Source: https://h2o.law.harvard.edu/collages/1341
Timestamp: 2019-12-13 05:52:01
Document Index: 784658588

Matched Legal Cases: ['§ 106', '§ 107', '§ 13', '§ 13', '§ 13', '§ 13', '§ 205', '§ 14', '§ 2201', '§ 504', 'art, 877', '§ 504', '§ 14', '§ 107', '§ 504', 'art, 830', '§ 1', '§ 1', '§ 14', '§ 505', '§ 101', '§ 505', '§ 3']

Basic Books, Inc. v. Kinko's Graphics Co.
Basic Books, Inc. v. Kinko's Graphics Co. | 758 F Supp 1522 | March 28, 1991 | evanm
Pay close attention to how that court applies the four factor fair use analysis. Specifically, compare the court's analysis under “Character of Use” to the court's analysis in Princeton University Press. EDIT ANNOTATED ITEM INFORMATION DELETE ANNOTATED ITEM
1758 F.Supp. 1522 (1991) 2
3No. 89 Civ. 2807 (CBM). 4
5March 28, 1991. 6
[1523] [1524] [1525] [1526] Ronald S. Rauchberg, Charles S. Sims, Herman L. Goldsmith, Jon A. Baumgarten, Proskauer, Rose, Goetz & Mendelsohn, New York City, for plaintiffs.
There are 12 instances of copyright infringement alleged in this case. The 12 excerpts, which vary in length from 14 to 110 pages, were copied from books previously published by the plaintiffs, compiled in five numbered packets ("anthologies") with excerpts from other books and distributed by Kinko's. Kinko's neither sought nor obtained permission to copy any of these works. There are two stores from which Kinko's sold the excerpts included in this suit: one at 24 E. 12th Street (which services, among others, students at New York University and the New School for Social Research) and a second at 2872 Broadway (which services Columbia University students). Below is a list of the 5 packets, by number and title, and a list of the titles of the works copied. Next to the latter title is the total number of pages [1527] copied, the approximate percentage of the entire book that was copied and whether the work was in- or out-of print.
Kinko's copied the following pages from this book: pages 1-17 (chapter 1), 342-45, [1528] 224, 225, 238-39, 256-61, and pages 306-13 of this 531-page book. The book has 12 chapters. It was published in 1971. The amount copied weighs against defendant.
It is undisputed that Kinko's markets and provides its copying services directly to university professors and students. At trial, [1529] Kinko's presented marketing brochures produced by the company which are distributed by their marketing representatives to university professors and used as the subject of follow-up visits. These brochures openly solicit from the professors lists of readings they plan to use in their courses. Kinko's then copies excerpts, some quite large, and sells them in bound form with excerpts copied from other books as well. Unaudited financial statements of Kinko's Graphics Corporation for the years 1988 and 1989 show revenue of $42 million and $54 million, respectively, and net profit of $200,000 and $3 million, respectively. Its assets totalled $12 million in 1988 and $15 million in 1989. (PX 25a). Appropriately, plaintiffs refer to this bound packet as an "anthology."[4] Plaintiffs derive a significant part of their income from textbook sales and permissions fees. Kinko's has conducted its Professor Publishing business at least since the mid-1980's.
Notwithstanding the provisions of section 106, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —
For almost 300 years, American law has protected intellectual property rights through the copyright law. The protection derives from the English Statute of Anne (8 Anne c. 19, 1710), the first statute to recognize the rights of authors. Section 106 of the 1976 Copyright Act provides that "[s]ubject to Section[] 107 ... the owner of copyright under this title has the exclusive rights ... to reproduce the copyrighted work." 17 U.S.C. § 106. In Folsum v. Marsh, 9 F.Cas. 342 (C.C.D.Mass. 1841) (No. 4901), Justice Story set forth the meaning of fair use to which we adhere today. "In short, we must often ... look to the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supersede the objects, of the original work." Id. at 348.
Fair use more currently has been defined as the "privilege in others than the owner of a copyright to use the copyrighted material in a reasonable manner without his consent, notwithstanding the monopoly granted to the owner...." Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303, 306 (2d Cir.1966), cert. denied, 385 U.S. 1009, 87 S.Ct. 714, 17 L.Ed.2d 546 (1967). The copyright law, through the fair [1530] use doctrine, has promoted the goal of encouraging creative expression and integrity by ensuring that those who produce intellectual works may benefit from them. See Iowa State University Research Foundation, Inc. v. American Broadcasting Cos., Inc., 621 F.2d 57, 60 (2d Cir.1980).
Courts and commentators disagree on the interpretation and application of the four factors, topics of current debate. See, e.g., Leval, Toward A Fair Use Standard, 103 Harv.L.Rev. 1105 (1990); Weinreb, Fair's Fair: A Comment on the Fair Use Doctrine, 103 Harv.L.Rev. 1137 (1990); Fisher, Reconstructing the Fair Use Doctrine, 101 Harv.L.Rev. 1661 (1988). The search for a coherent, predictable interpretation applicable to all cases remains elusive. This is so particularly because any common law interpretation proceeds on a case-by-case basis. The two Supreme Court precedents on the issue of fair use, Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) and Harper & Row v. Nation Enterprises, 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985), were both overturned at each level of review.
