Prof. Jane C. Ginsburg, Columbia University School of Law*
November 24, 2015

In this time of prospective copyright reform, some have called for revising copyright law to make a showing of commercial harm an obligatory element of the plaintiff’s infringement case.1  The result: Even were an author’s work copied or communicated to the public, she would have no claim were she unable to prove that the unauthorized exploitation harmed an actual or potential market for her work.  Unauthorized exploitation would not itself suffice to establish infringement.  Making a showing of harm part of the author’s case in chief would seem radically to change the nature of copyright as a “property right.”  For most property rights, the violation consists of a trespass on the owner’s dominion and control over the object of property.  If you, without my permission, picnic on my front lawn, I do not have to show that your unauthorized presence on my land caused me specific or prospective economic loss; your unwanted incursion violates my right to keep you off my land.  If you “borrow” my toaster during a time that I am not using it, and return it undamaged before I next would want to make toast, you have infringed my chattel rights, even though your temporary appropriation did not inconvenience me.  My property right in the toaster allows me to exclude you even when sharing the enjoyment of my goods would benefit you without harming me.

Of course, copyright has never been an “ordinary” property right.  While most property rights endure forever (or for as long as the object of the right exists), the Constitution commands that copyright last only for “limited times.”  Moreover, the subject matter of copyright does not extend to some objects of commercial value, such as ideas or information, contained within a work of authorship, and many exceptions and limitations, most notably fair use, confine copyright’s scope.  Nonetheless, as the Constitution establishes, and the current Copyright Act reiterates, the rights that comprise copyright are “exclusive”; they give authors and right holders the power to exclude third-party uses that come within the statutorily articulated exclusive rights.  That exclusivity, even substantially qualified, keeps copyright in the property right fold.

Recent caselaw, however, suggests that copyright revisionists who deplore the control that exclusive rights vest in the author, i.e., who lament authors’ rights to exclude third-party uses, need not look to Congress to take the property out of creators’ rights; the federal courts may already be accomplishing that task.  While an accretion of recent fair use decisions has brought us to this pass, the story starts with Congress and its codification of fair use in Section 107 of the 1976 Copyright Act.  Factor 4 directs courts to consider the potential impact of the use on the market for the plaintiff’s work.  The Supreme Court has emphasized that potential impact includes the effect of the use “if it should become widespread,”2 but it is not clear that courts lately have heeded that directive.  Since fair use has long been considered an affirmative defense, it would have been up to the defendant to demonstrate that its use did not substitute for an actual or potential market.  Section 107 also states that the fair use of a copyrighted work is “not an infringement”;3 if the defendant successfully bears the burden of persuasion on the overall assessment of the statutory and other factors that judges might add to the inquiry, then no infringement has occurred (and therefore there would be no statutory basis for a compromise legally authorizing the use, but providing compensation to the author4).  Economic harm entered the analysis as part of the defendant’s rebuttal of the plaintiff’s prima facie showing of infringement; but if the defendant failed to rebut, the plaintiff did not have to show harm to prevail.

Of course, if a defendant credibly argued lack of economic harm, the plaintiff would have been led to make its own showing of actual or potential deleterious economic impact, so proof of harm would enter the litigation in any event.  So long as fair use defenses were not systematically advanced or entertained, courts would not have had to assess economic harm until the damages phase, but infringement would already have been established.  The growth of fair use, however, particularly but not solely through the “transformative use” doctrine and its accommodation of verbatim integral copying of works even for commercial purposes, leads to the systematic injection of a harm criterion in infringement litigation.

Arguably, the defendant still bears the burden of persuasion on this issue, but a review of the caselaw suggests that courts have in fact placed the burden on the plaintiff.  For example, in Cambridge University Press v. Patton, the Eleventh Circuit, albeit finding the use (electronic “course reserves” consisting of excerpts from plaintiffs’ books) not “transformative,” ruled that the plaintiff’s failure to demonstrate that the use substituted for an actual licensing market would weight the assessment of fair use in the defendant’s favor.5  Denominating the purpose of the use “transformative” trips the burden shift because, as the Second Circuit has told us, a “transformative” use by its nature targets a market different from the plaintiff’s.6  If the plaintiff cannot persuade the court that the use invades or at least threatens an actual or imminent (not merely “prospective”) market, then the purpose’s “transformative” character will result in a ruling of non-infringement.

For example, in Perfect 10 v. Amazon,7 a controversy involving a search engine’s “highly transformative” indexing of photographs and display of thumbnail images, the court held that the plaintiff had not borne its burden of showing that the evolving market for paid downloads of thumbnail images onto cellphones, with which the defendant’s free thumbnails allegedly competed, was more than “hypothetical” (“Perfect 10 has not introduced evidence that Google’s thumbnails would harm Perfect 10’s existing or potential market for full-size images….  Weighing [Google’s] significant transformative use against the unproven use of Google’s thumbnails for cell phone downloads, and considering the other fair use factors, all in light of the purpose of copyright, we conclude that Google’s use of Perfect 10’s thumbnails is a fair use.”)  Apparently reminded that fair use is an affirmative defense, and therefore that the defendant bears the burden with respect to market harm, the court reissued its opinion, acknowledging the placement of the burden,8 and deleting the phrase “Perfect 10 has not introduced evidence that Google’s thumbnails would harm Perfect 10’s existing or potential market for full-size images,”9 but leaving its fair use analysis (including the reference to “the unproven use of Google’s thumbnails for cell phone downloads”) unchanged.

