American Geophysical Union v. Texaco, Inc.

American Geophysical Union v. Texaco, Inc., 60 F.3d 913,. Hereafter Texaco II. was a 1995 U.S. copyright case holding that a private, for-profit corporate library could not rely on fair use in systematically making copies of articles in academic journals for its employees. A divided panel of the U.S. Court of Appeals for the Second Circuit affirmed a ruling by Judge Pierre Leval of the U.S. District Court for the Southern District of New York in favor of the academic publishers who had filed the lawsuit. The case was the first heard by the Second Circuit to seriously consider the question of transformative use, a concept Leval had introduced, in evaluating a fair use claim.

In the wake of an earlier case that had held similar archival photocopying of academic articles by a government agency's internal library to be fair use due to the public purpose of the agency, Congress had urged the academic publishing industry to develop ways to adequately license such photocopying, a common practice, by private, for-profit libraries. One such system was in place during the 1980s, but Texaco declined to use it, citing its cumbersome bureaucratic requirements and its belief that the practice was fair use, leading several academic publishers, including the American Geophysical Union (AGU), to sue for copyright infringement.

At trial Leval found that Texaco's fair use defense failed on three of the four factors used to determine fair use. The copies were used for the same informational purpose as the original articles, and Leval did not find that the ability they gave the scientists to bring them into the lab or home was sufficiently transformative. The articles were copied in their entirety and adversely affected commercial opportunities for the publishers in the form of the lost revenue they otherwise would have made from licensing the photocopying and/or the sale of additional subscriptions to their journals. Only on the second factor, the purpose of the work, did Leval hold for Texaco, since both the originals and the copies were used commercially.

Two years later, the Second Circuit took into account the Supreme Court's Campbell v. Acuff-Rose Music, Inc. decision in the interim, which had recognized transformative use when it held parody to be protected under fair use. Judge Jon O. Newman's majority opinion, amended twice over the year following, criticized Leval for having emphasized Texaco's commercial purpose, and held that the second-factor test, the purpose of the work, favored neither side, but otherwise affirmed his holding. Judge Dennis Jacobs dissented, arguing that the use of the photocopied articles was indeed transformative since ultimately they could lead to new research and new ideas, as well as attacking as "circular" the majority's lost revenue finding when the entire purpose of the case was to determine whether the use that gave rise to those revenues was fair, themes echoed in criticisms by academic commentators. After further appeals were denied, Texaco settled the case.

Background

Williams & Wilkins Co. v. United States

Since the early 20th century, libraries had offered patrons the ability to make copies of documents, at considerable expense, with photostat machines. In the 1960s, commercial xerographic photocopying machines became widely available in libraries, allowing patrons to duplicate reading material for personal use. This diluted the value publishers could get for their work, and many in particular objected to the practice of institutional libraries of making copies in bulk of work considered useful by specialist patrons who might otherwise have to wait for a book to be returned, take extensive notes from a copy while in the library, or handwrite or retype the article. In 1973 several academic publishers filed suit against the federal government in the U.S. Court of Claims, arguing that such photocopying by the library of the National Institutes of Health (NIH) and the National Library of Medicine (NLM) for the researchers in their employ was copyright infringement. The government countered that the photocopying was fair use. At trial Judge James F. Davis held the government liable, but on appeal the court's full membership reversed.

Judge Oscar Hirsh Davis, writing for the majority, found the vague language in the Copyright Act of 1909 around copying work complicated the case.Williams & Wilkins, at 1350 He looked instead to fair use, noting that the practice of photocopying in some way in libraries was at least half a century old, that the NIH and NLM limited the amount of copies a user could request per month, that they were not commercial entities but government agencies working towards the public good, and that the photocopying did not seem to have measurably affected the market for subscriptions to the plaintiff's journals.Williams & Wilkins, 1353–63 Chief Judge Arnold Wilson Cowen, joined by Robert Lowe Kunzig and Philip Nichols Jr., dissented, arguing the majority had placed too much emphasis on facts favoring the defense. It had not noted, as the trial judge had, that the 1909 Act was not at all vague about what copying meant, that the libraries routinely granted exceptions to the limits the majority had noted, and that measured in terms of the plaintiff's journals it had been adversely affected.Williams & Wilkins, 1363–72 He included a portion of the trial judge's opinion, which he thought needed no elaboration, in his dissent.Williams & Wilkins, 1372–86

The publishers appealed to the U.S. Supreme Court, which granted certiorari and heard the case. Justice Harry Blackmun recused himself, and after hearing oral argument the remaining justices were equally divided. A short per curiam opinion was thus issued in 1975, allowing the Court of Claims's decision to stand.

