Why it matters: On December 31, 2015, The Authors Guild filed a petition for writ of certiorari with the U.S. Supreme Court seeking the Court's review of the Second Circuit's October 16, 2015, opinion in The Authors Guild v. Google, Inc. In that opinion, the Second Circuit held that the digital replication of copyrighted books by Google, Inc., as part of its Google Books digital database and Library Project programs, and the search and snippet display features of its Google Books search engine, constitute fair use so as to defeat copyright infringement claims asserted by the books' authors. The first line of the Second Circuit's opinion stated that "[t]his copyright dispute tests the boundaries of fair use." The Authors Guild is hoping that the U.S. Supreme Court agrees, and that the Second Circuit's opinion was sufficient to create a valid circuit split so as to warrant the Court taking the case up for review.

Detailed discussion: On December 31, 2015, The Authors Guild (on behalf of three named authors and "others similarly situated") (Plaintiffs) filed a petition for writ of certiorari (Writ) with the U.S. Supreme Court requesting that the Court agree to review the Second Circuit's October 16, 2015, opinion in The Authors Guild v. Google, Inc. In that opinion, the Second Circuit affirmed a lower court ruling in favor of Google, Inc. (Google) and unanimously held that Google's "use" of copyrighted books as part of both its online "Google Books" digital database (including the "snippet of text" display feature of its search engine) and its "Library Project" programs constitute fair use pursuant to Section 107 of the Copyright Act. In the Writ, the Plaintiffs argue that the Supreme Court's review is necessary and warranted because the Second Circuit's opinion created a split among the circuits concerning what constitutes, and the proper test to determine, "transformative" fair use. The relevant questions presented in the Writ that the Plaintiffs seek the Court to address bear this out:

  1. "Whether, in order to be 'transformative' under the fair use exception to copyright, the use of the copyrighted work must produce 'new expression, meaning, or message,' as this Court stated in Campbell and as the Third, Sixth, and Eleventh Circuits have held, or whether the verbatim copying of works for a different, nonexpressive purpose can be a transformative fair use, as the Second, Fourth, and Ninth Circuits have held.
  2. Whether the Second Circuit's approach to fair use improperly makes 'transformative purpose' the decisive factor, replacing the statutory four-factor test, as the Seventh Circuit has charged.
  3. Whether the Second Circuit erred in concluding that a commercial business may evade liability for verbatim copying by arguing that the recipients of those copies will use them for lawful and beneficial purposes, a rationale that has been flatly rejected by the Sixth Circuit."

A review of the Second Circuit's opinion is in order. Before we go on, however, a brief explanation of the "Google Books" and "Library Project" programs that are at issue: According to the facts set forth in the Second Circuit's opinion, Google's Library Project commenced in 2004, pursuant to which Google entered into agreements with numerous "major research libraries" (including those at Harvard, Stanford and University of Michigan) to create digital scans of books owned and submitted by the libraries for inclusion in the project. In addition to creating the digital scans, the agreements with the libraries permit Google to extract and index machine-readable texts from the scans for inclusion in its Google Books online digital database. Google then gives the libraries access to download and retain digital copies of the books they submitted for their own use. Since 2004, Google has created digital scans of and indexed more than 20 million books, including both copyrighted and public domain works, many of which are nonfiction or out of print. To the extent the books are subject to a valid copyright, Google does not seek the copyright holding author's permission to create the digital copies. Google created the Google Books search engine so as to enable the public to conduct searches of the "digital corpus" online database for specific words or phrases (which would allow, for example, a searcher to ascertain the frequency of usage of such search terms in different historical periods) and see short snippets of text from digital scans that contain the search terms. Google Books has built-in protections to block widespread dissemination of the digital scans via an aggregation of the snippets, such as "blacklisting," which makes one snippet of text on each page and one complete page out of every ten permanently unavailable. In addition, Google Books does not provide snippet views of certain books—such as cookbooks or dictionaries—where a view of the snippet would typically satisfy the search. Moreover, if the copyright-holding author so requests, Google will refrain from providing snippets of text from that author's book.

