Cases by Issue - Copyright

Golan v. Holder - Oral Argument

Fri, 07 Oct 2011 21:41:00 +0000

Case:

Golan v. Holder

Media File:

10-545_20111005-argument.mp3

Related Transcript:

10-545_20111005-argument.xml

Transcript:

ORAL ARGUMENT OF ANTHONY T. FALZONE ON BEHALF OF THE PETITIONERS

Chief Justice John G. Roberts: We'll hear argument next in Case 10-545, Golan v. Holder.

Mr. Falzone.

Mr. Falzone: Thank you, Mr. Chief Justice, and may it please the Court:

Section 514 did something unprecedented in American copyright law.

It took millions of works out of the public domain, where they had remained for decades as the common property of all Americans.

That violated the Copyright Clause and the First Amendment.

Let me turn first to the Copyright Clause.

In Eldred, this Court held Congress gets to pick the date on which a copyright expires, and it can extend that date before we reach that date.

Justice Ruth Bader Ginsburg: You said that Congress can set a time limit.

In this case, we are dealing with, let's say, Aaron Copeland, who gets the benefit of copyright, and Congress says: No, we think Shostakovich should be treated just like Copeland.

Yes, we took care of our own when we weren't part of the world community, but now we are.

And so all that Congress is doing is giving Shostakovich works the same limited work as Aaron Copeland.

And why does that violate the limited-time prescription?

Mr. Falzone: The problem is Congress is now setting a second limit long after the first one has come and gone.

Justice Ruth Bader Ginsburg: But the person -- the person we are talking about, the work we are talking about, never got the first limit.

There was no, there was no time, there was no time when that work could have been protected.

So why isn't it consistent with the Copyright Clause to say, you are entitled to limited time protection?

We are not talking about a case where you've had the protection, enjoyed it and then it expired, and then Congress says: We'd like -- we like your work so much, we are going to give you another term.

What's affected here are people who were unprotected.

And Congress says we think that they should have a limited time.

Mr. Falzone: So let me just clarify one thing.

Many of the works that were restored here did get some time, 28 years, and were not renewed.

But to get back to your question about the works that got none--

Justice Ruth Bader Ginsburg: They didn't get the equivalent of what a U.S. author -- but let's take the large category, because it's the ones that you feature.

We are talking about Shostakovich, Stravinski, and I say: Well, what's wrong with giving them the same time that Aaron Copeland got?

Mr. Falzone: --Congress has been setting the limited time at zero since 1790.

In the 1790 Act, Congress set the limit at zero for a wide array of works, those that did not comply with formalities, those that were written by foreign authors--

Justice Ruth Bader Ginsburg: That's not a limited time.

That's saying you have no time.

Mr. Falzone: --Well, but saying you have no time is itself picking the limit because the language of the Copyright Clause forces Congress to pick a limit that constraints copyright by marking its end.

And when -- If a limit does not mark the end once reached, then there is no limit, there is no end.

Justice Ruth Bader Ginsburg: But it has to have a beginning, too.

And for these people who were unprotected, because we didn't recognize their copyright, there is no beginning.

Mr. Falzone: No, there does not need to be a beginning.

It is within Congress's discretion.

Remember, this is permissive.

Congress may grant exclusive rights, but it can also say your limit is going to be zero, we decide that you're not going to get any exclusive rights.

Every Congress since 1790, every time it went to add subject matter, every time it went to extend the duration of copyright, respected that choice to give no time.

And in fact, the time -- the decision to make foreign authors ineligible is a decision that Congress has never gone back on.

None of the exceptions the government points to remove anything from the public domain that was placed there based upon a lack of national eligibility.

200 years of history is crystal clear about--

Justice Ruth Bader Ginsburg: I can understand your argument that the public domain is untouchable.

I'm not sure I get that from the Constitution, that says to secure to authors for a limited time the exclusive right.

That -- that's talking about what you can secure to authors, so I don't see why using the words of the Constitution

"to secure to authors for a limited time. "

Congress can't say: We want every author to have a limited time.

Mr. Falzone: --Well--

Justice Ruth Bader Ginsburg: The foreign works that we didn't give, we're not treating them any better.

They don't get a different startup date, but they get the same end date as our own authors.

Mr. Falzone: --Right.

The -- the operative language is the limited times restriction, and the limit it requires Congress to pick is the date at which all protection ends for good, and Congress has picked zero since 1790, and respected that decision, and that is no accident.

Because the -- the -- if -- if you want to know what limited times means, if it means anything it means if, for instance if Congress is not required to respect an expiration date long after it's passed, or its decision to deny a work any protection in the first place--

Justice Ruth Bader Ginsburg: We're not talking about expiration dates.

So I'd like you to concentrate.

Mr. Falzone: --Sure.

Justice Ruth Bader Ginsburg: That's not -- that's not -- none of these -- none of these copyrights have been extended beyond their expiration date.

They just weren't protected.

Mr. Falzone: Well, taking works that got no protection -- if Congress is not required to respect its decision to deny a work any protection in the first place, we can never know whether we've reached the end or not.

And in fact that's the problem with the government's theory.

Its theory says all Congress has to do is attach a nominal expiration date to any given copyright.

Well, if that's true, there is -- if that's all you need, there is nothing stopping us from reaching back de Tocqueville 100 years.

Justice Ruth Bader Ginsburg: But that is -- that is not -- that is most distinctly not before this case, so please let's not talk about a copyright that has been protected, has expired, and Congress wants to revive it.

We are concentrating on what Congress did to bring us into compliance with the worldwide system and it's saying: We are giving a limited time to these authors.

Mr. Falzone: Well--

Justice Ruth Bader Ginsburg: They never had a limited time before.

Mr. Falzone: --Well, I -- I was talking -- de Tocqueville never got any time, because he was a foreign author.

Ben Johnson never got any time, but on the government's theory we could give him 100 years right now.

This statute did work differently.

It certainly restored copyrights into the existing period.

That's correct.

That is an accurate description of this statute.

But that is not a limit that's contained anywhere in the government's interpretation of limited times.

Justice Ruth Bader Ginsburg: Did anyone in the same -- the same -- published the same year as de Tocqueville, a U.S. author, that would have a copyright protection today?

Mr. Falzone: I'm sorry.

I didn't hear you.

Justice Ruth Bader Ginsburg: I gave the example of Aaron Copeland versus Shostakovich.

Let's go back to de Tocqueville.

Who has a copyright who published in what, 18 -- what was it -- 40s?

Right.

Mr. Falzone: The answer is nobody.

But here is the problem.

If Congress wanted to reach that work, here's all it has to do on the government's theory, and even under the mechanism of section 514.

All it needs to do today is extend existing terms 100 years, and then reach back and restore into that existing term.

So on the government's theory and even by the mechanism on which this statute operates, the government could reach back and protect de Tocqueville.

Chief Justice John G. Roberts: Under your -- under your theory, let's say you have a copyright that expires on October 5th, okay?

On October 4th, Congress could extend that for 25 years.

Mr. Falzone: Yes.

Chief Justice John G. Roberts: Right.

But on October 6th, they couldn't go back and extend it 1 day.

Mr. Falzone: That's exactly right, because the limit the Copyright Clause requires us to pick is an end date with permanent consequence.

End dates are about finality.

If that end date doesn't have permanent consequence, if it doesn't have finality, we can never know if we've reached the end or not.

The limit the Framers knew was the limit of the Statute of Anne.

Justice Anthony Kennedy: But it -- it seems to -- it seems to me that that was rejected in -- in our most recent and earlier case on copyright.

Mr. Falzone: In Eldred?

Justice Anthony Kennedy: Yes.

Mr. Falzone: No, No.

Eldred said Congress can move the limit back we reach it.

But Eldred most certainly did not say that Congress is free to ignore the limit once we hit it, because if you can do that then you never know if you've reached the limit or not.

The limit the Framers knew was the one in the--

Justice Sonia Sotomayor: Counsel, there was no limit here, meaning these foreign works were never given the opportunity to be copyrighted.

Isn't that a substantial difference from the hypothetical that you're trying to proffer?

You're -- the hypothetical -- and I think that's what Justice Ginsburg was responding to -- is you had a copyright, it expired, and now Congress wants to revive it.

Isn't that different from not having had the opportunity at all, and being given a term to exploit your work and protect it?

Mr. Falzone: --The answer is no, it's not different; and Congress treated those situations exactly the same in all 19 amendments over the span of 200 years.

Justice Sonia Sotomayor: The problem--

Mr. Falzone: It gave equal respect.

Justice Sonia Sotomayor: --I -- I know, but it didn't do it when it set up the copyright system.

Mr. Falzone: Oh, it did.

Justice Sonia Sotomayor: In 1790, counsel, there were three States that didn't give copyrights.

There were other States, and you make a big deal in your brief about common law protection, but common law protection, particularly in New York, which you relied on, only extended to unpublished works.

Once a work was published, it was no longer protected under the common law.

That was true of most States.

And some States gave copyright protection to residents of their own State but not to residents from other States.

So it took a whole body of public works and gave them copyright protection the day they decided to pass the copyright law.

So what are you doing telling us that there has never been a historical experience with Congress taking public works out of the public domain?

Mr. Falzone: Well, let me be clear about what happened in 1790.

The 1790 Act did not remove anything from the public domain.

The text is clear, because insofar as applied to works already printed, it presupposes existing copyrights explicitly in the text of the act.

Justice Sonia Sotomayor: Read those words to me?

Mr. Falzone: So -- I'm looking at section 1 of the 1790 Act, and at -- at the beginning it talks about:

"After the passing of this act, the author and authors of any map, chart, book or books already printed within these United States, being a citizen thereof or resident within, or his or her executors, administrators or assigns, who have or have not transferred to any other person the copyright of such map, chart, book or books-- "

Justice Antonin Scalia: Wait a minute.

Who have or have not transferred to any other person.

So you don't have to have a copyright, right?

Justice Sonia Sotomayor: You have to have a--

Mr. Falzone: --You do have to have a copyright.

So it says "author or authors" and "have" is the singular and have -- "have not" is the plural for that.

Justice Antonin Scalia: Read it again?

Who have--

Mr. Falzone: Sure.

Justice Antonin Scalia: --or have not transferred to any other person?

Mr. Falzone: Right.

The copyright of such map.

It presupposes the existence of a copyright.

Justice Antonin Scalia: Oh.

Oh, the copyright.

I got you.

Mr. Falzone: Yes.

"The copyright" is the key language.

So the text makes it clear they presupposed existing copyrights.

And let me speak to--

Justice Sonia Sotomayor: --Your reading of that passage is different than mine.

I think it's a -- it's saying whether you have or you haven't.

Mr. Falzone: --But let me speak to the point you raised about common law protection for published works.

You said New York provided no common law protection for published works.

With respect, that's not correct.

The Naxos v. Capitol Records case, the highest court of New York, says New York common law provided protection for published works right up to the point where the Federal act cut it off.

And if you look -- and if -- if the question is whether the first Congress intended to take anything out of the public domain in 1790, the answer is you simply cannot reach that conclusion, because everything contemporaneous with the first Congress, the history of the common law in Britain, decided by Millar v. Taylor and Donaldson v. Beckett, recognized common law rights in published works.

The Federalist Papers spoke about Millar, and everything contemporaneous--

Justice Sonia Sotomayor: If we disagree with your proposition, does your argument fail?

If the historical work does not point to what you claim?

Mr. Falzone: --You mean the 1790 Act or the 19 after it?

Justice Sonia Sotomayor: In 1790.

If Congress did what I believe it did, would your argument fail?

Mr. Falzone: No, I -- no.

Not necessarily, because of course that was the first Copyright Act and Congress established a baseline.

It had to start somewhere.

What we see 19--

Justice Sonia Sotomayor: --it started in the place you want Congress to have started now.

Mr. Falzone: --Well, no, but then--

Justice Sonia Sotomayor: It said, moving forward, there is a Federal copyright.

It didn't have to take things out of the public domain.

We are arguing about whether they did or didn't.

But assuming they did.

Mr. Falzone: --Oh, I will assume they did.

They had to start somewhere.

They wanted uniformity.

They created a statute that provided it.

When you look at every amendment, 19 times in 200 years after that, Congress respected the permanent consequence of the limits it chose, even when those limits were a work gets no time whatsoever, based on formality and noncompliance, based upon national eligibility, based upon expiration of 28 years.

It was consistent each time it added subject matter, extended terms, and--

Justice Anthony Kennedy: Can you tell me a little bit about the phrase and the argument about the public domain?

Is in your view that just a synonym for when the time has ended?

Or is there something more substantive to it that -- is it your position that the public somehow owns what's in the public domain?

I'm--

Mr. Falzone: --Well, so to be precise, our position is once Congress calls the limit, that is, once it says this work is unprotected, whether it's the expiration of 28 years or a decision to give it no protection, it's creating affirmative rights in every member of the public.

Yes, they own it, and this Court has recognized--

Justice Anthony Kennedy: --But -- but how does the phrase -- so the public domain is simply a conclusion to express that, the operation of that principle?

The public domain doesn't have any more substantive meaning other than to just express the conclusion that there is a limited time?

Mr. Falzone: --Well -- in -- in this case, when I refer to the public domain, it's the collection of things for which Congress had said protection is done, it's over, we've hit the limit, it's done.

So things that went--

Justice Anthony Kennedy: Once again, it's just a conclusion for the argument.

Mr. Falzone: --I -- I think that's the operative concept here.

That's right.

Justice Ruth Bader Ginsburg: I think you gave an analogy to the statute of limitations, and I thought you were quite right about that.

You can extend the statute of limitations before it's expired, but once it's expired it's over.

The problem with using that as an analogy is that there was a beginning.

Time ran out, and you're trying to deal with a situation here where you say, you know, the time was limited for the U.S. work, but it's unlimited; you -- you cannot treat the foreign work -- you cannot give it a limited time, the same limited time that you would give a U.S. work.

You're saying these people had no time and they may never have time.

Mr. Falzone: They had no time because Congress decided that their works were going to be ineligible, and a limit of zero is one Congress has been setting since 1790, and respected consistently.

If the Chief Justice gives me a limited time for oral argument, I might say no thanks, I have nothing to say.

And we all know I can't come back tomorrow.

Justice Ruth Bader Ginsburg: But it isn't quite so, because there are these examples of people who couldn't get copyright because of wartime after both World War I and World War II, and -- so those people were allowed to get the protection that they couldn't get because of the war.

Mr. Falzone: That's correct.

That's what those statutes did.

They were never challenged.

And make no mistake, our position is, insofar as they removed anything from the public domain, they are unconstitutional.

But even if the Court doesn't want to go that far, I think the wartime statutes and the other small handful of exceptions the government points to fit quite well into a very limited exception for eligible authors who show nothing more than the familiar concept of excusable neglect, which has operated -- again, in very narrow situations -- to relieve people of the consequences of deadlines.

Chief Justice John G. Roberts: What about new categories?

You know, architecture.

Congress decides we're going to extend copyright protection to architectural design, and they say -- and we are going to go back 5 years, so any new architectural design conceived or constructed, whatever, within the last 5 years gets protection, and it goes on for another 15.

Mr. Falzone: Right.

So -- so -- of course, to be clear, that's not what Congress actually did when it protected architectural works.

Chief Justice John G. Roberts: No, no, I know.

Mr. Falzone: It looked forward, right.

But that -- so in that case, the -- the Federal scheme, if it had not previously regulated architectural works, it had not -- there had been no decision as to what the limit was going to be, so you may pose a different question.

Here, we are talking about works that were affirm -- affirmatively within the Federal scheme--

Chief Justice John G. Roberts: No, no, I'm just trying -- trying -- I'm trying to test the limit of your public domain argument.

Mr. Falzone: --Sure.

Chief Justice John G. Roberts: Does it extend to new categories of copyrightable works?

Mr. Falzone: I think the answer is the retrospective portion of that statute flunks progress of science but -- but passes limited times.

Justice Antonin Scalia: Would you -- would you spend a little bit of time on your other argument, I take it to be a separate argument apart from the -- you know, time limit argument, the argument that the problem here is that this law does not promote the progress of science and useful arts, and therefore does not comply with the Copyright Clause?

Mr. Falzone: That's right.

Justice Antonin Scalia: Why doesn't it promote the progress of science and the useful arts?

Mr. Falzone: So -- the -- the progress of science corresponds roughly to the creation and spread of knowledge and learning.

A statute that does nothing, like this one, does nothing but take old works out of the public domain without any impact on prospective incentives, cannot stimulate the creation of anything.

And as for things that already exists, it cannot stimulate the spread of them.

All it can do is restrict the spread of things that could warrant--

Justice Sonia Sotomayor: You don't think that there are some foreign authors who didn't or wouldn't come into the U.S. market because they couldn't protect their works here, and kept their works in other markets that -- in which it was protected?

Mr. Falzone: --Well, I don't--

Justice Sonia Sotomayor: And it doesn't encourage them to sort of make investments?

Mr. Falzone: --No.

This statute does not and cannot do that, because--

Justice Sonia Sotomayor: Why not?

Foreign authors who decided not to exploit their works here wouldn't be induced to think about coming into this market because now they can protect their works?

Mr. Falzone: --Well, whether they came into this market or not has no effect on whether they can protect their works or not.

They were unprotected whether they came into this market or not.

They would be protected--

Justice Sonia Sotomayor: You're -- you're not answering my question.

You don't think that this law induces those foreign authors to come here and promote their work?

Mr. Falzone: --I don't -- I don't see how it could.

Chief Justice John G. Roberts: Well, one way it could, I suppose, is that it shows that Congress is interested in making sure that American authors overseas have reciprocal protection, an issue that could come out in a variety of contexts.

And if I'm sitting there writing a great novel, I will have the confidence that my government will ensure that I get protection when it becomes a bestseller in China; right.

Mr. Falzone: Yes.

Chief Justice John G. Roberts: Well, that's -- that's an incentive.

Mr. Falzone: Yes.

And you were assured of that incentive in 1988, when we joined the Berne Convention without removing anything from the public domain, because when you sit down to write that book today, that work will absolutely be protected in all of the Berne and WTO countries.

So the incentive effect was achieved and achieved in full--

Chief Justice John G. Roberts: No, I'm talking about -- but the same issue can come up again, you know, whether it's in the area of formalities, whatever.

There may be another problem where there is a dispute between other countries and our country.

And I will know that in the past, the United States has taken action looking out for -- for the interests of American authors.

Mr. Falzone: --That's--

Chief Justice John G. Roberts: That's an incentive.

Now, it may be, as I think it was described in the court of appeals decision, a "meager" incentive.

You may be more interested in other protections.

But it's -- we haven't really required much more than that.

Mr. Falzone: --Perhaps.

I mean, there's nothing in -- in -- in the record before Congress here to reflect the fact they made any such conclusion.

Justice Antonin Scalia: Let me put it -- I think it's the same point another way.

Let's assume I'm a multibillionaire and I receive an award as a great patron of the arts because I have furthered the arts by giving several million dollars to someone who has already composed an opera or who has already written a book.

Wouldn't -- wouldn't I be furthering, be viewed as furthering the arts?

Mr. Falzone: Potentially, but the problem here, if I can move a little bit to the First Amendment, is the mechanism Congress chose to use here.

They chose to create that reward by taking away core public speech rights from the American public, and transforming them into somebody's private property--

Justice Antonin Scalia: Well, that's what the copyright law permits -- the -- the -- excluding things from the public domain, so long as in the process of doing it, you're furthering the arts.

Mr. Falzone: --Well -- but let me focus on the First Amendment problem.

An ordinary copyright statute does not revoke the public's Federal right to copy and use works in the public domain.

That is exactly the thing Congress refused to do 19 times over 200 years.

And that's the huge departure from traditional contours of copyright protection that triggers First Amendment scrutiny here.

And when you go to ask the First Amendment question, you can't ignore the mechanism Congress chose to use here, which is to take away public speech rights, and turn them into somebody else's private property.

That was the explicit motivation of -- of the people who came before Congress and asked them to pass this statute.

That is the justification the government--

Justice Anthony Kennedy: But now you're saying that there is a substantive component to this public domain argument, that the public does own something.

And that's different from what I thought you answered earlier when you said it's just conclusory for a limited time.

Mr. Falzone: --In that case, I misspoke.

The public -- the public domain is owned collectively by the public, and in fact, decisions of this Court going back to the 19th century refer to it as public property.

And I think--

Justice Stephen G. Breyer: I'm curious.

To go back a second, I thought Justice Sotomayor's question was, imagine Smith in Germany.

He has written a book.

It's there, already exists, but it has no copyright protection in the United States.

So after this, would he be more willing to send it to the United States?

And I take it your answer is no.

The reason is because I can go and buy a copy and sell it in the United States even without this law.

Is that right or wrong?

Mr. Falzone: --I think -- I think that it could possibly incentivize him to bring it over to the United States, depending on how the statute worked.

Justice Stephen G. Breyer: Well, isn't that the question?

The question is, now that Smith has the same protection in the United States that Germany gave him, doesn't that give him an incentive to send his book to the U.S.?

In thinking about that one, I thought: Not much, because I can go buy it today without this law and bring it to the United States and sell as many as I want.

Nonetheless--

Mr. Falzone: I think that's right.

Justice Stephen G. Breyer: --That's not right?

Mr. Falzone: No, I think you're correct.

I think you're correct.

I think that's--

Justice Stephen G. Breyer: Well, don't just jump on my answer as being correct if it's not.

[Laughter]

Justice Sonia Sotomayor: Counsel, it might be his incentive to buy it or not, but the question is the author's incentive to sell it here.

Those are two different incentives.

Whether -- you know, he could go anywhere and buy a cheaper book if he chose to take the trip or get on the internet and find it.

He could do that now.

Copyrighted materials here go at a different price than they do elsewhere.

That's not the issue.

The issue is the author's incentive.

Mr. Falzone: --The -- the -- the problem here is these authors are long gone.

You can't incentivize them.

These works are so old they are long gone.

You can't incentivize anything that's happened so long ago.

If you could--

Justice Sonia Sotomayor: Well, if you can't incentivize them, they are not going to claim their rights.

Mr. Falzone: --I'm sorry?

Justice Sonia Sotomayor: They are not going to come and claim their rights.

Part of this law is that they have to declare that they are interested in protecting their copyright here.

Mr. Falzone: No.

Actually, that's optional.

It's optional for them to file a notice of intent to enforce.

It's optional for them to declare.

But the real problem is--

Justice Sonia Sotomayor: Optional for them; but if they do, that's when they can sue a prior user.

Mr. Falzone: --That's right.

It -- Well, it depends who they want to sue, but yes.

They certainly have broader rights once they file a notice of intent to enforce.

But that--

Justice Antonin Scalia: Of course, the assumption of this line of questioning, I suppose, is that the mere marketing in the United States of stuff that has already been created promotes the progress of the useful arts.

I'm not sure it promotes the progress of the useful arts.

It makes more money for the guy who wrote it, but doesn't incentivize anybody--

Mr. Falzone: --That's right.

Justice Antonin Scalia: --to create art.

Mr. Falzone: It's not going to incentivize anybody to create anything, and it only restricts the circulation of things that once circulated freely.

If I can reserve my time for rebuttal, I'd like to do that.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Falzone: Thank you.

Chief Justice John G. Roberts: General Verrilli.

ORAL ARGUMENT OF DONALD B. VERRILLI, JR., ON BEHALF OF THE RESPONDENT

Mr. Verrilli Jr.: Mr. Chief Justice, and may it please the Court:

I'd like to begin by picking up on a point that my friend made in response to Justice Ginsburg suggesting that with respect to foreign works what Congress has done is set the copyright term at zero.

I don't really think that's a fair description of the situation.

It obscures what Section 514 actually does and what Congress is all about here.

Since 1891, Congress has concluded as a matter of copyright law that foreign works are entitled to the same protection as domestic works.

The problem with respect to the authors that Section 514 covers is not that Congress set the copyright limit at zero, it's that as a matter of foreign relations, we did not have treaties with these individual countries.

And what 514 does is remedy that be problem.

What 514 says is: With respect to a defined set of foreign authors, they get the remainder of the copyright term that they would otherwise have gotten, and nothing more, had they lived in countries where we had -- with which we had copyright relations at the time they published, or had they complied with the formalities that we used to enforce but no longer do to perfect and renew copyrights.

That's what it does.

It doesn't grant anybody a perpetual term.

It does not renew a copyright term that has run its full course and create a new one.

It rectifies that problem which doesn't, doesn't reflect anything about a congressional judgment setting the copyright term at zero.

It could--

Justice Samuel Alito: Could Congress grant copyright protection to works that had lost that protection due to the expiration of the period that was provided for under, under previous law?

Mr. Verrilli Jr.: --We think that the, there isn't an ironclad limit that can be derived from the text of the Copyright Clause or from history that would say that Congress is forbidden in any circumstance from doing that.

We do think that there are significant limits in the text of the Copyright Clause that would restrict any ability Congress might have to do that.

But one thing I think is important here is that Section 514 is not a statute in which Congress did that, and we would respectfully suggest that any assessment by this Court of whether Congress had that power should await a concrete context in which Congress exercises it, if it ever does.

Justice Sonia Sotomayor: What's the limit that you're referring to?

Mr. Verrilli Jr.: Excuse me, Justice Sotomayor?

Justice Sonia Sotomayor: You said there are limits.

Mr. Verrilli Jr.: Yes.

Justice Sonia Sotomayor: What--

Mr. Verrilli Jr.: Well, one limit I think is a quite important one is that the Copyright Clause says that you can only grant copyright in authors, to authors.

And as a work gets older and older when you're talking about Shakespeare and Ben Johnson, there really at that point isn't an author in which you could vest the copyright.

And creating any copyright for a long-expired work like that would really, I think, raise the problem that the framers were addressing by restricting copyright to authors which was to avoid the creation of patronage monopolies in which publishers who weren't the authors could claim the exclusive rights of copyright.

Justice Samuel Alito: But doesn't this -- doesn't Section 514 provide copyright protection for works that were created by people who are long since dead?

Mr. Verrilli Jr.: Yes, it does.

Justice Samuel Alito: So I don't understand the limit that you were just suggesting.

Mr. Verrilli Jr.: Well, because they--

Justice Samuel Alito: Do they have to be dead for some period of time before--

Mr. Verrilli Jr.: --No, but it--

Justice Samuel Alito: --Congress is unable to give them back their copyright?

Mr. Verrilli Jr.: --No.

What 514 does, Justice Alito, is provide copyright protection to works of foreign authors whose works still have copyright protection in their own country, whether they are dead or alive.

So long as the work has protection in the country, then 514 provides copyright protection.

And the reason it does so is to ensure our compliance with the Berne Convention.

And the why here is very important and I think provide the answer to Justice Scalia's question about how 514 contributes to the progress of arts and sciences.

What 514 does, 514 is, in essence, the price of admission to the international system.

We decided, the policymaking branches of our government, the executive and the Congress, decided that we needed to be, and was in the national interest, to be part of the international copyright system and to join the Berne Convention to accomplish that.

The reason we did so was because our intellectual property is subject to very serious levels of piracy in many foreign countries because of under enforcement.

By joining Berne, what we did was commit ourselves to the international standards.

And by enacting Section 514 to implement the Uruguay Round Agreements in 1994, what we did was say to the world that we are going to ensure compliance in this country.

Justice Antonin Scalia: General Verrilli, I do not find that an appealing argument.

It seems to me Congress either had the power to do this under the Copyright Clause or it didn't.

I don't think that powers that Congress does not have under the Constitution can be acquired by simply obtaining the agreement of the Senate, the President and Zimbabwe.

I do not think a treaty can expand the powers of the Federal government.

I mean, this is either okay under the copyright clause or it isn't.

Mr. Verrilli Jr.: We completely--

Justice Antonin Scalia: It would be nice to know the reason for it, but you would still have to establish that it's within the power of the Federal government--

Mr. Verrilli Jr.: --We completely agreement with that, Justice Scalia.

There is no textual limit in the Copyright Clause that would preclude Congress from enacting this statute.

The Petitioners have also raised a First Amendment argument.

We don't think First Amendment scrutiny applies here.

To the extent it did, the why would matter there, and there is definitely a substantial interest on the part of Congress in, in ensuring compliance with Berne and getting protection for our works in Berne.

Now in Eldred, the Court did say, I think quite clearly, that there is no requirement under the Copyright Clause that a new financial benefit granted through an existing, that a new financial benefit cannot be granted to an existing work.

Justice Stephen G. Breyer: No, but in Eldred the main difference is that in Eldred, there was a law that might, at least in principle, have elicited a new book.

And in this case, by definition, there is no benefit given to anything at all that is not already created.

Mr. Verrilli Jr.: I disagree.

Justice Stephen G. Breyer: So by -- How does it give any benefit to anything because it's already created.

Mr. Verrilli Jr.: Because it creates additional incentives for authors today and going forward, because they know that there is a much greater likelihood that whatever intellectual property they create will be better protected in foreign countries as a result of our joining the Berne Convention.

Justice Stephen G. Breyer: How does this provision do that?

I think maybe there are other provisions, but I thought this provision is talking solely about books, for example, that are already created.

Mr. Verrilli Jr.: Well--

Justice Stephen G. Breyer: Is it not?

I may have been misreading, it but I certainly got that out of like 42 briefs and--

Mr. Verrilli Jr.: --But we can't -- If we can't get the protections of Berne, Berne is not a menu in which we get to choose options.

Justice Stephen G. Breyer: --Oh, oh.

Okay.

Well, you know, as you also know from the 42 briefs, that there is a lot of argument that you could comply in other ways that are less restrictive; and whether that's true or not, is that -- there what you're saying is -- if I parody it, it's not a fair reading I'm going to give -- but what you're saying is we are, here have a law which says that libraries, music lovers, book buyers will either pay more money for things already in existence or will simply be unable to get them if they are orphans, on the one hand, so that other countries will impose similar kinds of restrictions upon their music lovers, music goers, libraries and -- so that they pay more for our works that are already in restrict -- that are already produced, or simply can't use them because they can't find who owns them.

Now that's in parody form, for succinctness.

What I think the argument is on the other side--

Mr. Verrilli Jr.: Right, but--

Justice Stephen G. Breyer: --And they will say, no copyright law -- with your exception of when the country was founded -- no copyright law has served that kind of purpose.

That's served often by tariffs--

Mr. Verrilli Jr.: --But--

Justice Stephen G. Breyer: --but not by copyright law.

Mr. Verrilli Jr.: --But there is another way of looking at that, Justice Breyer, of course, which is that the, but for the fact that these individual authors lived in countries that didn't have copyright relations with the United States, they would have the protection of our copyright law and they would have the term of copyright--

Justice Stephen G. Breyer: Not necessarily.

There are three categories.

One is the category of the people who you couldn't, because of the country; that's Egypt, I think, and Russia.

Their second is the category of the people -- of sound recordings, and their third is category which is not the null set, of people who did not comply with certain registration requirements.

For example, I believe that the widow of Samuel -- Brittan failed to renew her copyright, and there are probably many that failed to renew the copyright after 28 years, and the reason that they didn't is because they didn't think there was much money in it, and those are the very works that the libraries want to get ahold of and put in their databases.

Mr. Verrilli Jr.: --And there is no textual limit in the Copyright Clause that says that Congress cannot provide the same limited term to those categories of works that it provides to other works.

There just is no textual limit.

Justice Stephen G. Breyer: That's true, but for one text.

They say that text has to do with progress.

And when they read it historically in light of Macaulay, in light of the Statute of Anne, in light of going back to Venice and the copyrights, in light of going back to letters between Madison and Jefferson -- that term has always meant produce at least one new thing.

And here there is not one new thing.

Mr. Verrilli Jr.: And -- yes.

Yes, there is.

First, with respect to Section 514, it's part and parcel of joining Berne, and Berne gives protection not only to the previously created works but to newly created works, and it creates additional economic incentives in foreign -- by assuring better protection in foreign countries for newly created works.

So it creates many, many more than one new work.

And I think it's also quite reasonable, Justice Breyer, to read the incentive structure here in a way parallel to the way the Court did in Eldred, which is to say that just as in Eldred the Court assumed that there was an implicit guarantee to an author making a creation that that author would get the benefit, not only of the existing term of copyright but any extension, I think here with respect to American authors, it's an implicit guarantee that they get the benefit not only of the foreign protection in existence at the time, but any expansion of foreign protection through adjoining treaties, and Article 8 and Section 514 implementing Article 18 of Berne is the price of admission to that treaty--

Chief Justice John G. Roberts: General, there is something at least at an intuitive level appealing about Mr. Falzone's First Amendment argument.

One day I can perform Shostakovich; Congress does something, the next day I can't.

Doesn't that present a serious First Amendment problem?

Mr. Verrilli Jr.: --I don't think so, Mr. Chief Justice, and I do think -- for a host of reasons.

One is I think that it's -- it's just not so simple, and an -- I think the question that I think Your Honor asked my friend was what about when Congress expands the scope of exclusive rights for existing works?

Well, Congress has done that many, many times, and musical composition is a really good example of that.

In 1831, Congress created exclusive right in the publishing and vending of musical compositions, but not in their public performance.

So from 1831 on, once I bought the sheet music, their -- public performance was borrow the Petitioner's way of thinking in the public domain.

You could do it any time you wanted without having to get a license to pay any money.

But--

Chief Justice John G. Roberts: Well, that's -- that's -- one answer is that Congress has done this before.

Mr. Verrilli Jr.: --But then in 1897, Congress granted an exclusive right in the public performance of musical compositions--

Chief Justice John G. Roberts: Right.

Mr. Verrilli Jr.: --and made it applicable to all existing copyrights.

Chief Justice John G. Roberts: Okay.

So do you have an argument other than they have done this before?

Mr. Verrilli Jr.: Well, that they have done it many times before and it's a process -- I think it reflects -- and -- and the point is no one has thought with respect to any of those significant adjustments of the boundaries that it was an occasion for First Amendment scrutiny.

And I think that's because of the wisdom of the Court's opinion in Eldred, that these are--

Chief Justice John G. Roberts: But it's pertinent under the First Amendment in other areas, right?

It's a different analysis if your claim is the government should open up a park as a public forum, than if it's been a public forum for 200 years and the government decides to close it down.

Maybe they can do it but it's a different question.

So why isn't this a different question, whether they can extend copyright protection that's already there?

Mr. Verrilli Jr.: --I think -- because I think there is, once the Court gets into the business of First Amendment analysis, there is no stopping point, because all of the adjustments of the boundaries could have the same kind of effect I think as the musical composition -- show?

Chief Justice John G. Roberts: What about Jimmy Hendrix, right?

He has a distinctive rendition of the national anthem, and all of a -- assuming the national anthem is suddenly entitled to copyright protection that it wasn't before, he can't do that, right?

Mr. Verrilli Jr.: What copyright does, by definition, is provide exclusive rights in expression; and so if the First Amendment is triggered whenever copyright provides exclusive rights in expression that it didn't used to provide, then heightened scrutiny will apply any time Congress exercises its copyright power, and what the Court said in Eldred--

Chief Justice John G. Roberts: So he is just out of luck?

And that's just one example of many, where you take existing works and you have a derivative work or something that is distinctive to you.

So those people are just out of luck?

Mr. Verrilli Jr.: --Well, of course, under Section 514 they are not out of luck because it has significant protections and accommodations for derivative works.

The question of whether there should be heightened First Amendment scrutiny, we think Eldred answers, that -- that first the Copyright Clause already contains very significant accommodations of First Amendment interests.

The idea/expression dichotomy, fair use; and -- and that is going to provide -- maybe -- maybe Jimmy Hendrix could claim fair use in that situation.

And those are at the core of the traditional contours of copyright.

So if Congress were to try to extinguish fair use, I'd say yes, we'd have a First Amendment issue there.

If Congress were to try to provide exclusive right in the ideas that are expressed, as opposed to the expression itself, yes, we would have a First Amendment issue there.

If Congress were to, say, use the copyright power to engage in viewpoint discrimination--

Justice Anthony Kennedy: Well, it seems to me what you're saying, and I already gave this answer because originally, I thought I was going to put in my notes, the First Amendment does not apply to the copyright area -- and that just can't be.

What you're saying is, is that this law will pass intermediate scrutiny.

It's an important governmental interest and it's substantially related to that.

Mr. Verrilli Jr.: --We don't think it would have any problem passing intermediate scrutiny, but we don't think intermediate scrutiny ought to apply.

Justice Anthony Kennedy: But -- but -- can you -- can you cite me to some -- some authority which says the First Amendment doesn't apply to a copyright?

Mr. Verrilli Jr.: No.

We don't say it doesn't apply, but Eldred.

Justice Anthony Kennedy: The First Amendment test doesn't apply.

There has -- there has to be a -- a test.

Now maybe you say that it isn't immediate scrutiny; it's something else.

But -- but certainly the First Amendment is implicated.

Mr. Verrilli Jr.: Yes.

And what Eldred said, as I read it, Justice Kennedy, is that unless Congress alters their traditional contours of copyright then ration basis scrutiny rather than any heightened form of First Amendment scrutiny applies.

Chief Justice John G. Roberts: Even under -- even under rationale basis scrutiny, it seems to me that you run into Justice Breyer's concern that the government interest is vanishingly small when it comes to promoting progress under the Copyright Clause, so that the interest weighed on the other side of the -- the restriction of free speech rights, it's hard to say that that's necessarily going to tip the balance in every case.

Mr. Verrilli Jr.: I think it is going to tip the balance, Mr. Chief Justice, because the -- the reason Congress enacted section 514 at the urging of executive branch officials who were charged with trying to ensure that we could integrate ourselves into the international system of copyright protection was that if we didn't have this provision, then we were not going to be taken seriously.

Our works were not going to be protected in these foreign countries, and that it would defeat the purpose of joining Berne in the first place.

Justice Stephen G. Breyer: It couldn't have been that -- it must be somewhat overstated, mustn't it?

Because the only concern is not about protecting new works in the foreign countries -- the concern as I understand it was that we've had things in copyright for many years, and we want retroactive protection there.

The countries that didn't give it, like Japan, were not kicked out of the Berne Convention.

Rather, we pursued them in the WTO for many years, and I guess somebody might pursue us and then you get into an argument about whether there are other ways.

Now, is that strong enough to overcome what these briefs are full of?

I'll give you an example.

Save The Music is charged with looking for Jewish music in the periods '30s, '40s, and '50s.

Other organizations might find a treasure trove of literature that was -- that was copyrighted in Czechoslovakia or in Warsaw, and they want to put it on the web, and they want people to listen to it.

But they have no more idea of how to track down the person on that, and they aren't protected by any notice requirements because they aren't reliance parties.

We're told by Barbara Springer, former registrar, that there are millions of such instances where people would like to go back and would like to put music literature, film, et cetera, in a form that people can use it today and there is no way to do it without their becoming scofflaws, or without their having millions of dollars to hire infinite numbers of trackers and lawyers.

Now, that's the argument that's made on the other side, as the interest in communication that's important.

What do you say?

Mr. Verrilli Jr.: So -- two points.

First, with respect to the interest in what foreign countries will do, I think it's incorrect to assume that this will be tit-for-tat, that if we don't enforce Article 18, the only thing other countries won't do is enforce Article 18 with respect to our works, as opposed to believing that we're not an -- an effective partner and not enforcing their copyright laws for the whole purpose of our works.

Second, Justice Breyer, that problem that you identified just exists as a feature of copyright law.

With respect to those works, it's going to create that issue.

The problem here is just the result of a fortuity that those works might have been published in a country that at the time they were published didn't have copyright relations with the United States.

And what section 514 does is address that fortuity by putting those authors in the same position they would have been in had their country had copyright relations with the United States.

So I don't think that's a principled objection on a constitutional basis--

Justice Stephen G. Breyer: Right here, we have the argument.

I agree with you that it is a general problem.

It may be diminished in the United States but it still exists.

And I guess the argument here is well, don't make it millions of times worse.

Mr. Verrilli Jr.: --Well, it doesn't make it millions of times worse.

It applies to a small number of -- but a significant number of countries--

Justice Stephen G. Breyer: Barbara Springer said a million, numbers it in the millions.

Do you want to say that's--

Mr. Verrilli Jr.: --No, we don't have any reason to doubt the -- the aggregate number.

Justice Ruth Bader Ginsburg: That's presupposing that they are all going to give notice.

Mr. Verrilli Jr.: Well, with respect to reliance parties, that's certainly true.

They would have to give notice.

It is the case, Justice Ginsburg, that if you're not a reliance party, then there would be an infringement even without notice, so I do think there is something on that point.

But again, I just think that's a result of the fortuity of the countries not having copyright relations with the United States.

It's not about the -- it's not anything integral as a matter of constitutional principle -- the statute--

Justice Sonia Sotomayor: --Marbury -- the Davis law was passed.

Had to go and pick out all the books it had that were subject to copyright and throw them out, or do what with them?

Mr. Verrilli Jr.: --I -- I don't think--

Justice Sonia Sotomayor: Stop them from circulation?

I'm not sure -- how would they protect themselves from infringement?

Mr. Verrilli Jr.: --Yes.

