Vanderbilt Journal of Entertainment and Technology Law symposium
Panel 1: Treading the Line: Fair and Derivative Uses
(Note: I’m a bit under the weather; I may be missing parts of the presentations.)
Thomas F. Cotter, University of Minnesota Law, Transformative Use and Cognizable Harm
Transformative use is often more of a conclusion than an analytical tool for determining fair use. Undue emphasis on transformative use obscures the underlying policy issues and creates unnecessary doctrinal knots. Transformative use should be subsidiary to the overarching question of whether a use causes cognizable harm to the copyright owner.
Transformativeness tends to be underinclusive (citing me!). Efforts to define transformativeness have proven elusive. Possible definitions: (1) Any use likely to generate more social benefits than costs. But that’s too vague/unworkable. (2) Any use that would result in the creation of a derivative work. Problem: nullifies derivative works right. (3) Opposite result: any use that doesn’t result in the creation of a derivative work—approach taken by Posner in Ty v. Publications Int’l. Transformative uses are complementary to the original and derivative works are not. Problem: commonplace derivative works are complementary, at least for some users; some fair uses are not. Harry Potter Lexicon case also tried this move: derivative works transform the original into another medium, mode, language, or revision while represneting the original, while transformative fair use transforms the purpose of the original. Thus, the Lexicon was not a derivative work, though it did violate the reproduction right. It had a somewhat transformative purpose, but inconsistently so. Problem: this framework has assumptions about whether a use “represents” the original or what a new “purpose” is—we can define those things many ways. (4) As an empirical matter, transformation of content is less likely to be fair use, but transformation of purpose is more likely—Tony Reese’s article. Cites Kelly v. Arriba Soft & Perfect 10 v. Amazon, where thumbnail images were found to have different purposes from the original images. But see Gaylord v. US—transformation of content, but arguably not of purpose, held to be fair use. Application of these criteria is unpredictable.
We should do something else: assess whether unauthorized use threatens cognizable harm. Emerging scholarship by Balganesh, Bohannan, Sprigman, Stadler. Is this harm of the type the copyright system is intended to prevent? Must consider copyright’s purposes and the purpose of the fair use doctrine and the derivative works right in particular.
An unauthorized use harms the owner if her utility is lower in a world in which the unauthorized use occurs than it would be in a world in which the law forbids the user from engaging in the use absent the owner’s authorization and the user complies with the law. No harm, for example, where the owner would agree to use but for presence of high transaction costs.
Easy cases: I make 100 copies of a best-seller and hand them out to friends. Probably substitutes for authorized sales; a rule allowing this would cause systemic harm. Contrast: I quote portions of the original in a negative book review. Harms the copyright owner by diverting demand, but that’s not cognizable harm. What if my copying whets others’ appetites for authorized copies? This is harm under Cotter’s definition, because in the alternative universe in which the owner could demand compensation and the user would comply, the owner would be even better off. This is cognizable harm under current law, but he’s not sure it should be.
Harder cases: reproduction of works of visual art for purposes ancillary to news reporting/historical commentary: Bill Graham; LA News; Nuñez. Satires: Dr. Seuss. Works that critique the culture that a work symbolizes: SunTrust; Blanch v. Koons.
Relevant considerations: does the work create a conventional type of derivative work? Is the use a type foreseeable at the time of creation, or likely to pose a threat to the copyright incentive scheme? If not, should that be dispositive? If it is dispositive, do copyrights become unenforceable at some point prior to term expiration? Is the use the most effective way for the user to express her viewpoint (a Cohen v. California consideration)? Does the use cause psychological/moral rights harm to the owner, and do we care? Is the author likely to enter the niche served by the use or likely to prevent anyone from entering that niche?
Applications: a finding of cognizable harm may enable copyright owners to inhibit freedom of expression: Salinger v. Colting, wrongly decided unless we accept a moral rights theory.
Glynn S. Lunney, Jr., Tulane Law
The derivative work right proved largely unimportant under the Act. It was originally derived from the translation right as a response to Stowe v. Thomas, in which a German language publisher serialized/translated Uncle Tom’s Cabin. Held: a translation is not a copy. Expanded 1909 to encompass dramatizations; 1976 Act expanded further to any work. In application, hasn’t proved all that important because the reproduction right covers almost everything. Harry Potter Lexicon case is another example: you’d think it’s clearly a derivative work, but the district court finds that instead the Lexicon is a copy.
What role could the right play? A distinction between substitutes (reduce demand for the original) and complements (increase demand). We have a really good story about why copyright law should ban making substitutes without the author’s permission. We don’t have a good theory about why copyright owners should control production of complements. In other economic sectors, we don’t give control over complements: if you make a car, aftermarket sellers can sell tires, lights, little things to hang off the dashboard, etc.
