Fair Use & The CASE Act

Although this week marks the eighth annual observation of Fair Use Week, I remain unconvinced that the fair use doctrine is any better understood today than it was before this ritual began. I see fair use errors all the time—e.g. in chat threads where creators are trying to do the right thing—and I maintain that it is often the fair use advocates themselves who cause confusion by promoting theories that have not thrived terribly well in court. And it is confusion about the legal use of works, especially online, that was a major reason why the small-claim copyright provision was finally adopted with the passage of the CASE Act in December.

I mention the CASE Act because the site fairuseweek.org led off this week with a post written by scholar Kenneth D. Crews which asserts the “defense of fair use will be on the docket” when the Copyright Office implements the law and establishes the small-claim copyright tribunal, the Copyright Claims Board (CCB) at the end of this year.

Granted, none of us can say for certain how events will transpire at the CCB, but Crews raises concerns that seem to predict that the doctrine itself may be amended by the decisions of the Board—and presumably not in a way the fair use advocates would endorse. Specifically, one statement by Crews caught my attention because it seems to echo a wishful thinking principle about factor four of the fair use test, and one that was recently rejected (again) in Dr. Seuss Enterprises v. ComicMix. Crews writes:

Think of that fourth factor of fair use: the effect of the use on the market for or value of the work.  A court will often need confidential economic data about the sales of the work in question and the revenue earned.  The Copyright Claims Officers, parties, and staff attorneys do not have clear authority to compel disclosures and discovery.  They can “request” documents and information.  As a result, the Board could frequently be called upon to decide questions of fair use, but without the needed evidence.  The choices at that point will be far from satisfactory.

While financial data may be relevant evidence when considering the potential harm to the rightsholder’s market under the fourth factor, the case law generally holds that this analysis is agnostic with regard to such details. In fact, ComicMix attempted to assert this exact defense, arguing that DSE should be required to prove with financial evidence the direct harm their mash-up book would do to the plaintiff’s market. The district court in that case erred when it agreed with this argument, but that error was overturned by the Ninth Circuit Court of Appeals, which held that ComicMix’s fair use defense failed on all four factors. As the court stated directly on this matter:

Not much about fair use doctrine lends itself to absolute statements, but the Supreme Court and our circuit have unequivocally placed the burden of proof on the proponent of the affirmative defense of fair use. ComicMix tries to plow new ground in contending that fair use is not an affirmative defense and that the burden shifts to Seuss to prove potential market harm.

So, turning to the CCB, it seems the most logical assumption is to expect that, as a small-claims body adjudicating relatively straightforward cases, the Officers will not be eager to “plow new ground” in fair use doctrine. In fact, the Board is obligated by statute to follow the law. Its fourth factor analyses, therefore, should be consistent with the courts and largely ignore detailed financial information (as Crews indicates may be necessary) because those facts are not especially germane to that prong of the test. At the same time, where there may be a circuit split on any matter, including fair use, the CCB is required by the CASE Act to follow the precedent of the circuit where the case would be decided if it went to court.

To reiterate a point made many times on this blog and elsewhere, because potential market harm implies a market the rightsholder has never exploited, including possible derivative works, there is no financial data available in such an instance. And despite attempts to argue the contrary, recent case law has reiterated the principle that fair use does not extinguish the copyright owner’s exclusive right to prepare derivative works, or to prevent the preparation of derivative works if that is the copyright owner’s decision.

I would also add that a fair use analysis is a mix of law and fact, and to the extent that anyone may be concerned about the fate of the doctrine itself, it is opinions of law that matter. When, inevitably, a case is presented to the CCB that contains errors of fact on either side, the outcome of that individual case may be unfair as a result, but the law remains unaffected. Still, I homed in on Crews’s comment about factor four because it highlights why I would question his thesis that fair use doctrine somehow hangs in the balance as the CCB is formed and begins to adjudicate cases. Concerned that the CCB might begin to write its own common law, Crews states:

Decisions from the Copyright Claims Board will not be binding on anyone other than the immediate parties, and they officially will have no precedential value in later actions in a court or before the Board.  Yet conventions of lawyering and the inevitability of human reasoning will surely press to the contrary.  As the Board builds a record of rulings, the outcomes and the reasoning will undoubtedly be fodder for scrutiny and statistical tabulation.  Individual rulings will in some manner be referenced in later proceedings.  Analyses of trends and patterns will be pursued for their scholarly value and as insights for parties and attorneys thinking about the next case to come before the new Board.

This apprehension appears to hinge on an assumption that the Board would make decisions or render opinions that might reshape fair use doctrine, even though, as Crews notes, there is nothing officially controlling about the Board’s opinions. This is doubtful. For one thing, the types of cases in which both parties agree to adjudication by the CCB are very unlikely to present revolutionary legal challenges not already answered by case law. Although we correctly describe fair use as a case-by-case consideration, that does not mean each case presents a novel consideration. Further, if this assumption is not a sufficient guardrail, the CASE Act contains a provision that allows the CCB to dismiss any case that presents a novel theory of law.

In the last ten years alone, we have seen a compelling variety of contemporary fair use defenses; and if the CCB merely follows that guidance, Crews’s concerns should be allayed. Unless, of course, the concern is not that the CCB will be inconsistent with case law but that it will further solidify case law. After all, advocates of a broader, or looser, fair use doctrine have generally not faired too well in a number of headline cases in federal courts. So, I imagine that if the CCB renders decisions that affirm ComicMix, ReDigi, KinderGuides, Brammer, and VidAngel, to name a few, this might not be very popular among those who currently advocate a more expansive approach to fair use.

Crews does state explicitly that fair use can “survive” the work of the Copyright Claims Board, and he is certainly not wrong to say that the efficacy of the Board has to prove itself—frankly in all aspects of copyright litigation, and not just fair use. Moreover, the rubber-meets-road decisions by the CCB may serve to better educate both plaintiffs and respondents about copyright’s protections and limitations. And finally, I disagree with Crews that a respondent who believes he has a fair use defense is safer opting out of a CCB adjudication in the early days of its existence. As discussed in this post about Brammer v. ViolentHues (a very typical digital-age litigation), the defendant might have arrived at the same rejection of his untenable fair use defense for a fraction of the cost.

Photo by Corgarashu


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