Section 107 specifically provides that under this factor we consider "whether [the] use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107; see also Marcus v. Rowley, 695 F.2d 1171, 1175 (9th Cir.1983). The Supreme Court has held that "commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright." Sony Corp., 464 U.S. at 451, 104 S.Ct. at 793. Additionally, the Supreme Court has found that "the distinction between `productive' and `unproductive' uses may be helpful in calibrating the balance [of interests]." Id. at 455 n. 40, 104 S.Ct. at 795 n. 40. While both are significant considerations, neither of these is determinative.
Most contested instances of copyright infringement are those in which the infringer has copied small portions, quotations or excerpts of works and represents them in another form, for example, a biography, criticism, news article or other commentary. See, e.g., Harper & Row v. Nation Enterprises, 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985); New Era Publications v. Carol Publishing, 904 F.2d 152 (2d Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 297, 112 L.Ed.2d 251 (1990); Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir.), cert. denied, 484 U.S. 890, 108 S.Ct. 213, 98 L.Ed.2d 177 (1987); Wright v. Warner Books, Inc., 748 F.Supp. 105 (S.D.N.Y. 1990). In this case, there was absolutely no literary effort made by Kinko's to expand [1531] upon or contextualize the materials copied. See Pacific & Southern Co. v. Duncan, 744 F.2d 1490, 1496 (11th Cir.), cert. denied, 471 U.S. 1004, 105 S.Ct. 1867, 85 L.Ed.2d 161 (1985) (finding infringement by a defendant who neither "analyze[d] ... [nor] improve[d]" the work, noting that "the preamble to Section 107 indicate[s] [that] fair uses are those that contribute in some way to the public welfare.").[5] The excerpts in suit were merely copied, bound into a new form, and sold. The plaintiffs refer to this process as "anthologizing." The copying in suit had productive value only to the extent that it put an entire semester's resources in one bound volume for students. It required the judgment of the professors to compile it, though none of Kinko's.
Although Kinko's tries to impress this court with its purportedly altruistic motives, the facts show that Kinko's copying had "the intended purpose of supplanting the copyright holder's commercially valuable right." See Harper & Row, 471 U.S. at 562, 105 S.Ct. at 2231 (original emphasis). Kinko's promotional literature compares its "prompt" service to the "ineffectiveness of traditional publishing to meet the changing needs of faculty and students." "The Professor Publishing Newsletter, Fall 1984" (DTX C-D).
Kinko's offers a 10% discount if professors get in their orders early, emphasizes [1532] student savings, convenience, and service — all "at no cost to your department." Kinko's shows that it is keenly aware of students' and professors' preoccupation with educational costs and provides additional services to get their business: offering campus pick-up and delivery and free copyright permission assistance. See "Campus Rep Marketing Materials 1988" (PX 17). The extent of its insistence that theirs are educational concerns and not profitmaking ones boggles the mind.
While financial gain "will not preclude [the] use from being a fair use," New York Times Co. v. Roxbury Data Interface, Inc., 434 F.Supp. 217, 221 (D.N.J.1977), consideration of the commercial use is an important one.
"The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price." Harper & Row, 471 U.S. at 562, 105 S.Ct. at 2231. This is precisely the concern here and why this factor weighs so strongly in favor of plaintiffs.
Courts' consideration of the profit factor usually arises because the alleged infringing work competes in the same market as the copyrighted work, thus making the "commerciality" more harmful to the copyright holder. See Marcus v. Rowley, 695 F.2d at 1175; Haberman v. Hustler Magazine, Inc., 626 F.Supp. 201, 211 (D.Mass.1986). In cases in which a defendant is claiming fair use for a criticism, commentary or other scholarly research, the courts are more likely to find fair use under this factor. In New Era Publications v. Carol Publishing, 904 F.2d at 156, the Second Circuit found fair use under the character and use factor since the publication in suit was not an economic exploitation of the original work but a legitimate critical biography. In that case, a critic and biographer of L. Ron Hubbard and the Church of Scientology defended his use of quotes from 48 of Hubbard's works.
A potentially widespread use which was notably non-commercial has been held to be a fair use. In Sony Corp. v. Universal City Studios, 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984), television viewers taped plaintiffs' television programs on home video recorders, doing nothing to enhance the program — simply copying them in order to view them later. The Court decided this "time-shifting" was fair use and placed emphasis on the fact that the viewers were not selling their copies of these programs for profit. Id. at 454-55, 104 S.Ct. at 795.
The second factor concerns the nature of the copyrighted work. Courts generally hold that "the scope of fair use is greater with respect to factual than non-factual works." New Era Publications v. Carol Publishing Group, 904 F.2d at 157. Factual [1533] works, such as biographies, reviews, criticism and commentary, are believed to have a greater public value and, therefore, uses of them may be better tolerated by the copyright law. See Salinger v. Random House, Inc., 811 F.2d at 96. Works containing information in the public interest may require less protection. See Consumers Union v. General Signal Corp., 724 F.2d 1044, 1049 (2d Cir.1983), cert. denied, 469 U.S. 823, 105 S.Ct. 100, 83 L.Ed.2d 45 (1984). Fictional works, on the other hand, are often based closely on the author's subjective impressions and, therefore, require more protection. These are general rules of thumb. The books infringed in suit were factual in nature. This factor weighs in favor of defendant.
