Monday, November 27, 2006

Of the case for fair use: digital distribution of course materials -- Applying Sony

Applying Sony to Electronic Distribution of Course Material

Twenty-two years have elapsed since the Court decided Sony, and time has not been kind to its fair use holding. Its presumption in favor of non-commercial uses, its shifting of the burden of proof to the plaintiffs in non-commercial cases and its rejection of the idea that fair use favored only transformational fair uses have all been subsequently abandoned.[1] Moreover, the dissent’s approach, which adopted market failure concepts, has over time become the approach of the majority opinions in iterative use cases.[2] Nevertheless, for purposes of argument, we shall explore whether faithful adherence to Sony might support a fair use claim for repeatedly posting articles within course management systems or in electronic reserves. We should also consider whether, given the availability of instant permission through the Blackboard/CCC collaboration, Sony could support even first time use as fair. Put another way, is there still a fair use argument to be made in favor of spontaneous fair use if one can easily obtain permission to use the work through the CCC?

If a court acknowledged the benefit to the public and balanced it against the harm to the copyright owners as Justice Stevens did, and limited the sources of revenue it would consider when evaluating that harm to those revenues already in existence at the time the suit was filed and the record developed for trial, could the court conclude that Electronic Distribution of educational materials is fair use?

The statute’s four factors include:

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted work.[3]

Home videotaping and noncommercial Electronic Distribution have similarities under the first factor. Both are widespread although not-for-profit. This finding in turn heavily influenced Justice Stevens’ analysis of the second and third factors. He concluded that in a nonprofit context, it was not that important that entire (third factor), creative (second factor) works were copied.[4] He emphasized that the copying at issue promoted a public good, given its obvious benefits to society.[5]

Copying for Electronic Distribution is equally, if not more, beneficial to society and enjoys the additional argument that many, although not all, of the works copied will tend to be factual. Thus, the second factor will more strongly favor fair use in many cases.

On the other hand, there are significant differences between Electronic Distribution and home videotaping. Electronic Distribution involves distribution of copies that the copyright owner offers for sale or license right now. Home videotaping involved copying by an individual for the individual’s own use broadcast programming that was offered to the public for free. These differences could affect the analysis of each of the first three factors.

So, following Sony would not necessarily result in the first three factors weighing for fair use. Sony can certainly be criticized for its reasoning on these points, and the dissent roundly does so. And, as I will suggest later, the ease with which one can manipulate the four factors is a key to understanding why we cannot rely on urging a particular view of those factors.[6] But for the moment, we will assume the best possible outcome for the first three factors in order to focus on the fourth, and to show ultimately how fallible any factor-based analysis is.

On the critical fourth factor issue of the loss of revenues, Sony placed the burden of proof on the publishers because the use at issue was nonprofit.[7] Further, the Sony assumption, that not all conceivable revenues should be considered, allowed the court to exclude revenues from any source that was not in existence at the time the case was filed and the record developed for trial. Even within this framework, copyright owners today would doubtless submit evidence to show harm to their database and permission licenses, if not to their subscriptions and sales of books and journals.

Even if some harm were shown, however, the benefit to the public from universities’ freely using articles and book chapters for Electronic Distribution would be weighed against any losses the copyright owners were able to demonstrate to their database and permission revenues. Ultimately, where the court places the burden of proving harm to revenues could affect the outcome, but even if the burden were on the plaintiffs, they might prevail on the fourth factor. That is, they might be able to show that the harm Electronic Distribution causes to their database and permissions revenues, if not their subscriptions and sales revenues, outweighs the public benefit of allowing the uses. Nevertheless, a result along these lines could still be favorable: possibly three to one in favor of fair use for Electronic Distribution. But with this result in hand, we now can see how fair use’s flexibility proves to be its liability.

We fool ourselves if we indulge the belief that Sony provides us a fair use pass for Electronic Distribution, for the truth is that all four factors are so easily manipulated that they can be made to conform to any desired outcome without difficulty.[8] For example, if the court believes that it is socially desirable to make nonprofit educational uses free of permissions and royalties, it will logically conclude that the social benefit outweighs harm to markets and minimize the effect of the use under factors one, two and three. On the other hand, if the court believes that uses that can be paid for through an existing market should be paid for, it will find that the harm to markets outweighs the social benefit of allowing uncompensated uses. The first three factors can be made to come out however they need to come out to support the conclusion the court has otherwise reached. Thus, even though by the numbers, following Sony, one can make the fair use case for Electronic Distribution (three out of four should logically result in a finding of fair use), if a court wants to protect revenues in established markets, to say nothing of desiring to protect possible revenues that might form around markets in the future, it can easily emphasize the facts that would support a determination that at least one and possibly two of the first three factors favor getting permission. The plaintiffs will have supplied the court with a plethora of such facts. The amount and nature of the work used, factors two and three, are quite flexible. Even the first factor can be made to reflect negatively on a proposed use. Words like “systematic,” “repeated,” “multiple,” or “blatant” can be applied even to nonprofit educational activity to sully the character of the use under the first factor. A use that loses support along the way to the fourth factor is doomed if the copyright owner can demonstrate harm to revenues.

[1] Campbell v. Acuff-Rose Music.

[2] Texaco; MDS; Kinko’s; Kelly; Field.

[3] 17 U.S.C. 107.

[4] Sony, pp. 448 – 450.

[5] Sony, pp. 443 – 447.

[6] David Nimmer, Fairest of Them All and Other Fairy Tales of Fair Use, 66 Law & Contemp. Probs. 263 (Winter/Spring 2003).

[7] Sony, p. 451.

[8] David Nimmer, “Fairest of Them All.”

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