Strict Liability and Negligence in Copyright Law: Fair Use as Regulation of Activity Levels

• Publication year: 2021
• Citation: Vol. 97

97 Nebraska L. Rev. 384. Strict Liability and Negligence in Copyright Law: Fair Use as Regulation of Activity Levels

Strict Liability and Negligence in Copyright Law: Fair Use as Regulation of Activity Levels

Apostolos G. Chronopoulos*

TABLE OF CONTENTS

I. Introduction .......................................... 385

II. Strict Liability and Negligence in the Law of Accidents ............................................. 390
A. Unilateral Accidents: Care and Activity Levels ..... 391
B. Bilateral Accidents: Care and Activity Levels . . . . . . 393
C. The Challenges of Regulating Levels of Activity . . . . 395

III. Strict Liability and Negligence in Copyright ........... 396
A. The Case for Strict Liability in Copyright Law: Generating Authorial Incentives ................... 396
B. The Case for Negligence in Copyright Law: Fair Use as Regulation of Activity Levels ................... 401

IV. Legal Nature of Fair Use as a Negligence Standard. . . . 404
A. Why Combine Strict Liability with Negligence? . . . . 404
B. Further Reasons Behind the Choice of the Test . . . . 406
C. Copyright's Rule of Reason ........................ 412
D. A Multifactorial Test: The Role of the Four Factors ........................................... 415
E. Administrating the Multifactorial Test ............. 421
F. Copyright Infringement as a Bilateral Accident: When the Rights Holder Has an Incentive to Exercise Due Care ................................ 423

V. Case Law Analysis .................................... 426
A. Institutional Photocopying ......................... 426
B. Comment and Criticism ........................... 432
C. News Reporting ................................... 437
D. Private/Personal Uses ............................. 443

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E. Appropriation Art ................................. 447
F. Uses Facilitating the Access to Information ........ 458

VI. Conclusion ............................................ 466

I. INTRODUCTION

Copyright infringement is a tort.(fn1) As such, it aims at prompting third parties to consider the specific social costs associated with some types of unauthorized dealing with works of authorship, by holding them liable in tort for actions that undermine the creative incentives of authors. Any attempt to explain the rationale behind the choice of standards for copyright liability and the nature of the fair use doctrine could therefore gain valuable insight from the general theory and economic analysis of tort law, in particular accident law.(fn2)

Copyright law internalizes benefits to spur creative activity, thereby mirroring the internalizing function of tort law,(fn3) which internalizes costs with a view to inducing third parties to exercise care so as to avoid harming another.(fn4) Dealing with copyrighted works of authorship could be paralleled with "risky behavior" that threatens to cause an "accident" in the form of reduced authorial incentives. Much like the law of accidents, the standard for copyright liability must reflect considerations pertaining to the efficient precautions that the potential infringers have to take to avoid accidents.(fn5) Copyright

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provisions are concerned with both authors' and potential infringers' activity levels remaining optimal from a social welfare perspective. The choice of a proper liability standard is pivotal to achieving copyright's utilitarian purposes. Policymakers, legislators, and courts have a wide array of options at their disposal, including strict liability, negligence and its various forms, or a combination thereof.

It seems that the closest parallel that can be drawn to the law of accidents would be the one conceptualizing copyright infringement as a bilateral accident with variable activity levels.(fn6) The probability of an accident increases as potential copyright infringers seek to maximize their own utility by raising their levels of activity in dealing with copyrighted works without the author's permission. On the other hand, some of those unauthorized uses may turn out to be beneficial to social welfare because they promote cultural or expressive values, for instance. Activity levels of authors are also variable in that they correspond to the level of incentives generated by the system of copyright protection.

Copyright infringement is considered to be a strict liability tort.(fn7) Legal scholarship has challenged this fundamental tenet of copyright law predominantly on two grounds. First, the regime of strict liability affirming liability in cases of inadvertent plagiarism allegedly broadens the scope of the right in a disproportionate manner that threatens to suppress independent creation.(fn8) Second, by requiring evidence of harm in order to find infringement, the doctrine of fair use essentially renders copyright infringement a tort based on negligence.(fn9)

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In this Article, I argue that the tort of copyright infringement constitutes a mixed system of liability, which resorts to both strict liability and negligence to achieve the utilitarian aim of promoting the progress of science and the useful arts, as instructed by the Intellectual Property Clause of the Constitution.(fn10) Indeed, copyright infringement is structured to mirror trespass upon property, while the fair use doctrine operates as a negligence standard optimizing activity levels involving some form of dealing with an earlier work-such as incremental authorship, critical commentary, news reporting, or the development of new technologies-which the exclusive right in that work is not supposed to suppress. In this Part (Part I), I briefly summarize the main points of my argument.

Turning to the economics of accident law facilitates the analysis by highlighting the possible advantages and disadvantages of the various standards of liability with respect to the avoidance of accidents and the inducement of optimal activity levels (Part II). The analysis shows that both strict liability and negligence are vital to the implementation of the copyright system's goals. In order to secure incentives for the production of authorial works, copyright confers upon its owner a profit-maximizing opportunity in the form of a property right capable of being traded. Reliance investments in the creation of new works of authorship cannot be effectively induced unless (1) the intangible subject matter of property is precisely demarcated and (2) it is guaranteed to the author, as a matter of principle, that he or she will be able to obtain the economic benefit of the full market value for his or her creation. For these reasons, strict liability for trespassing upon copyright property should be the default rule.

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In addition, I argue that copyright's purpose of generating incentives for creativity is better achieved through general and abstract norms rather than flexible standards. On the other hand, the constitutional mandate from which copyright law derives its legitimacy rests on the premise that some dealings with copyrighted works should be permitted even during the copyright term to create a "breathing space," which eventually maximizes social welfare. Those activities, examples of which are listed in the preamble of section 107 of the Copyright Act,(fn11) should be subjected to a negligence standard because they are of such a nature that they should be carried out as frequently and intensively as possible. A negligence standard is apt to serve this purpose. Fair use mirrors negligence in that it allows third parties to engage in socially desirable activities while imposing on them obligations to exercise care toward the legitimate interests of the copyright owner. Importantly, the nature of the fair use doctrine as a negligence standard allows for optimal decentralization effects as it makes it possible for the courts to apply personalized standards of care. I argue that the application of the fair use doctrine by the courts reflects that approach (Part III).

Subsequently, I analyze the legal nature of fair use as a negligence standard (Part IV). Firstly, I examine the reasons for subjecting the duty imposed on third parties not to trespass upon the copyright owner's property right and their socially desirable dealings with earlier works to different liability standards. It would actually be impossible to use one single standard of liability. Strict liability would suppress socially desirable activities such as critical commentary. And negligence would not be an efficient standard for inducing optimal creative incentives. I take the opportunity to stress that strict liability is indispensable also because it is capable of creating social norms that would give rise to social environments in which copyrights are respected. It is only through abstract and general rules commanding immediate and unanimous agreement that the internalization of norms can eventually be achieved. Then, I look more closely at the

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nature of fair use as a negligence standard. In particular, I examine its operation as an ex post negligence standard, its capacity to factor in the effect of the adopted standard on innovation, and its commonalities with the structured balancing test of general tort law. The fair use calculus reflects a rule of reason, which requires the copyright owner to forego some of his or her economic benefits in some contexts where the exemption of socially desirable secondary uses from copyright liability...