Is The Authors Guild Going To Get Screw-gled?

On December 3, 2014, a three-judge panel of the Second Circuit Court of Appeals heard oral arguments in Authors Guild v. Google. (A detailed summary of the oral arguments is available here). The issue before the Court was whether Google’s mass digitization initiative (Google Books), in which Google scanned and digitized millions of literary works, including copyrighted works, constituted fair use. The lower court had found that Google’s uses were “highly transformative” and, therefore, a fair use. The Authors Guild appealed and, although the Second Circuit’s ruling isn’t expected until early next year, it appears the Court is poised to affirm the lower court’s holding. If it does, yet another blow would be dealt to creator rights by digitization and Congress should consider intervening with a legislative response.

At the December 3, 2014, hearing, the Authors Guild made two notable arguments to refute the lower court’s fair use finding. First, that Google’s status as a for-profit entity distinguished its use from the one made in HathiTrust, an earlier digitization case that the Court determined to be fair use. Second, that Google’s digitization project undercut the potential market for a digital licensing database from which authors could participate and profit.

The Second Circuit panel included Judge Pierre Leval, whose 1990 law review article in the Harvard Law Review, “Toward a Fair Use Standard” (available here), spurred the modern emphasis on transformativeness in fair use analysis. And true to his background, at the hearing Judge Leval made several comments that indicated he was not particularly inclined to reverse the lower court’s holding on the non-transformative grounds raised by the Authors Guild.

As to Google’s status as a commercial entity, Judge Leval replied, “The classic fair use cases are commercial. . . I would be surprised if you’re going to win this case by pleading that Google, like the New York Times, is profit [oriented].” Nor did Judge Leval appear convinced that Google Books impaired any value copyright owners could derive from a digital licensing market. Judge Leval remarked that the Guild’s position did not create “a very useful test” since there is always the possibility that someone may be willing to license the work to avoid potential litigation.

For those who have read my views on Fox News v. TVEyes, it should come as no surprise that I believe Judge Leval may have lost sight of the forest for the trees. True, the New York Times is a profit orientated entity, like Google, but the uses made by each stand in stark contrast. The New York Times does not simply repackage a work, or portion thereof, but instead adds its own criticism or news commentary, a practice that clearly falls within the fair uses contemplated by Section 107 of the Copyright Act. To that end, the New York Times limits the amount of a copyrighted work it uses to achieve that aim.

Google Books, to its credit, displays only a “snippet” of content to prevent third parties from easily accessing a full work. But the snippet is not tailored to achieve the third party’s fair use objective (assuming a fair use is being made at all). Because Google’s numerous users will make vastly different uses of the work, Google “needs” to copy an entire work and have the ability to disseminate any portions thereof to satisfy its users’ needs. The problem is that, in any individual case, a particular downstream user may need more or less of the work to achieve their fair use. The fair use analysis in these cases, however, creates a one-size fits all determination and forgoes any case-by-case analysis. Many recognize the burden authors bear in monitoring one’s works against infringing uses, but imagine how difficult the task becomes when the world’s largest database offers access to it for free. The sheer size and scope of potential users utilizing the work is so vast that the task of evaluating which uses are appropriate becomes sisyphean.

Additionally, Judge Leval’s portrayal of the Authors Guild’s market argument creates a red herring. The Guild’s proposed test was never precipitated on the existence of a single “willing licensee.” Rather, it sought to focus on the viability of a digital licensing market that is preempted by Google Books. The degeneration of the discussion was quite disappointing as there are comparable digital licensing schemes abroad, such as Google’s agreements with the French Publishers Association and publishers Hachette Livre and La Martiniere to license their out-of-print works for such a database, that demonstrate the viability of a similar market domestically.

So why hasn’t Congress acted yet to address digitization? Well, it may surprise you to learn that Congress has contemplated doing so for quite some time. As Terry Hart recently highlighted, legislators actually began to consider the broader issue of how copyright law and the use of copyrighted works with computers interact with one another in 1964. The 1964 Copyright Law Revision bill included the right “to reproduce [the copyrighted work] in any form in the programming and operation of an information storage and retrieval system” as one of several exclusive rights conferred to a copyright owner. However, that language was deleted when the 1965 Copyright Law Revision bill was presented to Congress and ultimately omitted from the final version of the Copyright Act of 1976.