I don't think that they had -- I don't think -- I don't think there is an active infringement by having a library book on the shelf, and of course, there are protections for libraries built into the Copyright Act in all events.

And I do -- if I could in my remaining time, I want to go back to the history that we started with, because I do think it is important that there is no -- as a matter of text, I think it's clear -- there is no unyielding requirement that you cannot restore copyright to works in the public domain.

I think the history really does bear that out.

I think Justice Sotomayor had the history exactly right, that in 1790, you had three states with no copyright statutes.

Of the 10 states with copyright statutes, you had seven that did not provide copyright to maps and charts, which the Federal statute did.

And I think this is the key point: Of the states that did enact copyright statutes to -- in the 1780s in advance of the 1790 Federal Act -- at least four, and depending on how you counted -- as many as eight provided copyright protection only to works printed after the date of the State statute.

They did that at the urging of the Continental Congress in 1783.

So I don't think there is any doubt that when Congress enacted the Copyright Act of 1790, it made a conscious choice to take a different approach, to grant copyright protection to existing works, including many, many, many works that were freely available for exploitation in those states.

Justice Samuel Alito: Doesn't that show at most that retroactive protection can be granted when there is an enormous interest in doing so, namely, the establishment of the uniform copyright system at the beginning of the country, because if Congress had not done that and had said the alternative would be to say things can be copyrighted going forward, then you would have different copyright laws in all of the States?

Mr. Verrilli Jr.: I think -- I don't think so, Justice Alito.

I think they could have followed the model nationally of prospective copyright only, and extinguishing the prior copyright, but they didn't make that choice.

They made a different choice.

Now, my friend suggests that the 1790 Act was just a transition, but of course, the same thing is really true in an important sense of section 514.

It's part of a tradition of a transition of the United States into the international system, which has required an adjustment of our rules in order to bring us into conformity with the international system.

And beyond the example of course of the 1790 -- and by the way, with respect to that language in the 1790 copyright who have or have not copyright, that's just a rerun of an argument that the Court rejected in Wheaton v. Peters.

In Wheaton, the Court said that -- that language in the 1790 Act was referring to pre-publication common law copyright, not post-publication common law copyright.

Beyond that, it seems to me pretty clear that what that language is referring to -- of course, Congress presupposes the existence of copyrights, or at least State statutes that created some copyrights -- but what Congress did was act far more broadly.

And -- so I do think -- and then when one looks at the examples of patents -- I think the -- the Oliver Evans example, and that case, is an important example, early in our history.

Congress creates a new patent term to an expired patent.

President Jefferson signs it.

Secretary of State Madison issues it.

Chief Justice Marshall upholds it as a circuit justice, and the Court upholds it against a charge that it's impermissibly burdening people who act in reliance on the expiration of the prior patent.

There wasn't a word in this Court's decision in that case about any potential constitutional infirmity with doing that.

And one would think if this was such a significant and viable principle of constitutional law, that someone would have brought it up in those cases.

In fact, the striking thing about reading the Evans decision is that the Court clearly looks at this all as a matter of legislative policy judgment.

It says, you know yes, you're right, it might have been an argument, a good argument in favor of creating some reliance interest here, but that's a judgment Congress should have made if anybody was going to make it.

It didn't -- and there is no reading of the -- there is no required reading of that statute that has to protect the reliance party.

So I don't -- I just think when you look at the patent protection, when you look at the 1790 Act, when you consider the fact that when Congress expands exclusive rights, as it did for example with respect to musical compositions but did in the 1976 Act with respect to lots of exclusive rights, it does so with existing copyrights.

And all of that points up to the wisdom of what this court said in Eldred, that within very wide margins, these are matters where legislative choice, these are policy calls that require the balancing of a complex set of interests, the drawing of a complex set of lines made even more complex by virtue of the fact that we are now trying to make a transition into full participation in an international system, which is of vital importance to protecting one of our most valuable economic exports, intellectual property.

Thank you.

Chief Justice John G. Roberts: Thank you, General.

Mr. Falzone, you have 4 minutes remaining.

REBUTTAL ARGUMENT OF ANTHONY T. FALZONE ON BEHALF OF THE PETITIONERS

Mr. Falzone: Thank you.

I have -- I have four points to make.

First one refusing to provide any protection for a work is setting the term at zero.

The point of the limited times restriction is it -- excuse me -- it forces Congress to tell us when the end has come, and if Congress is forever free to change its mind, then we can never know if the end has come.

Point number two, this statute does not and cannot promote progress, that is, the creation and spread of knowledge and learning.

When we joined Berne in 1988 we got all of its prospective benefits, or as the government put it, secured the highest available level of multilateral copyright protection for U.S. artists, authors and their creators.

This statute is not about that.

It's simply about rewarding people who made things long ago.

It's--

Justice Ruth Bader Ginsburg: At the time we joined Berne, there was an appreciation that we deferred the article 18 issue.

There wasn't any -- anyone who said that we satisfied it.

Mr. Falzone: --No.

There was an express finding -- explicit finding written into the statute, that -- and Congress found explicitly that we could comply with all Berne obligations without removing anything from the public domain.

Now, third point--

Justice Ruth Bader Ginsburg: Well there were many people who read article 18 in a different way and Congress was later persuaded that that was right.

Mr. Falzone: --Congress never revisited that finding.

So no; they found what they found in 1988, and they never revisited it.

Justice Ruth Bader Ginsburg: They -- they found that compliance with article 18 was appropriate for us to become a full member of the international copyright community.

Mr. Falzone: Congress did not make that finding, and I don't think you can even glean that from the testimony that was presented to Congress.

The problem here is -- the -- the -- the right to use works in the public domain has defined the freedom of speech that the public has known since 1790.

The 1790 Act made these freedoms clear by placing works unambiguously and clearly in the public domain, including all foreign works.

So even since before we had a First Amendment, that has defined the freedom of speech that the public knew.

And that right has also made sure that the copyright sequence provides ever-increasing protection for public speech rights.

It gives partial protection for some public speech interests during any initial period of protection, but that blossoms into complete protection for all public speech interests, once we reach the limit Congress picks, once they place the work in the public domain.

The burden on speech that this statute imposes is remarkable.

Let's start with the performance right, which is central to my clients.

There can't be any doubt, as I think Chief Justice Roberts got at, that the performance has a huge amount of original expression bound up in it.

It's the reason it's different to see King Lear at the Royal Shakespeare Company; it's the reason it's different when John Coltrane plays a jazz standard.

Hume amount of expression.

But even if you put performances aside, this Court has recognized in case after case that there is a critical speech interest in publishing the work of another author, in showing a film created by another, or for that matter performing the work of another, so that the burden here is it took speech rights of 250 million Americans and turned them into the private property of foreign authors, all on the bare possibility that might put more money in the pocket of some U.S. authors.

Justice Ruth Bader Ginsburg: All this rides on accepting your argument that zero is a limited time.

Mr. Falzone: No.

Not on the First Amendment side.

Not at all.

No.

That is -- the First Amendment argument is completely independent of that.

Even if you find Congress could do this on the Copyright Clause, we still have that First Amendment problem, and the -- there is no way the government can pass intermediate scrutiny here.

This was not required by Berne.

The government does not even contend Section 514 was required by Berne, nor could it, because that would violate Congress's explicit findings they made in 1988.

Justice Ruth Bader Ginsburg: Would you say it was would required by TRIPS?

Mr. Falzone: No.

Because TRIPS just implements Berne.

So that the problem here is this statute was not passed--

Justice Ruth Bader Ginsburg: We do not solve them if we don't come ply with Berne 18, and we are subject to being sanctioned by some World Trade Organization?

Mr. Falzone: --There was very vague testimony about the unsupported possibility that could happen, and that's why the government falls back on this interest of avoiding a dispute.

Here is the problem.

If the government can get around First Amendment limits by signing a treaty, and then the flexibility to take away public speech rights is defined by some complaint proffered by some treaty partner, then the First Amendment is defined only by the perceptions, the complaints and frankly the imagination of foreign countries.

That can't be the way it works.

Chief Justice John G. Roberts: Thank you, counsel.

The case is submitted.

Featured:

MGM Studios v. Grokster - Oral Argument

Fri, 09 Jan 2009 14:49:02 +0000

Case:

MGM Studios v. Grokster

Media File:

04-480_20050329-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Donald B. Verrilli, Jr.

Chief Justice Rehnquist: We'll hear argument now in number 04-480, MGM Studios versus Grokster, Limited.

Mr. Verrilli.

Mr. Verrilli Jr.: Mr. Chief Justice, and may it please the Court:

Copyright infringement is the only commercially significant use of the Grokster and StreamCast services, and that is no accident.

Respondents deliberately set out to capture a clientele of known infringers to stock their services with infringing content, they intentionally and directly promote the infringing use of the service, they support infringing use of the service, and they directly--

Justice Stevens: May I just interrupt for the one... you said "the only significant use".

There's a footnote in the red brief that says the figure is some 2.6 billion legitimate uses.

Mr. Verrilli Jr.: --Yeah.

Yes, Your Honor.

I--

Justice Stevens: Is that correct, or incorrect?

Mr. Verrilli Jr.: --Well, I think it's an absolutely incorrect assertion of reality, and perhaps I could delve into it and explain why.

The evidence in this case, which was presented at summary judgement, showed that 90 percent of the material on the services was either definitely or very likely to be infringing.

Justice Stevens: Now, was there a finding of 90 percent?

Mr. Verrilli Jr.: Well, this was submitted on summary judgement, Your Honor, and we lost summary judgement, so the evidence has got to be construed in the light most favorable to us.

And the Ninth Circuit decided the case on the assumption, we'd submit, of 90 percent.

But with respect to that 10 percent, what happened, and we submit is completely wrong, is that the Ninth Circuit drew the inference, because it wasn't shown by our expert study, which, by the way, is the only empirical analysis in the case, to be infringing, that the Court could assume that it was noninfringing and then extrapolate from that to a number along the lines of the number that Your Honor suggested.

And I think that that's completely illegitimate analysis, factually, and, besides, that number is big only because the overall activity is so big.

The scale of the whole thing is mind-boggling.

If there are that many noninfringing uses--

Justice Stevens: It goes to the--

Mr. Verrilli Jr.: --imagine how many infringing--

Justice Stevens: --accuracy of your statement that there is no other significant legitimate use.

Mr. Verrilli Jr.: --I don't think there... I think it's quite accurate on the summary-judgement record, and certainly drawing the inferences in our favor, as we must here on summary... on this summary-judgement record, that there is no commercially significant noninfringing use.

Justice Ginsburg: But there could be.

There could be, both with respect to material in the public domain and with respect to people who authorize the transmission.

Mr. Verrilli Jr.: I don't think, in the context of this record in this case and the business model of these Defendants, Grokster and StreamCast, that that is true, Justice Ginsburg.

I don't think that's right.

I think what Grokster and StreamCast are arguing is that this Court's decision in Sony stands for the proposition that their massive actual infringement is... gets a free pass, a perpetual free pass, so long as they can speculate that there are noninfringing uses out there, such as public-domain uses and authorized uses.

We don't think that that... that Sony stands for any such proposition.

We also want to point out that that doesn't help them... that proposition doesn't help them with respect to one very significant part of this case, and that's the fact that they intentionally built a network of infringing users, and they actively encouraged and assisted infringement.

Now, even if there are commercially significant noninfringing uses, and we submit there most definitely aren't under Sony, but even if there are, that's no defense to a contributory infringement claim based on intentional building up of an infringing business and active encouragement and assistance of infringement, and it can't be; because, otherwise, then the fact that they had commercially significant noninfringing uses, again, would be just a free pass to actively promote infringing uses; not merely to support them, but to promote them.

And so--

Justice Souter: Your argument, I take it, would be the same if the proportions were reversed.

Your argument with respect to... your current argument with respect to infringing use would be the same if only 10 percent... if it were assumed that only 10 percent of the use were illegitimate and infringing.

Is that correct?

Mr. Verrilli Jr.: --The active-encouragement aspect of our argument would be the same, certainly.

Justice Souter: That's right.

Mr. Verrilli Jr.: They don't get a... they don't get a free pass to encourage any infringement.

Justice O'Connor: Is that the same as active inducement--

Mr. Verrilli Jr.: Yes.

I think there's--

Justice O'Connor: --as that term--

Mr. Verrilli Jr.: --there's a lot of--

Justice O'Connor: --is used?

Mr. Verrilli Jr.: --Yes, Justice O'Connor, there's a lot of lingo floating around in this case... inducement, active encouragement and assistance.

Justice O'Connor: If we should think that the Respondents are not liable for the type of contributory infringement dealt with in Sony, could this Court reach the question of active inducement on this record?

Mr. Verrilli Jr.: Yes, very definitely.

I think... I think the Court, of course, should find that there's contributory liability under the Sony theory--

Justice O'Connor: I know you do, but--

Mr. Verrilli Jr.: --but with respect to--

Justice O'Connor: --I just said--

Mr. Verrilli Jr.: --that theory--

Justice O'Connor: --could you--

Mr. Verrilli Jr.: --Yes.

Justice O'Connor: --assume, for a moment, that we didn't; could we, nonetheless, address the active inducement--

Mr. Verrilli Jr.: Yes--

Justice O'Connor: --question?

Mr. Verrilli Jr.: --Justice O'Connor, and let me explain why.

The District Court in this case issued a partial final judgement, under Rule 54(b), granting the Respondent's summary-judgement motions.

Now, we argued for contributory liability on two theories in the District Court and in the Ninth Circuit.

We argued that there was a lack of commercially significant noninfringing use under Sony, and we've argued the inducement or active-encouragement theory.

We argued that both theories entitle us to relief against the current operations of the service, entitled us to damages, and entitled us to injunctive relief to eliminate the harmful ongoing infringing consequences of this intentionally built-up infringement machine.

The District Court granted summary judgement against us and gave a clean bill of health, gave absolution, essentially, to the current versions of the services.

The only thing that was left to us, as the Ninth Circuit and the District Court... and the District Court, both, understood the law, is that we can go back and try to show that, with respect to specific past acts of infringement, if we can show that they occurred at a time when we had given them notice that they were about to occur, and that we had the power to... and they had the power to stop them at the moment we gave them the notice, that we can get damages for those specific things, and those specific things only.

That's all that's left in this case.

And I think it's quite clear, from the Rule 54(b) certification order of the District Court that it was only damages with the past services and the past acts--

Justice Kennedy: It's not clear... it's not clear to me from your brief, focusing on the contributory aspect of it, not... and not the inducement part of it... it's not clear to me from your brief what your test is.

What do we tell the trier of fact, that if there is a substantial part of the use which is noninfringement, any part?

Mr. Verrilli Jr.: --Here's what I... here's where I think the test--

Justice Kennedy: Leaving aside the inducement.

Mr. Verrilli Jr.: --Right.

Here's what I... here's what we think the test is on the... what we'll call the Sony aspect of the case, that it's... the question here is... Sony poses to us... is really a touchstone kind of question, not a numerical kind of question.

The question under Sony is whether this is a business that is substantially unrelated to infringement.

In other words, are they building their business on supporting legitimate activity, or, instead, are they building their business supporting infringing activity?

Justice Kennedy: Well, then we just throw this to the birds on the trier of fact in every case--

Mr. Verrilli Jr.: No, I think--

Justice Kennedy: --Well, how do we know--

Mr. Verrilli Jr.: --And that's where you start.

That's the touchstone.

Now, the numbers, the relative proportions of use, are relevant.

In a case like Sony itself, certainly, where the majority use was noninfringing, that's a legitimate business; you don't need to go further.

In a case like this one, where, taking the record at summary judgement in our favor, as it must be, and the Ninth Circuit's assumption that you've got 90 percent infringing use, billions and billions of acts of infringing use, and minuscule actual noninfringing use, it seems to us it's just--

Justice Breyer: You're not saying... now you're using different tests.

Your test is "substantial".

All right, on your test, are we sure, if you were the counsel to Mr. Carlson, that you recommend going ahead with the Xerox machine?

Are you sure, if you were the counsel to the creator of the VCR, that you could recommend, given the use, copying movies, that we should ever have a VCR?

Are you sure that you could recommend to the iPod inventor that he could go ahead and have an iPod, or, for that matter, Gutenberg, the press?

I mean, you see the problem.

Mr. Verrilli Jr.: --Yeah, I think my answer to--

Justice Breyer: What's the answer?

Mr. Verrilli Jr.: --those questions are: yes, yes, yes, and yes.

[Laughter]

Justice Breyer: Because in each case... for all I know, the monks had a fit when Gutenberg made his press--

[Laughter]

--but the problem, of course, is that it could well be, in each of those instances, that there will be vast numbers of infringing uses that are foreseeable.

Mr. Verrilli Jr.: I disagree with that, Your Honor.

Certainly not... I don't think there's any empirical evidence to suggest, with respect to any of the things that Your Honor just identified... and let me pick out the iPod as one, because it's the most current example, I guess.

From the moment that device was introduced, it was obvious that there were very significant lawful commercial uses for it.

And let me clarify something I think is unclear from the amicus briefs.

The record companies, my clients, have said, for some time now, and it's been on their Website for some time now, that it's perfectly lawful to take a CD that you've purchased, upload it onto your computer, put it onto your iPod.

There is a very, very significant lawful commercial use for that device, going forward.

And, remember, I... what our test... our test is not "substantial".

Our test is that it's a... it's a... when it's a vast-majority use, like here, it's a clear case of contribution--

Justice Scalia: How do you... how do you know, going in, Mr. Verrilli?

I mean, I'm about to start the business.

How much time do you give me to bring up the lawful use to the level where it will outweigh the unlawful use?

I have to know, going in.

Mr. Verrilli Jr.: --Well, I--

Justice Scalia: And it's one thing to sit back and, you know, calculate with this ongoing business, it's 90 percent/10 percent.

But I'm a new inventor, and I'm... you know--

Mr. Verrilli Jr.: --I think the weight--

Justice Scalia: --I'm going to get sued right away.

I know I'm going to get sued right away, before I have a chance to build up a business.

Mr. Verrilli Jr.: --I don't think that's right, Your Honor, and here's why.

To... it's not just the absence of commercially significant noninfringing uses that demonstrates contributory infringement.

I mean, you have to demonstrate that you're making a material contribution, with knowledge that you're doing so.

The inventor, at the outset, is not in that position.

They're not making a contribution with knowledge that they're doing so.

Do they have absolute certainty?

No, they don't have absolute certainty.

Justice Kennedy: --Well, I don't quite understand the... I take it, inventors are profit-motive-driven, and if they know that something they're working on is going to have copyright experience, you... copyright problems, you can't just say,

"Oh, well, the inventor's going to invent anyway. "

Mr. Verrilli Jr.: Well, I... but the problem--

Justice Kennedy: Or did I misunderstand your--

Mr. Verrilli Jr.: --No, I... I think that you have... to show contribution, you should have... you have to be making a material contribution, with knowledge that you're doing so.

And so--

Justice Scalia: But the inventor of Xerox does that.

I mean, he puts out the machine.

He knows some... he knows a lot of people are going to use it to Xerox books.

Mr. Verrilli Jr.: --I don't think that's right, Justice Scalia.

I don't think there's anywhere close to a showing... I don't think there could be anywhere close to a showing that you've got the vast majority of use from... for infringement from the time that the device comes out.

I just don't think that's--

Justice Souter: Well, let's go--

Mr. Verrilli Jr.: --realistic.

Justice Souter: --let's go from Xerox back to your iPod.

How is that clear in the iPod case?

I may not understand what people are doing out there, but it's certainly not clear to me.

I know perfectly well I could go out and buy a CD and put it on my iPod, but I also know perfectly well that if I can get the music on the iPod without buying the CD, that's what I'm going to do.

And I think it's reasonable to suppose that everybody else would guess that.

So why, in the iPod, do you not have this Damoclean sword?

Mr. Verrilli Jr.: Well, because I don't actually think that there is evidence that you've got overwhelming infringing use.

I just think that's... it's not a... it's not a--

Justice Souter: Well, there's never evidence at the time the guy is sitting in the garage figuring out whether to invent the iPod or not.

I mean, that's--

Mr. Verrilli Jr.: --I think when you get to the--

Justice Souter: --the concern.

Mr. Verrilli Jr.: --I think when you have vast-majority infringing use, they should be on the hook.

Now, I don't think--

Justice Souter: Okay, but you're--

Mr. Verrilli Jr.: --you have that problem--

Justice Souter: --No, but you're--

Mr. Verrilli Jr.: --with the iPod, and--

Justice Souter: --you're not answering... you're not answering the question.

The question is, How do we know in advance, on your test, anything that would give the inventor, or, more exactly, the developer, the confidence to go ahead?

As was said a minute ago, he knows he's going to be sued immediately.

There isn't a product performance out there, as there is in this case.

So, on your substantiality theory, why isn't it a foregone conclusion in the iPod that the iPod loser... or developer is going to lose his shirt?

Mr. Verrilli Jr.: --Well, first of all, I don't... I think it's just counterfactual to think that there is going to be overwhelming infringing use of the iPod in the way that there indisputably is here.

Second, to the extent you get the closer cases, it is our position, as I gather it is the position of the United States, that you look at... to see what kind of business model the Defendant is operating under.

Is it a... is it... are they marketing it for legitimate purposes?

Are they taking reasonable steps to prevent infringement?

If they are, then they... then they're not liable.

Third--

Justice Scalia: That's your second argument, I think.

I thought you were going to just stick with the... with the first one.

I mean, that's an inducement argument.

Justice Souter: Yeah, that's inducement.

Mr. Verrilli Jr.: --No, I don't think it is an inducement argument, because it doesn't go all the way to requiring us to show, as we can show here, that they've got intent.

But I do think that the issue is, you know, really... in the real world, you know, it isn't the case that these guys have gotten immediately sued.

That's just not right.

And the... and the reality is that what happens is what happens here.

There's perfectly valid uses--

Justice Kennedy: --But it is the case under the test you're submitting to us.

Mr. Verrilli Jr.: --No, I don't think that's right, Justice Kennedy.

If there's vast-majority infringing use, and you continue to operate your business with the knowledge that there's vast-majority infringing use, then you've got liability.

Now, of course, we do have all the additional inducement facts here, but we've also got those facts.

And in the real world--

Justice O'Connor: Well, are you dealing with active inducement as just a theoretical add-on, or is that a satisfactory way to resolve this case?

Mr. Verrilli Jr.: --I think that it is a... I think--

Justice O'Connor: I don't understand--

Mr. Verrilli Jr.: --Neither, is the answer.

Justice O'Connor: --your pitch.

Mr. Verrilli Jr.: Neither, is the answer.

It is a basis for resolving this case, but not to the exclusion of getting the law right on Sony.

Justice Ginsburg: But you couldn't get summary judgement.

Your reply brief said,

"This case is so clear that we should get summary judgement. "

If inducement is the theory... you have just said, you have to show intent--

Mr. Verrilli Jr.: Yes.

Justice Ginsburg: --so you could not--

Mr. Verrilli Jr.: We--

Justice Ginsburg: --you'd have to go to trial.

Mr. Verrilli Jr.: --We agree with that.

We think, in a situation where the vast majority of the use is infringing and there isn't any evidence of a legitimate business plan, on the Sony part of the case we would be entitled to summary judgement.

We agree with you, Your Honor, that with respect to--

Justice Ginsburg: Sony itself had a trial--

Mr. Verrilli Jr.: --That's right.

Justice Ginsburg: --a full trial.

Mr. Verrilli Jr.: It came after the trial, that's right.

But the... a key point I think I want to make here is that this is not about this technology.

What happens in the real world is that inventors come up with technology.

Some people use it for lawful purposes and valid purposes, as some people use this technology for; some people abuse the technology to run business that... businesses that are devoted to expropriating the value of copyrights.

That's exactly what's going on in this case.

If I could reserve the balance of my time, Mr. Chief Justice.

Argument of Paul D. Clement

Chief Justice Rehnquist: Very well, Mr. Verrilli.

Mr. Clement, we'll hear from you.

Mr. Clement: Mr. Chief Justice, and may it please the Court:

The decision below allows companies, like Respondents, to build a business model out of copyright infringement without fear of secondary liability.

As long as they avoid obtaining actual knowledge that a particular customer is about to infringe a particular copyright, they are free to operate a system that involves massive copyright infringement with full knowledge that the draw of the entire system for customers and advertisers alike is the unlawful copying.

No matter much how much of that system--

Justice O'Connor: Well, what do you think Sony allowed?

It talked about... if it's, what, capable of substantial noninfringing use, it's okay?

Mr. Clement: --That's right, Justice O'Connor.

And then I think the Court explained and elaborated that the test is whether or not there are commercially significant noninfringing uses.

And I would say what the Ninth Circuit did in this case is basically adopt the test of mere theoretical capability for noninfringing use, plus maybe some anecdotal evidence.

Justice Kennedy: And what... and your test is whether there's a substantial use that's lawful?

Mr. Clement: Well, I think the way we would try to articulate it is that if the way that the business model of the particular Defendant is set up is that they are not involved in a business substantially unrelated from copyright infringement, that there should be liability in that situation.

And I think in an extreme case like this, where over 90 percent of the business... and I think Mr. Verrilli correctly describes that it's not a minimum of 90 percent; it's over 90 percent... because the only evidence on the other side is anecdotal evidence that there are such things as public-domain works.

Chief Justice Rehnquist: Where did the 90 percent figure come from?

I know we have to accept it because it's summary judgement, but where did it come from?

Mr. Clement: It came from a study by Petitioners' experts of the actual operation of the system.

And what they did is, they identified about 75 percent of the works as clearly infringing works, another 15 percent of the works were identified as very likely infringing works, then there were 10 percent they just couldn't tell anything about.

Justice Breyer: I thought it was just limited to music.

Mr. Clement: Well, I think the... it's not... the system is not limited to music.

Justice Breyer: I know, but I thought the study was about music.

Mr. Clement: I'm not sure about that, but--

Justice Breyer: Well, I thought... I mean, you know, we've had 90 briefs in this, and some briefs tear it apart, and others support it, but we also have briefs from the ACLU saying you could put whole libraries within this system.

Mr. Clement: --Well--

Justice Breyer: The question I wanted to ask you is, given that concern, that there are, conceptually anyway, really excellent uses of this thing, does deliberate... what is the word?

Mr. Clement: --Actual inducement?

Justice Breyer: Yes.

Because what you are worried about, it seemed to me that the actual inducement would take care of.

And if you sent it back and said,

"Let's have a trial on actual inducement. "

If this really is the extreme case you're talking about, why wouldn't the Petitioners here be bound to win that trial?

Mr. Clement: Well, based on our review of the record... and we haven't been able to see the entire record... I agree with you, the Petitioners ought to be able to win this case on an active-inducement ground, and that's a narrow way to decide the case.

I do think, though, this Court might have to say something about the Sony issue before it reached that issue.

And if it did feel compelled to do that, I think it would be a mistake to sanction the Ninth Circuit's reading of Sony, because, you're right, there's a theoretical possibility that public-domain works can be exchanged on this system, but it's also true that this system doesn't have much of a comparative advantage for trading in public-domain works.

Justice O'Connor: Well, you got interrupted a bit.

Tell us, in the simplest way you can, what test you think Sony stands for and how the Ninth got it wrong, if you believe it.

Mr. Clement: Justice O'Connor, it stands for... the test is whether or not there are commercially significant noninfringing uses.

The Ninth Circuit got it wrong because it thought that test was satisfied by a combination of two things: being able to point out that there were such things as public-domain works or authorized sharing of the Wilco album, for example, and anecdotal evidence that you could actually do that.

Now, if that were the right reading of Sony, with respect, I would suggest that footnote 23 of this Court's Sony decision would have been the sum total of the Court's analysis, because in that footnote the Court observed that there were broadcasts of public-domain works.

Justice Kennedy: Suppose the owner of the instrumentality, the program, thinks that there's going to be a vast area of lawful use, and he knows that there's going to be some abuse at the... in the short term, but he does everything he can to discourage that.

He says,

"This is a two... P2P is going to revolutionize the way we talk to each other, there's things in the public domain. "

"Please don't use this for copyright. "

But he knows that there's going to be some infringement, let's say, but it'll be 50 percent of the use, in the short term.

Can he use the program?

Mr. Clement: If it's 50 percent infringement in the short run?

We think, absolutely, yes.

Justice Kennedy: Yes, that he can--

Mr. Clement: He can--

Justice Kennedy: --use the program.

Mr. Clement: --use the program.

I mean, as we suggest, if you're at a 50-50... I mean, if you're anywhere below 50 percent, we think that there should be no liability under the Sony standard.

If you're above that level and there's sufficient evidence that you're really targeting infringing uses, then I think maybe there would be liability.

But in the hypothetical you suggest, there would clearly not be liability in that situation.

What we would like to suggest, though, is there ought to be enough room for... under the Sony test, before you reach actual inducement, to capture somebody where they've clearly set out, as a business model, to deal with the infringing uses.

And the only thing they point to are the theoretical possibility, anecdotal evidence, that it could be used for public-domain works.

Justice Ginsburg: If there's more, they could bring it out at trial, could they not?

The difference between your position and Mr. Verrilli, I take it, is that you think there should be not summary judgement for the Petitioners, but a trial.

Mr. Clement: I think that's a fair point, Justice Ginsburg.

We're operating in something of a disadvantage, because we haven't seen the entirety of the record.

Based on the record that I've seen, I think there's a close case, unless perhaps once this Court clarifies the legal standard, Respondents put on additional evidence.

I think this is a close case, where you actually could grant summary judgement in favor of the Petitioners.

But certainly we have no objection to having a trial on the Sony issue in this case.

What we object to is the Ninth Circuit rule, which, in every case, is going to obviate the need for a trial, based on a showing that there are such things as public-domain works.

Justice Scalia: The inducement... the inducement point doesn't get you very far.

Presumably a successor to Grokster, or whatever this outfit is called, could simply come in and not induce anybody but say, you know,

"We're setting up the same system. "

know very well what people are going to use it for, but not induce them.

And that would presumably be okay.

Mr. Clement: I think that's potentially right--

Justice Scalia: Which is why you need--

Mr. Clement: --Justice Scalia--

Justice Scalia: --the Sony--

Mr. Clement: --and that's why I think it's important to preserve a role for the Sony test.

And, again, this Court, in Sony, could have adopted a simple theoretical-capability test, but this Court, instead, adopted a test that required there to be shown some commercially significant use for the... noninfringing use.

And even in the patent context, where I think the test is, and should be, more demanding, even in that context, cases like Fromberg, which we cite at page 19 of our brief, show that there is an analysis to make sure that the suggested theoretical noninfringing use is, in fact, a practical use of the item.

Justice Scalia: --Will you give a company ten years to establish that?

Mr. Clement: Well, I don't think--

Justice Scalia: I mean, what I worry about is the suit that just comes right out of the box, as soon as the company starts up.

Will you give the company a couple of years to show that it's developing a commercial use?

Mr. Clement: --Well, Justice Scalia, we have concerns about that, as well.

I don't know that we would give them ten years of, sort of, free space to do as... facilitate as much copyright infringement as possible.

I think what we would say is that when you're... when a suit targets a nascent technology at the very beginning, there ought to be a lot of leeway, not just for observed noninfringing uses, but for the capacity of noninfringing uses.

I don't think, in fairness, that's what you have before you in this case, because this is a case where the peer-to-peer technology was out there, it was employed in a particular way, with a centralized server, in a way that was actually... had a lot of users involved in it, and they were users of the old Napster system, that had a distinct character.

They were using that system for infringing copyrighted musical works.

And then these individuals come along and seek to capitalize on that market.

That is their business plan from day one.

And it's not some newfangled idea.

The only newfangled idea here is that if you give something of value away for free by ignoring the copyright laws, you're likely to draw consumers to your site, and you're likely to attract advertisers.

But that cannot be the kind of innovation that we want to further through development of secondary liability into the copyright laws.

Justice Souter: Mr. Clement, in one way this presents an easy case for answering Justice Scalia's question, but what about a case in which there isn't the Napster example to start with?

Should there be some kind of flexible rightness doctrine in response to suits, as Justice Scalia put it, against the inventor or developer right out of the box?

Mr. Clement: Well, whether you call it a flexible rightness doctrine or you develop the doctrine in a way that is very forgiving--

Justice Souter: Congress of laches.

Mr. Clement: --a brand-new technology.

Justice Souter: Congress of laches.

Mr. Clement: Right.

I mean, I think... the way I would style it is to develop a substantive standard that's very forgiving of brand-new technologies and allows people to point to, in those situations, capabilities for future uses.

I do think that--

Justice Souter: How would you express the... how would you express that, that substantive standard that anticipates, just as you suggested we do?

Mr. Clement: --Well, I was just trying to articulate it, which is to say that this Court has talked about the capacity for noninfringing uses.

I think, with a mature product like this, it's fair to point to how it's actually used in the marketplace.

Chief Justice Rehnquist: Thank you, Mr. Clement.

Mr. Clement: Thank you.

Argument of Richard G. Taranto

Chief Justice Rehnquist: Mr. Taranto, we'll hear from you.

Mr. Taranto: Thank you, Mr. Chief Justice, and may it please the Court:

Because Respondent's software products are tools of autonomous communications that have large and growing legitimate uses, their distribution is protected under the clear Sony rule, that rule should be adhered to by this court, because copyright does not generally step into the role of product control, because doing so would cause overkill.

The Sony rule safeguards legitimate uses by protecting the product and--

Justice O'Connor: Yeah, but active inducement is a doctrine that's been employed to curb the intentional encouragement of noninfringing uses, isn't it?

Mr. Taranto: --Not in copyright law, it hasn't, but that's not my primary point.

My primary point is that it is critical, it is jurisdictionally critical, to separate two separate acts, distributing the product and any of the past acts that the Petitioners allege constituted encouragement, their synonym for "inducement", which were explicitly outside the District Court ruling that was certified for interlocutory appeal.

Questions about past acts not inherent in the distribution of our product remain--

Justice Scalia: But they are inherent.

They are inherent.

I mean, the point is that those past acts are what have developed your client's current clientele.

Mr. Taranto: --No, I don't think so, Justice Scalia.

The Petitioners... this is what I think is key or usable about the past acts.

They claim that there is an intent, as part of the current distribution of the product, to profit from increased use, including generically known infringing use, a point on which the District Court and the Court of Appeals assumed to be the case.

Beyond that, the question whether there were encouraging acts, any kind of promotional activity that says,

"We ask you to, and urge you to, use this product for infringement. "

that is not here, because that was explicitly part of the past activities, removed from the District Court decision.

And when the Petitioners sought interlocutory appeal, they said, expressly, these were "distinct and severable", in their terms... that's a quote--

Justice Souter: But I don't--

Mr. Taranto: --from the past.

Justice Souter: --understand how you can separate the past from the present in that fashion.

One, I suppose, could say,

"Well, I'm going to make inducing remarks Monday through Thursday, and I'm going to stop, Thursday night. "

The sales of the product on Friday are still going to be sales which are the result of the inducing remarks Monday through Wednesday.

And you're asking, in effect... you're asking us... to ignore Monday through Thursday.

Mr. Taranto: No, I'm not.

Let me try to be clear.

There is a theory, not present here, along exactly those lines, which Petitioners are entitled to argue, back in the District Court, without a remand, because that issue remains in the District Court.

It is a theory that says,

"You started your business with illegitimate acts, your current business is a causal consequence of that. "

I will say, there is not one bit of evidence that the Petitioners introduced, in resisting summary judgement, in support of that theory.

It is, in fact, a highly implausible theory, for reasons that the District Court can explain, because users of software like this switch readily.

There is no plausible lock-in effect to this software.

People go from Kazaa to Grokster to eDonkey to BitTorrent week by week.

That was... that is an available theory.

You would--

Justice Souter: Then why was current... why was inducement, as a current theory of recovery, even the subject of summary judgement?

It seems to me that to make it a summary judgement is implausible to a non worldly degree.

Mr. Taranto: --I'm not entirely--

Justice Souter: I mean, I thought you were saying that, so far as the inducement theory of recovery is concerned--

Mr. Taranto: --Yes.

Justice Souter: --the only summary judgement that was granted was with respect to current acts of inducement, the way the company is acting now, not the way the company was acting last year.

And my question is... if that is correct, then I don't see how summary judgement could even intelligibly have been considered.

Mr. Taranto: I think... because as the Petitioners insisted when they pressed for interlocutory appeal, they said these were distinct and severable, because, as Justice Scalia referred to before, the important question, on a going-forward basis, is whether the current set of activities... this software, given how it operates, being generally distributed... is a vendor's... the distributor of that software... secondarily liable because somebody else, tomorrow, can do exactly the same thing, without the baggage of any--

Justice Kennedy: Well, I don't want to get us too far off the track on this question, but it just seems to me that what you've done before bears on what you know, or have reason to know, on an ongoing basis.

Mr. Taranto: I agree with that, Justice Kennedy, but there's no dispute about that.

This case was decided on the assumption, which we are not contesting here, that the Respondents here knew that there would be widespread infringing use of a product that they were putting out, and, what's more, that they intended to profit from maximum use of the product, which necessarily would include infringing use, which they had no ability to separate from noninfringing use.

Justice Kennedy: Well, then why don't you tell us what's wrong with the Government's test and with the Petitioner's test, the substantial-use part of it.

Mr. Taranto: Well, I'm not entirely... I think there are several tests, and I'm not sure I followed them all here.

Justice Kennedy: We think it is critical that the Court adhere, for innovation protection, to the very clear Sony rule.

Justice Ginsburg: That, Mr. Taranto, is something I find very puzzling.

There is a statement... one could take it as clear... "capable of substantial noninfringing use".

That would be very clear, I agree.

But Sony goes on for 13 more pages.

If the standard were all that clear, it would have stopped there.

And usually when you're interpreting a document, one rule is, you read on, and if you read on, you find we need not give precise content to the question of how much use is commercially significant.

That doesn't sound very clear to me.

Or if you then read back, as a careful reader would, then you find the statement that the primary use of the Sony machine for most owners was time-shifting, a use that the Court found either authorized or fair, and, hence, noninfringing.

So I don't think you can take from what is a rather long opinion, and isolate one sentence, and say,

"Aha, we have a clear rule. "

Mr. Taranto: --Well, that sentence, Justice Ginsburg, is expressly stated to be the rule of law that is being applied.

And then the Court went on to apply it to say, there are two things that satisfy the test.

The primary thing, of course, is what takes up most of those 13 pages, the question whether in-home time-shifting is fair use, a question that was of considerable interest to tens of millions of individuals throughout the United States.

But the Court, in fact, didn't rely only on that; it said,

"In addition, there was this roughly 7 to 9 percent use of authorized time-shifting. "

It wouldn't have had to even talk about that if the primary use, you know, was the entirety of--

Justice Scalia: Mr. Verrilli, I hope you won't waste a lot of your time on this point.

This Court is certainly not going to decide this case on the basis of stare decisis, you know, whatever else is true.

Mr. Taranto: --Well, I will... let me urge that there is, in fact, considerable weight to stare decisis, because there are major technological industries that have relied on the rule that derives from patent law that there is no, kind of, predominant-use kind of meaning to Sony rule.

In the patent context from which this came, all there has to be, in Professor Chisum's words, is, uses that are not farfetched, illusory, uneconomical for the user.

And the inquiry there is, Is this a product whose... where the same features that are alleged to cause the infringement are also, in some nontrivial way, used for noninfringement?

Justice Breyer: What is... what is the answer to Justice Kennedy's question?

I took it, whether... for the last 21 years, industry throughout America has taken the standard as being approximately whether it is capable of substantial... commercially significant substantial noninfringing uses.

Mr. Taranto: Yes.

Justice Breyer: I... and the country seems to have survived that standard.

There is innovation.

There are problems in the music industry, but it thrives, and so forth.

So there is an argument for just following it, because it's what it is.

But suppose it's totally open.

Why should that be the right test, instead of some other test, like substantial use, et cetera?

Mr. Taranto: I... because I--

Justice Breyer: That, I think, was the question, and I'm very interested in your answer.

Mr. Taranto: --Right.

Because I think any alternative is worse.

A focus on intent to profit means that virtually every business which requires money and has the least bit of sensible forward-looking thinking about what the usage is going to be will be subject to litigation, arguing about their knowing that a substantial amount of the value of the product was going to be based on infringement.

Justice Kennedy: But--

Mr. Taranto: Every--

Justice Kennedy: --but what you have... what you want to do is to say that unlawfully expropriated property can be used by the owner of the instrumentality as part of the startup capital for his product.

Mr. Taranto: --I... well--

Justice Kennedy: And I... just from an economic standpoint and a legal standpoint, that sounds wrong to me.

Mr. Taranto: --Well, I'm not entirely sure about that formulation.

Sony clearly sold many more tapes because of the illicit activity of Library.

Sony presumably sold more machines, maybe even priced them higher, because there was a group of people who wanted the machine for the illicit activity.

The Apple iPod, in the 60 gigabit version, holds 15,000 songs.

That's--

Justice Kennedy: So you think that--

Mr. Taranto: --a thousand CDs.

Justice Kennedy: --unlawfully expropriated property can be a legitimate part of the startup capital.

