

Finally, there is the non-decision reached this week by the Supreme Court in the case of Costco v. Omega. That case involved not libraries, by a discount retailer and the claim by Omega Watches that first sale did not apply to copyrighted items (the symbol embossed on the back of watches) that are neither manufactured nor sold in the US. The 9th Circuit (again) held that first sale did not apply and the watches could not be resold in the US without authorization. The Supreme Court agreed to hear the case, and the Library Copyright Alliance filed a superb brief encouraging reversal. But the Court split evenly, with Justice Kagan recusing herself. That result leaves the troubling decision from the 9th Circuit in place, at least in Western quarter of the US.

The problem with the status quo in Costco is that it poses a threat both to some library lending and to the secondary market for used textbooks that is so important for students. The LCA brief makes clear that affirming the lower court in Costco would leave academic libraries especially in great uncertainty, since they obtain quite a bit of material from overseas. The case involves a technical issue about the so-called manufacturing clauses in the Copyright Act (sections 601-603) because that clause influences what is considered a copy “lawfully made under this title” for purposes of first sale (section 109). Section 602 contains an exception to its restrictions on imports that allows libraries to purchase both books and videos from abroad for their collections, but the language about audiovisual works, which is different from that regarding books, seems to deliberately exclude lending of foreign-made videos. So at the very least, academic libraries in the 9th Circuit must have doubts about whether they can lend foreign films purchased overseas.

Another potential problem created by Costco is for the used textbook market. As this news story indicates, textbook publishers urged the Supreme Court to affirm the 9th Circuit decision in Costco precisely because it opens the possibility of moving textbook publishing offshore and then relying on the decision to close down resale of used books.

Perhaps the sky is not falling, at least not yet, on the first sale doctrine. Kenneth Crews of Columbia suggests in this blog post that the Costco case, at least, does not give us cause to panic yet. But I think it is pretty clear that the doctrine is besieged from several different angles. Uncertainty about its scope and contours may translate, unfortunately, into less robust library services. The unfortunate scenario is that, just as libraries are being really creative in rethinking our traditional role as “book warehouses,” content providers, sometimes intentionally and sometimes not, seem to be pushing us back into that limited space. The reason, of course, is that the more first sale is restricted, for libraries and for consumers in general, the easier it will be to define the digital realm as a “pay-per-use” environment.

The other shoe drops

December 12, 2010 Kevin Smith, J.D. 4 Comments

On Tuesday, Dec. 7, the educational trade group AIME and one of its members, Ambrose Video, finally filed the long- anticipated lawsuit against UCLA alleging that UCLA’s practice of streaming digitized video through its course management system to students registered for a specific class, was copyright infringement.

When several publishers filed suit against Georgia State University on April 15, 2008, I took note of the date because it seemed the publishers were trying to enforce a new tax on higher education. Now the assault on academic fair use is continuing, but my initial temptation to draw a chronological analogy with the attack on Pearl Harbor – “a day that will live in infamy” – was easy to resist. Not only would such an analogy be disrespectful of the terrible tragedy that took place in 1941, it would also give too much importance to the very strange document that was filed Tuesday in the Central District of California.

The complaint is unusual in several ways. Those who try to read it off the AIME website will find, for example, that the PDF is riddled with problems in the scanning (one hopes) that make it very difficult to decipher. Also, it is curious that the only named distributor of educational videos is Ambrose. The complaint makes the claim that many others are also being injured, but it does not name them. Instead it inserts a strange defense of the claim that AIME itself has standing without the presence of more than one of its members. This is very different than with the Georgia State Case, where the Association of American Publishers led the search for a defendant but then dropped out and let the actual rights holders proceed. Rumor had it last year that Ambrose, whose CEO is also a leader of AIME, was very keen to sue but was having difficulty convincing his colleagues in the group that that was a good idea. The structure of this lawsuit seems to add credence to that rumor.

