Second Circuit 'Affirms Fair Use

On Oct. 16, in Authors Guild v. Google, No. 13-4829-cv, ___ F.3d___, 2015 WL 6079426 (Oct. 16, 2015) (Google), the U. S. Court of Appeals for the Second Circuit affirmed the holding of U.S. District Judge Denny Chin (sitting as a district court judge) that Google's mass digitization of more than 20 million books from major university libraries in order to enable users of the Google Books website: a) to conduct full-text searches to determine the appearance and frequency of particular words in the books contained in the entire database; and b) to view “snippets” from the books subject to existing limitations on their display, constitutes fair use. The Authors Guild v. Google, 954 F.Supp.2d 282 (S.D.N.Y. 2013). See, R. Bernstein and R. Clarida, “Google Granted Summary Judgment on Fair Use Defense,” New York Law Journal, Dec. 20, 2013, p. 3.

In a 48-page opinion by Judge Pierre N. Leval, joined by Judges Jose Cabranes and Barrington D. Parker, the court conducted a thorough review of fair use from its English precedents to the last three decades of Supreme Court fair use cases and their application to the digital age. (Note: Co-author Robert J. Bernstein served as local counsel to Google during an early stage of the district court proceedings in Authors Guild v. Google, but took no part in the summary judgment proceedings or appeal. Bernstein also served as co-counsel to defendant-intervenor National Federation of the Blind in Authors Guild v. HathiTrust, 902 F.Supp.2d 445 (S.D.N.Y. 2012), aff'd, 755 F.3d 87 (2d Cir. 2014), cited by both the district and appellate courts in Authors Guild v. Google.)

What emerges from this scholarly journey is the court's conclusion that the research uses enabled by Google Books serve copyright's ultimate goal to advance knowledge and learning, and are circumscribed so as to avoid market harm to plaintiffs. But equally important, the court emphasized throughout the opinion that its analysis was based strictly on its detailed exposition of the facts and circumstances of record, implying that broader uses would be subject to careful scrutiny under each of the fair use factors and their overall balance.

The Material Facts

In its de novo review of Judge Chin's grant of summary judgment, the court found that “plaintiffs have failed to show a material issue of fact in dispute,” and set forth the following salient facts and circumstances informing its fair use analysis:

1. Pursuant to agreements with several major university libraries, Google scanned over 20 million books from the libraries' collections, thereby creating a digital database enabling users of the Google Books website to search the entire contents of the database in two limited ways: a) to determine in what books, and how often, particular words and phrases appear (the Search Function); and (b) in “snippet” view, to view up to three “snippets” (each consisting of no more than one-eighth of a page) displayed on the user's screen and providing a limited context in which the words searched appear (the Snippet View function).
2. Limitations built into Snippet View function prevent users from circumventing the restrictions on the amount of text displayed. For example, in Snippet View, only one snippet on each page is displayed, and if multiple searches are made for the same words, whether from one or many computers, the same three snippets will be displayed.
3. The website incorporates limitations on display of text in the Snippet View mode that prevent users from viewing significant portions of the books in the database. Certain types of books, such as dictionaries and cookbooks, in which a few lines may contain valuable information, are not available in Snippet View.
4. The website provides users with information about the books in the database without significant harm to the market for the books. It is a research tool enabling users to have streamlined access to a vast database in order to locate books relevant to their interests.
5. The website also enables new forms of research called “data mining or “text mining” from which scholars may derive a wide range of insights across many disciplines.
6. In order for the search function and the Snippet View function to achieve their research purposes, it is necessary for Google to do complete scans of the books in the database (i.e., to copy all of the books in their entirety).
7. No fees are charged to users, and no advertising appears on the website during the Search Function or the Snippet View function. Google earns no fees from linking users to locations (e.g., Amazon or directly to publishers) where they may purchase books identified in response to searches on the website. As a commercial enterprise, Google may receive economic benefits from increased numbers of viewers using other Internet services it provides, but no direct monetary gain is derived from the website.
8. No evidence has been presented of lost book sales arising from use of the website. In some instances, there may be increased sales, such as when books identified in response to a search are linked to a sales outlet, or when a user's research uncovers previously unknown books.
9. The database includes works under copyright (both fiction and non-fiction), works in the public domain, in-print books and out-of-print books. As of 2005, Google has been excluding books from Snippet View at the request of the copyright owner.