According to the then-Register of Copyrights, the provision was deleted because the burgeoning field of computer technology was too new. The Copyright Office believed “it would be a mistake for the statute . . . to include an explicit provision that could later turn out to be too broad or too narrow.” Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st sess., 1965, p. 18. However, the Copyright Office warned,

unless the doctrine of “fair use” is applicable in a particular case, the bill contemplates that certain computer uses would come within the copyright owner’s exclusive rights. It seems clear, for example, that the actual copying of entire works (or substantial portions of them) for “input” or storage in a computer would constitute a “reproduction” under [the Copyright Act], whatever form the “copies” take: punchcards, punched or magnetic tape, electronic storage units, etc. Similarly, at the “output” end of the process, the “retrieval” or “print-out” of an entire work (or a substantial part of it) in tangible copies would also come under copyright control.

Id.

Almost forty years later, Google began to digitize library collections and allow users to search its books database, which led to the current dispute. The Authors Guild and Google have litigated the matter since 2005, and in 2009 it appeared the parties had resolved the matter after reaching a tentative settlement agreement. The proposed settlement would have created an opt-out collective licensing system whereby Google (and only Google) could utilize copyrighted and orphan works and rightsholders would be compensated through a collective registry.

As required, Google and the Authors Guild filed the proposed settlement with the Southern District of New York for final approval. The court, however, denied the proposed settlement in an order authored by Judge Chin. Judge Chin acknowledged that although the digitization project would serve several publicly beneficial goals, it would also fundamentally redefine the relationship of copyright law and technology and alter the exclusive rights conferred by copyright law. In the view of the court, Congress would be the appropriate authority to implement such a profound change to the copyright scheme. No. 05-8136 (S.D.N.Y. March 22, 2011) (order denying motion for final approval of the amended settlement agreement), available here.

The Copyright Office lauded Judge Chin’s decision. It too agreed that digitization could convey appreciable public benefits, but “copyright law may not be usurped as a matter of convenience[.]” Letter on Digitization from James H. Billington, The Librarian of Congress, and Maria A. Pallante, Then-Acting Register of Copyrights, to the Honorable Mr. Patrick Leahy and Mr. Charles Grassey (April 1, 2011).

Later that year, the Copyright Office released its preliminary analysis on mass digitization. In its report, the Copyright Office noted how mass digitization and dissemination would be “difficult to square with fair use.” However, in the three years since the Copyright Office expressed that sentiment, there are now three separate decisions that hold (and presumably will uphold) otherwise: HathiTrust, Fox News v. TVEyes, and Authors Guild v. Google (with varying degrees of persuasiveness).

Although the Second Circuit’s opinion in Authors Guild v. Google is not expected until early 2015, the writing on the wall is clear – the Second Circuit considers digitization to be a transformative use. And, worse, the Court’s earlier decisions are being used to justify digital repackaging for commercial uses. What initially began as a narrow finding to permit a non-commercial digitization venture that offered limited, if any, dissemination of out-of-print works (Hathi Trust) has morphed to allow wholesale copying and reproduction by commercial entities of readily available works (TVEyes). Given these decisions, the prospects of a voluntary licensing market developing are slim.

Even more alarming is that the Second Circuit has essentially created its own mandatory licensing regime. And, unlike the proposed settlement between the Authors Guild and Google, rightsholders are receiving no compensation for the use of their works and are unable to opt-out (or opt-in, for that matter) from participating. Admittedly, the Second Circuit’s regime addresses concerns that the 2009 proposed settlement would have granted Google monopoly power, but the Court has ignored that such a fundamental policy change to a creator’s exclusive rights is best addressed by Congress, not the courts.

At this point, Congressional action is needed now more than ever. Congress should make clear that technological convenience cannot justify the erosion of creator rights. That being said, I do not believe digitization should be outright prohibited. There are very compelling reasons as to why digitization can benefit the public and authors – new audiences, new markets, new sources of income – but, quite simply, there need to be established guidelines and boundaries. To that end, I believe Section 108 should be updated to reflect the current norm of digital consumption. A comprehensive revision of Section 108 could include a clear delineation of what entities can digitize and disseminate copyrighted works to balance the public benefits of digitization with the rights of creators.

