ip summer 2008 - kasunic.com
TRANSCRIPT
You have just spent years ofyour life filming and editing a doc-umentary film only to find that itcould not be sold or distributedbecause you filmed someone turn-ing on the radio in his or her car,thus reproducing a short portion ofa song that was being performed onthe radio. Or perhaps instead ofturning on the radio, someone inthe documentary film happened tobe watching a ballgame, a televi-sion show or sitting next to a copy-righted painting or photograph. The
song on the radio, the broadcast ofthe ballgame or television show,and the photograph are all copy-righted works, and the reproductionof these works on film could vio-late the copyright owners’ exclu-sive right of reproduction.Moreover, the distribution orbroadcast of your documentaryfilm might implicate other exclu-sive rights of the copyright owner.1
A copyright owner’s exclusiverights, however, are not unlimited.The exclusive rights contained in
§ 106 are themselves limitedgrants2 and are expressly subject tothe limitations contained in §§ 107- 122. You may have determinedthat the reproduction of the per-formance of the musical work andsound recording in your documen-tary was a “fair use” under the
Uniting Plaintiff, Defense, Insurance, and Corporate Counsel to Advance the Civil Justice System
Intellectual Property Law Committee
Summer 2008
Continued on page 10
IN THIS ISSUE:
CommitteeNewsCommitteeNews
E&O INSURANCE FOR DOCUMENTARY FILMS: THE EFFECT OF THEBEST PRACTICE IN FAIR USEBy: Robert Kasunic*
* Adjunct Professor, Washington College of Law at American University and Georgetown University Law School andPrincipal Legal Advisor at the United States Copyright Office. The views in this article do not represent the views ofthe United States Copyright Office.1 The sale of the film would implicate the copyright owner’s exclusive right of distribution and the broadcast wouldimplicate the exclusive right of performance to the public.2 17 U.S.C. § 106: § 106. Exclusive rights in copyrighted works Subject to sections 107 through 122, the owner ofcopyright under this title has the exclusive rights to do and to authorize any of the following:
(1) to reproduce the copyrighted work in copies or phonorecords;
(2) to prepare derivative works based upon the copyrighted work;
(3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of owner-ship, or by rental, lease, or lending;
(4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and otheraudiovisual works, to perform the copyrighted work publicly;
(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, orsculptural works, including the individual images of a motion picture or other audiovisual work, to display thecopyrighted work publicly; and
(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.
E&O Insurance ForDocumentary Films: TheEffect Of The BestPractice In Fair Use . . . 1
Word From The Chair . 3
Insuring IntellectualProperty Claims . . . . . . 5
The Collision LicensingProvisions And PatentLaw. . . . . . . . . . . . . . . . . 6
2008-2009 TIPS Calendar. . . . . . . . . . . . 18
Intellectual Property Law Committee Newsletter Summer 2008
2
ChairNathaly J Vermette
Law Offices of Nathaly J VermetteApt 800
1550 Rue MetcalfeMontreal, QC, Canada H3A 1X6
(514) 499-7444Fax: (514) 499-7444
Chair-ElectJohn F Stephens
Sedgwick Detert Moran & ArnoldFl 19
801 S Figueroa StLos Angeles, CA 90017-5504
(213) 426-6900Fax: (213) 426-6921
Last Retiring ChairVasilios Peros
Thomas & Libowitz PASte 1100
100 Light StBaltimore, MD 21202-1185
(443) 927-2118Fax: (410) 752-2046
Membership Co-Vice-ChairsTimnetra Burruss
PO Box 5208Chicago, IL 60680-5208
[email protected] Cummins
Sheppard Mullin et alFl 19
501 W BroadwaySan Diego, CA 92101-8541
(619) 338-6500Fax: (619) 234-3815
Newsletter Vice-ChairJohn F Stephens
Sedgwick Detert Moran & ArnoldFl 19
801 S Figueroa StLos Angeles, CA 90017-5504
(213) 426-6900Fax: (213) 426-6921
Vice-ChairsJohn Francis EastonPillsbury Winthrop et al
Ste 2000909 Fannin St
Houston, TX 77010-1028(713) 276-7624
Fax: (281) [email protected]
David FurlowThompson & Knight LLP
Ste 3300333 Clay St
Houston, TX 77002-4499(713) 653-8653
Fax: (832) [email protected] Ann Lemoins
Apt 1646 S Acadian Trwy
Baton Rouge, LA [email protected] Student Vice-Chair
Alan R MillerRobins Kaplan Miller & Ciresi
Ste 25800 Boylston St
Boston, MA 02199-8032(617) 267-2300
Fax: (617) [email protected]
Nancy N QuanDiscus Dental Inc8550 Higuera St
Culver City, CA 90232-2536(310) 845-8501
Fax: (310) [email protected]
Joseph F RakowExponent Failure Analysis Associates
149 Commonwealth DrMenlo Park, CA 94025-1133
(650) 688-7316Fax: (650) 688-7231
[email protected] Sandler
Apt 726100 N Federal Hwy
Fort Lauderdale, FL 33301-1183(954) 636-4081
[email protected] Stuart Sergent
Venable LLPSte 1800
2 Hopkins PlzBaltimore, MD 21201-2911
(410) 244-7400Fax: (410) 244-7742
[email protected] Worrall Tilton
First MediaSte 350
4350 Shawnee Mission PkwyFairway, KS 66205-2541
(913) 384-4806Fax: (913) 384-4822
[email protected] Matthew Wilkerson
Beard Kultgen Brophy Bostwick et al5400 Bosque Blvd
Waco, TX 76710-4482(254) 776-5500
Fax: (254) 776-3591John Hanny Zacharia
Apt 2011506 Northern Neck DrVienna, VA 22182-5543
(202) 305-2310Fax: (202) [email protected]
©2008 American Bar Association, Tort Trial & Insurance Practice Section, 321 North Clark Street, Chicago, Illinois 60610; (312) 988-5607.All rights reserved.The opinions herein are the authors’ and do not necessarily represent the views or policies of the ABA, TIPS or the Intellectual PropertyLaw Committee. Articles should not be reproduced without written permission from the Tort Trial and Insurance Practice Section.Editorial Policy: This Newsletter publishes information of interest to members of the Intellectual Property Law Committee of the Tort Trial& Insurance Practice Section of the American Bar Association — including reports, personal opinions, practice news, developing law andpractice tips by the membership, as well as contributions of interest by nonmembers. Neither the ABA, the Section, the Committee, nor theEditors endorse the content or accuracy of any specific legal, personal, or other opinion, proposal or authority.Copies may be requested by contacting the ABA at the address and telephone number listed above.
VISIT OUR WEBSITE AT: WWW.ABANET.ORG/TIPS
WORD FROM THE CHAIRAs my term as Chair of the TIPS Intellectual Property Committee is winding down, and great
new leadership is preparing to take the reigns, I reflect on some of the goals our Committee hadset for itself. One such goal was to provide TIPS members with a source of general IP informa-tion and notions to assist them in better serving their clients.
In that vein, our Newsletter Editors adopted a format where newsletters would collect articlesdealing with one type of intellectual property law only. While our last Newsletter dealt with issues relating topatents, this current issue contains two articles devoted to copyright and insurance related questions and a third cov-ering licensing issues and patents. I hope you find this new collection of articles interesting and useful to your prac-tice of law, and would invite you to write to me or the Committee’s Newsletter Editors to provide your commentsand suggestions for future Committee Newsletters.
Looking ahead to the 2008 ABA Annual meeting, you have been receiving flyers, publicity and registrationforms. I hope you have made your plans to join us in the “Big Apple” for superb CLE programming and wonder-ful activities to help celebrate TIPS 75th anniversary.