Instances: hardware/software interactions. DVD player is required to play the DVD. You need both: they’re complementary. Better music player = you are more likely to buy more music. Second, uses of the work that are complementary to the work: radio airplay, where it’s well established that radio play drives sales of records. Third: reworking that’s complementary, increasing demand for original work—the film made from a novel. Film release always increases sales of novel.
What are the economics of complements? Copyright law is all over the map with treatments of complements. What is the proper treatment?
Simplistic example: does a monopolist in one market need to control other markets to get the highest return? Answer: no. Assume you are the only seller of shoes, which sell for $10 and cost $2 to produce a pair. You price at $10. What if you only control the left shoe? No, you sell it at $9 and get the same monopoly profit, and the market drives down the price of the right shoe. So often a monopolist earns just as much without controlling complementary markets.
Sony safe harbor, limited by Grokster’s inducement theory. Generally copyright owners don’t have the right to control complementary hardware.
What about radio airplay? There is a performance right, but there are various exemptions like the homestyle equipment limitation for businesses.
Other unclear applications: selling extra levels of Duke Nukem.
When should copyright owners control the complement? The economics of the complement are the same, so our rules should be consistent, but they aren’t.
Incentive argument. But we don’t give copyright owners control over all complements; also, often the complements need incentives too. We want new tech, new ways to experience works. Incentives are required not just for tech but for reworkings—it took an awful lot of effort to create the Harry Potter Lexicon.
Public performance right for radio stations—should we transfer their profits, which can be monopoly profits, to songwriters? Well, do we want more songwriters or do we want more radio stations? Recurring payola scams suggest that, under existing rights, the songwriters are making too much money—they transfer their wealth to the radio stations so that they get more exposure.
Questions: are the complements likely to be natural monopolies? A film version of a novel is expensive, and there’s only likely to be one of them. Good idea to recognize copyright owner’s right where there will be a natural monopoly. If we’re only going to get one film, at least for a given time period, we probably want the author-authorized version rather than unauthorized.
What are the benefits/risks of requiring a license? If the transactions costs are too high, then it’s not worth it. That accounts for a lot of the complementary hardware rule—too hard to ask every copyright owner if it’s ok to make the iPod.
Version of Arrow’s paradox. If you have valuable information, how do you convince someone to pay for it when they don’t know what the information is? A person with a really great adaptation idea may not be able to negotiate with the author without losing the benefits of her idea.
Daniel J. Gervais, Vanderbilt Law, A Principled Approach to Copyright Exceptions and Limitations
We have no framework for limitations/exceptions; can we get one? History of international copyright: a one way rights elevator. Began with basic text and kept amending it to add rights. Derivative work right began as translation right; expanded—US version is probably the broadest in the world.
There’s only one mandatory exception to copyright in Berne/TRIPs: the right to quote. Then there’s a series of exceptions a nation is allowed to make, in most cases responding to countries that insisted that they wanted to maintain certain existing exemptions. In 1967, the negotiators added a general test for exemptions—the 3 step test. Not that far from the “cognizable harm” test—a cap on exemptions/limitations. But copyright rights are not capped. A
Irony: that’s not what the authors who drafted the first version of Berne wanted. Victor Hugo headed the committee that first drafted Berne. He did not want unlimited rights. In other countries as well: The Statute of Anne was an act to “promote learning,” not to give authors every possible right. In the US: “promote the progress of science and the useful arts.” The public interest was the dominant consideration, and in some cases the only relevant consideration.
We could in theory determine the ideal level of copyright protection to match our objective. But we are actually talking about protection levels—depends on type of work, type of user, type of use. That’s codified in fair use and its four-factor test.
Three things copyright can do: which functions should be within author’s control; which should be remunerated (compulsory licensing); which should be free. (The US has more compulsory licenses in its Act of any country.) Recognize need for two equilibria: internal balance of copyright; external balance with things like privacy (in filesharing measures, for example). Exceptions can limitations can’t take care of all these things, but they can help.
Human rights concerns: we see a balance in human rights instruments. They mention both protecting the moral/material interests of authors, and also a right to participate in the cultural life of the community, to enjoy the arts, and to share in scientific advancement and its benefits. A right to development, for example. Conflicts must be managed—someone has to decide when privacy ends and copyright control begins.
What if we reject human rights and say it’s all about money? This is reinforced by the move from Berne, standalone agreement, to TRIPS in the trade arena. Damage to copyright owners is lost revenue. According to two dispute resolution panels, the 3-step test for interference with normal commercial exploitation and the author’s “legitimate interests” must be interpreted in financial terms—are rightsholders losing money? If they are, then the exception violates the test. This could be used either to cabin the right or craft a broad exception in national law—we could enact a three-step test directly into national law and have courts assess it. He thinks this is a cop-out though, a denial of legislative responsibility—the test should be a safety valve.
