Round One to HathiTrust – Wins fair use ruling

This lawsuit stems from the Google Book Project, an ambitious program launched by Google in 2004 to digitize the library collections of the University of Michigan, Harvard, Stanford, the University of Oxford and the New York Public Library and make the collections available for searching online. In 2008, a group of universities established HathiTrust as a repository to combine, archive and share their digital libraries, and make the collection available to the public. At the time of the commencement of suit, the repository reportedly contained 10 million volumes. The Authors’ Guild, an authors’ trade association, and other authors’ groups sued HathiTrust for copyright infringement and swiftly moved for a judgment on the pleadings that HathiTrust could not rely on the fair use defense to the claim of copyright infringement.

First the Court addressed the issue whether the fair use defense is available to library institutions, or whether such institutions are limited to the separate defense to infringement found in Section 108 of the Copyright Act and known as the “library exception.” The court concluded that “fair use does not undermine Section 108, but rather supplements it.” The court then addressed the four fair use factors: purpose and character of the use; nature of the copyrighted work; amount and substantiality of the portion taken in relation to the copyrighted work as a whole; and the effect on the market for or value of the copyrighted works. The court found:

1. Purpose and character of the use. The court found that the use that HathiTrust is making of the works is transformative because it serves an “entirely different purpose than the original works.” The purposed is “superior search capabilities rather than actual access to copyrighted material.”

2. Nature of the copyrighted work; amount and substantiality of the portion used. The second and third factors were not considered important, though the court rejected the plaintiffs’ contention that the uses could not be fair because they made use of the entire works at issue.

3. Market effect.  The court found that this factor weighed in favor of fair use for a number of reasons. The plaintiffs could not identify any specific quantifiable harm to the market to exploit their works, or any documents relating to such harm. The court noted that HathiTrust has implemented security measures in place to prevent wholesale infringing copying. Finally, the transformative nature of the use undercut any actionable market harm, as a copyright holder cannot preempt a transformative market.

Balancing all the factors, the court found the use fair.  The case has been appealed.  A more detailed discussion of the Google Book project can be found in my paper, “Fair of Foul? Mass Digitization and the Fair Use Doctrine,” submitted in connection with the AIPLA’s 2012 Spring Meeting and available at http://www.shadesofgraylaw.com/wp-content/uploads/2013/04/AIPLA-Paper-2012.pdf

Patently Fair or Patent Nonsense? Prior Art Submissions, Copyright and Fair Use

Last week I had the privilege of addressing the Dallas Bar IP Section on the subject of the current controversy over copyright and prior art submissions in patent prosecution. Four lawsuits have been filed by publisher John Wiley & Sons and the American Institute of Physics against law firms alleging copyright infringement for reproducing and distributing various scientific articles in the course of preparing and submitting patent applications. The lawsuits allege that the law firms violated copyright in the articles at issue by (1) making and distributing copies of the articles to the USPTO in connection with patent applications; (2) making additional copies of articles cited in patent applications; and (3) making copies of articles that they neither cited nor submitted to the USPTO for internal purposes. One of the cases apparently settled over the summer. In two of the remaining cases, the plaintiffs have amended their pleadings to drop the allegations concerning submissions to the USPTO, leaving only the allegations regarding internal law firm copying.

The copyright and patent communities have taken note of these lawsuits, and there is an ongoing discussion regarding whether the practices at issue constitute fair use of the articles in question. In January of 2012, the General Counsel of the USPTO issued a memorandum asserting that the accused practices constitute fair use, and the USPTO has intervened in two of the cases as a defendant and counterclaimant, seeking a declaration of noninfringement. In this post, I will give an overview of the fair use doctrine and apply it to the copying at issue in the prior art cases. Continue reading

Tenenbaum Tries, Tries Again
Seeks New Trial or Reduction of Damages Award

Joel Tenenbaum rang in the New Year by seeking a new trial or, alternatively, a reduction of the $675,000 award of statutory damages imposed by a jury last summer for his illegal file-sharing activities.  Attempting to capitalize on favorable language in the court’s opinion rejecting his fair use defense, Tenenbaum’s motion trumpeted the court for becoming “the first to recognize a fair use interregnum for copyright infringement following the debut of Napster.”  Tenenbaum can’t be blamed for trying to turn lemons into lemonade, but the court recognized no such thing, though it plainly wished to rule otherwise.  At most, the court speculated that a file sharer “might” be able to rely on a fair use defense under certain limited circumstances not applicable to Tenenbaum’s conduct, such as by swapping files during the time period “before digital media could be purchased legally, but [] later shift[ing] to paid outlets.”