In the framework of the ABA Annual Meeting, the Intellectual Property Committee, in conjunction with theTIPS Media, Privacy and Defamation, Admiralty and Maritime Law and International Committees, and the ABAInternational Section has been hard at work over the last bar year preparing a program entitled “Ordering Libertyin an International Economy.” We have an extremely distinguished panel of international speakers that includeThe Honourable Mr. Justice W. Ian C. Binnie of the Supreme Court of Canada, The Honourable Mr. Justice R.Nugent of the Supreme Court of Appeal from the Republic of South Africa, Professor Thomas John Schoenbaumfrom both the International Christian University in Japan and The George Washington University Law School andMr. John Brosnan, an insurance industry representative from Financial Services Group - Professional RiskSolutions, a Division of AON Risk Services, Inc. This panel will address human rights issues in the global economicframework. More specifically, some of the issues that will be discussed are: how to protect international electron-ic communications, the means available for enforcement of intellectual property rights in foreign nations and thedeveloping world, and how the international economy affects transnational liberties, as well as how the insurancemarket has evolved to provide protection to companies in this increasingly dynamic global market.
I hope to meet many of you at this very special presentation to round out a summer work week on Friday, August 8, at 2 p.m. at the New York Hilton.
Nathaly J. Vermette, LL.B., LL.M. Chair, ABA TIPS IP Law [email protected] Metcalfe, Suite 800Montreal, Quebec, CanadaH3A 1X6Tel & Fax: (514) 499-7444
Intellectual Property Law Committee Newsletter Summer 2008
3
ABA ANNUAL MEETINGAUGUST 7-12, 2008
WALDORF~ASTORIANEW YORK, NY
www.abanet.org/tips/am08/home.html
FRIDAY, AUGUST 8, 2008 2:00 pm – 5:00 pm
CLE Program, New York Hilton
“Ordering Liberty In An International Economy” TIPS Committee Main Sponsors: Admiralty & Maritime Law, Intellectual Property Law, International Law, and Media, Privacy & Defamation Law Committees TIPS Committee co-sponsor: Business Litigation Sections, Divisions, Forums, Special Standing Committees and Commissions co-sponsors: International Litigation Committee of the Section of International Law Program Chairs: David Furlow, Thompson & Knight LLP, Houston, TX James J.S. Holmes, Sedgwick Detert Moran & Arnold LLP, Los Angeles, CA Jessica L. McClellan, U.S. Attorney's Office, Southern District of Georgia, Savannah, GA Michaela E. Noble, Lemle & Kelleher, New Orleans, LA Shirley Spira, Bivona & Cohen, P.C., New York, NY John F. Stephens, Sedgwick Detert Moran & Arnold LLP, Los Angeles, CA Nathaly J. Vermette, Vermette Law, Montréal, Québec, Canada Description: Hear an international panel of Justices and experts in the field discuss how to protect international electronic communications, the means available for enforcement of intellectual property rights in foreign nations and the developing world, and how the international economy affects transnational liberties. In addition, they will discuss how the insurance market has evolved to provide protection to companies in this increasingly dynamic global market. Moderators: David Furlow, Thompson & Knight LLP, Houston, TX Nathaly J. Vermette, Vermette Law, Montréal, Québec, Canada Speakers: The Honorable Mr. Justice Ian Binnie, Supreme Court Of Canada, Ottawa Ontario, Canada The Honorable Mr. Justice R. Nugent, Supreme Court of Appeal, Republic of South Africa, Union
of South Africa Thomas John Schoenbaum, International Christian University, Tokyo and George Washington
University Law School, Washington DC John Brosnan, Financial Services Group – Professional Risk Solutions, A Division of Aon Risk
Services, Inc. of Illinois, Chicago, IL
AMERICAN BAR ASSOCIATION ANNUAL MEETING NEW YORK, NY August 7-12, 2008
Intellectual Property Law Committee Newsletter Summer 2008
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INSURING INTELLECTUAL PROPERTY CLAIMSBy: Michelle Worrell-Tilton
The Second Article in a Series on Intellectual Property With a Special Focus upon Media Liability
When faced with a copyright,trademark or patent infringementsuit, a media defendant’s primaryconcern is whether insurance cov-erage is available to defray poten-tially staggering legal expense andexposure to loss. Because a compa-ny’s intellectual property is a keybusiness asset, threats against itstrademarks and copyrights must beprotected by the best insurance pol-icy available and never left tochance.
COVERAGE FOR PATENTINFRINGEMENT
Not all policies are createdequal with respect to coverage forintellectual property disputes. First,it is unlikely that any policy withthe exception of a special patentpolicy will extend to claims forpatent infringement or inducementto infringe a patent. Most courtshave consistently held that patentinfringement claims are not cov-ered under comprehensive generalliability (“CGL”) policies, andeven most media liability policies,which intend to cover intellectualproperty claims, consistentlyexclude coverage for patentinfringement. Media policies covercontent – not the protected designthat helped create it. Companieswhose primary exposure is in thedesign, development and licensingof inventions should procure apatent policy that provides cover-age for not only the defense ofpatent infringement actions, butalso provides coverage for theinsured to initiate an action as aplaintiff to enforce a patent. Thesepolicies are very expensive with
high self-insured retentions andoften co-insurance provisions.
THE CGL POLICY
If coverage for specific intellec-tual property exposures is not partof the risk management arsenal,defendants often turn to their CGLpolicy which is the “catch all” pol-icy for businesses. The 2003 CGLpolicy provides coverage forinfringement of copyright, trade-mark or trade secret or “personaland advertising injury liability”1 aslong as the claim arises from theinsured’s advertising of its ownproducts and services and as longas the insured is not engaged in themedia business. The relevant lan-guage from the 2003 CGL policythat excludes coverage for mediabusinesses is as follows:
EXCLUSIONS
This insurance does notapply to:
* * *
Insureds in Media andInternet Type Businesses
“personal and advertisinginjury” committed by aninsured whose business is:
1. Advertising, broadcasting,publishing or telecasting;
2. Designing or determiningcontent of websites for others; or
3. An Internet search, access,content or service provider.
* * *
For the purposes of thisexclusion, the placing of
frames, borders or links,telecasting or advertising,for you or others anywhereon the Internet, is not byitself, considered the busi-ness of advertising, broad-cas t ing, publ ishing or telecasting.
* * *
ISO Properties, Inc., 2003
This CGL form also specifical-ly excludes coverage for “person-al and advertising injury” arisingfrom electronic chatrooms or bul-letin boards controlled by theinsured, as well as the unautho-rized use of another’s name in theinsured’s e-mail address, domainname or metatag. In other words,the intellectual property cover inthe CGL extends to the advertis-ing of a non-media businessthrough relatively traditionalmeans. The CGL policy may varysignificantly in respect to cover-age based upon ISO form numberand by endorsement. Therefore, itis incumbent upon the risk manag-er to thoroughly review the cover-age on an annual basis with aknowledgeable broker and to askspecific questions as to how thepolicy might respond to intellec-tual property exposures. It isalways best to know about a poli-cy’s shortcomings up front ratherthan to find out after a claim hasbeen denied.
THE MEDIA LIABILITY POLICY
A media liability policy is anecessity for any company that
Continued on page 9
1 Coverage Part B of the 2003 CGL policy provides coverage for false arrest, detention or imprisonment; malicious prosecution, trespass, defamation, invasion of privacy, the useof another’s advertising idea in your “advertisement” or infringing upon another’s copyright, trade dress or slogan in your “advertisement.
