In a decision involving digital course materials provided by a public university, the U.S. Court of Appeals for the Eleventh Circuit exhaustively analyzed the Copyright Act “fair use” defense. The 129-page opinion considered whether Cambridge University Press, Oxford University Press, and Sage Publications - three publishing houses specializing in academic works - could sue Georgia State University (GSU) for copyright infringement in permitting professors to make available to students digital copies of book excerpts without paying any license fees. The publishers challenged 74 instances of infringement during three academic terms. GSU raised the fair use defense that any alleged use of copyrighted materials was for the purpose of teaching, scholarship or research and for nonprofit educational purposes.

The accused works were advanced scholarly texts for use in upper-level undergraduate and graduate courses, marketed to professors at universities and colleges. Professors could assign excerpts from a book to their students by placing the book on reserve at the campus library; preparing bound, photocopied, paper “coursepacks” containing excerpts from multiple works; or distributing digital excerpts over the Internet.

The U.S. District Court for the Northern District of Georgia determined that there was no infringement in 26 cases, that the fair use defense applied in 43 cases, and that GSU had infringed without any defense in 5 cases. Despite entering a narrow injunction against GSU, the trial court nevertheless found that GSU was the prevailing party in the case, awarding it over $2.89 million in costs and attorneys’ fees. On appeal, the Eleventh Circuit sent the case back to the District Court for a more “holistic analysis” in which the fair use factors were to be applied and weighed differently.

GSU employed two digital distribution systems for course materials that largely replaced paper coursepacks. Students buy paper coursepacks from the GSU bookstore but pay for digital materials only indirectly, through tuition and fees. Although GSU pays licensing fees for materials in paper coursepacks, it makes thousands of digitized copyrighted works available without license payments. In 2009, during the suit, GSU adopted a new policy that required professors to fill out a “Fair Use Checklist” for each excerpt. If the factors favoring fair use outnumbered the contrary factors, the professor was not required to obtain a license. Where fewer than half the factors favored fair use, the professor was required to seek a license.

The fair use doctrine, a defense to copyright infringement, requires analysis of (1) the purpose of the allegedly infringing use, (2) the nature of the copied work, (3) the size and significance of the copied portions, and (4) the effect of the alleged infringement on the potential market for or value of the original work. The trial court determined that the first and second factors strongly favored GSU in all cases because the use was strictly for nonprofit educational purposes and the books were all properly classified as factual information. The court applied a mechanical test for the third factor (amount of copying) of not more than 10 percent of the pages in any book or one chapter. Lastly, the court determined that the fourth factor weighed in the publishers’ favor in cases where a digital license was available and against the publishers where a license was not readily available. If three of the four factors favored GSU for a particular work, the fair use defense applied. If the factors were tied, the court reweighed the importance of each factor.

The Eleventh Circuit concluded that some unpaid use of copyrighted materials must be allowed to avoid placing overbroad restrictions on the use of copyrighted works, where the proper scope of the fair use doctrine depends on how much the fair users could affect the value of the market for the work before the owner lost incentive to publish. Courts must make case-by- case and work-by-work evaluations, using an equitable “rule of reason,” without balancing the relative weight of each factor in each case, or whether the copied works were on paper or digital.

The Fair Use Factors

The Eleventh Circuit observed that whether the use is appropriate depends on (1) the extent to which the use is transformative rather than merely superseding and (2) whether the use is commercial or educational. Here, the use was merely superseding, not transformative, because GSU uses the verbatim excerpts for the same purpose as the original works – reading material for students. The court’s focus should be on the use and not simply on the user, so the supplanting nature of GSU’s use must be considered.

In analyzing the second factor, the Eleventh Circuit noted that copying highly creative works or unpublished works is less likely to be fair use. The District Court erred in holding that the second factor favored GSU in every case, without examining whether the excerpts contained evaluative, analytical, or subjectively descriptive material in addition to bare facts. The Eleventh Circuit found that the court should have held the second factor was neutral or weighed against fair use, but had little importance here because the copied works were not fictional or unpublished.

The third factor covers whether GSU “helped themselves overmuch” to the copyrighted works, in light of the purpose and character of GSU’s use, combining it with the first and fourth factors. By applying a 10 percent/one chapter safe harbor to every work, the District Court abdicated its duty to make individualized determinations, taking into account whether the amount copied was excessive in relation to GSU’s educational purposes, measured against the length of the entire book, including whether the copied material was the heart of the work.

The fourth factor depends on the extent of market harm caused by the infringer’s actions and whether unrestricted and widespread conduct of that type, if everyone did it, would have a substantially adverse impact on the potential market for the copyrighted work. The importance of the fourth factor varies with the amount of harm and the relative strength of the other three factors. Because GSU’s use is non-transformative and fulfills the same purpose the publishers intend for their works, the threat of market substitution is great and increases the importance of the fourth factor in this case. Third-party licensing programs to authorize academic permissions provide a workable market for GSU to purchase licenses for excerpts. The District Court correctly concluded that uses for which a license was available substantially harmed the publishers’ potential market and uses for which licenses were unavailable weighed in favor of fair use. However, on remand, the District Court must give the fourth factor greater weight because of the severe threat of market substitution.

Whether a use is transformative under the first factor greatly affects a fair use analysis, although what is “transformative” can be similar to what is “obscene,” depending on the viewer. In a transformative use, something new is added to the original work in expression, meaning, or message, or the work is used for a new purpose. Several recent cases turn heavily on the courts’conclusions that the works were transformative, not on whether the uses were commercial. See Kienitz v. Sconnie Nation LLC, 766 F.3d 756 (7th Cir. 2014), cert. den. No. 14-815, March 23, 2015 (photographer’s image of Madison mayor on t-shirts, relies heavily on the market effect of the new work); Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013)(“appropriation” artist’s use of photographer’s work was transformative), Authors Guild, Inc. v. Google, Inc., No. 05 Civ. 8136 (DC) (S.D.N.Y. 2013) (wholesale copying of entire books was transformative), and Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014) (university library copying of entire books was transformative).

Source: Cambridge University Press v. Patton, U.S. Court of Appeals for the Eleventh Circuit, Nos. 12-14676 and 12-15157, October 17, 2014, rehearing en banc den (January 2, 20151)