cyckV4

A Fair Use Case-Study: Multiple Copies for Classroom Use 499
Sony, Harper & Row, and Campbell—is evocative of Kant’s categorical imperative.
“[T]o negate fair use,” the Supreme Court has said, “one need only show that if the
challenged use ‘should become widespread, it would adversely affect the potential
market for the copyrighted work.’” Harper & Row, 471 U.S. at 568, quoting Sony
(emphasis supplied in part). Under this test, we believe, it is reasonably clear that the
plaintiff publishers have succeeded in negating fair use.
As noted above, most of the copyshops that compete with MDS in the sale of
coursepacks pay permission fees for the privilege of duplicating and selling excerpts
from copyrighted works. The three plaintiffs together have been collecting permission
fees at a rate approaching $500,000 a year. If copyshops across the nation were to start
doing what the defendants have been doing here, this revenue stream would shrivel and
the potential value of the copyrighted works of scholarship published by the plaintiffs
would be diminished accordingly.
The defendants contend that it is circular to assume that a copyright holder is
entitled to permission fees and then to measure market loss by reference to the lost fees.
They argue that market harm can only be measured by lost sales of books, not permission
fees. But the circularity argument proves too much. Imagine that the defendants set up a
printing press and made exact reproductions—asserting that such reproductions
constituted “fair use”—of a book to which they did not hold the copyright. Under the
defendants’ logic it would be circular for the copyright holder to argue market harm
because of lost copyright revenues, since this would assume that the copyright holder
had a right to such revenues.
A “circularity” argument indistinguishable from that made by the defendants here
was rejected by the Second Circuit in American Geophysical, 60 F.3d at 929–31, where
the photocopying of scientific articles for use by Texaco researchers was held to be an
unfair use. It is true, the Second Circuit acknowledged, that “a copyright holder can
always assert some degree of adverse [e]ffect on its potential licensing revenues as a
consequence of [the defendant’s use] . . . simply because the copyright holder has not been
paid a fee to permit that particular use.” Id. at 929 n. 17. But such an assertion will not
carry much weight if the defendant has “filled a market niche that the [copyright owner]
simply had no interest in occupying.” Id. at 930. Where, on the other hand, the copyright
holder clearly does have an interest in exploiting a licensing market—and especially
where the copyright holder has actually succeeded in doing so—“it is appropriate that
potential licensing revenues for photocopying be considered in a fair use analysis.”
American Geophysical, 60 F.3d at 930. Only “traditional, reasonable, or likely to be
developed markets” are to be considered in this connection, and even the availability of
an existing system for collecting licensing fees will not be conclusive. Id. at 930–31. 4 But
Congress has implicitly suggested that licensing fees should be recognized in appropriate
cases as part of the potential market for or value of the copyrighted work, and it was
primarily because of lost licensing revenue that the Second Circuit agreed with the finding
of the district court in American Geophysical that “the publishers have demonstrated a
substantial harm to the value of their copyrights through [Texaco’s] copying.” Id. at 931.
4
Although not conclusive, the existence of an established license fee system is highly relevant:
“[I]t is sensible that a particular unauthorized use should be considered ‘more fair’ when
there is no ready market or means to pay for the use, while such an unauthorized use
should be considered ‘less fair’ when there is a ready market or means to pay for the use.
The vice of circular reasoning arises only if the availability of payment is conclusive
against fair use.” Id. at 931.