In addition, Congress should consider whether to implement a licensing regime for digitizations and the conditions for doing so. For example, should non-commercial, educational uses not require any license? Should commercial uses only be permitted when the parties agree to do so? Further, any discussion of digitization should also include revisiting the issue of orphan works as it would impact any voluntary or opt-in digitization project. It benefits neither the public nor the author to have unidentifiable authors that make a voluntary license impossible to attain. The Copyright Office would be able to offer Congress much guidance as it issued a major report on orphan works in 2006 and continues to study the issue with respect to mass digitization. In addition, with the UK’s recent launch of its orphan works registry, there are a number of models in Europe from which to gather empirical data for Congress to review. In truth, now may be a more ripe time than ever to undertake these various issues and hopefully Congress will.

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Fair Use and Market Harm: Use It or Lose It?

Fair use is complicated. Anyone with a passing familiarity with copyright law will tell you so. The doctrine, originally a judicial creation, was codified by Congress as Section 107 in the Copyright Act of 1976. According to Section 107, “fair use of a copyrighted work . . . is not an infringement of copyright.”

But how do we determine whether a use is a fair use? There is no bright-line rule. Instead, Section 107 sets forth several non-exclusive factors that should be given consideration, such as:

(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.

Congress believed that “the endless variety of situations and combinations of circumstances that can rise in particular cases preclude[d] the formulation of exact rules in the statute. . . [C]ourts must be free to adapt the doctrine to particular situations on a case-by-case basis.” H.R. Rep. 94-1476, at 66 (1976).

To say the application of fair use has been varied would be quite an understatement. Courts disagree on which of the above factors should be given the greatest weight. Compare Kienitz v. Sconni Nation LLC, No. 13-3004 (7th Cir. Sept. 15, 2014) (finding that of the fair use factors, “the most important usually is the fourth (market effect)”) with Cario v. Prince, 714 F.3d 694 (2d Cir. 2013) (holding the first fair use factor – whether a use is “transformative” – is the most important). And commentators cannot even agree as to whether fair use is a right or a privilege.

Instead of addressing which fair use factor should be given the greatest weight, this post only aims to examine the application of the fourth fair use factor – the effect of the disputed use upon the potential market for or value of the copyrighted work. In particular, how the Eleventh Circuit (mis)applied that factor in its recent decision Cambridge Press v. Patton, et al., No. 12-14676 (11th Cir. Oct. 17, 2014) (often referred to as the Georgia State University e-reserve case) and the repercussions it may have on creator rights.

For the unfamiliar, in 2008 three academic publishers (Cambridge University Press, Oxford University Press, and Sage Publications) filed suit against Georgia State University for copyright infringement. The publishers alleged that the University had encouraged professors to use copyrighted works in digital coursepacks, as opposed to print coursepacks, to avoid the payment of permission fees (a license) to the publishers.

The district court ruled that the University’s practice was a fair use. Many copyright scholars, however, felt the court’s reasoning was suspect. While the court analyzed the four factors set forth in Section 107, it conveyed equal weight to each factor and made its final determination by simply tallying which party had the most fair use factors in their favor. Moreover, in its evaluation of the third fair use factor – the amount and substantiality of the portion used – the court created a bright-line rule, holding that if the amount of copying fell within 10% of the original or one-chapter, then the third factor favored a finding of fair use.

Unsurprisingly, the publishers appealed the district court’s ruling to the Eleventh Circuit. In an eagerly anticipated decision, the Eleventh Circuit unanimously reversed the district court’s decision. The Court ruled that the district court erred “by giving each of the four fair use factors equal weight, and by treating the four factors mechanistically” instead of undertaking a “holistic analysis” and carefully balancing the four factors. Cambridge Press at *110. In addition, the Court held that it was error for the district court to adopt the 10% of one-chapter bright-line rule to analyze the third factor. Instead, the court should have evaluated the amount taken from a qualitative and quantitative perspective to determine whether the copying “was reasonable in light of the pedagogical purpose of the use and the threat of market substitution.” Id. at *111.

While, on its face, the decision was a victory for the publishers, the majority’s analysis of the fourth fair use factor left the publishers’ chances of success on remand quite murky. (Judge Vinson, who authored a separate concurrence, also took issue with the majority’s application of the principle of “media neutrality.”)

In its evaluation of the fourth fair use factor, the Eleventh Circuit analyzed the digital licensing market available for the publishers’ works. It held:

We note that it is not determinative that programs exist through which universities may license excerpts of Plaintiffs’ works. In other words, the fact that Plaintiffs have made paying easier does not automatically dictate a right to payment. “[A] copyright holder can always assert some degree of adverse [effect] on its potential licensing revenues as a consequence of the secondary use at issue simply because the copyright holder has not been paid a fee to permit that particular use.” The goal of copyright is to stimulate the creation of new works, not to furnish copyright holder with control over all markets. Accordingly, the ability to license does not demand a finding against fair use.

