The Next Great Copyright Act Conference, exceptions and limitations

Exception & Limitation Reforms

Moderator: Andrew Gass, Latham & Watkins

Jessica Litman, University of Michigan Law School

Saying that the most important reason for copyright is to encourage readers etc. to experience works of authorship might suggest that readers etc. have interests the law should pay attention to, and that’s controversial, though it shouldn’t be. Owners have concluded that attention to readers would limit their rights.  Thus we’ve heard “there are no users’ rights under copyright law” and “fair use is a privilege, not a right.”   But cyberradicals didn’t invent the concept that the public—readers, listeners, viewers—has interests that are sometimes more important than those of authors; appears in almost every SCt case in the 20th century and throughout the legislative history. Why is it suddenly scary?

Evolution of digital networks/markets has been very fast; looks like scary machine for disseminating millions of copies. Also, conviction not grounded in law or history that © owners ought to control all uses of their works.  Some owners have gotten used to arguing that it ought to be true. Copyfetish: any appearance of any part of work anywhere is a copy that needs a license or excuse, whether or not anyone will ever see the copy, whether it’s incidental to lawful use, etc. This inspired Authors Guild to sue HathiTrust over copies that no one will ever see. Copyright owners have been losing lawsuits they wouldn’t have brought if they didn’t feel obliged to protect themselves from all unlicensed copies—devotion to the RAM copy.  Litman thinks the 9thCircuit just made a mistake, but if we cling to the idea that RAM copies are always actionable, then playing a DVD, reading an ebook, using an MP3 player are all actionable reproductions. That would be major incursion on interests of readers, listeners, etc. who have counted on freedom to use works they purchase or license.

Another fetish: describing HathiTrust decision as “Plessy v. Ferguson.”  No one sees these copies; no one reads them; they are instead indexed and used to perform sophisticated analysis and attach metadata. They can be searched and users can find that a word is in a book, but can’t see a snippet of text.  They can generate readable copies for print impaired readers, which is expressly permitted. The only objection is dignitary: that the library has a whole bunch of copies it didn’t license.  Copyfetish means that when I say you have to consider the interests of readers, listeners and viewers, some in the room stop listening.

Legislation happens when lawyers for institutions get together and find a compromise they can live with.  Until now, readers have not gotten a seat at the table, and even NGOs representing them are banished to the children’s table.  Explains CONTU and section 108 study group.  So we can predict short shrift for readers’ rights, which should worry all of us. Every one of us who writes, makes movies, etc. wants to convey our works to audiences so they can enjoy them, interact with them, learn from them. Copyright works because it encourages authors to create and audiences to read, listen to, etc. those works.  Now for some the primary goal is to get paid, and allocation problems are real (see last panel), but that isn’t the problem of readers.

We should value imaginative readers as we value imaginative authors. If there is to be expansion, there should also be statutory readers’ rights.  Pretty modest list (unless you’re a copyfetishist). Someone who lawfully owns or lawfully accesses a work should be entitled to make incidental uses: copies, adapt to her needs, entitled to extract & use any material not protected by copyright, even if doing so means making a copy or defeating tech protections; she should be able to time-shift; loan, sell, give away; encouraged to respond to it and share her response with others; should have expectation that intellectual privacy would be respected. These aren’t radical. These were completely lawful before wide deployment of networked digital technology. Links of networks don’t change essence of reading, and engagement with works is as crucial today as it was 40 years ago.

We see impulse to control/suppress reader creativity motivated by panic about online piracy, but creative reader reaction isn’t what causes piracy and usually redounds to © owner’s bottom line’s benefit. More importantly, it’s good for the creative system.

Proposals to subject reading, listening, watching to tight control will not discourage people from stealing access to works they’re unable to buy. Instead they’re more likely to discourage them from buying access to works they’d otherwise be eager to see. Even if © owners came up with a perfect tech, if controls interfered with reading, listening, and viewing, it would harm half of the system.  When talk of reader’s rights discomfits authors it’s because the sense is that compensation is already shockingly inadequate, and reader’s rights might shave off more of the teeny tiny share of money that goes to creators from the sloshing pile of money. But that’s the fault of the architecture, and hamstringing readers won’t put any money in authors’ pockets.  Congress has repeatedly tweaked © law to enhance owners’ control over works, and none of those tweaks put more money in authors’ pockets.  If the point is to help authors, ratcheting up owner control yet again is unlikely to get the job done: instead restructure system to make getting money to authors a higher priority.