Having carefully delineated the context of the use, Judge Leval proceeded to weigh and balance the four statutory fair use factors in light of the doctrine's underlying purpose.

The Court's Fair Use Analysis

Legal Principles. Judge Leval commenced his analysis with these observations: “The ultimate goal of copyright is to expand public knowledge and understanding.” This goal is “achieve[d] by giving potential creators exclusive control over copying of their works” so as to provide economic incentive for their creation, and thus “authors are undoubtedly important intended beneficiaries of copyright.” However, “the ultimate, primary beneficiary is the public, whose access to knowledge copyright seeks to advance by providing rewards for authorship.” Google, supra, 2015 WL 6079426, at 5.

This follows from the Copyright Clause of the Constitution, which empowers Congress “'To promote the Progress of Science ' by securing for limited Times to Authors ' the exclusive Right to their respective Writings.'” As Justice Ruth Bader Ginsburg noted in Golan v. Holder, 132 S. Ct. 873, 888 (2012) (), “'[t]he Progress of Science' [as used in the Copyright Clause] ' refers broadly to 'the creation and spread of knowledge and learning.'” Because “giving authors absolute control over all copying from their works would tend ' to limit, rather than expand, public knowledge,” the fair use doctrine “'permits unauthorized copying in some circumstances, so as to further 'copyright's very purpose.'” Google , supra, 2015 WL 6079426, at 5. See also, Id. (quoting Campbell v. Acuff Rose Music, 510 U.S. 569, 594 (1994)).

Application of the Statutory Fair Use Factors. In 1976, Congress codified the fair use doctrine in '107 of the Copyright Act, 17 U.S.C. '107, which provides:

[T]he fair use of a copyrighted work ' for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include '

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The court applied these factors in light of the guidelines established by the Supreme Court in Campbell v. Acuff-Rose (note 7), which called for a flexible, case-by-case balancing of the factors, weighing each one in light of the others without bright-line rules, presumptions or decisive weight given to any one factor.

Factor One: Purpose of the Use. In Campbell, the Supreme Court adopted the concept of “transformative use” as the central element in weighing the first factor. As explained in Campbell, a “transformative use” does not supersede or supplant the original work, but “instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message '.” Campbell, supra, at 579 (citation omitted). A transformative use therefore serves the constitutional purpose of copyright by increasing our understanding and knowledge. Campbell further instructed that a transformative use could impact determination of the fourth factor (potential market impact) because the more transformative the use, the less likely it would serve as a substitute for the original.

The court found that Google's use was highly transformative, providing information about the contents of the database and enabling research on a scale previously unknown. The digitization of the books in the database enabled users to obtain information about the contents of the database without superseding or supplanting the books.

The fact that Google itself is a commercial enterprise was not weighed against fair use. In this respect, Judge Leval noted that many recognized fair uses are engaged in by commercial enterprises such as book publishers, magazines, and newspapers. The court therefore balanced the first factor in favor of Google.

Factor Two: Nature of the Work. The court observed that the second factor has generally not been a significant determinant of fair use. In the context of the books in the database, the court considered this factor to be neutral.

Factor Three: Amount and Substantiality of the Portion Used. By scanning all of the libraries' collections into the database, the entirety of each book was used. In most cases, making complete copies of the originals would result in the third factor weighing against fair use. However, Campbell disfavors bright-line rules, and, on the third factor, establishes this flexible guideline:

“[T]he extent of permissible copying varies with the purpose and character of the use,” ' [T]he relevant questions [are] whether “the amount and substantiality of the portion used'are reasonable in relation to the purpose of the copying” '. [T]he answer to that question will be affected by “the degree to which the [copying work] may serve as a market substitute for the original or potentially licensed derivatives, '.”

