LEGALITY OF DIGITAL COURSE PACKS: THE USA EXPERIENCE

(Warning: Long Post ahead!)

In a development which has major implications to the DU Photocopy case, the US Eleventh Circuit Court has come out with a ruling on the legality of course packs.  The case was filed by three publishing houses, namely, Cambridge University Press, Oxford University Press and Sage Publications against Georgia State University.

FACTS

The facts of the GSU case and the DU case have striking similarities, in the form of the plaintiffs as well as the concept of course packs. The difference however arises from the fact that GSU was indulging in digital dissemination of these course packs through the two on-campus systems maintained by them, namely ERes(E-Reserves) and uLearn. Both these systems allow students to obtain a digital copy of the designated course material as opposed to obtaining paper course packs (as was the case in the DU Photocopy case). The issue was whether GSU was required to take licenses/ “permissions” to post an excerpt of the Plaintiff’s works to ERes or uLearn. The Copyright Policy, 2009 of GSU provided that a GSU professor may post an excerpt on ERes or uLearn without obtaining “permission” from the copyright holder if the professor is convinced that it satisfies the Fair Use Checklist.

THE DISTRICT COURT’S DECISION

The Plaintiffs claimed that the Defendants had committed copyright infringement and that the Copyright Policy contributed to such infringement by misusing the defense of fair use. The District Court considered 74 claims of copyright infringement and ruled that the Defendants had infringed in 5 out of 74 instances. The District Court conducted its fair use analysis on four major prongs, namely, the purpose and character of the use, the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole and the effect of the use upon the potential market of the copyrighted work.  The District Court ruled that the first prong was strongly in favour of the Defendants, as the excerpts were strictly for non-profit educational purposes of teaching and scholarship. The second factor was also ruled in favour of the Defendants as the books were informational/ factual in nature, which favoured fair use. This is because original, creative expressions are accorded greater protections under copyright law as compared to compilations of facts and information. The District Court ruled that the right approach under the third prong was to fix a percentage of copying as a reasonable permissible limit. It stated that 10% was that reasonable limit and ruled that this prong would favour the Defendants if the copying was within 10% of the pages in the book and would favour the Plaintiffs if that limit was exceeded. This factor, the Court held would swing on a case-to-case basis. On the final factor, the District Court ruled that course packs do not affect sales of the books themselves. However, they do affect licensing revenues. Thus, the Court held that the fourth factor would be in favour of the Plaintiffs when an avenue for licensing was easily available and that it would be in favour of the Defendants where no such avenue was available.

The District Court also made two more important observations. First, it stated that course packs do not take away the academicians’ incentive to create, which lies at the foundation of copyright law. This is because the incentive to write for academicians rarely stem from royalties and are mostly grounded upon their interest in contributing to academic knowledge and to enhance their professional reputation. Secondly, the Court made a significant contribution when it stated “It is consistent with the principles of copyright to apply the fair use doctrine in a way that promotes the dissemination of knowledge, and not simply its creation.” It stated that the diminution of the Plaintiff’s permissions income would not appreciably affect its ability to continue in the publishing business. However, the availability of small free excerpts of scholarly works would make a major contribution to students’ lives. The District Court applied this fair use analysis to each individual claim of copyright infringement and ruled in favour of the party with three of the four fair use factors on its side. When there was a tie, the Court revisited and reviewed the factors until a solution was reached. Thus, the Court ruled against the Defendant in 5 out of 74 claims of copyright infringement.

APPEAL TO THE 11^TH CIRCUIT COURT

The District Court’s decision was appealed and heard by the 11^th Circuit Court. The Plaintiffs argued that the District Court erred in finding only five claims of copyright infringement and that the District Court failed to identify that the Copyright Policy, 2009 promoted and facilitated widespread, ongoing infringement. Thus, the Plaintiffs prayed for an injunction to stop such continuous infringement. The Defendants, on the other hand, argued that the District Court’s decision was proper and that the more restrictive injunction proposed by the Plaintiffs is unnecessary as GSU had already revised its copyright policy to comply with the District Court’s order.

DECISION OF THE 11^TH CIRCUIT COURT- FAIR USE ANALYSIS

The Court of Appeals went into a theoretical understanding of copyright law in the first instance, including the constitutional policy of the progress of science. They stated that the balance of copyright law lies between providing an incentive to create for the authors and preventing and limiting a monopoly in the hands of the authors in order to promote the public benefit of spread of knowledge. Fair use is one such mechanism for limiting a monopoly. Before delving into the fair use analysis, the Court held that while the District Court’s approach to determine fair use on a case to case basis was appropriate, its arithmetical approach to the fair use factors was erroneous. The Court stated that the right approach would have been to consider all the factors together. The Court held that the weightage given to each of the four factors need not be equal and a certain factor can be given more or less weightage after considering the specific circumstances of the case.

The 11^th Circuit Court then proceeded to do a fair use analysis. On the first factor, the Court stated that there are two facets to be explored, first, whether the work is transformative and secondly, whether the work is for a non-profit educational process or a commercial purpose. The Court held that the excerpts were not transformative as they were verbatim copies of the original books which had only been converted into a digital format. However they were for a non-profit educational process. The US Supreme Court in Campbell had held that work for a non-profit educational use may be considered fair use even when such use was non-transformative.  It was contended that GSU had profited indirectly from the excerpts because GSU collects fees in the form of tuition and for access to ERes and uLEarn and reduces its cost by not paying the license/permission fees it may otherwise have paid for the excerpts. The Court did not accept this contention and stated that any unlicensed use of copyright would profit in the sense that license fees were not paid and if this logic was accepted, no use would be non-profit under the first factor of fair use. The Court held that there was no evidence to show that GSU was making any meaningful profit out of the copying of excerpts. However, the excerpts definitely served a broader public objective-the furthering of education of students at a public university. Thus, the Court held that the non-profit educational nature of the use was sufficiently weighty to favour a finding of fair use, despite the non-transformative nature of the use.

