99 F.3d 1381 (6th Cir. 1996), 94-1778, Princeton University Press v. Michigan Document Services, Inc.

Docket Nº:94-1778.
Citation:99 F.3d 1381
Party Name:40 U.S.P.Q.2d 1641 PRINCETON UNIVERSITY PRESS, Macmillan, Inc., and St. Martin's Press, Inc., Plaintiffs-Appellees, v. MICHIGAN DOCUMENT SERVICES, INC., and James M. Smith, Defendants-Appellants.
Case Date:November 08, 1996
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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99 F.3d 1381 (6th Cir. 1996)

40 U.S.P.Q.2d 1641

PRINCETON UNIVERSITY PRESS, Macmillan, Inc., and St.

Martin's Press, Inc., Plaintiffs-Appellees,

v.

MICHIGAN DOCUMENT SERVICES, INC., and James M. Smith,

Defendants-Appellants.

No. 94-1778.

United States Court of Appeals, Sixth Circuit

November 8, 1996

Reargued June 12, 1996.

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[Copyrighted Material Omitted]

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J. Michael Huget, James E. Stewart, Butzel Long, Detroit, MI, Ronald S. Rauchberg (reargued and rebriefed), Herman L. Goldsmith, Proskauer, Rose, Goetz & Mendelsohn, New York City, for Princeton University Press.

J. Michael Huget, Butzel Long, Detroit, MI, Ronald S. Rauchberg, Herman L. Goldsmith, Proskauer, Rose, Goetz & Mendelsohn, New York City, Jon A. Baumgarten, Proskauer, Rose, Goetz & Mendelsohn, Washington, DC, for MacMillan, Inc., St. Martin's Press, Inc.

David G. Chardavoyne, Louise A. Marcotty, Bodman, Long & Dahling, Detroit, MI, Susan M. Kornfield (reargued and rebriefed), Lydia P. Loren, Bodman, Longley & Dahling, Ann Arbor, MI, for Michigan Document Services, Inc., James M. Smith.

Lyman Ray Patterson, University of Georgia School of Law, Athens, GA, for amicus curiae Concerned Professors of Copyright Law.

R. Bruce Rich and Elizabeth Stotland Weiswasser (briefed), Weil, Gotshal & Manges, New York City, for amicus curiae Copyright Clearance Center, Inc.

Michael E. Hobbs, Attorney General of Georgia, Atlanta, GA, for amicus curiae Attorney General of State of Georgia, National School Boards Association, Georgia School Boards Association, California School Boards Association, American Association of School Administrators.

Raymond J. Kelly, Jr. (briefed), Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for amicus curiae Follett Corp.

Stephen E. Gillen (briefed), Frost & Jacobs, Cincinnati, OH, for amicus curiae National Music Publisher's Association, Inc., National Association of College Stores, Inc.

Before MARTIN, Chief Judge; MERRITT, KENNEDY, NELSON, RYAN, BOGGS, NORRIS, SUHRHEINRICH, SILER, BATCHELDER, DAUGHTREY, MOORE, and COLE, Circuit Judges.

NELSON, J., delivered the opinion of the court, in which KENNEDY, BOGGS, NORRIS, SUHRHEINRICH, SILER, BATCHELDER and COLE, JJ., joined. MARTIN, C.J. (pp. 1393-94), MERRITT, J. (pp. 1394-97), and RYAN, J. (pp. 1397-1412), delivered separate dissenting opinions, with Judge DAUGHTREY joining in Judge MERRITT'S and Judge RYAN'S dissents, and Judge MOORE joining in Judge MERRITT'S dissent.

DAVID A. NELSON, Circuit Judge.

This is a copyright infringement case. The corporate defendant, Michigan Document Services, Inc., is a commercial copyshop that reproduced substantial segments of copyrighted works of scholarship, bound the copies into "coursepacks," and sold the coursepacks to students for use in fulfilling reading assignments given by professors at the University of Michigan. The copyshop acted without permission from the copyright holders, and the main question presented is whether the "fair use" doctrine codified at 17 U.S.C. § 107 obviated the need to obtain such permission.

Answering this question "no," and finding the infringement willful, the district court entered a summary judgment order in which the copyright holders were granted equitable relief and were awarded damages that may have been enhanced for willfulness. Princeton Univ. Press v. Michigan Document Servs., Inc., 855 F.Supp. 905 (E.D.Mich.1994). A three-judge panel of this court reversed the judgment on appeal, but a majority of the active judges of the court subsequently voted to rehear the case en banc. The appeal has now been argued before the full court.