Another legal oddity is the decision to sue UCLA for damages as well as injunctive relief, even though the complaint acknowledges that UCLA is “an arm of the State of California.” It would seem that sovereign immunity will be an issue, and AIME has not taken the steps that the GSU plaintiffs did to avoid the potential for dismissal on these grounds.

Much of the argument, of course, centers around fair use. Here too it was surprising to see how the complaint proceeds. It actually does not address the four fair use factors, but makes three arguments about why UCLA cannot claim that defense. First, it says that the videos are all licensed in a way that precludes fair use. Second, it asserts that it offers a licensed streaming service, which presumably goes to the market harm factor in a fair use analysis. Third, it asserts that UCLA is not using “reasonable and limited portions” of the videos. Again, the point here is to argue one of the fair use factors – amount and substantiality – but the language actually comes from the requirements of section 110(2) of the copyright act, not from fair use (section 107).

This last point is interesting because the complaint tries to refute any argument that 110(1) and/or 110(2) might apply to UCLA’s practice. It does not acknowledge the possibility, which I hope UCLA will argue, that even when those provisions do not fully apply, attention to the policy behind them and the restrictions place upon them strengthens the case for fair use. For example, if the impact of course-specific streaming is no different than employing 110(1) – the face to face teaching exception — it argues that there is a Congressional policy that refutes a claim for economic harm. When the complaint itself confuses the language between these exceptions, it points directly toward that possibility.

Licensing, however, is the heart of this complaint, in two ways.

First, Ambrose argues that its licensed streamed service makes a claim to fair use inappropriate. The entire Ambrose catalog is, oddly, attached as an exhibit to the complaint, but only a “sample” of the streamed offerings appears. An examination of the Ambrose website shows that not all of its offerings are available for streaming, but it is hard to tell what the percentages are. So the question arises, how much of the content must be available for licensed streaming before a fair use argument is ruled out? That question would, I think, persist even if a court accepted the claim, by no means obvious, that a licensing market does count to reduce the field for fair use. That latter claim is quite circular and courts have split over its validity.

Second, Ambrose makes the more basic claim that “many” of its products are licensed in a way that entirely precludes fair use, even when UCLA (and the rest of us) have bought a physical DVD. The complaint says that, if the purchase orders for these DVDs are “scrutinized,” licensing terms will be found. That claim made me think about what the Uniform Commercial Code (article 2) calls “the battle of the forms,” where parties to a sale of goods disagree as to what terms apply. Even if the terms found on the purchase orders (or some of them) are held to be valid in some ways (and I think they might be under the UCC) the question still remains as to whether these one-sided terms are adequate to take the use of the DVDs completely out of the realm of federal copyright law. Academic libraries should watch this issue closely, since it seems likely that similar attempts to use purchase order terms of use to abrogate the right of first sale, upon which libraries depend so heavily, will grow.

One finally oddity, from the perspective of academic librarians, should be noted. The Washington lawyer hired by AIME and Ambrose to pursue this case, Arnold Lutzker, is also scheduled to teach an online class on “Copyright, Photos, Video, Art & Multimedia” for the Center for Intellectual Property at the University of Maryland University College in 2011. This coincidence is a reminder that librarians need to look carefully at the educational opportunities they select and consider whether their common tendency to be excessively nervous about fair use might be reinforced when it should, at least in my opinion, be countered by more in-depth knowledge. We know how to recognize a bias when the Copyright Clearance Center offers to teach us about copyright; we need to be aware that other opportunities may also come with an agenda.

This is obviously a case we will need to watch as it progresses. These comments are based only on the complaint. UCLA will file an answer that will help clarify the issues and, one hopes, AIME and Ambrose will clarify many of the points that are left unclear by this strange initial document.

Fashioning innovation

December 8, 2010 Kevin Smith, J.D. 1 Comment

I do not usually use this space simply to offer links to other resources without adding my own comments, but this 16 minute video by Johanna Blakely of the Norman Lear Center at USC — “Lessons from fashion’s free culture” — is so good there is very little I can add.

