Continuing:


 
                           No. 94-1778
 
                  UNITED STATES COURT OF APPEALS
 
                      FOR THE SIXTH CIRCUIT
 

     _________________________________________________________________ 
   


David A. Nelson, Circuit Judge, concurring in part and dissenting
in part.  A generation ago, I suspect, this would have been an
easy case for us.  The notion that it could be "fair use" for a
commercial vendor, acting without authorization from the
copyright holder, to copy and sell as much as 30 percent of
copyrighted work of scholarship is a notion that would once have
seemed patently absurd.

Changes in technology, and concomitant changes in commercial
duplication services and in teaching practices, may have made
such a notion seem less patently absurd today.  Indeed, my
colleagues' rationale for concluding that the defendants'
unauthorized coursepacks represent a fair use of the copyrighted
materials impresses me as sufficiently plausible to justify
reversal of the district court's finding of willfulness.  I
concur in today's judgment insofar as it vacates the enhanced
damages awarded on the strength of the district court's finding
that the defendants acted willfully.

I do not concur in the majority's resolution of the fair use
question itself.  The question of fair use ought to be decided in
favor of the plaintiff publishers, in my view, or at the very
least ought to be the subject of a trial.

                                I

Of the four statutory factors that must be considered in
determining whether a particular use of a copyrighted work is
"fair," the most important is the one set forth in 17 U.S.C.
Section 107(4).  See Harper & Row Publishers, Inc. v. Nation
Enterprises, 471 U.S. 539, 566 (1985), citing 3 M. Nimmer,
Copyright Section 13.05[A], at 13-76 (1984).  I turn first to
this factor, "the effect of the use upon the potential market for
or value of the copyrighted work."

The burden of proof as to market effect rests with the copyright
holder if the challenged use is of a "noncommercial" nature.  The
burden rests with the alleged infringer, on the other hand, if
the challenged use is "commercial" in nature.  Sony Corp. v.
Universal City Studios, Inc., 464 U.S. 417, 451 (1984).  My
colleagues on the panel conclude that the plaintiff publishers
have the burden of proof because the use being challenged here is
"noncommercial."  I respectfully disagree.

It is true that the use to which the materials are put by the
students who purchase the coursepacks is noncommercial in nature. 
But the use of the materials by the students is not the use that
the plaintiff publishers are challenging.  What the publishers
are challenging is the duplication of copyrighted materials for
sale by a for-profit corporation that has decided to maximize its
profits -- and give itself a competitive edge over other copy
shops -- by declining to pay licensing fees to the holders of the
copyrights.
     
The defendants' use of excerpts from the books at issue in this
case is no less commercial in nature than was The Nation
Magazine's use of the excerpts from President Ford's book in
Harper & Row.  Like the students who purchase unauthorized
coursepacks, the purchasers of The Nation did not put the
contents of the magazine to commercial use -- but this did not
stop the Supreme Court from characterizing the defendant's use of
excerpts from the copyrighted book as "a publication [that] was
commercial as opposed to nonprofit. ..."  Harper & Row, 471 U.S.
at 562.  And like the use that is being challenged in the case
now before us, the use challenged in Harper & Row was
"presumptively an unfair exploitation of the monopoly privilege
that belongs to the owner of the copyright."  Id., quoting Sony,
464 U.S. at 451.

The strength of the Sony presumption may vary according to the
context in which it arises, and the presumption disappears
entirely where the challenged use is one that truly transforms
the original work into a new artistic creation.  See Campbell v.
Acuff-Rose Music, Inc., 114 C.Ct. 1164, 1176 (1994).  The case at
bar involves mere duplication for commercial purposes, as I see
it, but I readily concede that the presumption may be weaker in
the present case than it would be in many other contexts.  There
is a presumption of unfairness here, nonetheless, and I am not
persuaded that the defendants have rebutted it.

If I am wrong about the existence of presumption -- if the
challenged use is not commercial, in other words, and if the
plaintiff publishers have the burden of proving an adverse effect
upon either the potential market for the copyrighted works or the
potential value of the works -- I believe that the publishers
have carried the burden of proving a diminution in potential
market value.

One test for determining market harm -- a test endorsed by the
Supreme Court in both Sony and Harper & Row -- is evocative of
Kant's categorical imperative.  "[T]o negate fair use," the
Supreme Court has said, "one need only show that if the
challenged use 'should become widespread, it would adversely
affect the potential market for the copyrighted work.'"  Harper &
Row, 471 U.S. at 568, quoting Sony, 464 U.S. at 451 (emphasis
supplied in part).  Under this test, as I read the record, it is
reasonably clear that the plaintiff publishers have succeeded in
negating fair use.
     
