Vancouver, British Columbia
May 15-17, 1996
Susan Kornfield, J.D.
Bodman, Longley, and Dahling
Before I begin, I want to talk about two things with respect to the Michigan Document Services (MDS) case Princeton University Press v. Michigan Document Services, Inc. The first is to tell you with profound gratitude how very much we appreciate ARL signing on to the amicus brief submitted by a group of 11 copyright scholars in November 1994. I want you to know that the amicus brief ARL signed helped lead to our victory in the Sixth Circuit courts--a first for anyone advocating the position that we did. You deserve a part of the credit for the judges’ decision that using excerpts from books was an example of fair use.
Second, I want to talk about the horrendous reporting of this case in the news. In my opinion, there have been about five articles written about it that are worth reading: one by Ken Crews (see Addendum B), a couple by the Chronicle of Higher Education, and two by student newspapers. Everyone else seems out of their league--they have even claimed that the court ignored copyright law. So you see, we have people reporting on these cases not knowing what the term "fair use" means. They actually believe it is something outside the law.
Let me tell you a bit about the case. I am sure that when you hear the facts you will probably get a better idea of why, on February 12, 1996, the Sixth Circuit ruled in a split decision that my client, MDS, could make photocopies of excerpts when students and professors were able to make individual copies of the same material.
First of all, I thought you might be interested to know how the Association of American Publishers (AAP) decided to sue Jim Smith--a small business owner from Ann Arbor, Michigan. I want you to understand why they are going after Jim and why the attack is such a personal one.
In March 1991, the Southern District of New York ruled in the Kinko’s case that it was unlawful for Kinko’s to reproduce and combine excerpts of books into a coursepack to sell to students. I really think that the AAP sent a little note to copy shops around the country within 24 hours of the ruling, saying that this was now the law. I say this because I haven’t seen any other case where a district court ruling had the impact of a Supreme Court decision. But then maybe that is just New York.
When my client received a copy of the ruling, he read it and said, "Gee, if this is really the law, I’m going to have to stop doing what I do--or at least start doing it differently." So he decided to do a little research. He spent the next four months at the University of Michigan law library reading copyright cases--including the Kinko’s ruling--and talking with judges. He hired a copyright lawyer and spent a lot of time talking to members of the National Association of Quick Printers, or the NAQP. He came to the conclusion that the Kinko’s ruling was wrong.
Later that summer Jim Smith was invited to a NAQP conference in Washington, D.C. to talk about the Kinko’s case, which, of course, had such a large impact on the quick-print industry. At first Jim wasn’t too sure he wanted to stand in front of a whole room full of people and tell them he thought the Southern District Court in New York was wrong. But, after some thought, he decided to go through with it. A few months later, the AAP sued him for copyright violation.
Not only was he sued, but he was also targeted for AAP attacks. For instance, in a letter they wrote to the editor of--I believe--the Chronicle of Higher Education, they called Jim a "looter" because he reproduced excerpts of books at the request of professors and then copied them for students. But they didn’t stop there. I have in front of me copies of letters to the editor of Lingua Franca, which published an article by David Stow about the frustrations scholars face trying to jump through the permission hoops and the problems this conferred upon their pursuit of scholarship. After the publication of this article, Sanford Thatcher, from the Penn State University Press and Chair of the Copyright Committee of the Association of American University Presses, wrote Lingua Franca to say that MDS was nothing more than a parasitic publisher free-riding on the labor of others.
As you can see, people are quite passionate about this issue. And it all started when three professors from the University of Michigan decided to assign a variety of excerpts from books, articles, and other reading materials. After they made these decisions, they brought their materials to MDS and asked Jim Smith to make copies for their students, which, of course, he did. The students then came and picked up the materials. No excerpts were sold to the public. Jim was simply providing a service to the professors, who could easily have made the copies themselves.
In this particular case, had the professors decided not to send the materials to a copy shop, they could have put them on reserve at the university library, where students could have checked them out and made copies. The fee at the library is ten cents per page; Jim Smith charges five cents per page. So the excerpts would be copied either way: the students could either pay a dime a page at the library or a nickel a page at MDS.