"There are no absolute rules as to how much of a copyrighted work may be copied and still be considered a fair use." Maxtone-Graham v. Burtchaell, 803 F.2d 1253 (2d Cir.), cert. denied, 481 U.S. 1059, 107 S.Ct. 2201, 95 L.Ed.2d 856 (1987). This third factor considers not only the percentage of the original used but also the "substantiality" of that portion to the whole of the work; that is, courts must evaluate the qualitative aspects as well as the quantity of material copied. See New Era Publications Int'l v. Carol Publishing Group, 904 F.2d at 158. A short piece which is "the heart of" a work may not be fair use and a longer piece which is pedestrian in nature may be fair use. The balancing of the four factors must be complete, relying solely upon no one factor. The purpose of the use may be balanced against the amount and substantiality of the use. For example, "[e]ven substantial quotations might qualify as fair use in a review of a published work." See Harper & Row, 471 U.S. at 564-65, 105 S.Ct. at 2232-33.
Courts have found relatively small quantitative uses to be fair use. See, e.g., New Era Publications, 904 F.2d at 158 (court found as fair that defendant used a "minuscule" amount of 25 works: 5-6% of 12 works, 8% or more of 11 works "each of the 11 being only a few pages in length."); Iowa State University Research Found., Inc. v. Am. Broadcasting Cos., Inc., 621 F.2d at 61-62 (court found unfair copying of 8% of videotape never before broadcast); Maxtone-Graham, 803 F.2d at 1263 (inclusion of 4.3% of work was fair); Salinger, 811 F.2d at 98-99 (finding this factor weighed "heavily" in favor of Salinger, the court found no fair use of quotation and paraphrasing totalling one-third of 17 letters, and 10% of 42 letters); Harper & Row, 471 U.S. at 564-65, 105 S.Ct. at 2232-33 (the 300 copyrighted words appropriated to the Times article were an insubstantial portion of the work but "`essentially the heart of the book.'").
Additionally, "reference to a work's availability is appropriate." Wright v. Warner Books, Inc., 748 F.Supp. at 112. Therefore, longer portions copied from an out-of-print book may be fair use because the book is no longer available. (This has been thought to be true because, presumably, there is little market effect produced by the copying. However, plaintiffs in this case convincingly argue that damage to out-of-print works may in fact be greater since permissions fees may be the only income for authors and copyright owners.)
This court finds and concludes that the portions copied were critical parts of the books copied, since that is the likely reason the college professors used them in their classes. cf. Harper & Row, 471 U.S. at 565, 105 S.Ct. at 2233 ("the fact that a substantial portion of the infringing work was copied verbatim is evidence of the qualitative value of the copied material."). While it may be impossible to determine, as the Court did in Harper & Row, that the quoted material was "essentially the heart of" the copyrighted material, Id. at 565, 105 S.Ct. at 2233, it may be inferred that they were important parts.
This factor, amount and substantiality of the portions appropriated, weighs against defendant. In this case, the passages copied ranged from 14 to 110 pages, representing 5.2% to 25.1% of the works. See Findings of Fact, supra, for discussion of amount copied. In one case Kinko's copied 110 pages of someone's work and sold it to [1534] 132 students. Even for an out-of-print book, this amount is grossly out of line with accepted fair use principles.
The fourth factor, market effect, also fails the defendant. This factor has been held to be "undoubtedly the single most important element of fair use." Harper & Row, 471 U.S. at 566, 105 S.Ct. at 2233. "To negate fair use one need only show that if the challenged use `should become widespread, it would adversely affect the potential market for the copyrighted work.'" Id. at 568, 105 S.Ct. at 2234 (quoting Sony Corp., 464 U.S. at 451, 104 S.Ct. at 793, emphasis added).
[1535] Additionally, the Classroom Guidelines express a specific prohibition of anthologies. The fact that these excerpts were compiled and sold in anthologies weighs against defendant.
Kinko's did not produce any professor to testify that he or she uses course packets and would be disabled from teaching effectively if Kinko's could not copy without paying permissions fees. Defendant did produce a witness, Dr. Bruce Johnson, who testified to the results of a survey he conducted which showed the widespread use of course packets by college professors and the reasons for this use.[9] (DTX L-Z). Notwithstanding professors' complaints of costly original materials, rapid change in course subject matter, and inadequate current offerings — which are all good reasons for desiring anthologies — defendant's witnesses did not produce evidence which would explain why they could not seek and pay for permission to create these anthologies. Dr. Johnson's survey fails to do so. This argument also fails.
The Classroom Guidelines, entitled the "Agreement on Guidelines for Classroom Copying in Not-For-Profit Educational Institutions," are a part of the legislative history of the Copyright Act of 1976. H.R. Rep. No. 1476, 94th Cong., 2d Sess. 68 (1976). These Guidelines were the result of negotiation and agreement among the Ad Hoc Committee of Educational Institutions and Organizations on Copyright Law Revision, the Authors League of America, Inc., and the Association of American Publishers.[10] Id. at 67. One commentator confirms the Guidelines as an act of compromise which "was necessitated by the widespread availability of reprographic technology which eliminated much of the copyright owner's control over the reproduction of his work." Patry, The Fair Use Privilege in Copyright Law at viii (1985). The legislative history acknowledges "the long controversy over the related problems of fair use and the reproduction (mostly by photocopying) of copyrighted material for educational and scholarly purposes." House Report, at 66, U.S.Code Cong. & Admin.News 1976, p. 5679. This indicates that Congress saw the maelstrom beginning to churn and sought to clarify, through broad mandate, its intentions.