Mr. Taranto: No, I... what I think is that, as a matter of general judicially formulated secondary copyright liability law, there is no better policy balance that the Court can strike, and that only Congress can make the judgements about what the industry-wide facts are.

And I... let me pause there a minute... there are no industry-wide facts in this record.

Every citation in the Petitioner's brief about the magnitude of harm to the industry is extra-record citation.

There are 26 billion--

Justice Ginsburg: Then perhaps there should be a trial so it would all come out.

Mr. Taranto: --Petitioners... it's not just that they didn't have it in their brief, they did not submit any evidence in response to the summary-judgement motion that said the rule of Sony should be applied here because the magnitude of the injury to the recording industry or in... someday in the future, to the movie industry, is at zero--

Justice Ginsburg: Well, they weren't concentrating on the damage to them, they were concentrating on the facilitation of copying that was provided.

And you don't question that this service does facilitate copying.

Mr. Taranto: --As does the personal computer and the modem and the Internet service provider and the Microsoft operating system.

There's... everything in the chain that makes this work is absolutely essential to facilitating the copying.

The question is which pieces, if any, and under what standard, get singled out for a judicially fashioned secondary copyright liability doctrine.

Justice Ginsburg: Well, you said... I think you were saying... this is something for Congress to solve; it's not for the Court.

But the Court is now faced with two apparently conflicting decisions: Aimster, in the Seventh Circuit, the Ninth Circuit decision.

And if you're just looking at this in the abstract, you might say,

"Well, it's... isn't it odd that Napster goes one way in the Ninth Circuit, and this case goes another way? "

Mr. Taranto: Let me suggest why that's not odd and why the cases are not just different, but critically different.

Napster rests... never mind the exact words of the opinion... Napster involves something more than distribution of a product.

Napster, the company, was sending out, in response to requests, "Where is this filed", an answer, the information, "The file is here".

Every time it sent out that information, if it had been told by Mr. Verrilli's client,

"That file may not be shared. "

it was, with specific knowledge to that file, giving assistance.

That is a classic contributory infringement case based on specific knowledge of infringement.

And the reason--

Justice Souter: Why isn't this a classic willful-ignorance case?

Mr. Taranto: --Because willful ignorance is about having possession of information and refusing to look at it.

This... that does not occur here.

This tool of autonomous communication is one in which there is no Mother-may-I system, no chaperone, no information provided to us at the time that there is any regress.

When I ask for a file from you, there is no information that goes back to StreamCast or to Grokster--

Justice Souter: Sure, but I thought willful ignorance was basically a certainty of what was going on without empirically verifying it, so as to, sort of, maintain the guise of one's hands over one's eyes.

And it seems to me, if that's what it is, that's what we've got.

Mr. Taranto: --No, I don't think so, I think, on either account.

My understanding of where in the law willful ignorance has bite is when you do have the information right in front of you, and you refuse to look at it.

And, what's more, the change of system to an autonomous communication tool, where there is no intermediary, which is what all of their filtering systems would require, getting permission in advance, the change of tool is not just some way of blinding oneself to the information.

Justice Scalia: Yeah, I think it would also include disabling yourself from looking at it.

And so, I think it's an important part of your case, that you didn't adopt this new system of decentralizing the file so that it's in the computers, out there, solely in order to get around Napster.

Mr. Taranto: Right.

And I think that the summary-judgement record on this is... it, I mean, doesn't leave any real room for dispute.

Seeking--

Justice Breyer: Well, wait.

In respect to that... I mean, is it open?

If you win on the question of the standard, is it open, or would we have to remand it for them to argue, in light of the history, in light of what they do now, they, your client, with knowledge of infringement, actively encouraged users to infringe copyright using their... using the Grokster technology, and, indeed, knowingly would include willful blindness?

Mr. Taranto: --I think--

Justice Breyer: Because... as I had gotten that from one of these amicus briefs, you know, that's their standard... they say a willful... of willful, deliberate inducement.

And that, it seems to me, important that they be able to argue that.

Now, can they argue it, in your opinion, if we do nothing but affirm the Ninth Circuit?

Mr. Taranto: --I think that they can certainly argue, with an affirmance by this Court, that all of the past acts, to use the District Court's term, constitute a basis for a... inducement liability.

There would be some legal questions about whether there is such a thing as inducement liability, but they get to argue that.

No remand is required for that.

The record in this case establishes that one reason for going to the decentralized system, without a central index and a third-party intermediary, was to... was a reaction to the Ninth Circuit's Napster decision that said, "That's a legal problem".

But it is also, I think, beyond genuine dispute, for summary-judgement proposes, that there were other reasons.

You don't have to have the servers to maintain.

When StreamCast, in particular, was running a Napster-like system, the so-called openNap system, it had ten servers, and quickly maxed out and started crashing, and immediately concluded... I think this is at page 789 or... and 798 of the joint appendix... we would have had to start doubling, tripling, quadrupling the number of services, and we didn't have--

Justice Stevens: Mr. Taranto--

Mr. Taranto: --the money to do it.

Justice Stevens: --can I ask... I'm still a little puzzled about the posture of the case.

Mr. Taranto: Yes.

Justice Stevens: Because I read the District Court opinion.

I think he said... the judge said that both parties agreed that there were no disputed issues of fact that would preclude the entry of summary judgement in either way, no disputed issues relative to whether to grant relief.

And I... it's on page 24a of the cert petition.

And I understand you to be saying that leaving everything alone, affirming would allow the case to go forward with your adversaries seeking damages on an active-inducement theory.

Am I correct?

Mr. Taranto: Yes.

I think... all I read this, page 24a, to say is that both sides filed for summary judgement, so each one, of course, thought that there was... that it was entitled to summary judgement.

Each--

Justice Stevens: But it says,

"Both parties believe there are no disputed issues of fact material to Defendant's liability. "

Mr. Taranto: --I think that's just because each side filed summary judgement.

Each side filed extensive--

Justice Stevens: So then your answer to my question is that, yes, if we affirm, as a possibility, they could continue to seek damages on an active-inducement theory.

Mr. Taranto: --Yes, absolutely.

And there are... there are affirmative defenses that are not even part of this motion that, of course, would, by themselves, preclude summary judgement in their favor.

Justice Stevens: And then one other--

Justice Ginsburg: I thought--

Justice Stevens: --question I had.

Does the record contain their proposed form of injunction that they requested?

Mr. Taranto: I don't think it does, beyond the statement at the end of their summary-judgement pleading that asked for a very general injunction, "Stop the Defendants from infringing".

I'm not aware of anything more specific.

Let me comment a bit on what the record says about the substantial legitimate uses.

This is not a question of--

Justice Ginsburg: --Mr. Taranto, before you go back to that, I wanted to be clear on what you were saying would be left over for trial.

Mr. Taranto: --Yes.

Justice Ginsburg: Because, as I read your briefing, it was,

"Well, they can argue about some bad things that Grokster was doing in the past, but this decision says: henceforth, what we're doing is okay. "

"The case zeroed in on now and the future, and the only thing that was left open was something that was over and gone could get damages for it. "

But I thought that this judgement gave you an okay, a green light, from now on.

Mr. Taranto: I... my view that... I mean, this was not talked about in these terms.

I believe it ought to be open to the Petitioners, not only to prove that past acts were, themselves, illegal, but that the causal consequence of those past acts should somehow reach forward into the current acts.

Justice Souter: Then what is the point of the current summary judgement?

Mr. Taranto: The point of the current summary judgement is that there is... the forward-looking character of the activities taking place, starting in September 2002 on forward, has been held, by itself, not to be a basis for--

Justice Souter: So you're saying the summary judgement simply, in effect, says,

"They're not doing anything wrong now, but we have left open the question, not merely of what they have done wrong in the past, but whether what they did wrong in the past can carry forward into the future? "

Mr. Taranto: --As I say, it wasn't stated in those terms, but, yes, I think that--

Justice Souter: That's bizarre.

Mr. Taranto: --Well, I don't think so, because--

[Laughter]

--because the important question is, to the Petitioners, the entire recording and movie industry, Is this set of activities, which you and I, tomorrow, can start engaging in, one that they can stop?

There are literally a handful... on page 7 and 8 of their brief--

Justice Souter: So you're saying... what it really says is,

"There's nothing to enjoin, but there may very well be something to recover for-- "

Mr. Taranto: --Yes.

Justice Souter: --"even as to future activity".

Mr. Taranto: Yes, exactly right.

And they would, of course, have had to make the very implausible assertion, in a business in which there is no plausible lock-in, that somehow a set of isolated events... e-mails... a handful of e-mails out of literally, between the two companies, 1700 a day, that might have said,

"Why don't you load some music out +/? "

are somehow the causal... the cause of what is going on today.

Let me say a few words about what the record says about legitimate activities.

Altnet is a company... this is at 1169 and 70 of the joint appendix... they say that they have distributed, on peer-to-peer systems, hundreds of thousands of authorized songs, and, they say, millions of pieces of... of video games, leading to sales.

This is not a trivial number.

JIVE, at page 67 to 68, speaks about 250,000 peer-to-peer downloads of a music video.

The Internet archive, which is talked about in the record, and as you now look at what they are on their Website, now lists some several hundred musical artists with 20,000 recordings which are being put out there for peer-to-peer distribution.

The Creative Commons is licensing all kinds of things for authorized public distribution.

There are musical bands--

Justice Scalia: Because, I gather, that some artists don't make money from the records, but make money from the popularity that draws fans to their concerts.

Mr. Taranto: --My understanding--

Justice Scalia: So they're willing to give away the records for free.

Mr. Taranto: --my understanding is "some" is a great understatement, yes.

The bands talked about at 159 and 160 to '70 of the joint appendix, which have authorized their live concert recordings to be traded among... on... to be traded.

The GigAmerica business is in the business of compiling... this is at 323 of the joint appendix... of compiling musical recordings and other things for authorized distribution.

The world of music distribution and video distribution and movie-trailer distribution and, in small instances now, text distribution, but growing, is changing and making use of this extremely innovative, low-cost tool.

The great innovation of this tool of communication--

Chief Justice Rehnquist: Mr. Taranto?

Mr. Taranto: --Yes.

Chief Justice Rehnquist: In your motion for summary judgement, did you ask that the Plaintiff's claim be dismissed?

Mr. Taranto: Well, we asked for judgement, in our favor on their claim, that our current activities constituted a basis for secondary liability.

I'm not sure if the word "dismiss" was--

Chief Justice Rehnquist: Were there other claims?

You said "on their claim".

Were... did they make other claims?

Mr. Taranto: --They had a generic claim about secondary copyright liability.

We made the motion... or, actually, StreamCast made a motion that said,

"Let's carve this piece out and talk just about whether the set of current activities supports secondary liability. "

The other side eventually agreed that that was distinct and severable from their claim of secondary liability as to past acts and as to past versions of the software, which has... which has changed.

Justice Ginsburg: Where does one find that?

Chief Justice Rehnquist: xxx--

Mr. Taranto: Yes, the motion... well, it... the simplest place, I guess, is in the June 2003 District Court ruling, which is in the Joint Appendix and attached to the brief in opposition, ruled on the Petitioner's motion for an interlocutory appeal under 1292.

Justice Ginsburg: But the motion itself is not there to take it through the opinion of the Court?

Mr. Taranto: No, the motion is not... is not in the joint appendix.

The... most of the motions... in fact, both of our summary-judgement motions and their summary-judgement motion, are in the joint excerpts of record in the Ninth Circuit, can be found in--

Chief Justice Rehnquist: --The text on--

Mr. Taranto: --30 volumes.

Chief Justice Rehnquist: --the text, on pages 23a and 24a, gives the impression that the District Court is disposing of the entire case.

Mr. Taranto: That... it may give that impression on those pages.

Later, the Court explains that it's ruling only on the current versions of the software.

And then in the June 2003 order, the Court was explicit in saying,

"If I haven't been clear enough, let me amend my June... my April order. "

which is what you were just reading from, "to make explicit the limitation".

And we quote that in our brief.

The great virtue of peer-to-peer decentralized software is that it doesn't require anybody to put stuff onto a server and then bear the cost of bandwidth, of being charged by the Internet service provider when a million people suddenly want it.

It automatically scales.

It... the more people who want it, the more people will have it, because it will be out there on a million computers.

That is an inherent distributional economy, together with the autonomy of the user, rather than having a kind of Mother-may-I system, with having to check every communication through some third party to say,

"Am I authorized to make this communication. "

that are the virtues of this system and that make it clearly capable of growing the already large hundreds of thousands, even millions, of uses that this... that these pieces of software already enable people to do.

One final... final word.

We're not disputing that there are, in an industry-wide way, a set of important policy issues here, though there's nothing in the record about what self-help measures... digital-rights management, encryption, other things... there's nothing in the record what... about that.

There's nothing in the record about what kinds of real industry harm is being done by this.

Right?

This is all citations to Websites in their brief.

These are classic questions of predictive judgement, industry-wide judgements that Congress should make to decide whether there is a problem in need of solution, and what solutions ought to be considered, whether changing the rule would have a overriding bad effect on other industries.

And--

Rebuttal of Donald B. Verrilli, Jr.

Chief Justice Rehnquist: Thank you, Mr. Taranto.

Mr. Verrilli, you have four minutes remaining.

Mr. Verrilli Jr.: Thank you, Mr. Chief Justice.

I'd like to start by clarifying the inducement issue, and then explain why inducement is not enough, and then have a word, if I might, about the reality of this case.

The reason, Justice Souter, you find it bizarre is because a shell game is going on here.

What the Respondent's position... excuse me... the Respondent's position here is that we can sue for specific infringements that we can show were induced by these specific acts, such as e-mail support.

Our position on inducement is that we are entitled to injunctive relief against the continued operation of this gigantic infringement machine, which was built by the inducement.

Now, I think that the Respondents have quite clearly said that they're... they don't think any injunctive relief is available, going forward.

But we're entitled, under Section 502 of the Copyright Act, to effective relief, not merely a... relief, judgement relief, that says, "Go and sin no more", but relief that undoes the consequences of this inducement, of this massive effort to build a gigantic engine of infringement.

And that is why they're just wrong about that.

And you certainly can't affirm the Ninth Circuit and allow us to go forward with anything like that here, because the Ninth Circuit said the only thing we can sue for... the only thing we can sue for... is a situation in which we can show that we had knowledge of specific acts of infringement at a time when we could stop those specific acts of infringement.

So there's just no way to affirm and let that go forward.

Now, why is infringement... why is inducement not enough?

It's not enough because, as Justice Scalia suggested, these companies already operate in the shadows, and a ruling here, which would be, I submit, a significant cutback of the Sony rule, that inducement is the only available ground of liability, would just need them to paper over... you know, we do have some paper evidence here, a paper trail here, but that'll just... they just won't exist next time.

And it's just... it's just not enough.

And I submit that Sony was quite clear on this.

Sony said that the staple article-of-commerce doctrine, not copyright law, generally, and not secondary liability, generally, but the staple article-of-commerce doctrine, the noninducement part of the analysis, has got to strike an effective balance... a real balance that provides effective protection of copyright, as well as protecting unrelated lines of commerce.

Now, their rule is a rule of immunity.

It's a free pass.

It says, all you've got to do is speculate about noninfringing use, and you can continue with infringement, ad infinitum.

And that's not a rule that protects innovation; that's a rule that destroys innovation.

It certainly destroys the innovation that the creators of the copyright law is supposed to protect, and that's supposed to be the effective protection part of the balance that Sony said this law is supposed to strike.

It also... it also deters legitimate technological innovation moving towards legitimate means of distributing this... of distributing, in a digital format, music and movies through the kinds of companies that filed amicus briefs and that are trying to do this legitimately.

They are inevitably and invariably undercut by the kinds of businesses that Respondents and the others run, so it deters innovation; it doesn't move it forward.

And, beyond that, Justice Kennedy, as you suggested, it isn't just that they get to use our copyrighted... the value of our copyrighted materials as the seed capital, that's the whole business.

That is the whole business.

And that's the reality here, and that's the problem.

They can talk about the hundreds of thousands, or maybe even millions, of uses, but the reality is that there are 2.6 billion downloads, unlawfully, every month.

So what they're talking about as lawful is a tiny, teeny little fraction of what's really going on here.

And the problem with the rule which they say is a clear rule, but it obviously isn't in Sony, because Sony said, "strike a balance".

And the problem with that rule, Your Honor, is that it gives them a perpetual license to keep going forward with billions and billions of unlawful downloads a month.

They never have to do anything to try to bring their conduct into conformity with law.

They're not in the position of that inventor that you identified, Justice Scalia, who has to, sort of, think through, "What am I doing"?

They're just in a position where they have every economic incentive in the world to maximize the number of infringing uses, because they make more money when they do so.

Now, and with respect to the reality of this situation, let me just say... and I must beg to differ, Justice Breyer, with the suggestion that this industry is thriving.

What the... the facts are that we have lost... the recording industry has lost 25 percent of its revenue since the onslaught of these services.

And that's particularly critical, because, remember, this is really... the recording business, in particular, is really a venture-capital business.

Most of the records we put out don't make money.

A few make a lot of money.

Well, what do you think's getting traded on Grokster and StreamCast and the rest of them?

It's the few that make all the money.

So they're draining all of the money out of the system that we use to find new artists and--

Chief Justice Rehnquist: Thank you--

Mr. Verrilli Jr.: --foster development.

Chief Justice Rehnquist: --Mr. Verrilli.

Thank you.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Eldred v. Ashcroft - Oral Argument

Fri, 09 Jan 2009 14:50:36 +0000

Case:

Eldred v. Ashcroft

Media File:

01-618_20021009-argument.mp3

Related Transcript:

transcript.xml

Clips:

Clip 001: Test

Clip 002

Transcript:

Argument of Lawrence Lessig

Chief Justice Rehnquist: We'll hear argument now in Number 01-618, Eric Eldred v. John D. Ashcroft.

Mr. Lessig.

Mr. Lessig: Mr. Chief Justice, may it please the Court:

Petitioners are before you this morning challenging Congress's 1998 Sonny Bono Copyright Term Extension Act, which extended the term of subsisting and future copyrights by 20 years.

Petitioners submit such a blanket extension of existing terms exceeds Congress's power under the Copyright Clause and it violates the First Amendment.

Now, the Government has responded to petitioners' argument in a way that betrays a simple but fundamental confusion.

The Government has argued as if petitioners had advanced a general theory of the Copyright Clause, or a general constraint under which Congress must operate.

That is a mistake.

This case is about limits to an enumerated power.

It's not about general power of Congress to exercise its copyright authority.

Petitioners have advanced a particular interpretation of the only express limits in the Copyright Clause designed to give those limits meaning.

Justice O'Connor: Mr. Lessig, I'll tell you what bothers me about your position, and that is that Congress has extended the term so often through the years, and if you are right, don't we run the risk of upsetting previous extensions of time?

I mean, this seems to be a practice that began with the very first act.

Mr. Lessig: Justice, we do not believe that the very first act extended terms at all.

Speaking technically, which for a lawyer means speaking accurately, the 1790 act did not extend a Federal term.

The 1790 act granted a term for works that already existed in precisely the pattern that the English parliament had done in the Statute of Anne in 1710, and that the English parliament did with monopolies, general monopolies in the statute of--

Justice O'Connor: But there have been a number of extensions since.

Mr. Lessig: --That's right.

Justice O'Connor: Even if you can get over the first hurdle.

Mr. Lessig: That's right.

That's the important hurdle, and we'd like to jump that first, but the other ones, Justice, you're right, in 1831 and in 1909 Congress extended terms in a way that is inconsistent with the strongest form of the test that we have advanced.

Those extensions, however, were never challenged in any court and certainly not considered by this Court.

Chief Justice Rehnquist: Well, doesn't that itself mean something, Mr. Lessig?

The fact that they were never challenged, perhaps most people, and perhaps everybody felt there was no basis for challenging them.

Mr. Lessig: Well, Mr. Chief Justice, it's absolutely true that this case is here because of a fundamentally important changed circumstance that makes the Framers' limitations on the Copyright Clause much more significant.

This is the first time I can remember where this Court has been pointed to changed circumstances as a reason to reaffirm the Framers' values, because for most of this period, Mr. Chief Justice, the only people who were regulated by copyright law under the Copyright Act would have been commercial publishers, primarily, and now for the first time the scope of this exclusive right has expanded because of the changed technology of the Internet to reach an extraordinarily broad range of creativity that never would have been imagined before.

Now, it's not the case that the earlier extensions were not questioned on constitutional grounds.

In fact, Melville Nimmer, in the consideration of the 1976 act, suggested they were plainly under--

Chief Justice Rehnquist: Well, I'm talking about court challenges, not academic challenges.

Mr. Lessig: --That's right, there is no court challenge.

Justice Souter: Mr. Lessig, your theory, as I understand it, regardless of changed circumstances or not, your basic theory, which on your argument would have been appropriate at any time historically, is that there has at least got to be the possibility of a kind of a causal connection between the extension and the promotion or inducement for the creation of some subsequent work, but why is that any more plausible a reading of the Promotion Clause than simply a reading that says the Promotion Clause requires that there be a general scheme in place, which overall tends to promote or induce, and part of one aspect of that scheme can be that the... that at the discretion of Congress the period of protection is extended from time to time?

Why do you require... why do you say the clause has got to be read by this kind of specific causation theory as opposed to a kind of systemic theory of promotion?

Mr. Lessig: Justice Souter, the reason is exactly related to the point I began with, that this is a case about limits and not about discretion.

If it's not the case that this Court--

Justice Souter: No, but that's... I mean, that's the issue in the alternative reading.

Mr. Lessig: --That's right.

Justice Souter: And why is it a limit case, rather than a discretion within a general scheme kind--

Mr. Lessig: That's right.

Justice Souter: --of clause?

Mr. Lessig: Because if this Court does not adopt a reading of the form we've offered, then there is no limit to the ability of Congress to extend subsisting terms.

Justice Ginsburg: Do you say the same thing for scope?

This case is about duration, but Congress from time to time... in fact, you mentioned--

Mr. Lessig: Yes.

Justice Ginsburg: --the expanded applications of copyright, and Congress itself extends the scope from time to time.

Mr. Lessig: That's right.

Justice Ginsburg: Would you make, as far as, say, translation rights that didn't exist before, the same argument?

Mr. Lessig: I--

Justice Ginsburg: Why... or... and if you wouldn't, why not?

Mr. Lessig: --I... no, Justice Ginsburg, we would not, and the reason is again related to the method we have adopted to interpret "limited Times".

We have not said that "promote the progress of science" is a general and independent constraint on the Copyright Clause authority.

We've said it must be looked to to interpret the scope of "limited Times", and unless retrospective extensions are forbidden, it will eviscerate the meaning of "limited Times".

That does not occur in the context of the scope of exclusive right, nor in the context of the power to secure.

If that's--

Justice Breyer: Could we then go back to Justice O'Connor's question?

To make that very specific, if we agree with you, does that mean that we would, in principle, have to hold the 1976 extension unconstitutional?

I mean, in 1976, Congress extended the term from 28 years, renewable once, to life of the author plus 50 years.

Now they're extending it life of the author plus 70.

If the latter is unconstitutional on your theory, how could the former not be?

And if the former is, the chaos that would ensue would be horrendous.

Mr. Lessig: --Justice Breyer, under our theory as we've advanced it, you're right; the 1976 act would be unconstitutional.

Whether this Court would apply such a holding in this case to that act is a question that would have to be resolved under the retrospective--

Justice Breyer: Maybe we ought to find another theory, then.

Is there any--

Unknown Speaker: [Laughter]

Mr. Lessig: --Justice, the theory, which would advance the aim of limiting times in a way that is enforceable, is only applicable in the case that we brought before you here to the '98 act, and would not necessarily be applicable under the '76 act for the reasons the Government has offered.

We would not advance this argument, but the Government has offered an argument in a parallel case that suggests a distinction between the '76 act and this case.

That's not been briefed here.

It's been grounded in their claim that the treaty power creates some special power.

We wouldn't advance that claim, but the point is there are a number of issues that the '76 act--

Justice Breyer: In essence, you think it's at least arguable that the '76 act had various positive aspects to it in terms of the purpose of the Copyright Clause that this act lacks?

Mr. Lessig: --That's certainly true, and we also believe that, for the reasons averted to by amicus AOL in this case and the reasons you've just suggested, the disruption in that context under the retrospectivity cases Ryder and Reynolds Casketville Company would be sufficient to fit it within the, quote, "severe disruption exception" to the retrospectivity.

Justice Kennedy: Well, I suppose implicit in the argument that the '76 act, too, should have been declared void, and that we might leave it alone because of the disruption, is that for all these years the act has impeded progress in science and the useful arts.

I just don't see any empirical evidence for that.

Mr. Lessig: Justice, we are not making an empirical claim at all.

Nothing in our Copyright Clause claim hangs upon the empirical assertion about impeding progress.

Our only argument is, this is a structural limit necessary to assure that what would be an effectively perpetual term not be permitted under the copyright laws.

Justice Kennedy: Well, perhaps I misunderstood.

I thought the whole thrust of your argument was that there is a great First Amendment force here that's being silenced, that's being thwarted.

Mr. Lessig: Well, the thrust certainly--

Justice Kennedy: I thought that's the whole underpinning of your case.

Mr. Lessig: --It's certainly the case that we are asserting, in light of the changed circumstances, that the opportunity to build upon works within the public domain is a fundamental First Amendment interest, and that the First Amendment values, the vital speech interest at stake of this case, is that the public domain be permitted as a source for cultivating work about our culture without unnecessary legal restriction.

Chief Justice Rehnquist: Well, but you want more than that.

You want the right to copy verbatim other people's books, don't you?

Mr. Lessig: We want the right to copy verbatim works that should be in the public domain and would be in the public domain but for a statute that cannot be justified under ordinary First Amendment analysis or under a proper reading of the limits built into the Copyright Clause.

Justice Ginsburg: Mr. Lessig, on your First Amendment argument I don't see where the retroactivity-prospectivity comes in, because... I follow your argument under the Copyright Clause, but if you're saying that the time is too long, the public domain should get this stuff sooner rather than later, would you explain to me how your prospectivity-retrospective line fits into your First Amendment claim?

Mr. Lessig: Justice, we've argued that it would be inappropriate in this case for the Court to consider the prospective line until they decide whether the case, whether the prospective and retrospective is severable, and we submit it's an easy case to show that it's not.

Justice Ginsburg: On the First Amendment--

Mr. Lessig: Yes.

Justice Ginsburg: --argument you're making that as, I take it, an argument independent of, it doesn't hang on your Copyright Clause argument.

Mr. Lessig: That's right.

I--

Justice Ginsburg: And so let's just take... let's say that was your only argument in this case.

How does that tie into a retrospective-prospective distinction?

Mr. Lessig: --Well, the strongest First Amendment argument is about the retrospective extension, because of a fundamental change that occurs when Congress extends subsisting copyrights, rather than when Congress legislates prospectively.

When Congress legislates prospectively, it has no way to know who's going to benefit from its extension.

It is simply evaluating what the term should be prospectively in a way that we presume this Court should presume is legitimate under the First Amendment.

When it legislates retrospectively, it is, in effect, looking at particular authors and estates of authors who are before Congress asking for this extension, and it's choosing between these particular authors and the public at large.

Now, it may be that in exercising that choice in this case, Congress made an objective valuation of who would be in the best position to advance the interests of promoting the progress of science, or any--

Justice Ginsburg: But you... under your intermediate scrutiny test we would not be hypothesizing what might have been in Congress's mind.

Your First Amendment test is a stringent one.

You have to have an important purpose, and the means that you use is necessarily tied to that purpose.

If you take that position, I don't see how you make the retroactive-prospective line work.

Mr. Lessig: --Well, the line comes from deciding what the First Amendment interest is, and if this Court heed the First Amendment interest off of this difference between selecting who gets the benefit of 20 years of extension and just simply legislating in a general way prospectively, then this Court could hold, with respect to the prospective, that it's not even necessary to raise the intermediate scrutiny in that context, but again, for Ashwander reasons we don't think that this Court should address the prospective aspect of the CTEA even under the First Amendment.

Justice Ginsburg: Even though Congress's pattern has been to treat all authors equally?

I mean, the reason that it's been prospective and retrospective is that people should be, people who hold copyrights should be subject to the same regime and not have some people who got their copyrights the week before the law passed treated differently than people who got it the week after.

Mr. Lessig: Well, Justice, that certainly is the reason the Government offers for this pattern.

It, of course, doesn't explain actually what Congress has done and, even in this case, when a work has passed into the public domain, then there is precisely the same week before/week after problem that you advert to, that extension does not extend to all subsisting works, it only extends to all subsisting copyrights.

So that line is already drawn in the practice that Congress has adopted, but our point is, the only way to assure--

Justice Ginsburg: But Congress has... or, you're not disputing that Congress has always made these extensions, both retroactive and prospective?

Mr. Lessig: --Well, in 1831 it did not.

In 1831 it granted the benefit of its extension to a subset of all subsisting copyright holders.

Justice Ginsburg: Let's stick with 1976.

Mr. Lessig: In 1976--

Justice Ginsburg: Because that was what you said... that's... the pattern under the CTEA is identical to the one in the '76 act.

Mr. Lessig: --That's absolutely right, yes.

So they have extended it to both.

But our argument is, unless this Court draws a line about this extension, then for the reasons Judge Sentelle suggested below, there will be no limit to Congress's ability to--

Justice Ginsburg: Judge Sentelle did not deal with the First Amendment, as far as I--

Mr. Lessig: --That's right.

Justice Ginsburg: --recall.

Mr. Lessig: That's right.

Justice Ginsburg: And so I'm asking you... perhaps I'm missing it.

I haven't seen where you get the prospective-retrospective in connection with your First Amendment.

It seems that you're just saying there that 70 years is an unreasonable... is not necessary.

Mr. Lessig: Yes.

Justice Ginsburg: And it doesn't serve an important purpose.

Mr. Lessig: Yes.

Precisely... actually, we're not saying anything about the 70 years in this case even under the First Amendment, because we believe it's unseverable, but--

Justice Souter: But I thought you were saying that if you accept the Copyright Clause argument, then you have a way, in effect, of devaluing the Government's claim of its important interest and important objective when you get to the First Amendment intermediate scrutiny analysis.

Whereas if you don't accept the Copyright Clause claim, then, in order to make the First Amendment analysis we've simply got to say, well, gee, is the promotion of useful art and so on more important than the public domain, and can we say that that allows a distinction between 50 years and 70 years?

We're pretty much at sea, so I thought your Copyright Clause argument was necessary to give us some handle with which to deal with the First Amendment.

Mr. Lessig: --Our Copyright Clause argument is certainly a way of framing why extensions of subsisting terms cannot be seen to promote the First Amendment interest of speech at all.

Justice Souter: Okay.

Let's assume we don't... for the sake of argument here, let's assume we don't accept the Copyright Clause argument.

Do you have an independent First Amendment argument in your brief?

Mr. Lessig: Yes, of course we do.

Justice Souter: Okay, and it is... tell me in a sentence or two what it is.

I mean, at that point I'm where Justice Ginsburg is.

Mr. Lessig: Yes.

The First Amendment argument we've argued in our brief is with respect to the retrospective extension, and the First Amendment argument is, that needs to--

Justice Souter: No, but that's the Copyright Clause argument, and it seems to me you're saying, okay, we then apply that in First Amendment analysis, which allows us to make a coherent intermediate scrutiny argument.

If we don't accept the Copyright Clause retrospectivity argument--

Mr. Lessig: --Yes.

Justice Souter: --then what is your First Amendment argument?

Mr. Lessig: That's right, I'm sorry, Justice.

What I'm saying is not that it's the retrospectivity that makes the First Amendment argument troubling... I mean, that drives our First Amendment argument.

All I'm saying is, we have addressed the retrospective portion of CTEA, and so I'm saying in the retrospective portion of CTEA you would apply ordinary, intermediate First Amendment review, and we would ask--

Justice O'Connor: Well, this Court really has not... if you say that the Copyright Clause is not violated, I don't think there are examples where this Court has then resorted to First Amendment analysis to invalidate the same act.

Mr. Lessig: --Well--

Justice O'Connor: I mean, this would be quite a new proposition.

Mr. Lessig: --Well, Justice O'Connor, the First Amendment is always an independent limitation on what otherwise would be legitimate exercises of congressional authority, so this--

Justice O'Connor: Yes, but the Framers seem to have adopted these two things at the same time--

Mr. Lessig: --That's right.

Justice O'Connor: --in effect.

Mr. Lessig: That's right, and if--

Justice O'Connor: And I think there are not examples that I can think of where we have said, well, we'll analyze it under the Copyright Clause, but if that fails we'll turn to the First Amendment.

Mr. Lessig: --Justice, that's right.

If only we had the Framers' copyright before us, because of course, again remember, the exclusive right the Framers spoke of was the right to print and publish.

It didn't include the derivative rights, it didn't include the display rights, and it certainly--

Justice O'Connor: Right.

It has expanded very much, and they also envisioned a very short term, and I can find a lot of fault with what Congress did here--

Mr. Lessig: --That's right.

Justice O'Connor: --because it does take a lot of things out of the public domain that one would think that someone in Congress would want to think hard about.

Mr. Lessig: That's right.

Justice O'Connor: But having done that, it's very difficult to find the basis in the Constitution for saying it isn't a limited term.

It's longer than one might think desirable--

Mr. Lessig: Right.

Justice O'Connor: --but is it not limited?

Mr. Lessig: Well, if it is limited, then there is no limit to the ability of Congress to extend subsisting terms, and that fundamentally destroys the objective that the--

Justice O'Connor: Rule against perpetuities might jump in there at some point.

Unknown Speaker: [Laughter]

Mr. Lessig: --Right, and we submit the Framers had something very different in mind than the rule against perpetuities.

The point is, if this is permitted, then there is no limit to the ability to extend terms, and that is precisely contrary to what the Framers had in mind when they worried about this problem originally.

What was the problem they were solving?

It was, as this Court stated in Graham--

Justice O'Connor: Well, I could agree with you, in terms of policy, that this flies directly in the face of what the Framers had in mind, absolutely.

But does it violate the Constitution?

Mr. Lessig: --Well, if it flies in the face of what the Framers had in mind, then the question is, is there a way of interpreting their words that gives effect to what they had in mind, and the answer is yes.

Chief Justice Rehnquist: Well, you know, certainly what is happening in the country today in the way of congressional... under the Commerce Clause is totally different than what the Framers had in mind, but we've never felt that that was the criterion.

What the Framers thought of, there weren't steamboats, there weren't railroads.

Mr. Lessig: That's right.

Chief Justice Rehnquist: We've said there was a general grant, and that Congress was free to run with it in many respects.

Mr. Lessig: In many respects, Mr. Chief Justice, but, as this Court has also said, there are limits to what Congress can do under the Commerce Clause.

Justice Breyer: But isn't--

Justice Stevens: --Can I ask you about one of the limits, just focusing on the Copyright Clause and the progress of science and useful arts?

In your view, does that... is that limited to encouraging creativity by authors and inventors, or does it also include the distribution of materials that might not otherwise be distributed, like old films and so forth?

Mr. Lessig: We're happy to adopt a broader interpretation of what promote the progress is about, within the general framework that the Framers established in light of the English practice, which was a quid pro quo.

The ability to facilitate distribution--

Justice Stevens: So that if the quid pro quo is that we can facilitate distribution of some old film by an additional monopoly grant, you'd think that's permissible?

Mr. Lessig: --So long as the grant is conditioned upon the distribution.

So long as the grant--

Justice Breyer: In other words you could have... right now, if Congress decides to have a law, and this law is going to give copyrights in 1) the Bible, 2) Shakespeare, 3) Ben Jonson, and the reason they do it is that they think that that would lead publishers to produce those and distribute them, and they're right, they will, okay?

In your view, that's perfectly constitutional?

Mr. Lessig: --No, that's the view of the Government's, Justice Breyer.

My view is--

Justice Breyer: Well, I thought that was the question you were getting, and I thought you were saying... I must have misunderstood.

I thought you were saying that was constitutional.

Mr. Lessig: --No.

What we were saying is, if Congress wants to permit restoration of films, for example, an issue that's been well briefed here, Congress can say, if you restore the film, then the restoration gets a copyright so long as it satisfies originality as outlined in Feist, and it gets a copyright for a period of time.

But this Court's opinion in Graham and in Feist made clear that it could not extend copyrights to works in the public domain.

The Government doesn't concede that, but we stand on that as a way of understanding why this Court--

Justice Breyer: So your answer to Justice Stevens is no, they cannot give a copyright purely for purposes of dissemination to publishers, is that right?

Mr. Lessig: --No.

Justice Breyer: Oh, all right.

Mr. Lessig: They cannot give a copyright purely for purposes of distribution to publishers.

[Laughter]

They would need to satisfy all of the implied limitations that this Court has expressed in the context of this, the most carefully limited clause in Article I, section 8.

It is one of the--

Justice Ginsburg: Mr. Lessig, the clause says, Congress shall, and suppose Congress decides in this expanded world of ours that it's going to make certain changes and demand other changes from our treaty partners.

Suppose it says, well, the Germans led the fight for 70 years in the European Union, we'll go with that, but we're going to insist that they have a more expansive notion of, say, a fair use.

Now, why couldn't that fit within the promotion of knowledge?

Mr. Lessig: --Justice Ginsburg, we have no quarrel with the objective of harmonization fitting within the "promote the progress of science" understanding, subject to constitutional limitations.

If France adopted a rule that said you couldn't grant copyrights to hate speech, we could not harmonize with that rule consistent with our First Amendment and similarly, as Mary Beth Peters testified before Congress, ours is the only Constitution that has an express limitation on terms.

That's got to mean something, and if it means that we are limited in our ability to agree with the Europeans as they continually expand the term in light of their own vision of what copyright is about, then that's the meaning of a constitutional restriction.

This Court's interpretation of "limited Times" could, of course, eviscerate that term of any meaning, but under the principle of enumeration as this Court has articulated it, this Court should interpret that clause in a way that gives its terms effect in a simple way.

Just as a limited addition print is not a limited... is not limited if each time a customer comes in a new print is printed, so, too, a limited term is not limited if each time copyright holders come to Congress they can extend the term.

Justice Souter: Well, but the difference... the reason that analogy doesn't cut it for me is that the limited edition print depends basically on an implied understanding between the person who makes the print and the person who buys it, and the understanding is, you won't go beyond 100, or whatever number you write.

We're not engaged in a contractual analysis under the Copyright Clause between the writer and the... and somebody representing the public domain.

Mr. Lessig: That's right.

Justice Souter: The analogy doesn't seem to work.

Mr. Lessig: That's right.

All that I'm suggesting is, here is a plain meaning of the term that gives effect to the constitutional limit in a way that assures that, in fact, the limit is respected, contrary to the Government's argument, which, in effect, permits Congress the power perpetually to extend terms.

If I may reserve the remainder of my time.

Argument of Theodore B. Olson

Chief Justice Rehnquist: Very well, Mr. Lessig.

General Olson, we'll hear from you.

Mr. Olson: Mr. Chief Justice, and may it please the Court:

The questions today, especially the initial questions, suggest one of the many insurmountable obstacles to petitioners' petition in, position in this case.

That is that the first Congress explicitly gave copyright protection to the authors of any books already printed as well as explicitly the owners of existing copyrights.

Thereafter, in 1831, 1909, 1976, and 1998, and in numerous private copyright bills and temporary extensions of the copyright law and in repeated patent law revisions, Congress extended the terms of Federal copyright and patent protection of subsisting works.

As this Court explained 100 and some years ago in its Burrows-Giles opinion, such constructions are accorded very great weight and, as that Court went on to say, when consistent and unchallenged for over a century are almost conclusive that consistent construction by Congress of its authority under the Copyright and Patent Clause now has lasted from the 105th... from the first through the 105th Congress.

It has been sustained by Justices of this Court and early decisions of this Court.

It is consistent with what the law of England was from the Statute of Anne--

Justice Stevens: Yes, but take one of the early extensions, just extending a... an already granted patent to an inventor for an extra 10 years.

How can that be squared with the language of the provision?

Maybe Congress did it, but maybe it acted improperly when it did it.

Mr. Olson: --Well, the Congress--

Justice Stevens: And that's our question, really.

Mr. Olson: --Well, that... it seems to me that there may be... this is... the clause itself is a very, very broad grant.

It says the--

Justice Stevens: Do you view it as entirely a grant, or do you think it also contains limitations?

Mr. Olson: --Well, I think that to the extent that there may be limitations, Justice Stevens, they are... require considerable deference by this Court to the judgment of Congress--

Justice Stevens: Well, I understand that, but do you... I'd be interested in knowing, do you think it does contain limitations?

Mr. Olson: --It contains... the clause itself contains limitations, limited times, authors, exclusive rights and things of that nature.

I don't think... and the petitioners expressly disclaim the assertion that there are any substantive limitations in the "Promote the-Progress" Clause.

What the Framers were saying is, we want to give Congress the authority to promote the progress of useful arts and sciences, and--

Justice Stevens: How did the example we just talked about, a patentee giving an extra 10 years on his... how does that promote the progress of science?