The decade-long procedural path to the Second Circuit was a circuitous one. In September 2005, the three Plaintiff authors, whose books were digitally scanned as part of the Library Project and incorporated into the Google Books database, brought a putative class action in the Southern District of New York on behalf of themselves and similarly situated copyright-holding authors. After years of negotiations, the parties reached a proposed settlement in 2011 that would have allowed Google more extensive use of the digital scans in exchange for royalty payments to the rights holders. That proposed settlement was rejected by the district court in March 2011. In October 2011 the plaintiffs filed a fourth amended class action complaint, which was the complaint at issue before the Second Circuit. The district court certified a class in May 2012, which the Second Circuit later decertified without addressing the merits of the case pending resolution of Google's motion for summary judgment with respect to its fair use defense (which, if granted, would "moot" many of the class certification issues before the Second Circuit). On November 14, 2013, the district court granted Google's motion for summary judgment, ruling that Google's "use" of the copyrighted books (i.e., the digital copies of those books) as part of the Library Project and the Google Books database met all of the elements of fair use under Section 107. On December 10, 2013, the district court entered an amended judgment dismissing the plaintiffs' case with prejudice. The plaintiffs thereafter appealed to the Second Circuit, which affirmed.

The Second Circuit began its analysis with a review of the "Law of Fair Use," commencing with its common law origins and noting that "while authors are undoubtedly important intended beneficiaries of copyright, the ultimate, primary intended beneficiary is the public, whose access to knowledge copyright seeks to advance." The Court said that common law "thus developed the doctrine, eventually named fair use, which permits unauthorized copying in some circumstances, so as to further 'copyright's very purpose' " of promoting the public's access to knowledge. The Court went on to state that the doctrine of fair use was officially codified by Congress in Section 107 of the Copyright Act, which lists the following four "factors to be considered" when determining whether there has been fair use in any particular instance: "(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purpose; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work."

The Court noted that Section 107 on its face "does not furnish standards for recognition of fair use," but that the courts have developed such standards, most notably in the Supreme Court's 1994 decision in Campbell v. Acuff-Rose Music, Inc., which "undertook a comprehensive analysis of fair use's requirements, discussing every segment of Section 107." Noting the Supreme Court's ruling in Campbell that the Section 107 factors must be considered and weighed together on a case-by-case basis, and noting further that the Supreme Court in later rulings has deemed the first and fourth factors to be "more significant than [the] others" and thus entitled to greater weight, the Court stated that "[e]ach factor thus stands as part of a multifaceted assessment of the crucial question: how to define the boundary limit of the original author's exclusive rights in order to best serve the overall objectives of the copyright law to expand public learning while protecting the incentives of authors to create for the public good."

Given this background, the Court went on to "discuss each of the statutory factors, as illuminated by Campbell and subsequent case law, in relation to the issues here in dispute." First up for the Court were the Google Books "search and snippet view functions." With respect to the first Section 107 factor, the Court cited Campbell to find that these functions were "transformative uses" of the copyrighted books, which, when found, "tend to favor a fair use finding because a transformative use is one that communicates something new and different from the original or expands its utility, thus serving copyright's overall objective of contributing to public knowledge." The Court thus had "no difficulty concluding that Google's making of a digital copy of Plaintiff's books for the purpose of enabling a search for identification of books containing a term of interest to the searcher involves a highly transformative purpose, in the sense intended byCampbell." Further, the "[s]nippet view adds important value to the basic transformative search function, which tells only whether and how often the searched term appears in the book," and thus "adds importantly to the highly transformative purpose of identifying books of interest to the searcher." The Court then addressed the Plaintiffs' argument that Google's use was "commercial in nature," thus outweighing its transformative purpose. Here, the Plaintiffs had argued that, although Google derived no direct revenues from the operation of Google Books, Google is nonetheless "profit-motivated and seeks to use its dominance of book search to fortify its overall dominance of the Internet search market" so as to indirectly profit. To this argument, the Court stated that it has "repeatedly rejected the contention that commercial motivation should outweigh a convincing transformative purpose and absence of significant substitutive competition with the original," and thus "we see no reason in this case why Google's overall profit motivation should prevail as a reason for denying fair use over its highly transformative purpose, together with the absence of significant substitutive competition, as reasons for granting fair use."

The Court then looked at the Google Books functions in relation to factors two and three of Section 107 and found both favored a finding of fair use in this case. With respect to the second factor, which the Court stated has "rarely played a significant role in the determination of a fair use dispute," the Court found it "favors fair use…because the secondary use transformatively provides valuable information about the original, rather than replicating protected expression in a manner that provides a meaningful substitute for the original." With respect to the third factor, the Court stated that "a finding of fair use is more likely when small amounts, or less important passages, are copied than when the copying is extensive, or encompasses the most important parts of the original." Here, the Court acknowledged that the copyrighted books were digitally copied in their entirety for Google Books' purposes, but stated that "[c]omplete unchanged copying has repeatedly been found justified as fair use when the copying was reasonably appropriate to achieve the copier's transformative purpose and was done in such a manner that it did not offer a competing substitute with the original." The Court found that the copying in this case, while unauthorized, was "made to enable the search function to reveal limited, important information about the books" and that at no time was the entire copied book revealed to the public. With respect to the snippet views of text revealed as part of the Google Books search, the Court concluded that, while this feature could be troubling depending on how much of the book is excerpted "as presently structured by Google, the snippet view does not reveal matter that offers the marketplace a significantly competing substitute for the copyrighted book."

