What doctrine is provided in the Copyright Act as a major defense to a claim of copyright infringement?

Few issues have created greater confusion in criminal copyright prosecutions than the "first sale doctrine." The doctrine is one of the specific statutory restrictions which Congress has placed on the exclusive rights of copyright owners. Criminal defendants frequently resist prosecution by claiming that they believed that the works they were selling had been the subject of a legitimate first sale. Moreover, several criminal copyright convictions have been overturned because of inadequacies in the government's proof on this issue. For this reason, a federal prosecutor should have a clear understanding of the first sale doctrine when considering whether to bring a criminal copyright case.

The first sale doctrine, codified at 17 U.S.C. § 109, provides that an individual who knowingly purchases a copy of a copyrighted work from the copyright holder receives the right to sell, display or otherwise dispose of that particular copy, notwithstanding the interests of the copyright owner. The right to distribute ends, however, once the owner has sold that particular copy. See 17 U.S.C. § 109(a) & (c). Since the first sale doctrine never protects a defendant who makes unauthorized reproductions of a copyrighted work, the first sale doctrine cannot be a successful defense in cases that allege infringing reproduction.

Further, the privileges created by the first sale principle do not "extend to any person who has acquired possession of the copy or phonorecord from the copyright owner, by rental, lease, loan, or otherwise, without acquiring ownership of it." See 17 U.S.C. § 109(d). Most computer software is distributed through the use of licensing agreements. Under this distribution system, the copyright holder remains the "owner" of all distributed copies. For this reason, alleged infringers should not be able to establish that any copies of these works have been the subject of a first sale.

Although courts agree that the first sale principle applies to criminal prosecutions, they do not agree on the burden of proof. Several cases suggest that in criminal copyright prosecutions, the United States must prove that the copyrighted work was not the subject of a first sale. Other cases, however, hold that the issue of a first sale is an affirmative defense that must be raised by the defendant. NOTE: Please consult the Computer Crime and Intellectual Property Section's Intellectual Property Rights Prosecution Manual for a detailed discussion of the first sale doctrine and related case law.

[cited in Criminal Resource Manual 1847; Criminal Resource Manual 1849; JM 9-71.001]

Terms:

Rebuttable Presumption:
A rebuttable presumption is a conclusion drawn from a certain fact or set of facts, or a conclusion mandated by law, which can be contradicted upon the introduction of facts to the contrary. For example, a child arriving home after curfew might give rise to a rebuttable presumption that she was up to no good. If the child can point to a flat tire that needed to be fixed, we might change our mind. Basically, this is the default position which is maintained unless, and until, evidence to the contrary is provided.

Our final topic in Copyright involves the free, unimpeded, non-infringing use of the protected property of others. Prior to the Copyright Act of 1976, fair use doctrine was fairly well established in the courts. See e.g., Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass, 1841), Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49 (2nd Cir. 1936), Rosemont Enters v. Random House, Inc., 366 F.2d 303 (2d Cir. 1966).

In the oft-cited Reflections on the Law of Copyright, 45 Colum. L. Rev. 503 (pt.1) and 719 (pt. 2) (1945), Professor Chafee discusses the approach in Folsom, in which a work fails to qualify as a fair use because it could be seen as a substitute for the original, and the different approach in Rosemont Enters, in which the new work fails to add to the original. In Chafee’s words, “a dwarf standing on the shoulders of a giant can see farther than the giant himself,” which means that unless the new work is something more than a mere substitute – unless it adds something to the original – it is not a fair use of the underlying work but rather an infringement.

With the Act of 1976 fair use doctrine was codified:

"The courts have… developed over the years the concept of "fair use" to describe some limited and useful forms of copying and distribution that are tolerated as exceptions to copyright protection. The 1976 Copyright Act codified this judicial doctrine at 17 U.S.C.S. § 107 (1977) without significantly altering it." - Pacific & Southern Co. v. Duncan, 744 F.2d 1490, 1494 (11th Cir. 1984).

Title 17 §107 permits the use of a protected work without the right-holder’s permission if the use is for a purpose “such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research….” (emphasis added).

EXAMPLE: Sarah is writing a paper which will serve as her final exam in a college class. The paper, which discusses Saul Sipke’s theory, will necessarily include numerous quotes from Sipke’s recent book, and some from various scholarly articles he has written in the past. Unless Sarah is able to use these materials freely, she would be unable to seek Sipke’s permission before the paper is due. She would flunk the course, drop out of college, and end up on the street. Her mother would disown her, her friends would pretend they didn’t know her, and the harsh, cruel world we live in would never give her a second chance. Thank goodness for §107!