Intellectual Property Law Committee Newsletter Summer 2008
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THE COLLISION LICENSING PROVISIONS AND PATENT LAWBy: Vasilios Peros1 and Munachi Nsofor2
Lawyers and non-lawyers are routinely faced with negotiating, executing and enforcing theirrights under a contract dealing with a variety of transactions. When such a contract deals with
intellectual property, such as patent license scenario, the interpretation of the contractual terms will not likely bedetermined by applying only contract law principles. The collision of the licensing contractual provisions withintellectual property law principles requires different analysis. In this article, we discuss the decision issued onJune 9, 2008, by the U.S. Supreme Court regarding a patent infringement case involving patent rights, licensingprovisions and the exhaustion doctrine. The Court’s opinion directly affects the amount of royalties that can becollected by the patent holder, as licensor, from end users downstream of the licensee.
The success of today’s hightechnology companies is greatlydependent on the acquisition, pro-tection and commercialization oftechnology. These technology com-panies may attain such protectionwhen they file for and are grantedpatents for their inventions. As a
part of their commercializationapproach, these companies grant tothird parties the right to licensetheir inventions and technology.The high technology company, asthe licensor, and the third party, asthe licensee, negotiate and enterinto a license agreement that sets
forth the terms and conditions ofthe licensing deal. When patentsare involved in any such contract,the licensor must be careful tounderstand what patent rights aregranted or retained. The failure toclearly and carefully delineate therespective rights of the parties
1 Vasilios Peros is a member at the law firm of Thomas & Libowitz, P.A. and heads the firm’s Technology & Intellectual Property practice. He is a past Chair of the ABA TIPSIntellectual Property Committee. He can be reached at (443) 927-2118 or [email protected] Munachi O. Nsofor is an associate at the law firm of Thomas & Libowitz, P.A. He can be reached at (443) 927-2112 or [email protected].
Intellectual Property Law Committee Newsletter Summer 2008
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could lead to the unintendedexhaustion of patent rights of thelicensor. In Quanta Computer v. LGElectronics, 553 U.S. __ (2008),the U.S. Supreme Court recentlyissued its opinion regarding apatent infringement case involvingpatent rights, licensing provisionsand the exhaustion doctrine. Theoutcome of this case has significantramifications on the interpretationof patent license agreements andthe ability of patent licensors toseek royalties from third parties.
LG Electronics, Inc. (“LGE”)owns several patents relating tothe computer components andassemblies. Some of LGE’spatents cover components such asmicroprocessor chips and chipsets,while other patents covered thesystems and methods associatedwith these components and assem-blies. LGE entered into a patentlicense agreement with IntelCorporation (“Intel”) for use ofLGE’s components in Intel’s prod-ucts. The parties also entered intoa separate master agreement underwhich Intel agreed to give noticeto its purchasers that the licensegranted to Intel by LGE did notauthorize third parties to combinethe products with non-Intel prod-ucts. Quanta Computer Inc.(“Quanta”) purchased productsfrom Intel and installed them incomputers in combination withnon-Intel products. Pursuant to theseparate master agreementbetween Intel and LGE, Intel noti-fied Quanta that such license grantdoes not extend to combining theproducts with non-Intel products.LGE brought suit against Quantafor patent infringement assertingthat Quanta infringed upon theclaims of LGE’s patents – not forthe components themselves – butrather for systems and methods ofcombining licensed components
with non-Intel components in itscomputers.
The United States District Courtfor the Northern District ofCalifornia granted summary judg-ment of non-infringement toQuanta holding that Intel’s sale toQuanta generally exhausted LGE’spatent claims, but the courtdeclined to find that LGE’s methodclaims were exhausted. The courtalso held that Quanta could notinfer a license from Intel’s sale ofLGE-licensed components becauseIntel expressly notified Quanta thatthe license did not cover non-Intelproduct combinations. On appeal,the Court of Appeals for theFederal Circuit reversed in part,concluding that the exhaustion doc-trine does not apply to an expresslyconditional sale or license, and thatthe notice provided by Intel toQuanta created a conditional sale,therefore the exhaustion doctrinedid not apply. Quanta Computer v.LG Electronics, 453 F.3d 1364(Fed. Cir. 2006), rev’d, 553 U.S. __(2008).
A review of the exhaustion doc-trine is required to understand theissues of this case. The exhaustiondoctrine (also known as the “firstsale doctrine”) is common undercopyright and patent law. Undercopyright law, once a copyrightedwork is sold to any party, suchparty can sell, distribute or lendthat one copy to another party with-out infringing any copyrights. Forexample, if you purchase a DVD ofa movie, you have the right to lendor resell that copy of the DVD ofthe movie to a friend.
Under patent law, the exhaus-tion doctrine generally providesthat a patent holder’s exclusiverights, as derived from a patentclaim, end at the first sale of apatented product. The patent
exhaustion doctrine is triggered byan unconditional sale. An uncondi-tional sale of a patented productexhausts the patentee’s right to con-trol the purchaser’s use of the prod-uct. The theory is that a patentholder has bargained for andreceived an amount equal to the fullvalue of the products and that hegives up the right to restrict thatuse.
The patent exhaustion doctrinealso applies to an incomplete prod-uct that has no substantial use otherthan to be manufactured into acompleted patented and allegedlyinfringing article. Cyrix v. IntelCorp., 846 F. Supp. 522 (E.D. Tex1994), aff’d without op., 42 F. 3d1411 (Fed. Cir. 1994) (holding thatthe patent holder’s microprocessorscould not be used for any commer-cially viable purpose without nec-essarily forming a combinationcovered by the patent claims);United States v. Univis Lens Co.,316 U.S. 241 (1942) (holding thatthe sale of eyeglass lens blanks thatpartially practice a patent exhaust-ed the method patents that were notcompletely practiced until theblanks were ground into fully com-pleted eyeglass lenses). The uncon-ditional sale of an uncompletedproduct which embodies a claimedinvention, or in other words, con-tains essential features of a patent-ed invention, exhausts the patentholder’s rights so far as it may beembodied in a particular productwithout other substantial use.Univis, 316 U.S. at 248-251.
However, the patent exhaustiondoctrine may not negate a lawfulexpress restriction. An uncondi-tional sale, required for patentexhaustion, cannot exist wherethere is a lawful express restriction.In such a transaction, one may rea-sonably infer that the parties nego-tiated a price that reflects only the
Intellectual Property Law Committee Newsletter Summer 2008
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value of the use rights conferred bythe patent holder. As a result,express conditions accompanyingthe sale or license of a patentedproduct are generally upheld. B.Braun Med. Inc. v. Abbott Labs,124 F.3d 1419 (Fed. Cir. 1997).However, it must be clear that thepurchaser fully understood therestriction and agreed to suchrestriction. Such express conditionsare contractual in nature and aresubject to contract and any otherapplicable law.
Furthermore, a licensor mayseek to exclude the rights to combi-nation claims where the componentand the combination are separateand distinct. Accordingly, a com-puter manufacturer may not obtaina right to the combination claimsmerely by purchasing or licensing acomponent. The patent holder mayargue that these combinationpatents would not be exhausteduntil a full royalty is recovered forthe combination via the sale of thecomponent. A patent holder maytake the position that the compo-nent patents are separately enforce-able from the combination patents.Under this position, a patent holdercould seek additional royalties.
The application of the patentexhaustion doctrine has been deter-mined by the U.S. Supreme Court’sinterpretation of the above princi-ples. The Court held that the patentexhaustion doctrine extends topatent method claims. Althoughpatented methods may not be soldin the same way as a component,the methods nonetheless may beembodied in a product, the sale ofwhich exhausts patent rights. LGEfailed in its attempt to make a dis-tinction between the componentswhich Quanta purchased from Inteland LGE’s patented systems andmethods and failed in its argumentthat a sale of a patented component
does not exhaust rights in the inde-pendently patented systems andmethods to which the componentbelongs. LGE argued that it hadgranted Intel a license to manufac-ture and sell the components andanother license to practice LGE’ssystems and method patents. Inmaking its decision, the Court rec-ognized that eliminating exhaus-tion for method claims would seri-ously undermine the exhaustiondoctrine. Patent holders couldavoid the exhaustion doctrine bysimply including method claims intheir patents. For example,although a licensee would beauthorized to sell a computerassembly, the downstream pur-chasers could nonetheless be liablefor patent infringement. Such aresult would violate longstandingprinciples.
