Tuesday, December 20, 2011
The Fair Use Quandary
The anatomy of a copyright infringement dispute
The Devil Is In The Details
While I don't doubt the findings from the AIPLA's survey (disclaimer: I'm a member of the editorial board for the AIPLA's Quarterly Journal) regarding the average costs for copyright infringement actions, it simply strains credibility to suggest that the cost renders the concept of fair use meaningless.
As for the AIPLA's survey results, the devil is in the details. The figure quoted in the Gizmodo article is the median litigation cost through trial, including all costs, travel expenses, court reporter's expenses, expert witness costs, etc. Each case is unique, and some may be more expensive than others. However, the total cost through trial is hardly a legitimate measure, considering that the distinct majority of cases never go to trial. The median cost of the case through the end of discovery is roughly half the total figure, and odds are good that the parties in the litigation will have a good idea if sufficient evidence exists to support a fair use defense long before the end of discovery.
Putting aside the significant costs of litigation, the real fallacy behind an argument predicated on the significant cost of litigation is that both parties—the copyright owner and potential infringer—face those sorts of costs. Thus, each takes a significant risk when permitting a case to proceed into litigation. The copyright owner takes a risk that he or she will be able to recover a large enough damages-and-attorney's-fees award so as to justify the cost of enforcing copyrights and ending an instance of infringement. (The copyright owner might be able to avoid some of this risk by finding an attorney willing to handle the case on a contingency fee basis; however, all this arrangement does is shift the risk from the copyright owner alone to the copyright owner and his or her attorney.) Similarly, the potential infringer takes a risk that he or she will be able to prove that there was no infringement, and that the court will award sufficient attorney's fees to compensate the potential infringer for the defense costs. The U.S. Copyright Act gives the court discretion to award reasonable attorney's fees to the prevailing party, which could be the copyright owner or the accused infringer. Thus, both parties take a significant risk—one that may easily exceed the amounts likely to be awarded for the infringement itself—by allowing a case to proceed.
If anything, the significant cost associated with litigation, when coupled with a claim that a particular use is a "fair use" under the Copyright Act, may have more of a chilling effect on copyright owners who may deem the cost of litigation an unwise business investment.
Lessons To Be Learned
If there's a lesson to be learned from the dispute and settlement, it is to always obtain clearances in advance. Even if you believe a certain use will qualify as a "fair use," you still have to weigh the risk of possible litigation. It doesn't help that "fair use" is one of the more difficult concepts in U.S. Copyright Law, or that, as Baio observes, "[t]here are a lot of myths and misconceptions about 'fair use' on the Internet. Everyone thinks they know what fair use is, but not even attorneys, judges and juries can agree on a clear definition." Given the complexity of the issue, Baio might have been able to avoid some of these misconceptions, or at least gain a better understanding of the risks, by seeking the advice of a lawyer who understands fair use prior to engaging in potentially infringing conduct.
Since Baio believes that both the music and artwork are sufficiently transformative to qualify as fair use, his licensing of the music, but not the image, might seem incongruous. "But with the current state of music licensing, I never needed to take that gamble [that the use of the music would be fair use]," writes Baio. Under U.S. Copyright Law, a musician can record a cover of a copyrighted song, pro-vided notice is given and provided the musician pays for a compulsory license. This compulsory licensing scheme permitted Baio to pay a relatively small fee for a license rather than taking a risk that the record company might sue for infringement. However, the compulsory licensing scheme doesn't apply to works of visual art, including photographs.
Contrary to the oft-repeated phrase, "It's easier to ask for forgiveness than for permission," Baio was able to avoid claims of infringement from the record company by licensing the music. Had Baio attempted to obtain a license from Maisel, he might have been able to avoid a claim of infringement and then paying to settle the claim. Even if Maisel refused to license the image, that information would have permitted Baio to make an informed decision when weighing the risks associated with creating a pixelated version of Maisel's image.
As is often the case, there's another lesson here, which although less obvious, is nonetheless significant. The reality is that the majority of copyright infringement disputes and cases settle, as did Maisel's dispute with Baio. Claims may be settled prior to litigation, or early in discovery after the parties are able to assess the relative strengths and weaknesses of their case, or at mediation, or even on the eve of trial. Whether claims settle early, or after each side has invested substantial resources in the case, is ultimately up to the parties. By settling prior to litigation, Maisel was able to stop Baio's use of one of his images and cover his legal expenses. And that's kind of cool.
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