Nevertheless, “it is sensible that a particular unauthorized use should be considered ‘more fair’ when there is no ready market or means to pay for the use, while such an unauthorized use should be considered ‘less fair’ when there is a ready market or means to pay for the use. The vice of circular reasoning arises only if the availability of payment is conclusive against fair use.” Put simply, absent evidence to the contrary, if a copyright holder has not made a license available to use a particular work in a particular manner, the inference is that the author or publisher did not think that there would be enough such use to bother making a license available. In such a case, there is little damage to the publisher’s market when someone makes use of the work in that way without obtaining a license, and hence the fourth factor should generally weigh in favor of fair use. This is true of Plaintiffs’ works for which no license for a digital excerpt was available.

Id. at 95-96. But see id. at 96 n. 32 (“Of course, it need not always be true that a publisher’s decision not to make a work available for digital permissions conclusively establishes that the publisher envisioned little or no demand, and the value of the permissions market is zero.”)

The Court’s analysis, however, distorts the fair use inquiry required by the Copyright Act.

Congress unambiguously stated that courts should consider the impact a disputed work would have on “the potential market for or value of the copyrighted work.” But the Eleventh Circuit’s logic creates a presumption that ignores potential markets by presuming that the copyright holder’s lack of presence in a market indicates that there is no value to derive from that market.

The implications of such a presumption are quite troubling. If any untapped market is a market that the copyright owner has deemed to lack value, then any use of the copyrighted works in those markets could not deplete the work’s value. That essentially renders the term “potential” in Section 107(4) moot as only a market where the work is not currently utilized in is a potential market and, according to the Eleventh Circuit, those markets have, at best, a de minimis value.

For purposes of illustration, consider the impact the Eleventh Circuit’s holding, when taken to its logical conclusion, would have on the film industry. Studios often utilize a “standard release” model where a film is first released in movie theaters for an exclusive period of time. Thereafter, the film is made available for purchase on home video platforms (such as DVD) or digital download and that period will often be exclusive to those markets. Then, the film is made available through video-on-demand or streaming services and, eventually, broadcast television.

Do Disney and Marvel Studios believe that Guardians of the Galaxy, its epic summer blockbuster that has grossed over $770 million theatrically worldwide, will have no value on home video platforms? According to the Eleventh Circuit, it must be, as the film has yet to be released on home video, leading to the presumption that the “publisher did not think that there would be enough [demand for] such use to bother making a license available.”

Obviously most would acknowledge that Disney and Marvel Studios believe the film will be (significantly) valuable in the home video market, so why the staggered release schedule? A simultaneous multi-platform release of the film might jeopardize the overall profitability of the work, while a staggered release is the best means to extract the most value from the work. In the film industry, downstream markets (home video, streaming services, and television licensing) often provide the bulk of returns on the work to the author over the long run, but box-office performance drives public perception of and future interest in the film and future interest. That perception impacts the downstream demand for the work, the value or price-point of downstream licensing deals, and the ability to secure future financing for subsequent studio projects. A simultaneous release may also cause the work to cannibalize its own profits if the different markets could act as substitutes for one another. If the goal of copyright law, as the Eleventh Circuit acknowledges, is to stimulate the creation of new works, then it is paramount to protect the release model (and downstream potential markets), even if it delays the license of the work to other platforms.

Some would be quick to point out that the Eleventh Circuit only raises the presumption of no market harm when there is no current market and that the copyright owner may rebut that presumption with evidence to the contrary. But how do we determine which markets possess potential value streams that would result in substantial market harm to the copyright owner if the disputed work or practice are found permissible?

Do we look at industry practice? Returning to the film industry, while the standard release model is common, simultaneous or direct-to-video release does occur. Instead, should we look at common markets to which copyright owners often expand? Well, in the publishing industry, print and digital releases are quite common. And, in Cambridge Press, the three publishers had already released some works digitally, but the Court still found that the evidence indicated the digital market had no value. Moreover, the digital coursepacks did substitute for the original print market “that had previously required the payment of permission fees[.]” Id. at *120 (Vinson, J., concurring). Lastly, how should copyright owners react to new, burgeoning platforms? Are copyright owners required to utilize those new platforms even if the value is speculative?