For a proper analysis, there must be initial consideration given to the issue of what comprises educational copying and whether Kinko's status as a for-profit corporation, and its profitmaking intent, renders [1536] it outside of a Guidelines review. We believe that it does.
Kinko's contends that it serves an important function in the educational process— providing prompt, cost-effective service to educational institutions. If they did not provide this service to colleges and universities, they claim, these institutions and their students would suffer educationally and financially. However, Kinko's is in the business of providing copying services for whomever is willing to pay for them and, as evidenced in this case, students of colleges and universities are willing to pay for them.
This commercial copying can be contrasted to library copying. In Williams & Wilkins Co. v. United States, 487 F.2d 1345, 203 Ct.Cl. 74, aff'd, 420 U.S. 376, 95 S.Ct. 1344, 43 L.Ed.2d 264 (1975), the court found library copying to be a fair use. In that case, the Department of Health, Education and Welfare, through the National Institutes of Health (NIH) and the National Library of Medicine (NLM) copied articles from medical journals and disseminated them to researchers and personnel who requested them. The libraries established rules regarding page limitations, frequency and number of copies, and they did not charge a copying fee. See id. at 1347-49. The NLM reproduced each copy with a statement saying: "`This is a single photostatic copy made by the National Library of Medicine for purposes of study or research in lieu of lending the original.'" 487 F.2d at 1348. Classroom and library copying are viewed more sympathetically "since they generally involve no commercial exploitation and ... [have] socially useful objectives.... [T]his is not true of photocopy shops, which reproduce for profit." Nimmer, § 13.05[E], at 13-93—13-94, & n. 69.
There is dispute as to whether the Guidelines represent a maximum or minimum of allowable copying. The Guidelines assert its intended meaning thusly: "[t]he purpose of the following guidelines is to state the minimum and not the maximum standards of educational fair use under Section 107 of H.R. 2223." Id. at 68. The Guidelines clearly state that notwithstanding their promulgation, fair use standards may be more or less permissive[12]—depending upon the circumstances and based upon equitable considerations. See also Nimmer, § 13.05[E], at 13-96 (courts may decide whether a use which exceeds the Guidelines may be fair use and whether a use which is within the Guidelines may exceed fair use; courts must balance the interests involved). This court finds that the copying in suit clearly deviates from the letter and spirit of the Guidelines.
Under the section "Multiple Copies for Classroom Use," the stated premise is that "[m]ultiple copies (not to exceed in any event more than one copy per pupil in a course) may be made by or for the teacher giving the course for classroom use or discussion...." H.R.Rep. No. 1476, at 68 (emphasis supplied), U.S.Code Cong. & Admin.News 1976, p. 5682.[13] The Guidelines provide that a teacher may make multiple copies of copyrighted material if the copying meets the tests of brevity, spontaneity, and cumulative effect and so long as "each copy includes a notice of copyright." Id. at 68, U.S.Code Cong. & Admin.News 1976, p. 5682. It has already been found that Kinko's [1537] failed to include copyright notices on any of the works in suit.
Kinko's alleges that the plaintiff publishers have collectively attempted to "impede [1538] and prohibit educational copying for classroom use as carried out by Kinko's on behalf of professors" and have "combined with each other to promulgate as a purported `industry standard' with respect to photocopying a version of `fair use' that is inimical to Section 107 of the Copyright Act as enacted by Congress." Defendant's Proposed Conclusions of Law, at 34-35. The defense of copyright misuse through violation of the antitrust laws has generally been held not to exist. See Nimmer, § 13.09[A], at 13-142.1 — 13-143; see also Orth-O-Vision, Inc. v. Home Box Office, 474 F.Supp. 672, 686 (S.D.N.Y.1979) (violation of antitrust laws is no defense to copyright infringement); Peter Pan Fabrics, Inc. v. Candy Frocks, Inc., 187 F.Supp. 334, 336 (S.D.N.Y.1960) (same).
However, some courts have held that "misuse of a copyright, in violation of the antitrust laws, may be asserted as a defense in copyright infringement cases." United Telephone Co. of Missouri v. Johnson Pub. Co., 855 F.2d 604, 611 (8th Cir. 1988). The defense of patent misuse has been recognized as a defense to patent infringement if the patent is being used to restrain competition, particularly through "tying clauses" which require that, in order to get a license for one product, the purchaser must buy another also. See United States v. Loew's, Inc., 371 U.S. 38, 83 S.Ct. 97, 9 L.Ed.2d 11 (1962); United States v. Paramount Pictures, Inc., 334 U.S. 131, 68 S.Ct. 915, 92 L.Ed. 1260 (1948); Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363 (1942). Patent misuse doctrine is "an extension of the equitable doctrine of `unclean hands' to the patent field." U.S. Gypsum Co. v. National Gypsum Co., 352 U.S. 457, 77 S.Ct. 490, 1 L.Ed.2d 465 (1957). Patent and copyright doctrine can be compared on this point.
