Panel 6: Unanticipated Consequences of New Technologies and Practices

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.