Thus, the Eleventh Circuit’s decision threatens to impose an affirmative requirement on copyright owners to license their works across markets and media platforms lest they risk an adverse finding of fair use. This requirement essentially converts a copyright owner’s exclusive bundle of rights under the Copyright Act to a mere right of first refusal.

“[A]lthough dissemination of creative works is a goal of the Copyright Act, . . . nothing in the copyright statutes would prevent an author from hoarding all of his works during the term of the copyright.” Stewart v. Abend, 495 U.S. 207, 228-29 (1990). In fact, the Act’s grant to the author of a limited monopoly over use of the work was to motivate creative activity that would eventually pass to the public. See Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). The Eleventh Circuit gives little consideration to this delicately struck balance by requiring copyright owners to “use it or lose it.” This proposition proves particularly worrisome for smaller content creators who may lack the desire, resources, insight, or opportunity to utilize their works in certain markets or mediums or those creators simply wishing to develop a better appreciation for their works’ true value.

To its credit, the bulk of the Eleventh Circuit’s decision is a well-reasoned analysis of the fair use doctrine and its proper application in light of the goals of copyright law. The Court properly recognized that certain factors in the analysis support a finding of fair use (educational) and others that do not (non-transformative). And while the market impact analysis, as interpreted by the Eleventh Circuit, may not prove dispositive to the district court’s finding on remand, the Court’s reasoning threatens to unbalance the fair use analysis and prejudice content creators. It will be interesting if the Eleventh Circuit agrees and grants the publishers’ en banc appeal.

For those who may be interested, check out this article about an author’s perspective on the process and concerns of licensing a novel for film. You can also read my earlier post on the fair use defense in the case of digitization projects.

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A Slippery Slope: The Facilitation of Fair Use as Fair Use

In 1975, Ms. Barbara Ringer, the Register of Copyrights, warned, “The basic human rights of individual authors throughout the world are being sacrificed more and more on the altar of . . . the technological revolution.” Unfortunately, her words have proved to be truly prophetic. More often than ever, courts have stretched doctrines of copyright law to protect technological convenience over the interests of copyright owners. Fox News Network, LLC v. TVEyes, Inc., No. 13 Civ. 5315 (AKH) (S.D.N.Y. Sept. 9, 2014), is one of the latest instances of technological innovation being valued over the interests of copyright owners.

In 2013, Fox News filed a lawsuit against TVEyes, a media-monitoring service. TVEyes records the programming of over 1,400 television and radio stations, twenty-four hours a day, seven days a week. Using speech-to-text technology, TVEyes stores the content on its website and creates a searchable database of the content. TVEyes offers its service to subscribers (currently only businesses, not the general public) for a monthly fee.

TVEyes’ subscribers can search the database for terms or phrases, view clips, read transcripts of the programs, and also save, archive, edit, and download an unlimited number of clips. When accessing the clips, subscribers are directed to TVEyes’ website, not the site where the content originated from (if available online). The clips are limited to ten minutes in duration, but most clips are shorter than two minutes. Subscribers may share clips with anyone, even non-subscribers, through email or social media. TVEyes does, however, require subscribers to agree to its terms of service, which includes a provision that states downloads only be used for internal purposes.

Fox News argued, inter alia, that TVEyes copied and distributed clips of Fox News programs in violation of the Copyright Act. TVEyes acknowledged its service copied Fox News’ copyrighted works, but asserted that its activities were protected under the doctrine of fair use.

The Copyright Act provides copyright owners with several exclusive rights with respect to their works. However, those rights are subject to one very important limitation – the right of others to make fair use of the works. 17 U.S.C. Section 107. Section 107 provides that “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” To determine whether a use is fair use, courts consider the following (non-exhaustive) factors:

(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.

Id.

The district court in TVEyes discussed each of the four fair use factors set forth in Section 107. The bulk of the court’s analysis, however, focused on the first factor – whether the purpose and character of TVEyes’ use of the copyrighted works transformed Fox News’ works. In discussing that factor, the court compared TVEyes’ service to two recent decisions on digitization projects by electronic libraries – Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014) and Authors Guild, Inc. v. Google, Inc., 954 F. Supp. 2d 282 (S.D.N.Y. 2013) (No. 13 Civ. 4829, app. pending).