You probably heard that the District Court judge ruled against my client. From the moment we walked into the courtroom, the judge seemed to agree that Jim was a parasitic publisher. He even stated, at one point, "He [Jim Smith] is using other people’s property without their permission. There is simply no excuse for this conduct." The judge apparently hadn’t read Section 107 of the copyright law closely, as it addresses the issue of making multiple copies for classroom use.
Now I want to tell you a bit about the oral argument from September 1995 in the Sixth Circuit Court. I want to read you a couple of lines from the oral argument so you can hear what the judges said as they tried to understand the case. The judge I refer to first is Judge McKay, who was what is called a visiting judge. He is the Chief Judge of the Tenth Circuit, but was sitting on the Sixth Circuit panel for this particular case. The other two judges are Judge Ryan, who wrote the majority opinion, and Judge Nelson, who wrote the partial concurrence.
This is Judge McKay addressing the AAP counsel, a Mr. Rauchberg.
JUDGE: Counsel, let me ask you a sequence of questions. Do you dispute that a professor could copy this material as it is on a rented copy machine rented from Xerox?
MR. RAUCHBERG: I don’t think that question can be answered in this case.
JUDGE: I want the answer to it.
MR. RAUCHBERG: Well, the publishers have not--I understand Your Honor wants the answer and--
JUDGE: Are you arguing that this--there’s something about this material that would prevent a professor from copying it without violating the copyright laws?
MR. RAUCHBERG: If the question is could a professor produce a book like this or could a university prepare a book like this and sell it to students in the same way that Michigan Document Services does, I would point out that it may well be that the answer is no. There are classroom guidelines that were adopted by Congress as a part of the legislative history of the Copyright Act and that express what Congress said is the Congressional intent in defining the extent of fair use copying for purposes of education, that describe how far a....
JUDGE: Have you asserted in the trial court or in your brief here that this material is material that the university--that a professor could not duplicate on a rented copy machine in the professor’s office?
MR. RAUCHBERG: No, Your Honor, we have not made that argument.
JUDGE: All right. Now, have you disputed that the professor could make multiple copies and distribute them to the students in the class?
MR. RAUCHBERG: We have not made that argument, either.
JUDGE: You have not made that argument. Do you make that argument now?
MR. RAUCHBERG: No, Your Honor. The argument that --
JUDGE: Could the professor--have you made the argument that the professor could not charge the students the per page rental cost of the machine? In other words, if the rental is on a per page basis for the copy machine, that the professor could not charge the students the reimbursement of that cost of duplicating these exact materials?
MR. RAUCHBERG: We have not made that argument.
The judges later determine from cross-examining Mr. Rauchberg that the publishers in this case do not argue that the professors could not have made the copies themselves. They do not argue that the students could not have made the copies themselves. They do not argue that the professors could not have made the copies and then charged the students for them. And they do not argue that students could not have paid a dime per page at the library.
So what is this case all about? It is about whether Jim Smith can make the copies and charge students a nickel per page for them. This is the only thing the MDS case is about. Why? Because in every case the issues to be decided are determined by the framework of the facts and by the arguments made by counsel. The AAP has waived any claim to say that too much of the work was excerpted because at several points during oral argument they clearly stated that they were not making that argument.
So when you read in the papers, as I’m sure you will, that this case will make it possible for anyone to copy over 30 percent of a book--or anything else they damn well please--as long as they say it’s for education, you will know the papers are wrong.
Now let me tell you a bit about how the issues are being framed for the re-hearing. By the way, a re-hearing is a very unusual procedure. Of the thousand cases the Sixth Circuit hears annually, they re-hear only eight. Typically, courts hold re-hearings to reverse panel decisions. But ours is a rather unusual case: these judges know there has never been a case like this argued in any Court of Appeals in the history of U.S. copyright litigation. This case may well go to the Supreme Court, and they know it.