It has proven difficult to convince courts of the misuse defense. In CBS v. American Society of Composers, 400 F.Supp. 737 (S.D.N.Y.1975), CBS defended a copyright infringement claim by assailing ASCAP's and BMI's blanket licensing arrangements as copyright misuse. The court held that CBS failed to prove copyright misuse because it did not show that the defendants had "refused or would refuse to license their compositions ... or [had] otherwise used their collective leverage to compel CBS to license rights to music which it did not wish to license." 400 F.Supp. at 782. In F.E.L. Publications, Ltd. v. Catholic Bishop, 506 F.Supp. 1127 (N.D.Ill.1981), rev'd on other grounds, 214 U.S.P.Q. 409, 1982 WL 19198 (7th Cir.), cert. denied, 459 U.S. 859, 103 S.Ct. 131, 74 L.Ed.2d 113 (1982), the Circuit Court reversed the District Court and held that plaintiff's licensing agreement, which required licensees to pay for all 1,400 songs in its hymnal regardless of how many songs were actually copied, was no violation of the Sherman Act. Id. at 413-16. In United Telephone, supra, defendant increased its licensing fee 500% to 49 cents, but only after it had offered plaintiff the opportunity to license its telephone listings at 10 cents per entry. The court denied defendant's copyright misuse defense since defendant initially had been offered the lower price and because defendant had not shown that plaintiff's telephone list was a monopoly since defendant could canvass the city and develop its own list. 855 F.2d at 612.
Kinko's asserts that plaintiffs have misused their copyrights by impermissibly "broaden[ing] or extend[ing] the monopoly of [their] copyright in an effort to restrain competition." Defendant's Proposed Conclusions of Law, at 33-34. However, the facts of this case do not support a legal finding of copyright abuse. They show no agreement among plaintiffs to advocate any industry standard in excess of fair use. Plaintiffs' efforts to restrain competition by Kinko's is simultaneously an effort to stop Kinko's from infringing their copyrights. [1539] Plaintiffs have acted reasonably in so doing, not collusively for some illegal, monopolistic purpose. Consequently, Kinko's contentions fail.
The Ninth Circuit court in Hampton v. Paramount Pictures Corp., 279 F.2d 100 (9th Cir.), cert. denied, 364 U.S. 882, 81 S.Ct. 170, 5 L.Ed.2d 103 (1960), stated the elements of the estoppel defense. Plaintiff must know of the defendant's infringing conduct; plaintiff must intend that his conduct be acted on or must act in a way that the party asserting the estoppel had a right to believe it was so intended; defendant must be ignorant of the true facts; and defendant must rely on plaintiff's conduct to his detriment. Id. at 104. These four elements were adopted in Lottie Joplin Thomas Trust v. Crown Publishers, Inc., 456 F.Supp. 531 (S.D.N.Y. 1977), aff'd, 592 F.2d 651 (2d Cir.1978); Rohauer v. Killiam Shows, Inc., 379 F.Supp. 723 (S.D.N.Y.), rev'd on other grounds, 551 F.2d 484 (2d Cir.1977).
[1540] Plaintiff may be estopped from asserting its rights under a copyright if plaintiff has aided the defendant in infringing or otherwise induced them to infringe or has committed covert acts such as "holding out ... by silence or inaction." Nimmer, § 13.07, at 13-134 (acknowledging that such passive acts are rarely so held). "The plaintiff's acquiescence in the defendant's infringing acts may, if continued for a sufficient period of time and if manifested by overt acts, result in an abandonment of copyright." Id. at 13-135. In such a case, the estoppel "destroys the right asserted" and will be a defense for all acts occurring after the acquiescence. Id.
In New Era Publications Int'l. v. Henry Holt & Co., 873 F.2d 576 (2d Cir.1989), cert. denied, ___ U.S. ___, 110 S.Ct. 1168, 107 L.Ed.2d 1071 (1990), the court denied plaintiff's request for permanent injunction on the grounds of laches. Before suing for an injunction, plaintiff waited two years after protesting to the defendant and drawing a flat refusal to cooperate. By this time, 12,000 copies of defendant's book, the subject of the suit, had been printed, packed and shipped to stores. The court found an "unconscionable delay" which would work a hardship on the defendant resulting in severe prejudice. Id. at 584-85.
Pursuant to 17 U.S.C. § 205(d), Kinko's challenges the court's jurisdiction of two of the works involved in this case: [1541] Lyndon Johnson and the American Dream and The Money Market. Plaintiffs Harper & Row and Jones-Irwin assert that they hold valid copyrights on these works. Defendant argues that plaintiffs' failure to record the instruments of transfer as to these two works prior to filing their original complaint on April 25, 1989, bars them from bringing suit.
Defendant argues that "the law is wellsettled that a litigant cannot cure a jurisdictional defect by alleging facts that occurred only after the action was brought." Defendant's Proposed Conclusions of Law, at 30-31 (original emphasis). Defendant is misguided. While recognizing that proper recordation is a jurisdictional prerequisite to instituting a copyright infringement suit, defendant fails to see that plaintiffs' recordation problem was cured by its supplemental filing which was allowed by this court pursuant to Fed.R.Civ.P. 15(d). Courts have held this to be proper procedure. "There is no question that leave to serve a supplemental pleading should be granted if it cures a jurisdictional defect." Dan-Dee Imports, Inc. v. Well-Made Toy Mfg. Corp., 524 F.Supp. 615, 619 (E.D.N.Y. 1981) (citing Mathews v. Diaz, 426 U.S. 67, 96 S.Ct. 1883, 48 L.Ed.2d 478 (1976)).