Google, supra, 2015 WL 6079426, at 12 (quoting Campbell, supra, at 586'588).

Applying this standard to Google Books, the court found that the third factor favored fair use. With respect to the Search Function, the court followed its own opinion in Authors Guild v. HathiTrust, 755 F.3d 87 (2d Cir. 2014). See, R. Bernstein and R. Clarida, “Book Digitization Ruling Shifts Transformative Use Analysis,” in the July 2014 issue of our sibling newsletter, Entertainment Law & Finance. In HathiTrust, our court concluded in its discussion of the third factor that “[b]ecause it was reasonably necessary for the [HathiTrust Digital Library] to make use of the entirety of the works in order to enable the full-text search function, we do not believe the copying was excessive.” As with HathiTrust, not only is the copying of the totality of the original reasonably appropriate to Google's transformative purpose, it is literally necessary to achieve that purpose. If Google copied less than the totality of the originals, its search function could not advise searchers reliably whether their searched term appears in a book (or how many times). See, Google, supra, 2015 WL 6079426, at 15 (quoting HathiTrust, supra, 755 F.2d at 98.

With respect to the Snippet View function, which was not present in HathiTrust, the court acknowledged that a more difficult question was presented. Thus, if the quantity or quality of the portions displayed became significant enough to serve as a market substitute for the original, then the third (and probably the fourth) factor would weigh against fair use. Here, however, the court concluded: “[A]t least as presently structured by Google, the snippet view does not reveal matter that offers the marketplace a significantly competing substitute for the copyrighted work.” Google, supra, 2015 WL 6079426, at 13. The third factor was therefore balanced in favor of fair use.

Factor Four: Potential Market Harm. Although Judge Leval characterized the fourth factor as “undoubtedly the single most important element of fair use,” Id., at 6 and 14 (quoting Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 566 (1985)), it is not clear why this would remain so after Campbell, in which the Supreme Court set forth these guidelines:

[T[he more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.

* * * *

Market harm is a matter of degree, and the importance of [the fourth] factor will vary, not only with the amount of harm, but also with the relative strength of the showing on the other factors.

Campbell, supra, at 582, 590.

In any event, in this case (but perhaps not others), the outcome of the court's fair use analysis would have been the same even if it had not considered the fourth factor to be the most important, because the court balanced this factor in favor of Google. As stated above, neither the Search Function nor the Snippet View function serves to divert significant sales from plaintiffs. The court acknowledged that there could be some lost sales due to the Snippet View function. However, on the record presented, it found that any such loss did not constitute “a meaningful or significant effect 'upon the potential market for or value of the copyrighted work'” due to the limitations on the manner and amount of text displayed. See , Google, supra, 2015 WL 6079426, at 15 (quoting 17 U.S.C. '107(4)). The court rejected plaintiffs' additional argument that potential harm from hacking into the database should be weighed against fair use, because the evidence presented was speculative. The court therefore balanced the fourth factor in favor of fair use.

Summary

In light of Google's highly transformative use, the necessity for complete scans to achieve the purpose of the use, and the absence of significant market harm, the court weighed the first, third and fourth factors, and the overall balance, in favor of fair use, and affirmed the summary judgment for Google. The court also rejected plaintiffs' arguments that the creation of the database violated the copyright holders' right to create derivative works and that Google was a contributory infringer.

Conclusion

The facts found by the court both shape and circumscribe its fair use analysis. Although this observation may appear self-evident, it serves as a caution against display functions that go beyond Google's existing limitations. It is not clear, and the court did not provide any insight into, at what point longer displays might be viewed as harming book sales. But the careful balancing of owner and user interests required under fair use analysis could well lead to a different result if text displays were perceived as excessive. The Authors Guild has announced its intention to petition the Supreme Court for review, so the final fair use analysis of Google Books may not yet have been made.

Robert J. Bernstein practices law in New York City in The Law Office of Robert J. Bernstein. Robert W. Clarida is a partner at Reitler, Kailas & Rosenblatt.

