RE-CONSTRUCTING FAIR USE- WILLIAM FISHER (SUMMARY AND TAKEAWAY)

I am choosing to summarize and analyze one of the (in my opinion) most important pieces of Copyright theory and policy (some very prominent Professors here at Berkeley refer it to as their bible on anything copyright). I am putting this here for everyone to be able to contextualize the role of Fair use as a policy matter while thinking of copyright’s role, its trade-offs, and how to think about progress/ values and its role in it. Here is the full piece (highlighted): Link

Prof. Fisher, to begin with, recounts that fair use as an affirmative defense, distinct from an inquiry of infringement began in the mid-twentieth century, and was subsequently adopted in Section 107 of the Act of 1976. He recounts the logic given by Justice O’Conner of Market Impairment in Sony Betamax and argues that every case where the fair use defense is invoked will involve market harm, and so it is relevant to estimate the “magnitude” of market impairment by privileging certain uses, not the mere “existence” of market impairment. 

On Necessity, Prof. Fisher points out to be wary of the dangers inherent in its ambiguity. Sony and Harper v. Row discounted the necessity factor- however, J. O Conner in his analysis did say that copying essential to communicate facts may be privileged. 

Prof. Fisher points out J. O Conner’s discussion where he says the rights conferred by copyright are designed to assure contributors to the store of knowledge a fair return for their labor. Prof. Fisher criticizes this as showing an objective that is fundamentally different from social utility. He says that the notion J. O Conner embodies is that authors and inventors deserve a reward for labor irrespective of whether they would continue to work in the absence of this compensation. He criticizes this as being ambiguous- in terms of what exactly is a “fair” return for creative labor- how to balance it with the dissemination of output concerns, etc.  He argues fair use, in its (then) current practice to be aiming at “balancing” inconsistent claims derived from conventional, incommensurable premises- something which perpetuates difficulty, as against concreteness in analysis. 

He then goes on to choose premises- firstly relying on economic premises- he argues- that the objective of copyright law in general and the fair use doctrine, in particular, should be the efficient allocation of resources. Secondly, he argues, what he calls more of a utopian vision relying on cultural premises- stating that “copyright law has a significant effect on the shape of our culture and that a vision of the sort of culture we would like is a prerequisite to wise administration of the law.”

Coming to the doctrine, he says that if the package of entitlements created by the provisions of the copyright act other than 107 enabled creators of intellectual work to collect monopoly profits in greater than optimal amounts, a judge could use fair use to chip away at that package until reaching the most efficient combination. He argues that economic analysis helps us realize this, in spite of its important critiques of fostering complete market dependence.  He argues that the point of inducement through monetary incentives is to have more and better works, but efficiency gains from this inducement are only realized upon increased consumer satisfaction that results when readers have access to these more and better works. 

Prof. Fisher states that an efficient way of using the incentive access paradigm towards efficient allocation of resources through the fair use doctrine – is to analyze whether the production of “work” requires- or is affected by incentives or not. He firstly talks about special circumstances where the provision of incentives through the law has no role to play in the inducement of further production, given optimal earnings even without such legal protection is available. Here he says every use should be fair. On the other hand, he talks about works where even a single putatively infringing use would incur economic costs that exceed gains due to sensitivity to fluctuation in anticipated incomes and behavioral elasticity in respect thereof. In such a situation due to the inefficiency involved, it should be ruled unfair. Moving on from these special circumstances, he argues that In more complex situations, differentiating types of works for applying fair use creates some efficiency and some inefficiency as well. He says that copyright covers a variety of works from books to films, to factual works to fictional works, to computer software- the incentive interests/requirements on which are different. He thus argues that creating some difference in the nature of work in relation to their purported incentive requirement does make sense, but too many differences may lead to distortion where artists will assume the worth of their works legally and pursue or distort from pursuing a particular form in favor of the other. His solution is the following:

