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Fair's Fair -- Or Is It?

2 Jan, 2004 By: Holly J. Wagner

The concept of “fair use” is a vital legal issue that helped to propel the home video industry in its infancy. Today, rapid developments in the delivery of digital music and video files are pushing fair use to the forefront again.

This year is likely to see a number of developments that will determine whether the landscape has changed for the entertainment business in the issue of fair use.

What Is Fair Use?
Back in 1980, average consumers only dreamed of being able to copy movies from TV and watch them at their own convenience. VCR technology was new and expensive, and the content providers, which saw the technology as an eventual threat to their revenue, went to court seeking to have home recorders banned.

Instead, the U.S. Supreme Court, in a ruling commonly called the Betamax decision, found that consumers should be allowed to time-shift -- store programs to watch at more convenient times -- and that just because a device could potentially be used to violate copyrights didn't mean it was inherently bad.

That decision hinged on the concept of “fair use,” the notion that copyright law includes certain exceptions that can be used as defenses against allegations of copyright infringement. Those exceptions allow copying for academic or research purposes or social commentary. The four factors in determining whether the exemption applies are the nature of the copyrighted work; the purpose and character of the use, including whether it is commercial; the amount of the work used; and how the use will affect the market for the original copyrighted work.

“Its beauty and its greatest challenge is that it's flexible and tailor-made to the situation in front of us. It leaves room for new fair uses, it leaves room for the next VCR. Yet it leaves room for people to be chilled because they don't know that their use is infringing” and may err on the side of caution, said Wendy Selzer, an intellectual property attorney at watchdog group the Electronic Frontier Foundation (EFF).

How Much Is Too Much?
Although consumers have come to regard recording and storing programs as a right, TiVo VP, general counsel and chief privacy officer Matt Zinn recently noted the court stopped short of saying consumers could legally collect libraries of programs. Today, the industry is wrestling with the question of how much is too much.

“In 1983, fair use became a much broader concept than people thought it was. Until the late '70s or early '80s, piracy really wasn't much of a problem. Motion pictures until then really weren't available for mass reproduction by the public,” said Fritz Attaway, EVP and Washington general counsel for the Motion Picture Association of America (MPAA). “With the marketing of movies for the first time ever [direct] to consumers, piracy became a huge problem. It transformed from a minor irritant to [the content providers'] number one challenge, and we developed a worldwide antipiracy program to deal with it.”

In finding recording legal but failing to define how much, the court set up a debate that is playing out with digital technology today: Is fair use still fair in a digital age?

“The difference that digital technology presents is that fair use is, by design -- because of its four factors and that none of them presents a bright line for marking its boundaries -- kind of a moving target,” said Video Software Dealers Association (VSDA) president Bo Andersen. “As elements elevate in commercial significance, then the availability of fair use as a defense disappears or gets reduced in its viability to respond to a claim by a copyright holder.”

In other words, consumers who have long flown under the radar recording movies at home are suddenly perceived as a threat to the industry revenue stream because digital technology makes copying both easier and higher quality. More importantly, digital technology lets users transmit content over the Internet, something that was not envisioned when VCRs were in their infancy.

“Fair use is alive and well. I don't think ever before in the history of the world has the opportunity to exercise fair use been so available,” Attaway said. “Technological developments allow fair use to expand. The downside to that is that technology also increases the opportunity to infringe. It is the goal of ourselves and government to create rules that try to capitalize on the ability to make fair use without excusing or expanding the ability to infringe.”

Dealing With the Internet
Internet peer-to-peer (P2P) services that let computer users share or trade files have complicated the matter, even though Attaway concedes that most of the movie piracy taking place today never touches the Internet.

“Right now, most piracy does not involve the Internet,” he said. “Unfortunately, we are going to be in a similar position one day if we do not find a way to deal with the problem and download a movie in less than a few minutes.”

The movie industry has tried to preempt a Napster-style meltdown, most notably by persuading Congress in 1998 to enact the Digital Millennium Copyright Act (DMCA). Among other things, that law makes it illegal to circumvent copy-protection technology in hardware and software, but the law is being challenged on several fronts.

“If copyright holders can unilaterally eliminate fair use by putting on technological protections, then it eliminates fair use,” Selzer said. “Having fair use available in the abstract is no good to the consumer who can't access the content he buys.”

Because interpretations of fair use can be fairly fluid, the courts are likely to face a number of copyright issues in the years to come.

“It is a very flexible standard. Until the 1976 Copyright Act, it was entirely court-made law,” Attaway said. “Even today, fair use continues to be a flexible standard that is what the court says it is.”

Future Issues
Most experts say three issues are more likely than others to land on the steps of the U.S. Supreme Court:

DMCA Subpoenas: A federal appellate court, in a case involving Verizon and the Recording Industry Association of America (RIAA), recently raised the bar for subpoenas issued under the DMCA to force Internet Service providers (ISPs) to reveal the names of their customers when content providers request them. Unless a higher court disagrees, those seeking to use DMCA subpoenas will have to have a stronger paper trail in place to get the orders.

P2P Software: Two federal district court judges hearing similar cases on opposite coasts reached opposite conclusions: One found that the P2P application Aimster is illegal because its primary purpose is infringing copyrights; the other found that P2P application Grokster is legal because it has uses other than infringing copyrights.

DVD Copying Software: A federal judge in San Francisco has been considering arguments about DVD copying software since May. The company that sought to have its copying software declared legal, 321 Studios, is still selling its software, but is facing legal challenges from content providers in the United States and the United Kingdom.

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