They also know that the last time they decided a fair use case their decision was overturned by the Supreme Court. In fact, the decision was reversed on five separate grounds. So they may feel a need to look more closely at this case; the judges want to be sure that the panel was correct the first time.
The publishers have raised three issues on appeal. First, that the court should not have considered the professors and the students in this case. They say the professors and students are irrelevant in this case, which, as you remember, is all about copies assigned by professors for use by students. Yet the publishers insist these groups are irrelevant.
What the publishers evidently want to do is to tell the federal courts, "You will not look at users unless we sue them. Your analysis of a fair use case will be dictated by the defendant, not the users." The court needs to decide if this is true.
The first issue the court will have to consider when making this decision is what it means to use an excerpt. Do you use an excerpt when you make a copy of it? Or do you use an excerpt when you read, analyze, and discuss it?
Obviously, in this case we contend the latter. The works are used by professors and students. They select them, they read them, and they analyze them. My client, the copy shop, only makes copies of the works. Let me give you an example. Say I have a brief to file in court and I need 25 copies of it. I collect the material I have written and all the attachments and I walk down the street and give it to a copy shop. I don’t think anyone would contend that the copy shop has sold me 25 briefs when I later go to pick them up. They have simply copied the brief 25 times, charging me a per page copy cost. They do not use the brief--they copy it.
Next, the court must consider the relevance of classroom guidelines. It never occurred to me when I was in law school--or even afterwards--that I would ever stand in a federal court and say, "Let’s talk about the law." The law is what Congress enacts. The law is what the Supreme Court rules. The law is set by the Constitution, by statutes, and by controlling case law. What the law is not is some gentleman’s agreement reached in 1976 to create a safe harbor for educators. I think most lawyers would say a law must be enacted by legislation. There are many Supreme Court cases that discuss the legislative history of a particular statute. There is also a great deal of case law that says, "Say you have a group of guidelines here and statutory language here. If you choose to enact this, it means that you have also chosen not to enact that." This is another important fight in this case.
The third issue in this case is whether publishers can show economic injury as a result of copy shops charging for the copying of excerpts. This is actually a very interesting question.
If you look at Supreme Court cases dealing with the fair use statute, and specifically the fourth fair use factor in the statute, you would see that the Court says there are two copyright markets: one for the original work and the second for derivative works. The phrase "derivative works" is defined in the Copyright Act as "a new work that is created by adding new authorship and transforming the original authorship into a different work." Examples of derivative works are: foreign translations, movie versions of books, serialization rights, etc. The MDS case is not one involving derivative works. The excerpt that was copied was copied intact; my client didn’t translate it, and he didn’t make a movie based on it. He didn’t alter it in any way. He copied it.
The only contentious issue in this case is the use of excerpts by both the professors and the students. Since the publishers concede they cannot prove one lost book sale, we have won the fourth factor analysis in this case.
Interestingly, although the publishers have agreed that they cannot prove one lost book sale, they do agree that we have 350 affidavits on file by individuals who state that as a result of reading excerpts (what a surprise) they sometimes buy the books from which the material was originally excerpted. They buy more books by that author. They buy more books on that topic. So allowing excerpts to be copied actually increases book sales.
Finally, we have about 160 authors and professors who signed affidavits stating that they find it an incentive to create new works when their books, when not assigned for purchase, are excerpted for students.
So all of the evidence in this case points in one direction: allowing book excerpts to be copied benefits students, professors, publishers, and authors. Moreover, there is absolutely no harm done to the market for the original work.
Of course, when the publishers lost this case, a couple of publishing groups and authors guild groups wrote briefs saying, in effect, "We want as much money as possible from the works we create. We want the courts to make anyone who uses anything we write pay us for it." The only problem with this demand is that it is inconsistent with the law.