The Court further held that thesale of the microprocessors andchips was essentially a sale of anuncompleted product which con-tained essential features of apatented invention, and such saleexhausted the patent holder’srights so far as they may beembodied in a particular productwithout other substantial use.Quanta successfully argued thatthe sale of the microprocessors andchips exhausted LGE’s patentrights in the same way as the saleof the eyeglass lens blanksexhausted the patent rights in theUnivis case. The microprocessorsand chips had only one real usewhich was as a part of a computer.The Intel products cannot practicethe LGE patent claims until theyare combined with other compo-nents and assemblies in a comput-er. The patent exhaustion doctrineis triggered by the sale of compo-nents that essentially, even if notcompletely, embody the invention.Otherwise, patent holders could
authorize the sale of computersthat are complete with the excep-tion of one minor step and extendtheir rights through each down-stream purchaser all the way to theend user.
The Court finally found nothingin the license agreement that limit-ed Intel’s ability to sell its productspracticing the LGE patents. Suchrestrictions were not included in thelicense agreement between LGEand Intel. Quanta did not disputethat patentees can engage in condi-tional sales; however, Quantaargued that patent holders can andshould negotiate specific contractswith purchasers if they want toimpose restrictions on their prod-ucts. LGE unsuccessfully arguedthat notice, as required under theseparate master agreement betweenLGE and Intel, was given by Intelto its purchasers that the licensegranted to Intel by LGE did notauthorize third parties to combinethe products with non-Intel prod-ucts. Because Intel was authorizedto sell Intel’s products to Quanta,the patent exhaustion doctrine pre-vented LGE from asserting itspatent rights with respect to Intel’sproducts. The Court acknowledgedthat LGE may have other contractrights, but refused to express anopinion as to whether contractdamages might be available eventhough exhaustion operates to elim-inate patent damages.
The Supreme Court’s decisionhas reaffirmed the patent exhaus-tion doctrine and clarified theextent of a patent holders’ licenserights. The Court’s decision infavor of Quanta, finding exhaustionupon LGE’s first sale to Intel, rea-sonably limits a patent holders’rights. Patent holders are preventedfrom circumventing the patentexhaustion doctrine by simplyincluding method claims in their
Intellectual Property Law Committee Newsletter Summer 2008
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patents so that they can exercisecontrol over post-sale use of theirpatented components. The Courtmade clear that a sale of an uncom-pleted product, which containsessential features of a patentedinvention, exhausts the patent hold-er’s rights so far as they may beembodied in a particular product
without other substantial use. Thepatent holders are not able to col-lect royalties from downstreamusers unless the licensor and licens-ee mutually consent to express con-tractual provisions in their licenseagreement. A decision for LGEwould have potentially expandedpatent holders’ rights by severely
undermining the patent exhaustiondoctrine and allowing the patentholder to collect royalties frommultiple users as a product worksits way from manufacturer to theend user. These increased costswould have most likely beenpassed down to the end user consumers.
publishes, broadcasts or advertisesbecause media companies arespecifically excepted from cover-age under the CGL policy. It is forthis reason that media companiesrequire a special professional liabil-ity policy. The media liability policy is an essential risk manage-ment component for companiesthat are in the business of gather-ing, creating or disseminating orig-inal or third party content –whether news, entertainment oradvertising. The public’s insatiableappetite for content has resulted ina proliferation of infringementclaims, especially copyrightinfringement. The best possiblemedia liability coverage providescoverage on an “open peril” or “allrisk” basis, yet also specificallyenumerates intellectual propertyperils – infringement of copyright,plagiarism, piracy, misappropria-tion of ideas or information,infringement or dilution of trade-mark, title, slogan, trade name,trade dress, service mark or servicename – so there is little room fordisagreement as to what the policycovers.
Specialty insurers provide anadvantage in the defense of intel-lectual property claims becausethey employ experienced claimscounsel, who provides meaningfulinsight and assistance in the
defense of the claim. In-housecounsel is unlikely to react like theproverbial deer in the headlightswhen presented with an intellectualproperty claim. Experienced insur-ance counsel is important becausehe or she will have input in respectto the selection of outside defensecounsel, as well as other importantdecisions that will impact theinsured. Knowledgeable insurancecounsel will also help the insuredmanage legal expense, which mayclimb well into the six figure rangeand beyond.
A media liability policy willalso provide broad definitions of“claim” and “loss,” which areimportant terms in the intellectualproperty arena. It is important forthe definition of “claim” to includea demand for equitable relief, suchas a request for a temporaryrestraining order or other injunctiverelief. If the definition of “claim”does not include equitable relief —but only a monetary demand — thecoverage agreements may not betriggered under the policy. Whilemost media policies will not coverthe cost of complying with aninjunction, i.e., the costs of recall,redistribution or correction, thesepolicies will provide coverage fordefense costs, which are often thelion’s share of the exposure.Statutory damages, multiplieddamages, and attorneys’ fees maybe awarded to a prevailing plaintiffin a copyright or trademark suit. It
is important for the definition of“loss” to clearly address the insur-er’s intent in respect to damagesthat are ordinarily part of a plain-tiff’s recovery.
There are certain standardexclusions that limit coverageunder media policies. As set forthearlier in this article, media policiesspecifically exclude coverage forpatent infringement. Media policiesalso exclude coverage for infringe-ment claims brought by musiclicensing associations, such as theAmerican Society of Composers,Authors and Publishers (ASCAP),Broadcast Music, Inc. (BMI) andothers, on behalf of the musicalartists, writers or composers theyrepresent. These entities collectlicensing fees on behalf of themusic creators they represent forpublic performances and distributeroyalties. The procurement of suchmusic licenses by radio broadcast-ers, in particular, is considered ausual and ordinary cost of doingbusiness that will not be assumedby the insurer.
It should also be noted thatmany media liability advertiserpolicies, i.e., policies for compa-nies that advertise their own prod-ucts or services, specificallyexclude coverage for trademarkinfringement. It is perceived as amoral hazard to provide trademarkcoverage for an advertiser who canprofit by creating confusion in the
INSURING...Continued from page 5
Intellectual Property Law Committee Newsletter Summer 2008
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marketplace as to the origin of itsgoods or services. Trademark cov-erage can be added back byendorsement for additional premi-um if the advertiser has a distinctbrand. For example, while a com-pany like McDonald’s, which is abrand leader, would not haveincentive to create confusion inthe fast food market, a new ham-burger establishment namedMcDoogle’s just might try to
capitalize on the well establishedMcDonald’s trademarks.
Because media policies containvarious exceptions to coverage, it iscrucial that media companiesemploy and practice sound loss pre-vention techniques to better insulatethemselves from expensive andt ime consuming l i t i ga t ion .Companies must be vigilant withrespect to procuring and complyingwith licenses for unoriginal content,
such as for music or film clips. Thecreation of original content shouldbe documented with a paper trailfrom inception. Companies alsoneed to establish a policy for deal-ing with unsolicited idea submis-sions from third parties to avoidcostly misappropriation claims.
Next month’s InsideTrack arti-cle will discuss the limited applica-bility of the defenses of “fair use”and “public domain.”
