Fair Use Intro to IP Prof Merges 2

Fair Use Intro to IP – Prof Merges 2. 28. 2012

Wendy Gordon: Fair Use as Market Failure

Harper & Row v. Nation • Gerald Ford Memoir • Clear and definite financial harm: loss of $12, 500 payment by Time Magazine • Held: Reversed, Not Fair Use

“Implied Consent” Theory – p. 595 • Does this hold up in subsequent cases? • Compare: classic defense of fair use for criticism, e. g. , book reviews

Unpublished Nature of Work • P. 595: Author’s right to control prepublication of works, creative control and financial returns. . . • True for all time? What about long unpublished works?

Authorial control “Publication of an author’s expression before he has authorized its dissemination seriously infringes the author’s right to decide when and whether it will be made public, a factor not present in fair use of published works. ” – p. 595

First Amendment Defense • Fair Use should be informed by First Amendment • First Amendment protection built into copyright in idea/expression dichotomy • First Amendment argument would eliminate market for political memoirs, etc.

Commercial Use • Commercial uses are presumptively not fair uses • Effect on the market as key factor • “Market Failure” theory of fair use – p. 597

1992 Amendment “The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors. ” – Sec. 107

Sec. 107. Limitations on Exclusive Rights: Fair Use Notwithstanding the provisions of sections 106 and 106 A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.

The 4 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.

Sony Part II [W]e need only consider whether on the basis of the facts as found by the district court a significant number of [uses of the Betamax] would be noninfringing.

IPNTA 5 th at 608 • [T]he District Court’s findings plainly establish that timeshifting for private home use must be characterized as a noncommercial, nonprofit activity.

Effect on the Market • Court notes that Universal does not represent all copyright holders whose works are copied by the Beta. Max • Some copyright owners grant permission to copy, others do not • Fair Use preempts a market here. . .

1992 Amendment “The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors. ” – Sec. 107

AGU v. Texaco • Copying of academic journal articles • Exhaustive analysis of 4 factors

The 4 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.

Texaco: Factor 1 • Purpose and character of the Use • Here: personal archival copies • Possibly helpful to Texaco: protect originals from chemicals in the lab

Factor 1: Commercial Use? [C]ourts will not sustain a claimed defense of fair use when the secondary use can fairly be characterized as a form of ‘‘commercial exploitation, ’’ i. e. , when the copier directly and exclusively acquires conspicuous financial rewards fromits use of the copyrighted material. . Conversely, courts are more willing to find a secondary use fair when it produces a value that benefits the broader public interest …. P. 614.

Factor 1: Transformative Use [T]hough a ‘‘transformative use is not absolutely necessary for a finding of fair use, . . . the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. ’’ [Campbell v Acuff-Rose] at 1171. – IPNTA 5 th, 615

The District Court properly emphasized that Texaco’s photocopying was not ‘‘transformative. ’’ After the District Court issued its opinion, the Supreme Court explicitly ruled that the concept of a ‘‘transformative use’’ is central to a proper analysis under the first factor, see Campbell, 114 S. Ct. at 1171 - 73.

Factors 2 and 3 • Nature of Copyrighted work: factual (not in © “core”) – favors defendant Texaco • Amount and substantiality of portion used: entire articles (favors plaintiffs)

Factor 4: Effect on Market/Value • This is the heart of the Texaco case; relevant in many settings • [T]here is neither a traditional market for, nor a clearly defined value of, individual journal articles. As a result, analysis of the fourth factor cannot proceed as simply as would have been the case if Texaco had copied a work that carries a stated or negotiated selling price in the market.

Judge Newman opinion • “[I]t 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. ” • -- IPNTA 5 th p. 619

Wendy Gordon: Fair Use as Market Failure

IPNTA 5 th ed. at 620 • Would a well-functioning licensing market— such as that envisioned by the CCC and encouraged by Judge Newman—serve to promote both primary and cumulative creativity? Or would it simply add another transaction cost to scientific research?

IPNTA 5 th ed. – p. 621 • Does the existence of licensing transactions vindicate Professor Merges’ conjecture about strong property rules producing effective licensing institutions? To the extent that licensing markets function well—i. e. , producing efficient, low-cost access to scholarly works—is fair use needed?

2 Live Crue

Campbell v. Acuff-Rose Music, Inc. • Facts • Procedural posture – Dist Ct—commercial no bar/conjure up test/no market impact – C of A—commercial presumption (Sony); heart theft (Harper) • Souter sets the stage – Must consider all 4 factors – It is always a case by case analysis – Footnote 10 - damages instead of injunction

Campbell v. Acuff-Rose Music, Inc. • Four factors – Factor 1: Nature of the work: parody special – Amount & substantiality of portion used- the heart or all – tied to Factors 1 and 4 – Market effect--- D & others, includes derivative market, Sony presumption? Lethal parody’s impact? Beneficial impact like song in a movie? • Holding: This Parody was a fair use

Campbell v. Acuff-Rose Music, Inc. • Transformative use favored, though not required • Parody is a transformative use • Parody must criticize Plaintiff’s © ‘ d work, not society • Courts will not recognize derivative market for critical works, but supplanting a derivative market for rap non-parody cuts against fair use • Commercial not presumptively unfair • No presumption of market harm from commercial nature of use unless mere duplication for commercial purposes

Transformative Use • The [Campbell] Court explained that though a ‘‘transformative use is not absolutely necessary for a finding of fair use, . . . the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. ’’ Id. at 1171.

Because many parodies lampoon the original, the authors of the original are often unwilling to permit a parody to be prepared at any price. Robert Merges has described this reluctance as the ‘‘bargaining breakdown’’ problem— noneconomic factors prevent the parties from agreeing to what might be an efficient license (in purely economic terms). See Robert Merges, Are You. Making Fun of Me? Notes on Market Failure and the Parody Defense in Copyright, 21 AIPLA Q. J. 305 (1993). Cf. Richard Posner, When Is Parody Fair Use? , 21 J. Legal Stud. 79 (1992).

Bill Graham Archive v. Dorling. Kindersley Press • Tickets and posters – images of Dead shows • Incorporated into Defendant’s book

DK’s purpose in using the copyrighted images at issue in its biography of the Grateful Dead is plainly different from the original purpose for which they were created. Originally, each of BGA’s images fulfilled the dual purposes of artistic expression and promotion. … In contrast, DK used each of BGA’s images as historical artifacts to document and represent the actual occurrence of Grateful Dead concert events featured on Illustrated Trip’s timeline. – IPNTA 5 th p. 637

Transformative works vs. market orientation • Biographical book is different type of work; BUT • There was a negotiation here; DK used the posters after it broke down • Better to enforce © and encourage private bargaining?

Lennon v. Premise Media • 15 second excerpt from “Imagine” • Incorporated into film about creationism and “academic freedom”

• "I'm extremely gratified to hear that Yoko Ono's attempts to silence our little film have not succeeded and that free speech is still alive and well in America, " noted Stein. "There is a culture war going on in this country, but the numbers are with the traditionalists. While a few Americans may be interested in films like Bill Maher's Religulous, Expelled is the kind of film that most mainstream/traditionalists Americans are going to most resonate with and we are looking forward to great numbers when the DVD comes out. "

Companion Case • New York State Supreme Court, Aug. 13, 2008 • Preliminary Injunction for Capitol Records denied