Fair use

Tenenbaum devoted much of his brief to rehashing the same fair use arguments that the court already (properly) rejected.  After praising the court for supposedly establishing the so-called “fair use interregnum,” Tenenbaum faulted the court for cutting it off before his file-sharing was detected in August 2004 due to the fact that “a commercial market for digital music had fully materialized” by then.  According to Tenenbaum, early online sellers of digital music did nothing to alleviate the injustice of having to purchase entire CD’s rather than individual songs because they employed encryption technology which restricted purchasers’ ability to transfer songs between different media players.  This “boxed music consumers like Tenenbaum into an unfair choice” until the music industry began offering unrestricted copies of songs for sale online in 2007.  Tenenbaum also reasserted his “attractive nuisance” argument – that the music industry lured Tenenbaum and other consumers into wrongdoing with their marketing strategies – and bemoaned anew the conscription of parents and universities as “copyright police to regulate internet use” by children and students.  None of these arguments is likely to persuade the court that it made a mistake in rejecting Tenenbaum’s fair use defense, which remains, as the court succinctly noted, “completely elastic, utterly standardless, and wholly without support.” 

Statutory damages and due process

Tenenbaum buried his most interesting, and potentially most successful, argument at the end of the brief – that the $675,000 statutory damages award is so grossly excessive that it violates his Constitutional right to due process.  The Supreme Court has held that statutory damages violate due process where they are “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”  St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67-68 (1919).  In Williams, the Court upheld a $75 statutory damages award against a railroad that had overcharged passengers by 66 cents per ticket.  Relying on the Williams standard, Tenenbaum contrasted the “bankrupting” size of the award with his conduct, which he characterized as “at most comparable to shoplifting music from a record store.”  Assuming a purchase price of 99 cents per song, Tenenbaum calculated that the ratio between the award and the actual damage to the plaintiffs was 22,500 to 1 – far in excess of the 113 to 1 ratio which the Williams Court found acceptable.    

The shoplifting analogy is a compelling one.  The consequences for theft can be severe, but it is almost inconceivable that Tenenbaum would have been assessed a six-figure penalty for walking out of a record store with a handful of CD’s stuffed under his jacket.  The methodology he used to arrive at his 22,500:1 ratio is flawed in that it fails to account for the fact that a single song, made available over a peer-to-peer system, could be copied innumerable times, thus resulting in more than one lost sale to the plaintiffs.  Nonetheless, the award is strikingly high given the nature of the offense.  The judge has already expressed considerable sympathy for Tenenbaum and distaste for the record industry’s strategy of suing individual file sharers; the argument that a penniless college student should not be bankrupted for a relatively petty offense could well resonate with the court.  

Tenenbaum also argued that the damages award violated due process under the standard applied to punitive damages.  A punitive damages award which is “grossly excessive” in relation to the state’s interest in punishment and deterrence enters “the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment.”  BMW v. Gore, 517 U.S. 559, 568 (1996).  Courts examine three “guideposts” to determine whether punitive damages are appropriate: (1) the degree of reprehensibility of the defendant’s conduct; (2) the disparity between the actual or potential harm suffered by the plaintiff and the damages award; and (3) the difference between the award and the civil penalties authorized or imposed in comparable cases.  Id. at 575.  Tenenbaum contended that his conduct was not reprehensible, involving only economic harm not motivated by intentional malice and conduct that “even now many see as having been unauthorized but not morally wrong”; that the Supreme Court has noted that “few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process”; and that statutory damage awards in file-sharing cases in which the defendants lost by default or on summary judgment have been limited to the minimum possible statutory damage amount. 

In citing Williams as the standard for assessing the appropriateness of a statutory damages award in the copyright context, and addressing Gore as an alternative argument, Tenenbaum departed from the post-trial strategy employed by Jammie Thomas-Rasset, the other file sharer to seek modification of a massive statutory damages award.  Thomas-Rasset was found liable for copyright infringement for sharing 24 songs, and a jury initially awarded the plaintiffs $222,000.  The court vacated that award due to concerns over the propriety of the jury instructions concerning liability.  After a second trial, Thomas-Rasset was again found liable, and the jury awarded the plaintiffs $1.9 million in damages.  Thomas-Rasset moved for a new trial, relying primarily on the standard set forth in Gore, essentially conflating the two tests (“The Due Process jurisprudence that is today embodied in BMW v. Gore has its roots in Williams, a case involving statutory damages”).  