We agree with the district court that the defendants' commercial exploitation of the copyrighted materials did not constitute fair use, and we shall affirm that branch of the district court's judgment. We believe that the district court erred in its finding of willfulness, however, and we shall vacate the damages award because of its possible linkage to that finding.

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I

Thanks to relatively recent advances in technology, the coursepack--an artifact largely unknown to college students when the author of this opinion was an undergraduate--has become almost as ubiquitous at American colleges and universities as the conventional textbook. From the standpoint of the professor responsible for developing and teaching a particular course, the availability of coursepacks has an obvious advantage; by selecting readings from a variety of sources, the professor can create what amounts to an anthology perfectly tailored to the course the professor wants to present.

The physical production of coursepacks is typically handled by a commercial copyshop. The professor gives the copyshop the materials of which the coursepack is to be made up, and the copyshop does the rest. Adding a cover page and a table of contents, perhaps, the copyshop runs off as many sets as are needed, does the necessary binding, and sells the finished product to the professor's students.

Ann Arbor, the home of the University of Michigan, is also home to several copyshops. Among them is defendant Michigan Document Services (MDS), a corporation owned by defendant James Smith. We are told that MDS differs from most, if not all, of its competitors in at least one important way: it does not request permission from, nor does it pay agreed royalties to, copyright owners.

Mr. Smith has been something of a crusader against the system under which his competitors have been paying agreed royalties, or "permission fees" as they are known in the trade. The story begins in March of 1991, when Judge Constance Baker Motley, of the United States District Court for the Southern District of New York, decided the first reported case involving the copyright implications of educational coursepacks. See Basic Books, Inc. v. Kinko's Graphics Corp., 758 F.Supp. 1522 (S.D.N.Y.1991), holding that a Kinko's copyshop had violated the copyright statute by creating and selling coursepacks without permission from the publishing houses that held the copyrights. After Kinko's, we are told, many copyshops that had not previously requested permission from copyright holders began to obtain such permission. Mr. Smith chose not to do so. He consulted an attorney, and the attorney apparently advised him that while it was "risky" not to obtain permission, there were flaws in the Kinko 's decision. Mr. Smith also undertook his own study of the fair use doctrine, reading what he could find on this subject in a law library. He ultimately concluded that the Kinko's case had been wrongly decided, and he publicized this conclusion through speeches, writings, and advertisements. His advertisements stressed that professors whose students purchased his coursepacks would not have to worry about delays attendant upon obtaining permission from publishers.

Not surprisingly, Mr. Smith attracted the attention of the publishing industry. Three publishers--Princeton University Press, MacMillan, Inc., and St. Martin's Press, Inc.--eventually brought the present suit against Mr. Smith and his corporation.

Each of the plaintiff publishers maintains a department that processes requests for permission to reproduce portions of copyrighted works. (In addition, copyshops may request such permission through the Copyright Clearance Center, a national clearinghouse.) Macmillan and St. Martin's, both of which are for-profit companies, claim that they generally respond within two weeks to requests for permission to make copies for classroom use. Princeton, a non-profit organization, claims to respond within two to four weeks. Mr. Smith has not put these claims to the test, and he has not paid permission fees.

The plaintiffs allege infringement of the copyrights on six different works that were excerpted without permission. The works in question, and the statistics on the magnitude of the excerpts, are as follows: Nancy J. Weiss, Farewell to the Party of Lincoln: Black Politics in the Age of FDR (95 pages copied, representing 30 percent of the entire book); Walter Lippmann, Public Opinion (45 pages copied, representing 18 percent of the whole); Robert E. Layne, Political Ideology: Why the American Common Man Believes What He Does (78 pages, 16 percent); Roger Brown, Social Psychology (52 pages, 8 percent);

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Milton Rokeach, The Nature of Human Values (77 pages, 18 percent); James S. Olson and Randy Roberts, Where the Domino Fell, America and Vietnam, 1945-1950 (17 pages, 5 percent). The extent of the copying is undisputed, and the questions presented by the case appear to be purely legal in nature.

II

The fair use doctrine, which creates an exception to the copyright monopoly, "permits [and requires] courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577, 114 S.Ct. 1164, 1170, 127 L.Ed.2d 500 (1994), quoting Stewart v. Abend, 495 U.S. 207, 236, 110 S.Ct. 1750, 1768, 109 L.Ed.2d 184 (1990). Initially developed by the courts, the doctrine was codified at 17 U.S.C. § 107 in 1976. Congress used the following formulation in Section 107:

"[T]he fair use of a copyrighted work, including such use by reproduction in copies ... 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--

(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...

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