Subsequent developments

Congress soon afterward passed the Copyright Act of 1976, the first major overhaul of copyright law since 1909. Fair use, which previously had been a matter for judicial determination, was formally codified as Section 107 (§107), with courts given four factors they were to assess to determine whether it was properly claimed: the purpose of the secondary work, the nature of the original work, the portion of the original work and the impact on commercial opportunities of the original work. Under those rules, meant to account for rapid improvements in information dissemination and storage technology, the Supreme Court found in 1984's Sony Corp. of America v. Universal City Studios, Inc. that television viewers recording shows on their VCRs to watch later were making fair use of the copyrighted programming. The following year, it provided some guidance for courts to apply the four fair use factors when it did so for the first time in Harper & Row v. Nation Enterprises, holding that the publication of leaked excerpts of a forthcoming book did not meet the test.

The Act of 1976 did not include any specific provisions aimed at the bulk-photocopying issue that had been at the heart of Williams & Wilkins. So, in response to a recommendation from Congress when it had been considering and developing the legislation, academic journal publishers had formed the Copyright Clearance Center (CCC) in 1977 to administer a licensing and royalty system. Its Transactional Reporting System, established the following year, required that all subscribing institutions provide a report listing all the copies they made, which some found cumbersome. In 1983 the CCC introduced another option, the Annual Authorization Service (AAS), which allowed unlimited copying for the payment of a blanket fee. That option proved popular with large companies, and by 1991 CCC had 500 subscribers between the two plans, earning it around $27 million a year.. Hereafter Texaco I.

In 1990 federal judge Pierre Leval of the Southern District of New York, which hears many copyright cases due to the many media companies in New York City, published an influential Harvard Law Review article about fair use. "Toward a Fair Use Standard", drew on cases from the Second Circuit Court of Appeals, which has appellate jurisdiction over the Southern District, and the Supreme Court in the years since 1978, when the 1976 Act took full effect, to discern what judges might be coming to a common understanding of in interpreting its fair-use provisions. In considering the first factor, the purpose of the secondary, allegedly infringing, work, which had more commonly been about whether that purpose was primarily commercial, Leval identified a concept he called "transformative use" derived from courts' decisions:

Underlying dispute

Texaco (since merged with Chevron) was a for-profit corporation that refined and sold oil products of all kinds. It employed at the time of the suit between 400 and 500 scientists and engineers at six research centers in the U.S., one of which was located outside Beacon, New York, approximately north of Manhattan. At the center, like its others, it maintained an internal library that, in addition to its holdings, subscribed to many scientific journals, for the benefit of its researchers.Texaco I, 4–6

Like other corporate internal libraries, Texaco's routinely supplied the company's researchers with photocopies of articles from the journals it subscribed to, both those that it believed might be of interest to them and those they specifically requested. Unlike other companies, including most other major oil companies, while Texaco had purchased a license under CCC's per-transaction plan,Texaco I, at 25n23 CCC and its member publishers noticed that the company was photocopying much less than comparable licensees. They concluded that Texaco was probably underreporting the total amount of copies it made. According to copyright lawyer William Patry, who represented the publishers in the early portions of the suit, the goal of the suit was to disincentivize companies from trying to save costs that way and encourage them to pay more for the blanket plan allowing them to copy as much as they wanted.

In 1985, six journal publishers that licensed photocopying through CCC,Cásarez, at 644n8 led by the American Geophysical Union, sued Texaco in the Southern District of New York, alleging copyright infringement. Texaco responded that per Williams & Wilkins the activity was protected under fair use.Texaco I, at 25

Leval was assigned to hear the case. Although the plaintiffs at the time of filing did not offer any evidence of infringement, he allowed the case to proceed on the grounds it was likely that it had, an unusual decision.Patry, 431n14 The evidentiary record reached 31 bound volumes.Texaco I, 29–30 In 1992 Leval rejected Texaco's claim of fair use and held that it was infringing the journal's copyrights.

District court

The parties stipulated that the fair-use question would be contested on eight pieces—four articles, two notes, and two letters to the editor—from the Journal of Catalysis, published at the time by Academic Press (now part of Elsevier). The research center library received three subscriptions to it, at a cost of almost $2,500 ($ in current dollars) annually. They were kept in the file of one Texaco researcher, Donald Chickering, a PhD in chemical engineering who studied catalysis, the process by which small amounts of an additional chemical can speed up a reaction. His job consisted of designing and conducting experiments in the labs.

First factor

On the first factor, the purpose of the secondary work, Leval observed that while it was typically a question of commercial or non-commercial use courts had increasingly been allowing commercial reuse to be offset by a sufficiently transformative use. But Texaco's photocopying was neither, merely "superseding", since it:Texaco I, 11-13Patry, 434–35