Remittitur

Tenenbaum then argued that if the court does not grant him a new trial, it should reduce the statutory damages award to the minimum amount.  Remittitur is appropriate where an award is “grossly excessive, inordinate, shocking to the conscience of the court, or so high that it would be a denial of justice to permit it to stand.”  Here, Tenenbaum’s strategy mirrored Jammie Thomas-Rasset’s; she also sought remittitur as an alternative to her due process argument.  The court recently granted Thomas-Rasset’s request, reducing the $1.9 million award to $54,000. 

Tenenbaum argued that Congress set the currently applicable range of statutory damages to combat large-scale commercial piracy of software over the Internet, but did not intend to subject consumers like Tenenbaum to the upper limit of available damages.  According to Tenenbaum, Congress sought to remedy the tremendous costs of software piracy to software companies, their employees and the economy – concerns that sound strikingly familiar in the music file-sharing context – but that it envisioned imposing those damages on those who made the software available for download on a widespread basis and not the individuals who actually downloaded them.  Of course, Tenenbaum himself placed songs in the shared folder of his hard drive, making them available for download to anyone within his peer network, so it is unclear how, in practical effect, his conduct differed from that of the software pirates, except perhaps in degree. 

Moreover, Tenenbaum offered no justification for why the minimum statutory damages amount is the appropriate award, as opposed to some other amount.  This omission underscores the difficulty associated with his request; namely, how the court can defensibly set a damages award within such a large range of potential statutory damages.  Perhaps the court will look for guidance to the recent decision in the Thomas-Rasset case; there, the judge settled on a trebling of the minimum award per sound recording as the appropriate amount, based on treble damage provisions in other federal statutes.

The Department of Justice, intervening to defend the constitutionality of the Copyright Act’s statutory damages provisions, and the plaintiffs have submitted their briefs opposing Tenenbaum’s motion.  A hearing is scheduled to occur on February 23, 2010.

“It’s Not Fair!”
Court Rejects Tenenbaum’s Fair Use Defense to File Sharing

On December 7, 2009, the District of Massachusetts issued a remarkable written opinion elaborating upon its earlier ruling that individual file sharing did not constitute fair use in Sony BMG Music Entm’t v. Tenenbaum, 2009 U.S. Dist. LEXIS 112845.  The case stemmed from Boston University graduate student Joel Tenenbaum’s file-sharing activities, which spanned several years and multiple file-sharing services.           

The opinion stands out in a number of respects, but most starkly for (1) its eagerness to find any basis to rule in Tenenbaum’s favor and (2) its scathing assessment of defense counsel’s performance.  The court was “deeply concerned by the rash of file-sharing lawsuits, the imbalance of resources between the parties, and the upheaval of norms of behavior brought on by the internet,” and did “everything in its power to permit Tenenbaum to make his best case for fair use.”  Courts don’t usually go to such lengths to advance one party’s interests, at least not where the party is represented by counsel.  Here, Tenenbaum was represented both by a private law firm and by a Harvard Law School professor – a team presumably capable of advancing his interests without an assist from the judge.  But this opinion conjures up the image of a judge itching to vault over the bench to argue Tenenbaum’s case for him:

“[T]he court was prepared to consider a more expansive fair use argument than other courts have credited . . . For example, file sharing for the purposes of sampling music prior to purchase or space-shifting to store purchased music more efficiently might offer a compelling case for fair use.  Likewise, a defendant who used the new file-sharing networks in the technological interregnum before digital media could be purchased legally, but who later shifted to paid outlets, might also be able to rely on the defense.”

Tenenbaum made none of these arguments, however, and the court deplored – in unusually harsh and explicit terms – his counsel’s performance in the case.  Among a litany of other transgressions, the court chastised counsel for litigating the fair use defense “as an afterthought, and literally on the eve of trial,” and characterized the defense as “truly chaotic” and based on “perfunctory” papers.  Indeed, Tenenbaum’s papers opposing summary judgment on fair use were structured skeletally, resembling an outline more than a substantive brief; cited only sparsely to the record and to caselaw; addressed the four traditional fair use factors in cursory fashion while emphasizing arguments drawn from unrelated legal doctrines; and invoked generalized incantations of “fairness” more reminiscent of the playground than the courtroom. 

