The balance of interests in US copyright law
(Michael J. Remington, Kexin Li)
Updated: 2013-09-05

Second, a core issue in copyright litigation across the globe is whether a copyright has been infringed and, if so, what damages should be awarded. In China, many people are shocked by learning that under most circumstances they should pay for music downloaded from the Internet. This view illustrates two competing interests: on one hand, the public interest in enjoying music at prices as low as possible (even free); and, on the other hand, the need for songwriters and record labels to be rewarded for their musical works and sound recordings. In Capitol Records, Inc. v. Thomas-Rasset (692 F.3d 899 (8th Cir. 2012)), a Minnesota woman, Jammie Thomas-Rasset, downloaded 24 sound recordings via Kazaa, a filesharing computer program, and left them in the default file-share folder so that others could download the music. A copyright infringement suit was brought by several record companies against Thomas-Rasset. After three trials in federal district court, a jury verdict awarded the companies $222,000 in statutory damages (but no actual or punitive damages). The US Court of Appeals for 8th Circuit refused to set aside the award, finding that a standard established by the Supreme Court controls: a statutory damages award comports with the due process clause so long as it cannot be said to be “so severe and oppressive as to be wholly disproportioned to the offense or obviously unreasonable.” St. Louis I.M. & S. Railway Co. v. Williams, 251 U.S. 63, 67 (1919). The court also rejected a challenge raised by Thomas-Rasset against the constitutionality of statutory damages. Finally, the court issued an injunction against Thomas- Rasset precluding her from making the companies’ sound recordings available to the public through an on-line media distribution system. Despite a declination the US Supreme Court to review of the lower court's decision, some parties still argue that the judicial review standard is outdated and too deferential to copyright-owner interests and, in this regards, distorts the balance of interests in US copyright law.

It is noteworthy that, at several points in the lengthy litigation process, Thomas-Rasset rejected settlement offers that were far less than the final award. In the US, the concept of statutory damages also adds balance to the author and copyright owner side of the equation because the actual damages caused by the infringement of a single work — be it a song, photograph, or painting — is often far less than attorneys’ fees and litigation costs. Consequentially, it may be extremely difficult for a young author or small business with limited resources to protect copyright rights. In any event, policy critiques cannot overturn existing laws in the US. If Congress decides to embark on an omnibus revision of copyright law, the restructuring of statutory damages would likely be discussed.

Third, a recent case invoked the fair use privilege which operates as a limitation on the exclusive rights of copyright owners. Set forth in 17 U.S.C. §107, the fair use of a copyrighted work is not a copyright infringement. Fair use includes criticism, comment, news reporting, scholarship, research, teaching, which all serve important public interests, but is not limited to these categories. Courts determine fair use on a case-by-case basis by applying a statutory four-factor analysis. A question arose: what about news aggregators? Relatively new in the US, news aggregators collect news articles via the Internet and use excerpts of those articles to compile daily newsletters sent to subscribers. In The Associated Press v. Meltwater U.S. Holdings, Inc. (Case 1:12-cv- 01087-DLC (S.D.N.Y. Mar. 21, 2013)), a well-known news cooperative owned by 1,400 newspapers in the US, the Associated Press (AP), sued Meltwater, an international news aggregator, for copyright infringement based on redistribution practices. AP has licensed agreements with three news clipping services that are Meltwater competitors. In response to Meltwater’s fair use defense a federal district court in New York found that Meltwater’s infringing activities were not excused. According to the court, Meltwater “is an expensive subscription service” and acts as “a substitute for news sites operated or licensed by AP,” without paying AP a penny. Such practices injure AP’s ability to perform an essential function of democracy – news reporting. Additionally, “permitting Meltwater to avoid paying licensing fees gives it an unwarranted advantage over its competitors who do pay licensing fees.” Meltwater also argued that AP should be barred from enforcing its copyrights because — by engaging in price-fixing with competing news organizations in violation of the antitrust laws — AP had misused its copyrights. This defense was rejected by the court.

