The word “fair” is a useful rhetorical device. Children learn early to cry “that’s not fair!” as the ultimate argument, and the habit continues. In any dispute, a party who successfully grabs the label of fairness is on the way to victory.

Given the deep resonance of the concept, it is not surprising that some of the most intense battles about copyrights are fought on the terrain of “Fair Use” - the principle that people have, under some circumstances, a right to use copyrighted intellectual property without permission or payment.

Most recently, the flag of fair use has been hoisted by “consumers’ rights” groups, such as Public Knowledge and Digital Consumer. These assert that “protecting fair use rights in the digital world,” to quote Digital Consumer, requires a Consumer Technology Bill of Rights, preferably imposed by Congress, codifying a right of consumers to shift content in time or among platforms, reformat to make it more usable, and - the real punch - to break any protection systems that stand in the way of these enterprises. Several bills embodying some or all of these concepts have been introduced.

This approach is a wrong use of fair use, and for Congress or courts to adopt it would be no favor to consumers. Quite the reverse; it would harm them greatly.

Copyright gives the creator of an intellectual work the exclusive right to exploit it for a term of years. The rationale for this franchise rests on both moral and utilitarian grounds. Morally, in the words of the legislature of Massachusetts in 1783, the “security” of “learned and ingenious persons” to the “fruits of their study and industry” is a “natural right[] of all men, there being no property more peculiarly a man’s own than that which is produced by the labour of his mind.” Practically, the economic argument for copyright is logical and conclusive. Neither creators nor their financiers can create, publish, or distribute without resources. Selling a work is a logical way to obtain these. But if the creator lacks exclusivity, then an imitator, who need not recover any costs of creation, can easily undercut his price.

Without protection, creative activity would suffocate, over not-too-long-a-period, because the only people who could afford to engage in it would be those with an external motive, such as advertising or ideology, those of independent means, or those who attract rich patrons. Opponents of intellectual property sometimes suggest that the institution could be replaced by a system of government subsidies, an idea with zero appeal for anyone who watches the NEA, the NEH, or the activities of any major foundation grants committee.

On the other hand, exclusivity is a dangerous concept. All creators draw on the vast cultural commons, and they have no right to fence in parts they did not create. An old saw says there are only seven basic plots in literature, and the quantity of real originality in the work of even the greatest musician is limited. To create is to steal, or at least to borrow.

Furthermore, every work adds to the cultural commons, where others draw on it for new creations. This must be accepted; once a work is out in the world, it is in the heads of potential creators, and there is no way in which can not influence them. Indeed, such borrowing should be rejoiced in, because most creativity consists of remixing old elements in new ways, and in climbing on to the shoulders of giants. There is nothing new under the sun. (Wait - that’s from Ecclesiastes! Is it still under copyright?)

Copyright law is the story of creators, disseminators, legislators, and judges working out the tension between these principles. An important limit is the rule that one can copyright a particular form of an expression, but not the underlying idea. Another rule is that one cannot copyright facts; anyone can republish numbers from a telephone book or information from a news story. (However, one can copyright a creative arrangement of facts, or creative commentaries on bald facts.)

Fair use is another of these limiting principles. It must be called a “principle,” not a “rule,” because it is a fuzzy jumble of jerry-built doctrines. Originally erected by judges, the structure of fair use was codified, sort of, when Congress revamped the copyright law in 1976. In deciding whether a use qualifies, a judge is to consider whether a use is commercial, the nature of the work borrowed, the substantiality of the portion used, and the effect of the use upon the potential market or value of the work. In applying the test, purposes such as criticism, comment, news reporting, teaching, scholarship, and research are particularly favored, but the scope for its application is open ended and the case law is a patchwork.

An excellent short course can be found in two articles by Judge Pierre N. Laval, “Toward a Fair Use Standard,” 103 Harvard Law Review 1105 (1990), and “Copyright in the 21st Century,” 13 Cardozo Arts & Entertainment Law Journal 19 (1994) (sorry, no links - law reviews are available only over Lexis or WestLaw, for dollars.). The key, re-emphasized in the 1994 Supreme Court opinion upholding as fair use the 2 Live Crew parody of Pretty Woman, is the concept of “productive use.” The more a borrower is using the work as a take-off point for additional creations, the more the use is transformative, the more likely to be regarded as fair.