Copyright Act, but the producersand publishers of the documentarybelieve that the fair use privilege,codified in § 107 of the CopyrightAct, is much too uncertain to relyupon.3
Fair use is an equitable doctrinethat has been developed by thecourts to limit the strict applicationof the exclusive rights of copyrightowners in situations where the useis reasonable under the circum-stances. In the Copyright Act of1976, Congress codified this judi-cial doctrine in order to endorse itsimportance in the American copy-right scheme. On enacting the fairuse privilege in § 107, Congressstated that it did not intend to con-strict or expand the doctrine, butintended the courts to develop thedoctrine on a case-by-case basis.For purposes of guidance,
Congress enacted a Preamble thatprovided illustrative examples oftraditional fair uses, such as criti-cism, comment, news reporting,teaching and scholarship, but statedthat in any particular case, whetheror not a particular use would bedeemed fair must be determined byconsideration of, at a minimum,four statutory factors. These factors– the purpose and character of theuse, the nature of the copyrightedwork, the amount and substantialityof the portion used, and the effecton the potential market for or valueof the copyrighted work – wereviewed by Congress as the key con-siderations that had historicallybeen applied in the courts whenassessing fair use determinations.As codified, fair use may be a limiton all of the copyright owner’sexclusive rights and may be appli-cable for any type of copyrightedwork. The breadth of fair use andthe four-factor approach impart the
fair use privilege with great flexi-bility. But, because the factual situ-ations in which fair use assertionsmay arise are so varied, fair use isoften viewed as dysfunctionallyuncertain.
Traditionally, when gatekeepersdemanded more certainty than fairuse provided, there were fewoptions available to documentari-ans. They could seek a license touse the work in the film, but alicense for the use of a song in afilm, even a portion of a song, canbe prohibitively expensive, particu-larly if the documentary was madeon a limited budget.4 In somecases, documentarians could noteven get copyright owners torespond to their requests for licens-es, because of relatively smallerscale and their budget restrictions.Documentary filmmakers couldalso opt to delete the scene from thefilm, but such an option couldaffect the creative purpose if that
E&O INSURANCE...Continued from page 1
3 17 U.S.C. § 107 (1992): § 107. Limitations on exclusive rights: Fair use notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, includingsuch 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 (includingmultiple 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 usethe factors to be considered shall include —
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.4 Consider that the song “Happy Birthday” still receives licensing revenues of approximately $ 2 million per year for uses of this song. There are, however, many questions aboutwhether the work is still protected by copyright. See, Robert Brauneis, Copyright and the World’s Most Popular Song, forthcoming, available at:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1111624 (last visited 3/1/08). It has been claimed that Warner/Chappell may charge documentary filmmakers up to $10,000 foruse of the song in a film. See, e.g., http://en.wikipedia.org/wiki/Happy_Birthday_to_You (last visited 3/1/08).
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scene contributed to the expressivegoal of the filmmaker. Short of alicensing agreement or deletion of ascene, they could replace the copy-righted work with a public domainwork or create an original work inorder to avoid potential liability.However, such editing of realitycompromises the filmmaker’s goalof portraying events faithfully inorder for them to speak for themselves.
Given the inherent problemsraised by these alternative options,copyright can become an obstacleto the creativity of the filmmaker,which is ironic, because the verypurpose of copyright law is toencourage creativity, not to stifle it.The exclusive rights of copyrightowners are expressly limited by thefair use doctrine and other limita-tions in the Copyright Act, butsince fair use is determined by acase-by-case consideration of thestatutory factors, the outcome isinherently uncertain. It appears thatoften copyright owners and usersdisagree on the application of thefair use privilege. This appearanceof uncertainty is intensified by thevolatility of fair use cases in thecourts where it is not uncommonfor lower court decisions to bereversed on appeal. Faced withsuch judicial uncertainty, ProfessorLarry Lessig stated that “[f]air usein America simply means the rightto hire a lawyer to defend yourright to create.”5 Thus, despite thefact that a fair use of a copyrightedwork does not require permissionor payment of a license to the copy-right owner, and the potential
monetary liability that could resultfrom such an error, many viablefair uses of the copyrighted worksare abandoned.6 This is particularlytrue when risk-averse intermedi-aries, or “gatekeepers,” such aspublishers, broadcasters and dis-tributers, are injected into the cre-ative process. Given the legal andmonetary risk of reliance on fairuse, gatekeepers often simplyinstructed documentarians tolicense the use of other works orremove the works if they want thefilm to be publicly distributed orpublicly performed.
The growing fear of relying onfair use undermined the value ofthis important American doctrine.Fair use has been an integral part ofcopyright law for over 150 yearsand has served as an essential freespeech safeguard.7 If filmmakerscould not rely on fair use in somereasonable manner due to its uncer-tain nature, the creative productwould suffer and, as a result, sowould the benefit to the public. Buthow could this situation be remedied?
Typically, in situations of uncer-tainty, the answer has been toattempt to create negotiated guide-lines. For instance, during the lastmajor revision of the copyright lawthat led to the enactment of the1976 Copyright Act, Congressinstructed interested parties tonegotiate some safe harbors foreducational uses of copyrightedworks. In essence, copyright own-ers and educational groups werebrought together to hammer out a
compromise that both could livewith. The result was the Agreementon Guidelines for ClassroomCopyright in Not-For-ProfitEducational Institutions withRespect to Books and Periodicalsand the Guidelines for EducationalUses of Music.8 While these guide-lines provided some certainty, thenegotiated nature of their creationresulted in a relatively narrow safeharbor. Other attempts to createguidelines and consensus agree-ments on fair use failed.9 The lackof consensus limited the usefulnessand minimized reliance on manyguidelines as a functional safe har-bor. Attempting to assist documen-tarians with such a negotiated strat-egy would have been likely to leadto a similar fate: either the discus-sions would have broken down orthe guidelines would have been sonarrow and specific that they wouldnot flexibly serve the needs of doc-umentary filmmakers.
Faced with this fate, the Centerfor Social Media in the School ofCommunication at AmericanUniversity and the Program onIntellectual Property and the PublicInterest in the Washington Collegeof Law at American Universityfacilitated a new approach. Ratherthan develop guidelines in anadversarial negotiation with tradi-tional copyright owner representa-tives, documentarians and film-makers were brought together todevelop reasoned and reasonablepractices for themselves. The resultwas the Documentary Filmmakers’Statement of Best Practices in FairUse10 (the “Statement”). To many,
5 Lawrence Lessig, Free Culture: How Big Media Uses Technology to Lock the Law (2004).6 Some documentarians, broadcaster and other gatekeepers did utilize fair use to justify use of others’ works in films, but they typically did so quietly and were reluctant to pub-licly discuss their practices. This further led to the view that fair use could not be used, even if, in fact, it was being used by some.7 Eldred v. Ashcroft, 537 U.S. 186, 221 (2003).8 See U.S. Copyright Office Circular 21, p.7 – 10, available at: http://www.copyright.gov/circs/circ21.pdf .9 See, e.g., proposed guidelines for multimedia (http://www.utsystem.edu/ogc/INTELLECTUALPROPERTY/ccmcguid.htm) under the Conference on Fair Use (http://www.utsys-tem.edu/ogc/INTELLECTUALPROPERTY/confu.htm) that was generally regarded as a dismal failure with little consensus achieved.10 The full Statement is available at: http://centerforsocialmedia.org/rock/backgrounddocs/bestpractices.pdf. Related material is available on the Center for Social Media websiteat: http://www.centerforsocialmedia.org/resources/publications/statement_of_best_practices_in_fair_use/.
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this was a radical concept. Howcould a group of “users” be expect-ed to achieve a moderate and fairresult? Why wouldn’t their desirefor broad use lead to an extremeposition?
Despite these fears and to thesurprise of many, the experimentworked. It succeeded for a numberof reasons. For one thing, docu-mentarians are not merely users.Documentary filmmakers are cre-ators who care deeply about theworks they create. When excessesarose in the discussion of best prac-tices, filmmakers became awarethat whatever best practices weredeveloped for the use of others’works would equally apply to othercreators’ use of their documen-taries. This twist on the GoldenRule – use from others only to theextent that you would have yourown work used by others – was sig-nificant in moderating excesses.Additionally, if these best practiceswere going to have any value, theywould have to be generally per-ceived and accepted as reasonable.The goal of best practices was forothers, and ultimately the courts, toagree that they represented rea-soned and reasonable custom andpractice within the documentaryfilmmaking community. In order tosucceed, the best practices had tobe objectively reasonable.