I want to remind you of one other point. The speaker this morning, Mr. Harris, was talking about learning and change and uncertainty. I know that many of you in the room negotiate from time to time with other groups about use rights, and I know there is a great desire to bring some certainty to the area of fair use instead of balancing these four factors. What I want to say to you is this: although the classroom guidelines state that they are a safe harbor for educators and that they do not in any way minimize the fair use rights in Section 107 of the Copyright Act, it just isn’t so.
In court, counsel for the AAP informed the court that the classroom guidelines were adopted by Congress--I’m not sure what this means; Congress enacts laws--and that they were the extent of fair use. This means that if you want lawyers to have a chance in court, you must stop signing onto guidelines that will be used to limit the rights of users. Because those people on the other side of the table never use them the way they tell you they will. Instead, they stand in court and say, "This is the extent of fair use. Look at all the prestigious groups that agree with us."
But I want to tell you that, after many years of hard work, our last brief is being filed today with the Sixth Circuit Court of Appeals. Oral argument for the re-hearing will be June 12th.
I want to end with a plea. I know your constituents want certainty. But, please beware trading uncertainty for a limitation of your rights. We can only be this lucky so many times.
Thank you.
Copyright © 1998 by Susan Kornfield
MR. WEBSTER (ARL Executive Director): I think it would be useful for Susan to comment a bit more on the Kinko’s case. She talked a little last night at dinner about her assessment of the hypothetical Supreme Court treatment of that case--it never got that far--and how we should view it from the users’ point of view.
MS. KORNFIELD: I wanted to have a chance to tell you about the Kinko's case and the appeal that was lodged with the Court of Appeals in the Second Circuit and was later dropped (we don’t have a further ruling on the Kinko’s case).
Let me tell you why the Supreme Court, in 1991, would have reversed the Kinko’s decision on four different grounds. The Court dealt with these four issues in a 1994 case, Campbell v Acuff Rose, which involved the 2 Live Crew rap parody version of the Roy Orbison song Pretty Woman. You will see how these two cases are closely connected.
First, the Kinko’s court said, "Every commercial use is presumptively an unfair exploitation of the copyrighted work." This meant that the users had a presumption against them coming into court, and that they would have to provide a great deal of evidence to either neutralize that presumption or to overcome it.
In the Campbell case the Supreme Court said, "We have here 2 Live Crew who have made a commercial use of the Roy Orbison song." And the Sixth Circuit (which is, incidentally, the same court that decided the MDS case) said, "One of the reasons we know it’s an infringement is it was a commercial use. And, as we all know, every commercial use is presumptively an unfair use."
The Supreme Court’s response was, "We have no idea where you got that language. Every commercial use is not presumptively an unfair use. In fact, there is no presumption against commercial use."
So the first lesson of the Kinko’s case is: the Sixth Circuit’s ruling on commercial use was a reversible error. We know this is so because the Supreme Court said so in the Campbell case, three years later.
The second lesson of the Kinko's case is that the District Court judge said that, in order to claim fair use, you must transform the original work. You can’t merely have copied it. In the Campbell case, the Supreme Court dealt with the fact that 2 Live Crew, in creating a rap version, had indeed transformed the original work. The Court considered the transaction to possess intrinsic value because it created another work for the public to listen to and read and discuss. Then the Supreme Court dropped a footnote, the famous footnote 11, which states the obvious: "Statutory exception to any focus on transformative use is the straight reproduction of multiple copies for classroom use."
So we have the Supreme Court saying, basically, that only an idiot would equate transformative use and making multiple copies for classroom use. Of course, the Kinko’s court said the fact that Kinko’s was making copies counted against them in court.
Third, the Supreme Court surely would have reversed the Kinko’s ruling on the basis of the following faulty logic: the Kinko’s court said, "Let’s look at what the professors picked. Now, they wouldn’t have picked that unless it was the most important part. And since it was the most important part, it will always weigh against fair use." So the Kinko’s court said that whatever the professor selected would always be the heart of the work. You can’t use the heart of the work. Here again was another strike against Kinko’s, and against fair use.