“To make an efficient choice, the judge should estimate three figures. First, he should determine how much of an efficiency gain, caused by differentiating the monetary incentives for creating different types of intellectual products, would result from moving from each level of specificity to the next. For any of a variety of reasons, the optimal combination of entitlements for musicals may be different from the optimal combination for other sorts of plays. Lumping them together would therefore result in a less-than-ideal system of incentives for playwrights of all sorts. The judge should ascertain how much less than ideal. Second, the judge should determine how much of an efficiency loss, caused by reducing playwrights’ ability to predict their incomes, would result from each subdivision. Suppose, for example, that differentiating musicals from other plays resulted in sharply different combinations of entitlements and income levels for writers of the two sorts of works, but left a substantial number of potential playwrights uncertain as to whether the plays they contemplated writing would ultimately be classified as musicals or non-musicals. The effect would be to sacrifice much of the efficiency gain described above by reducing the willingness of risk-averse playwrights to write works whose status was unclear. Third and finally, the judge should calculate how each additional differentiation would affect the number of cases in which the parties disputed the classification of the copyrighted work in question, and what the litigation costs generated by those controversies would be.”

Another theory that could relate to the nature of work factor, that Prof. Fisher furthers is that, when an art form is in its infancy, or just starting to grow in circulation, adjusting the compensation system so as to increase the number of artists engaged in developing it may increase quality and variety available to consumers- if that is what the legislature values. As opportunities for synergies of this sort diminish, the scope of protection can rather be reduced. 

Prof. Fisher, in his economic analysis, continues to focus on identifying the incentive/loss ratio by examining efficiency considerations upon every use on the incentive and its consequence on the overall allocation of resources and efficiency, as a tool to understand whether a use is fair or not. 

Moving on to his utopian vision, he uses J.S. Mill to argue that self-determination and the development of mental and moral faculties for a rich, diversified, and animating culture is the most important goal of copyright policy. He argues that cultural innovativeness- the key to diversity- would not just be tolerated by the government but rather nourished and rewarded. This is what he invokes to be his theory of protection of transformative works as fair uses. 

He argues that defining the optimality of incentives when calculating the incentive/loss ratio needs to accept the following analysis: The creators of art should be afforded better than average incomes (or greater freedom from drudgery) whenever, but ONLY whenever, such a policy would increase their output enough to yield a net improvement in the lives of non-artists. He argues fair use as limitations on the freedoms of some to advance the interests of others from the view of helping shape tastes and capacities that enable the formation of autonomous and socially determined preferences in lieu of a good life. 

His main argument for reformulating fair use is the following.:

“Maximization of allocative efficiency can be achieved by arranging the set of activities putatively reserved to copyright owners by section io6 in order of their incentive/loss ratios, identifying the point in the series at which the benefits secured by holding out monetary incentives to talented persons exceed by the maximum amount the attendant monopoly losses, and declaring all uses above that point fair and all uses below it unfair.”

Coming to the factors: he argues that the transformative factor is important as it creates more opportunities for Americans to be actively involved in shaping their culture and socially shaping identities- thus enhancing abilities beyond the ability if all were mere passive consumers. 

Then he goes on to advocate for the value of the use- citing education as an example- and so he argues that acidities that facilitate education by enhancing access to information and argument on matters of public importance, or facilitate dissemination of education – they should be fair uses due to the value component involved- however, the degree of preferential treatment, according to fisher depends on how important (NECESSITY) to education is the use of that activity. 

Another value determinant he cites is cultural diversity- any usage that facilitates cultural diversity and faculties of choice and self-determination. He thus argues to deem fair – uses- that have the potential for more derivative works – given their impact on cultural diversity. (AK comment: I think he is conceptualizing derivative works in a broad way to include transformations in content, otherwise I don’t know how this would make sense given the meaning and message remains the same irrespective of the potential to have more derivative works). 

The next factor for him is Protecting the Creative Process: where he argues to disfavor things that undercut the artistic process- and provide artists and consumers maximum opportunities for engaging in the creative process. He uses this to analyze the “published” – “unpublished” dichotomy and argues for use of unpublished works to be unfair- given for him they hamper the confidence of the artist in his/her/their creative process. He says rather than deterring all unpublished works from being used, a more precise standard would be “disfavored unauthorized uses of materials the creators of which were still considering revising”. 