Mr. Olson: --Well, it may provide additional incentives for the patentee to exploit and promote and disseminate that particular work.

With respect to creative works like works of art, books and that sort of thing, it may provide many ways--

Justice Stevens: I'm just concentrating on our patentee, and I'm wondering how that fits into the notion that there was a bargain in effect between the inventor and the Government that at a certain period of time it would become part of the public domain.

It seems to me it's inconsistent with that.

Mr. Olson: --It isn't inconsistent, I submit, Justice Stevens, for the Congress to exercise its juris... its responsibility under this broad grant of power to determine that there could be many ways in which the holder of an existing right may benefit the public by continuing to have that right for an additional period of time, the same reason that Congress... same reasons that Congress had when it created the right in the first place.

It's not just the--

Justice Stevens: No, the reason for the right in the first place was to encourage invention.

Mr. Olson: --Well, but I... we submit that specifically with respect to the Copyright Clause, but I think it applies to the patent portion of the clause at all, it isn't just the invention, it isn't just the writing of the work... and this relates to the questions that were asked of my colleague a moment ago.

It includes the dissemination of the work, not necessarily--

Justice Breyer: Dissemination alone?

Mr. Olson: --Not necessarily the dissemination alone--

Justice Breyer: Well, no, not... don't say not necessarily.

I'm... for purposes of my thinking about it, I'd like to know, imagine we have just dissemination.

Mr. Olson: --That something is already in the public domain.

Justice Breyer: That's correct.

The only justification for the extension, there is no other, is dissemination of a work that is already in existence.

Mr. Olson: I would not want to rule that out, Justice Breyer, for the very reason--

Justice Breyer: Well, I want to say, do you think yes or no?

Mr. Olson: --Well, I think that it could very well be yes, for the reason that in the 1790 statute the Congress specifically was aware of... that there were State copyright laws which didn't last as long as the Federal statute.

Several of the States hadn't finished enacting those copyright laws, and a couple of States hadn't enacted them at all.

Justice Breyer: So in your opinion, in my example, if you recall it--

Mr. Olson: It's--

Justice Breyer: --your answer would be, if Congress tomorrow wants to give a copyright to a publisher solely for the purpose of reproducing and disseminating Ben Jonson, Shakespeare, it can do it?

Mr. Olson: --It may--

Justice Breyer: I hate to say may--

Mr. Olson: --Well--

Justice Breyer: --because that really... that's an important question.

Mr. Olson: --Well, because I don't think that a per... I don't think there is a per se rule that should apply here because this is a grant of Congress, to Congress to exercise its judgment as to what may be beneficial.

There may be other constitutional provisions that come into play, or there may be--

Justice Breyer: All right, let me explain to you why it's important to me.

I have a list.

This is an economic statute.

The harms that seem to be caused by it, the extension, I've listed as follows, approximate numbers, made up, but magnitude correct.

The existing copyright holders who survive, their copyright survives 70 years, who have already been paid, on the numbers that were given, about $24 billion or more, will receive an extra $6 billion.

That, I take it, is a harm.

Their works have already been created.

Harm number 2.

The fact that people, for the 99 percent of the copyrights that have no commercial value after 70 years, have to find the copyright holder to put them in databases.

The cost of that, on my numbers in here, made up, at least a billion dollars, or they can't find the people at all and get permission, an innumerable cost, un... valuable cost to people who want to use it.

Those are costs.

On the plus side I see uniformity, dissemination, and... now, you tell me.

Mr. Olson: --Well, I also see compliance with international competitive markets and the laws that are being adopted, and the incentives--

Justice Breyer: Uniformity.

That's uniformity.

Mr. Olson: --Well, that's not just uniformity.

It's providing incentive to people to publish here, as opposed to publish in Europe, where longer terms might be available.

There is an incentive to distribute existing works that may be necessary.

It's the consistency that Congress is promoting by saying to individuals, as they might have said when they enacted the Copyright Clause in the first place, we will not only give you 14 years, but if we change our mind tomorrow, and think that a better, a longer period is necessary, we're... this is consistency, but it's also a matter of fairness, and it's--

Justice Breyer: Why... on the last point, it's... I've counted that as zero.

The reason I've counted it as zero is it seems to me that the added value, incentive value to produce between life plus 50, or life plus 70, is zero.

It's carried out, as the economists do, to three decimal points, divide by 100 for the probability of your ever having such a work, and you get virtually zero, no difference between this and a perpetual copyright.

Mr. Olson: --Well, I think that that's a very good illustration of why the authority is granted to Congress, because if you are an 80-year-old writer, that may make a considerable difference in terms of what you decide to do.

Justice Breyer: How could it?

Mr. Olson: It may... because you may... if you have no incentive, if you know that this is going to go into the public domain sooner rather than later, it may affect your judgment with respect to--

Justice Breyer: In... I--

Mr. Olson: --It might also affect whether the publisher... what the publisher pays for your prospective work, Justice Breyer.

We... the Copyright Clause incentive provides incentives not just for... not just to the creators, but to the disseminators, the publishers, the broadcasters, the film companies.

Justice Breyer: --So you think, say, Verdi, Othello, Verdi, Othello, 80 years old, the prospect of an extra 20 years way down the pike would have made a difference?

Mr. Olson: Well, I think again that illustrates why the authority is vested in Congress to make these judgments rather than in courts to make these judgments, because we're not talking about the effect on an individual author, or an individual creator.

What the Framers of the Constitution were concerned about is a gross judgment with respect to what might generally provide incentives to the population--

Justice O'Connor: But it is hard to understand how, if the overall purpose of the Copyright Clause is to encourage creative work, how some retroactive extension could possibly do that.

I... one wonders what was in the minds of the Congress, even if somehow they didn't violate the clause.

But if we affirm here, is there any limiting principle out there that would ever kick in?

Mr. Olson: --Well, that's a... that is a difficult question to say whether there is any limiting principle when such a broad grant of power, authority is given to Congress and has been exercised so repeatedly that--

Justice O'Connor: Well, if it's a limited term, as the Constitution says, is there indeed any limit out there?

Mr. Olson: --What I submit... well, first of all, even the petitioners acknowledge that, as far as prospective limits are concerned, that isn't a judgment that this Court is being made to ask and, in fact, the petitioners acknowledge that it isn't a judgment that this Court should make, so the only point that the petitioners--

Chief Justice Rehnquist: Well, if Congress says we're going to grant this copyright indefinitely, forever--

Mr. Olson: --That would seem--

Chief Justice Rehnquist: --that violates the limited term, does it not?

Mr. Olson: --I acknowledge that.

And anything that--

Justice Kennedy: In Victorian England you could buy a box seat for 900 years.

There was serene complacency about their culture, and God bless them, but--

Unknown Speaker: [Laughter]

Justice Kennedy: --I really think this is an important question and, as Justice O'Connor points out, if we have to ask what's the most plausible explanation for this rule, to reward existing vested interest or to stimulate new works, it seems to me that it's probably the former.

Mr. Olson: --Well--

Justice Kennedy: I mean, we know that.

Mr. Olson: --It is... well, it... let me say with respond... in response to both of those questions, an unlimited time would violate the Copyright Clause.

Something that was the functional equivalent of an unlimited time would violate the Copyright Clause, but the Framers specifically did not put in numbers.

They had the opportunity to do that.

Thomas Jefferson suggested that a number should be put in.

We submit that it would be... even... since the petitioners don't suggest that it's an appropriate function of this Court, certainly in this case, to pick a number, 133 years or something of that nature, but it is quite clear that Congress from the Statute of Anne, 1710, we have 300 years of history, of Congress thinking that it continues to benefit the process, not just of the productivity, of the creation of the work itself, but the dissemination of it to provide--

Justice Scalia: General Olson, you say that the functional equivalent of an unlimited time would be a violation, but that's precisely the argument that's being made by petitioners here, that a limited time which is extendable is the functionable, functional equivalent of an unlimited time, a limited time that 10 years from now can be extended, and then extended again, and extended again.

Why... their argument is precisely that, a limited time doesn't mean anything unless it means, once you have established the limit for works that have been created under that limit, that's the end.

Mr. Olson: --Well, the Framers had an opportunity to say immutable, unalterable, unamendable.

They didn't use that.

They used the phrase, limited term, which means then, meant then and means now, a certain specified--

Justice Souter: Okay, assuming--

Mr. Olson: --number of years under the statute.

Justice Souter: --With the exception of a limitation which illustrates the distinction between forever on the one hand and a definite number on the other, is there any limitation in the clause?

Does the promotion, does the preambular recitation of promotion as such place a limit on it?

Mr. Olson: I submit, Justice Souter, that there's no per se limitation, that if there is, as Justice Scalia suggested, for... if it is true that Congress, having specified 14 years or 28 years, decides that doesn't work very well because of the economies of other countries, the parade of constraints on artists in other countries, the reasons that we want things to be preserved or distributed, it should be 2 more years, or 5 more years later--

Justice Stevens: Yes, but that argument would apply to new copyrights, but to extension of already existing copyrights your argument doesn't apply.

Mr. Olson: --It does apply, Justice Stevens, because--

Justice Stevens: The work has already been created.

Mr. Olson: --The work has already been created, but the artists that are creating works day in and day out take into consideration the fact that Congress has decided, there's an ease of administration--

Justice Stevens: But for them, they get the benefit of the longer term if you don't apply it to an existing copyright.

I mean, if you say you need 70 years because of changes in the economy to encourage works, you grant 70 for the future, but why does that, making that apply to somebody who created his work 20 years ago and has already provided what he, the quid pro quo, why do you need it for him?

Mr. Olson: --We're not just... because we're not just talking about the author.

If we... we're talking about--

Justice Stevens: The Constitution refers to the authors and the inventors, doesn't it?

They're certainly the prime actors in this scene, aren't they?

Mr. Olson: --Yes, but all of the history of the development of these clauses suggests that... and this Court has indicated in its decisions with respect to copyright, that the Framers were concerned and the Congress is legitimately concerned not just in providing the spark of creativity, but to make sure that that's distributed widely and available, and there may be many reasons why... we're... we--

Justice Stevens: And that it gets into the public domain at the expiration of the term.

That was an important part of the bargain.

Mr. Olson: --Yes, and what... but the definition of the term was a responsibility vested in Congress, because it has the power... the legislative history of the 1998 act itself suggests what was going on here and suggests why the Framers gave this authority to Congress.

There were numerous hearings, there were testimony by the folks that represent the same position as petitioners here as to why this shouldn't be done, why it should be done.

Congress weighed... as this Court, the phrase that this Court used, I think it was in the Feist case, the delicate balance that was so difficult for Congress to--

Justice Breyer: How--

Justice Souter: --Okay, but you--

Justice Breyer: --what weighs in that balance, because to go back for one second, in practical, economic terms I gather the difference between a copyright that lasts for 100 years, lasts for 1,000 years, lasts forever, is probably something less than 1,000... on $1,000 a penny.

I mean, it's a penny on 1,000, or probably a lot less than that, frankly.

So I can not only not imagine a person whose decision to write would be governed by such a thing, I cannot imagine a European who would come to America to copyright his work for such a reason.

Indeed, I wonder why that European wouldn't come anyway, even if the term were 10 years, because if he doesn't come, he's not going to get protection.

Mr. Olson: --Well, the--

Justice Breyer: I mean, who are these people that are going to be moved by that incentive?

Mr. Olson: --The... as we described in our brief, in pages 34 through 36, I believe it is in our brief, that the concerns about the limitation on exploitation and the limitation of a copyright period in Europe is based upon the country of origin of the work and the shortest time available.

So that there may be differences, and we describe that, but that illustrates, Justice Breyer, the difference between 1 cents and 10 cents and $100 with respect to this particular author who's this particular age, or a particular author like Melville, whose works weren't... weren't... didn't... or Schubert, whose works weren't properly appreciated or exploitable until many years after their death.

All of these variations are quintessentially legislative judgments.

It would be very difficult for the Framers to have eschewed deciding 14 years was a constitutional limitation, and for this Court to say 99 years is, and again, even the petitioners aren't asking the Court to make that judgment.

The petitioners are only saying that there shall be a per se rule that the word "limited Times" means unchangeable times.

Justice Ginsburg: But there has to be a limit, as you acknowledge.

Perpetual copyright is not permitted.

Who is the judge of... within that line?

Who is the judge of when it becomes unlimited?

Is there, in other words, judicial review and, if there is, what standard will this Court apply to determine whether something short of perpetual is still unlimited?

Mr. Olson: Well, the issue before this Court, I hasten to say, as I said before, is only whether, once the Congress makes that judgment, it can ever change it retrospectively.

The issue before this Court is not whether, in the future, a certain length of time would be appropriate.

That... but the answer to that, Justice Ginsburg, I submit, is found in the Necessary and Proper Clause, and this Court's interpretation of the Necessary and Proper Clause as to the extent that this Court would find or not find that the judgment made by Congress with respect to the implementation of this very broad power is convenient or useful in terms of the achievement of the goals.

Justice Souter: Okay, and is your argument that we should so find and hold against their retrospective argument, because there is some, at least plausible basis to say that there can be a causal connection between the retrospective extension and some benefit that can be traced to those particular works through the retrospective extension, like dissemination?

Is that your argument?

Mr. Olson: That is among our arguments, Justice Souter.

Justice Souter: Is it also your argument that even if you cannot trace that kind, or at least plausibly argue that there could be that kind of a causal benefit, that it would still be constitutional, because you should judge the extension simply as contributing to a general system, one feature of which is that from time to time there may be retrospective extensions, and so long as that general system induces the creation of works, or the dissemination of works, or the preservation of works, so long as the general system works, there is no review, no limitation on the tinkering that can be done, even retrospectively?

Is that also your argument?

Mr. Olson: I think that's a fair statement of an argument that we have made and articulated in the brief--

Justice Souter: Okay.

Mr. Olson: --that unless there is a... the Court is... because the circumstances change, that we are living in an era now where piracy is a significant problem, there's question of administrative ease, of administering a system where copyrights may be different for one set of authors, or different for another set of authors, there's changes that are taking place internationally, so that what we're saying is that not only could this Court conceive of reasons why Congress thought it was accomplishing the objectives of this clause, but that there are numerous objectives that are entirely legitimate and--

Justice Scalia: Do you also argue that the Necessary and Proper Clause alone will justify the retroactive extension simply as a matter of equity?

Mr. Olson: --Yes.

Justice Scalia: That is, that the Copyright Clause justifies the extension for works not yet created, but it would be enormously inequitable to have other authors who put in the same amount of work get a lesser protection, so the Necessary and Proper Clause now allows you to do the retrospective?

Mr. Olson: Yes, Justice Scalia, and the examples that are--

Justice Stevens: Can I ask you, why is it enormously inequitable if they get exactly what they were entitled to at the time they made the work?

Mr. Olson: --The implicit promise that--

Justice Stevens: I mean, they have some right to expect that they will be... you know, an additional grant, later on?

Mr. Olson: --I think that's not an unreasonable expectation at all, Justice Stevens, because that was the premise of the--

Justice Ginsburg: That is the way it's always been done.

There hasn't been any copyright extension that hasn't applied to subsisting work.

Mr. Olson: --That's--

Justice Ginsburg: But there was one... Justice Breyer brought up Ben Jonson, so... this case doesn't involve works that are already in the public domain.

Mr. Olson: --That is correct.

Justice Ginsburg: This is subsisting copyrights.

Mr. Olson: That is correct.

Justice Ginsburg: So--

Justice Souter: --But why wouldn't it?

Justice Kennedy: Why?

Why not?

Justice Souter: Why wouldn't it?

If the equity argument under the Necessary and Proper Clause justifies extension of the copyright for those whose copyright will expire tomorrow if it's not extended, in order to put them on parity with those getting copyrights for new works, why doesn't it apply to the copyright, the holder of the copyright that expired yesterday?

Mr. Olson: You could arguably... you could conceivably make that argument, Justice Souter, but there is a bright line there.

Something that has already gone into the public domain, which other individuals or companies or entities may then have acquired an interest in, or rights to, or be involved in disseminating--

Justice Souter: And if you don't--

Mr. Olson: --This is a rational--

Justice Souter: --If you don't throw out a line there, then Ben Jonson certainly gets recopyrighted.

Justice Stevens: Well, the difficulty--

--If we're just looking for a bright line, the line that they suggest between unexpired patents and copyrights and brand new ones is also just as bright.

Mr. Olson: --Oh, I concede that it's a bright line, but it's a bright line that would have--

Justice Souter: Except Congress chose this one and didn't choose the other one.

That's--

Mr. Olson: --Congress--

Justice Souter: --Basically you're saying the presumption ought to be in the congressional judgment about how to draw the line as well as in how long a line to draw.

Mr. Olson: --I agree, and this Court has... we're not just talking about the judgment of the Congress of the... the 105th Congress in 1998.

This is the way the Statute of Anne was written.

This is the way the State copyright laws were written when this country became a Nation.

This is the way the 1790 copyright statute, the number of--

Justice Stevens: Well, of course, the original statute was replacing a bunch of State statutes or State rules, partly common law, partly statutory, that... they had kind of a mixed up legal situation, and there was an interest in having one uniform rule for the first time around.

Mr. Olson: --Well, there was an interest in having a uniform rule, and that's precisely why the Framers created the Copyright Clause in the Constitution, but there was copyright protection in some States, there wasn't copyright protection in other States, and what we know from the decision of this Court in the Wheaton decision is that there was not a common law copyright in existence.

This Court explicitly held that.

Now, the petitioners make this quid pro quo argument that somehow implicitly the initial 1790 copyright statute was saying to people, you get a copyright if you exchange whatever existing rights you have.

That simply does not make any sense.

There is no language, and it's a relatively late-discovered argument, because it sees its full--

Justice Breyer: I want you to finish that, but I want you to go back to the... I have one question on the equity principle.

Are you... I want you to finish.

Mr. Olson: --I wasn't finished, but I'm happy to come back.

Justice Breyer: Go ahead.

No, no, you finish first.

Mr. Olson: Well, I was going to say there's no language whatsoever of preemption, abandonment, abrogation, or exchange in the 1790 copyright, but compare... Copyright Act.

But compare that to the 1793 Patent Act under the same clause, where there is that exchange there.

The other thing, as this Court has said, there is no implied abrogation of common law rights which would be a doctrine which would be inconsistent with what the petitioner is arguing.

Now--

Justice Breyer: Why... I mean, I think you have a point on this equity principle.

I wonder, is there any review there?

That is, suppose you have a statute, as this one arguably is, where 99.9 percent, many billions of dollars of benefits, are going to the existing holders of copyright on grounds of equity, and the effect of the statute in eliciting new works is near zero.

I mean, that would seem... where this equity idea is the camel and the production idea is the gnat, and is there any... can we say something like that, or does Congress have total leeway in respect to--

Mr. Olson: --Well, it--

Justice Breyer: --who they want to give the money to, basically?

Mr. Olson: --Justice Breyer, it's conceivable that the Court might do that if that situation was present, but it's not remotely the situation here.

We have the adoption of copyright terms which are consistent, generally speaking, with copyright terms which exist in the European Union, our principal competitor, and in connection with international treaties.

We have a copyright term that's consistent with the concept of the creator plus the creator's first generation heirs.

We have a copyright term, remember, which supersedes the earlier copyright provisions that were added to the period between creation and publication, so that the limited number of years in the first, the 1790 and the 1831 statute were the number of years plus the relatively unlimited period of time between creation and publication, so we don't have anything remotely like that in this situation.

We have a process which, as you suggested, or one of the questions suggested, is... may not have been the policy that you as a Member of Congress would have supported.

You might have made the balance, that delicate balance that this Court has referred to, in another way, but that is something that Congress, through its ability to gather facts and make balances, is quintessentially capable of doing, and that is where the Framers vested the responsibility, and what this statute does is to favor, if at all, the creator with respect to the utilization of these rights, as opposed to the person who wishes to copy the creator.

That's an entirely rational distinction for Congress to make.

Thank you.

Rebuttal of Lawrence Lessig

Chief Justice Rehnquist: Thank you, General Olson.

Mr. Lessig, you have 3 minutes remaining.

Mr. Lessig: General Olson has been perfectly clear in setting out the structure of the Government's argument.

It is that there is no effective limit on Congress's power under the Copyright Clause.

Now, were this the first time this Court had considered Congress's copyright authority, that might be a plausible argument, but the very first time this Court ever struck down a law of Congress as exceeding Article I, section 8 power was in the context of the Copyright Clause.

We have 125 years of history of this Court making sure that the limits, both express and implied, in the Copyright Clause, have some meaning.

The Feist opinion very clearly sets out the implied limits, a per se limit for originality, for the reasons Justice Breyer was trying to get me to say.

The Harper as well as Graham set out very clear limits on the context of the ability to extend works in the public domain.

Those limits make no sense under the reasoning the Government has offered.

The Government's reasoning would make all of those opinions irrelevant and wrong.

Now, we offer a simple way to make this clear, express limit make sense, and that is precisely the understanding we suggest that existed in 1790.

The only precedents that existed in 1790 were precedents of setting a term, and then when parliament was asked in 1735, '37, and '39 to extend it, they rejected it, and as amicus historians said, they rejected it because, as a pamphleteer described it, that would be effectively a perpetual term.

Now, this delicate balance that the Government invokes, Justice Breyer, let me give you the numbers.

The delicate balance is that, under the most reasonable assumptions of copyright royalty income and under our interest rate of 7 percent, as the amicus economists note at page 6, note 6 of their brief, the current term gives authors 99.8 percent of the value of a perpetual term.

Now, that might be a delicate balance, that they give the author 99.8 percent and the public.2 percent, but in my mind, that's delicate in a very different sense of that term.

Thank you very much.

Chief Justice Rehnquist: Thank you, Mr. Lessig.

The case is submitted.

Attribution:

The Oyez Project

Featured:

New York Times v. Tasini - Oral Argument

Fri, 09 Jan 2009 14:50:30 +0000

Case:

New York Times v. Tasini

Media File:

00-201_20010328-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Laurence H. Tribe

Chief Justice Rehnquist: We'll hear argument now on number 00-201, the New York Times Company versus Jonathan Tasini.

Mr. Tribe.

Mr. Tribe: Mr. Chief Justice and may it please the Court:

The parties on both courts below agree on at least two things, first, that section 201(c) represents a compromise that assures freelance authors that they may control and exploit their individual contributions to collective works like newspapers and magazines in new anthologies and serializations and screenplays and other derivative works unless they've expressly transferred that right.

The parties are also agreed as are both courts below that 201(c) assures the publication of collective works that the publisher of such collective works has the aggregate right to publish any article in the collective work both in publishing the collective work itself of course, but also in publishing that article, quote, as part of any revision of that collective work, again unless there has been an express transfer of the right.

Now the principal impetus for this measure was a rather strong wish to undo several quite notorious rulings like that of the Southern District of New York in the Geisel case in 1968 which of course involved the legendary Dr. Seuss and denied him the right to stop the unauthorized distribution of toy dolls that were derived from cartoons that he had published decades earlier.

There is no hint at all in the history of this measure and I think no hint in the way it's written that microfilm, for example, which had been in use for some 40 years at the time this measure was passed and which people used to make copies of individual articles more often than to make copies of entire cumbersome periodicals was seen by anyone as a problem to be addressed or solved by 201(c).

Justice Scalia: When you say people used to make copies you mean the ultimate user?

Mr. Tribe: The ultimate end user.

Justice Scalia: Yes, but the person who produced the microfilm or the microfiche produced the entire work.

It produced the article as part of the entire work, not to be shown.

When a person went to the machine he would only look to the article that he was interested in.

Mr. Tribe: As do we, Justice Scalia, in Nexis and in the CD-ROMs, the entire text with the exception of certain graphics that cannot be handled by ASCII is put in.

Chief Justice Rehnquist: When you would look at a newspaper on microfilm you would get the whole page.

You would probably want to single out a particular article but it was the whole page that appeared to you.

Mr. Tribe: That's right and in this case you basically conduct a search under the algorithms that are used by Nexis, conduct a search of the entire periodical whether you call for a particular topic...

Chief Justice Rehnquist: But it's not all in one piece, is it.

Mr. Tribe: Well it's in virtual... it's in... it's certainly not... it's not a newspaper that we're used to.

You can't drink your coffee to it or wrap your fish in it but that really is a red herring, if I may say so.

Justice O'Connor: Well, but I suppose that it has removed the photographs and the ads.

It's been disaggregated and what you see are the individual articles from a particular...

Mr. Tribe: At any one time, but with a very simple prompt of about 15 characters you can get the entire periodical.

Justice O'Connor: But at least in let's talk about the Nexis for a minute.

You don't see ads and the photographs and all that.

But you can pull out an entire article that had appeared in the Times.

Mr. Tribe: You certainly can.

That's why we're...

Justice O'Connor: Now, I assume that the publisher can enter a contract with an independent author to cover the subsequent use in database material and...

Mr. Tribe: Yes, and for decades...

Justice O'Connor: Probably the publisher does that today...

Mr. Tribe: Sometimes.

What's happened, Justice O'Connor, it appears that for at least 20 years people have assumed because no one complained of this practice that the standard contract was not limited to the print medium.

Now as of 1995, for example, the New York times made clear they would not make contracts with people for print only.

Justice O'Connor: I notice, though, that the head of the copyright division has at least written a letter that looks like she thinks the court below was absolutely right.

Mr. Tribe: That's right.

On the basis of a display argument that is disclaimed by the Tasini respondents that wasn't made below and that doesn't make sense under the statute, because quite clearly if we are involved in reproduction and distribution display is covered in the intersection of those.

It's not, I think, a serious argument.

You notice the solicitor general did not decide to come into this case.

But you're right about the register of copyright.

However that...

Justice Ginsburg: Mr. Tribe, does that view of the register of copyright relate at all to one effort that was made in the 76 act and to give the independent artisan, the artist, the author more muscle vis-a-vis the publisher or the patron than before?

Mr. Tribe: It's an interesting theory, Justice Ginsberg, but I've tried to imagine how by carving this pie into two pieces one could give the older, the other, more muscle.

Justice Ginsburg: One could pay that's...

Mr. Tribe: Well, in 1995, I was saying a minute ago, the New York Times said we're not going to run articles print only.

It would be kind of pointless now when almost everything has to go onto the Internet or be preserved in some other way other than print and they said that our contract will automatically cover print and electronic rights.

And what's interesting is that the royalties didn't change a cent after that.

I think it's a kind of belief in magic that leads some people to think that if there's an inequity of bargaining power it will be solved by creating two estates rather than one.

In fact, in the mid 1980s it's interesting that the respondents went to Congress, the National Writers Union went to Congress and tried to get a measure much more modest than this one, a measure that would say that when there is a demonstrable inequity in bargaining power, an unconscionable arrangement, and when that's shown by individualized proof there could be a transfer of rights.

Here they want a wholesale, global transfer which I don't think is necessarily going to change anything for the future but could have very serious impact on existing writings whose authors and heirs and assigns are going to be extremely difficult to locate.

Chief Justice Rehnquist: So far as the future is concerned, Mr. Tribe, we're just talking about money, aren't we.

I mean the people can negotiate one way or the other, however...

Mr. Tribe: That's right and all I'm saying is there is not any particular reason to think the deals will come out very differently.

Justice Scalia: But at least people evidently think it will.

They're expending a fair amount of money.

Mr. Tribe: Well, I think, Justice Scalia, that they think quite rightly that they can get a lot of money to settle a case in which, if we were to lose, we and many other publishers around the country would have no choice but to engage in defensive deletions of a lot of material that could otherwise expose us to massive statutory damages under the copyright laws.

That's why a number of Pulitzer Prize winning historians have said they're afraid of what it will do to their research.

That's why the American Library Association which is an amicus on their side has conceded that it's awfully difficult to find these people and there may be an adverse impact.

Even the register of copyright in the letter to which you referred, Justice O'Connor said there may be an impact on scholarship and research.

And I think that's an understatement.

Justice Ginsburg: Well, for one thing, this is a three year statute of limitations which will...

Mr. Tribe: I don't know that that will help a lot, Justice Ginsburg and the reason is that keeping something on Nexis or in CD-ROMs that you have in circulation after it has been determined to be infringing and letting people potentially have access to it, which the download might be an infringement, would be a new act.

So I don't think the statute of limitations will solve the problem.

Justice Ginsburg: It's hard for me to see that that's going to be the effect in the real world because after all these authors have an interest in exposure, it's just like a lot of people now no longer have to be artists for hire are that anyway, because they will give the copyright to the patron, they want people to get to know who they are.

Mr. Tribe: I think that's the irony, Justice Ginsburg.

I think the erasures of a lot of these things will not be in the interest of the people whose work may be erased but someone who wrote an article in 1980 and maybe was 60 years old at the time and maybe isn't around at the moment, there are a lot of people like that.

We don't know how many.

We don't know how many articles, but the U.S. News and World Report has already decided in anticipation because there's no... they think no analytic difference between microfilm and some of these products, certainly the GPO CD-ROM which is a photographic copy is not different, they've stopped putting their work on microfilm.

The line drawing problem here, if I may say, is one of several reasons why recalibrating the balance that Congress struck is a particularly inappropriate job for the Court.

Justice Scalia: Mr. Tribe, can I pursue this damages question.

I mean, as far as ripping out everything that's on the systems already, that certainly need not be done by court decree.

Mr. Tribe: No, certainly.

Justice Scalia: A court can say, you know, taking equity into account we're not going to issue such an injunction so the question would be your clients would be compelled to erase all of this stuff because of the damages they would have to pay.

What would the damages be if, as you say, it was worthless.

Mr. Tribe: Well under...

Justice Scalia: If it was worthless, the damages would be negligeable.

Mr. Tribe: You would think that, but under 504 damages are not measured by the harm to the person who sues.

There is a provision that says that they can take the... get the benefit of the presumption that all of our gross income was attributable to their contribution and the theory of that would I suppose be that they don't need a theory because the statute says it, but the theory would be that all of the work we put in electronic form would not have been worth anything if it looked like Swiss cheese with stuff missing.

Justice Scalia: Rebuttable or irrebuttable?

Mr. Tribe: It's rebuttable.

But they can also elect statutory damages which can go up to $30,000 a violation and some courts accept the Nimmer theory of multiple violations per infringement.

It would be more even, if not, it could be...

Justice Scalia: The statutory violation applies only to willful violations.

Mr. Tribe: No, it's more if it's willful.

But there is a statutory provision in any event and it would become willful.

Justice Scalia: What's the nonwillful amount?

Mr. Tribe: I think it's a sliding scale, Justice Scalia, and I think there is discretion to set it.

And it can be very low, I think as low as $250 and as high as over 10,000, but I have to say I don't remember for sure.

But the point is there are something like 100,000 freelance articles just on Nexis.

There are 18,000 journals on Nexis.

You don't have to multiply 100,000 or 50,000 or 20,000 by a very large number to know that a good business judgment for a lot of these companies is going to be who wants the litigation, and you couldn't put together class actions to solve the problem easily, given Amchem and Ortiz because of the incredible variability of the contracts of the... some of them, for example, will have registered the copyright in the article within three years of its publication and then be eligible for statutory damages, others won't.

They'll be plaintiff-specific defenses, statutes of limitations and laches.

You mentioned the statute of limitations, Justice Ginsburg.

It seems to me that of course that is not a reason to read the statute incorrectly but I think...

Justice Breyer: I think if we go back to that for just one second, because I'd like to go about to where Justice O'Connor, I think, started.

The part that I'm having difficulty understanding and I don't actually understand this is what precisely, precisely say in the case of Nexis was the event that you think the other side is saying changed the work from a revised work to a new work.

In particular I'm thinking, say, at ten in the morning on May 11th, 2001, the Washington Post has a piece of paper, it's called the Washington Post.

And then in a analogous form that piece of paper is in its computer.

And then something happens.

That is, there's a transfer of that information over to Nexis and what, I'd like you to focus right on that, because what you... I want to know what event in that series of events on that morning we're talking about as being the copying, the unlawful copying.

Mr. Tribe: That moves beyond revision.

Justice Breyer: Yes, in their view in your opinion.

Mr. Tribe: I assure you, Justice Breyer, I'd love to know at least as much as you would and I hope Mr. Gold will enlighten us, because...

Justice Breyer: All right.

Well, then, let me give you a little bit further... imagine what it might be.

It might be this.

It might be that there is a person in the Washington Post who pushes a button called send, and at that point what is sent is not the electronic and analog of the Washington Post several pages, but rather a few articles from the Post and then a little later in the day a few more are sent.

And then a little later a few more are sent, and when they arrive in Nexis, they are nowhere stored in a form that is in any sense analogous to that page or several pages in the Washington Post, but rather is in a large computer where they are mixed with hunting fishing journal and everything else.

Mr. Tribe: Justice Breyer, the record is completely unambiguous that nothing like that happens.

What happens is that the computer text itself, the very same computer text that goes to the printing office so that the New York Times then arrives at your front desk.

Chief Justice Rehnquist: example is the Post.

Mr. Tribe: Well the Post, that's fine.

I'll take the Washington Post, Washington Post, Washington Star, we can pick our paper.

The Washington Post, they all follow the same protocol.

There is a computer text and that text is ASCII readable.

That means it can be put in computer form and one version... one copy, it's not even a version, the identical thing goes to the printing facility and...

Justice Scalia: With an identification code for this day's edition of the Washington Post.

Is that the identification code?

Mr. Tribe: Yes absolute... the identification code...

Justice Scalia: So that when you pull it up what you get is the whole Washington Post.

Mr. Tribe: If you ask for the Washington Post.

Justice Scalia: Ah, you have to go out of your way to ask for... have it recompiled.

Mr. Tribe: I wanted to first describe what happens when it gets there and then I'll try to say what happens at the other end when someone...

Justice Scalia: I want to know what's sent.

Mr. Tribe: What is sent is computer data, whole Washington Post and it's put before it goes there they add advertisements and some other graphics.

And then it goes to the assembly room and then it's delivered and put on newsstands.

That edition of the ads and the graphics which are not ASCII...

Justice Breyer: Forget about the ads and the graphics.

Mr. Tribe: That edition is not made in the version that goes to Nexis.

Nexis processes that unitary computer data.

It goes instantaneously, not in driblets, and it doesn't go article by article.

Justice Breyer: So I could look to the opinion of the district court to find that because it might very technically turn on whether the transmission to Nexis is the transmission at one instant of time of the electronic analog, and I chose the Post purposely because it's not involved in some other aspects of the case, the... it might turn on whether that whole electronic analog of the entire paper is transmitted instantly at one instance over to Nexis where later on they use electronic scissors and cut it up or whether article by article at different times it's transmitted so that there is no cutting up.

Mr. Tribe: There's not a shred of evidence, not a whisper that suggest that they're first disassembling the paper into articles and then whisking it over.

It is true that the computer text registers each article and identifies it just as it identifies pages and there is a file for each article.

But a file is really a conceptual thing here.

It's not that they have a little file and they have the article stuffed in it.

And the result of all this is that the technology shouldn't obscure what's happening.

What's happening is that something that is as close to the Washington Post for that day as it could be given this medium appears in the Nexis computer.

Justice O'Connor: Well, Mr. Tribe, despite how it is transmitted, if the whole thing goes immediately, then at Nexis is it disaggregated and stored in a way that one finds as individual articles.

Mr. Tribe: No, Justice O'Connor.

What happens is...

Justice O'Connor: That's odd, because when I've used something like that I've gone to an author's name or a subject matter and tried to retrieve an individual article, not the whole newspaper.

Mr. Tribe: No, of course not.

Although some people want the whole newspaper and you can get it by saying date, paren, 3/28/2001.

But let me answer your question...

Justice O'Connor: Well, I think it's fair to say that Nexis at least strips out the ads, strips out the graphics and the photos.

Mr. Tribe: Nexis doesn't strip out the ads.

Justice O'Connor: Well, somebody is doing it because what you get...

Mr. Tribe: The ads are just not added.

Justice O'Connor: What you get is the article.

Mr. Tribe: First of all, you get the whole thing in the GPO CD-ROM.

Secondly, Nexis doesn't subtract the ads, they're just not added by the Washington Post, although I'm not sure that that matters.

Third...

Chief Justice Rehnquist: They're not added but they are in the original version.

Mr. Tribe: That's right.

That's why this is a revision.

We're not claiming it's the same thing but it is awfully close and if this isn't a revision, it's hard to know what would be.

The point I want to make is that with... once the computer has all of the digital information, it indexes it according to key words and among those words are the date and an author and the data is sort of scattered to the magnetic...

Justice Souter: Isn't that the point, Mr. Tribe, at which there is no longer any functional difference between the way Nexis stores and the Nexis subscriber calls up on the one hand and simply a freestanding reprint of the article which anybody can walk into a store and buy on the other hand.

Mr. Tribe: There are several important differences, Justice Souter.

One, the search inside Nexis is always of whole periodicals, and that's undisputed, two...

Justice Souter: I don't understand what you mean.

If I want an article by Smith, I understand that I can search for an article by Smith not for the entire New York Times or Washington Post in which Smith's article occurred.

Mr. Tribe: I understand Justice Souter but it is undisputed that the way they do it, it's more efficient, is that they will take the intersection of all of the indices you want and they will search the entire periodical by periodical to find the article.

They don't... it's not after all a thinking machine.

It's a dumb operation, but more important, you're not charged for the article the way you would be at a copy service.

You're charged for search time and that's the time for searching entire periodicals.

Also...

Justice Souter: Okay.

And if I want to get the article cheap I identify the article very specifically so that the search time will be less rather than more and the functional effect is that I buy the article.

Mr. Tribe: When you get it, you get it as part of the revision and that's...

Justice Souter: Well, no, but I don't.

If I get... maybe you're telling me something in fact that I shouldn't dispute, but if I want Smith's article, what comes out of the machine is Smith's article not the entire edition of the Post.

Mr. Tribe: I understand Justice Souter, but if you'll permit me, let me say why I nonetheless think you're getting it as part of the revised periodical, and the reason is this, it's very important, so please let me stress it.

If it were the case that the only way you could comply with 201(c) was that when you asked for an article you get, whether you want it or not, the whole periodical in which the article appears, that would satisfy the concern you're expressing.

But if that was the only way you could do it, the statute would be incoherent because it says that you may reproduce and distribute the contribution as part of a revision or you may distribute the revision itself or a later element in the series, and if it were the case that you have to get the whole thing, then we would have erased from the statute the key compromised words...

Justice Souter: I will accept that but it may then simply be that the price of coherence, as you put it, is a limitation on the right of the periodical or of the collection and a corresponding recognition of the right of the author.

That may be what coherence demands.

Mr. Tribe: Well, but wouldn't that be for Congress, Justice Souter?

That is, Congress said...

Justice Souter: If that is a necessary... if that is the only way to avoid for practical purposes reading the author's copyright protection right out of the statute then I would suppose that's what Congress necessarily has provided.

Mr. Tribe: But Justice Souter, to say that it reads that protection out of the statute is hard to square with the fact that these authors in undisputed testimony themselves said that when they tried to syndicate their work or serialize it or sell it in some way there was never any evidence that its appearance in this archival context on Nexis or the CD-ROMs ever made the slightest difference.

They can fully exploit their individual work, the argument is that we should be able since Congress said so to reproduce and distribute not just a revision of the composite work, but the article as part of that revision, and that cannot mean...

Justice Ginsburg: Well, because you played... the idea is you played their song beyond their permission.

Tell me, Mr. Tribe, why if it is wrong to think of what's going on here if you put it in very simple terms as taking the article that the Post has received, to put it in the Post, and just putting it in a much, much larger journal?

When you give it to Nexis, isn't that what happens?

Mr. Tribe: No.

No, Justice Ginsberg, it's when you bind the book and put it on a library shelf you could say it's part of a huge book.

The fact is that this is a huge database and the Second Circuit's suggestion that we are treating that whole database as the revision is completely wrong.

We've said all along that the revision is simply the digitized version of the periodical.

That digitized version is one that contains...

Justice Scalia: That doesn't exist... that does not exist separately, it does not exist by itself, it's part of this big mass of data.

Mr. Tribe: That's the nature of the medium.

Nothing exist separately.

Justice Scalia: You're inventing a revision that has no real world existence.

You're saying there's just this part of the data which is scattered all through I don't know how they scatter on the disk or wherever...

Mr. Tribe: But Justice Scalia, Congress was well aware... they talked about disks, they talked about any medium, they talked about machines having to read the stuff, they knew about the computer, 1978 wasn't that long ago.

This law was written to make sense in the computer context.

Justice Scalia: It would have been thoroughly feasible, would it not, to send over the Washington Post with identification that would only refer to this edition of the Washington Post.

Mr. Tribe: But the statute allows...

Justice Scalia: In which case you would have no problem in the world, you have sent over the Washington Post.

Mr. Tribe: No.

The problem in the world we'd have, Justice Scalia, is the world doesn't want only... and Congress...

Justice Scalia: That may well be so pay for it then.

That just proves that it's better to do it the way you're doing it, commercially better, but that doesn't prove you should have to pay for it.