Aaron Perzanowski, Case Western Reserve School of Law

The idea that you own the stuff you buy from online retailers was deemed an extreme digital view.  Here to defend that idea. If you accept property rights framework, must accept that creators are not the only ones with ownership interests at stake: users own the copies of books and albums they have. The Q is which rights deriving from ownership will survive transition to digital marketplace. Analog world drew line using exhaustion. Exhaustion is not an unfortunate loophole exploited by scofflaw competitors and rogue librarians. It’s a fundamental component of ©’s balance between copyright owners and consumers. Exhaustion allows copyright owner to set initial price.  Rightsowner receives reasonable return for that particular copy.

Incentives for consumers: by making sure consumers have property rights in their purchases, encourages them to participate in the market in the first place. © asks consumers to pay supracompetitive prices for works available for free everywhere. How to convince them? Statutory damages are sticks; exhaustion is a carrot.

§109 makes digital first sale very hard now. ReDigi court is fixated on reproduction v. distribution; digital transfers demand reproduction, so §109 can’t make sense of digital first sale. Copy ownership is the trigger, but ownership isn’t defined in the Act and courts aren’t giving much clarity. 9thCircuit: decides based on unilateral statements in license agreements; also sometimes 9th Circuit does opposite and looks at economic realities of transaction.

What does digital exhaustion look like?  (1) Detailed list of exceptions spelling out rights reserved for consumers and rights for copyright owners. Would not let 15 people read the “same” copy of a book as long as they weren’t all reading at once.  (2) Look at what’s really going on. Should think about how transaction is characterized to consumer, not in 15,000 word terms of use but if they’re clicking on a button that says “buy.”  Digital exhaustion is both workable and wise; real extremism would be elimination of consumer property rights.

Jane Ginsburg, Columbia Law School

Not a copyfetishist, but fair use has run amock.  Two fateful and related developments in the doctrine of fair use: First, its expansion from its historical role of encouraging creation of new works by providing follow-on authors the breathing space to write commentaries, analyses, parodies, and so forth without being infringing derivative works. Played that role even before Folsom v. Marsh in the doctrine of fair abridgement. Sony consecrated fair use in new forms of dissemination/technological fair use, with complete copies of existing works without transforming those works into new works, for largely the same purpose of enjoying the work.  Second: the transformation of “transformative” use, coined by Judge Leval.  Transformed to transformative “purpose,” allowing complete copies of the same work, for supposedly different purpose but it seems that often means new business models. Transformative use has a stampeding effect, as Barton Beebe says, on the four factor analysis. If a court finds a use transformative, well, we never cared about factor two anyway. The third factor might be thought to mean “not the whole work” but we got over that in Sony. Factor four repeats factor one: a transformative use is likely to be in a transformative market and thus doesn’t negatively affect the market for the copyright owner’s work.

Wonderful and publicly beneficial use = must be fair use! She thinks that’s the bottom line in HathiTrust and Google Books, whether or not one thinks it’s a good outcome.

We get there because fair use is an on/off switch, all or nothing.  Proposes a middle route. (I remember when it was copyright restrictionists who wanted a fair use payant (like the domaine public payant), to allow more uses to be free of copyright owners’ veto power.  It’s a sign of the change that Ginsburg is talking about that it’s now a rearguard proposal by expansionists.)   Some, like libraries, should get, if not a free pass, a heavily discounted rate; proper source for that subsidy might be the author/copyright owner.  With market failure where use would otherwise be foregone there could be fair use, but it’s not the same normative justification as for new works or for subsidization; logically, if a market develops it should no longer be a free pass.  

Even with a totally functioning license market, we might still think that some people should be subsidized.  She doesn’t agree w/the case, but it’s an example: Georgia State litigation over e-reserves.  Georgia State court made up a 10% fair use quantum.  Above that, judge made up a rule: license it or lose it. If they offered a reasonable license, no fair use; if not, fair use.  10% off the top is the straight subsidy and license it or lose it was the rest—she wants to put that in broader context.

US is outlier in having capacious fair use that doesn’t compensate copyright owners at all for redistributive uses (she is not proposing to reform new creative uses cases—those have problems but they are problems we’ve had forever).  By and large, the rest of the world, with respect to the social subsidy uses, has: license or lose solutions; license or gov’t compulsory license; extended collective licensing; new French law on unavailable books supposed to foster mass digitization. If a book published before 2000 is not in commerce, and if the publisher doesn’t object, a gov’t society administers licenses for digitization and distribution, society composed half of authors and half of publishers; half the money goes to authors. Countries with intermediate solutions pay the authors for the uses.  Recognizes that a number of differences b/t US and EU exist, including antitrust, scope of collecting societies, and our all-purpose fair use doctrine, but still instructive.