The Supreme Court said, in the Campbell case, that you must first look at how much of the original material was used in relation to the purpose for which it was selected. The Court recognized that, since the purpose in this case was parody, 2 Live Crew had to use the underlying melody, the arrangement, and the same kind of base rhythm. In our particular case, the MDS case, the uncontradicted testimony of the professors is they only use as much as necessary for the specific teaching purpose. The publishers chose not to contest that.
Finally, the Kinko’s court said that you can look for economic injury to the licensing revenue the publishers say they would have gotten if they had been paid what they had asked. That is something the Sixth Circuit properly regarded as circular; what we are trying to figure out is if a fee can be demanded for that use. The fact that the publishers want the fee doesn’t help us to figure that out. So we have to take away from this equation the fact that you are demanding the payment, and instead we have to look to see if they are entitled to be paid before we can determine whether or not they are injured by not receiving payment. The Supreme Court said you may not consider licensing revenue for the claimed fair use. So the fact that we are claiming the making of multiple copies for classroom use an example of fair use means that the publishers may not claim revenues for that market.
Clearly, had the Kinko’s case gone to the Supreme Court it would have been reversed on these four grounds, just as the Campbell case was.
MR. FRAZIER (University of Wisconsin): How do we get to a point where the public perceives that fair use is not outside the law--and that classroom guidelines are?
MS. KORNFIELD: I think it’s fair to say that the misunderstanding stems from those handy printouts disseminated by the AAP, which we know is not exactly an impartial group.
I have a little story to tell you. About two years ago I received a memo from a friend at the University of Michigan School of Business. It said, "Thought you might be interested in the attached." It was a letter from the Dean of the University of Michigan Business School to the faculty, discussing the use of coursepacks. What do you think the dean had attached to that letter? A little publication by the AAP that listed classroom guidelines.
So, of course, I called the Dean’s office, introduced myself, and asked if we could get together to talk about copyright law. I was referred to his assistant, who basically said that it was easier to attach the AAP’s handy little summaries than to actually work to understand copyright law.
So, I believe one reason for the public’s misunderstanding is that fair users really don’t have vocal advocates of their position working to educate the public on what fair use really is.
I think the other problem is that people do not understand that fair use is a part of copyright law. If they do, they do not understand why it is a part of copyright law. They think it’s some kind of sanctioned theft. They don’t realize that fair use furthers dissemination of information, the publication and purchase of works, and that it creates an incentive to produce more works. This really lies at the heart of fair use.
Perhaps we should consider a public education campaign on fair use issues.
MR. FRAZIER: Classroom and other guidelines actually say they are the minimum definition of fair use. Are you opposed to guidelines even when this type of language is included?
MS. KORNFIELD: I am, but only because of this case. Let me tell you why. I live in Ann Arbor, Michigan. I have friends in the University of Michigan’s Office of the General Counsel, and I can tell you that I have never seen a group of people more opposed to taking risks than university administrators. I don’t mean that in an unkind way; I know their butts will be on the line if they get the university involved in a lawsuit. But as a result of their aversion to risks, they say, "Okay, the publishers won’t sue us on this. Let’s just do that; it’s so much easier."
As a result, the very people whose mission it is to foster the dissemination of information are afraid of the consequences of doing so. Again, I understand that, but I think universities should not have to conform to the publishers’ idea of what is safe.
Actually, I have told many university counsels that they should become more active in backing their professors. Universities should tell professors not to sign contracts that divest them of their copyright privileges and they should tell the publishers, "If you even touch our professors, we’re going to yank your books off of the reading lists." In other words, you have to get the universities to understand that this doesn’t have to be a win-lose situation unless, of course, they let the publishers set the limits of their rights.
MR. KOBULNICKY (University of Connecticut): One of the things I’ve noticed is a growing opposition on our campuses to our perspective because of bookstores that have demonstrated that they can use permissions effectively.
I don’t know if there is a response, but I’m concerned because, where the universities once might have been able to speak with one voice on this issue, they cannot do so today. The bookstores say that a permission profit model is possible, and effective.