In HathiTrust, the Second Circuit ruled that digitization project of the Hathi Trust Digital Library (“HDL”), a non-profit electronic library, was protected against claims of infringement under fair use. HathiTrust, 755 F.3d at *34. There, the HDL created a repository of scanned copyrighted works – books and other written materials – without seeking authorization or providing compensation to the copyright owners. The HDL permitted its users to conduct full-text searches for terms and view search results that would furnish users with the page numbers on which the search term appeared and the number of times the term appeared in the work. The HDL did not, however, display snippets of the text with the terms.

In Authors Guild v. Google, the district court of the Southern District of New York reviewed a digitization project similar to the one at issue in HathiTrust with two notable differences. First, Google itself is a for-profit entity and its Google Books service a commercial product. Second, the Google Books service provided users with snippets of the copyrighted content (although Google did incorporate certain measures to prevent users from utilizing the service to obtain full access to the entirety of the copyrighted work). Despite those differences, the district court found that Google’s service had become an important tool for librarians and fact-checkers so it too constituted fair use. Google, 954 F. Supp. 2d at 291. (The case is now before the Second Circuit on appeal.)

The TVEyes court found TVEyes’ service was analogous to Hathi Trust and Google’s digitization projects and, therefore, ruled that its searchable database and provision of clips to subscribers qualified as fair use. In the court’s view, TVEyes’ search results transformed the original work by showing subscribers “this is what [Fox News] said” as opposed to how Fox News presented the content as “this is what you should [know or] believe.” Id. at *20. Furthermore, subscribers could utilize the content for the public good, such as police departments monitoring stations’ compliance with situation reports. Id. at *2. Accordingly, TVEyes did not commit copyright infringement because “subscribers [could] use the service for research, criticism, and comment . . . fair use[s] as explicitly identified in the [Copyright Act].” Id. at *20.

Consider that progression again. The HDL merely created a searchable reference guide. Google took it a step further by providing content snippets in a fashion that would largely reflect how the content was communicated in the original work. To justify that step forward though, the court emphasized how the service was convenient for librarians and fact-checkers – not whether the service would lead consumers to substitute the Google Books service for the original work. Now, we have TVEyes, a service that captures and relays not only written expressions but also the oral presentation and expression of the content. Again, the court justifies that wholesale repackaging as a technological convenience that facilitates fair use activities by third parties.

Even with the limited nature of the decision, it continues a worrisome trend – permitting a for-profit entity to commit direct copyright infringement because of potential downstream fair uses by third parties. While the fair use doctrine has long been nebulous, it should concern copyright owners that that downstream fair use could justify upstream infringement. Under the court’s reasoning, one could assert that it is not copyright infringement for a street vendor to pirate a copyrighted film and sell it to a film critic so that she may review it because criticism and comment are permissible fair uses.

Although, there may be valid reasons for applying fair use broadly, such as promoting free speech, there is no basis in case law to support the district court’s current application of the doctrine. As the Second Circuit observed in HathiTrust,

Under the fair-use doctrine, a book reviewer may, for example, quote from an original work in order to illustrate a point and substantiate criticisms, and a biographer may quote from unpublished journals and letters for similar purposes. An artist may employ copyrighted photographs in a new work that uses a fundamentally different artistic approach, aesthetic, and character from the original. An internet search engine can display low-resolution versions of copyrighted images in order to direct the user to the website where the original could be found. A newspaper can publish a copyrighted photograph (taken for a modeling portfolio) in order to inform and entertain the newspaper’s readership about a news story. A viewer can create a recording of a broadcast television show in order to view it at a later time. And a competitor may create copies of copyrighted software for the purpose of analyzing that software and discovering how it functions (a process called “reverse engineering”).

HathiTrust, 755 F.3d at *15. Those examples all share a common feature – the fair use at issue is the action of the alleged infringer, not a third party entity or downstream user.

There are two notable areas where courts may consider whether a third party’s actions qualify as fair use: (1) claims of secondary (or contributory) liability and (2) preservation projects.

In claims of secondary liability, courts have (and should) consider whether a third party’s actions qualify as fair use. See e.g., Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984). In Sony Corp., Sony was sued for creating and selling the Betamax, the precursor to the VCR. The theory in the case was not that Sony itself committed any acts of infringement, but rather it contributed to acts of infringement by Betamax users by furnishing the technology. Thus, the cause of action was one of secondary liability. The Supreme Court held that Betamax users used the device for substantial non-infringing activities, namely time-shifting – the recording of a program to permit a user to consume the program at a later, more convenient time. According to the Court, time-shifting was fair use, so Sony was not liable for potential infringement by Betamax users. Id. at 442-43.