Filing a supplemental complaint, pursuant to Fed.R.Civ.P. 15(d), may relate back to the original filing so as to cure a jurisdictional defect. See, e.g., Security Insurance Co. of New Haven v. United States, 338 F.2d 444, 449 (9th Cir.1964) (supplemental complaint related back so as not to bar suit by statute of limitations even though supplement was filed more than a year after original suit); Dan-Dee Imports, Inc. v. Well-Made Toy Mfg. Corp., 524 F.Supp. at 619-20 (amended and supplemental complaint accepted for filing when no prejudice shown to defendant). See also Kenbrooke Fabrics, Inc. v. Soho Fashions, Inc., 690 F.Supp. 298, 302 (S.D. N.Y.1988) (plaintiff who recorded 8 months after beginning suit was not precluded from asserting rights because he filed before hearing); Wales Industrial Inc. v. Hasbro Bradley, Inc., 612 F.Supp. 510, 514-15 (S.D.N.Y.1985) (recordation 5 weeks after filing the complaint cured any jurisdictional defect because recordation occurred before the hearing on the motion); Meta-Film Associates, Inc. v. MCA, Inc., 586 F.Supp. 1346, 1351-52 (C.D.Ca.1984) (subsequent filing of assignment cured jurisdictional defect and related back); Co-Opportunities, Inc. v. National Broadcasting Co., 510 F.Supp. 43, 49 (N.D.Ca. 1981) (subsequent recordation allowed to relate back).
A plaintiff must show liability and the threat of continuing violation to be entitled to an injunction. Universal City Studios, Inc. v. Sony Corp. of America, 659 F.2d 963, 976 (9th Cir.1981), rev'd on other grounds, 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984); Nimmer, § 14.06[B]. "[I]njunction is not the automatic consequence of infringement" but the result of equitable consideration. New Era Publications Int'l v. Henry Holt Co., 884 F.2d 659 at 661 (2nd Cir.1989).
We answer both questions in the affirmative. When liability has been determined, and a history of continuing infringement and a significant threat of future infringement exists, a court must enjoin infringement of future copyrighted works. Orth-O-Vision, Inc. v. Home Box Office, 474 F.Supp. at 685-86 (infringement persisted from 1974 until 1978 when Orth-O-Vision filed suit alleging antitrust violations); see also Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91, 94 (2d Cir.), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 759 (1978) (preliminary injunction affirmed upon a finding that irreparable injury may be presumed when copyright is infringed).
In this case, liability has been determined and there remains a significant threat that Kinko's will continue to infringe plaintiffs' copyrights given the nature of Professor Publishing and Kinko's historic willful blindness to the copyright law. Although there is little history established on the record of Kinko's infringing these publishers' copyrights prior to 1989, this court has found that Kinko's has conducted its Professor Publishing business at least since the mid-1980's. The nature of Professor Publishing makes it particularly susceptible to infringement because of the large volume of copying it conducts and the added threat created by anthologizing. Additionally, the willfulness defendant exhibited in this case persuades this court that "there is a strong possibility that defendant[] will engage in continuing copyright violations unless an injunction is issued." Encyclopaedia Britannica Educational Corp. v. Crooks, 542 F.Supp. 1156, 1187 (W.D.N.Y.1982). For these reasons, this court thinks it prudent and equitable to grant plaintiffs' request for injunction and will enjoin defendant from future anthologizing and copying of plaintiffs' works without permission and prepayment of fees in the manner shown violative of the concept of fair use as proved in this case, and including similar works not currently existing but which may in the future be owned by plaintiffs and as to which plaintiffs have not consented.
[1543] For declaratory judgment, a controversy must be "of a justiciable nature, thus excluding an advisory decree upon a hypothetical state of facts." Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 325, 56 S.Ct. 466, 473, 80 L.Ed. 688, 699 (1936). Title 28 of the U.S.Code requires that there be an "actual controversy." 28 U.S.C. § 2201. "The existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where it is appropriate." Fed.R.Civ.P. 57. The test for determining when an actual controversy exists was set forth by the Supreme Court in Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941):
Id.; see also Salomon Bros., Inc. v. Carey, 556 F.Supp. 499, 501 (S.D.N.Y.1983).
Broadview Chemical Corp. v. Loctite Corp., 417 F.2d 998, 1001 (2d Cir.), cert. denied, 397 U.S. 1064, 90 S.Ct. 1502, 25 L.Ed.2d 686 (1970) (quoting Borchard, Declaratory Judgments 294, 299 (2d ed.1941)). Lastly, it is within the court's discretion to determine when declaratory judgment is appropriate; equitable principles govern this discretion. Declaratory judgment is inappropriate in this case.
A copyright owner may elect to recover statutory damages instead of actual damages and profits. 17 U.S.C. § 504(c)(1). Plaintiffs have made that election. Once the plaintiff elects statutory damages, that remedy is generally exclusive. Oboler v. Goldin, 714 F.2d 211, 213 (2d Cir.1983).