Another implicit basis for thebest practices was that not all fairuses need be controversial. Thestatement that fair use is nothingmore than the right to hire a lawyeris inherently wrong. Fair use isused by individuals, businesses,
and technologists every day. Thevast majority of fair uses are neverquestioned or litigated. The trans-parent nature of fair use in ourcopyright system goes largelyunnoticed, whereas it is the unusu-al situations where fair use goes totrial and receives wide publicity.But these hard cases, involving dif-ficult balancing of equitable inter-ests, are not the heart of fair use. Iffair use was eliminated, we wouldquickly realize just how importantit is to the everyday working of ourcopyright system and our society.The Statement focused on princi-ples of objective and transforma-tive social value. The principlesestablished, and the illustration ofthe principles revealed, that someunauthorized uses of copyrightedworks under certain circumstancescan be generally accepted. Not all fair uses are intrinsically controversial.
What followed the developmentof the best practices surprisedeveryone: rapid change. Mostexpected a grassroots acceptance ofthe principles having a positiveeffect among documentary film-makers. It was also expected that“courts would respect the views ofresponsible professionals aboutwhat kinds of uses are fair in theirarea of practice.”11 The practicesleveraged what had already begunin the courts – the judicial trendtoward focusing on transformativeuses as a determinative factor in thefair use analysis – and built uponthat legal foundation for the practi-cal benefit of documentary film-makers. It enabled documentarians
to more confidently assert reason-able uses and thereby reduce unrea-sonable clearance costs or artisticcensorship. But the Statement didnot only affect documentary film-makers.
Quickly after their release, gate-keepers also began to embrace doc-umentarians’ uses based on theStatement. Three films that justi-fied fair uses based on theStatement were shown at theSundance Film Festival.12 As aresult of the Sundance screenings,all three received television screen-ings.13 Filmmakers were also ableto negotiate lower clearance costsusing the Statement as leverage.14
Television programmers, such asWGBH, use the Statement and pro-vide it to their producers.15 But per-haps most importantly, the insur-ance industry joined in as well.16
As the ultimate, risk-averse gate-keeper, the insurers’ acceptance ofthe Statement as prudent customand practice led the way to wide-spread and rapid acceptance in themarketplace.
Before the Statement, it was vir-tually impossible to distribute orshow a film without clearing everywork used within the film and thenobtaining errors and omissions(“E&O”) insurance to indemnifytheatres, broadcasters, and distribu-tors.17 In less than two years afterthe release of the Statement inNovember 2005, four insurancecompanies announced programs tocover fair use claims. Although anumber of insurers had been will-ing to insure films on a case-by-case basis, because following the
11 Pat Aufderheide and Peter Jaszi, Fair Use and Best Practices: Surprising Success, Intellectual Property Today (October 2007) available at:http://www.centerforsocialmedia.org/files/pdf/IPTodaySuccess.pdf (last visited 4/2/08). See also Peter Jaszi, Motion Pictures and Copyright Discipline, forthcoming in the Utah LawReview and the Oxford Handbook of Film and Media Studies and available at: http://www.centerforsocialmedia.org/files/pdf/fairuse_motionpictures.pdf. 12 Ibid.13 Ibid.14 Ibid.15 Ibid.16 William McGeveran, Insurers Tune in to Fair Use Best Practices, Info/Law, http://blogs.law.harvard.edu/infolaw/2007/02/13/insurers-tune-in-to-fair-use-best-practices. 17 Ibid.
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Statement dramatically reducedrisk, these insurance programswere an enormous breakthrough inbroad market acceptance. AsProfessor Larry Lessig stated:
“This is a huge breakthrough.As many of us have beenarguing, the real constraint offair use comes not from thecourts, but from those in themarket who are trying toavoid any risk of copyrightexposure. This market-basedsolution will now clear theway for many films to bereleased which before couldnot secure insurance. And weare eager to use the inevitablecases that will emerge to solidify the fantasticStatement of Best Practicesdeveloped by the Center forSocial Media.”18
What started as quiet accept-ance and coverage for particularfilms gave way to E&O insurers’express willingness to offer insur-ance for fair use claims upon a sat-isfactory legal opinion letter by alawyer. One insurer, MediaPro,made a special arrangement withLos Angeles lawyers, such asMichael Donaldson, and theStanford University’s Fair UseProject for pro bono or reduced feerepresentation in case a law suitarises, with MediaPro agreeing topay legal costs if the defense fails.19
Other insurance companies requireonly a legal opinion letter that thefair use meets the standards of theStatement. Although the insurersdo not have standard pricing, thepresence of multiple insurers in thefair use market creates a competi-t ive environment in which
documentarians can negotiate moreeffectively with insurers as well ascopyright owners.20
This rapid market acceptance ofthe Statement has been a boon notonly to documentary filmmakers(and thereby the public), but it hasalso been the impetus for a host ofsimilar projects in support of othercreators and culturally significantusers. The Statement blazed a trailthat others now seek to follow andbuild upon. Projects have begun toaddress fair use in user-generatedcontent sites, such as YouTube.21
Another project was begun toaddress the use of copyrighted worksby teachers of media literacy and theneed to inform teachers of reason-able fair use practices.22 These arebut a few of the examples of a move-ment still in its nascent stage. TheStatement proved that fair use canserve a vital role in our society andthat its flexibility need not be animpediment to its use, but is in factits greatest asset. The DocumentaryFilmmakers’ Statement of BestPractices of Fair Use also provided amodel for other creators to follow inthe pursuit of reasoned and reason-able reliance on fair use.
Documentary Filmmakers’Statement of BEST PRACTICESIN FAIR USE
PREAMBLE
This Statement of Best Practicesin Fair Use is necessary becausedocumentary filmmakers havefound themselves, over the lastdecade, increasingly constrained bydemands to clear rights for copy-righted material. Creators in otherdisciplines do not face suchdemands to the same extent, and
documentarians in earlier eras expe-rienced them less often and lessintensely. Today, however, docu-mentarians believe that their abilityto communicate effectively is beingrestricted by an overly rigidapproach to copyright compliance,and that the public suffers as aresult. The knowledge and perspec-tives that documentarians can pro-vide are compromised by their needto select only the material thatcopyright holders approve andmake available at reasonable prices.
At the same time, documentari-ans are themselves copyright hold-ers, whose businesses depend onthe willingness of others to honortheir claims as copyright owners.They do not countenance exploita-tive or abusive applications of fairuse, which might impair their ownbusinesses or betray their work.
Therefore, documentariansthrough their professional organi-zations, supported by an advisoryboard of copyright experts, nowoffer the statement that follows.
BACKGROUND
“Fair use” is a key part of thesocial bargain at the heart of copy-right law, in which as a society weconcede certain limited individualproperty rights to ensure the bene-fits of creativity to a living cul-ture. We have chosen to encour-age creators by rewarding theirefforts with copyright. To promotenew cultural production, however,it also is important to give othercreators opportunities to usecopyrighted material when theyare making something new thatincorporates or depends on suchmaterial. Unless such uses are
18 Larry Lessig, Major News: Fair Use and Film, http://lessig.org/blog/2007/02/major_news_fair_use_and_film.html. 19 Pat Aufderheide and Peter Jaszi at b.20 Ibid.21 Recut, Reframe, Recycle, http://www.centerforsocialmedia.org/resources/publications/recut_reframe_recycle/ and The Good, The Bad, and The Confusing: User-GeneratedVideo Creators on Copyright: http://www.centerforsocialmedia.org/files/pdf/good_bad_confusing.pdf. 22 The Cost of Copyright Confusion for Media Literacy,
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possible, the whole society maylose important expressions justbecause one person is arbitrary orgreedy. So copyright law has fea-tures that permit quotations fromcopyrighted works to be madewithout permission, under certainconditions.