Within this framework, one can find several subthemes. Commentary on a work, such as reviews and criticism, requires quotation, often extensive, and requiring permission would be a bad idea. Parody is in the same bin; few would willingly consent to being lampooned. However, a court disapproved The Cat NOT in the Hat (by Dr. Juice) on the ground that it was not a parody of the Dr. Seuss book but a commentary on the O.J. Simpson trial, which removed it from the scope of protection afforded to parodies.

Similarly, debate, whether public or scholarly, requires an ability to draw on source materials. The idea/expression distinction and the “facts” rule are also important in this context, and the right to borrow, while not unconstrained, is broad.

Another theme involves creation of a riff on a well-known work. Quintessential situations are the dispute over The Wind Done Gone, the unauthorized sequel to Gone With the Wind, or the less-publicized Lo’s Diary, described by the Associated Press as “an irreverent retelling of the late Vladimir Nabokov's Lolita from the young girl's point of view.” (Courts are warier of classifying this as fair use; both these cases were settled with divisions of the spoils.)

Transaction costs are also relevant. In the Texaco case, a company defended its practice of copying articles from journals for research purposes. The court said that this might have succeeded at one time, when getting permission and arranging payment would have cost over-much time and effort, but that the development of the copyright clearinghouse mechanism enabling easy payment changed things. The court said:

[I]t is not unsound to conclude that the right to seek payment for a particular use tends to become legally cognizable . . . when the means for paying for such a use is made easier. . . . [I]t is sensible that a particular unauthorized use should be considered "more fair" when there is no ready market or means to pay for the use, while such an unauthorized use should be considered "less fair" when there is a ready market or means to pay for the use. . . . . We do not decide how the fair use balance would be resolved if a photocopying license . . . were not currently available.

The transaction cost analysis has received only minimal attention in the courts. This seems unfortunate, because it is extremely important to the actions of consumers. The idea of getting permission to copy a news article for friend seems absurd, totally out of proportion to the value of the transaction. Similarly, it seems fair to consumers that one be able to shift one’s use of a product without saying “mother, may I?”. Few of us think we should buy multiple copies of software if we work off multiple computers, or that we should have different CD collections for home, office, and auto, especially when we only use one at a time.

Interestingly, the recording industry agrees. The RIAA does not give any ground legally, but its website (when you can reach it through the depredations of hackers) has a section on “Its Okay” which endorses these kinds of common sense replications.

The wild card in the “productivity” approach to fair use is the 1984 Sony decision, in which the Supreme Court classified “time shifting” by consumers -- recording a copyrighted program to view later - as fair use. The explanation of just why it was fair was opaque; as the dissenters pointed out, cutting the doctrine loose from the standard of “productivity” “deprives fair use of the major cohesive force that has guided evolution of the doctrine in the past.”

But Sony fits neatly into the transaction cost framework, especially since the Court did not think the copyright owners were actually injured. How could a viewer get permission to time shift, after all? There was no mechanism. So the only alternative would have been to declare illicit the technically possible and convenient action of recording, an absolutely unenforceable edict, since consumers would not have paid the least attention, or to outlaw the VCR as a technology, and a majority of the court quailed at this step.

The consumer rights groups are trying to tap into this transaction cost dimension of fair use. But it does not fit the world of the Internet. As in Texaco, the march of technology is shifting the concept of what is fair because it is reducing transaction costs and making possible the creation of markets.

The lot of consumers will not be improved by creating abstract “rights.” It will be improved by giving them options. For example, a reader interested in a journal might buy a full subscription for $X, an individual copy for $Y, or a single article for $Z - take your pick

Similarly, consumers of music delivered over the Internet are best off with multiple options and varying prices. If I want an album for use solely on my home stereo, why shouldn’t I pay less than the buyer who wants more functionality, such as additional use in his auto and office? Why should I not be able to buy a right to read a book once or twice, paying a lower price than the buyer who wants to add it to his library for continuing reference? Phrased another way, why should the one-time reader be forced to subsidize the heavy user? The book stores are full of volumes that I refuse to pay $30 for, but which I would cheerfully read once for $3.00.

A colleague likes to point out that those who ask Congress to define expansively the packages that should be offered to consumers are saying, in effect, that video rentals should not be allowed. They would force the viewer to buy the whole thing rather than a time-limited license. As the market is evolving, viewers have a choice between these options, and that is a good thing.

So the bottom line is that consumers are best off if the concept of fair use is applied only in the contexts of productivity or sticky transaction costs, and is kept very narrow in the context of consumer uses. Property rights, technology, and markets, allowed to work their magic, will bring us a cornucopia of choices. Legislation will freeze us into pre-Internet patterns.