First Amendment based copyright misuse.

• Author: Olson, David S.

ABSTRACT

We are at a crossroads with respect to the underdeveloped equitable defense of copyright misuse. The defense may go the way of its sibling, antitrust-based patent misuse, which seems to be in a state of inevitable decline. Or--if judges accept the proposal of this Article--courts could reinvigorate the copyright misuse defense to better protect First Amendment speech that is guaranteed by statute, but that is often chilled by copyright holders misusing their copyrights to control others' speech.

The Copyright Act serves First Amendment interests by encouraging authors to create works. But copyright law can also discourage the creation of new works by preventing subsequent creators from using copyrighted work to make their own, new speech. Courts have long recognized this inherent tension and have also recognized that the conflict should sometimes be decided in favor of allowing a subsequent speaker the right to make unauthorized use of others' copyrighted works. Accordingly, courts created, and Congress codified, the fair use defense to copyright infringement, which allows unauthorized use of copyrighted works under certain circumstances that encourage speech and creation of transformative works. The problem with fair use, however, is that the informational uncertainties and transaction costs of litigating the defense make the fair use right unavailable to many as a practical matter. Subsequent creators are left open to intimidation by copyright holders threatening infringement suits.

By decoupling the copyright misuse defense from its basis in antitrust principles and basing it instead in First Amendment speech principles, the legal protections for fair use can be shifted from theoretical rights to practical rights for many. Copyright misuse has two deterrent features that will allow fair use as a practical right. First, a copyright holder's misuse of its copyrights against anyone can be used to prove the defense of misuse. Second, once misuse is found, the copyright owner loses its ability to enforce its copyright against everyone, at least until the misuse is cured. Thus, by defining as copyright misuse the unjustified chilling of speech that some copyright holders perpetrate, the misuse defense will encourage important speech rights that are currently underprotected.

TABLE OF CONTENTS INTRODUCTION I. THE (MIS)USE OF COPYRIGHT To CHILL SPEECH AND INQUIRY II. THE FAILURE OF FMR USE AS A PRACTICALLY AVAILABLE RIGHT III. SURVEY OF PREVIOUS PROPOSALS TO ENABLE FMR USE RIGHTS IV. HISTORY AND DEVELOPMENT OF COPYRIGHT MISUSE A. Copyright Misuse's Growth out of Antitrust-Based Patent Misuse B. Critiques of Patent and Copyright Misuse Based in Antitrust 1. Critique One: Antitrust Interests Are Better Vindicated Directly Through Antitrust Claims 2. Critique Two: Patent Uses that Courts Have Ruled Anticompetitive in the Past Actually May Be Harmless or Even Procompetitive C. The Decline of Misuse Defenses Based on Antitrust Principles? V. THE CASE FOR BASING COPYRIGHT MISUSE ON FIRST AMENDMENT SPEECH INTERESTS CONCLUSION INTRODUCTION

We are at a crossroads with respect to the underdeveloped equitable defense of copyright misuse. The defense may go the way of its sibling, antitrust-based patent misuse, which seems to be in a state of inevitable decline. Or--if judges accept the proposal of this Article--courts could reinvigorate the copyright misuse defense to make it serve as a protector of statutorily guaranteed First Amendment speech.

The Copyright Act serves First Amendment interests by encouraging authors to create works. The Copyright Act grants authors exclusive rights to their works, and thus, if they create works that the public is willing to buy, they can profit from their creations. But copyright law can also deter speech, and discourage the creation of new works, by preventing subsequent creators from using copyrighted work to make their own, new speech. (1) Courts have long recognized this inherent tension and have also recognized that the conflict should sometimes be decided in favor of allowing a subsequent use of another's copyrighted work. For instance, there is a strong First Amendment interest in allowing rival politicians to quote their opponents' speeches without permission when campaigning for office. Similarly strong First Amendment interests exist in critique or commentary on books, articles, plays, music, visual art, and other forms of expression, as well as in the quotations of historical and literary figures in works analyzing such figures. Any effective commentary, critique, or scholarship will generally need to quote the works being analyzed. Courts recognized early on, however, that if copyright owners could prohibit quotations from their works by critics and commentators, only favorable commentators would ever be given permission to quote from copyrighted works, and free speech would be curtailed. (2)

