29th Annual BTLJ-BCLT Spring Symposium: Origins, Evolution,
and Possible Futures of the 1976 Copyright Act

Jennifer Urban, UC Berkeley Law (Speaker and Moderator)

Daniel Gervais, Vanderbilt Law: Copyright act as
undergirding licensing architectures for AI. © rights are inert without
exchange. A reproduction right is sterile if the transaction costs of licensing
exceed the value of any license. Ghost architecture of the statute: the
licensing machinery built around it by antitrust enforcement/courts, and
extended by subsequent legislative initiative. Why a mix of compulsory
licenses, court-supervised blanket licenses, CMOs, and congressionally
sponsored organizations? Reflects judgments about when markets will work to
create licensing regimes on their own and when they won’t.

Congress understood that certain uses would produce market
failures if left entirely to the private system—difficulty of advance licensing
millions of daily transactions, supervising individual uses. Compulsory licenses
are not concessions to users at the expense of rightsholders; they are a
mechanism to have market activities occur when otherwise they’d be unlikely to
occur at all—tech would be frozen out of the market or rightsowners would be
uncompensated. ASCAP, BMI, SESAC allowed for licensing without compulsory licensing.

The initial compulsory license was created to prevent monopolization,
not to subsidize record companies. The streaming eras revealed some weaknesses,
including “address unknown” filings to the Copyright Office, demonstrating a
systemic breakdown. The MMA in 2018 tried to address that failure with a
mandatory administrator of a blanket license, reducing the loophole and
creating a matching database to find authors & deal with unclaimed
royalties.

SoundExchange is neither voluntary nor a traditional
intermediary—does not require opt-in. The compulsory license is one half of the
architecture. The other is voluntary licensing in text & images, showing
judicial calibration of licensing market. This played out with the CCC and fair
use litigation—the early fortunes of CCC were modest without a judicial determination
that licensing was important. Texaco (2d Cir. 1994) changed that landscape by
holding that systematic copying of journal articles was not fair use.

AI is a stress test b/c of the scale of reproduction beyond any
existing licensing system. International system: no national licensing scheme
can avoid the possibility of arbitrage. The licensing system is starting to
respond for high-value sources like NYT. CCC has expanded to cover AI uses.
Other countries are introducing AI specific licenses. Voluntary arrangements
can try to fill that space even before legislation.

History in US: incremental expansion of compulsory license
as scale increases. American experience counsels against using a levy to
respond: AHRA’s statutory royalty on digital audio recording devices and blank
media seemed designed well but the tech passed through the market like a comet.

How can a system built on territoriality deal with cross-border
content? Reciprocal agreements, through voluntary licensing. Each adaptation is
slower and imperfect but it does happen. AI: most demanding test b/c of scale,
speed, and international complexity.

Matthew Sag, Emory Law: Nonconsumptive uses. © is built on
the metaphor of the printing press. Copyright provides incentives to authors
whose works would otherwise be reely copied on first publication. Thus,
reproduction is the locus of exchange b/t reader and author, where the toll can
be imposed. But what if there are no readers?

We have seen a series of copy-reliant technologies—search engines,
plagiarism detection, machine learning, generative AI. They necessarily copy
works but usually don’t deliver prior original expression to any human reader. This
issue wasn’t anticipated in 1976, even if AI authorship clearly was.

Should hidden intermediate copies be permissible if no one
ever reads them? Tension b/t 2 intuitions—copying (the technical act) is
infringement versus copyright’s purpose is to protect expression communicated
to audiences—consider how we judge substantial similarity, or give rights over
public performance.

His solution: nonexpressive use is fair use. When he
started, he mostly had software reverse engineering in mind, then plagiarism
detection and Google Books. Gen AI produces outputs that might compete with
human-made expressive works, which changes the politics entirely, if not the
law.

Courts have generally held that technical copying is fair
use when the copying isn’t communicating to the public. Bartz & Kadrey both
found model training to be highly transformative fair use; Ross Intelligence
disagreed and currently under review by 3d Circuit. If that case goes the other
way, it may be on narrow grounds related to the 4^th factor.

Where is this heading? Courts have done a pretty reasonable
job with the nonexpressive use cases. But we don’t have to rely on courts.
Netcom: an analogous issue; court did a great job recognizing insanity of
holding infrastructure providers liable for passive passthrough, and
articulated volitional conduct requirement. Congress also stepped in and gave
us 512, modeled on Netcom but more predictable than the volitional/nonvolitional
conduct line. A functional Congress could provide additional clarity.