Title 17 of the United States Code, Section 504(c)(2) provides for statutory damages of up to $100,000 for each infringement when an infringement is willful. Plaintiffs have the burden of showing defendant's "willfulness" in order to receive statutory damages. Plaintiffs may show willfulness by showing that defendant recklessly disregarded plaintiffs' rights. Wow & Flutter Music v. Len's Tom Jones Tavern, Inc., 606 F.Supp. 554, 556 (W.D.N.Y.1985); Lauratex Textile Corp. v. Allton Knitting Mills, 519 F.Supp. 730, 733 (S.D.N.Y.1981). Plaintiffs also sustain their burden by showing defendant knew or "should have known" it infringed their copyrights. Fallaci v. New Gazette Literary Corp., 568 F.Supp. 1172, 1173 (S.D.N.Y.1983). Willful does not mean "malicious," rather, it means "with knowledge," whether actual or constructive. See Fitzgerald Publishing Co., Inc. v. Baylor Publishing Co., Inc., 807 F.2d 1110, 1115 (2d Cir.1986), aff'd, 862 F.2d 304 [1544] (1988) ("a defendant's actual or constructive knowledge proves willfulness.").
In Fallaci, the court found that the publisher of a copyrighted newspaper should have been aware "that its unauthorized republication of a Washington Post article constituted copyright infringement." 568 F.Supp. at 1173; see also Warner Bros., Inc. v. Dae Rim Trading, Inc., 677 F.Supp. 740, 764 (S.D.N.Y.1988), aff'd in part, rev'd in part, 877 F.2d 1120 (2d Cir.1989) (defendant's actions not willful when they "`were not aware and had no reason to believe that his or her acts constituted an infringement of copyright'."). Similarly, in Engel v. Wild Oats, Inc., 644 F.Supp. 1089 (S.D.N.Y.1986), the court found that the defendant willfully copied a photograph when the art director "knew or should have known that the unauthorized reprinting of a photograph was a copyright violation." Id. at 1092. Although the court could not find evidence of actual knowledge, it found that the defendant had a reckless disregard for the plaintiff's rights. Id.
In deciding an award of statutory damages the court should take a number of factors into consideration. Courts in the past have used a wide array of criteria: fair market value of the rights infringed, Quinto v. Legal Times of Washington, 511 F.Supp. 579, 582 (D.D.C.1981); revenue lost by the plaintiff and profits gained by the defendant, Boz Scaggs Music v. KND Corp., 491 F.Supp. 908, 914 (D.Conn.1980); the infringer's state of mind, Id.; and deterrence of future infringement. See Fallaci v. New Gazette Literary Corp., 568 F.Supp. at 1174 (doubling the fair market value of the infringed right to arrive at an amount sufficient to deter a willful infringer because "[a] willful infringer ... should be liable for a substantial amount over and above the market value of a legitimate license."); Lauratex Textile Corp. v. Allton Knitting Mills, 519 F.Supp. 730, 733 (S.D.N.Y.1981) (court arrived at $40,000 statutory damage figure based on $5,000 actual revenue to the infringer and defendant's willfulness); Lauratex Textile Corp. v. Allton Knitting Mills, 517 F.Supp. 900, 903-04 (deterrence needed in case where there was evidence of numerous suits in which Allton's president was a defendant and negative inference drawn from his refusal to testify).
Kinko's maintains that, if at all, it is an innocent infringer. The statute provides a damage amount of $200.00 if a defendant shows that it was not aware and had no reason to know it was infringing. 17 U.S.C. § 504(c)(2). The defendant shoulders the burden of proving this good faith and that its belief was a reasonable one. Nimmer on Copyright § 14.04[B][2], at 14-40.1 — 14.40.2. See also Peer International Corp. v. Pausa Records, 909 F.2d 1332, 1336 (9th Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 1019, 112 L.Ed.2d 1100 (1991) (defendant must show reasonable good faith belief to refute evidence of willful infringement). The minimum damage figure is mandatory, not discretionary, upon the court finding good faith. Id. at 14-40.2 — 14-40.3. Kinko's has failed to prove it was an innocent infringer by failing to show its good faith. Kinko's should have known that it was infringing plaintiffs' copyrights.
[1545] In the "Classroom Guidelines" section of the Handbook, it provides:
Handbook, page 14. In so stating, Kinko's appears to have exempted itself from the purview of the Guidelines altogether. To the contrary, being beyond the scope of the Guidelines, to this court, still renders Kinko's subject to fair use law. Kinko's never acknowledges that its role as a commercial enterprise may in any way affect the fair use determination even though § 107 expressly provides that commercial use is to be considered and Supreme Court precedent states that it is "presumptively ... unfair." See Sony Corp., 464 U.S. at 451, 104 S.Ct. at 793.[21]
Defendant claims it acted as the agent of the educational institutions when it copied the excerpts in suit. Section 504(c) provides that the court "shall remit statutory damages ... where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use ..., if the infringer was (i) an employee or agent of a nonprofit educational institution...." 17 U.S.C. § 504(c)(2). Kinko's claims to demonstrate its role as an agent through several factors: the professor selects the works to be copied, directs Kinko's to copy, and seeks permission to copy on behalf of the professor. Additionally, the professor signs an order form which states:
The materials to be copied ... are for classroom use of no more than one copy per student, constitute only a small part of the entire work, and are to be solely for non-profit, non-commercial educational purposes in teaching activities. If such copies were not available, I would not require students to purchase the work. [1546] Defendant's Proposed Conclusions of Law, at 38-39. Defendant cites no caselaw in support of its position that this constitutes an agency relationship.