On Oct. 16, in Authors Guild v. Google, No. 13-4829-cv, ___ F.3d___, 2015 WL 6079426 (Oct. 16, 2015) (Google), the U. S. Court of Appeals for the Second Circuit affirmed the holding of U.S. District Judge Denny Chin (sitting as a district court judge) that Google's mass digitization of more than 20 million books from major university libraries in order to enable users of the Google Books website: a) to conduct full-text searches to determine the appearance and frequency of particular words in the books contained in the entire database; and b) to view “snippets” from the books subject to existing limitations on their display, constitutes fair use. The Authors Guild v. Google, 954 F.Supp.2d 282 (S.D.N.Y. 2013). See, R. Bernstein and R. Clarida, “Google Granted Summary Judgment on Fair Use Defense,” New York Law Journal, Dec. 20, 2013, p. 3.

In a 48-page opinion by Judge Pierre N. Leval, joined by Judges Jose Cabranes and Barrington D. Parker, the court conducted a thorough review of fair use from its English precedents to the last three decades of Supreme Court fair use cases and their application to the digital age. (Note: Co-author Robert J. Bernstein served as local counsel to Google during an early stage of the district court proceedings in Authors Guild v. Google, but took no part in the summary judgment proceedings or appeal. Bernstein also served as co-counsel to defendant-intervenor National Federation of the Blind in Authors Guild v. HathiTrust, 902 F.Supp.2d 445 (S.D.N.Y. 2012), aff'd, 755 F.3d 87 (2d Cir. 2014), cited by both the district and appellate courts in Authors Guild v. Google.)

What emerges from this scholarly journey is the court's conclusion that the research uses enabled by Google Books serve copyright's ultimate goal to advance knowledge and learning, and are circumscribed so as to avoid market harm to plaintiffs. But equally important, the court emphasized throughout the opinion that its analysis was based strictly on its detailed exposition of the facts and circumstances of record, implying that broader uses would be subject to careful scrutiny under each of the fair use factors and their overall balance.

The Material Facts

In its de novo review of Judge Chin's grant of summary judgment, the court found that “plaintiffs have failed to show a material issue of fact in dispute,” and set forth the following salient facts and circumstances informing its fair use analysis:

1. Pursuant to agreements with several major university libraries, Google scanned over 20 million books from the libraries' collections, thereby creating a digital database enabling users of the Google Books website to search the entire contents of the database in two limited ways: a) to determine in what books, and how often, particular words and phrases appear (the Search Function); and (b) in “snippet” view, to view up to three “snippets” (each consisting of no more than one-eighth of a page) displayed on the user's screen and providing a limited context in which the words searched appear (the Snippet View function).
2. Limitations built into Snippet View function prevent users from circumventing the restrictions on the amount of text displayed. For example, in Snippet View, only one snippet on each page is displayed, and if multiple searches are made for the same words, whether from one or many computers, the same three snippets will be displayed.
3. The website incorporates limitations on display of text in the Snippet View mode that prevent users from viewing significant portions of the books in the database. Certain types of books, such as dictionaries and cookbooks, in which a few lines may contain valuable information, are not available in Snippet View.
4. The website provides users with information about the books in the database without significant harm to the market for the books. It is a research tool enabling users to have streamlined access to a vast database in order to locate books relevant to their interests.
5. The website also enables new forms of research called “data mining or “text mining” from which scholars may derive a wide range of insights across many disciplines.
6. In order for the search function and the Snippet View function to achieve their research purposes, it is necessary for Google to do complete scans of the books in the database (i.e., to copy all of the books in their entirety).
7. No fees are charged to users, and no advertising appears on the website during the Search Function or the Snippet View function. Google earns no fees from linking users to locations (e.g., Amazon or directly to publishers) where they may purchase books identified in response to searches on the website. As a commercial enterprise, Google may receive economic benefits from increased numbers of viewers using other Internet services it provides, but no direct monetary gain is derived from the website.
8. No evidence has been presented of lost book sales arising from use of the website. In some instances, there may be increased sales, such as when books identified in response to a search are linked to a sales outlet, or when a user's research uncovers previously unknown books.
9. The database includes works under copyright (both fiction and non-fiction), works in the public domain, in-print books and out-of-print books. As of 2005, Google has been excluding books from Snippet View at the request of the copyright owner.