Fourth, a decision in a landmark case, Kirtsaeng v. John Wiley & Sons, Inc. (No. 11–697 (S. Ct. Mar. 19, 2013)), was recently issued by the US Supreme Court. The case addresses the reach of the “first sale doctrine” (17 U.S.C. §109). Supap Kirtsaeng, a Thai citizen, sold copies of foreign edition English-language textbooks that he purchased in Thailand in the US. The prices of foreign edition textbooks are generally significantly less than US editions. The publisher plaintiff, John Wiley & Sons, brought a copyright infringement suit against Kirtsaeng, alleging that he infringed the publisher’s exclusive right to distribute and an import prohibition elsewhere in the Copyright Act. Kirtsaeng raised the first sale doctrine as his main defense. The doctrine delineates the extent to which a copyright holder can control its copyrighted work. It provides that, “not withstanding the distribution right, the owner of a particular copy or phonorecord lawfully made under this title…is entitled, without the authority of the copyright owner, to sell…that copy or phonorecord.” An important question arose: does the first sale doctrine permit copyrighted works lawfully made and sold outside the US from later importation and resale in the US for profit? On March 19th, 2013, the US Supreme Court answered the question affirmatively; construing words “lawfully made under this title” as meaning “in accordance with” or “in compliance with” the Copyright Act. By clarifying this limitation on copyright holders’ exclusive rights, the Court broadly construed the statutory language. The Court’s decision manifests the impact that US copyright law has on international markets. A cautionary note is necessary: the first sale doctrine applies to sales. Because some entertainment services increasingly use download and cloud-based access services based on licenses (not sales) that permit copyright owners more control over their content, the decision may have different impacts on different industries. Legitimate commercial enterprises may decide to engage in arbitrage opportunities (making profits from price differences between two or more markets) for hard-product sales. And industries that provide streaming and transmission services pursuant to licenses may gain competitive advantage. Time will tell.

Receptivity of copyright law to societal changes

Few areas of American law reflect change more dramatically than copyright law, which mirrors societal transformations. The shifting patterns in the fabric of copyright law are systematic responses: to new threads of creative expression; to technologies of reproduction, distribution, and public performance; and to uses of copyrighted works by the public. The law contains provisions to accommodate maps, charts , books , photographs , piano rolls, broadcast radio and television, cable and satellite retransmissions, musical works and sound recordings, architecture, the visual arts, computer software, semiconductor chips, digital audio recording technology and the Internet. Although many changes are legislated based on what elected officials believe to be in the best interests of the nation, other refinements accrue through judicial decision-making and the resultant body of common law. The fabric has stood the test of time, but is frayed in certain places. The digital era has placed substantial pressures on a copyright system that is neither well-equipped to predict technological changes nor able to provide a rapid response to them. Since 1999, the system has had to deal with Napster, Grokster, YouTube, DMCA takedown notices and safe harbors, cloud computing, satellite technologies, digital archiving, MegaUpload, Aereo and many other issues. Some issues await dispositive resolution.

To fill the gap between Congress and the courts, proposals have been made to give the Copyright Office substantive rulemaking authority. These proposals raise issues with Congress about giving power to an administrative entity. They address also the perils and pitfalls of government by regulation. As an example of these pitfalls, the Office recently issued a rule in an area within which it is allocated rulemaking authority — the circumvention of digital rights management technologies — and barred the unlocking of digital phones. Immediately thereafter, the White House opposed the new rule and five bills were introduced in Congress to override it. Currently, it is unclear whether Congress will give the Office expanded rulemaking authority or override the Office’s anti-circumvention rule.


As contemplated in Article I, section 8, clause 8 of the US Constitution, as crafted by Congress over more than two centuries, and as interpreted by the judicial branch of government, the balance of interests in US copyright law creates a constructive tension among copyright owners (who, through authorship, are incentivized to create and share copyrighted works), distributors (be they publishers, television or radio stations, web-casters, and/ or on-line service providers), and the public interest (consumers, students, and other end-users). Every encounter between copyright law and a new technology presents a stark choice for lawmakers: whether to expand copyright so that authors and copyright owners can be compensated appropriately for the value of their works or whether to withhold protection, in which case users might benefit from “free” content and distribution interests reap rewards from the popularity of their services. Invariably, in the US, statutory amendments involve some sort of a political compromise between competing interests.

In the US, is copyright an author’s right? Do distribution interests have affirmative responsibilities? And are users the beneficiaries of the copyright system? The answer to all these questions is “yes.”

Copyright balance is not easy to achieve — as is the case in all life matters. But, in the US, the pursuit of balanced interests in the copyright law is thought to be well worth the effort.

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