The Court stated: “Congress devoted extensive effort to ensure that fair use would allow for educational copying under the proper circumstances and was sufficiently determined to achieve this goal that it amended the text of the statute at the eleventh hour in order to expressly state it.  Furthermore, as described above, allowing latitude for educational fair use promotes the goals of copyright. Thus, we are persuaded that, despite the recent focus on transformativeness under the first factor, use for teaching purposes by a nonprofit, educational institution such as Defendants’ favors a finding of fair use under the first factor, despite the non-transformative nature of the use.”

Under the second fair use factor, the Court stated that there were two general criteria. The first criterion is the creative nature of the work. Highly creative works which contain the most originality and inventiveness receive maximum protection under copyright law. On the other hand, copyright law recognized the greater need to disseminate factual works as opposed to fiction or fantasy. Therefore, a fair use finding is more likely for factual works as opposed to highly creative works. The second criterion is whether the work is unpublished or not. This is a recognition of the author’s right to control the first public appearance of his/ her work. In the instant case, only the first criterion is applicable. The District Court had ruled in favour of the Defendants vis-à-vis the second factor. The Circuit Court held that the District Court had erred in its analysis. It ruled that “where the excerpts of Plaintiffs’ works contained evaluative, analytical, or subjectively descriptive material that surpasses the bare facts necessary to communicate information, or derives from the author’s experiences or opinions, the District Court should have held that the second factor was neutral, or even weighed against fair use in cases of excerpts that were dominated by such material.” However, it concluded stating that the second fair use factor was of relatively little importance in the instant case.

On the third fair use factor, the Circuit Court ruled that the blanket 10% threshold laid down by the District Court was improper. It stated that the third factor was to be analysed on a case-to-case basis taking into consideration the quantity and quality of the work, that is, whether the excerpts taken constituted the heart of the original work and whether the quantity was excessive in light of the educational purpose of the use and the threat of market substitution. Thus, the Circuit Court ruled that the District Court had properly considered the pedagogical purpose of the work and assessed the quantity copied in relation to the original work and stated that this factor would swing based on a case-to-case analysis.

Under the fourth fair use factor, the Court clarified that the inquiry was not whether GSU’s use would cause the Plaintiffs some loss of potential revenue. The question was whether GSU’s use (if everybody else followed suit as well) would cause substantial economic harm such that allowing it would frustrate the purposes of copyright by materially impairing Defendants’ incentive to publish the work. The Court agreed with the District Court’s analysis that the fourth factor weighed in favour of the defendants. It stated that the excerpts were not a substitute for the books in the book market. On the issue of whether it affects the licensing market, the Court held that if a copyright holder has not made a license available to use a particular work in a particular manner, the presumption is that the copyright holder did not feel that there was a market for such licenses. The Plaintiffs, in the instant case did not provide any licenses for the digital excerpts of their works and had not entered the digital permissions market. Thus, the Court held that the “Plaintiffs likely anticipated that there would be little to no demand for digital excerpts of the excluded works and thus saw the value of that market as de minimis or zero. If the market for digital excerpts were in fact de minimis or zero, then neither Defendants’ particular use nor a widespread use of similar kind would be likely to cause significant market harm.” Hence, the fourth factor was found in favour of the defendants.

The 11^th Circuit Court also commented on the two additional considerations of the District Court, namely, that course packs do not take away the incentive to write for academicians and that it is consistent with copyright law to apply fair use in a manner that promotes the dissemination of knowledge and not merely its creation. On the first point, the Circuit Court noted that the copyright holders in the instant case are the publishers and not the academic authors. Therefore, the consideration ought to be whether GSU’s use would take away the publishers’ incentive to publish and not whether it impacts the authors’ right to create.  On the second point, the Court noted that while the District Court had rightly made such an observation, it was unhelpful in “separating the fair use sheep from the infringing goats.”  Moreover, the first fair use factor deals with this consideration when it states that educational use which promotes the dissemination of knowledge is more likely to be fair.

Thus, owing to the District Court’s erroneous application of the fair use test and the legally flawed methodology adopted by them to balance the four factors, the Circuit Court reversed the District Court’s decision. It vacated the injunction, declaratory reliefs and award of fees and cost to the Defendants and remanded the matter for further proceedings consistent with the Circuit Court’s opinion. This is likely to mean that this matter may be litigated before the Trial Courts yet again, if the publishers choose to continue the litigation.

IMPLICATIONS FOR INDIA

This decision from the USA is among the many decisions across jurisdictions which are questioning the legality of course packs in various forms (Access Copyright from Canada being a notable example). The important takeaways from this decision is the privileging of dissemination of knowledge and use of course packs for educational purposes as the public benefit copyright law aspires to achieve over incentivizing creation. This is all the more relevant in India where a majority of the students would be unable to afford the cost of education in the absence of course packs.

The rejection of a blanket 10% rule also provides flexibility to the Courts of law in determining fair use. However, it takes away the certainty that universities such as GSU could provide to their professors in the form of ‘Fair Use Checklists’ and other documents. This uncertainty has the potential to prove problematic, if it results in deterring professors and universities from making available excerpts to students. In India, no such indicium exists. A plain reading of section 52(1)(i) would suggest that an entire reproduction of the work is permissible (100%) provided it falls within the scope of “course of instruction”. To this extent, the 10% rule has no direct relevance to India. However, it could have had persuasive value. One has to wait and see how Indian courts are likely to decide this issue