Mr. Tribe: I think we're paying for the existing royalty and secondly, Congress said that we could publish as part of that compromise that we could publish the individual article as part of the revision.

I'm saying that carries this implication and it doesn't destroy their copyright.

Justice Scalia: Suppose you had an old fogy editor who didn't want to use any of new-fangled stuff so what he does is he cuts out each article in a magazine, each separate article and he sends it over to some separate library, he sends over the whole thing but it's sent over article by article and it is and knowingly to be... to be indexed in that library that he's sending it to by the article, rather than by the Washington Post of the day, would you say that somehow this is just a revision?

Mr. Tribe: Probably not.

Probably not, because I think...

Justice Scalia: I don't see why this is any difference in substance.

Mr. Tribe: It differs in a lot of ways.

We are sending over the entire periodical and people can find...

Justice Scalia: My case, too.

The whole thing's sent over, but it's sent over article by article and it is indexed by the article, in a whole mass of articles from every magazine in the country, now would that be okay if it was done in print?

Justice Kennedy: I don't see why...

Mr. Tribe: Would they be charged for the articles or charged for the time it takes to search the whole library.

Justice Scalia: Oh, you think that's the difference?

Mr. Tribe: I think it makes an important difference.

These things are also... if you look at the promotional materials they're promoted as complete periodicals, hundreds of volumes of the most widely-read periodicals.

I think I should reserve the balance of...

Argument of Laurence Gold

Chief Justice Rehnquist: Very well, Mr. Tribe.

Mr. Gold, we'll hear from you.

Mr. Gold: Mr. Chief Justice and may it please the Court:

I'd like to begin by addressing the part of the discussion that just concluded, Section 201(c) and its cognate Sections 103 and the definition sections as has been discussed distinguished between the author's copyright in his individual contributed work, which he retains when he contributes it to a collective work, and the collective work copyright owners, this language couldn't be more cumbersome, mainly the publishers' copyright in the collective work as a whole.

The statute couldn't be clearer, we believe, in the proposition that the collective works copyright owner has no copyright in the individual article in these free-lance situations where there is the separate author copyright.

It seems to us that the clearest lesson from that is that if the publisher were in print terms to publish reprints of individual articles and treat them separately that would be an infringing action, the publisher would be exploiting the article as an article and without any authorization.

Justice Kennedy: Suppose that the Times published bound volumes of its paper but it had an index in the front of it, maybe it does, with all of the authors names and all of the subjects names and the other thing it did was it had tabs so that you could easily find the index.

I take it that would be a permitted revision just because it's in paper.

Mr. Gold: Well, if in paper terms, the Times were to publish a version of what they electronically provide to Nexis, article by article, by the way in file... each article in a file.

But if they were to publish that as a coherent whole, the reader's condensed May 1st New York Times, I think there's a very strong argument that that's a revised version of the paper.

Justice Kennedy: Well, at some point it changes so much that it's not...

What you're saying...

Justice Breyer: Electronically that's all this is, is it not?

Mr. Gold: I'm saying that is a fair argument but we're miles away from that fair argument.

Justice Scalia: No, but take Justice Kennedy's precise example, it's not just the indexed New York times of this date but the Times publishes a massive volumes, all of the New York Times from 1950 to 1990 with an index in it, would you consider that just a revision of the one edition of the New York Times for which the Times had the copyright.

Mr. Gold: I do not think that's...

Justice Scalia: I wouldn't think that either.

Mr. Gold: a revision.

Justice Stevens: It also could be a later collective work in the same series.

Mr. Gold: The question here, though, at least there is an argument that that's a revision and not an exploitation of the copyrighted author's article as an article, but my point, my beginning point is that as I understand Mr. Tribe's argument, if the Times were to publish an article as an article, saying this was part of the New York Times and offer it on the market, make copies and offer it to anyone who wants to buy it, that that would be part of the publisher's 201(c) right.

At that point there's nothing, on that theory, there is nothing left of the fact that the author is the copyright holder in the article.

We thought that was the starting point, that the one thing that is plain is that the collective work copyright holder cannot exploit the article as an article, as a separate freestanding work.

And in the end what the Nexis system does is exploit articles on an article by article basis.

They're drawn from hundreds of collective works.

Justice Stevens: Mr. Gold, it would help me if you would identify for me precisely when the infringement occurs.

Let me just take the very first step.

Supposing the New York Times sends an E-mail to Nexis and attaches an exhibit and on that exhibit is an entire copy of all the stories in the paper that day.

Is that an infringement?

Mr. Gold: I don't think that if you take a particular view of what the revised work is at that stage whether there is an infringement seems to me questionable, but...

Justice Stevens: And the reason it would not be an infringement is because translating it from the paper media to the electronic media would be a revision?

Is that correct?

Justice Scalia: Just as though you put it in Braille, that would be a revision.

Mr. Gold: As long as a collective work, but what is done here...

Justice Stevens: So that step isn't an infringement.

Now when does the infringement occur and by whom?

Mr. Gold: The... it seems to us there are a series of infringements, the first is...

Justice Stevens: Let's take the first one and by whom.

Mr. Gold: The first is that the articles are coded, the article files are coded and then inserted into an overall database of millions and from the latest numbers, billions...

Justice Stevens: And then you're going to have to tell me, why is that different from putting a photostat or a microfiche of a New York Times in a particular place in a big library?

Mr. Gold: Because you're not putting a microfiche of the New York Times as a New York Times what you're...

Justice Stevens: No, but you're putting a revision in.

Mr. Gold: No.

Justice Stevens: What you just said was a revision.

Mr. Gold: No, you're putting articles that were part of the revision into an undifferentiated mess and in that sense you're creating a quite different work.

Those articles...

Justice O'Connor: I thought your complaint alleges contributory infringement by the New York Times the minute it sends it to me, data central.

I thought that was the allegation in your complaint, that that's a contributory infringement because the New York Times knows what they're going to do with it, they're going to disaggregate it and have it available.

Is that the allegation or not?

Mr. Gold: That's the allegation.

Justice Souter: That's how I read it.

Mr. Gold: But my point was that it by putting... they're not sending an integrated New York Times to Nexis, they're sending disaggregated articles which will be further disaggregated.

Justice Souter: But that... even if they...

Justice O'Connor: The other side disputes that.

Mr. Tribe says that's not it.

We send exactly what we had, but be that as it may.

Is it not your allegation in the complaint that whatever the New York Times sends is a contributor infringement?

Mr. Gold: Yes.

Justice Souter: Okay, now if that is so, why should it make a difference whether the Times sends it in an arguably aggregated form or an arguably disaggregated form, isn't the real point from your... from the standpoint of your case that the newspaper is participating in a process the end point of which is disaggregation and access to disaggregated materials.

Mr. Gold: Yes.

Justice Souter: And if that's the case then why isn't it on your theory an infringement, no matter what the format in which the Times or any newspaper sends the material to Nexis?

Mr. Gold: My only point in making... in stating that the form of the transmission, namely in article files, is that is part and parcel of what you've just stated, namely an overall process, to create a set of disaggregated article files.

Justice Souter: Then I should think your answer to Justice Stevens' question would be the infringement on the part of the newspaper takes place at the moment of transmission.

Mr. Gold: I think that in those terms that's true and I thought I did answer it that way in the... in the sense that it is the nature of the... the nature of the disaggregation and assigning each article to an article file which is part and parcel of this overall...

Justice Kennedy: I'm still not clear of your answer of Justice Stevens' question, when does the first infringement take place?

It sounds as if you're saying the infringement takes place when the Times pushes the button to remove all the ads and the graphics or when the Times pushes the button to enable a searcher to pull up the article by author and that seems very strange to me.

When is the first act of infringement?

Forget about contribution to the tort, when is the first infringing act?

Mr. Gold: When you say forget about contributing to, I'm just not clear on what you're asking.

The...

Justice Kennedy: There's a tortfeasor and persons who contribute to the tort.

When is the tort first committed?

The tort of infringement.

Mr. Gold: This is, I guess, as I see it an act that is the first step in a continuing process of infringement.

The Times...

Justice Kennedy: When can I say, ah-ha, there's an infringement.

Mr. Gold: It seems to me that in practical terms the first act of infringement of any substance is the putting of the article files as separate article files on the Nexis database and making it available in this system to be accessed, printed out, downloaded and so...

Justice Souter: I understand that, but why, since the newspaper knows that that is what is supposed to happen, that in fact is what it called for in its contract with Nexis, why doesn't the newspaper infringe at the moment when it takes the first step in that process, which I suppose would be the moment at which it presses the send button to send the material to Nexis?

Mr. Gold: I don't think I've ever before been faced with an embarrassment of riches where I'm being asked to say how many multiple...

Justice Breyer: I'm not going to ask that, I'm asking the opposite.

That is, what is the process, and the reason I find it important is it seems to me possible from what your opponents have said that what happens at say the Post or the Times is there is the analog electronically of the front page.

It doesn't have the pictures, it doesn't have the graphs.

I don't care about that for the moment.

Assume you lose on that one.

I have the electronic analog which is close enough.

And then what happens is somebody pushes the send button and at one instance of time that electronically is transmitted to Nexis where it's on a chip.

Now all that happens after that, where we have the electronic analog on a chip, is some electronic signals are added by Nexis to parts of the chip so that any user of Nexis who wants to can call it up like any other thing, article by article.

Now I want to know is, is that what happens?

Mr. Gold: My understanding of what happens is that the Post creates a set of article files, each of which are an electronic...

Justice Breyer: Creating an article file maybe that on a chip there's the electronic analog or on a disk and you add a few other signals.

Mr. Gold: Well...

Justice Breyer: Now the reason I'm asking this and the reason I think it's important is because it seems to me it might make an enormous difference if the only infringing act is when a user comes in and calls up a file, because at that point principles of fair use come into play, and I think principles of fair use might make an enormous difference to the end result and the reason to get my whole question out because I might not have another opportunity is I am disturbed very much by what I call, by way of parody, their Chinese Cultural Revolution argument.

That is, we wipe out the history of the 20th Century and that's an overstatement but it's not such an overstatement when you think that most school children today will be looking for information on machines and if it isn't in the database library D.H. Lawrence, John P. Marguand or lesser figures will simply disappear because it's too expensive for them to locate each heir and to get the copyright permission to put the article on the machine.

All right, I've got it all out now I'd like your response.

Mr. Gold: Do I get one sentence or two?

Justice Breyer: I'd like you to take as long as you'd like and I won't interrupt further.

Mr. Gold: First of all the... it is enormously different, I would suggest, to breakdown and disaggregate a collective and into component parts when the component parts are the copyright property of someone else and to take the first and necessary step for those component parts to be exploited as individual freestanding works and with the purpose of... providing that they will be exploited as freestanding works.

The... every step from the first step taken by the newspapers and breaking this down into article files coding it, providing those article files to Nexis where they are further coded and inputted, not necessarily in sequence, is to create a system in which the article files can be exploited as individual files, as individual articles.

This process is the print equivalent process of printing each article as an individual article which can be combined with any other of a billion articles in a new compilation which has nothing to do with the original collective work or any revised collective work or published by itself, printed and published.

Justice Stevens: Mr. Gold, if you've had a chance to finish your answer, why is that different from sending a newspaper to a library with very detailed indexes, knowing that the library will allow people to come in and make individual copies of individual stories, individual contributions to it.

Mr. Gold: Well if the library...

Justice Stevens: Has a very elaborate index system and it's part of a huge library.

Mr. Gold: Yeah.

Justice Stevens, all I can say is if the library is part and parcel of copying individual articles, that's a copyright infringement.

Justice Stevens: All it does is provide the information that enables the person to pick and choose what he wants.

Mr. Gold: Well, there are two different questions that it seems to me you're raising.

If the library simply gives someone an index and a copy of the paper and says...

Justice Stevens: And has a xerox machine where the guy can go in and get the particular one he wants.

Mr. Gold: The question is whether the library is implicated in providing the duplicating system.

The law could not be clearer on that.

There are elaborate provisions in the Copyright Act with regard to library permitted or created copying for a price and don't forget this is all commercialized.

Nexis is not a free service.

It is a publishing service creating new copies of these works for...

Justice Stevens: So just to be sure I understand, the infringement occurs, I still want to know just when it first... the infringement occurs when the individual makes a selection and then makes a copy of his particular choice.

Mr. Gold: You mean in the library example you are raising?

Justice Stevens: Is it not the same in the electronic situation?

There's no infringement and some individual picks out a particular article that was both part of a revision and part of original copyright by the author and makes a copy of that without making a copy of the whole revision.

Mr. Gold: Two things if I can, the copying of the work onto the disk is one kind... if we're correct, is one kind of copyright infringement.

Justice Stevens: I thought you said earlier that if the whole E-mail was copied in electronic form that would be a revision, not an infringement.

Are you changing your view on the...

Mr. Gold: No, I'm sorry, I don't understand what you're asking.

If the... we're discussing your newspaper...

Justice O'Connor: Correct.

Mr. Gold: library example.

The only infringement is if the library is actively engaged in facilitating, allowing further...

Justice Scalia: Selling individual articles, yeah, right.

Mr. Gold: Duplications for a price.

In this case, there are multiple infringements before that because...

Justice Stevens: What's the first one before that.

Mr. Gold: The first one is the preparation of the article files as separate article files for the purpose of creating an overall compilation of separate article files which are to be exploited as separate article files.

Justice Stevens: Is that analytically different from creating elaborate indices in a print library.

Mr. Gold: Yes, because it is part and parcel of a process for printing, if you will, for reproducing and distributing separate article files, separate articles as such.

If the news... to go back to...

Justice Scalia: Well, its equivalent in the print media, I guess, would be sending over a package of separate articles which in combination were the Washington Post of that day, but they're sent over as separate articles and each one indexed in such a way as to facilitate the obtaining of those articles without obtaining the rest of the Washington Post.

Mr. Gold: Right, for a price, for sale.

That is precisely what I...

Justice Stevens: That's not what my understanding of the record is, they sell it... send it over as a bundle.

They don't send it over in separate pieces.

Justice Breyer: That's what I wanted to know.

Mr. Gold: They send over a bundle of separate pieces.

Justice Breyer: Well, all right, but suppose it's the exact electronic analog of the morning paper.

I mean, if it's the exact electronic analog of the morning paper that they send over, I know it's technical but this is a pretty technical case and then it seems to me that it is not just sending separate articles.

If they send one at ten in the morning and another at four in the afternoon it might be quite different.

Mr. Gold: Justice Breyer, if to use Justice Scalia's example, you send to the print shop every separate article that appeared in the newspaper and said print each one up as a separate article to be purveyed to the public, given the structure of this act, that is different from saying here is a collective whole, because...

Justice Scalia: You have to establish that they are sent over as separate articles.

What constitutes the sending over of them as separate articles?

I thought it was the fact that when they're sent over they are coded and identified...

Mr. Gold: Right.

Justice Scalia: separately, not as simply one unidentifiable part of the Washington Post of May 2nd.

Mr. Gold: Correct.

Justice Scalia: Each one has a code on it which enables it to be treated as a separate article.

Mr. Gold: Right, and the only togetherness, if you will, is that it's our understanding, and it is my understanding of the record that after the paper is broken down and these article files are created and coded, they are transmitted or streamed as a set of distinguishable article files but they are not a unit, an electronic unit of the May 1st paper, they are a separate...

Justice Scalia: That would be quite useless for the purposes for which they want it.

They don't want the Washington Post of May 2nd.

They want the ability to get individual articles.

Mr. Gold: Correct.

This is a purpose of commercial activity.

Justice Ginsburg: Mr. Gold, before you finish I would like you to respond to Mr. Tribe's point that on your theory the microfiche, it would be the same thing, equally infringing.

Mr. Gold: We don't believe that the microfiche is equally infringing?

Chief Justice Rehnquist: Why not.

Mr. Gold: Because it is a reproduction of the whole paper in integral form.

Now, if to the extent that the paper is shown rather than read, you have the whole paper, you can read what you want, but it's a one to one relationship between the number of copies that are made and the number that are...

Justice Stevens: Isn't that a problem that with computers we can... you can simultaneously be a bundle and a whole bunch of separate things, depends on which button we decide to push whether you want the whole thing or just one.

Mr. Gold: Well, that's why the fact that it is... that the system is one of articles which can be exploited as articles or in any combination of articles makes all the difference.

It is not a set in any real terms of the works.

Rebuttal of Laurence H. Tribe

Chief Justice Rehnquist: Thank you Mr. Gold.

Mr. Tribe you have two minutes remaining.

Mr. Tribe: Thank you, Mr. Chief Justice.

Let me first say very clearly it is not the case that these newspapers disaggregate something and break it down to facilitate copyright violation.

It is disaggregated from the word go, that is, when they put together the computer text file that's going to go to the printer they do it article by article because as it happens, that's what goes into a newspaper.

That exact text, and you'll see it unmistakably in the record, is exactly what is sent.

Justice Breyer: No additional code on it?

Mr. Tribe: Well, sometimes indexing codes, but not only for articles.

You've got to be able to find this stuff.

You can't just wander around inside a computer.

And it is the readers guide to periodicals.

That's what we've got here.

Whether it is in written form or in index form, it's the same thing.

So point one, they don't deliberately disaggregate.

Point two, if you look at 349 A of the joint appendix, that's one of many places, I just happened to find this one, where they say they're not claiming any contributory or vicarious liability with respect to infringements by end users.

Their whole theory was putting this stuff in the way that the 20th and 21st centuries has to do it is an infringement.

It's really a quite Luddite theory.

Their distinction with microfilm is that microfilm is a piece of something, you can see it.

Well, what about the CD-ROM, then?

You can't see it except with a machine.

It just looks like it might be Joan Baez singing, but it turns out it's got volume upon volume of material.

There's nothing fancy that's done here to facilitate violation.

What they're doing is making entire bunch of material available and I didn't hear an answer to Justice Breyer's question.

If we read the law the way they propose to read it and I still don't know the exact moment they think is an infringement and how analytically it differs from Justice Stevens' library example, we're going to have a serious problem with our kids doing homework and with professors of history finding out what happened in the middle of the 20th century.

It seems to me that before this Court takes a step like that it should pause.

Chief Justice Rehnquist: Thank you, Mr. Tribe.

The case is submitted.

Attribution:

The Oyez Project

Featured:

TrafFix Devices Inc. v. Marketing Displays Inc. - Oral Argument

Fri, 09 Jan 2009 14:50:34 +0000

Case:

TrafFix Devices Inc. v. Marketing Displays Inc.

Media File:

99-1571_20001129-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Lawrence G. Wallace

Chief Justice Rehnquist: We'll hear argument now in Number 99-1571, Traffix Devices, Inc. v. Marketing Displays, Inc.--

Mr. Roberts.

Justice Roberts: Thank you, Mr. Chief Justice, and may it please the Court:

The president and founder of Marketing Displays, Incorporated, MDI, invented a new type of sign stand, one with a dual-spring design that allowed the stand to resist the wind.

MDI patented that invention and, for the term of its patents, MDI labeled its sign stands as patent-protected to warn of copiers, touted in its trade literature the benefit of its, quote, patented dual-spring design, end quote, and when another company, Windproof, tried to market a copy of MDI's patented stand, MDI sued it for patent infringement and won.

But then MDI's patents expired, as under the Constitution all patents eventually must.

Sometime thereafter, Traffix Devices, the petitioner, copied MDI's stand, added some improvements of its own, and marketed a competing version.

No longer armed with its patents, MDI tried a new tack to exclude competition.

It claimed that the configuration of its stand, the same dual-spring design that it had touted as patent-protected during the term of the patents, was protected as trade dress and could not be copied.

Justice O'Connor: Mr. Roberts, how do we determine what the patent covers?

Does it... I mean, I can look at it, but I'm still not sure.

I think in the record, in the material here, we have a copy.

Does it include in this case the legs and the whole structure, or just the dual spring, and how do we normally determine what the patent covers?

Justice Roberts: Well, in this case, of course, it's easy to determine that the patent covers this particular sign stand because MDI labeled that sign stand as patent-protected.

Justice O'Connor: The whole thing?

Justice Roberts: The whole sign stand, yes.

Justice O'Connor: Legs, spring, and all?

Justice Roberts: And all, but in its trade literature, for example, it focused on the dual-spring design.

That is what makes the invention work.

That's what allows it to resist the wind, and it said, this is our patented dual-spring design and, of course, it not only labeled the stands but in its trade literature, and in the Windproof case it sued when somebody made an exact replica, the same replica that Traffix Devices--

Justice Kennedy: So under your view of the case, if the legs that the patentee had had a very special color, like the John Deere green or something, that could be copied after the patent ran?

Because I notice--

Justice Roberts: --Well--

Justice Kennedy: --in the pictures the legs were orange in your client's stand and aluminum in the other.

Justice Roberts: --Well, incidental ornamentation that is not part of what the patent protects does not give rise to the right to copy.

There should be an exact symmetry.

Whatever the patent had protected as part of the patent bargain, the public has the right to copy.

Now, the color of the legs probably would not have been claimed in the patent, and wouldn't have been part of the invention, and therefore it would not give rise to a right to copy that color.

Justice Ginsburg: In any event, they're different in this... if I'm looking at the right diagrams the... your client has a different... has the orange color.

Justice Roberts: Well, it depends on which stand is involved.

The steel stand is one color and the aluminum stand is another, but in terms of what they claimed in the patent as... the part that makes the invention work, it's not the legs that made this invention.

It's not the sign.

It is the dual-spring design.

That's what they said was patented.

When they marketed this, when they had the exclusive right to do so, they focused on that in their trade literature, said this is our patented dual-spring design, and that is the same claim they now raise in their trade dress assertion.

Justice Ginsburg: But Mr. Roberts, didn't the court of appeals say, at least as I understood it to say, okay, the dual springs Traffix could have, but you have to devise some kind of other stand, curved legs, or a double stand.

I thought that's--

Justice Roberts: It said we... it said we basically had to design around their stand.

Now, if they said, you could use three springs or four springs, I guess it would never end, five springs, or you could put a little skirt around the springs so people wouldn't see them, or, as Your Honor points out, if you're going to use the springs you have to change something else so it doesn't look like it.

But that's not what this Court's cases have held.

What the Court has said, Singer and Kellogg and Sears, is that the public has the right to copy the patented invention in precisely the form in which it was practiced, and that's critically important.

The idea of designing around what had previously been patented is a significant hindrance to competition, and this case is a good example.

When we copied the sign we added an important improvement of our own, the step-and-drop leg.

Under MDI's stand you have to bend over and pull the pins out.

Under ours, you just step and the legs come out.

Now, if the rule were the rule that the respondents are arguing for, we would have had to add that new improvement to some different sign stand, but the right to copy attaches to the product as it was practiced during the term of the patent.

We don't have to design around their superior stand... that's why it succeeded in getting the patent... to add improvements of our own.

Justice O'Connor: --Does it depend in part on how we define functionality under the trade dress inquiry?

Justice Roberts: We think there is a freestanding right to copy from an expired patent, that it doesn't depend upon what functionality is.

Justice O'Connor: And you think that there can never be a trade dress protection in some aspect of an expired patented item?

Justice Roberts: If the item was simply incidental ornamentation... one of their amici used the example, if you're patenting a chair and the drawing shows a purple bow.

Well, we don't think there's a right to copy the purple bow, because the purple bow is not covered.

That's not the invention.

Justice O'Connor: So there could be a trade dress in an expired patented item.

Justice Roberts: In the item itself, yes, but not in the subject of the patent.

Justice O'Connor: And I suppose that depends on how we define functionality, in a sense.

Justice Roberts: Functionality I think leads to the same place that we come to from looking at patent law, if you define functionality as it has traditionally been defined, as turning on usefulness.

If functional... if functional means useful, then our case comes out the same way, because you have to be useful to get a patent, and if it's been the subject of a patent, the feature has been useful, therefore it's functional, therefore it's not eligible for trade dress protection.

Justice Kennedy: Justice O'Connor's question suggests this to me.

You're arguing for the rule that you maintain here so that you will not have to litigate functionality.

Justice Roberts: Exactly, and functionality--

Justice Kennedy: But why isn't functionality sufficient protection, particularly in this case?

Justice Roberts: --Functionality is sufficient if functionality means useful, but if functionality means, as the lower court said in this case, something for which there is a competitive need, or for which there are not available alternatives, and there's a multi-factor balancing test to determine so-called legal functionality--

Justice O'Connor: Well, I guess the court, the Sixth Circuit pulled that out of Qualitex' opinion.

Justice Roberts: --Well, we--

Justice O'Connor: The competitive need.

Justice Roberts: --I don't think Qualitex opined on the exact definition of functionality in this case, or it was misread by the lower court.

The definition in Qualitex had a very important connector there.

It said, a useful product feature, or, and then it went on to talk about competitive need, so--

Justice O'Connor: So as far as you're concerned, if it's useful, then it's functional?

Justice Roberts: --Period, without regard to competitive need, available alternatives... MDI's position is, look, you can make a sign that stands up to the wind that's just as good as our sign stand, so don't make it the way we made it, but the patent, the expired patent gives us the right to copy--

Justice Souter: Well, it gives you... this... I think my question is related to Justice O'Connor's, and this is a problem that I have in understanding, and maybe you can help me.

You have a right to copy the invention.

Does it follow that you have a right to copy the configuration that that invention took in the hands of the patent holder?

Justice Roberts: --I think Justice Brandeis' opinion in Kellogg answers that.

Kellogg did not have to show that there was no way to make or sell shredded wheat other than in the pillow-shaped biscuit form that Nabisco had made famous when it had its patent.

It was enough that that was the form in which Nabisco had practiced its patent.

Kellogg therefore could copy it, even though they could have made shredded wheat some other way, and that's important precisely because of the purpose of the patent bargain to promote competition.

As I said, why... if we have an improvement to this sign stand, the step-and-drop legs, why should we have to add it only to a very different sign stand?

It's the commercially proven version that the public has the right to copy.

That is important to enhance competition.

To require people, if they're going to make improvements, to design around the form that the public had become accustomed to, would inhibit competition, and--

Justice Ginsburg: If we were dealing, Mr. Roberts, with just the patent law, that would be one thing and, as I understand it, although it's confusing, the word useful is a patent term of art and functionality is a trade dress term of art, but you're trying now to equate these two terms in answer to questions that you've had as one and the same, but they have different purposes, as I understand it, in the patent law, the idea of useful, trade dress, the idea of functionality.

You recite the old cases like Kellogg.

It's been argued that on the trade dress side the law has evolved since those old cases, and it's now, trade dress gets more protection.

Justice Roberts: --Yes.

You're dealing with what is in the trade dress area essentially judge-made law, and it has expanded in various ways, and functionality... it doesn't interfere with the patent bargain if functionality means a broad range of other things, but so long as it is also satisfied completely by a demonstration that it is a useful product feature.

There may be other limitations on a trade dress claim going to competitive need, available alternatives, any of the various multi-factor tests, but if functionality is going to serve the purpose of demarking the regime of trademark and trade dress and patent law, it must be satisfied by a showing that it is a useful product feature and in our case that's significant, because you can't get a utility patent as MDI had, without showing that it's a useful product feature, so the fact that they had a utility patent, that it covered the dual-spring design, should be enough to establish functionality and therefore should be enough to reject their trade dress claim.

Justice Souter: Do you agree that at least one basis on which we could decide this case would simply be on the basis of how expensive a concept of configuration trade dress we want, because if we take your position, configuration trade dress is going to be, at least in formally patented matters, a pretty narrow concept, and if we're going to have coherence within the concept of configuration trade dress, we're going to have to make it equally narrow.

I mean, we can't have different functionality tests, I presume, and if on the other hand we find good reason to think configuration trade dress is desirable, then we're going to go the other way with a different concept of functionality, I suppose.

Justice Roberts: I think it is the expansion of the concept of configuration trade dress that has given rise to this issue and the problem.

If you go back to where trademark was limited to marks on the product, of course, the product could be patented, the trademark is fine.

If you even then go the next step, and you're talking about trade dress and packaging, again, so long as it's distinct from the product, there's no interference with patent.

But when you start saying that the configuration of the product itself is entitled to protection as trade dress, you bump right into the patent law, because the key to the patent bargain is, if you're going to control a useful product feature, as the Court said in Qualitex, that's the regime of patent law, and it's no answer to say, well, we're protected by patent law and when the patent expires we're protected under trade dress law, because that takes away the public's half of the patent bargain.

We're giving exclusive right to an inventor for a term of years on the condition that he or she disclose what the invention is, and that the public obtains a right to copy it when the patent expires.

So yes, I mean, it is the expansion of product configuration trade dress that has given rise to this problem, and I would at least suggest that the Court should not get on board with that expansion without waiting for Congress to say something about it, particularly given the fact that it so directly impinges upon the central patent bargain underlying the patent system.

Justice Stevens: Of course, Mr. Roberts, you rely heavily on the patent in this case, and that's the question presented.

You've presented only that narrow question.

But I take it you would argue even if there had been no patent issued in this case, no patent application, that this was nevertheless functional?

Justice Roberts: Certainly, yes, and--

Justice Stevens: The fact of the patent really is just evidentiary support for the ultimate conclusion that this is a functional feature.

Justice Roberts: --Well, it gives rise to an important distinction.

In other words, having been covered by the patent, another producer knows that when it comes off patent he can copy it, and that's how it worked in this case.

Traffix Devices knew... they were in the business... this was a patented sign stand, they couldn't make it, it comes off patent, they can make it.

Now, if they at that point had to... instead, if respondent's position were adopted, they had to go to their lawyer and say, is this legally functional, their lawyer would tell them, well, it depends.

There are six factors in this circuit, there are eight factors in the other circuit.

We've got to get expert economic testimony.

It depends on consumer surveys.

By that time the producer says, forget it, it's not worth the candle, I'll go make something else, and competition suffers.

Justice Breyer: The difficulty, I guess is, would you make the test absolute, because if you make it absolute, you know, you're going to get into huge litigation about whether this thing in the patent was or it was not an essential element, and then somebody will say, oh yeah, I guess I did include it as one of the specifications in the patent, but it really wasn't that important.

I mean, should you make it absolute never, or should you allow somebody to defend on the ground that, look, it wasn't that crucial to the patent, and everybody's come to identify it, and please let me make an exception here, and then they give some fabulous reasons.

Should it be absolute, or leave them a little bit of a loophole?

Justice Roberts: Well, you know, a little bit of a loophole suddenly expands, particularly when you have a multi--

Justice Breyer: But it goes both ways, because if you allow no loophole you're going to get the same kind of arguments about whether it was or was not an essential part of a patent.

Justice Roberts: --Well, of course, in this case it's easy.

The key to the invention--

Justice Breyer: In this case it may be easy, but the question is, what about the rule?

Justice Roberts: --and producers all the time compete all the time in the confines of patents.

They have to look at a patent and decide, can I make a competing product or not, so it's not a new inquiry, and in the typical case such as this, where you have a product coming off patent, you will have the conduct of the patentee, which will illuminate exactly what he thought was covered.

Here, we not only have the labeling and the trade literature, we have the Windproof litigation.

Someone made the exact same sign here and he said, a-ha, that infringes my patent.

Well, if it did infringe his patent, and the Ninth Circuit concluded it did, then the public has a right to copy.

I'd like to reserve--

Justice Ginsburg: Wasn't the exact same sign... I thought one of the points that was made was that in the patent infringement case, that sign didn't look as much like the Market Display signs--

Justice Roberts: --Yes.

The patent displays what they call a business sign, with two springs far apart.

The Traffix sign, the one at issue in Windproof and at issue here, the springs are closely together.

MDI argued successfully that made no difference, that the two closely spaced springs were covered by the patent to the same extent as the farther apart springs.

Thank you, Your Honor.

Chief Justice Rehnquist: --Very well, Mr. Roberts.

Mr. Wallace, we'll hear from you.

Mr. Wallace: Thank you, Mr. Chief Justice, and may it please the Court:

Our brief is built on the premise that the functionality doctrine, the traditional functionality doctrine of trademark law is what makes trademark protection of trade dress and other symbolic elements consistent with this Court's patent law jurisprudence, as synthesized and reaffirmed as recently as the Bonito Boats case, but I think part of the reason the two laws harmonize is because the use of functionality doctrine is to limit the scope of protection of the device.

Its traditional function was to bar the holder of a patent or other utilitarian device, even if nonpatented, from withdrawing that device from the public domain when there's no longer the protection of the patent as trade... withdrawing it from the public domain as trade dress because people have a right to practice and use as the building blocks for further innovation whatever devices are in the public domain that are utilitarian in nature, including their overall configuration, but there is still protection against confusing similarity through requirements of labeling, packaging, avoiding palming off and other misrepresentations.

Functionality really goes to the scope of protection, and limits the scope of protection available under trademark law by preventing someone from monopolizing and withdrawing from the public domain utilitarian features or the entire utilitarian device in the absence of valid patent protection.

That is the domain of patent law, and one must qualify for a patent and have a valid patent in order to have a legal monopoly that withdraws, that prevents others from using the device, but there... as I say, these other protections are still available as well as the ability to exclude ornamental or incidental features.

That is what to us harmonizes the two statutory schemes.

The traditional understanding of functionality was not an artificial concept.

It was the ordinary meaning of the word.

What enables the device to function is what is functional.

That was reflected in a very terse quotation we have in a footnote on page 17 of our brief by Representative Lanham himself, when someone raised concerns about whether the trademark law might result in compromising of the public's right to use useful inventions, and he said--

Justice Ginsburg: Mr. Wallace, may I ask if you would answer the question that Justice Stevens posed to Mr. Roberts in the same way?

That is, the definition you're now giving us as functional sounds like you would come out the same way on this alleged trade dress infringement, even if there had never been any patent in the picture, because this sign, all the ingredients are functional.

There's no purple bow on it.

Mr. Wallace: --That is absolutely correct.

We would come out the same way as we were... I think this Court's decision in Bonito Boats is an example of that, because there was no patent shown in the record, as the court noted, of the boat hull that they said could not be copied.

Justice Kennedy: So your position is the utilitarian feature of the patent is a conclusive presumption in a trade dress suit where functionality would otherwise be at issue?

Mr. Wallace: With regard to the scope of protection, that others cannot be excluded from using something utilitarian.

As we compressed our brief down to our allotted 30 pages we carefully preserved a quotation on page 11 that you can see at the top of the page from the 1917, or 1911, excuse me, Seventh Circuit decision because it states the common sense of it.

If you have utilitarian features that didn't even meet the standard for getting a patent, they should not be given a perpetual monopoly in contrast to what was then the 17-year monopoly that you could get if you met the criteria for patentability.

The other protections available against confusing similarity make the need for a right to exclude imitation of trade dress relatively unimportant compared to the policies this Court has reiterated at least since 1896 in the Singer case about the need for utilitarian features to be used as building blocks and to be in the public domain except for the limited period of time in which they are protected by a valid and unexpired patent, and we understand this Court's decision in Qualitex to mean much the same thing.

The difficulty has arisen because an alternative test of functionality has also become appropriate as the scope of trademark protection has extended to matters that don't have utilitarian features to them.

We point particularly to the protection of color as an example, where there is relevance to looking at competitive need in... we give an example in our brief of an orange-colored can of soda.

There were other amicus submissions in the Qualitex case in which people were making claims that raised issues that went quite beyond what was involved in the press pad that was at issue in Qualitex.

One of them, for example, involved orange-colored sprinkler system piping.

Well, it raised other questions.

I don't say the result would necessarily be different but one would have to examine whether a competitor who wanted to compete for replacing a portion of the piping would be disadvantaged if he couldn't match the color of it.

It was a different case from the Federal Circuit's Corning, Owens-Corning case involving the pink-colored insulation, because that goes behind the wall and people don't see it.

The orange coloring in some contexts connotes danger, and perhaps there is marketing significance to that.

But the mistake that I think some of the courts of appeals have made, including the Sixth Circuit in this case, is to say that that is now the exclusive approach, and you wind up with multi-factored tests that don't really give an adequate guidance to what the law is.

A very good example is found on page 17 of the light green amicus brief filed by the International Trademark Association in this case, in which they speak approvingly of various multi-factored tests that the courts of appeals have adopted in this area, which leaves open what this Court in its salutary opinion in Wal-Mart v. Samara Brothers referred to as the plausible threat of litigation which can discourage competitors and become an impediment to the benefits that consumers would get from competition, and to have tests of this kind applied to displace the traditional approach to functionality would be very detrimental to competitors for the very reasons the Court has recognized in the cases synthesized in the Bonito Boats opinion.

Justice Scalia: Mr. Wallace, I'm not sure what your proposal is, that we use the simple test for what, for useful features--

Mr. Wallace: That--

Justice Scalia: --whether or not they are patented, and the more complex test for... for what?

Mr. Wallace: --Both... either test can show that something is functional, whichever one suits the needs of the particular factual situation.

Argument of John A. Artz

Chief Justice Rehnquist: Thank you, Mr. Wallace.

Mr. Artz, we'll hear from you.

Mr. Artz: Mr. Chief Justice, and may it please the Court:

This Court granted certiorari due to a conflict between regional courts of appeals on one issue, and that is whether or not the visual image and appearance of a product... with a product whose operation and performance was covered by a utility patent, can still be protected as trade dress under section 43(a) of the Lanham Act.

The imposition of any per se rule, whether the Government's rule or Traffix rule, which says it cannot be protected in my opinion is unnecessary, unjustified, and unworkable.

It's unnecessary because there are already adequate rules in place, the trade dress rules and functionality that have been referred to already.

It's unjustified because it would cause harm to the public's right not to be confused or deceived.

Those are paramount in trade dress and trademark cases under the Lanham Act.

That's a touchstone of the Lanham Act.

It would also--

Justice O'Connor: It's a touchstone of patent law that an expired patent can be copied, so we really do have to make the two doctrines mesh well.

Mr. Artz: --Yes.

Justice O'Connor: And the concern we have is with this expanded competitive need test that some of the lower courts have begun employing, and I am quite interested to know how you think the two doctrines can fit neatly together, because in an ideal world a trade dress could not cover something that was covered by a patent that's now expired.

Mr. Artz: Well, Justice O'Connor, the mediating factor between the two is the functionality test, in my opinion.

There's... you've got the patent laws, you've got the trademark laws and the Lanham Act, two federal laws--

Justice O'Connor: And it's possible that some of the courts have lowered the bar too much on the functionality inquiry.

I mean, I think that's what we need to look at.

Mr. Artz: --Well, in the Qualitex case, the Qualitex gave a specific definition of functionality, and remember now, in 1998-1999, Congress made some amendments to the trademark act, or Lanham Act, and in this they specifically mentioned functionality several times.

They added it to the fact that you can't have functional trademarks... you can't have trademark that's functional but if it's nonfunctional you can, and they knew about the Vornado case at that time because it was decided in 1995, and that's the Tenth Circuit, and there's a lot of flurry of activity in the intellectual property bar because of that, so all that was before Congress when it amended it, and Congress did not go to any per se test at that time, and so you've got two Federal laws here, and under the Morton case and the Ruckelshaus case which are cited.

Chief Justice Rehnquist: Is there evidence, Mr. Artz, that Congress affirmatively approved the Tenth Circuit case?

Mr. Artz: No, they did not.

I mean, because they... what they... they actually... the legislative history mentions the fact that their patent expiration, and people might be trying to get trademark protection after the expiration of the patent, and then they go on to add functionality.

Chief Justice Rehnquist: Well, I... you... I thought part of your argument was that the Tenth Circuit had decided this case in 1995 and it was quote, before, close quote, Congress at the time it made the amendments.

What is the purport of that?

Mr. Artz: Well, what I'm saying is, in 1995 that Vornado case was there, and in 1998 Congress amended the trademark act.

Now, there's no legislative history that I can see that actually mentioned the Vornado case.

I'm saying that it probably--

Chief Justice Rehnquist: But you're not... you're arguing, I hope, something more than post hoc ergo propter hoc.

Mr. Artz: --Yes.

Yes, I am, Your Honor.

Justice Breyer: Would you go back to Justice O'Connor, which I thought was the key question, and I didn't--

Mr. Artz: Yes.

Justice Breyer: --hear the answer.

I mean, I know Qualitex.

I'm surprised not at your reading, because that's your job, but I'm pretty surprised at the Tenth Circuit, the court, which... I learned you read the whole case, what the context is not just a sentence taken out of context, so I obviously thought that Qualitex was about a doctrine called aesthetic functionality.

I thought, on page 165 where the court quotes the tradition, what's in quotes, the definition, a product feature is functional if it is essential to the use or purpose of this article, all in quotes, or if it affects the cost or quality of the article, okay, end of the matter.

Now it adds, because that's what happens to be relevant to aesthetic functionality, that is, if exclusive use of the feature would put competitors at a significant nonreputational disadvantage.

That last clause is relevant to what happens to be the subject of this case, called aesthetic functionality.

Mr. Artz: Yes, Your Honor.

Justice Breyer: Two pages later, in case that wasn't clear, the case quotes Restatement Third about aesthetic functionality and says, in respect to aesthetic functionality, i.e., color, quote, the ultimate test is whether the recognition of trademark rights would significantly hinder competition, all right.