Dr. Blakely discusses, in a smart and engaging way, the role that intellectual property protections play in providing incentives for creativity and innovation. Her primary example is the fashion industry, where the lack of strong IP rights not only does not hamper creativity but seems, in Blakeley’s argument, actually to support innovation and rapid growth. Her chart illustrating the relative income generated by creativity industries that “enjoy” strong IP protection versus those that don’t may be an oversimplification, but it does provide a strong refutation to the argument that IP protection is necessary for creative industries to thrive and for innovators to pursue their work.

The video is also an excellent lesson in how to do a fun, engaging and informative presentation. I offer it with envy for Dr. Blakely’s skill and confidence that it will be a valuable way for readers to spend 16 minutes. I am just disappointed that I don’t get all of the contemporary cultural references.

This one is really odd

December 3, 2010 Kevin Smith, J.D. 6 Comments

Mark Twain once wrote in his Notebooks that “Only one thing is impossible for God: to find any sense in any copyright law on the planet.” It has been a full century since Twain’s death in 1910 and he is just now presenting us with good evidence for the truth of his comment.

The gist of the story, which is recounted here and analyzed from an Australian point of view, is that Twain left an Autobiography when he died, along with instructions that it not be published until he had been dead for 100 years. Twain’s purpose apparently was to avoid giving offense or committing defamation. That long-awaited publication has now taken place, and the question that interests me is whether the Autobiography has any copyright protection.

Under current US law, the copyright in an unpublished work lasts for the life of the author plus 70 years. That term of protection for Twain’s Autobiography would have expired in 1980. For a currently published work the term of protection is the same, so it is logically impossible to apply that term starting from the time of publication in 2010.

Perhaps we should look at Twain’s expectations in regard to copyright. At the time he died the 1909 Copyright Act had just come into force, with a 28 year term of protection that was renewable for an additional 28 years. This protection was dependent on publication with notice, so perhaps Twain thought that his work would be protected for 56 years after its 2010 publication. But it is unlikely that he could have believed, critically aware of copyright as he was, that the law would not change in that long period of time. It is even more unlikely that the thought of a copyright beginning in the 21st century and lasting 56 years was any motivating factor in Twain’s decision to write his memoirs. So protecting his expectations, whatever they were, would not serve the fundamental purpose of granting the copyright monopoly, which is to provide an incentive for authorship.

If we accept, for the moment, an analogy between copyright and real property, perhaps we should recognize that the copyright in Twain’s Autobiography belongs in the category of intentionally abandoned property, based on his deliberate decision to suppress it past any reasonable term of protection.

I have to admit that I rather hope that someone will challenge the inevitable claim to a copyright that the Mark Twain Foundation will make in this work. I would love to see how a court would sort out these issues.

In the meanwhile, however, I think there is a point to made here about the folly of believing that there is such a thing as a “limited” monopoly, which the Constitution requires that copyright should be. Monopolies serve special interests by allowing prices to rise well beyond the level they would reach in a competitive market. They are so beneficial to those interests that any boundaries imposed on them will always be pushed, tested and expanded whenever they can be. The Mark Twain Foundation has a much stronger reason for asserting a copyright claim, even a baseless one, than any other party has in spending the money necessary to challenge it. The result will likely be a continuing monopoly over a work that rightly belongs to the public; an inevitable but unintended consequence of granting a monopoly and then trying to control it.

About the copyright monopoly Lord Macauley said in 1842 “It is good that authors should be remunerated; and the least exceptionable way of remunerating them is by a monopoly. Yet monopoly is an evil. For the sake of the good we must submit to the evil but the evil ought not to last a day longer than is necessary for the purpose of securing the good.” With the case of Twain’s Autobiography we have a clear situation where the evil Lord Macauley decried has the upper hand and is likely to persist well past any rational justification for its existence.

Monthly Archives: December 2010