The record shows that most of the copy shops that compete with
the defendants in the sale of coursepacks pay modest "permission
fees" for the privilege of duplicating and selling excerpts from
copyrighted works.  In the early 1990s, it appears, the three
plaintiffs were collecting permission fees at a rate that
approached a total of $.5 million a year.  If copy shops across
the nation were to start doing what the defendants have been
doing here, this revenue stream would shrivel and the potential
value of the copyrighted works of scholarship published by the
plaintiffs would be diminished accordingly.
     
The defendants contend that the permission fee argument is
circular.  In support of this contention they cite the dissenting
opinion in American Geophysical Union v. Texaco, Inc., 37  F.3d
881, 900 et seq. (2d Cir.) (Jacobs, J., dissenting), amended &
superseded, 60 F.3d 913 (1994), cert. dismissed, 116 S.Ct. 592
(1995), and a footnote in a Court of Claims decision, Williams &
Wilkins Co. v. United States, 487 F.2d 1345, 1357 n.19
(Ct.Cl.1973), aff'd by an equally divided court, 420 U.S. 376
(1975).  But the potential uses of the copyrighted works at issue
in the case before us obviously include the selling of licenses
to copy portions of the works for inclusion in coursepacks, and
the likelihood that publishers actually will license such copying
is a demonstrated fact.  A licensing market actually exists here,
as it did not in Williams & Wilkins or American Geophysical.  I
believe that this is a "protectable derivative market," to use
the terminology employed by the Supreme Court in Campbell, 114 S.
Ct. at 1178.  If so, there is no circularity in saying -- as I do
say -- that the potential for destruction of the protectable
derivative market by widespread circumvention of the plaintiffs'
permission fee system is enough under the Harper & Row test, "to
negate fair use."
     
My final point with regard to the fourth statutory factor is that
an absence of market harm is not supported by the affidavits of
the three professors who assigned one or more of the copyrighted
works to be read by the students in their classes.  None of these
affidavits shows that the professor executing the affidavit would
have refrained from assigning the copyrighted work at issue if
the position taken by the copyright holder had been sustained
beforehand.
     
It is true that Professor Victor Lieberman, who assigned the
excerpt from the Olson and Roberts book on America and Vietnam,
raises questions about the workability of the permission systems
of "many publishers."  In 1991, Professor Lieberman avers, a
Kinko's copy shop to which he had given materials for inclusion
in a coursepack experienced serious delay in obtaining
permissions from unnamed publishers.  Professor Lieberman does
not say that a timely permission could not have been obtained
from the publisher of the Olson and Roberts book, however, and he
does not say that he would have refrained from assigning the work
if the copy shop had been required to pay a permission fee for
it.
     
It is also true that the publisher of one of the copyrighted
works in question here (Public Opinion, by Walter Lippmann) would
have turned down a request for permission to copy the 45-page
excerpt that the defendants included in a coursepack prepared to
the specifications of Professor Donald Kinder.  The excerpt was
so large that the publisher would have preferred that students
buy the book itself, and the work was available in an inexpensive
paperback edition.  But Professor  Kinder does not say that he
would have refrained from assigning the excerpt from the Lippmann
book if he could not have been included in the coursepack. 
Neither does he say that he would have refrained from assigning
any of the other works mentioned in his affidavit had he known
that the defendants would be required to pay permission fees for
them.
     
The third professor, Michael Dawson, assigned a 95-page excerpt
from the book on black politics by Nancy Weiss.  Professor Dawson
does not say that the license would have deterred him from
assigning the book.

                                 II
     
The other statutory factors are less important, except insofar as
they touch on the fourth factor.  I shall deal with them
relatively briefly.

                                A

As to "the purpose and character of the use, including whether
such use is of a commercial nature or is for nonprofit
educational purposes," 17 U.S.C. Section 107(1), I have already
explained my reasons for concluding that the challenged us is of
a commercial nature.  I recognize, of course, that the first
sentence of 17 U.S.C. Section 107 lists "teaching (including
multiple copies for classroom use)" as one of the purposes for
which the reproduction of a copyrighted work may constitute a
non-infringing fair use. The quoted language may or may not
suggest that the professors themselves could properly make
multiple copies of large excerpts from the copyrighted works
without paying permission fees, but it does not suggest to me
that independent contractors who are not members of the teaching
profession are free to do so.

My colleagues find it significant that the defendant copy shop
can profitably produce multiple copies for less than it would
cost professors or the students who produce them.  Most of the
copy shops with which the defendants compete have been paying
permission fees, however, and I assume that these competitors can
still perform the copying on a more cost-effective basis than the
professors or students can.  This strikes me as a more
significant datum than the ability of a black market copy shop to
beat the do-it-yourself cost.

As to the degree to which the challenged use has transformed the
original copyrighted work, which is another element in the first
statutory factor, the majority opinion finds the transformative
aspect of the coursepacks to be "slight."  I agree.  If you make
verbatim copies of 95 pages of a 316-page book, you have not
transformed the 95 pages very much -- even if you juxtapose them
to excerpts from other works and package everything conveniently. 
This kind of mechanical "transformation" bares little resemblance
to the creative metamorphosis accomplished by the parodists in
the Campbell case.