Turning to the fourth factor of Section 107—which the Court said is of "great importance in making a fair use assessment" due to the commercial nature of copyright—the Court considered whether the snippet views, while transformative, brought to the marketplace "a competing substitute for the original, or its derivative, so as to deprive the rights holder of significant revenues because of the likelihood that potential purchasers may opt to acquire the copy in preference to the original." The Court answered this question in the negative, concluding that "we think it would be a rare case in which the searcher's interest in the protected aspect of the author's work would be satisfied by what is available from snippet view, and rarer still—because of the cumbersome, disjointed, and incomplete nature of the aggregation of snippets made available through snippet view—that snippet view could provide a significant substitute for the purchase of the author's book."

After thus considering the four Section 107 fair use factors "in light of the goals of copyright," the Court held that "Google's making of a complete digital copy of Plaintiffs' works for the purpose of providing the public with its search and snippet view functions (at least as snippet view is presently designed) is a fair use and does not infringe Plaintiffs' copyrights in their books." The Court dismissed as "without merit" the Plaintiffs' argument that they had derivative rights under Section 106(2) of the Copyright Act in the Google Books search and snippet view functions, finding that "the copyright that protects Plaintiffs' works does not include an exclusive derivative right to supply such information through query of a digitalized copy." The Court also dismissed the Plaintiffs' arguments that Google Books' storage of the digitalized copies of their books exposed them to the risk of wide dissemination by hackers, thereby destroying the value of their copyrights; while these arguments were "theoretically sound," the Court found them to be not supported by the evidence.

The Court next addressed and dismissed the Plaintiffs' argument that the Library Project was not a fair use of the Plaintiffs' books and exposed them to risk of copyright devaluation if the digital copies provided to the participating libraries were used in an infringing manner or if the libraries failed to keep them secure from hackers. The Court pointed out that the Library Project consists of participating libraries contracting with Google to create for them digital copies of books that they already own for their use in a noninfringing fair use manner, typically consisting of making the digital scans available to be searched by library patrons (similar to Google Books). The Court further pointed out that it would be fair use if the libraries had made their own digital copies of their books for patron search purposes and it did not become infringement simply because the libraries contracted with Google (with its expertise and resources) to create the libraries for them. Moreover, the Court noted that Google's contracts with the libraries contain provisions requiring the libraries to use the digital copies in a manner consistent with copyright law and to take security precautions to prevent hacking resulting in their wide dissemination to the public. The Court thus concluded that "Google's creation for each library of a digital copy of that library's already owned book in order to permit that library to make fair use through provision of digital searches is not an infringement." The Court further reasoned that if the libraries were in the future to use the digital copies in an infringing manner or insecurely store them so as to expose them to risk from hacking, then the Plaintiffs could bring suit against the libraries, not Google, unless it could be proven that Google was a contributory infringer. The Court found this argument, however, to be purely speculative and not supported by the facts before them.

The Court thus concluded by holding that "(1) Google's unauthorized digitizing of copyright-protected works, creation of a search functionality, and display of snippets from those works are non-infringing fair uses. The purpose of the copying is highly transformative, the public display of text is limited, and the revelations do not provide a significant market substitute for the protected aspects of the originals. Google's commercial nature and profit motivation do not justify denial of fair use. (2) Google's provision of digitized copies to the libraries that supplied the books, on the understanding that the libraries will use the copies in a manner consistent with the copyright law, also does not constitute infringement. Nor, on this record, is Google a contributory infringer."

The Second Circuit's opinion certainly does seem to "test the boundaries of fair use" among the circuits. We will be watching with avid interest to see if the Supreme Court agrees to review the case and report back.

Click here to read the Petition for a Writ of Certiorari filed with the U.S. Supreme Court by The Authors Guild on 12/31/15.

Click here to read the Second Circuit's 10/16/15 opinion in The Authors Guild et al. v. Google, Inc.