To that end: proposes revising 107 to recognize that copying
works to extract unprotected information or enable nonexpressive computational
functions is highly transformative—not fair use b/c there should be room for
courts to evaluate the whole picture.

Lots of people perceive licensing as a solution for LLM
training. ASCAP is amazing, efficient, but they don’t pay anyone a check for
less than $100 or direct deposit for less than $1. It works b/c the authors w/
works of negligible value don’t get paid. But we have no way of tracing which
individual works are important to the system. We’d have to divide revenues
among a lot of people, not just songwriters, book authors, but everyone who
ever posted on social media or commented on Stack Overflow. That’s billions—a very
large sum of money divided by billions turns into a lot of transaction costs.
You could still send checks to large content owners, but those are precisely
the folks who can do deals w/large companies. This would just be a tax system.
If you want to tax LLMs and redistribute $ for worthy causes, that’s a great
idea, but tax!

Rebecca Tushnet, Harvard Law School: And now for something
completely different!

When I started my career writing about fan fiction, which
involves fans writing, for example, the further adventures of Kirk and Spock from
Star Trek or Mulder and Scully from the X-Files, people in the legal community were
often surprised that I cared—wasn’t this a bunch of infringing derivative works? Now, when
I talk about fan fiction, people in the legal community are often surprised
that I care because noncommercial fanworks seem obviously transformative and
fair, or at least obviously not going to come under legal threat. Chloe Zhao
directs movies for Marvel and talks about her fan fiction; the actress who
plays Dr. Javadi on The Pitt says that her character is a regular girl and gives as a key
example that she’s on AO3, which she expects you to know means the Archive of
Our Own. My students have never known a world in which fan fiction was hard to
find. I’m more pleased to be in the latter situation, but it does make me feel
a bit old! And given that noncommercial fanworks were not on the radar of the
drafters of the Copyright Act—even if some of them almost certainly knew about
science fiction fan culture—my placement on this panel makes sense.

A bit about my relationship with fanworks: a founder and
presently co-chair legal committee of the Organization for Transformative Works,
or OTW. Mission, to support and defend noncommercial fanworks, explicitly
framed as transformative both in the legal copyright sense and in the broader
sense of being different in exciting ways. One of the ideas was that we’d try
to show up in the rooms where it happens to give fans a voice in policy and
legal discussions as creators, the way the EFF does for general internet
freedom.

Today, the OTW’s Archive of Our Own hosts over seventeen
million fanworks—works based on existing media. We’re a Library of Congress
American heritage site. The OTW also supports a wiki, Fanlore, dedicated to
fan-related topics; a peer-reviewed open-access journal named Transformative
Works and Cultures; and a legal advocacy project to help protect and defend fan
works from legal challenge and commercial exploitation. The OTW routinely
submits amicus briefs and policy comments to courts, legislatures, and
regulators regarding copyright, trademark, and right-of-publicity issues.

One of our most longstanding projects has been seeking and
obtaining exemptions from 1201 for noncommercial remix videomakers—vidders or
fan editors. Our exemption currently allows noncommercial remixers to rip clips
of video from DVDs, Blu-Ray and streaming video in order to make their own
transformative works.  In the 1201
exemption process the Copyright Office perceives its job to be narrowing your
requested exemption as much as possible. Still, we showed that noncommercial
fan videos were regularly fair use and that 1201 hampered fans’ ability to make
those fair uses. We’ve obtained renewal of those exemptions several times.

Some lessons:

First, there is no substitute in the modern state for
organizations that can speak the language of regulation. Citizens must organize
or they will be ignored. But a small group of people can effectively do that!
Very few of the more radical anti-copyright, anti-capitalist people who think
the OTW is a liberal (derogatory) organization are in this room, but I think we’ve
had a productive effect on the overall conversation that includes them.

Second: It is not good for everyday practices to get
fundamentally out of sync with formal law. If the everyday practices are acceptable
and even good, the formal law ought to recognize that, and we can use fair use to
do so.

There are those who say that fanworks are tolerated
infringement. Some of those people are probably in this room. This is at best
an argument that the formal law sweeps way too broadly under any justification
you want to give for copyright rights—yes, the main “tolerators” are big
conglomerates, simply because as we heard yesterday they’re the source of most
of the widely disseminated for-profit copyrighted works we have today, but
there’s a reason that even the individual authors who say they oppose fanworks
haven’t actually sued over noncommercial fanworks.

In addition, the “tolerated infringement” argument is a
profound indictment of statutory damages specifically. If damage to the
exclusivity in a copyrighted work is both infringed by a noncommercial,
nonreproductive work and subject to up to $150,000 in damages, that damage
ought to be bad, not just an annoyance. Pam Samuelson has always had the
right of it and we heard yesterday various forms of agreement with her position
that statutory damages have been harmful to the rest of the copyright scheme.