He also favors uses that equalize public access as ones that ought to be deemed to be fair. 

In conclusion of his utopian analysis he identifies that consistent application of the utopian analysis would require expansion of fair use to the point where creators would be left only with income to live on, or a just conception which would require that the expansion of fair use be only halted when further movement would leave creators substantially below the national average of income- given the law perpetuates this enablement. 

He finally argues that:

“for the time being, it seems wisest to limit judges’ involvement in the compensation of artists to (i) the avoidance of superfluous income; (ii) the promotion of cultural diversity by favoring types of art for which popular demand currently is low; and (iii) providing artists (to the extent practicable) minimal levels of income.”

PROPOSAL:

Recognizing that his utopian vision is not going to tangibly turn in policy any time soon, he proposes a modest solution using factorial reform for better fair use to ensure a better deal than the one existing then: 

1. Whether the creator considered the work finished.
2. Definition of injury of harm.
   • Ascertain the “type of copyrighted use at issue” to ascertain incentives actually required in the said type, in terms of the incentive/loss ratio. This, however, should be carefully done narrowly as is consistent with preservation of the ability of authors to identify which camp they fall in. 
   • Conduct of the sort engaged by the defendant- commercial or not (although not a separate analysis but only a component of defining the harm caused to the creator if at all)
3. Decide whether the harm above is substantial (reduce the quantity or quality of output by affecting incentives) or insubstantial. 
4. If the above three tests fail to resolve the controversy- or there isn’t enough information to draw a conclusion out of the above three tests- be proposes the following factors to step into:
   • The magnitude of injury (the more serious harm to producers- the less willing the judge should be to deem it fair)
   • Creativity (the more the activity or use is creative, and transformative, the more the judge should deem it fair as they increase diversity)
   • Education (Fisher points out this is to be of relatively higher importance): use increases access to info or arguments (perspectives) on issues of public importance or facilitates efforts to make available to students resources to learn- the more the bend towards fair use. 
   • Price discrimination (the more use undermines the ability of the holder to engage in price discrimination, the weaker case of fair use- given price discrimination is good policy as it increases rewards and increases access. (Differential pricing strategies- which have lately been criticized due to administrative difficulties and parallel importation logics)

A PRELIMINARY THEORY OF FAIR USE THAT I AM BEGINNING TO CONCEPTUALISE:

The legislature values certain things (not in the commodity sense) that it seeks to ‘enable’ (a proxy for incentivizing, given it doesn’t really incentivize in my opinion- it ensures they are not de-incentivized)  so that people who produce these valuable outputs are not disincentivized from producing and shift to marginal sources of revenue, because well they aren’t able to survive and make enough money by doing these pursuits. The corollary of not enabling them would be such performances (a proxy for “creations” because I personally do not believe anyone can ever find out who created an expression) not existing in society, and these performances are valuable. So the legislature using the tool of the Copyright Act enables them by giving them a limited property-Esque right/ market power over their creations so that they can extract value out of it (social and economic). However, the legislature does recognize the constraints of giving such market power access to these valuable outputs- the very reason why they want these creativities to exist- the very reason they value it is so that people can experience it. 

So, to ensure that they protect interests that they value over/more than the enablement of creators- they create exemptions and limitations (and not exceptions) to this statute that provides enablement. Values like research, education, cultural diversity, etc are more important for the legislature than enabling the creation of works- and this “hierarchy of values needs to be understood”. Fair use is representative of this hierarchy of values. Fair use is not a defense in that understanding- it is in fact a tool to show which value is deemed to be more important and what sacrifices does enablement of creation has to go through to actually and tangibly support the achievement of the ultimate policy goal and value it seeks to instrumentally achieve – i.e., the existence of more and diverse works for people to understand, internalize and be exposed to. Fair use stems from this hierarchy of values that in a democracy the legislature prioritizes.

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