What is to be done? We have compulsory licenses and bargaining in their shadow.  Should we have more? Reading §119 is a good answer to that question.  But license it or lose it has a certain appeal. The problem is that it has to be convenient and reasonable according to Georgia State—who is to decide? Will every court be a rate court?  So she’s working through a proposal for a form of “last best offer” arbitration before CRB.  Owning parties and using parties, who might be represented by bargaining agent, would come in, each with last best offer, and CRB then picks one. There are huge details to be worked out.  If we did something like this it should have a five-year sunset, because compulsory license is a problem because they just stick around. Market licensing mechanisms should be encouraged, and sunset would encourage that.

Alfred Yen; Boston College Law School

The problem of costless overreaching. Copyright concepts are ambiguous.  One can also be big about rights one claims; this goes both ways (people post things they don’t own); people send invalid takedowns or claim rights they don’t have.  Amendments to the Copyright Act over past decades have been explicitly designed to fight the aggressive copyright user.

As casebook author, my publisher wants everything cleared, including exhibits in federal court decisions. We dutifully cleared everything: including with Rogers in Koons v. Rogers.  Once this happens, we have copyright creep; the practice becomes more audacious about what ought to be licensed—Jim Gibson, Jason Mazzone, etc. have documented this. We should recognize that people who aren’t infringing are exercising free speech and we shouldn’t accept interference with that as a fait accompli.

Two ideas: Someone who is trying to silence a critic v. expedient overreachers who do it because it’s costless.  Attorneys’ fees provisions aren’t enough because so few people ever fight back. There should be costs.  Suit for bad faith. Bad faith insurance claims have caused insurers to be a little less greedy. Like §512(f) but broader.  Should be able to elect treble damages, statutory damages, or punitive damages. Should be enforceable by declaratory relief.  To establish bad faith, the would-be defendant has to explain to the © why the claim is bogus. The owner can choose to insist or withdraw the claim.  Someone who declines to respect an assertion of fair use could potentially face a bad faith claim.

Would also like to embellish effect of a putback notice: create 6 month statute of limitations. If you don’t file a suit against a putback, you should very quickly lose your right to sue.  You know about the infringement; could put up or shut up.

Gass: for Perzanowski: if users value ownership, why won’t a market emerge?

Perzanowski: Apple and Amazon seem to be looking at that; this might be a reasonable compromise in some respects, but there are still reasons to worry.  Licensed resale markets within particular ecosystems lead to worries about platform lock-in. Also doesn’t take care of transaction cost/information cost problem. Uniformity emerging from legal process has value.

Litman: waiting for licensed market has big problems, losses, while waiting for markets to arise. Barriers are less about tech and more about business.

Ginsburg: unless you think we need an entire world of ratesetting because we think that authors/owners ought to make only so much (the content of the so much is unclear), she thinks we should leave it to the market. Her proposal is a stopgap for when the market hasn’t formed (but we think it should).

Q: what about we do about people who want to resell but keep their copies?

Perzanowski: we’ve never asked people to prove they haven’t made copies before they resell their copy at a used bookstore (or before they resell their used CDs).  So this isn’t new, but there are possible solutions, with technological measures.

Q: prior notice of intended fair use sounds reasonable when you’re doing it, but I worry about a trolling problem.

Yen: like lawyers run around setting up insurance companies for bad faith claims?  Although I’m not entirely enamored of insurance practice, on the whole it’s a good thing. When people say they’ll be trolled, it’s easy to protect yourself: if it’s a reasonable use proposed, don’t object.

Ginsburg: a way of trying to compensate artists is the resale right; that’s for the physical object, but it’s a similar theory that the artist ought to get a percentage of resale, though not any continuing control. This is the subject of a directive in the EU. It was in California, but now preempted. Doesn’t think there’s much prospect of it at the federal level but the impetus was the feeling that artists weren’t enjoying the increased value of their works, while copyright gave rewards to other kinds of authors who got royalties. Don’t confuse author’s right with copyright.  Based on the physical object, and copyright isn’t.

Peter Jaszi: another form of costless overreach: over the top C&D letters. May be based on nominally plausible claim but asserts statistically impossible damages claims.  Any remedy for that?

Yen: you need some savviness on the part of the recipient, which is why I want to educate people. 

Q: §108 study group—recommended preservation exception for qualifying libraries, because there should be speed bumps/obligations to protect and manage content, even though digitization is wonderful. Thoughts about responsibilities for digitizing organizations?

Litman: the preservation problems posed by digital media are very serious, b/c digital media degrade much faster than books. Seems a good thing for libraries and archives to be more aggressive in preservation than a narrow reading of §108 would support. The difficulties of updating §108 has forced many to rely on fair use to carry out their mission of making sure copies endure.
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