Mr. Artz: Yes.

Justice Breyer: But nothing in the case--

Mr. Artz: No.

Justice Breyer: --purports to change any earlier test in respect to anything else--

Mr. Artz: Well, that's--

Justice Breyer: --or even change anything there, so as I read the case that seemed to be its reading, which would say in this case, which isn't about aesthetic functionality, we apply what is the traditional test.

Mr. Artz: --Well, every case which has actually looked at functionality actually has come up with the result that the Sixth Circuit did, the Seventh Circuit did--

Justice Breyer: Maybe, but I thought the place you look for a test is in the Supreme Court opinions, and in the Supreme Court opinions, Qualitex quotes the traditional test.

It didn't make it up.

Mr. Artz: --That's correct.

Justice Breyer: It said, in general terms a product feature is functional if it is essential to the use or purpose of this article, or it affects the cost or quality of the article.

That's all in quotes.

The rest is explanation as applied here.

So if we take that as the test, why isn't that the test?

Mr. Artz: Well, the Supreme Court goes on in the Qualitex case and says, that is... that is, if exclusive use of the feature would put competitors at a significant nonreputational related disadvantage.

Justice Breyer: Well, that was my question.

My question was as to that add-on, doesn't that have to do with an explanation of the test as relevant to the issue before the Court in Qualitex--

Mr. Artz: I think that--

Justice Breyer: --namely, aesthetic functionality, which is an aspect of quality I think people could argue about.

Mr. Artz: --I think that is the test, Your Honor, whether or not--

Justice Breyer: The test in the case of aesthetic functionality?

Mr. Artz: --Yes.

Justice Breyer: Fine.

Is this a case of aesthetic functionality?

Mr. Artz: I believe it is, yes.

Justice Breyer: Aesthetic?

It involves color?

Mr. Artz: It involves how things look, the appearance, visual--

Justice Breyer: Everything in design involves how things look.

Mr. Artz: --Okay.

Justice Breyer: I mean, that's--

Mr. Artz: Well, it's aesthetic in that sense, but it's not... it doesn't involve color, no, it does not.

It's not like the color that was allowed in the Qualitex case, but I think that is the test.

Justice Ginsburg: --It involves size and shape, and this discussion about Qualitex and aesthetic functionality doesn't get into what effect the patents, if any, has on functionality, and in your view does the patent... your having had a patent, building up goodwill, free, over 20 years, nobody can compete with that, so if you've got secondary meaning it's because you have been able to keep everybody off.

We've been dealing with cases in your discussion where there was no patent in the picture.

How should the fact that there was a patent bear on the inquiry that was made in cases where there was no patent?

Mr. Artz: Justice Ginsburg, I think that the case, Midwest case by the Federal Circuit, the Thomas & Betts case of the Seventh Circuit, our case, Sixth Circuit, and the Sunbeam case, Fifth Circuit, all apply the proper test.

There are different forms of intellectual property laws, or IP laws, as I call them, you've got five different basically Federal laws on intellectual property, patents, copyrights, trademarks, trade dress, unfair competition.

They're all separate and distinct.

The fact that you have a patent on something, that is different than whether or not you can have a trade dress on something.

Patent would be relevant in the sense that under this commercial necessity test, if there's only one way to make that product, that was look and appearance, then it's functional, and so in that sense the functionality test would apply and the patent, if it says something about the functionality, that would be relevant to the functionality test in the trade dress area, but they're separate and distinct, and they always have.

Design patents, for example--

Justice Scalia: They may be separate and distinct, but they bear upon one another, and there seems to be something horribly unfair about allowing someone who has acquired a secondary meaning in the trade dress only because of the patent... let's say the shape of a Coca-Cola bottle.

I mean, you know, if that wasn't patented, somebody else could have come out with the same shape bottle as soon as it... you know, as soon as the first ones came off the line they could say, gee, that's a nice-looking bottle, and they could have copied it, but you couldn't copy it because it was patented, and therefore, by reason of the patent, for 17 years Coca-Cola acquires a secondary meaning.

Anyone who sees that bottle would say, it's Coca-Cola.

Then, when the patent expires, Coca-Cola in effect extends the patent by parlaying what was the design patent into what is now trade dress protection, because they say, well, gee, everybody knows that that's a Coca-Cola bottle, but the only reason they know is because you've been given a monopoly for 17 years, and it doesn't seem right to enable you to extend that monopoly indefinitely.

The only reason you acquired the secondary meaning was because of the patent.

That's unlike other companies that get secondary meanings without a patent.

Doesn't there seem any incompatibility with the patent law to you?

Mr. Artz: --No, I don't think it's unfair at all, Your Honor.

I think they're separate and distinct.

I agree that perhaps, if you have this 17-year monopoly on this patent, that might help you on the trade dress area with respect to secondary meaning, but then, of course, just as we found here, the functionality test, the fact that you had a patent on it actually hurts you.

It might be a wash between those two.

The trade dress has three separate and distinct tests.

You have to show it's distinctive... in other words, it has secondary meaning... and the public recognizes it as something which comes from a certain source.

It's a source identifier.

You have to show it's nonfunctional.

However, trademark law has been amended, which specifically says you have that burden of proof if it's unregistered.

You have to show it's nonfunctional.

Under the Qualitex case in my opinion you have to show whether it's competitive necessity, then you've got to show whether there's a likelihood of confusion.

You may have a product that looks exactly the same as yours, but if you can't show there's a likelihood of confusion, you don't win.

You need all three of those tests in the trade dress area.

Justice Ginsburg: There's a problem--

Justice Scalia: --Well, it's the second that we're arguing about, I think.

I think it's the second, when you have to show that it's functional, and I find it hard to think that it's not functional when you have a patent on it.

You only give patents to things that are functional.

Mr. Artz: I think functionality, Your Honor, legal functionality is really a misnomer, like I believe in the Wal-Mart case the secondary meaning was looked at as being a misnomer.

It was really acquired meaning, acquired meaning afterwards.

Legal functionality really is a misnomer.

Every product has a function.

The Coke bottle has a function, obviously.

It's useful, has a purpose.

It's got a flat bottom so it doesn't tip over.

It's got a narrow waist so you can grab it, a narrow spout so you can drink it easier, it's clear so you can see it.

Those are all functional, useful, purposeful.

Justice Breyer: Aesthetic functionality isn't conceivably in this case.

They're the ones that argue functionality, not you.

They're the ones that say that the product is functional.

They're not saying that the functionality of your product arises from the way it looks.

They're not saying, like color, it warns people that the boat's black.

They're saying that the functionality of the product is that the springs prevent it from twisting in the wind.

Now, that isn't a claim of aesthetic functionality, and I don't see how you could even closely claim that it is.

Mr. Artz: Well, I think the functionality test that's been developed in Qualitex applies to any type of trade dress--

Justice Breyer: Ah, wait.

I thought what you said is, you agreed with me before that Qualitex is talking about aesthetic functionality, that we apply the normal test without that little add-on, but we apply Restatement Three, the aesthetic functionality test, which is the add-on, where they make the claim that the reason this product is functional is because of the way it looks, i.e., the pipes are painted orange as a warning, which is not their claim in this case.

Am I... now, where am I wrong in that?

Mr. Artz: --I think the test that's set forth in Qualitex that Your Honor says is for just aesthetic functionality applies in every functionality test.

I think that's the difference.

Justice Breyer: So then the pages written at 169 and 170, and trying to explain just what we're driving at are sort of beside the point.

Mr. Artz: Yes.

It says in general terms a product feature is functional and cannot serve if, and then you say it's essential to use or purpose.

I mean, that's broad and ambiguous.

Everything has a use or purpose, and then you say, if it affects the cost or quality.

Virtually everything affects the cost or quality, so it seems to me the only objective test you have here, because it relates to competitors and consumers, is whether or not it puts competitors at a significant disadvantage in the marketplace.

Justice Ginsburg: Can we apply that test, because I'm having a little trouble connecting to the real world and the device before us and these multi-factor tests and even what you've just been saying.

Tell me what it is in your formerly patented device that Traffix can copy now that the patent has expired.

Can it make a sign with those two coil springs adjacent to each other?

Mr. Artz: Yes, it can, Your Honor.

Justice Ginsburg: If you could describe to me what it can copy and what it must change I would have a more secure handle on what your case is.

Mr. Artz: Our trade dress, Your Honor, it's really a combination of five features.

It's got your X-shaped legs, a narrow base, a pair of upright vertical coil springs, an upright attached to that, as well as this diamond-shaped sign above it, and I have a model of it that actually shows what it is here.

This is in the record before the court of appeals.

Now, they could change any one of those.

They could keep the coil springs if they change some other configuration to make it look different, to give it a visual... different visual appearance.

Like, right now, even the vice president and their technical expert say that when they see a sign like this one driving along the road, they know it comes from Marketing Displays.

They know it's a Windmaster.

Justice Ginsburg: But there aren't that many things to adjust.

I mean, one of the things about Qualitex and the green/gold you could have tan/silver, any number of combinations that would serve that purpose, but for that road sign that's not going to blow in the wind you have to have those springs, and you have to have some kind of base, and there aren't that many variations.

Justice Scalia: And the law requires the shape of the sign.

I mean, in many States that shape of a sign indicates a certain type of warning, so what's left?

There's nothing left but the legs, and--

Mr. Artz: You have--

Justice Scalia: --And your friend over there says that they changed the legs.

They did change the legs.

Mr. Artz: --Now--

Justice Scalia: Somebody who sees their legs say, gee, it has the... what do you call them... step-down legs, or whatever it is, so the one thing it seemed to me that they could have changed, they did change.

Mr. Artz: --No, they kept the same visual appearance and image, Your Honor.

This was what the patent covered with a product such as this.

They could have gone to something like this, with a wide base, a pair of springs way apart, they could have gone to straight legs like this, they could have gone to an upright like this, rather than this, and attached the sign to it.

This is what the patent covered.

This is what was shown in the patent.

This is only found to infringe, under the doctrine of equivalents, which took several years and several thousands of dollars for MDI to prove it, and that's the problem with a per se test.

Justice Ginsburg: Because that one in your right hand probably works better.

Mr. Artz: I think so.

[Laughter]

Justice Ginsburg: Yes, and that's why they wanted to copy it, and not something that worked less well.

Mr. Artz: Well, the thing here is a competitive necessity test.

I think it's important, because there are really, like, eight competitors in this marketplace, MDI, Traffix, and six others.

Six others all came up with sign stands which looked different.

They have different spring mechanisms in particular.

There's flat springs, horizontal spring, there's a torsion spring, and so Traffix said, I had to copy MDI's, yet all the other competitors made their own design.

They came up with sign stands which look different.

They have different visual appearance.

So there are seven types of sign stands out there, MDI's, six others, and then Traffix'.

Justice Stevens: You know, I have to confess that I'm... I find it a little difficult to imagine that most motorists are looking at what... the legs of the sign instead of the message on the sign.

[Laughter]

I find it hard to believe that people really identify with two legs or three.

I don't have the slightest idea how many legs there were on most of the signs I've looked at when I was driving along.

Justice Kennedy: I've been looking in the last week.

It's very interesting.

[Laughter]

Justice Scalia: I gather you don't care about the motorists.

You just care about the highway purchasing departments.

Mr. Artz: That's it, yes.

Justice Scalia: Right?

Mr. Artz: It does... confusion as to the purchaser, who the relevant purchasers--

Justice Scalia: You couldn't care less about the motorists.

You just want to sell the signs.

[Laughter]

Justice Breyer: Could I ask you a question about the patent part?

I'd like to ask you about the patent part, and will you assume for purpose of this that Qualitex is about color, which is a matter that doesn't easily fit within the terms, you know, purpose, use, cost or quality, and suppose here we're dealing with something that does easily fit within those terms, all right, so keep Qualitex out of it.

Now, assuming that that's so, what would be wrong... and they come in and they say, look, these springs are part of the function.

They're part of the function.

They're essential to the use, these springs, in this way.

Now, should there be an absolute presumption that if you one day said... I'm not saying what you did say, but we'll assume this.

If you one day said in the patent application, I have a great idea here, and my idea is to have two springs just like this, and then later on, when it's expired, they say, that was the heart of it.

It was useful.

Should the fact that you said that one day in the patent be the end of the matter, nobody ever looks further?

There is a... what the Government said here is where as an expired utility patent discloses that the feature alleges trade dress contributes to the operation of the formerly patented device, the feature must be considered function.

Now, that's the Government's suggestion.

Mr. Artz: --Okay.

Justice Breyer: All right.

Now, you can of course argue that wasn't essential, et cetera, but my problem's a general one, leaving this case out of it.

Should that be the test?

Mr. Artz: No, it should not be the test.

Justice Breyer: Because?

Mr. Artz: Because I think what you say in the patent could be relevant, and the patent obviously is going to be put into every trade dress case, and that is one of the reasons I think that trade dress tests, that their absolute test is unworkable, because in every trademark case now what you're going to have is, a defendant's going to run out and scour the 5 million expired patents, find one which has a claim which may read on this trade dress, accused trade dress and say, a-ha, it's dedicated to the public on this other, somebody else's patent.

See, one of the things that--

Justice Kennedy: It would seem to me that would be, even under your rule, a... well, maybe not under your, but under the Government's rule, quite an appropriate thing to do, to show that there is functionality that the patent office has recognized.

Mr. Artz: --Well, again I don't want you to confuse legal functionality with something that's useful in purpose, because legal functionality is different.

It's a legal test.

It means, as in the Qualitex case, I believe, or it means what is competitive necessity to use it, and just now, recently, in the 1998-1999, Congress made amendments to the Lanham Act and it did not go for an absolute test.

It did not go for a test for use or purpose.

What it did, it just said, if it's... you know, burden of proof of functionality is going to be on the party saying it's nonfunctional.

Justice Scalia: Mr. Artz--

Mr. Artz: Yes.

Justice Scalia: --I hadn't realized it, you are not complaining about their use of the double spring feature.

That's not the complaint.

You said they could have--

Mr. Artz: No.

Justice Scalia: --used the double springs if they had put them separate--

Mr. Artz: Yes.

Justice Scalia: --separately and apart.

Mr. Artz: --possibly, in a bit different visual image and appearance, Your Honor.

Justice Scalia: And the double springs next to each other was not part of your original patent application--

Mr. Artz: No, it was not.

Justice Scalia: --that they were originally apart.

Mr. Artz: That's right.

Justice Scalia: So the issue, really, is simply the functionality of putting the springs close together.

Now, what if putting the springs close together... it would have nothing to do with the patent, but what if putting the springs close together makes the sign more stable?

Mr. Artz: Actually, technically it would make it less stable.

It would make it easier, more easy to twist.

Justice Scalia: Okay, but if it made it more stable, then you would acknowledge that they could copy even that feature, the unpatented feature?

Mr. Artz: No.

They have an improvement in performance that they say is more stable, but it doesn't mean that they can still copy it if it's part of our trade dress.

There's a... the... our trade dress has a number of features, as I mentioned before.

It's not just the coil springs.

They could use coil springs close together as long as they change the base, or change the legs, or change something which gave it a different visual appearance to the public.

One of the touchstones here of the trademark Lanham Act is to prevent confusion of the public, the public buying this.

You don't want to confuse or deceive the public, which this does--

Justice O'Connor: Well, the public isn't buying it.

It's highway departments that are buying it.

The public isn't buying this sign, is it?

Mr. Artz: --That's the relevant public for this purpose, Your Honor, yes.

Justice O'Connor: Yeah, it's the highway department purchasers.

Mr. Artz: That's correct.

Justice O'Connor: And doesn't the State typically regulate the shape of the sign, as Justice Scalia asked you?

Mr. Artz: Yes.

Justice O'Connor: I mean, diamond shape indicates a certain kind of warning, does it not?

Mr. Artz: Correct.

Justice O'Connor: So they can use that shape and color, presumably.

That's necessary.

Mr. Artz: Yes, I agree, Your Honor.

Justice O'Connor: So what are we arguing about, the legs?

Mr. Artz: The... yes, legs, the shape, the base, and the springs, and then the upright.

It's a single upright, too.

This doesn't have the single upright because it's a small model.

Chief Justice Rehnquist: Well, what is the base, after you get through with the legs, and the upright, and the springs?

Mr. Artz: Uh-huh.

Chief Justice Rehnquist: I mean, could you... you indicate, what are we arguing about, the legs and the base.

Mr. Artz: There's no... I don't think there's any doubt that these have a different visual appearance.

One has a wide base, one has a narrow base, one has straight legs, one has X-shaped legs.

Chief Justice Rehnquist: So when you say base, that really is another way of saying the legs?

Mr. Artz: No, it's what the legs are attached to.

It would be this... this part in between the legs, and here are the bases.

It's what the legs are connected to.

Justice O'Connor: But obviously you're holding up one that's a rectangle, so it makes sense to have the posts on either side, as opposed to the diamond shape, where it makes sense to have it in the middle.

I mean, you're not showing us an equivalent-shaped sign.

Mr. Artz: Well, this, under the doctrine of equivalents, this was held to be an infringement.

But right, individual appearance, I think they are different, and so from a trade dress standpoint these are two different products.

Justice Scalia: Well, you're willing to fight out the... I gather you're willing to fight out the functionality battle as to whether putting the two springs right next to each other instead of apart is a functional matter.

You're willing... are you willing to combat on that ground?

Mr. Artz: Well, I... whether it's useful, has a purpose, I mean, if that's functionality--

Justice Scalia: Whether it's functional within the meaning of the trade dress restriction.

Mr. Artz: --Well then the answer, I agree... I think is no, because is there a competitive necessity to have them together?

The answer is no.

Justice Scalia: Okay, but you would agree that that inquiry would be addressed to the spacing of the springs.

Mr. Artz: Only--

Justice Scalia: Even if we think that the use of double springs is automatically no basis for giving you trade dress protection, since you had patented the double springs, you hadn't patented whether they were close together or far apart and so whether putting them close together, as your opponent did, is a violation of trade dress protection would depend upon whether putting them close together is functional within the meaning of trade dress law, right?

Mr. Artz: --It's whether or not their whole visual appearance, of a combination of five features, is functional in the competitive necessity test.

That's why--

Justice Stevens: I thought you a minute ago acknowledged that if the two springs were closer together it would be less wind-resistant than otherwise, which seems to me demonstrates it has some functional significance whether they're close or not.

If one is a... better resistant to the wind than the other, doesn't... isn't that functional, isn't that enough to prove functionality?

Mr. Artz: --Not the legal functionality test--

Justice Stevens: Not under all these tests, but why shouldn't it be enough?

The Government argues that the competitive need is a sufficient proof but not a necessary proof of it as a defense to the trade dress argument.

Mr. Artz: --Well, the problem you have, Your Honor, is that tests... either the Government's test or Traffix' test is going to be unworkable, because you could have company A that makes this product, or comes up with this idea, company B. Company A gets a patent on it, goes 17 years.

Company B doesn't get a patent, and gets trade dress protection on it, and yet company A for some reason doesn't sue them, but when this patent expires, that means all the trade dress that company B has developed over all those years is shot.

It's out the window, because it happens to be the subject of a patent.

See, that's a problem with this per se test that they're saying.

Justice Breyer: I don't... I thought as a factual matter that there are five features in your patent, including the legs, all the other things of appearance, but the district court found that there are a lot of other competitors that have every one of those features, so it's not unique but for the spaced-apart coil springs, so that all were... is that true?

Mr. Artz: That's true.

Justice Breyer: All right, so all we're talking about... and then I thought also as a factual matter that somebody before the patent expired used those two spaced-apart springs in that narrow configuration that your finger's on right now.

Mr. Artz: Uh-huh.

Justice Breyer: And you sued them, and it was found in your claim, in your view, those spaced-apart that much, not wide apart, violated your patent, and you won.

Mr. Artz: Well, the patent covered some other things other than that.

They had to have initial compression along the coils of the spring.

They also had to meet a certain geometric relationship with the center of gravity--

Justice Breyer: But they didn't get out of it... they didn't get out of your patent, because the springs were close together rather than being far apart.

Mr. Artz: --Well, that's the doctrine of equivalents, and--

Justice Breyer: Yeah.

Mr. Artz: --one language of the claim which calls for spaced-apart springs, and then we--

Justice Breyer: That's right.

Mr. Artz: --It was equivalent from a patent standpoint whether two springs together were the equivalent of two springs spaced apart.

Justice Breyer: That's right, so I--

Mr. Artz: That was that issue.

Justice Breyer: --Yeah.

Mr. Artz: That's only one of several issues in that patent case, and the fact that the others happened to use this coil spring, they used the other parts, that shows you that you can change one or two parts of this particular trade dress and comes up... have something that looks completely different.

In that case, the competitors made a flat spring, they had a horizontal spring, they put two springs at 45-degree angles, you could change the legs, you could change the upright... all of those might give a different visual impression.

That's what the Sixth Circuit said.

See, the district court in this case concentrated on just the two springs, and the Sixth Circuit said that was not proper because it's the overall appearance, visual, visual and image of the product which really controls.

You can't look at one--

Justice Scalia: But it seems to me if the different spacing is the functional... is a functional equivalent for patent law, then it seems to me that the spacing of the spring is part of your patent protection.

Mr. Artz: --All right.

Justice Scalia: As well as the nature of the springs, and so the square stand is no different for purposes of the issue in this case than the diamond-shaped stand.

Mr. Artz: As long as you don't confuse the patent law with the trade dress law, Your Honor, two separate and distinct, but from a patent law standpoint you're right, but not from the trade dress standpoint.

There's another... right now we're looking at the public domain, and the difference is where it comes from.

If it comes from a patent, it's given special recognition.

You can't use it for the trade dress, but if it doesn't, then you can use it.

Now, that to me is not a real consistent... not a real consistent argument.

You also have the fact that as... where do you look at the trade dress and this functionality, look at one patent, look at two patents, what if there are several patents that show it.

You know, what if you don't even own the patents?

What if we were just a licensee and asserted it?

What if you didn't own it?

Would that make a difference, or if a third party owns the patent.

There are several things, questions we raise at the back of our brief that Traffix and the Government really can't answer.

They really do admit that if someone is the subject matter of one patent by one person, and it expires, somebody else's trade dress will expire.

I mean, right now we also have a situation where they're trying to get special protection for utility patents, which is different than, for example, for design patents.

Or, talk about something being nonfunctional, design patenting in which having this right, as you mentioned before, of an exclusive period of 14 years develop secondary meaning.

There's no question whatsoever that courts do allow parties to get trade dress protection in such a matter of design patents, and there you've got this secondary meaning over 14 years in which you've used it exclusively, and that goes to the look and appearance of the product, but there's no problem with having trade dress protection afterwards because it isn't functional, so why should utility patents be treated any differently?

And as I said initially, there are different areas of intellectual property law, you have different standards, different tests, different remedies.

You know, in trade dress law you have... in trademark law you have much different remedies to protect the public and consumers.

Here--

Chief Justice Rehnquist: Thank you, Mr. Artz.

Mr. Artz: --Thank you, Your Honor.

Chief Justice Rehnquist: Mr. Roberts, you have 2 minutes remaining.

Justice Roberts: Thank you, Your Honor.

There was until this morning no dispute that moving the springs closer together was functional.

If you look at petition appendix page 54a, there is the explanation from MDI's chief engineer that doing so makes the sign more compact and weighs less, very important if you're ferrying these things up and down the highway, and also makes it less expensive to manufacture.

As far as the two different sign stands, the diamond one with the closely spaced springs, joint appendix page 236, MDI said that those signs, even though the other one was depicted in their patent, that the closely spaced springs were, quote, slavish copies from the standpoint of function of the sign stand described and claimed in the Sartesian patents.

Third, that is the form in which they practiced their patent, the closely spaced springs.

Kellogg, Singer, Sears, that line of cases gives Traffix Devices and any member of the public the right to copy the patent in the form in which it was practiced.

That is critically important to maintain competition.

Whether you begin with patent law and the right to copy from an expired patent, or trade dress law and the definition of functionality that focuses on usefulness, is it a useful product figure, you come to the same point.

Traffix Devices had the right to copy the MDI sign stand when it came off patent, and it did so.

It did so in the way Bonito Boats explains enhances competition, imitation and refinement through imitation by adding an improvement of its own that made a more competitive product better for highway safety departments.

Thank you, Your Honor.

Chief Justice Rehnquist: Thank you, Mr. Roberts.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Feltner v. Columbia Pictures Television, Inc. - Oral Argument

Fri, 09 Jan 2009 14:50:03 +0000

Case:

Feltner v. Columbia Pictures Television, Inc.

Media File:

96-1768_19980121-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Henry J. Tashman

Chief Justice Rehnquist: We'll hear argument now in Number 96-1768, C. Elvin Feltner v. Columbia Pictures Television.

Mr. Roberts.

Justice Roberts: Thank you, Mr. Chief Justice, and may it please the Court--

In this case, a district judge determined that Mr. Feltner should pay Columbia Pictures 8.8 million in statutory damages for a copyright infringement.

Before arriving at that figure, the judge held a bench trial, after which he made the factual finding that Mr. Feltner's conduct was willful, which increased the amount of damages which could be awarded under the statute.

In light of clear historical practice on both sides of the Atlantic prior to 1971, Feltner had a right under the Seventh Amendment to have a jury make that finding and others on which the award was based and determine the amount of damages to be imposed within the statutory limits.

Before reaching that constitutional question, however, we need to consider whether the statute may be construed to afford a jury trial right.

It may be.

First, the first Federal statute providing statutory damages in an amount

"as to the court shall appear to be just. "

the 1856 act, also provided that those damages should be recovered in an action on the case, a prototypical legal action for which a jury would be available.

Statutory damages as to the court shall appear to be just, the samel terminology as employed in the 1856 act, were carried forward in successive acts up to the 1909 act, when the statutory damages provision took its modern form, with no indication that Congress wanted to delete the jury trial right that was so clearly present in 1856.

Unknown Speaker: The concept of statutory damages has changed some, has it not, from 1856 to 1909?

Justice Roberts: Certainly--

Unknown Speaker: The guidelines, or whatever you want to call it.

Justice Roberts: --Yes.

It has been... it was expanded significantly in 1909.

The range was expanded and the 1856 act applied to dramatic compositions.

The 1909 act applied more generally.

But that same language, as to the court shall appear to be just, carried through all the different statutory provisions.

Unknown Speaker: I take it in the '56 act there was no opportunity to elect a different damage scheme after verdict but before a judgment as there is in the current act.

Justice Roberts: That's right.

That's one of the distinctions added in 1909 from the 1856 act.

Unknown Speaker: So if we followed your reasoning in this case, as I think your opponents have pointed out, we would have to accept as a consequence that a jury could render its verdict on actual damages, be discharged, go home, and at that point the election could be made to go for statutory damages, and I don't know what happens then.

I guess the jury would have to be called back on your theory.

Justice Roberts: That's a false problem.

It's never been a problem in the courts that have recognized the jury trial right so far.

All the judge needs to do--

Unknown Speaker: But it could happen, couldn't it?

Justice Roberts: --I don't think so.

All the judge needs--

Unknown Speaker: Why?

Justice Roberts: --to do is to say to the plaintiff, when the jury comes back, I'm going to enter judgment promptly upon their verdict and therefore they'll be there.

If the plaintiff says I want to elect statutory damages--

Unknown Speaker: Well, if--

Justice Roberts: --the jury would not have been sent home by that point.

Unknown Speaker: --And at that point do you tell the jury... and this is a problem that I have that runs through the whole case as to what the judge tells the jury.

Would it suffice if the jury is told, render such damages as you consider to be just?

Justice Roberts: Well, I think the jury would be instructed according to the factors it's supposed to consider, as juries are, for example, in awarding punitive damages.

Unknown Speaker: I looked in Devitt and Blackmere to see if there were any instructions on statutory damages.

There are not.

The common law measure is there.

I'm just not sure what the judge tells the jury.

I'm not sure also which way that cuts.

Justice Roberts: Well, the courts have developed guidelines of what is appropriate to consider, whether it's a jury or a judge, in awarding statutory damages, the amount of loss, the value of the copyright, profits--

Unknown Speaker: Those are all set forth in Nimmer and in the brief, amicus brief filed by the Composer's Association and again, I'm not sure which way that works.

It... on the one hand it seems to me that this is an area where we should develop uniformity and consistency and judges would be helpful.

I suppose your answer to that is that a set of jury instructions developed over the years could do the same thing.

Justice Roberts: --Well, just as with the case of punitive damages, which is an amount of damages left largely to the discretion of the jury, there have developed instructions as to the factors they should consider, and likewise--

Unknown Speaker: None of which have been effective.

It's been a serious problem.

But this copyright law is so odd, because under your version, then, a jury would go out and could determine actual damages and come back with a verdict and a figure and then the plaintiff can say, well, I've looked at that, I think I'd do better under statutory damages and can reject that and ask for statutory damages.

Justice Roberts: --That's true whether a jury or a judge is making that initial determination, so that concern I think doesn't really cut one way or the other on the question of whether--

Unknown Speaker: Mmhmm.

Justice Roberts: --the jury or the judge reaches that conclusion.

They are unusual in that respect.

Unknown Speaker: Now, in the Tull case from this Court we upheld a scheme under similar Seventh Amendment type concerns and said the judge could nonetheless determine statutory damages.

Justice Roberts: Well, the holding in Tull is first of all that that is a legal action, the civil penalty action.

The court analogized to civil penalty actions in the Eighteenth Century, said they were legal, noted that the nature of the remedy, punishment was legal, and then at the very end said, but the actual amount is for the judge.

Now, here--

Unknown Speaker: Well, maybe that would be true here.

Justice Roberts: --If it is true here, then the judgment needs to be reversed because, of course, this judge didn't just determine the amount of damages.

He made a factual finding of willfulness under the statute.

That's something that if this is a legal action--

Unknown Speaker: Well, I assume the willfulness aspect could certainly go to a jury if that were the Court's decision, but what would your position be on the balance?

Justice Roberts: --Well--

Unknown Speaker: Because there still is a discretionary element there, a range of sentences.

Justice Roberts: --There is a discretionary element and Tull, I think, should be limited to the civil penalty context in which it arose for a number of reasons, first of all because that aspect of the holding was dicta in Tull as a technical matter.

The question of who should determine damages wasn't before the Court, because the Court had reversed on liability.

It may not have been necessary to reach that question at all.

That's a technical point.

But the more substantive one is that if you go back and look at the briefing in Tull, it was devoted almost exclusively to the question of liability, very little discussion of the question of damages at all and, whatever may be the case with respect to civil penalties prior to 1791, when damages were not fixed, juries decided damages.

Unknown Speaker: And the distinction is that in Tull the Government received the money and that makes it a governmental type of penalty and here the private individual--

Justice Roberts: Well, the distinction--

Unknown Speaker: --The owner of the copyright receives the money and therefore it's not a penalty.

Justice Roberts: --The distinction goes back to the 18th Century practice in England.

When damages were not fixed, juries set the amount of damages, so if Congress has not fixed the amount of damages in a copyright action, they should be set by juries under this Court's precedent.

Unknown Speaker: Well, but they didn't fix them in this Clean Water Act, either, under Tull.

I'm asking.

Justice Roberts: I don't think there was any evidence of juries--

Unknown Speaker: I know we have a problem with Tull for your case and you want to limit it and you indicated it's a penalty, but can't you look at the statutory damages also as a penalty, and so I ask, does the--

Justice Roberts: --Well, they--

Unknown Speaker: --identity of the recipient determine... is that what your distinction's based on?

Justice Roberts: --Well, that's part of it, and also in the civil penalty action you have an analogy to criminal sentencing where a judge determines the sentencing.

That analogy doesn't apply in this case because this is a private right... it's not a public right... a private action between two parties and the core of the analysis, though, although I think Tull can be limited in that way and its statement is dicta, the core of the analysis shouldn't be extended because it can't be defended.

The idea that although Congress fixed the... when Congress fixes the amount of the penalty it can therefore delegate that task to judges ignores the whole purpose of the Seventh Amendment.

The Seventh Amendment is to protect against judicial bias and corruption and overreaching and, while that's not implicated when Congress fixes the amount because Congress is doing that, the judge is just applying it, when you give that task to the judge the whole reason for having the Seventh Amendment comes into play, so that logic in Tull, I think, should at the very least not be extended any further.

Unknown Speaker: Is there any evidence who set the... in... under the Statute of Anne in the 18th Century it was a penny a sheet or something, I think, in damages.

Justice Roberts: Yes.

Unknown Speaker: If there was an argument about how many sheets there were, did the jury decide it or the judge, do we know?

Justice Roberts: The jury, cert jury.

We've cited cases to that effect I believe on page 43 of our brief.

Unknown Speaker: But Mr. Roberts, in this case on that very point that was the one piece of it that I noticed... and you said willful or not goes to the jury and how much goes to the jury, but in this case, it may not be the case generally, it seems to me that how many infringements was ruled on as a matter of law.

Didn't the judge rule on it even before his bench trial?

Justice Roberts: It's very confusing.

He did not.

At the start of the bench trial he said that the issues remaining for trial were how many infringements were involved and were they willful, and what should the damages be, so at the very outset at least, he thought that was an issue for trial.

Later on, he also said he wanted to hear about how many infringements were involved.

Later on, he said he was ruling on it as a matter of law.

Unknown Speaker: But aren't those questions... whether each series is a... each one episode in a series is a separate work, it sounds to me like that's a legal question.

Is it--

Justice Roberts: Oh, it's a mixed question of law and fact.

It depends... and the legal standard was correctly stated.

It depends upon whether each episode has what's called an independent copyright life, an independent economic value, and that's a question of fact.

You take evidence on that.

How was it copyrighted?

How was it produced?

How was it marketed?

Would the television station show just one episode of a series or not?

There are factual issues involved in that and then a legal standard to be applied, and we think what should have happened is that the jury should have been able to determine those facts based on proper instructions of the... what the legal test was.

Unknown Speaker: --Do you say the same thing about the two stations, whether they were--

Justice Roberts: Yes.

Unknown Speaker: --separate entities?

Justice Roberts: It's not just a question of whether they were separate entities, but whether they were jointly and severally responsible for the infringement, because the statute allows only one award of statutory damage for all individual or joint and several infringements of each work.

Unknown Speaker: So you say if this judge ruled on those two questions as a matter of law that he was wrong.

Justice Roberts: Yes.

That... those should have been submitted to the jury and, as I say, there's some confusion as to what he did.

It's hard to tell.

Unknown Speaker: You're not saying that in principle they could never be ruled on as a matter of law.

Justice Roberts: Oh, no.

Unknown Speaker: I mean, the facts could be so clear that no reasonable jury could find the factual element except one way.

Justice Roberts: The normal rules--

Unknown Speaker: You assert that's not the case here.

Justice Roberts: --The normal rules about directing verdicts and taking issues away from juries I think apply.

Unknown Speaker: That happened on the infringement question.

Justice Roberts: Yes.

Yes.

Infringement was settled on--

Unknown Speaker: That was summary judgment.

Justice Roberts: --On summary judgment.

Unknown Speaker: But you don't think that this question, how many, could be summary judgment, too, but you say it wasn't in this case.

Justice Roberts: I think it was not in this case.

I do think it's difficult to tell when you have the judge acting both as factfinder and as ruler of law when he's saying based on these facts I'm making this decision, or I'm making this decision as a matter of law and it's also difficult, when that same judge has made a ruling on summary judgment, to tell, is he saying based on the evidence at trial, or I saw this evidence before on summary judgment.

So there is some ambiguity in the record, but I think the jury should have been instructed on the number of infringements, as the judge indicated was an issue available for trial at the outset.

And the court of appeals seemed to think that that was decided at least as a mixed question.

It referred to the judge's findings and whether or not they were erroneous, rather than treating it as a legal ruling.

Now, the first step in this Court's constitutional approach is to find an analogue to this action in 18th Century practice and ask whether that's legal or equitable.

The analogue to modern actions for statutory damages for copyright infringement is the 18th Century action for statutory damages for copyright infringement under the Statute of Anne, under the first Federal copyright statute passed 1 year before the Seventh Amendment by the same Congress that passed the Seventh Amendment, and those statutes provided for recovery of amounts and specified that they should be recovered in an action at law.

Unknown Speaker: As I understand it, after the Statute of Anne, the... if a copyright owner thought the damages were a little too small, so he preferred often to go into equity to get an injunction.

Justice Roberts: Yes.

Unknown Speaker: When he did that, could he also get damages?

Justice Roberts: He had to go in a separate proceeding at law to get damages.

Unknown Speaker: Could not get damages on the equity side.

Justice Roberts: Not in equity, no.

Unknown Speaker: Do you... is there a citation for that in your... I--

Justice Roberts: Well--

Unknown Speaker: --It sounds to me right, but--

Justice Roberts: --Millar v. Taylor I think is the best that I can come up with, which is--

Unknown Speaker: --The Millar case.

Justice Roberts: --After the Seventh Amendment was adopted.

It discusses the history.

Unknown Speaker: But that was overruled, basically, by the statute... well, all right, thank you.

Justice Roberts: Overruled by the House of Lords in Donaldson but not on that question.

It was the question of whether common law copyright survived the Statute of Anne.

Another thing that--

Unknown Speaker: But in the fullness of time didn't equity clean up?

I mean, the cleanup doctrine that if there were damages... the main thing was injunctive relief, but you could incidentally collect damages.

Justice Roberts: --Up until Beacon Theatres and Dairy Queen.

Unknown Speaker: Yes, but there was... you didn't have to bring a separate action at law under the cleanup doctrine.

Justice Roberts: Under the cleanup doctrine, but in Beacon Theatres the Court noted that that could not be used to deprive a party of the right to a jury trial.

Now--

Unknown Speaker: But the judge could no longer set the order of trial.

Justice Roberts: --That's right, that ruling on the injunctive aspects couldn't deprive a litigant of his right to a jury trial on the legal aspects, and the legal aspects plainly included the right to statutory damages.

Now, the statutory damages have changed since then, as was pointed out.

The main difference is the modern version gives you a range, and these 18th Century precedents we've been talking about are primarily fixed amounts.

That is not a distinction that makes a difference.

The Government made that same argument in the Tull case in footnote 7.

It said those 18th Century civil penalty actions were for fixed amounts and this, the Clean Water Act is for a discretionary range.

The exact words of this Court are, we do not find that distinction to be significant.

In addition, there were statutory damages--

Unknown Speaker: Isn't that inconsistent with the argument you made earlier that Congress sets the amounts?

Justice Roberts: --Sets the--

Unknown Speaker: I thought you... we were talking earlier about how to distinguish or confine Tull and you said, well, the Congress sets the amounts.

Justice Roberts: --In--

Unknown Speaker: But the Congress there set a vast range, and it's... which is very much like the statute we're involved with here.

Justice Roberts: --But the argument in--

Unknown Speaker: And--

Justice Roberts: --In Tull was, because Congress had fixed the amounts earlier they could delegate that to a judge.

Here you had in the 18th Century fixed amounts under the Statute of Anne, under the first Federal copyright statute, but also a situation where you could get damages for copyright infringement that weren't fixed by Congress and whenever they were not fixed by Congress, those were for a jury.

I don't know that that situation was replicated with respect to the civil penalty actions of the sort at issue in Tull.

And it's also the case here we had 18th Century preSeventh Amendment statutes providing for a range of statutory damages.

Statutes in Massachusetts, New Hampshire, and Rhode Island provided for the recovery of statutory damages within a broad range, so therefore that basic distinction, the difference between fixed and range, doesn't make a difference with respect to characterizing the action.

The second step in this Court's constitutional analysis is to look to the nature of the remedy.

Here, the remedy is money damages, the hallmark of legal relief, and this Court has said that monetary damages are legal and require a jury except in two very specific, defined circumstances, when they constitute restitution or disgorgement, and when they're incidental to or intertwined with equitable relief.

The first certainly doesn't apply here.

Restitution is one of the factors that the jury can consider in setting the amount of damages, but it's not the only one.

They also can look at punishment and compensation, traditional legal remedies, and those legal remedies give the right to a jury.

Again, this is another argument that was made in Tull.

The Government argued there the purpose of the Clean Water Act penalties is restitution.

Therefore, this is equitable.

The Court said no, the purpose is also punishment.

Punishment was one of the purposes.

That's a legal remedy and therefore this is a legal action.

The modern statutory damages serve the legal purposes of punishment and compensation.

You can see the punishment aspect in the fact that you get a broader... a higher range for willful, a lower range for innocent.

You can see the compensatory aspect in the fact that these damages are instead of actual damages.

You don't get both because they serve the same purpose, provide some recompense for the copyright holder.

Unknown Speaker: --What about the argument that actual damages may be hard to prove and so because the legal remedy is inadequate, actual damages, so you have this alternate of the statutory damages, so doesn't equity come in when the legal remedy is inadequate.

Isn't that the basic reason for equitable--

Justice Roberts: That is the basic prerequisite for equitable relief and it's not specified here.

Here, statutory damages are available at the election of the plaintiff for whatever reason or no reason.

He does not have to show that legal... actual damages or legal remedies are inadequate.