Third and More broadly, noncommercial fanworks are good
because they offer a distinct field for creative endeavors, separate from the
copyright-enabled commercial system. They are both artisanal and widely
distributed, making them an important alternative form of expression. Noncommercial
works are fundamentally different in the aggregate from commercial works. They
can be Poetry; 100-word drabbles; short stories; 20,000 word stories;
million-word stories; other things there’s not much commercial market for. This
is part of what makes fanworks worth preserving and protecting: they are part
of the background of a thriving modern creative ecosystem.

Noncommerciality complicates questions around blanket
licensing: don’t want money, don’t want to participate in the commercial
system.

In addition and relatedly, fan cultures have a long
connection to queer writing: fan fiction is inherently about difference/the
fact that the story could be different/possibility—encourages both repetition
with difference and experimentation, which allows some people to open
themselves to various possibilities in the rest of their lives. If you want to
cry about the power of creativity, read the stories we collected for our
submission to the NTIA’s inquiry into the legal
framework for remixes: the power of making stories and other creative works
within a community that is excited to hear everyone speak has literally saved
lives.

Beyond its transformative effects on people,
noncommercial fandom is a huge boon to creativity generally. Professors Andrew
Torrance and Eric von Hippel have identified “innovation wetlands”: largely
noncommercial spaces in which individuals innovate that can easily be destroyed
by laws aimed at large, commercial entities, unless those individuals are
specifically considered in the process of legal reform.   Their description fits remix cultures well:

The practice of innovation by
individuals prominently involves factors important to “human flourishing,” such
as exercise of competence, meaningful engagement, and self-expression. In
addition, the innovations individuals create often diffuse to peers who gain
value from them …. 

Innovation requires that individuals have rights to make,
use, and share their new creations, collaborating with others to improve them,
as remix authors do.  Given the small
scale and limited resources of most individuals, “[a]nything that raises their
innovation costs can therefore have a major deterrent effect.” 

Things I have personally been around for: the adoption of curated
folksonomy/AO3-style tags in publishing. New story types and tropes: five
things that never happened for exploring different scenarios for characters
that together illustrate something about the fan author’s view of the
characters; the fan-invented “omegaverse” tropes about humans with certain
animalistic characteristics.

If you forget about noncommercial works in your creativity
policy, you enable the destruction of vital diversity and seed corn for the
next generation.

Finally, a coda with another view of internationalism: The
US was at the time of the OTW’s founding, nearly twenty years ago, the only
place we could count on a strong and flexible fair use defense. This has somewhat
changed, including by adoption of fair use in several other jurisdictions,
Canada’s noncommercial user-generated content exception, and most recently by
greater European flexibility on pastiche, but fair use’s impact is still really
notable. American hegemony meant that we didn’t even need a term like “the Brussels
effect” for the effect of American fair use and safe harbor laws, but it really
did seem like the internet was another American territory. That’s changing,
more every day, but we are probably going to miss it when it’s gone.

Jennifer Urban: In-formalization, term extension, and orphan
works. Although there was a near-consensus and energy to address it,
c2004-2015, efforts were ultimately not a rousing success.

Orphan works: policy questions are related to your sense of
who is an author & what authors generally want. Orphan=owner can’t be
identified and someone wants to make use of a work in a manner that requires
the owner’s permission. 76 Act increased the number of orphan works by removing
the formalities.  Widespread agreement
thus on the definition and scope of the problem

Solution space: limitations on remedies of injunctive relief,
especially when a significant amount of original expression was added; limitations
on damage remedies (US proposals); statutory exceptions (EU directive w/r/t
making available and reproduction rights); compensation to later-appearing ©
owners (reasonable compensation, extended collective licensing).

Conditions on relief: proposed: reasonably diligent search; identify
use as orphan work on the use itself (notice requirement); register use,
potentially with waiting period before use; takedown/stop use upon appearance
of © owners; pay compensation to later-appearing owner; provide attribution to
later-appearing owner; categorical limitation on type of users (e.g., EU ©
Directive: educational, library, & public heritage institutions &
public broadcasters).

Why so complicated? Different uses are different:
archive/library digitization are sensitive to search costs; takedown on notice
is more feasible; licensing fees may be prohibitive at scale. Derivative
works/smaller scale: more extensive search may be more feasible but
takedown/removal not feasible and injunctive relief is prohibitive. Where you
were willing to compromise depends on where you sit.