Courts created, and Congress later codified, the fair use defense to copyright infringement because of this recognized value of the speech interests involved in the unauthorized use of copyrighted works. (3) The statutory test for fair use sets out four factors in analyzing whether an unauthorized use of a copyrighted work is socially valuable enough to overcome whatever harm it does to the (mostly financial) interests of the copyright holder in preventing use of his work. (4) I believe that the fair use test does an admirable job of setting out the factors a court should consider to determine whether to allow an unauthorized use of a copyrighted work.

The problem with the fair use test, however, is that although it looks great on paper, the informational uncertainties and transaction costs of litigating a fair use determination make the fair use right unavailable to many as a practical matter. The fair use test requires detailed consideration of the copyright and speech interests at issue. (5) The nuance and sensitivity of the test often make it difficult for parties to know their legal rights without litigating. (6) This level of uncertainty leaves those who would make probable fair use of a copyrighted work vulnerable to threats of copyright infringement. (7) The possibility of being assessed statutory damages and attorney's fees that may total many multiples above any actual damages further deters people from making fair use of copyrighted material. (8) In the most egregious cases, copyright holders can deter obvious fair use by threatening to sue the user of their copyrighted works because the cost of defending a fair use suit is quite high.

This unfortunate situation is well known in copyright literature, (9) and commentators have made numerous suggestions regarding how to change copyright law or the fair use defense to alleviate this problem. (10) Suggested legislative changes have, for the most part, fallen on deaf ears, however. This is not surprising given that content owners have more organizational and lobbying power than diverse persons who would like to make fair use of copyrighted works. (11) And although some of the suggested changes to judging fair use cases may yet be adopted by courts, (12) the chasm between statutory and practical fair use rights remains wide.

Sophisticated copyright owners know this dilemma, and they are able to misuse their copyrights--by threatening litigation without a good-faith basis, or by tying demands for editorial control to licenses to use their works--in order to make practically unavailable those fair use rights that are explicitly granted by law. A solution--or at least a partial solution--is available, however. My proposal would not require any changes to the substantive rights of copyright holders or of fair users. (13) Each person's rights would be exactly as they are set out by statute. Instead, my proposal would increase the practical availability of the statutorily granted fair use right.

"Copyright misuse" currently exists as an underdeveloped equitable defense to copyright infringement. The problem is that the defense developed as an analog to "patent misuse," and, like patent misuse, courts tend to focus primarily on antitrust issues in determining whether the copyright misuse defense should apply. This Article argues that copyright misuse should be decoupled from its basis in antitrust principles and instead should be based primarily in First Amendment speech principles. This would be beneficial for two reasons. First, antitrust-based copyright misuse may be inevitably on the decline due to a strong attack on the misuse defense, both in patent and copyright cases, by critics who argue that antitrust concerns are poorly addressed through the misuse defense. Second, just as antitrust concerns can be addressed directly by antitrust law, the chilling of legally protected First Amendment speech by aggressive copyright holders can best be curbed by a copyright misuse defense that focuses specifically on free speech interests. In particular, First Amendment based copyright misuse would occur when a copyright holder uses its copyright to (1) threaten litigation in the face of obvious fair use, (2) seek to deter areas of inquiry through litigation threats, or (3) grant licenses to quote from or use copyrighted works only if the user grants the copyright holder improper editorial control. (14)

The copyright misuse defense might not seem to pack much punch at first--after all, why would a copyright holder care if its threats or licensing behavior are occasionally called unfair? But two unique features of copyright misuse as it currently exists make it a powerful defense. First, an accused infringer can defend on the basis of copyright misuse by proving that the copyright owner misused its copyright against anyone--not just against the defendant to the suit. Thus, if a copyright owner used its copyrights to deter obvious fair use by a third party unrelated to the suit being litigated, that misuse as to the third party...