The doctrine of fair use is a defense against a claim of infringement. In other words, if a person is sued for copyright infringement, this limitation (along with the other limitations on exclusive rights carved out throughout Chapter 1 of Title 17) can be used to avoid liability. Rather than arguing that the protected work was not used without authorization, the argument is that authorization is not required for this type of use.

Four factors are listed in §107, which must be considered in evaluating a fair use defense. Note that the section states that “the factors to be considered shall include….

1. the purpose and character of the use
2. the nature of the copyrighted work
3. the amount and substantiality of the work used
4. the effect the use has on the work’s value

EXAMPLE: In a recent issue of Rustler magazine, a full-page parody of an ad was printed which featured the likeness of Perry Gaulwell, a well-known minister. The ad, far from flattering to Gaulwell’s image, included a disclaimer which stated that it was a parody. An organization to which Gaulwell belonged, Major Morality, copied the ad and distributed it as part of a campaign to raise funds for a lawsuit against the magazine. The four factors listed in §107 are weighed as follows:

    1. The use was primarily commercial, as it was part of a market approach to fundraising. This leads to a rebuttable presumption of unfair use.

    2. Because the work was creative in nature, the scope of fair use is less than it would have been if the work were informative in nature.

    3. Although only one page of the magazine was copied, the component copied is entitled to copyright protection independent of the collective work, and that component was copied in its entirety.

    4. This factor is potentially the most important, and a court might ask:

        a. Does the infringing use tend to diminish or prejudice potential sales of the original?

        b. Does the infringing use tend interfere with the marketability of the original?

        c. Does the infringing use tend to fulfill the demand for the original?

Because this 4th, most important, factor leans toward a finding of fair use, the other factors are outweighed in this case and defendant’s use is a fair use of the original work. See Hustler Magazine, Inc. v. Moral Majority, Inc.,796 F.2d 1148 (9th Cir. 1986).

Because the statute states that the analysis shall include these factors, other factors have been considered by courts, such as a defendant’s bad faith or standard industry practice. See e.g., Roy Export Co. Establishment v. Columbia Broadcasting System, Inc. 503 F.Supp. 1137 (S.D.N.Y. 1980), Triangle Publications Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171 (5th Cir. 1980). Therefore, these factors are not exhaustive, and in the effort to “resolve tension” (see Pacific & Southern below) a court may use its discretion in weighing factors beyond those listed in §107.

If a court can consider factors beyond those listed in the statute, may it also choose to ignore one or more of the listed factors? According to Pacific & Southern Co. v. Duncan, 744 F.2d 1490 (11th Cir. 1984), the answer is a resounding “No.”

The statute uses mandatory language to the effect that in a fair use determination, the "factors to be considered shall include" (emphasis added) the four listed. Pacific & Southern at 1495.

Regarding the principles underlying the doctrine of fair use, the court went on to say that:

"[T]he fair use doctrine [functions] as a "rule of reason." Fair use allows a court to resolve tensions between the ends of copyright law, public enjoyment of creative works, and the means chosen under copyright law, the conferral of economic benefits upon creators of original works." - Pacific & Southern at 1495.

What is clear, therefore, is that the four factors must be considered, but this is not meant to limit courts in their endeavor.

Around the same time as the 11th Circuit decided Pacific & Southern, the 2d Circuit was busy with Diamond v. Am-Law Pub. Corp., 745 F.2d 142 (2d Cir 1984). But just prior to Pacific & Southern, the Supreme Court had already decided Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417  (1984), cited in Pacific & Southern.

In the Sony case, Sony was sued for manufacturing Betamax video tape recorders (remember those?) which consumers then used to record television programs. Although the issue there involved the manufacturer’s liability for potentially infringing use by consumers, the §107 fair use exception had to be analyzed in order to determine whether or not that use by consumers fell under the exception.

"[A]lthough every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright, noncommercial uses are a different matter. A challenge to a noncommercial use of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential market for the copyrighted work." - Sony at 451.

Thus Hustler, Pacific & Southern, and Sony all teach us the same thing; the factors in §107 must be considered, but the outcome of any given case is not a matter of mere calculation of these factors. There is no single factor which always outweighs the others, nor is it impossible for any given factor to outweigh all the others, given the right set of facts. See Campbell v. Acuff-Rose Music, 510 U.S. 569 (1994) (Supreme Court found that a song’s commercial nature was only one element relevant to fair use analysis) (regarding 2 Live Crew’s 1989 parody of “Oh, Pretty Woman).  

Issues in copyright can involve anything from famous musicians to boring fabric designs. Whatever the case, the preceding materials should provide a good jumping off point for your research of the issues which affect your clients and the attorneys you work for. 

What is a defense against a claim of copyright infringement?

What is the fair use doctrine of copyrighted material?

What does the first sale doctrine do?

What is essential to defending a fair use of copyrighted material?