Similarly for copyright owners, © owners like
photographers/illustrators were worried they’d be hard to find & usually
don’t need to use orphan works themselves. Filmmakers are easier to find and
more likely to want to use orphan works.

Limited effectiveness: administrative/centralized licensing
adopted in Canada, Japan, Korea, Hungary, UK—fewer than 1000 licenses total by
2015 since 1999. Expensive, not productive. [CASE Act looks better than that!]

2021 EU directive followup found very limited use of EUIPO
database and very limited use overall by most eligible organization. 70% of
entries in database registered by British Library, and number dropped hugely
after Brexit. Lots of complaints about strict search requirements.

Fair use case law also developed to allow a lot of the big
data uses; a risk management question. People worried about orphan works
protection cabining fair use, even with a savings clause, and that slowed
momentum.

Where are we now? Substantial strides in digitization of
Office records, which is helpful. But records remaining are in the “sour” spot
of 1945-1978. Later-appearing © owner can still register and then sue. Risk
aversion is still an issue. Gatekeepers for small creators, libraries—people making
decisions about risk aren’t necessarily fully economically rational but have
practical effects. Same things with fair use. Occasionally, courts have
considered market unavailability in the fair use analysis, but that brings in
gatekeepers/risk aversion, leading to “clearance required” policies. And the
definition of an orphan work is that it can’t be cleared.

AI raises similar but maybe harder problems.

Urban to RT: how does AI training compensation come into
this?

A: it’s incommensurable. It’s like offering me payment after
I had you over for dinner at my house. There’s nothing immoral about
restaurants but that’s not the kind of relationship I was seeking.

Q about 103(b) and fanworks: if they’re fair use, then 103(b) doesn’t come into it. Fan authors sometimes worry about commercial misappropriation: they have a copyright in their fair use fanworks, so they can try to shut down unauthorized commercial uses, and they also aren’t responsible for such unauthorized uses. Goldsmith even makes this a bit clearer by establishing that the analysis goes use by use; a fanwork created for noncommercial purposes is fair regardless of whether deliberate monetization by the creator would be unfair.

Urban to Sag: how does international nature of training
affect this?

Sag: the international scene is quite complicated. Peter Yu
& Sag survey the global scene—different jurisdictions take very different
approaches, but each trying to (1) make a pathway for legal text data mining,
(2) have some protections for © owners. What you see is difference in
regulatory style. EU is far more prescriptive in DSM directive. There’s clarity
there; some others go further than fair use, but may require, e.g., not just
noncommerciality but affiliation w/a library or university. People who think we
can put the genie back in the bottle are likely wrong, but even if that’s what
you wanted to do, a lot of this activity is portable—you can go to other
jurisdictions to train. And that fact of int’l competition should be
recognized. Hard to see how a licensing system or tax & redistribution system
could work on an int’l basis. We don’t have the political competence to do it here
on a national basis, but they might be able to do it in the EU. Only a handful
of jurisdictions have TDM protections, but it’s 52% of the world’s GDP. The
fact that we allow it in the US isn’t an outlier among our peers.

Gervais: voluntary licensing can deal with crossborder
issues. Collective or individual licenses can say something like “parties don’t
agree on current scope of fair use” but contracts can manage that risk up to a
point, waiting until there’s more coherence in the courts.

RT: maybe we should bring Kalshi in and just use prediction
markets. [joke!]

Urban: if there’s nobody to pay, then the orphan works
schemes involving collection don’t support the © system.

Q: about licenses b/t major copyright owners and AI
companies: will they narrow the scope of fair use?

Sag: I don’t think those licenses should narrow the scope of
fair use, though the editor of the Atlantic did say that he entered into one
such license to prove the existence/validity of the licensing market. A few
notes: most of the licenses, as far as he can tell, are not just for AI
training but for retrieval-augmented generation—the economics and copyright
implications of sending an AI agent onto the web and assemble them into a
report are quite different from the AI training cases and it makes sense to
license that activity. Mostly they’re licensing access, which you can see most
easily with Reddit, which doesn’t own © in content but charges $60 million/year
for firehose access. That’s fine, though it shows need to update robot.txt protocol,
but they don’t prove that licensing is a general training solution. We’ll see
more of those licensing deals and they’re good, but hopes courts don’t jump to “market
for training.”

Litman to Sag: instead of amending fair use to presume training
highly transformative, consider moving away from fair use and avoid “transformative,”
which attracts additional political, emotional, religious opposition that you
don’t need.

from Blogger https://tushnet.blogspot.com/2026/04/panel-6-unanticipated-consequences-of.html