Revenge of the Fourth Factor: GSU Back in Court

posted by Tucker Taylor (University of South Carolina) and John Burger (ASERL), July 31, 2017.

The Georgia State University e-reserves copyright case is still going after all these years. Officially starting in 2008, this case has bounced around the courts for many years, and it was back at the 11th Circuit Court of Appeals on Thursday, July 27, 2017.  The plaintiffs are Cambridge University Press, Oxford University Press, and Sage Publishing, with significant financial support from the Copyright Clearance Center (CCC) and the Association of American Publishers (AAP).  The case deals with nonprofit academic institutions’ rights to post portions of copyrighted materials online for their students –  how much and under what circumstances is this allowable?  Most of the importance of this case revolves around how US copyright law interprets Fair Use provisions under these circumstances, which is common to all academic institutions.

There have been many blog posts and articles about the GSU case by library copyright experts such as Brandon Butler, Dave Hansen and Kevin Smith, and others.  And a good overview, if a bit outdated, to this long, complicated case can be found on Wikipedia.  Please check those out for more detailed information on the case.

Potential for Market Harm
While each lawyer had prepared remarks, most of the time in court was devoted to a back-forth conversation between the three judge panel and each of the attorneys.  The focus of the overwhelming amount of the conversation focused on how Judge Evans at the District Court interpreted and implemented the directive from the first Appeals Court panel regarding the importance of the potential for market harm, the fourth factor in assessing Fair Use.  The first Appeals panel noted that in this type of case – nontransformative use of copyrighted materials  – the risk of harm from market substitution was “severe” and directed Judge Evans to give the fourth factor greater weight than in her first analysis.

In her first decision, Evans gave each of the four factors equal weight — 25% each.   After receiving the first Appeals Court ruling, Judge Evans’ second decision re-calculated the weighting of each of the factors:

  • 25% to factor 1 (purpose and character of the use),
  • 5% to factor 2 (nature of the copyrighted work),
  • 30% to factor 3 (amount and substantiality of the portion taken), and
  • 40% to factor 4 (the effect of the use on the potential market).

In her second review, Judge Evans also changed the methodology she used to determine the fourth factor, taking into consideration the licensing revenues the plaintiffs would have received for each of the book excerpts they cited as potential infringements.  In some cases, the revenues the publishers would have gained if GSU had  licensed the content would have been quite small — just a few dollars — which seemed to impact Evans’ interpretation of potential for market harm.

The product of Judge Evans’ detailed analyses:  In her first decision in 2012, Evans identified 31 instances of potential copyright infringement using the 25%/25%/25%/25% formula.  In her second decision in 2016, Judge Evans found only four of the same uses to be infringing using the ‘new’ 25%/5%/30%/40% formula and the new process for determining the 4th factor.   In this most recent hearing, Judge Pryor in particular found this change in methodology and its results to be completely untenable and he was singularly focused on this issue.  Further, at one point Judge Pryor commented to the court that he “hates balancing tests” and believes them to be “antithetical to the rule of law.”  He later noted that if Judge Evans’ second ruling was allowed to stand “everyone in educational settings could do what GSU did and steal the content.”   Ahem.

Availability of Licensing
Judge Rosenbaum’s main line of questioning also centered around the fourth factor, although not the same aspect.  Rosenbaum questioned the “circularity” of relying solely upon the availability of a license to determine market harm, and noted that the availability of a license is not, in her opinion, “determinative.”  She pointed out that this sole criteria created a situation that would never allow Fair Use if a license were available, and this was not a sufficiently meaningful way to determine where the scale tipped for the fourth factor.  She even quoted from the preamble to the Fair Use statute that includes teaching with multiple copies for classroom use as an example of a fair use to bolster her line of reasoning.  This question was raised several times by Rosenbaum and Pryor during the arguments, however a clear answer was not offered as a result of their discussions.

The Specter of an Injunction
The publishers’ attorney noted that the case has always been about seeking a judicial injunction against the type of uses they found objectionable at GSU, not monetary damages.  Judge Pryor asked the plaintiffs’ lawyer what they would like to see an injunction, beyond a ruling of “follow the law.”  Rich pointed to the Classroom Copying Guidelines drafted by Congress in 1976, as well as the need to have training for and oversight of faculty who are tasked with determining if their desired use of content falls within the boundaries of Fair Use.  Attorney Rich was also able to work several anticipated points into the discussion, such as the detrimental effect of repeated use of the same material, to Princeton v Michigan Document Services (the ‘course pack case’), to American Geophysical Union vs Texaco, and others.  Regrettably, GSU’s lawyer failed to rebut those analogies, as each has been found to be not germane to this case in earlier proceedings.

In his argument, GSU’s lawyer Steven Schaetzel pointed out the lack of evidence for market harm.  Most of his time was devoted to defending Pryor’s barrage of questions regarding Judge Evan’s re-evaluation of the fourth factor determinations.  Schaetzel defended this by saying Evans needed to examine the evidence holistically in order to judge how to best weigh the factor.  Schaetzel summed up his arguments by stating that the publishers’ fear was not that faculty would make bad Fair Use decisions, but instead that they would make good ones.  He believes the goal of this case is to enshrine the availability of a license to be the only determining factor, which would remove the possibility of Fair Use from educational use.

Who Should Pay Legal Fees?
A small amount of the discussion was spent on reviewing Judge Evans’ decision requiring the plaintiffs to repay all of GSU’s legal fees, approximately $3M at this point. Judge Martin questioned Schaetzel to explain why he felt the court costs should be awarded to Georgia State.  Schaetzel felt that there were several actions by the publishers that were worthy of deterrence, including how they had complained of thousands of unspecified possible infringements before the trial, but at trial they only could specify 99 instances, and later could only pursue legal action on half of those claims because of lack of evidence and lack of case, either because the publishers could not show they owned the copyright or they could not prove there was any use of the works.   The discussion of legal fee awards was very brief, and difficult to gauge how each judge felt about the matter.

We were partly expecting – hoping, perhaps — that this hearing to be focused primarily on who would pay the legal fees, considering the two previous decisions from the District Court strongly favored GSU.  However, it was clear the publishers are dogged in their determination that Judge Evans at the District Court erred in her methods in both the first and second rulings, and they are continuing to actively pursue an injunction against GSU.  If there is a decision against GSU, it would ostensibly be limited in its effect — impacting only  universities in the 11th Circuit (Georgia, Florida, Alabama) and how they can use Fair Use principles to provide unlicensed content to students via e-reserves.  In reality, the final ruling will likely be interpreted to apply to libraries nationally, so the implications here are significant.  On the other hand, the use of e-reserves varies widely among libraries — some libraries see it as a technology that has come and gone, while other libraries continue to use it quite actively – the ultimate impact of this seemingly-endless litigation could vary widely.