The more “transformative” the appropriation, the less likely the plaintiff can prevail without proving harm, but the more “transformative” the appropriation, the more futile endeavors to show harm may prove.

As for what’s “transformative,” a statement from the Second Circuit’s recent Google Books decision arguably invites all but the most directly competitive commercial uses to shelter in transformativeness’s welcoming embrace: “a transformative use is one that communicates something new and different from the original or expands its utility, thus serving copyright’s overall objective of contributing to public knowledge” (emphasis supplied).  Characterizing one’s appropriation to fit this generous bill does not seem a daunting task.  Admittedly, the Google Books court cautioned: “The word “transformative” cannot be taken too literally as a sufficient key to understanding the elements of fair use. It is rather a suggestive symbol for a complex thought, and does not mean that any and all changes made to an author’s original text will necessarily support a finding of fair use.”  In Google Books (where no changes were made to the authors’ original text), the court’s dictum referencing transformative expansions of a work’s utility should be understood in light of the non-substitutional character of the search program’s outputs, and the court’s emphasis on Google’s extensive security preventing both substitutional accumulation of “snippets” and hacking into the database, Nonetheless, one may anticipate litigants’ propensity to take the broader statement out of context in an endeavor to expand the applications of the syllogism: transformative use = different market; different market = no market harm; ergo fair use, and consequently no infringement. 10

If a showing of harm is to become an element of many or most infringement claims, whether directly through copyright reform, or through the expanding back door of fair use, then it will be important for courts to develop a capacious understanding of what “harm” means.  If the unauthorized use in itself no longer establishes the harm, so that the violation is not mere trespass to a property right, but something more, then the additional element must account comprehensively both for economic and non-economic harm to authors and rightowners.11

New technological uses create new markets, so courts should not brush aside as “hypothetical” copyright owner contentions that the challenged use competes with an emerging market.  Similarly, the tendency to dismiss claims of future lost licensing opportunities as “circular,” when the copyright owner has not yet developed the market,12 ignores the premise that markets generated from copying the work or communicating it to the public are copyright markets; there should be no “first entrant” exception allocating to the technological entrepreneur, or other user availing itself of that technology, the fruits of the uses the copyright-dependent technology made possible.

Equally importantly, non-economic concerns require full consideration.  An author’s vision of her work may lead her to decline to enter certain markets, for example for sequels, or for audiovisual versions of literary works, or indeed to withhold the work from publication altogether.  It does not follow that she incurs no “harm” if others enter a market she is unwilling to exploit.13  If she has chosen not to authorize certain exploitations, she may rank retaining control over the integrity of her creation more highly than the income foregone from undesired derivative exploitations.  The Second Circuit has in the past acknowledged that “the copyright law must respect that creative and economic choice.  ‘It would … not serve the ends of the Copyright Act – i.e., to advance the arts – if artists were denied their monopoly over derivative versions of their creative works merely because they made the artistic decision not to saturate those markets with variations of their original.’”14  Thus, the court has understood that the “harm” the author (and, ultimately, society at large) would incur were the law to override rather than to support her artistic choices belittles her authorship and discourages its undertaking.   While some reformers assert that “the underlying purpose of the copyright grant is to reserve to the owner the right to earn money from commercial exploitation of the work,”15 copyright is about far more than economic gain and the commercial sphere.

The fundamental purpose of copyright is to foster an environment of respect – both material and moral – for authorship conducive to creative endeavors.  Recognizing authors’ property rights in their creations favors the development and persistence of a culture of authorship.  Subjecting authors’ rights to a proof-of-harm requirement clashes both philosophically and rhetorically with a property rights conception of copyright, and thus devalues authorship.  Even were one to interpolate a harm criterion to qualify the property right, too cramped an understanding of the nature of the harm risks endangering the creative environment.

But before we concede a refashioning of copyright away from property rights, we might recall the prescient warning of former Register of Copyrights David Ladd in his 1982 Brace Lecture, “The Harm of the Concept of Harm in Copyright”16:

The framers of the Constitution were men to whom the right to hold property was enormously important.  They were not far removed from Locke.  His ideas pervaded their debates and decision.  Property was seen not as opposed to liberty, but indispensable to it; for men with property would be independent of the power of the State, in that rough and tumble roiling of opinion and power which marks freedom….

By limiting potential rewards in the copyright market .. by … curtailing them in any way under arguments of “harm[,]” the entrepreneurial calculus which precedes risk taking in authorship and publishing is shifted in the direction of not taking a chance, i.e., not writing or publishing a “risky” work, whether ideologically or economically risky.  Every limitation on copyright is a kind of rate setting.  And however high minded, every person who thus sets rates applies a value judgment: how much the author or publisher should receive.  Whoever makes this judgment regulates – i.e., controls – how successful a class of authors, works, or publishers shall be.  This control of idea laden copyrighted works is more wisely left with the people than vested in … even a sincere judge searching a record for undefined harm….

While Ladd focused on the economic consequences of a “harm” predicate, the artistic and dignitary interests comprised within the “exclusive Right”17 prescribed by the framers also diminish if forced within a concept of “harm” and its concomitant prizing of market over non-material objectives.