S.E.C. v. American Bd. of Trade, Inc., 654 F.Supp. 361, 366 (S.D.N.Y.), aff'd in part, dism'd in part, 830 F.2d 431 (2d Cir.1987) (citing Restatement (Second) of Agency § 1 comment b (1977)). New York common law principles provide that agency is a fiduciary relationship "which results from a manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and the consent by the other to act." Meese v. Miller, 436 N.Y.S.2d 496, 499, 79 A.D.2d 237 (App.Div. 4th Dept.1981). "[T]here can be no agency relationship where the alleged principal has no right of control over the alleged agent." Mazart v. State, 441 N.Y.S.2d 600, 605, 109 Misc.2d 1092 (N.Y. Ct.Cl.1981). However, every detail need not be determined by the alleged principal. An agency may exist where the principal retains the right "to make management and policy decisions affecting the agent." Id.
This court has confirmed the soundness of these principles. See Ahn v. Rooney, Pace Inc., 624 F.Supp. 368, 370-71 (S.D.N. Y.1985) (element of "subservience" is essential to agency). The Second Circuit is in accord. In In re Shulman Transport Enterprises, Inc., 744 F.2d 293 (2d Cir.1984), the court stated the essential elements of an agency relationship are direction and control. Id. at 295 (citing Restatement (Second) of Agency § 1(1) comment b, § 14 (1958)).
We will not here discuss whether it was reasonable for Kinko's to believe its copying was a fair use, since a finding of no agency relationship precludes a determination [1547] for remission of damages under the statute.
Attorneys fees and costs may be awarded pursuant to 17 U.S.C. § 505. "Fees and costs in copyright infringement cases, like statutory damages, are matters assigned to the court's discretion, to be awarded with an eye toward encouraging the pursuit of colorable copyright claims and deterring further infringement." Engel v. Wild Oats, Inc., 644 F.Supp. 1089, 1093 (S.D.N.Y.1986). See also Oboler v. Goldin, 714 F.2d at 213 ("Such an award assures equal access to courts, provides an economic incentive to challenge infringements, and penalizes the losing party."). "Because Section 505 is intended in part to encourage the assertion of colorable copyright claims and to deter infringement, fees are generally awarded to prevailing plaintiffs." Diamond v. Am-Law Publishing Corp., 745 F.2d 142, 148 (2d Cir.1984). See also Whimsicality, Inc. v. Rubies Costume Co., Inc., 891 F.2d 452, 457 (2d Cir. 1989) ("Plaintiffs who prevail are awarded fees as a matter of course."); Roth v. Pritikin, 787 F.2d 54, 57 (2d Cir.1986) (prevailing plaintiff is generally entitled to fees).[24] In addition "[b]ecause the award of fees has a statutory basis, a finding of subjective bad faith is not necessary." Diamond, 745 F.2d at 148.
Some courts have required some evidence of willfulness. In Fallaci, the court found that defendant's "willful" infringement was a deciding factor in allowing attorney's fees. 568 F.Supp. at 1174. Further, in Bourne Co. v. MPL Communications, Inc., 678 F.Supp. 70, 72 (S.D.N.Y. 1988), the court refused to award fees to the plaintiff's attorney because of the novelty of the issues involved in the case and the lack of bad faith on the part of the defendant.
[16] Evidence presented at trial shows fees Kinko's paid Harper & Row for permission to copy its works. The royalties ranged from 50 cents to $5.00 per copy cost to the student, before copying costs (usually approximately 4 cents per page). (PX. 357). Those permissions which cost $5.00 per copy, rather than 50 cents, generally included a greater number of pages copied — 200 to 300 or 500 pages — or perhaps an entire book. A cursory analysis of the exhibit shows that the permissions price is often a multiple of the number of copies requested, i.e. the number of students supplied. For example, 40 copies of an excerpt from the book Living With Change: The Semantics of Coping by Wendell Johnson and Dorothy Moeller brought a permissions price of $120.00. That particular request included 214 pages from this book (there was no notation stating whether this was the entire book). By comparison, 20 copies of an excerpt from History of African Civilization by E. Jefferson Murphy brought a permissions price of $80. This request included 400 pages, the entire work. While there is no set formula evidenced by these or other examples, there is also no evidence of exhorbitant pricing nor discriminatory scheme.
[24] Other circuits have held that attorney's fees should not be awarded as a matter of course in every case. See Annotation, Award of attorney's fees under §§ 101 et seq. of Copyright Act, 17 USCS § 505 — Modern Cases, 85 ALR Fed. 435, § 3[b], at 455 (1987).
Original Item: "Basic Books, Inc. v. Kinko's Graphics Co."
Lineage of: Basic Books, Inc. v. Kinko's Graphics Co.
08/09/2012 at 04:14 by evanm
Name: evanm