Having carefully delineated the context of the use, Judge Leval proceeded to weigh and balance the four statutory fair use factors in light of the doctrine's underlying purpose.

The Court's Fair Use Analysis

Legal Principles. Judge Leval commenced his analysis with these observations: “The ultimate goal of copyright is to expand public knowledge and understanding.” This goal is “achieve[d] by giving potential creators exclusive control over copying of their works” so as to provide economic incentive for their creation, and thus “authors are undoubtedly important intended beneficiaries of copyright.” However, “the ultimate, primary beneficiary is the public, whose access to knowledge copyright seeks to advance by providing rewards for authorship.” Google, supra, 2015 WL 6079426, at 5.

This follows from the Copyright Clause of the Constitution, which empowers Congress “'To promote the Progress of Science ' by securing for limited Times to Authors ' the exclusive Right to their respective Writings.'” As Justice Ruth Bader Ginsburg noted in Golan v. Holder, 132 S. Ct. 873, 888 (2012) (), “'[t]he Progress of Science' [as used in the Copyright Clause] ' refers broadly to 'the creation and spread of knowledge and learning.'” Because “giving authors absolute control over all copying from their works would tend ' to limit, rather than expand, public knowledge,” the fair use doctrine “'permits unauthorized copying in some circumstances, so as to further 'copyright's very purpose.'” Google , supra, 2015 WL 6079426, at 5. See also, Id. (quoting Campbell v. Acuff Rose Music, 510 U.S. 569, 594 (1994)).

Application of the Statutory Fair Use Factors. In 1976, Congress codified the fair use doctrine in '107 of the Copyright Act, 17 U.S.C. '107, which provides:

[T]he fair use of a copyrighted work ' for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include '

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The court applied these factors in light of the guidelines established by the Supreme Court in Campbell v. Acuff-Rose (note 7), which called for a flexible, case-by-case balancing of the factors, weighing each one in light of the others without bright-line rules, presumptions or decisive weight given to any one factor.

Factor One: Purpose of the Use. In Campbell, the Supreme Court adopted the concept of “transformative use” as the central element in weighing the first factor. As explained in Campbell, a “transformative use” does not supersede or supplant the original work, but “instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message '.” Campbell, supra, at 579 (citation omitted). A transformative use therefore serves the constitutional purpose of copyright by increasing our understanding and knowledge. Campbell further instructed that a transformative use could impact determination of the fourth factor (potential market impact) because the more transformative the use, the less likely it would serve as a substitute for the original.

The court found that Google's use was highly transformative, providing information about the contents of the database and enabling research on a scale previously unknown. The digitization of the books in the database enabled users to obtain information about the contents of the database without superseding or supplanting the books.

The fact that Google itself is a commercial enterprise was not weighed against fair use. In this respect, Judge Leval noted that many recognized fair uses are engaged in by commercial enterprises such as book publishers, magazines, and newspapers. The court therefore balanced the first factor in favor of Google.

Factor Two: Nature of the Work. The court observed that the second factor has generally not been a significant determinant of fair use. In the context of the books in the database, the court considered this factor to be neutral.

Factor Three: Amount and Substantiality of the Portion Used. By scanning all of the libraries' collections into the database, the entirety of each book was used. In most cases, making complete copies of the originals would result in the third factor weighing against fair use. However, Campbell disfavors bright-line rules, and, on the third factor, establishes this flexible guideline:

“[T]he extent of permissible copying varies with the purpose and character of the use,” ' [T]he relevant questions [are] whether “the amount and substantiality of the portion used'are reasonable in relation to the purpose of the copying” '. [T]he answer to that question will be affected by “the degree to which the [copying work] may serve as a market substitute for the original or potentially licensed derivatives, '.”