Second of all, the fact that that's one of the reasons you have this relief doesn't make it equitable.

Parties frequently provide liquidated damages in contracts because they think it will be difficult to prove actual damages.

If you sue for liquidated damages in a contract it's still a legal action for which a jury is required.

That's the reason you had the fixed penalties in the Statute of Anne, because actual damages were difficult to calculate and yet the respondent agrees that that was a legal action to recover those damages.

Unknown Speaker: --Perhaps you've said this, but it would be helpful if you could just summarize in a sentence, possibly.

If you take Tull, you know, and look at part 3... you know what I'm thinking of.

Justice Roberts: Yes.

Unknown Speaker: All right, and then suppose someone were to say, well, that seems to describe this case, you would say, no it doesn't, and the main distinction that you would make between part 3 of Tull and this case is?

Justice Roberts: Well, the main distinction is that Tull--

Unknown Speaker: Or two if you'd like, or three, but I mean, I'm just trying to get the heart of what you--

Justice Roberts: --Tull is a... Tull first of all is an action by the Government for civil penalties.

This is an action between private parties for damages.

At common law, when damages were not fixed, as they're not here, juries determined the amount of damages, whatever may have been the case with respect to civil penalties.

In Tull, I think--

Unknown Speaker: --I don't want to interrupt Justice Breyer's colloquy with you, but you're talking about two things.

You're talking about the identity of the recipient and the... whether or not the amount is fixed and it seems to me that the latter doesn't help you here, because Justice Breyer I think implied that the range of penalties that Congress sets under the Clean Water Act in Tull look very much like the range that it is setting here.

Justice Roberts: --The difference is that under Tull and the Clean Water Act the Court couldn't... wasn't provided with and didn't find any analogies in the 18th Century where there was a similar range and you got a jury.

Here we have that.

The three State statutes I mentioned provided a range prior to the adoption of the Seventh Amendment and they said, you recover this range in an action of debt, an action at law.

So whatever may be the case, and under the Seventh Amendment you need to look at the particular actions and the historical analogues, whatever may be the case with respect to civil penalties, the analogue here is there prior to the adoption of the Seventh Amendment and it was an action at law.

But with those distinctions of Tull in mind, again, the basic core of the reasoning should not be extended.

When damages were uncertain, that was when the juries were needed most.

This Court said so in Barry v. Edmunds.

Where no precise rule of law fixes the reasonable damages, it is the peculiar function of the jury to determine the amount.

That was the rule at common law, Lord Townshend's Case, the jury are judges of the damages, and that is what this Court held with respect to the Seventh Amendment consistently, at least prior to Tull.

That's why we don't have additur or unconditional remittitur, because it's for the jury to determine the amount of damages.

That's the rationale in Chief Justice Marshall's opinion in Bank of Hamilton.

The statute there said you could be evicted, but you were entitled to compensation for improvements, improvements will be set by commissioners, unconstitutional under the Seventh Amendment.

Juries set the amount of damages.

Now, that body of precedent with respect to damages is wellestablished.

The body of precedent with respect to civil penalties may well be different, but the Court noted in Tull, for example, that it had been presented with no evidence that the Framers were concerned that the jury trial right extend to the question of remedy, and that's right.

If you go back and read the briefs, the evidence isn't there, but the evidence is there in the real world.

The amount of damages was a critical component of the jury trial right.

The episode in New York in 1764 that figured in the ratification debates involved solely a redetermination of the amount of damages set by the jury.

Unknown Speaker: Is the history of it that in England the amount of damages wouldn't have been an issue in terms of amount in respect to the... because the Statute of Anne says a penny a page, but in the United States your point is that some States did make it a jury issue?

Justice Roberts: Well, that point--

Unknown Speaker: A lot of States, perhaps.

Justice Roberts: --That point, but also another one, Your Honor.

Unknown Speaker: What?

Justice Roberts: And that is that there are other situations where damages for copyright infringement were not set.

For example, if you're seeking damages with respect to an unpublished work, then a jury would determine those amounts.

Under--

Unknown Speaker: But that's a different--

Justice Roberts: --Under section 504(b) if you're seeking actual damages a jury would determine that amount.

There are situations where the damages are not fixed and in those cases there's no question that it would be for a jury to determine, so whatever the force of Tull with respect to civil penalties, they don't apply to the copyright infringement area.

Unknown Speaker: --What about if... suppose a person brought in the 18th Century an action for an injunction and coupled it with a request for damages?

Justice Roberts: I believe that the action for damages had to be filed separately in a court of law.

It couldn't be joined with the equitable action for an injunction.

Unknown Speaker: But we've already agreed that, as equity emerged, you could combine the two.

You could clean up, you could get damages if you... the main thing that you want is... in the--

Justice Roberts: Well--

Unknown Speaker: --Until Beacon and Dairy Queen--

Justice Roberts: --Yes.

Unknown Speaker: --that was routine.

You could go into equity and say, by the way, equity cleans up, clears up, so incidentally, award me damages.

Justice Roberts: Yes, and Beacon Theatres and Dairy Queen pointed out the flaw with that line of reasoning, which is it was depriving the parties of their right to a jury trial through the conduct of the litigation and you could not go and get both in a single action in equity in England.

Now, with... the State precedent here I don't think should be dismissed as simply the American practice as opposed to the English practice.

The Court is concerned about looking to practice here because they don't want to rely on idiosyncratic practice, but there's no evidence here that the statutes in New Hampshire and Massachusetts were in any way inconsistent with English common law.

There were three of them, which suggests that they were not aberrational at all and the language was perfectly consistent with all the other statutes that were provided at that time, all of which providing relief at law, with the difference that they provided it within a range.

Unknown Speaker: Mr. Roberts, correct me if I'm wrong, but I thought that the cleanup doctrine originated in England and we... our law developed in the same way.

Justice Roberts: I think it did originate in England.

I don't know when.

But again, my reading of Millar v. Taylor is that you couldn't get damages for copyright infringement in an action brought at equity.

You could get your injunction, then if you wanted damages you went in a separate action at law.

Unknown Speaker: Well, at any rate the test is what was the practice at the time of the adoption of our Constitution, isn't it?

Justice Roberts: Yes.

Unknown Speaker: Not what became the practice later.

Justice Roberts: Yes.

If I could reserve the remainder--

Unknown Speaker: Very well.

We'll hear from you, Mr. Tashman.

Mr. Tashman: Mr. Chief Justice, may it please the Court--

Congress enacted statutory damages in 1909 as an alternative to actual damages to provide some recompense to copyright holders.

Congress did this because it recognized that actual, legal damages were frequently difficult, if not impossible to prove and therefore did not provide an adequate remedy.

Statutory damages were later amended and expanded in 1975 and in 1988.

The formulation of an alternate form of relief where legal damages are inadequate is quintessentially an equitable remedy.

Moreover, statutory damages require and involve the exercise of nearly unbridled discretion by the court and an appeal to the court's sense of justice based upon the particular facts in an individual case to fashion a remedy that is both just and consistent with the goals of the Copyright Act.

Unknown Speaker: Did the Tull footnote 7 in effect say that's not a consideration that should influence--

Mr. Tashman: No, it didn't.

I think the Tull footnote 7 said that the Government's argument regarding discretion was in a sense trumped by the fact that what we were dealing with in Tull were punitive damages, or a punitive statute and that was the more important consideration in Tull and the Court correctly stated in Tull that punitive damages and penalties were the exclusive province of the courts of law and not the courts of equity.

However, statutory damages, and by that I mean the damages in the 1909 and 1976 act, are not punitive damages and this Court has so ruled in the L. A. Westermann case.

The primary purpose of statutory damages is to find some method of recompense to the copyright holder, given the inadequacy of the legal remedy of actual damages.

Unknown Speaker: --Mr. Tashman, if I follow your argument correctly, then if a copyright holder comes in at the outset and says, I want the court to find that there has been an infringement and I want statutory damages, I don't want any other kind of damages, could such a plaintiff then avoid having a jury trial on the question of infringement?

On your theory, I take it yes.

Mr. Tashman: Absolutely.

I would characterize statutory damages as an equitable action and an equitable proceeding, just like an action for an injunction and, as in an action in an injunction, all the issues, including the issue of infringement, would be for the court and in a similar fashion, if only statutory damages were sought, which is quite possible under the current act, in the 1976 act, then all of the issues, including infringement, would go to the court.

Now, in this case statutory damages were not elected until after the court granted summary judgment both on copyright liability and also the number of infringements which were involved.

The court held--

Unknown Speaker: There seems to be a debate about what... the number of infringements, whether that was, in fact, a summary judgment--

Mr. Tashman: --Oh, there's no question about it.

The only question that I think is subject to some debate, and even that is really not subject to serious debate, is not the number of broadcasts, because that was either found by the court or stipulated to, but the number of... or the number of series that were broad... the number of episodes which were broadcast because, again, that was stipulated.

Unknown Speaker: --But whether each episode counts as a work.

Mr. Tashman: Correct.

Correct.

Unknown Speaker: Mr. Roberts said that is a mixed question of law and fact.

Mr. Tashman: It is, except in this case there was no dispute as to the facts, and we don't dispute the facts.

There was no dispute at trial that the series are sold in a single contract.

There was no dispute at the trial that the stations are free to broadcast any number of the... of these episodes, but in this case it was stipulated to that each and every one of the episodes was broadcast between two and three times on a separate date.

Unknown Speaker: Well, I don't want to distract you with a question that would be peculiar just to this case, but I think you have made an important clarification that in your argument statutory damages are just like injunctive relief, so if you come into the court and say, all I want is an injunction, then the infringement will be determined by the court as well.

Similarly here, if the copyright holder says, I want to have those statutory damages and so, please, no jury to say whether the defendant infringed or not.

Mr. Tashman: Yes, I think that would flow once the court, or if the court characterized the statutory damages as an equitable remedy and an equitable--

Unknown Speaker: Why didn't the--

--That's difficult to do, isn't it?

I mean, in an injunction the question for the court is whether certain conduct should be prohibited or not and here, in the statutory damages, there is a range of options for the imposition of the damages and there's a certain amount of discretion involved in fixing the amount within the possible range, is there not?

Mr. Tashman: --Well, there's a huge amount of discretion involved.

Unknown Speaker: Yes.

Mr. Tashman: And that--

Unknown Speaker: And that is a typical question that a jury would address and certainly, if you look to the common law antecedents, that's the kind of thing that in the copyright area would have been determined by a jury.

Mr. Tashman: --Well, I have to agree with... I have to disagree with Your Honor on two counts.

First, as to the practice at common law, under the colonial statutes and under the 1790 act as well, the... well, let me focus on the 1790 act first.

The jury played no role whatsoever in determining the amount of damages.

The only thing the jury determined was whether or not there was an infringement and the number of copies in the possession of the infringer and, once those two facts had been determined, damages were calculated arithmetically by multiplying the number of works in possession by the 10 cents a page, or whatever.

So if we look at the state of the world just prior to the passage of the Seventh Amendment, the jury really had no role in calculating the amount of damages.

Unknown Speaker: Well, it surely would have had a role in determining what later emerged to be an element of willfulness and the extent of the violation and how many pages, or how many events occurred.

Mr. Tashman: Well, I'm afraid I have to disagree with Your Honor again.

Willfulness is a concept that is completely alien to copyright infringement at common law and, indeed, it's completely alien to copyright infringement until 1978.

Unknown Speaker: Oh, but it's a concept that is very familiar at common law in all kinds of criminal and tort law situations.

That's a typical determination by a jury, is something intentionally done, or willfully done.

Mr. Tashman: That is certainly true.

Unknown Speaker: That lends itself to jury determination very readily.

Mr. Tashman: Unlike the assessment of statutory damages within a range, which involves a huge amount of discretion and this discretion is really entirely different from the discretion that a jury uses in trying to ascertain the appropriate amount of actual damages.

Unknown Speaker: How about punitive damages?

A jury has extraordinary discretion there.

Mr. Tashman: Well, it certainly has more discretion than it does in determining actual damages, but for example, the jury cannot, and it would be error for the jury to take into account the conduct of the attorneys and the conduct of the litigants in bringing the litigation and how they conducted the litigation and yet these are factors that courts have taken into account in determining the amount of statutory damages.

Also, I think juries--

Unknown Speaker: You think that that would be impossible under punitive damages, if the jury thought that the defendant in the case knew that it was guilty and had conducted a rear guard action of obstructionist litigation and so forth?

I'm not sure a jury--

Mr. Tashman: --Well, I--

Unknown Speaker: --couldn't consider that for punitive damages.

Mr. Tashman: --I believe there are cases which have held that it would be reversible error for the jury to consider the conduct of counsel at trial and that that conduct has been considered--

Unknown Speaker: Oh, I'm sure just an isolated, you know, piece of rudeness or something like that, I'm sure that would be the case.

You think that could be taken into account here?

Mr. Tashman: --If statutory damages... absolutely.

The courts--

Unknown Speaker: Really?

Mr. Tashman: --The courts--

Unknown Speaker: The jury thinks counsel were rude to the judge--

Mr. Tashman: --No, no, in statutory damages courts have used the cooperation or lack of cooperation and the manner in which counsel have conducted themselves at trial as a factor in determining the appropriate amount of statutory damages.

Unknown Speaker: --Is... I just wonder, can I go back for a second to your answer to Justice Ginsburg.

Could you explain to me very briefly, as... perhaps I haven't a clear view of Tull, but Tull was a case that I thought gave you support and, as I understood the case, it would have said that the action for damages, a penalty in that case, is, in fact, legal and therefore the plaintiff or a defendant, there would be a right to a jury trial, but then it talked about the assessment of the amount of the penalty and, as far as the assessment of the amount of the penalty was concerned there was no Seventh Amendment right.

Now, if that's... if I'm reading it correctly, then in this case it would suggest that even if... I take it you'd have to say and even if.

Even if the claim is legal and therefore there is a right to a jury trial to determine whether or not statutory damages is due, there is under Tull nonetheless no jury trial right as to the amount of the damages.

Now, is that a correct reading of Tull?

Is Tull applicable in that way?

Are you going to disown Tull, or what is it you want to do about that?

Mr. Tashman: Well, I'm very happy about Tull and I certainly don't want to disown that case.

Tull I think is controlling.

In the event that the Court finds that statutory damages are a legal remedy, our initial threshold argument is that statutory damages are not legal but are equitable.

Tull is not consistent with that.

Tull found that the civil penalties in that case were legal.

Unknown Speaker: That's right.

Now, I want to know what happens if I think, hypothetically, that this is a legal remedy, statutory damages.

Mr. Tashman: Right.

Unknown Speaker: At that point, is that the end of the matter, or are you saying that indeed, even if that's so, given part 3 of Tull, the judge may or Congress may give the judge the power to assess the amount of the penalty?

Mr. Tashman: Well, we are arguing that this is equitable, but in the event that the court rejects that and finds that it is legal, we are clearly arguing that, based upon Tull and based upon the second prong of the test in the Court's recent decision in Markman, that it would be entirely appropriate for the Court to assess the amount of statutory damages.

Unknown Speaker: But then you would lose under--

--But if it were legal, then you'd have the right to a jury trial on infringement, I take it.

Mr. Tashman: Correct.

Correct.

So... I'm sorry.

Unknown Speaker: And also on... if all you have in your corner is Tull, then you lose on infringement, you lose on willful, or innocent.

That would also be for the jury under--

Mr. Tashman: Well, certainly we don't lose on infringement because in this particular case infringement--

Unknown Speaker: --Yes, but I mean as a question of whether you would be entitled to a jury trial if there is a fact to be tried.

Mr. Tashman: --I know--

Unknown Speaker: If Tull is all you have, then if there is a fact to be tried, the only thing you would get from a judge is the amount of damages, not the willfulness determination, not the number of infringing acts, and not the basic infringement question.

What more could you get from Tull except the very last piece of it?

Mr. Tashman: --I would think that Tull would give us more than the last piece, and that would be any issues that relate solely to the question of liability, such as willfulness, would be the province of the court, and I think that's especially significant in this case.

There is no requirement under the Copyright Act... and the petitioners make this argument and I think it's clearly incorrect, that there is no mandatory requirement for a finding of willfulness or a finding of innocence.

The statute gives the court the absolute discretion to award damages between 500 dollars and 20,000 dollars without any finding whatsoever as to willfulness or innocence and in this case the court found that 20,000 dollars was the appropriate award, and that is an award which does not require any finding of willfulness or innocence.

Only if the court wants to go above the 20,000 dollars is there a requirement that the court find willfulness.

Unknown Speaker: But didn't the court find willfulness here as kind of a part of his explanation of why he picked 20 rather than 500 dollars?

Mr. Tashman: Well, we certainly know that the court did find willfulness.

As to why the court decided to award 20,000 dollars, which would be the maximum amount without a finding of willfulness, we really don't know.

Unknown Speaker: You really want to slice this statute very, very fine, so that not only does the amount of damages somehow get lopped off from the rest of it, but even within the damage provision, up to 20,000 dollars can be decided by the judge alone and when you get above that, if there's willfulness, it... the jury has to be called in.

How does that work?

What... I mean, how does the judge know there's no willfulness, so that he should only give up to 20,000 dollars?

I assume he has to send it to the jury first for the jury to find whether there's willfulness and, if the jury finds no, then he can do between 5 and 20, but that didn't happen here, did it?

Mr. Tashman: Well, I think we could avoid that problem by... in a case where the plaintiff requests damages no greater than 20,000 dollars.

Unknown Speaker: Well, let me ask even... even in that case, I'm... I want to ask a question that goes to the point of whether Tull helps you even on damages alone.

One reason Mr. Roberts suggested that Tull might not help you on that is that in Tull there was no... there was no 18th Century analogue and here he says there is and, going to that point, my question is this.

Granted that in the early actions which were, I guess, brought in this country either for debt or in an action on the case for damages which were, as you point out, just mathematically calculated... you find the number of sheets, you multiply it times a penny or whatnot, and that's your verdict... nonetheless, despite the rather mechanistic way that damages would be calculated in those cases, is there authority that indicates that in those early cases the juries were returning verdicts simply of so many sheets plus infringement, as distinct from a verdict for money damages?

In other words, were the juries coming back with general verdicts, or were they simply coming back with the basis for calculating a verdict which the judge then did?

Do we know?

In other words, I want to know what the 18th Century analogue is here in practice.

Mr. Tashman: I... that's not a question that I have an answer to, although I would argue that, regardless of whether or not the juries specified an amount in the award or whether they just specified the number of copies in the possession of the defendant, that this statute and the colonial statute are entirely inadequate analogues to statutory damages, because the key and the essence of statutory damages is finding an alternate way to recompense the plaintiff outside of the standard rules of proof and outside of the standard measure of damages and outside of the standard rules of evidence.

And what we have in the 18th Century are classic, rigid, legal causes of action either in debt, which is a sum certain, which is the antithesis of statutory damages--

Unknown Speaker: Or case, which is not.

Mr. Tashman: --Or case, but again, while there's more flexibility in case, what we're talking about is actual damages.

What we're talking... there's no question that case is the analogue of actual damages under 504(b) and there's no question that, under 504(b) for actual damages, there's a constitutional right to a jury trial.

Unknown Speaker: All right.

Let's assume that.

Let's assume that the analogue is not point for point.

How do you answer this objection one of the questions that we have to ask, if we get to the point in the argument, is whether the jury... according the jury trial under the present circumstances is necessary to preserve the substance of whatever the 18th Century right was.

If we start with the conclusion that the 18th Century juries were at least awarding something in the nature of actual damages, as distinct from statutory damages today, you nonetheless I think have to face this, that if, today, a plaintiff asks for actual damages, the plaintiff would, on the reasoning of the 18th Century analogue, get the jury trial right and the defendant would get the benefit of the jury trial right.

Whereas if today's plaintiff says, I want to go for big money, I want to go for the kind of statutory damages which in this case could have resulted, I think... what was it, 44 million dollars, the upper limit +/?

a great deal of money, anyway, the jury right disappears and, given your answer to Justice Ginsburg, it disappears even on the question of liability.

Don't you face the problem of how we preserve the substance of the 18th Century right if we accept your argument and, in particular, if we accept your answer to Justice Ginsburg?

Mr. Tashman: No, I don't think so.

I don't think the substance of the 18th Century right goes to the amount or the size of the award.

Unknown Speaker: Well, let's assume that it at least goes to liability and the... on your answer to Justice Ginsburg, the right to a jury determination on liability is likewise gone if the election is made to accept the statutory damages.

Mr. Tashman: And that is no different from the fact today, or during the 18th Century, that if a copyright holder brought an action for an injunction plus an equitable accounting, that all issues in that case, including the question of infringement, would be for the court.

Now, the size and the impact--

Unknown Speaker: Well, they would be, but at least the accounting is... is at least for money that should not have been in the pocket in the first place.

We're talking about a statutory damage remedy here with an outer limit in a willfulness case that exceeds anything that was known to 18th Century equity, I would suppose.

Mr. Tashman: --Well, I'm not sure that's true if you factor in inflation, but regardless of that, if you're talking about an injunction to enjoin another copyrighted work... for example, today one motion picture believes another motion picture is infringing and if you want to talk about leverage, the leverage and the risk is not so much the damages as enjoining the infringing work, which may have cost hundreds of millions of dollars, before that work is distributed based upon copyright infringement.

So it's quite possible that when you're dealing with injunctions the potential for injury to the defendant is just as great, if not greater, than when you're dealing with actual damages or statutory damages.

Indeed, I think--

Unknown Speaker: Do we... is that the... I mean, I think that's a very good argument.

It raises a question in my mind as to whether we should accept that analogy, because isn't the analogy that we look at in asking about the preservation of the substance of the jury trial right the analogy between the action at law then, or an action at law then and an action at law now?

In other words, should I accept your analogy to what equity could do?

Mr. Tashman: --Well, certainly equity did not do that in the 18th Century, but if there were statutory damages it would be an equitable... it would be an equitable... you would get them in equity, because they involve extraordinary discretion--

Unknown Speaker: If you were doing what you just described today it would still be... if all you want is the injunction, no money relief at all, you want to stop the other picture from being shown, you don't have... the other side and you don't have a jury trial right if all you're seeking is an injunction.

Mr. Tashman: --I think that's not subject to dispute and that could result in damages of hundreds of millions of dollars, injury of hundreds of millions of dollars--

Unknown Speaker: But you wouldn't get the damages, because your claim would be precluded.

Mr. Tashman: --No, when I say... I'm sorry, when I say damages, the consequence of an injunction, given those facts, would result in a huge amount of injury to the party being enjoined.

Unknown Speaker: There's a practical question related to this that I have that you may not have a judgment on, but as... in your experience, copyright holders who by and large are plaintiffs in these suits, if I compare them to other plaintiffs, say in tort suits, we don't... I haven't normally heard complaints from plaintiffs in tort suits about the jury.

To the contrary.

They feel that punitive damages, et cetera, normally... I'd say not everybody, but the jury's more than adequate, or adequate in awarding... taking care of the interests of the tort plaintiffs through punitive damages, et cetera.

Why is it, in your experience, that in this case the copyright holders who tend to be plaintiffs in these cases fear... at least, I read that into what they're saying, that the jury won't be able properly to compensate them or to work with a statutory punitivetype situation?

Mr. Tashman: Well, I know the amici have raised those issues and I can only speak to my experience in this case and in this case we do not believe that a jury would be incapable of awarding statutory damages.

I suspect a jury would have awarded more statutory damages, because once they found willfulness, they would have felt compelled to go into the willfulness range, which is something the district court did not do.

I can see... so we don't think that this gets into the third prong articulated in Ross, at least not given the facts here.

I can see hypothetically two situations where it would.

First, where statutory damages were elected after a jury came down with a verdict for actual damages and then you'd have to send back that jury and the jury, having deliberated and figured out that X dollars was the appropriate award of damages, kind of send them back and tell them, no, no, no, unring the bell, come up with another award, and I think that's conceptually a difficult thing to ask a jury to do, kind of to unring the bell, especially when you don't give them any guidelines to tell the jury... other than the possibility of willfulness or innocence, which is not a mandatory factor but a discretionary factor.

So I would think under those facts it would be something that would be--

Unknown Speaker: Would you comment on Mr. Roberts' response to that, that the same problem applies when the judge tries the case?

Mr. Tashman: --I'm sorry, can you repeat the question?

Unknown Speaker: The... Mr. Roberts suggested in response to this argument that you can unring the bell even if you don't have a jury.

I mean, you can ask the judge to take a second look, too.

Mr. Tashman: Well, the judge hasn't taken a first look, because the judge has not, while the case was going to the jury, spent days trying to figure out the appropriate amount of actual damages and lost profits, so the judge is really coming to that issue completely afresh, while the jury is already committed to this concept that X dollars were lost profits and X dollars were actual damages.

Unknown Speaker: You're saying that if the judge has already determined actual damages it would be too late to unring the bell.

Mr. Tashman: Well, the judge doesn't determine actual damages.

Unknown Speaker: Oh, but if there's no jury trial at all, if there's no jury right at all, he's going to.

Mr. Tashman: Well, if there's no jury right, then the judge won't determine actual damages because the only question is statutory damages, so in that case--

Unknown Speaker: No, I thought--

--No--

--Justice Stevens--

Mr. Tashman: --I'm sorry.

Unknown Speaker: --was asking the question, suppose neither side wants the jury, you have a judge trial, plaintiff gets an amount calculated by the judge--

Mr. Tashman: Ah.

Unknown Speaker: --and says, judge, I don't like that calculation.

Do it under statutory damages.

Mr. Tashman: Thank you.

Is that your hypothetical?

Unknown Speaker: Yes.

Mr. Tashman: Thank you for the clarification.

I would think it would be difficult for a judge, but I think a judge would be in a better position to go back and to recalculate or rethink than a jury would be, although--

Unknown Speaker: Although I suppose a judge could protect himself and say, if you're going to submit the matter to me, are you asking for actual damages or statutory damages and you can say we... make a prayer in the alternative.

Mr. Tashman: --Correct.

Unknown Speaker: I suppose a judge could protect himself by demanding to know from the client in advance what he wants.

Mr. Tashman: I think that's quite true.

Unknown Speaker: Can you require the determination to be made in advance like that?

Mr. Tashman: No.

Unknown Speaker: I thought it... so the answer's no.

Mr. Tashman: No.

Unknown Speaker: Would you... I had the same problem Justice Breyer asked you about.

I understand you just represent one client in this case and the irony of it is, maybe... you may be better off if you lose, because a jury may come in with a bigger award.

Mr. Tashman: Well, I hope you wouldn't rule based upon that.

Unknown Speaker: Well, I certainly won't.

[Laughter]

I certainly won't, but it's ironic... or the other way around.

They... there may be a crossverdict.

Mr. Tashman: I think my client would not feel better off if he lost.

Unknown Speaker: If they have to try the case over.

No, I understand that.

But it is puzzling to me as to why, because of the position filed by the amici, why this class of plaintiffs is afraid of... seems to disapprove of juries whereas the plaintiff generally would seem to prefer juries.

Is there anything about copyright law that suggests why that should develop?

Mr. Tashman: Well, I think we're dealing with intangible rights.

We're dealing with rights that are inherently difficult to value.

We're dealing with rights which are not consumed.

We're dealing with cases where you have large companies suing local establishments, where--

Unknown Speaker: Not much human interest in it at all, is there?

[Laughter]

Mr. Tashman: --Where it's... you know, it's very difficult to try to figure out how a huge music company has been injured by Joe's Bar and Grill performing.

Unknown Speaker: Thank you, Mr. Tashman.

Mr. Tashman: Thank you very much.

Unknown Speaker: Mr. Roberts, you have 4 minutes remaining.

Justice Roberts: Thank you, Mr. Chief Justice.

Justice Souter, the answer to your question is juries at common law returned general verdicts for an amount.

They didn't say 50 sheets, go do the math.

The citations are collected at page 43 of our brief.

Unknown Speaker: They returned general verdicts where there was a statutory specified amount for each sheet?

Justice Roberts: Sure.

Now, it's a calculation, but they did the calculation.

Unknown Speaker: But I mean, it wasn't a great mystery what the calculation ought to be.

Justice Roberts: No.

No, at least not under those where the amount was fixed.

It was under the statutes in New Hampshire and Massachusetts and Rhode Island.

Justice Kennedy, a better citation than the one I gave you is on page 35 of our brief, the Colburn case, saying the court in equity doesn't award anything beyond the accounting, so damages beyond restitution would not be allowed.

It's important to recognize that the willfulness determination here was critical to the judgment.

The district court noted the range for willful infringements before imposing his award.

Columbia argued that the court should award a higher award.

They said, just 40,000 per infringement and that's less than half the amount you can award, what they said and, of course, the court of appeals in upholding the amount emphasized that the infringements were willful and the 20,000 figure was well within the statutory range.

Now, to focus for a moment on the third point in Tull, the damages question.

If this is a legal action, issues of infringement, number of works, willfulness have to be tried to the jury and Tull is the only impediment to the conclusion that damages also are for the jury.

Tull proceeds along the assumption that, although the Framers were willing to take up arms over the issue of whether a judge or a jury decides liability, they didn't care one way or another whether the judge or the jury said 200 dollars or 100,000 dollars.

The proposition simply makes no sense.

The amount of--

Unknown Speaker: So we'd have to overrule Tull, in your view.

Justice Roberts: --No.

I think Tull can be confined to the civil penalty context in which it arose and the particular history in which it arose.

In other words, the historical fact about civil penalties as opposed to damages.

But we know that damages were set by the jury when they were not fixed, regardless of the case with respect to civil penalties.

Thank you, Your Honor.

Chief Justice Rehnquist: Thank you, Mr. Roberts.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Quality King Distrib. v. L'anza Research Int. - Oral Argument

Fri, 09 Jan 2009 14:50:05 +0000

Case:

Quality King Distrib. v. L'anza Research Int.

Media File:

96-1470_19971208-argument.mp3

Related Transcript:

1997_96_1470_argument.xml

Transcript:

Argument of Allen R. Snyder

Chief Justice Rehnquist: We'll hear argument first this morning in Number 96-1470, Quality King Distributors v. L'anza Research International.

Mr. Snyder.

Mr. Snyder: Mr. Chief Justice, and may it please the Court:

The Members of Congress in 1976 who enacted the copyright law of 1976 would be quite surprised to learn from the Ninth Circuit's decision below that Congress allegedly intended section 602 of that law to override the longstanding and fundamental principle in copyright law known as the first sale doctrine and thus to allow a manufacturer to control the import and the subsequent resale of particular copies of goods that the manufacturer itself had already sold.

This Ninth Circuit decision is inconsistent not only with the statutory language but also with the legislative history and, indeed, Congress simply has not addressed either in the copyright law or elsewhere respondent's efforts to curtail parallel imports--

Unknown Speaker: Well, Mr. Snyder, the Government has come in and urged us to rely on the section that... 602, dealing with infringing importation of goods, and they tell us that the United States has entered into treaties on the assumption that that provision governs.

What do we do with that argument made by the Government?

Mr. Snyder: --Justice O'Connor, I believe the issue before the Court is what did Congress say and what did Congress intend in a statute.

Unknown Speaker: Yes, I think so, but I would be very interested to know how you evaluate the extent to which this country has relied on some other interpretation, as the Government argues.

Mr. Snyder: I believe that the Government has shown that in several bilateral trade agreements that were never submitted to Congress either for consideration or for action, the Government has asserted the position in dealing with the Governments of Cambodia, Trinidad and Tobago, and several other countries, that it is the executive branch's position that parallel imports of the kind at issue here should be curtailed.

We believe that, to the extent the Government is relying on copyright law for that position, that it is up to Congress to pass the law and set the policy, and it is up to this Court to interpret that position of Congress and what Congress said and meant.

Unknown Speaker: Do we owe deference to any Government agency in interpreting these laws before us?

Mr. Snyder: I believe not, Justice O'Connor.

This is not a case where the Government has even alleged Chevron deference.

This is not a case where the Government has been assigned by Congress any duty under 602(a).

There are no regulations.

There is no role for the Copyright Office or any other agency of the executive branch to administer 602(a).

It is solely a private right of action, and under those circumstances we think there is no deference to be accorded.

The executive branch is free to take whatever position it wishes in bilateral negotiations, but if their positions conflict with the position of Congress, we submit they should go to Congress for a change in the law.

Unknown Speaker: Let me ask you one more question, since I have you interrupted, and then I'll leave it alone.

Section 501, dealing with infringement of copyright, says anyone who violates any of the exclusive rights of the copyright owner covered by sections 106 through 118, or who imports copies into the United States in violation of section 602, is an infringer.

Under your theory, that section wouldn't be needed, I suppose, insofar as it refers to section 602.

Mr. Snyder: I think it's correct that that particular language could have been omitted.

However, it would have raised questions where, in... for courts to interpret the language, since section 106 obviously deals with distribution to the extent we're discussing it here, and we all agree that importation is not literally the same thing as distribution, Congress chose to make importation part of the distribution right.

Had section 501 not specifically referred to importation, someone could have argued that the reference there to distribution or to section 106 didn't necessarily cover things that were actually dealt with in 602 but not literally in 106.

I think it was a situation where Congress appropriately tried to be sure that their intention was crystal clear.

Unknown Speaker: Mr. Snyder, I--

--Of course, one of the things they... just on this point.

One of the things they wanted to make sure of, perhaps, is that 602 was kept intact as an independent provision, because 602 says, under their reading, that it is an independent act of infringement to import without the consent.

Mr. Snyder: Well, it is an act of infringement.

However, I think it's not totally independent in the sense that the language of 602 specifically made importation a violation of the distribution right under 106, so as we interpret the language, Congress was saying that we wish to make importation a separate type of violation of the distribution right.

Unknown Speaker: But Mr. Snyder, if you're right about that, wouldn't it have been more logical to say, in the first part of 501(a), exclusive rights, section 106 through, including the right, the 602 right, instead of making it conjunctive, as... instead of making it separate?

Your argument would fit very well if Congress had said 602 belongs with 106A, but it makes it separate, and in that light, going back to Justice O'Connor's point about the representations this Nation has made, the Government isn't making them in the air.

It does point to this 501(a), and if that's a plausible reading, even if we don't owe Chevron deference, don't we owe some... don't we give some weight to the representations our Government has made to other Governments?

Mr. Snyder: Well, first of all, Justice Ginsburg, 501 obviously is not the section that specifically was dealing with either the distribution right or the importation issue, and I think to determine Congress' intent, the first place that I would urge the Court to look would be the statutes directly on point, including 109, but I take your point that it could have been phrased in a different way.

However, I would suggest respectfully to the Court that by referring in 602 to the rights under 106, Congress was doing something that really made quite a bit of sense, and that is that all of the panoply of conditions and exceptions to distribution rights that are contained within 106 and its cross-referenced sections thereby were applied here.

Section 106 begins by saying, subject to sections 107 through 120, quote-unquote, there will be certain exclusive rights, including the distribution right.

Those exceptions include such things as the fair use doctrine, which is a quite fundamental element of American copyright law.

By... by making 602 a part of the 106 right and cross-referencing it the way Congress did, it included the fair use doctrine, the first sale doctrine, the other exceptions, into the importation rules just as they're in all the other parts of the copyright law.

Section 501 simply provides for the enforcement mechanism for all of the rights, and I would respectfully suggest that, because it lists importation as an additional word in 501, it really doesn't negate, I don't believe, the intent of Congress in the operative sections.

And obviously one of the key operative sections here is section 109, and 109, which is the current codification of the first sale doctrine, which is a doctrine that goes back well over 100 years in copyright law, section 109 says that if someone is the owner of a particular copy that was lawfully made under this title, that that owner can sell or otherwise dispose of that copy.

And we believe that that is about as broad language as Congress could use and in fact follows a... quite a lengthy history of broad language in the statutes, the predecessor statutes, and in the legislative history, all of which have made clear that Congress intended to say that once a particular copy that's lawfully made under the U.S. copyright law has been sold, the copyright owner's rights cease, and that's the actual language in the legislative history of the '76 act.

The rights cease, of the U.S. copyright owner, as to that particular copy.

We think that the first sale doctrine, there is nothing in the language of the statute that suggests that the first sale doctrine was being overridden, or that Congress intended to change it, there's nothing in the legislative history where Congress was talking about changing the first sale doctrine, and we think the more natural reading of all of these sections together, including section 501, the more natural reading, to try to follow the congressional intent, not the policy arguments that each side can make, not the positions that the executive branch might wish to take as a matter of policy or as a matter of bilateral negotiations, we think that the fairer way to read the actual language of Congress is the way we've set forth.

The treaties... excuse me.

They're not treaties, actually.

They're bilateral agreements that the Government has cited.

They represent positions that the executive branch has taken.

I might add that they've taken that position in multilateral negotiations and the international community has so far rejected them, but Trinidad and Tobago and several other countries, and you have the lodgings in front of you, have agreed to the U.S. position.

However, there is no liability on the part of the United States if the U.S. position is wrong.

If there's a violation of those agreements, there is an obligation for consultation.

There is no arbitration, there is no financial liability, and we would respectfully suggest that if the executive branch wishes to curtail parallel imports beyond the language of existing statutes, then if they wish to rely on copyright law or any other congressional enactment, they should go to Congress.

Unknown Speaker: Mr. Snyder, can I ask you another question.

I haven't quite figured out the answer.

If your position is correct, what is the function of the three exceptions to the statute?

Mr. Snyder: The 602 exceptions, Justice Stevens, we believe apply on their terms to very limited situations where people are importing or bringing property in for personal use or for noncommercial use.

Each of the exceptions, library use, Government use, do not apply to commercial distributions, and they apply generally to very limited numbers.

In other words, you can bring in one copy or bring in a copy in your baggage.

We think those are very different situations from the first sale doctrine that deals with sales.

Unknown Speaker: Why wouldn't those exceptions already be protected by the first sale doctrine if it applied?

That's what I'm not quite clear.

Mr. Snyder: Justice Stevens, they are not because the language of the 602 exceptions is not limited to copies that are lawfully made under this title.

In other words, one of the paradigm situations that the copyright considerations were looking at was where property is copyrighted under a foreign copyright, and this happens very frequently.

This is a quite common situation, and it was discussed at length in the deliberations leading up to the statute.

If an author gives the British copyright to his or her book to a British company, and the U.S. copyright to his or her book to a U.S. copyright holder, the U.S. copyright holder obviously wishes to avoid having the unrelated British copyright holder ship 1,000 copies of the book here because the U.S. copyright holder has no control over the independent entity, has not been paid anything for those copies, et cetera.

That was discussed in the deliberations leading up to the statute, and the phrase in 109, lawfully made under this title, we submit means copies that are made under the U.S. copyright law or made with the authorization of the U.S. copyright holder, whereas, Justice Stevens, under 602, if I'm traveling in Britain, and I pick up a copy of a British book that's been British-copyrighted and I put it in my baggage, I can come home with it.

Unknown Speaker: Or, if you're traveling in some other country and you pick up a totally unauthorized copy of a phonograph, a CD or some... or a book, totally unauthorized, you'd be protected as a traveler if you bought it and brought it back in--

Mr. Snyder: Yes, Justice O'Connor.

Unknown Speaker: --under the 602 exceptions.

Mr. Snyder: That's correct.

Unknown Speaker: But it would not be protected under 106, presumably.

Mr. Snyder: We agree with that, and we think that is a very significant distinction between the two statutes.

Unknown Speaker: Maybe I'll reveal my ignorance about that.

I just want to be sure I understand.

In other words, if the author gave the British copyrights to a separate company from the publisher, the American publisher, the British company then sells to some person in Britain, abroad, a bunch of copies, those are not protected by the first sale doctrine?

Mr. Snyder: As... not as we interpret the statute, although this has not been addressed in any of the decisions that I'm aware of precisely.

But the lawfully-made-under-this-title language of the first sale doctrine in 109, the Government agrees with us on this point that that means it's made with the authorization of the U.S. copyright holder, in other words, made under U.S. copyright law.

Unknown Speaker: Yes, but if the U.S. copyright... oh, I see.

The U.S. copyright holder could be a licensee of the author, and you have a different copyright holder who's also a licensee in Britain.

Mr. Snyder: That's correct.

It's quite common for property--

Unknown Speaker: So British copies would not be lawfully made under this title, within the meaning of 109, in your view.

Mr. Snyder: --That is our understanding, and that is exactly the parallel or analogue to what this Court held in the K Mart case, which obviously arose under customs laws and trademark law, but in K Mart the Solicitor General then argued that the first sale doctrine in the trademark law should protect a U.S. mark holder from competition from a totally unrelated entity, such as the kind we're talking about now, but should not protect the U.S. mark holder if the U.S. mark holder is a parent or a subsidiary of the foreign mark holder.

That was the position the Government took then, and this Court was unanimous... while it... the Court split on several other of the various alternative cases dealt with in K Mart, the case 1 and the case 2A situations that I've just referred to, the Court was unanimous on that.

The position we are taking is exactly the same under copyright law as this Court found Congress had authorized under the trademark law, and we think it makes good sense in terms of the interests that are at stake and, most importantly, it follows the language of the statute.