Fair use is the most important ofthese features. It has been animportant part of copyright law formore than 150 years. Where itapplies, fair use is a right, not amere privilege. In fact, as theSupreme Court has pointed out, fairuse helps reconcile copyright lawwith the First Amendment. Ascopyright protects more works forlonger periods, it impinges moreand more directly on creative prac-tice. As a result, fair use is moreimportant today than ever before.
Creators benefit from the factthat the copyright law does notexactly specify how to apply fairuse. Creative needs and practicesdiffer with the field, with technolo-gy, and with time. Instead, lawyersand judges decide whether an unli-censed use of copyrighted materialis “fair” according to a “rule of rea-son.” This means taking all thefacts and circumstances intoaccount to decide if an unlicenseduse of copyright material generatessocial or cultural benefits that aregreater than the costs it imposes onthe copyright owner. Fair use isflexible; it is not uncertain or unre-liable. In fact, for any particularfield of critical or creative activity,such as documentary filmmaking,lawyers and judges consider pro-fessional expectations and practicein assessing what is “fair” withinthe field. In weighing the balance atthe heart of fair use analysis, courtsemploy a four-part test, set out inthe Copyright Act. In doing so, theyreturn again and again to two keyquestions:
• Did the unlicensed use“transform” the materialtaken from the copyrightedwork by using it for a differ-ent purpose than the original,or did it just repeat the workfor the same intent and valueas the original?
• Was the amount and natureof material taken appropriatein light of the nature of thecopyrighted work and of theuse?
Among other things, both ques-tions address whether the use willcause excessive economic harm tothe copyright owner.
If the answers to these twoquestions are affirmative, a court islikely to find a use fair. Becausethat is true, such a use is unlikely tobe challenged in the first place.Documentary films usually satisfythe “transformativeness” standardeasily, because copyrighted materi-al is typically used in a context dif-ferent from that in which it origi-nally appeared. Likewise, docu-mentarians typically quote onlyshort and isolated portions of copy-righted works. Thus, judges gener-ally have honored documentarians’claims of fair use in the rareinstances where they have beenchallenged in court.
Another consideration underliesand influences the way in whichthese questions are analyzed:
Whether the user acted rea-sonably and in good faith, inlight of general practice inhis or her particular field. Inthe future, filmmakers’ abili-ty to rely on fair use will befurther enhanced by theStatement of Best Practicesin Fair Use that follows. This statement serves as evi-dence of commonly held
understandings in documen-tary practice and helps todemonstrate the reasonable-ness of uses that fall withinits principles.
Documentarians find other cre-ator groups’ reliance on fair useheartening. For instance, historiansregularly quote both other histori-ans’ writings and textual sources;artists reinterpret and critique exist-ing images (rather than merelyappropriating them); scholars illus-trate cultural commentary with tex-tual, visual, and musical examples.Equally important is the example ofthe news media: fair use is healthyand vigorous in daily broadcast tel-evision, where references to popu-lar films, classic TV programs,archival images, and popular songsare constant and routinely unlicensed.
The statement that followsdescribes the actual practice ofmany documentarians, joined withthe views of others about whatwould be appropriate if they werefree to follow their own under-standing of good practice. In mak-ing films for TV, cable, and the-aters, documentarians who assertfair use often meet with resistance.All too frequently they are told(often by nonlawyers) that theymust clear “everything” if theywant their work to reach the public.Even so, some documentarianshave not been intimidated.Unfortunately, until now the docu-mentarians who depend on fair usegenerally have done so quietly, inorder to avoid undesired attention.In this statement, documentariansare exercising their free speechrights—and their rights undercopyright—in the open.
This statement does not addressthe problems that result from lackof access to archival material that is
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best quality or the only copy. Thestatement applies to situationswhere the filmmaker has readyaccess to the necessary material insome form.
The statement also does notdirectly address the problem of“orphan works”—works presum-ably copyrighted but whose ownerscannot be located with reasonableeffort. Generally, it should be possi-ble to make fair use of orphanworks on the same basis as clearlysourced ones. Sometimes, however,filmmakers also may wish to useorphan works in ways that exceedfair use. A more comprehensivesolution for orphan works may soonbe provided through an initiativespearheaded by the U.S. CopyrightOffice (for more information, seewww.copyright.gov/orphan).
This statement finally does notconcern “free use”—situationswhen documentarians never needto clear rights. Examples of typesof free use are available in docu-ments at www.centerforsocialme-dia.org/fairuse.htm.
THE STATEMENT
This statement recognizes thatdocumentary filmmakers mustchoose whether or not to rely onfair use when their projects involvethe use of copyrighted material. Itis organized around four classes ofsituations that they confront regu-larly in practice. (These four class-es do not exhaust all the likely situ-ations where fair use might apply;they reflect the most common kindsof situations that documentariansidentified at this point.) In eachcase, a general principle about theapplicability of fair use is asserted,followed by qualifications that mayaffect individual cases.
The four classes of situations,with their informing principles andlimitations:
ONE: EMPLOYING COPY-RIGHTED MATERIAL AS THEOBJECT OF SOCIAL, POLITI-CAL, OR CULTURAL CRITIQUE
DESCRIPTION: This class ofuses involves situations in whichdocumentarians engage in mediacritique, whether of text, image, orsound works. In these cases, docu-mentarians hold the specific copy-righted work up for critical analysis.
PRINCIPLE: Such uses aregenerally permissible as an exer-cise of documentarians’ fair userights. This is analogous to the waythat (for example) a newspapermight review a new book and quotefrom it by way of illustration.Indeed, this activity is at the verycore of the fair use doctrine as asafeguard for freedom of expres-sion. So long as the filmmaker ana-lyzes or comments on the workitself, the means may vary. Bothdirect commentary and parody, forexample, function as forms of cri-tique. Where copyrighted materialis used for a critical purpose, thefact that the critique itself may doeconomic damage to the market forthe quoted work (as a negativebook review could) is irrelevant. Inorder to qualify as fair use, the usemay be as extensive as is necessaryto make the point, permitting theviewer to fully grasp the criticismor analysis.
LIMITATIONS: There is onegeneral qualification to the princi-ple just stated. The use should notbe so extensive or pervasive that itceases to function as critique andbecomes, instead, a way of satisfy-ing the audience’s taste for thething (or the kind of thing) cri-tiqued. In other words, the criticaluse should not become a marketsubstitute for the work (or otherworks like it).
TWO: QUOTING COPY-RIGHTED WORKS OF POPU-LAR CULTURE TO ILLUS-TRATE AN ARGUMENT ORPOINT
DESCRIPTION: Here the concern is with material (again ofwhatever kind) that is quoted notbecause it is, in itself, the object ofcritique but because it aptly illus-trates some argument or point that afilmmaker is developing—as clipsfrom fiction films might be used(for example) to demonstratechanging American attitudestoward race.
PRINCIPLE: Once again, thissort of quotation should generallybe considered as fair use. The pos-sibility that the quotes might enter-tain and engage an audience as wellas illustrate a filmmaker’s argu-ment takes nothing away from thefair use claim. Works of popularculture typically have illustrativepower, and in analogous situations,writers in print media do not hesi-tate to use illustrative quotations(both words and images). In docu-mentary filmmaking, such a privi-leged use will be both subordinateto the larger intellectual or artisticpurpose of the documentary andimportant to its realization. Thefilmmaker is not presenting thequoted material for its original pur-pose but harnessing it for a newone. This is an attempt to add sig-nificant new value, not a form of“free riding” —the mere exploita-tion of existing value.