MS. KORNFIELD: I have two responses. One is factual and one is philosophical. As a factual matter, we have several hundred affidavits on file saying the current system doesn’t work. We have professors saying they have chosen to go without making articles available to students because the permission was too expensive. As a factual matter, I think it’s fair to say--as we did in our brief--"Judge, if you consider permission systems relevant, you must recognize the fact that in this record there is conflicting evidence as to whether it is in fact operative and workable."
The other point is philosophical. I could tell you that you can speak your mind any time you want-- it will just cost you five cents a day. I’ll even give you a self-addressed, stamped envelope for Susan Kornfield in Ann Arbor, Michigan. I’ll let you pay in advance. But, of course, the point is that it’s illegal for me to assess that charge, just as it is illegal for publishers to be assessing permission fees. Congress has spoken on this point, and they have listed six kinds of uses that are typically--but not always--fair uses: criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, and research. It is unlawful to assess fees for these uses.
I also don’t think bookstores and copy shops should serve as collection devices for publishers.
MS. STOFFLE (University of Arizona): I would just like to reinforce what Paul said. I was doing a presentation before the National Association of College Stores, NACS, the day the Michigan case was announced. I was very excited about the ruling, and I remember saying, "Isn’t this wonderful?" But everyone there thought it was the most awful thing ever to happen. The college stores people are on the opposite side of this issue. I think we need to do something about that on our campuses.
MS. MARTIN (Georgetown University): How do you apply fair use within the electronic environment, where the resource is not locally owned, where you don’t purchase it, where you’re accessing a database that is held by the publisher or producer?
MS. KORNFIELD: Unfortunately, I think you have to go through the same analysis every time you want to make such a use. You have to first question, "What is the use for this material?" You have to ask yourself, "Is it just general societal dissemination of information? Or is it for criticism, comment, news reporting, teaching, etc.?"
Next, you should ask yourself how you can prove to a court that you took the necessary safeguards to prevent general public access, assuming your goal was to make the material accessible to students, which is what Congress said was meant by multiple copies for classroom use.
So one of the questions we would have for you is, "Can you show us technologically that you have taken steps to make the material available to the students of this class?" You would also have to ask yourself, "How will this weigh on the other factors? Is it going to replace the purchase of an underlying work? If so, is that work out of print?" The Supreme Court said, in Harper v. Roe, that you have a greater right to make use of something that is inaccessible, out of print, or otherwise unavailable. Of course, what the publishers say now is, "Well, sometimes we would like those things to be out of print and unavailable because, as the copyright owners, we get to decide what is available and we might want it unavailable. And we certainly don’t want you making it available."
So, the fair use analysis requires you to go through all of those steps. I do think that the judges are concerned about the electronic environment because of the hysteria created by copyright owners. But when the court evaluates these cases on an individual basis, they arrive at different conclusions than the guidelines would dictate. Who would have imagined that videotaping an entire creative work would be an example of fair use? But the Supreme Court ruled in a 1985 5-4 decision exactly that. And two years ago it said parodying a musical work is also fair use.
I think what all this means is that when you take these cases to the Supreme Court they usually get it right. I hope this happens to our case.
MR. CAMPBELL (University of Southern California): If we could demonstrate that the AAP had deliberately misinformed us about the provisions of the law, and that this, in turn, had retarded our business, would we be able to bring a class action suit?
MS. KORNFIELD: Since this woman over here is taking notes, I’ll only say this: I was contacted not long ago by somebody who asked whether we would look into anti-trust violations and unfair trade practices. I’m sorry, but that is all I can say on this particular issue.
NOTE: In response to a request from ARL, Ms. Kornfield supplied a copy of the pages of the court transcript in which counsel for the publishers addresses classroom guidelines, and the response of the Michigan Document Services, Inc., rejecting the publisher assertions (see Addendum A). See Addendum B for the Ken Crews paper, "The MDS Decision and Fair Use for Coursepacks." See Addendum C for an update on the MDS case.