We cannot assume that all new uses are covered by existing rights or need new ones. Tech can defeat a “right” to control, as P2P suggests. Privacy is going to be a big barrier for copyright. They used to be in harmony; copyright didn’t care what books you read in the privacy of your own home. When the end user became a potential disseminator and re-creator, things changed. No thought given at the international level to exceptions or limitations that would react to these developments.
Principles: copyright rights should not prohibit use in the private sphere of users (remuneration remains a possibility). They should not prohibit access in countries or by groups of users who would not otherwise have reasonable means of access to the content. They should not prevent educational uses that cannot be reasonably licensed. They should not prohibit access by institutions whose purpose is to document and preserve culture. (Notes that filesharing services represent the greatest collection of music the world has ever known.) They should not prevent use and reuse that serve a publi interest in free expression, including the creation and dissemination of culture and information—quotation, parody, caricature, pastiche, research, criticism, and review. Courts should have latitude not to apply exclusive rights, especially where they interfere unreasonably with the right of information or free press—injunctions should not be mandatory. Copyright should not prevent government use in the public interest, though internal/commercial uses by the government should remain subject to exclusive rights. Copyright shouldn’t prevent access to and at least noncommercial use of governmental publications of a general nature—the US already recognizes this, but Crown copyright and the like elsewhere are a big problem. Finally, given the 3-step test, exceptions should consider compensation as a substitute for control.
Q: Nimmer calls the derivative work right superfluous. So is there any optimal level of the derivative work right? Do we need it at all?
Cotter: In the US, there are marginal situations where it matters. Gilliam—taking the original and modifying it, where for technical reasons there’s no reproduction. (Seems unlikely to me that there was no reproduction in Gilliam.) Could tweak the law to capture those instances. May not be necessary as a matter of policy. Moral rights might also justify the concept of a derivative work rights.
Lunney: He doesn’t think it’s necessary; and in fact he wouldn’t extend the reproduction right to works that were very different from the original—he would require a showing of substitution.
Gervais: Within the current rights framework, the first step is to have a principled discussion of what we want out of our exceptions. So for example there is a current dispute over what, internationally, we should do about exceptions for people with disabilities, who can’t read plain text. We keep giving rights and it doesn’t seem to be doing that much.
Mike Madison: Emerging dialogue over the concept of harm. Cotter defines harm for his purposes, but doesn’t define the causal relationship—should we use a concept of causation, and if so how would that work?
Cotter: Ancillary to the overall question of whether certain types of harm should be compensated.
Steven Hetcher: Isn’t cognizable harm circular? Google Books: you’ll sell more books because of our scanning; but the owners say we’d do better if Google had to pay us for scanning.
Cotter: Trying to avoid circularity with his inquiry.
Q: Salinger: do you read it to hold that intent to enter the market is irrelevant?
Cotter: Yes, that’s where the judge ends up—also considers that author may have been motivated to create the work in part because no one could write an unauthorized sequel—weighs the author’s right to veto. Questions whether that’s consistent with copyright as means to promote progress. The harm asserted here would be psychological.
My Q: Cotter & Lunney seem to conflict on complementary uses. Go at it?
Cotter: He thinks his cognizable harm factors are similar to Lunney’s proposal.
Lunney: There are consistencies, but the two start from different places. He focuses on social utility, not whether the author is better off.
Me: but conceptually you seem to disagree about whether the definition of “complementary” is useful.
Cotter: Yes, he thinks that the movie example is helpful—the book isn’t really a movie substitute.
Lunney: He’s not saying complement/substitute maps directly onto the derivative works right. He’s troubled when a court concludes that a use increases the value of the copyrighted work, but it’s still not a fair use because Congress decided to give these rights to the copyright owner.
Mark McKenna: A plaintiff in a TM case can construct a story of confusion in practically any circumstance. Harm in copyright too—there’s always a way to say that potential money was lost. We need to decide whether we want copyright owners to control ancillary markets. Cotter is inviting courts to engage in fine-grained analysis about harm; Lunney seems to want more categorical judgments about kinds of uses where we will ignore harm stories.
Cotter: Asking about harm can screen out some things, for example the high transaction cost case in which no deal would occur.
McKenna: But then the owner says, “give me the right and a market for clearance will develop”—CCC, etc.
Cotter: Still, clarifies the nature of the harm. We can decide whether we care about the kind of harm identified.
Christina Bohannon: She’d add some categories of no-harm situation. For example, when the defendant was never going to pay for the use (the counterfactual world just doesn’t exist). Copy shop cases: these professors wouldn’t assign those works if they had to pay the fees. (There’s very interesting literature on counterfactual worlds that might be of use to Cotter there.) Or when the new use increases sales.
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