LIMITATIONS: Documen-tarians will be best positioned toassert fair use claims if they assurethat:
• the material is properlyattributed, either through anaccompanying on-screenidentification or a mention inthe film’s final credits;
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• to the extent possible andappropriate, quotations aredrawn from a range of differ-ent sources;
• each quotation (howevermany may be employed tocreate an overall pattern ofillustrations) is no longerthan is necessary to achievethe intended effect;
• the quoted material is notemployed merely in order toavoid the cost or inconven-ience of shooting equivalentfootage.
T H R E E : C A P T U R I N GCOPYRIGHTED MEDIA CON-TENT IN THE PROCESS OFFILMING SOMETHING ELSE
DESCRIPTION: Document-arians often record copyrightedsounds and images when they arefilming sequences in real-life set-tings. Common examples are thetext of a poster on a wall, musicplaying on a radio, and televisionprogramming heard (perhaps seen)in the background. In the context ofthe documentary, the incidentallycaptured material is an integral partof the ordinary reality being docu-mented. Only by altering and thusfalsifying the reality they film—such as telling subjects to turn offthe radio, take down a poster, orturn off the TV—could documen-tarians avoid this.
PRINCIPLE: Fair use shouldprotect documentary filmmakersfrom being forced to falsify reality.Where a sound or image has beencaptured incidentally and withoutprevision, as part of an unstagedscene, it should be permissible touse it, to a reasonable extent, aspart of the final version of the film.Any other rule would be inconsis-tent with the documentary practiceitself and with the values of the
disciplines (such as criticism, histor-ical analysis, and journalism) thatinform reality-based filmmaking.
LIMITATIONS: Consistentwith the rationale for treating suchcaptured media uses as fair ones,documentarians should take carethat:
• particular media contentplayed or displayed in ascene being filmed was notrequested or directed;
• incidentally captured mediacontent included in the finalversion of the film is integralto the scene/action;
• the content is properly attributed;
• the scene has not beenincluded primarily to exploitthe incidentally capturedcontent in its own right, andthe captured content doesnot constitute the scene’sprimary focus of interest;
• in the case of music, the con-tent does not function as asubstitute for a synch track(as it might, for example, ifthe sequence containing thecaptured music were cut onits beat, or if the music wereused after the filmmaker has cut away to anothersequence).
DESCRIPTION: In manycases the best (or even the only)effective way to tell a particularhistorical story or make a historical point is to make selec-tive use of words that were spoken during the events in ques-tion, music that was associatedwith the events, or photographsand films that were taken at that time. In many cases, suchmaterial is available, on reason-able terms, under license. On
occasion, however, the licensingsystem breaks down.
PRINCIPLE: Given the socialand educational importance of thedocumentary medium, fair useshould apply in some instances ofthis kind. To conclude otherwisewould be to deny the potential offilmmaking to represent history tonew generations of citizens.
FOUR: USING COPYRIGHT-ED MATERIAL IN A HISTORI-CAL SEQUENCE
DESCRIPTION: In manycases the best (or even the only)effective way to tell a particularhistorical story or make a historicalpoint is to make selective use ofwords that were spoken during theevents in question, music that wasassociated with the events, or pho-tographs and films that were takenat the time. In many cases, suchmaterial is available, on reasonableterms, under license. On occasion,however, the licensing systembreaks down.
PRINCIPLE: Given thesocial and educational importanceof the documentary medium, fairuse should apply in someinstances of this kind. To con-clude otherwise would be to denythe potential of filmmaking torepresent history to new genera-tions of citizens. Properly condi-tioned, this variety of fair use iscritical to fulfilling the mission ofcopyright. But unless limited, theprinciple also can defeat the legit-imate interests of copyright owners—including documentaryfilmmakers themselves.
LIMITATIONS: To support aclaim that a use of this kind is fair,the documentarian should be ableto show that:
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• the film project was notspecifically designed aroundthe material in question;
• the material serves a criticalillustrative function, and nosuitable substitute exists(that is, a substitute with t h e s a m e g e n e r a l characteristics);
• the material cannot belicensed, or the material canbe licensed only on termsthat are excessive relative toa reasonable budget for thefilm in question;
• the use is no more extensivethan is necessary to make thepoint for which the materialhas been selected;
• the film project does not relypredominantly or dispropor-tionately on any singlesource for illustrative clips;
• the copyright owner of thematerial used is properlyidentified.
FAIR USE IN OTHER SITU-ATIONS FACED BY DOCU-MENTARIANS
The four principles just stateddo not exhaust the scope of fair usefor documentary filmmakers.Inevitably, actual filmmaking prac-tice will give rise to situations thatare hybrids of those describedabove or that simply have not beenanticipated. In considering such situations, however, filmmakers
should be guided by the same basicvalues of fairness, proportionality,and reasonableness that inform thisstatement. Where they are confi-dent that a contemplated quotationof copyrighted material falls withinfair use, they should claim fair use.
SOME COMMON MISUN-DERSTANDINGS ABOUT FAIRUSE
As already indicated, two goalsof the preceding statement are toencourage documentarians to relyon fair use where it is appropriateand to help persuade the peoplewho insure, distribute, and pro-gram their work to accept and sup-port documentarians in thesechoices. Some common errorsabout fair use and its applicabilitymay stand in the way of accom-plishing these goals. Briefly, then,here are some correctives to thesemisunderstandings:
• Fair use need not be exclu-sively highminded or “edu-c a t i o n a l ” i n n a t u re .Although nonprofit or aca-demic uses often have goodclaims to be considered“fair,” they are not the onlyones. A new work can be“commercial”—even highlycommercial —in intent andeffect and still invoke fairuse. Most of the cases inwhich courts have foundunlicensed uses of copy-righted works to be fair haveinvolved projects designed
to make money, includingsome that actually have.
• Fair use doesn’t have to beboring. A use is no less like-ly to qualify as a fair onebecause the film in which itoccurs is effective in attract-ing and holding an audience.If a use otherwise satisfiesthe principles and limitationsdescribed in the Statement ofBest Practices in Fair Use,the fact that it is entertainingor emotionally engagingshould be irrelevant to theanalysis.
• A documentarian’s failedeffort to clear rights doesn’tinhibit his or her ability toclaim fair use with respect tothe use in question.Everyone likes to avoid con-flict and reduce uncertainty.Often, there will be goodreasons to seek permissionsin situations where they maynot literally be required. Ingeneral, then, it never hurtsto try, and it actually canhelp demonstrate the film-maker’s good faith. Andsometimes (as in connectionwith Principle Four) it can becritically important.
Center for Social MediaAmerican University4400 Massachusetts Avenue, NWWashington, DC 20016-8080202-885-3107socialmedia@american.eduwww.centerforsocialmedia.org/fairuse.htm
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Intellectual Property Law Committee Newsletter Summer 2008
18
2008-2009 TIPS CALENDARAugust7-12 ABA Annual Meeting Waldorf~Astoria Hotel
New York, NY
September30 – Oct 5 TIPS Section Fall Meeting The Westin Resort
Hilton Head IslandHilton HeadIsland, SC
November6-7 Fidelity and Surety Law Committee Renaissance Harbor Place
Fall CLE Program Baltimore, MD
2009
January22-23 Fidelity and Surety Law Committee Waldorf~Astoria
Midwinter Meeting New York, NY
February11-17 ABA Midyear Meeting TBD
Boston, MA
26-28 2009 Insurance Coverage Litigation Millennium BiltmoreCommittee Meeting Hotel
Los Angeles, CA
March5-6 Transportation MegaConference IX Sheraton New Orleans
New Orleans, LA
April2-3 Emerging Issues Motor Vehicle Litigation Arizona Biltmore
Phoenix, AZ