In this context, it is reasonable for the court to evaluate third party conduct as the entire cause of action is predicated upon third party conduct. If the entity itself is not committing any act of direct infringement, then its actions presumably comply with the Copyright Act. As fair use is an affirmative defense to infringement, none of its actions would technically qualify as fair use as there is no infringement. Thus, the only potential fair use would be that of the third party infringer.

Fox News Network, LLC v. TVEyes, Inc. is not a case of secondary liability. While there is certainly concern over subscribers’ unrestricted ability to download and share the copyrighted content, Fox News’ claim is that TVEyes, not its subscribers, has merely repackaged and republished its copyrighted programs. TVEyes provides no original comment or commentary itself. Instead, its defense relies entirely on how it helps facilitate fair uses of the copyrighted works by its subscribers.

With respect to direct liability, the only fair use defense that touches on third party uses is that of preservation (or archival). Many acknowledge that copying in these instances is socially beneficial as “preservation of printed knowledge is necessary for the progress of science and the useful arts.” Robert Oakley, Copyright and Preservation: A Serious Problem in Need of a Thoughtful Solution (Washington, D.C.: Council on Library and Information Resources, September 1990) <http://www.clir.org/pubs/abstract/pub11.html>.

Section 108 of the Copyright Act explicitly permits libraries and archives to make reproductions for the purpose of preservation. But that provision also narrowly defines what qualifies as an eligible library or archive (such as being open to the public) and when a copy may be permissibly made. Still, Congress noted that “[n]o provision of Section 108 is intended to take away any rights existing under the fair use doctrine [Section 107]. To the contrary, section 108 authorizes certain photocopying practices which may not qualify as a fair use.” Senate Report No. 94-473 (1975).

A close examination of the legislative history behind the right of preservation shows that Congress’s goal was to permit reproductions of published works where the library’s copy was damaged, deteriorating, or a replacement was not otherwise commercially available in the United States. Senate Report No. 91-1219 (1970). To protect against works from collectively disappearing, Congress permitted libraries – non-profit entities – to make limited copies. While Congress did not intend to replace the rights of libraries to make copies under Section 107 with Section 108, it seems perverse that TVEyes, an entity that would not meet the stringent requirements of Section 108, could avail itself to the same rights.

TVEyes, however, does not defend its actions as that of a preservation service. In fact, the copyrighted works it loads onto its database are removed after about a month. As noted above, TVEyes defends its service on alternative ground – that it service facilitates uses that serve the public good. This, however, brings us back to my earlier concern. If copyright infringement can be justified because of some downstream fair use(s), the limitation threatens to swallow the rule.

Fair use is only supposed to allow individuals to utilize the amount and substantiality of the work needed to achieve the transformative goal of the use. Thus, the permissible amount of copying and use will depend on the use at issue. For example, the police department may use TVEyes to monitor station compliance with broadcast alerts. To verify compliance and achieve that goal, only a simple confirmation of the alert terms’ usage would be needed – not a transcript of the broadcast and certainly not the audio or video. However, if a industry watch group wants to use the footage to comment on how news organizations are reporting a story, a copy of the audio or video may be needed. TVEyes provides all of the content regardless of the subscribers’ use. In the district court’s eyes, this is permissible and the latter’s fair use now justifies the former’s overuse. A very slippery slope indeed.

Like much of copyright law, fair use is a particularly tricky doctrine. It requires courts to closely review the facts of each case and balance the (oftentimes, conflicting) benefits of technological convenience with the interests of copyright owners. Admittedly, in today’s politically-charged media, The Daily Show and others have proven that there may be value in TVEyes service where “[t]he actual images and sounds depicted on television are as important as the news information itself[.]” TVEyes, 13 Civ. 5315 at *18. But it is dangerous path to tread where otherwise infringing activities can be justified on the grounds of third party fair uses. In this case, while it may have been easy for the district court to downplay Fox News’ claim in light of its significant revenue opportunities elsewhere, it may have paved a path where it will become easier to fashion reasons to set aside the rights and interests of individual authors and smaller creators for the sake of technological convenience.

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