                                B

The second statutory factor, "the nature of the copyrighted
work," is not in dispute here.  The defendants acknowledge that
the excerpts copied for the coursepacks contained creative
material,  or "expression;"  it was certainly not telephone book
listings that the defendants were reproducing.

                                C

The third statutory factor, "the amount and substantiality of the
portion used in relation to the copyrighted work as a whole," may
have more significance for the 95-page excerpt from the black
politics book than for the 17-page excerpt from the Vietnam book. 
But all of the excerpts far exceed the 1,000 word limit that
legislative history of the Copyright Revision Act of 1976
suggests as a benchmark for "educational" copying.  See H.R. Rep.
No. 1476, 94th Cong. 2nd Sess. (1976); H.R. Conf. Rep. No. 1733,
94th Cong. 2nd Sess. (1976).

My colleagues would give no consideration to the legislative
history of the Copyright Revision Act, their theory being that
the statutory fair use factors are unambiguous.  But the fair use
issue has long been the most troublesome one in the whole law of
copyright, see Acuff-Rose Music, Inc. v. Campbell, 972 F.2d 1429,
1439 (6th Cir. 1992) (Nelson, J., dissenting), and the 1976
legislation did not make it any less so.  The Classroom
Guidelines incorporated in the legislative history clearly lack
the force of law, but this does not mean that we must shut our
eyes to them altogether.  See Harper & Row, 471 U.S. at 549-553,
where the Supreme Court turned for guidance not only to the house
report cited above, but to an earlier senate report "discussing
fair use of photocopied materials in the classroom. ..." Id. at
553.  And see Campbell, 114 S.Ct. at 1170, where the Court
likewise turned to the congressional committee reports for
guidance.

The conference committee that reported out the bill enacted in
1976 did not consider the compilation of anthologies to be fair
use.  The defendants' coursepacks are anthologies, of course, and
the excerpts they contain are much longer than the 1,000-word
standard suggested as a safe harbor by the conferees.  The
guidance offered by the legislative history of the statute that
codified the fair use doctrine is far from irrelevant, in my
view.

                               III

I take as the text for my concluding part Justice Stewart's 
well-known exposition of the correct approach to "ambiguities"
(see Sony, 464 U.S. at 431) in the copyright law:

     "The immediate effect of our copyright law is to secure a
     fair return for an  author's' creative labor. But the
     ultimate aim is, by this incentive, to stimulate artistic
     creativity for the general public good.  The sold interest
     of the United States and the primary objective in conferring
     the monopoly,' this Court has said,  lie in the general
     benefits derived by the public from the labors of authors.'
     ... When technological change has rendered its literal terms
     ambiguous, the Copyright Act must be construed in light of
     this basic purpose." Twentieth Century Music Corp. v. Aiken,
     422 U.S. 151, 156 (1975) (footnotes and citations omitted).

The majority opinion attaches considerable weight to the
assertions of numerous academic authors that they do not write
primarily for money(1) and that they want their published
writings to be freely copyable. The suggestion is that unlicensed
copying will "stimulate artistic creativity for the general
public good."

This suggestion would be more persuasive, I think, if the record
did not demonstrate that licensing income is significant to the 
publishers. It is the publishers who hold the copyrights, of
course -- and the publishers obviously need economic incentives
to publish scholarly works, even if the scholars do not need
direct economic incentives to write such works.

The writings of most academic authors, it seems fair to say, lack
the general appeal of works by a Walter Lippman, for example.
(Lippmann is the only non-academic author whose writings are
involved in this case.) One suspects that the profitability of at
least some of the other books at issue here is marginal. If
publishers cannot look forward to receiving permission fees, why
should they continue publishing marginally profitable books at
all? And how will artistic creativity be stimulated if the
diminution of economic incentives for publishers to publish
academic works means that fewer academic works will be published?

If the decision in this case stands, and if our sister circuits
follow our lead, it seems likely that some academics will find it
harder to get their books published. Perhaps these academics will
not perish as a result -- electronic samizdats may turn out to be
the wave of the future, for all I know -- but book publishing as
we have known it will clearly have taken a hit. An unfair hit, in
my judgment.

I respectfully dissent from this court's resolution of the fair
use issue.

                             END NOTE

1. I imagine that most of these academics are acquainted with the
pertinent dictum of Dr. Johnson, see Campbell, 114 S.Ct. at 1174,
and to my ear, at least, their testimony has the ring of truth.
One might almost view what they say as an admission against
interest.

   
   
       
        ____________________________________________________________________ 
      
      Front Page | News Update | Resources | Colloquy | Washington Almanac |
      This Week's Chronicle | Chronicle Archive | Jobs | Information Bank |
      Advertisers | Help  
        ____________________________________________________________________ 

 Visits to this page since May 2, 1999