Possibly the most interesting insight into Tenenbaum’s defense, however, comes from his own attorney’s legal blog.  Following Tenenbaum’s loss at trial, and public criticism of his fair use defense, his attorney, Harvard Law School professor Charles Nesson, solicited feedback in the blogosphere on what alternative defenses commentators felt might have prevailed.  In response to one commentator’s list of potentially successful arguments, Mr. Nesson wrote, “these defenses do not join the fundamental issues.  this [sic] trial was not an exercise in getting joel off the hook.”  The notion that counsel’s job could consist primarily of anything other than exonerating his client should boggle any practicing litigator’s mind.   Presumably, Tenenbaum – now saddled with a $675,000 verdict – might wish that his counsel had been more concerned with getting him “off the hook” than with transporting the fair use doctrine to a galaxy far, far away.

Fair Use Analysis

Despite its apparent desire to find in Tenenbaum’s favor, the court correctly noted that the fair use “analysis is not some open-ended referendum on ‘fairness,’ as [Tenenbaum]  would have it, but an effort to measure the purpose and effects of a particular use against the incentives for literary and artistic creation that drive copyright protections.”  Consistent with mainstream fair use jurisprudence, the court examined each of the four statutory factors and concluded that each one weighed against a finding of fair use.  But the court’s overt predisposition in Tenenbaum’s favor unmistakably influenced its reasoning. 

For instance, the court refused to “label” Tenenbaum’s conduct as commercial because “there is a meaningful difference between personal file sharing and a business strategy that exploits copyrighted works for profit.”  In this respect, the court disagreed with the Ninth Circuit, which found in the Napster case that file sharing was commercial because “repeated and exploitative unauthorized copies were made to save the expense of purchasing authorized copies.”  A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9thCir. 2001).  In contrast, the court felt that Tenenbaum’s conduct fell “somewhere in the middle” of a spectrum of commerciality ranging from “pure, large-scale profit-seeking to uses that advance important public goals. . .” 

Similarly, in its treatment of the portion of each copyrighted work infringed, the court urged that if Tenenbaum had “just sampled individual songs as a prelude to purchasing the full albums on which those songs appeared[,] [t]hat could well present a compelling argument for fair use.”  Tenenbaum admitted, however, that his purpose in downloading songs was not to sample them in anticipation of later purchases, which the court ultimately acknowledged.  The disappointment that results when the facts do not support a cherished theory of the case is familiar to many a litigator.

After finding that each of the four traditional fair use factors weighed against a finding of fair use, the court then addressed the creative and unusual “non-statutory factors” that Tenenbaum advanced.   These included that: (1) the copyright owners assumed the risk of infringement by releasing their works in an environment where file sharing was rampant; (2) the copyright owners aggressively marketed their works while failing to protect them in any meaningful way, essentially creating an attractive nuisance; (3) Tenenbaum was forced to engage in file sharing because only entire albums, not individual songs, were available for legal purchase; (4) it is unfair for parents and universities to bear the costs of policing the file-sharing activity of children and students; and (5) the “injustice of the action” weighed in favor of fair use. 

The court properly rejected each of these arguments, though it viewed some of them with a degree of approval.  For instance, because the Supreme Court has suggested that the unavailability of a work for purchase through normal channels is a proper fair use consideration, the court felt that Tenenbaum was “on firmer ground” in arguing that his conduct was excused because he could only legally buy entire CDs rather than individual songs.  Nonetheless, by August 2004, when Tenenbaum’s file sharing was detected by the plaintiffs, “a commercial market for digital music had fully materialized,” making the “unavailability of paid digital music [] simply not relevant.” 

The opinion concluded by reiterating that the court was “very, very concerned that there is a deep potential for injustice in the Copyright Act as it is currently written.  It urges – no implores – Congress to amend the statute to reflect the realities of file sharing.”

This opinion – and the verdict that followed it – should strike fear into the hearts of file sharers everywhere.  It is the second staggering jury verdict against an individual file sharer, following the nearly $2 million verdict in Capitol Records v. Thomas-Rasset.  Nonetheless, at least one piece of anecdotal evidence suggests that file sharers are not so easily deterred: overheard in the ticket line at a movie theatre over the holidays, one youth commenting to another, “We can just download it illegally online!”