Google, supra, 2015 WL 6079426, at 12 (quoting Campbell, supra, at 586'588).

Applying this standard to Google Books, the court found that the third factor favored fair use. With respect to the Search Function, the court followed its own opinion in Authors Guild v. HathiTrust, 755 F.3d 87 (2d Cir. 2014). See, R. Bernstein and R. Clarida, “Book Digitization Ruling Shifts Transformative Use Analysis,” in the July 2014 issue of our sibling newsletter, Entertainment Law & Finance. In HathiTrust, our court concluded in its discussion of the third factor that “[b]ecause it was reasonably necessary for the [HathiTrust Digital Library] to make use of the entirety of the works in order to enable the full-text search function, we do not believe the copying was excessive.” As with HathiTrust, not only is the copying of the totality of the original reasonably appropriate to Google's transformative purpose, it is literally necessary to achieve that purpose. If Google copied less than the totality of the originals, its search function could not advise searchers reliably whether their searched term appears in a book (or how many times). See, Google, supra, 2015 WL 6079426, at 15 (quoting HathiTrust, supra, 755 F.2d at 98.

With respect to the Snippet View function, which was not present in HathiTrust, the court acknowledged that a more difficult question was presented. Thus, if the quantity or quality of the portions displayed became significant enough to serve as a market substitute for the original, then the third (and probably the fourth) factor would weigh against fair use. Here, however, the court concluded: “[A]t least as presently structured by Google, the snippet view does not reveal matter that offers the marketplace a significantly competing substitute for the copyrighted work.” Google, supra, 2015 WL 6079426, at 13. The third factor was therefore balanced in favor of fair use.

Factor Four: Potential Market Harm. Although Judge Leval characterized the fourth factor as “undoubtedly the single most important element of fair use,” Id., at 6 and 14 (quoting Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 566 (1985)), it is not clear why this would remain so after Campbell, in which the Supreme Court set forth these guidelines:

[T[he more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.

* * * *

Market harm is a matter of degree, and the importance of [the fourth] factor will vary, not only with the amount of harm, but also with the relative strength of the showing on the other factors.

Campbell, supra, at 582, 590.

In any event, in this case (but perhaps not others), the outcome of the court's fair use analysis would have been the same even if it had not considered the fourth factor to be the most important, because the court balanced this factor in favor of Google. As stated above, neither the Search Function nor the Snippet View function serves to divert significant sales from plaintiffs. The court acknowledged that there could be some lost sales due to the Snippet View function. However, on the record presented, it found that any such loss did not constitute “a meaningful or significant effect 'upon the potential market for or value of the copyrighted work'” due to the limitations on the manner and amount of text displayed. See , Google, supra, 2015 WL 6079426, at 15 (quoting 17 U.S.C. '107(4)). The court rejected plaintiffs' additional argument that potential harm from hacking into the database should be weighed against fair use, because the evidence presented was speculative. The court therefore balanced the fourth factor in favor of fair use.

Summary

In light of Google's highly transformative use, the necessity for complete scans to achieve the purpose of the use, and the absence of significant market harm, the court weighed the first, third and fourth factors, and the overall balance, in favor of fair use, and affirmed the summary judgment for Google. The court also rejected plaintiffs' arguments that the creation of the database violated the copyright holders' right to create derivative works and that Google was a contributory infringer.

Conclusion

The facts found by the court both shape and circumscribe its fair use analysis. Although this observation may appear self-evident, it serves as a caution against display functions that go beyond Google's existing limitations. It is not clear, and the court did not provide any insight into, at what point longer displays might be viewed as harming book sales. But the careful balancing of owner and user interests required under fair use analysis could well lead to a different result if text displays were perceived as excessive. The Authors Guild has announced its intention to petition the Supreme Court for review, so the final fair use analysis of Google Books may not yet have been made.

Robert J. Bernstein practices law in New York City in The Law Office of Robert J. Bernstein. Robert W. Clarida is a partner at Reitler, Kailas & Rosenblatt.