Unknown Speaker: Does the U.S. copyright holder have to have specific authorization from the author to manufacture abroad in order to avoid a violation of 602?

Mr. Snyder: Well, we do not believe that 602 limits the question of where you manufacture, and there's a BMG decision from the Ninth Circuit that we cite in our brief that seems to say the opposite, but that decision's been criticized by a number of other courts, including the Ninth Circuit in a later case.

We don't think the language of Congress makes anything turn specifically on where you manufacture.

Now, to fully answer your question, Justice Souter, there could well be contractual limitations.

If the author divided up the worldwide rights in a certain way, where it's manufactured--

Unknown Speaker: But if the contract is silent, your answer is the geography of manufacture is irrelevant.

Mr. Snyder: --I think that's correct, but I... I'm not certain.

Unknown Speaker: Am I right in my understanding of your answer to Justice Stevens that (1), (2), and (3) are exceptions from 602?

They all deal with, let's imagine a human being who comes to the border.

That human being who comes to the border got his book, for example, some way or other.

If the way he got that book was subject to the first sale doctrine, then under your theory you wouldn't need (1), (2), or (3), but if it was not, you do need (1), (2), or (3), and whether that category, not, is big or little or medium-sized is beside the point.

It's not the null set.

Mr. Snyder: I think that's correct, Justice Breyer.

Unknown Speaker: Is that right?

Mr. Snyder: There could... there are cases I think where there could be some overlap between the 109 protection and 602, but there are a great number of cases where there's not overlap.

Unknown Speaker: I mean, there might be a lot of people who have those books coming to the border who didn't buy them.

Mr. Snyder: Correct.

Unknown Speaker: In which case there's no first sale doctrine under anybody's theory.

Mr. Snyder: Well, if they don't own them--

Unknown Speaker: There was no sale.

Mr. Snyder: --If they don't own them, there might not... there wouldn't be a first sale doctrine.

You actually... you don't have to have bought them, I believe.

It could have been a gift or other situation.

Unknown Speaker: Where there are other... yes.

Mr. Snyder: There also could be situations where the property wasn't... was made under U.S. law or wasn't made under U.S. law.

There could be cases where the traveler took it with him or her when they went abroad and then brought it back.

So there are a variety of hypotheticals.

I agree with you they're not totally separate.

The two statutes have some overlapping situations, I agree.

Unknown Speaker: There's one other language point that the Government makes in addition to its 501 argument.

It refers to the later provision, the one in the... what is it, the chip, the 905 and 906, and that 906 includes... 906(b) refers not simply to otherwise dispose, but includes the word, import, and the argument is, and when Congress... Congress knows there's a difference between importing and otherwise disposing.

Mr. Snyder: Well, Justice Ginsburg, I think it's fair to say that this statute, as many other congressional enactments, probably could have been phrased in different ways, some of which would have made our job easier.

But, for example, 106A, which we cite, is a statute that specifically says that that provision is an exception, is... that the first sale doctrine, the other exceptions don't apply to that one.

In other words, in 106A Congress made it very clear they were enacting a provision that wasn't going to include the exceptions in 106 that we've relied on, so you know, we've made the assertion that if... that Congress knows how to make it clear that something is not subject to the exceptions.

They did it in 106A.

I think you're correct, the Government is correct that there are other ways that Congress could have phrased several of these provisions that probably would have made them a little bit clearer, but I don't think there's anything in the sections that you just cited, Justice Ginsburg, that's inconsistent with our position.

They simply made that section a little clearer than they made 602 and 106.

I think it's undisputed by everyone that there is no specific reference in the legislative history to the interplay between 106... I'm sorry, between 602 and 109.

In other words, no Congress Member ever addressed how these two should go together.

We believe that the best way to deal with that, given the language that's in the statutes at issue here, the most relevant statutes, 602 and 109, is to say Congress just hasn't addressed the matter.

Congress obviously is free to address it, and the Government can either submit the bilateral agreements that it's negotiated to Congress for review, or it can go in with a statute on parallel imports.

There actually have been quite a number of proposed bills to curtail parallel imports.

Unknown Speaker: What is your response to the argument... I recall it was part of the Ninth Circuit's opinion... that the predecessor of 602 was worded in a way which would cover many of the examples you gave, and yet they added the terms, acquired outside the United States, so it seems that your arguments give very little weight or significance to the changes between the two... between the predecessor statute and 602 as now written.

Mr. Snyder: I think the predecessor statute only applied to pirated goods, Justice Kennedy, and the Government and the respondent have both made the... have both referred to the fact that the new statute in '76 was clearly intended to cover more than just pirated goods, but so-called lawfully made goods as well.

We agree with that, and that's exactly the case that I referred to that's analogous to the K Mart situation.

In other words, goods that are lawfully made under foreign copyright laws but not under the U.S. law we think are covered by 602, and the fact that 109 is limited to lawfully made goods under this title we think draws the line between goods made under U.S. copyright law and goods made under foreign copyright law, and we've laid out in our brief quite a number of situations where the new 602 does have meaning, because it applies, for example, in the case where an unrelated foreign copyright holder has produced the good, it applies to many other cases.

Basically, our position is that 109 applies in the importation situation just as it applies to all other aspects of the distribution right, and 109 limits the distribution right to some extent, and we think the importation rules in 602 have become part of the distribution right, and 109 applies to those as well.

Unknown Speaker: Well, to prevail, do we have to think that importation is a form of distribution?

Mr. Snyder: No.

I do not believe it is literally a form of distribution.

If it were, there would be no need for the 602 statute.

But Congress, we believe, intended to subsume 602 within the distribution right.

We think that's what it meant by saying that an unauthorized importation is a violation of the right under 106, that Congress was simply declaring it to be a... for legal purposes a form of distribution, even though linguistically it may not be precisely that.

If I may, Mr. Chief Justice, I would like to reserve the balance of my time for rebuttal.

Unknown Speaker: Very well, Mr. Snyder.

Mr. Goettsch, we'll hear from you.

Argument of Raymond H. Goettsch

Mr. Goettsch: Mr. Chief Justice, and may it please the Court:

I think it's important at the outset to note that we believe that the K Mart v. Cartier case is not apposite to this case at all.

In that case, the Court addressed section 526 of the Tariff Act of 1930, and under section 526, a U.S. entity can record its U.S. trademark with the Customs Service to prevent unauthorized importation of goods, even those with a genuine trademark.

The protection, however, extends only to goods of foreign manufacture, and the issue before the Court was whether the Customs Service's regulations were based upon a reasonable interpretation of that statute, and a majority of the Court found the phrase, foreign manufacture, to be ambiguous and then as a result found that some of the regulations of the Customs Service were reasonable.

But to the extent that the K Mart case dealt with trademark law, it's important to remember that, as this Court recognized in the Sony v. Universal Studios case, the... there's a difference between the scope and scheme and purpose of the trademark law as opposed to the copyright law, and the courts are not to take principles or doctrines from trademark law and extend them to copyright law.

Unknown Speaker: May I ask, since you've cited the Sony case, which dealt in part with fair use, how, under your reading of the statute, does the fair use doctrine protect the importation of foreign-made goods?

Mr. Goettsch: Well, I think that in enacting section 602(a) Congress made a decision that the limitations under Chapter 1 of the Copyright Act, which would include the fair use under section 107 as well as the first sale defense under section 109(a), did not apply to section 602(a).

Unknown Speaker: Oh, so your view is there is no fair use defense in this... for imported goods.

Mr. Goettsch: Yes, except to the extent that we think that the three exceptions that Congress did set out expressly to section 602(a) do have a fair use element to them.

The question, of course, before this Court is whether section 109(a) of the Copyright Act is a defense to copyright infringement under section 602(a) for unauthorized importation of copies acquired outside the United States.

The answer to this question should be purely a product of statutory interpretation.

Prior to the enactment--

Unknown Speaker: Mr. Goettsch, you don't question the contention of petitioners that there is no need to give any deference to the negotiation... negotiating position of the United States in trade agreements?

Mr. Goettsch: --Well, I don't... no, we do not agree with that.

First of all, I think it's important to recognize that--

Unknown Speaker: Well, then you say that there is some... I thought you just said that we just pay attention to the language used by Congress, but you're saying, though, that that language should be interpreted through the prism of the executive branch deference?

Mr. Goettsch: --No, I'm not saying that.

What I'm saying is that... first of all, I don't think that the Court needs to reach that issue to interpret this statute.

I think the statute is unambiguous on its face.

However, if the Court were to consider legislative intent, since the Copyright Office was very much involved in the writing of the 1976 Copyright Act, then I would simply say that its interpretation of that act corroborates--

Unknown Speaker: It has no duties under this section, does it?

I mean, it doesn't administer this act.

Mr. Goettsch: --No.

Unlike 602(b), where Customs is required to prohibit or bar the import of piratical copies, under section 602(a) it's up to the copyright holder to enforce the bar to entry of unauthorized importation.

Unknown Speaker: Well, on your interpretation of the statute, actually, that it's sort of an import violation rather than a distribution violation, it really ought to be the Customs Service to whom we might defer rather than the Copyright Office.

Mr. Goettsch: Well, that could be.

The--

Unknown Speaker: But I don't understand your argument that just because the Copyright Office had much to do with the drafting of this provision we give them deference.

I mean, we certainly don't give General Motors deference if they have had substantial participation in the drafting of a particular provision.

Mr. Goettsch: --Well, I think what I meant by deference, and probably my choice of words was not particularly apt, what I meant was that if the Court is going to look at legislative intent, which I don't think the Court needs to do, that the Copyright Office's role in the writing of the statute is corroborated... is evidence of intent, and its current interpretation corroborates the legislative intent.

Unknown Speaker: Okay.

You don't... you do not contend that we owe them deference.

Mr. Goettsch: Not in that sense, just in the sense that this is corroborative evidence of legislative intent if the Court needs to reach that.

Unknown Speaker: Will you... just concentrating on the language for a minute, will you explain how you get out of the box that the right that's been infringed is the exclusive right to distribute copies under section 106, a right which is otherwise qualified as a first sale doctrine, fair use doctrine and others.

Why, if it's the right granted by 106, why isn't that right qualified by the other provisions between 107 and 119?

I don't quite understand your answer to that.

Mr. Goettsch: Well, there are several reasons.

First of all, if section 109(a), the first sale defense, applied to section 602(a), then the three exceptions that Congress expressly identified--

Unknown Speaker: Well, I understand.

As... you're saying... I understand that argument, but initially, if it's just the 106 right, which has already been curtailed by the first sale doctrine, how can you say it's more... I don't understand.

You say the 106 right has two different scopes, one for most infringement cases, and then a broader right under 602(a), is that right?

Mr. Goettsch: --Well, section 106, subparagraph (3), which provides for the copyright holder--

Unknown Speaker: Subject to 107 through 120, yes.

Mr. Goettsch: --Right, but that gives the copyright holder the right to control the exclusive distribution of a copy, is not exhausted unless there is a sale, and importation does not denote a sale, so the distribution right under section 106 is complementary but separate from the importation right under section 602(a).

Unknown Speaker: Well, but the importation right is treated as though it were an infringing sale, and to be an infringing sale, it has to get by all the things like the fair use doctrine, the first sale doctrine, and so forth.

Maybe I just don't quite--

Mr. Goettsch: No, I don't think it is Justice Stevens, I don't think it is treated as an infringing sale.

The importation, the act of unauthorized importation of copies acquired outside of the United States itself is copyright infringement, as recognized separately in section 501(a) of the act.

Unknown Speaker: --But, of course, the argument on the other side is, there's no infringement, obviously, if there's been a first sale, because 109 applies.

I mean, that's the argument, and I don't... it's kind of odd that you're here arguing, all you have to do is look at the statute, it's so clear.

The other side is saying the same thing.

Frankly, I think the other side has the better argument on looking at the statute and seeing what it means, so I'm concerned about what, if any, deference is owed to anybody here.

What about the Government's position on these bilateral trade agreements?

How much does that concern us?

Is this something Congress can fix, if they're worried about it?

Is it not odd that we would find in the middle of the copyright statute some effort to control importation of some kind of goods?

I mean, it just doesn't fit comfortably under the copyright law, does it?

Mr. Goettsch: Well, I don't agree, Justice O'Connor, because prior to the enactment of the 1976 Copyright Act section 602 prohibited the importation of piratical goods, meaning unauthorized copies, and Congress... by enacting section 602(a), Congress intended to extend that protection to the copyright holder beyond piratical goods to the unauthorized importation of authentic copies.

Unknown Speaker: Well, of course, that gets us to the issue.

May I ask this, do you agree that there was a distinction which... and again, I don't know the answer to this by any means, but is there a distinction between piratical goods on the one hand and goods lawfully manufactured pursuant to a British licensee of an American author?

Isn't it... he relies heavily on that distinction.

Is there such a distinction?

Mr. Goettsch: I don't think so.

Unknown Speaker: You would say that the piratical goods encompass lawfully made goods pursuant to a license from the original author--

Mr. Goettsch: Well--

Unknown Speaker: --in the other... the British copyright.

Mr. Goettsch: --Justice Stevens, if you're asking, prior to the enactment of section 602(a) was the provision with respect to piratical goods applicable to that situation, then I think it was.

Unknown Speaker: You think it was?

It was.

Well, what were all those experts who testified saying they needed 602 for, including Ms. Harriet Spilpellan, Horace Man--

Mr. Goettsch: Well, it wasn't... there was no case law that expressly said that, and I think that Congress, by enacting section 602(a), wanted to make it very clear that the unauthorized importation of authentic copies was copyright infringement.

Unknown Speaker: --That makes sense, but I don't see how it helps you.

I mean, they wanted to say, suppose that I bring in some books from England, and really they are perfectly legitimate, but if I were to distribute them in the shop it would violate the distribution right of the copyright holder.

Well, 602 says, stop them at the border.

I mean, nothing in that theory tells you whether they are or are not subject to the first sale doctrine.

It wouldn't hurt if they were, wouldn't hurt if they weren't.

Mr. Goettsch: Well--

Unknown Speaker: If there's been a first sale, no more reason to... no more reason, if there's been a first sale, to stop them than if there's been a first sale in the United States.

It's the same problem.

Mr. Goettsch: --Well, of course--

Unknown Speaker: Do you want to apply a first sale doctrine to copyrighted books or not?

If the answer is yes, why distinguish them where the first sale was abroad?

If the answer's no, treat them all alike.

Mr. Goettsch: --Well, because the first sale is intended to reflect the fact that the copyright holder has exhausted its exclusive distribution right and has received the full value of its copyright, and a sale abroad, a sale outside the United States, since the Copyright Act operates territorially, the sale outside of the United States does not exhaust--

Unknown Speaker: No, but he's been paid for it, hasn't he?

I mean, if they're legitimate and not pirated, he's been paid for that.

Mr. Goettsch: --Well, under the facts of this case, which is true in many situations where copyright holders sell the copyright goods abroad, they're sold at a discount, a significant discount.

If those copies are allowed to come back into the United States and compete with the copies--

Unknown Speaker: They would like... the copyright holder, I take it, would like to have a vertically imposed territorial division, as would many manufacturers.

Normally we control that through the antitrust laws.

Sometimes you can do it, sometimes you can't.

Why, to repeat Justice O'Connor's question, would this antitrust issue of vertically imposed territorial restrictions suddenly be brought into the copyright law when it isn't brought into the trademark law or most other laws?

I mean, wouldn't you have to have a fairly clear expression of congressional intent to find it, rather than the other way around?

I mean, that's basically my underlying question in this case.

Mr. Goettsch: --Well, the concern is that if the copies acquired outside the United States at a discount come back into this country, then they compete with the copyright holders--

Unknown Speaker: Yes.

That's also true when you sell to California.

It's also true when you sell to Maine.

Mr. Goettsch: --No--

Unknown Speaker: If you decide to sell at a discount, it would be nice to do that often, and many manufacturers feel that way.

Mr. Goettsch: --Well--

Unknown Speaker: You can't sell at a discount to Maine, and you won't be able to to France.

Mr. Goettsch: --Well, if the sale were in the United States, then the copyright holder would have exhausted the right under 106(3) to control the exclusive distribution, and then section 109(a) would apply, but if the sale is outside of the United States, then the right to control distribution has not been exhausted.

Unknown Speaker: May I ask... just to comment very briefly on one aspect of the case that I just can't quite get out of my head, it's easy to follow the arguments when you're talking about books and records and so forth, but when you're talking about the label on a product that is not itself patented or copyrighted, the label is controlling the distribution of the product, is that relevant at all in the case?

Mr. Goettsch: No, because the Copyright Act does not recognize classes of copyrights.

There's no first class copyright for a book or play and a second class copyright for--

Unknown Speaker: For a label.

Mr. Goettsch: --a product label or a product design.

If--

Unknown Speaker: Thank you, Mr. Goettsch.

I think you've answered the question.

Mr. Goettsch: --Thank you.

Unknown Speaker: Mr. Wallace, we'll hear from you.

Argument of Lawrence G. Wallace

Mr. Wallace: Thank you, Mr. Chief Justice, and may it please the Court:

One very important component of the text of the statute which I believe has been overlooked in the discussion thus far is 602 itself.

What is set forth in the appendix to the petition for certiorari on the very last page, E-3, is not all of section 602.

It is section 602(a), which is in substance the new part of section 602.

Section 602 also contains a subsection (b).

Unknown Speaker: Where do you want us to be reading?

What brief, and what page?

Mr. Wallace: Well, subsection... the 602(a)--

Unknown Speaker: Yes.

Mr. Wallace: --is set forth in the appendix to the petition for certiorari.

Unknown Speaker: Yes, but you're referring us to something else.

Where do we find the something else?

Mr. Wallace: It's not set forth in any of the briefs, the text of it.

It's the very--

Unknown Speaker: And yet it's the most important part of the case.

Mr. Wallace: --Well, I--

Unknown Speaker: What is actually--

[Laughter]

Mr. Wallace: --I say that it's been overlooked.

Unknown Speaker: It's on page 2 of the appendix in the amicus brief that Mr. Olson filed.

Well, isn't it on page 2 of the red brief?

Rebuttal of Raymond H. Goettsch

Mr. Goettsch: Yes.

Rebuttal of Lawrence G. Wallace

Mr. Wallace: All right.

It's on page 2 of the red brief, then.

I'm sorry.

In any event, the very first sentence carries forward what had been in existence in somewhat different words in the 1909 Copyright Act, that importation of piratical copies is prohibited, and the Customs Service is given authority to stop those at the border.

That was always true.

What is added in 602(a)--

Unknown Speaker: May I ask right there, Mr. Wallace... it's quite important to me... did that section cover copies made pursuant to the... an authorized British copyright?

Mr. Wallace: --Piratical copies are copies that are not legitimate in the country where acquired, and not--

Unknown Speaker: So you're answer is no.

Mr. Wallace: --My answer is no.

Unknown Speaker: And so his response to the argument you're developing as well, this... the big change in this statute was, it covers that universe.

Mr. Wallace: The authority that has been given in 602(a), the new authority, allows the owner of the copyright to prevent without... if it doesn't have his permission, to prevent importation of legitimate copies as well as piratical copies, but the piratical copies are prohibited from entry separately as well, under 602(b).

Therefore, the exceptions listed in 602(a) cannot be exceptions to allow the entry of piratical copies because their importation is already prohibited by the companion provision.

It can... they can only be exceptions to allow the importation of copies that were legitimate copies authorized by the copyright holder where acquired.

Unknown Speaker: Or by the British copyright, right?

Mr. Wallace: However... but it--

Unknown Speaker: It would have permitted those.

Mr. Wallace: --Right.

Unknown Speaker: I want to be sure we understand what it does apply to.

There are three categories of goods, piratical goods, stuff made pursuant to the British copyright, and stuff made pursuant to the American copyright.

It picks up the middle category.

Mr. Wallace: Of course, we have--

Unknown Speaker: Do you agree with that?

Mr. Wallace: --Yes, but we have agreements with these countries so that there's reciprocal recognition of copyright rights, and the British copyright is very apt to derive from the American copyright, or vice versa, depending on where the original copyright is, so that we're not really separating out very much.

Unknown Speaker: Is there a substantial reduction of copyrighted goods, pursuant to copyrights in Trinidad and these other countries, that these agreements are made with?

Tobago... yes.

Mr. Wallace: There... the goods are marketed in these countries, and our concern in negotiating these agreements has been in protecting the distributors from gray market imports that would undermine the distribution of the American made works in these other countries.

Unknown Speaker: Briefly, you want to assure that the Americans can sell cheaper in that country than they do at home, right?

Mr. Wallace: Well--

Unknown Speaker: Briefly put.

Mr. Wallace: --there... that is part of the reason why we have been--

Unknown Speaker: We don't even do that at home.

We... you know, we generally don't... don't make sure that people can sell in Maine cheaper than they can sell in California.

Why do we want to do it for Tobago?

Mr. Wallace: --There are reasons why we've been espousing this, because in order to market copyrighted works, and the whole point of copyright is to give incentives to created copyrighted works and to protect their... the ability of the authors to market them--

Unknown Speaker: We're talking about shampoo here, aren't we?

I mean, these people don't care about the labels.

They're trying to piece out the market for shampoo.

Mr. Wallace: --The statutory issue is going to apply to motion pictures, sound recordings--

Unknown Speaker: But it's also going to apply to shampoo.

Mr. Wallace: --When the label that is affixed to it qualifies for copyrighting.

This is a venerable part of the copyright law, but I think it would be a mistake to let that drive this case, because--

Unknown Speaker: Well, is it your position that in construing the statutory language we should give some sort of deference to the position that our Government has taken in negotiating with Trinidad and Tobago?

Mr. Wallace: --We have not asked for deference, nor do we think deference is the right approach to this.

We do believe that the Court was entitled to be informed about this.

We--

Unknown Speaker: Well, if there's no deference, why... I'm sure we're entitled to be informed about it, but why do you take up your time informing us about it?

[Laughter]

Mr. Wallace: --Well, because of the very reason that the Court gave.

We... just 2 years ago in the case of Vimar Seguros... we quoted on page 25 of our brief one sentence from the opinion.

The very next sentence is what we think is pertinent here, and the very next sentence starts out--

Unknown Speaker: The sentence that you didn't quote?

Mr. Wallace: --That we didn't quote, and the very next sentence starts off, that concern counsels against construing the act differently.

That's all it does.

It is a factor to take into consideration--

Unknown Speaker: Well, should we look, for example--

Mr. Wallace: --as the Court said.

Unknown Speaker: --Is it the case... I'm not certain at all about this.

I've a recollection, though, that the European Court of Justices found a first sale right, a similar kind of thing, through imports from one country to another.

Are those relevant, too?

Am I supposed to look at those cases to see which way they come out?

Mr. Wallace: Well, they have not been brought to my attention, and we're talking here about construing an act of Congress, and--

Unknown Speaker: So why is the Government... normally the Government takes the position, with what I consider here... you can see the analogy to territorial restrictions imposed by a manufacturer.

Normally the Government wants those viewed under a rule of reason and is often hostile.

Why, in this case, is the Government willing to forego the rule of reason and just saying, well, they're okay across the board?

Mr. Wallace: --Well, there are trade restraints in copyrighted and patented materials that are not permitted elsewhere, and they're permitted under statutes that Congress has enacted.

We really think the answer to this case is in the statutes that Congress has enacted--

Unknown Speaker: Mr. Wallace, since it's obvious that there is some ambiguity here, room for different views, since the Government was taking this position in its representations to other nations, why didn't it ask Congress for a clarifying amendment so that there would be no doubt about how the statute should be read?

Mr. Wallace: --Well, I'm not privy to reasons that... why it did not.

It took 15 years to do the revision in 1976.

It started off at the very beginning of the 1960's with a series of studies by Congress and the committee and they heard from a great many people.

Unknown Speaker: I'm talking about once this problem surfaced.

Now, we have the Ninth Circuit with one opinion, the Third Circuit with a different one, so that this particular problem has been known for a while, and as far as I know there hasn't been any effort to get Congress to spare the judiciary this kind of decision.

Mr. Wallace: Well, this is not a problem that arises in Government litigation.

It's not just the Government that might have come forward.

In fact, we're talking now about the rights between two non-Government parties.

We looked in connection with another case pending before this Court and didn't find a single pending case in which the United States has... a single reported case in which the United States has sued anyone for copyright infringement.

We're not usually involved in this litigation, so we're not necessarily the ones who would come forward with requests for an amendment that might clarify something.

We are faced--

Unknown Speaker: Then you're saying this is not a very important issue for the Government, however important it is for private--

Mr. Wallace: --Well, it--

Unknown Speaker: --participants.

Mr. Wallace: --We do think it's important because it bears on positions we've been taking in international negotiations.

It's important to the Government in that way.

Unknown Speaker: Mr. Wallace, I've been reading subsection (b) and I'm curious, could you just help me with the second sentence?

The first sentence, the one you pointed to, repeats the prohibition against pirated... piratical works.

The second sentence says, in a case where copies were lawfully made the Customs Service has no authority to prevent their importation unless the provisions of 601 are applicable, and 601 has to do with English literary works or something.

What do I do with--

Mr. Wallace: Well--

Unknown Speaker: --Why doesn't the second sentence describe this case?

Mr. Wallace: --It's... it does describe this case for purposes of what the Customs Service is authorized to do.

Congress in section 602 did not expand the authority of the Customs Service to prevent importations.

That is still limited to piratical copies.

It added 602(a) to give the copyright owner ability to move against copies that were legitimate in the country in which they were acquired, but that would be too difficult for the Customs Service to try to distinguish between goods that may or may not be violating contractual restrictions on their distribution, so the Customs Service still has the same authority in substance that it had before.

Unknown Speaker: That just emphasizes, it seems to me, the statement in (a) that importation is not a violation of any importation restriction.

Importation is only a violation of the right to distribute.

That sentence just--

Mr. Wallace: The right--

Unknown Speaker: --doubles up on that statement.

Mr. Wallace: --The right to distribute is covered in section 106B, a separate section in a separate chapter of this provision, and something was added here to stand alone in a different chapter, and there are a series of exceptions listed which the petitioner in substance is saying can be explained because they would allow piratical copies in, but they would not allow piratical copies in.

Unknown Speaker: No, not piratical copies, legitimate copies made under a different copyright, under a different licensee.

That's... he says that takes care of the British copyright situation.

I don't think you've responded to that.

Mr. Wallace: But that--

Unknown Speaker: You keep referring to piratical.

Mr. Wallace: --But that limits very... most of these importations that are listed here as exceptions would have been ones where a first sale of a legitimate copy occurred.

It would not be... would not--

Unknown Speaker: Well, what about the personal right of a traveler in their baggage.

You can bring in anything, piratical or otherwise, if it's in your luggage.

Mr. Wallace: --There's nothing in the copyright law that allows a piratical copy to be brought in.

Unknown Speaker: Well, 602(a) now has a specific little provision for somebody arriving at Customs with an illicit book--

Mr. Wallace: But the point I've been--

Unknown Speaker: --in their baggage.

Mr. Wallace: --The point I've been trying to make, and perhaps I haven't explained it, is that 602(b) separately prohibits that.

Unknown Speaker: Is 602... can you--

Mr. Wallace: It prohibits the import of any piratical copy.

Unknown Speaker: --Can you correct this, which I'm about to say: 602(a) says, the act of importing is an act of distribution.

602(b) says, if what you're importing is a pirated copy, i.e., one that would have been unlawful had the laws of the United States applied there, you can seize it, Customs person.

If it's not a piratical copy, you can't seize it.

You just notify.

So (b) is explicating (a).

Now, what's wrong with what I just said, if anything?

Mr. Wallace: Because (a), (a) has--

Unknown Speaker: (a) is covering both.

(b) says, if at the border it's a pirate, you can seize it.

If not, you can't.

You notify.

Mr. Wallace: --It doesn't... what is wrong for a starter is that 602(a) says that importation is an infringement of the exclusive right to distribute.

Unknown Speaker: Right.

Mr. Wallace: It doesn't say it's a distribution.

Unknown Speaker: No, no--

Mr. Wallace: What is a distribution is in 106(3), and importation is treated separately from distribution in provision after provision of the act, as we've set out in our brief.

Unknown Speaker: --Thank you, Mr. Wallace.

Mr. Wallace, our records reflect that this is your 141st appearance before the Court.

You have now eclipsed the 20th Century record of 140 arguments accumulated by John W. Davis, who was a former Solicitor General, so on behalf of the Court I extend to you our appreciation for your many years of advocacy and dedicated service during your 30 years in the Solicitor General's Office.

Thank you.

Mr. Wallace: Thank you very much, Mr. Chief Justice.

It's been a great privilege.

Unknown Speaker: Mr. Snyder, you have 5 minutes remaining.

Rebuttal of Allen R. Snyder

Mr. Snyder: Thank you, Mr. Chief Justice.

Mr. Wallace said at one point that we are

"talking here about interpreting an act of Congress. "

We agree with that, and we think that's the key issue before the Court, and in our view the position of the U.S. Government in bilateral negotiations or bilateral agreements doesn't by itself change what Congress intended.

And I would point out to the Court that in one of the lodgings that the Solicitor General has provided the Court is a 1990 telegram that includes the Government's legal position and argument before most of these bilateral agreements were negotiated.

In that memorandum the Government lawyer cites the Sebastian decision from the Third Circuit, which was at the time the only court of appeals decision on this issue anywhere.

The Government was aware that the law, as set forth by the court of appeals, was contrary to their position.

We believe they could have come to Congress for a clarifying change.

They still can.

There is no reason why the Government can't ask Congress to change the law, but we believe there has been nothing cited today or otherwise that suggests that Congress in the copyright statute was making the kind of broad, antiparallel imports rule that the Congress... that the respondents and their amici are now suggesting.

All of the amici for respondents, including the Solicitor General, have been really quite candid in saying that a big part of what's at issue here is that many manufacturers do charge more for U.S. made goods in the United States than those U.S. manufacturers charge for the same U.S. made goods in foreign countries.

The Solicitor General has argued that somehow that's good for our economy.

That's a policy argument we don't agree with, but we do not think that that is an issue for this Court to decide or for us to opine on.

If the Congress wishes for U.S. consumers to pay more for U.S. goods than foreign consumers, that is a legitimate issue for Congress to deal with as a matter of policy, parallel import--

Unknown Speaker: You could put it more kindly.

You could say they want foreigners to pay less.

That seems more generous.

[Laughter]

Mr. Snyder: --I will accept that, Justice Scalia, although I don't agree with the ultimate decision.

Unknown Speaker: Well, they do say that the foreigners have to advertise it on their own, they have to service it, it doesn't come with a warranty, so there is--

Mr. Snyder: Well--

Unknown Speaker: --There's a justification for the differential.

Mr. Snyder: --They do say that, Justice Ginsburg.

I would point out that, in the recording industry amicus brief that they filed here, they pointed out that videotapes cost as much as six times more in the United States than the same U.S. videotape is sold for in certain foreign countries.

I don't think anyone contends that the marketing cost is 600 percent of the price.

The Government has been quite candid in saying that they believe there are certain foreign policy values in promoting underdeveloped countries, some other economic issues.

There may be antitrust issues at stake.

Whatever those considerations are, we don't think in the copyright law Congress addressed them, and while I agree, Justice Stevens, that copyrights can apply to labels sometimes, I think the tail is wagging the dog here, and that Congress certainly didn't intend the result that's at issue here.

We would also point out that the respondent--

Unknown Speaker: But you wouldn't have any problem if you just changed the label, right?

I mean, you could... you could do everything and not have any problem about importing if you just made a different label.

Mr. Snyder: --There might be some issues of tampering with goods if we were to take off the label of someone else's product, but I'm not prepared to say what the State law issues there are.

Certainly, the copyright law itself wouldn't, I think, address that, I agree, but there may be some other tort issues that might come into play.

The respondent has acknowledged that under his theory the fair use doctrine of section 107 doesn't apply to imported goods.

We think that is an extremely important point, because the logic of their position is that none of these exceptions apply, including fair use.

When the owner of the London Times gives authority to import multiple copies of the London Times to sell in the United States, under the respondent's theory the owner of the London Times copyright cannot bring in his own newspaper if there is a book review in the London Times that quotes from someone else's book in what normally would be considered fair use, because the fair use doctrine that allows scholarly books, treatises, book reviews to quote someone else's work, it only allows that under 107.

Under their theory, 107 is simply inapplicable to imports.

It would be a quite major change in the law of this United States.

We think their entire argument, getting rid of the first sale doctrine, also is a major change.

We have in our country--

Chief Justice Rehnquist: Thank you, Mr. Snyder.

Mr. Snyder: --Thank you, Mr. Chief Justice.

Chief Justice Rehnquist: The case is submitted.

Attribution:

The Oyez Project

Featured:

Campbell v. Acuff-Rose Music - Oral Argument

Fri, 09 Jan 2009 14:49:52 +0000

Case:

Campbell v. Acuff-Rose Music

Media File:

92-1292_19931109-argument.mp3

Related Transcript:

1993_92_1292_argument.xml

Transcript:

Argument of Bruce S. Rogow

Chief Justice Rehnquist: We'll hear argument first this morning in No. 92-1292, Luther R. Campbell v. Acuff-Rose Music, Inc.--

Mr. Rogow.

Mr. Rogow: Mr. Chief Justice, and may it please the Court:

Since the statute of Anne in 1709 through the Copyright Clause of our Constitution, through the copyright statute and until today, the purpose of copyright has been to encourage creativity.

Parody is a creative force in our society and has historically been a creative force, and parody should be encouraged.

The decision of the Sixth Circuit discouraged parody, and we ask the Court today to reverse the decision of the Sixth Circuit.

The rule that we suggest is that parody is a fair use unless it materially impairs the market for the original, and material impairment of the market for the original means supplant the original.

Unknown Speaker: How do you define parody?

Mr. Rogow: A parody imitates and ridicules.

It pokes fun at the original.

And there are many definitions of parody--

Unknown Speaker: So it has to poke fun at the original work.

Mr. Rogow: --Not necessarily.

It can poke fun at the original, or it can poke fun at something else using the original work.

There are two aspects of the criticism.

One would be criticism of the original work, the other would be criticism of society using the original work as a means of conveying that criticism.

Unknown Speaker: So that any time someone takes a melodic line and substitutes new lyrics, that is permitted so long as it is making fun of something else in society.

Mr. Rogow: As long as... yes, Justice Kennedy, as long as it is making fun of something else in society or the original, because that is the purpose of parody.

Unknown Speaker: Well, Mr. Rogow, that's a little broader than it needs to be, isn't it, for this case?

Mr. Rogow: For this case--

Unknown Speaker: Don't we have a situation here where it's making fun of the original?

Mr. Rogow: --We do, Justice O'Connor.

And for this case--

Unknown Speaker: And I would have thought that maybe Harper & Row, the case we had here a few years ago, refused to recognize a fair use exception even for political commentary.

So I think your position that a parody, if it's directed at something other than the original work, should have some kind of all-encompassing provision as being a fair use.

Mr. Rogow: --Justice--

Unknown Speaker: I mean that's... that's a pretty big step to take.

Mr. Rogow: --Justice O'Connor, for this case it is true that the parody in this case only poked fun at the original.

And one could limit this case to just those facts and that would be quite fine.

Harper & Row is actually quite helpful to us, because Harper & Row... it is true, it was the Nation, a news magazine, but it materially impaired the market for the Harper & Row publication.

And I think that's the other important factor here, impairment of the market.

Unknown Speaker: So it's your position that a parody should be found to be a fair use when it... when the lyrics poke fun at the original, but the music is the same?

Mr. Rogow: One... yes.

One needs to use the music from the original in order to evoke the image of the original, and that is this case.

And in parody there must be some taking, some copying of a certain sort, because that is the purpose of parody, to borrow from the original and then to imitate and ridicule the original, which is what happened in this case.

So, yes, there does have to be some taking from the original, the music in this case.

Some of which was taken, the guitar riffs especially, was necessary in order that the listener would know that what was being made fun of was the original.

Unknown Speaker: Mr. Rogow, could you explain to me why... why criticism either of the original song or, as your position states, of almost anything using the original song, is to be encouraged more than, let's say, patriotism?

Why shouldn't be I be able to use any song that anyone's ever written in order to set patriotic lyrics to it?

Isn't that something that's to be encouraged?

Mr. Rogow: It is, although one can encourage patriotism without necessarily borrowing the music from another tune, although historically we have borrowed from other tunes to have patriotic songs.

Unknown Speaker: Well, but one can criticize other things without borrowing the music from a tune.

Unless you're willing to limit your proposition as much as Justice O'Connor just suggested, your argument doesn't hold.

Mr. Rogow: For this case I can limit it to exactly these facts.

Unknown Speaker: And so are... but let's assume the more general proposition that you were trying to establish.

What's your answer to my question for that?

Mr. Rogow: That as long as the parody is commenting critically upon society, be it cultural, be it social... the social aspect of society, be it political, the use of the tune would still fall within the definition of criticism, which has to have some breathing room.

Unknown Speaker: But why encourage... you can criticize society in many ways.

You're quite right.

You can... you can... you can make fun of this particular tune only by using the particular tune.

But you can make fun of society.

You can criticize society in a lot of different ways; why do you have to take my tune to do it?

Mr. Rogow: Because sometimes taking that tune conveys to the listener something extra.

This Court has, for example, the Home Box Office video--

Unknown Speaker: My tune is very effective.

You like my tune.

It's catchy.

People remember it.

But a lot of people would want to use it for that reason, probably.

Mr. Rogow: --But the tune... Justice Scalia, the tune can go with the parody.

For example, there is a video that the Court has in this case where the Beverly Hillbillies is used, but the parody is called Capitol Hillbillies.

Now, using the Beverly Hillbillies evokes a certain image, and then the criticism that is conveyed by Capitol Hillbillies, the parody, is useful.

I think that's a threshold issue here.

Is parody useful?

Is criticism useful?

And 107 of the copyright law does say that criticism is useful and should be encouraged.

Unknown Speaker: Is patriotism useful?

Mr. Rogow: Yes, it is useful, but pure patriotism without making the political comment, critical comment, is not embraced within 107, although I'm not saying it isn't something worthwhile of protection.

Obvicouly, it is.

But we're in this narrow copyright area where we have on one side the private interest of the copyright holder, versus the public interest and the historical interest of promoting creativity.

And if parody does have a creative force in our society, and we suggest that it does.

Historically it does.

The Capitol Stepe have given this Court--

Unknown Speaker: Well, certainly the copyright states suggest that there's a strong public interest in protecting the copyright holder.

So I... it seems to me it's very difficult to suggest, as you do, that there's only a private interest on one side, where there's a great public interest on the other.

Mr. Rogow: --It is a mixed interest, really, on the copyright holder's side.

The private interest, the copyright holder, Mr. Chief Justice, takes his or her copyright, subject to the fair use statutory provisions in 107.

So the statute... so the statute tells the copyright holder you may have to put up with some use of your work that will be a fair use, for the greater good of society.

Unknown Speaker: Yeah, I don't... I don't doubt for a minute what you say the statute says.

But you're suggesting... that there's only a private interest on one side while there's only a large... while there's a large public interest on the other, I don't think is accurate.

I think the statute itself suggests there's a strong public interest in encouraging works that can be copyrighted.

Mr. Rogow: I agree, Mr. Chief Justice.

And when I said a private interest, the primary thrust, obviously, in a copyright case is protecting that private interest.

The larger thrust is this is good for the public, and I concur with that.

But a fair use is also good for the public, and that's the point--

Unknown Speaker: Mr. Rogow, you started out by defining parody, and that first step, I think the Sixth Circuit, even if grudgingly, took and said, yes, this falls within parody.

But you're not saying that if it's parody, it is necessarily a permissible fair use.

Mr. Rogow: --I'm not, Justice Ginsburg.

Unknown Speaker: So what in the... since the Fifth Circuit... the Sixth Circuit agreed with you that we are dealing here with parody, where did the Sixth Circuit go wrong?

Mr. Rogow: By applying a presumption that if it is a commercial parody, then it is presumptively harmful to the market.

And they drew that from the language in Sony and Harper & Row v. Nation.

Unknown Speaker: But there's language in our cases that say exactly that.

Is it your position that the commercial nature of the use is a factor to be considered, but it isn't... even if it is found to be for a commercial purpose, that that isn't the end of the inquiry.

Mr. Rogow: That is our position, Justice O'Connor.

Unknown Speaker: Now, what is the market that we should look at.

Is it the market for parodies, or is it the market... do we look at whether it would supplant, somehow, the demand for the original work?

What is it we look at?

Mr. Rogow: You... that is what you look at, Justice O'Connor; would it supplant the demand for the original work in many or... or multiple venues, not just a single venue?

I recognize that from the cases.

And Justice Story in Folsom v. Marsh in 1841 talked about superseding the original, and that goes to supplanting the original.

Unknown Speaker: And what were the findings of the district court as to that in this case?

Mr. Rogow: That it did not adversely effect the market.

It did not supplant the original Orbison-Dees song.

It did not impair its market.

Unknown Speaker: Did--

--And did the Sixth Circuit find that that was erroneous?

Mr. Rogow: It did not.

It applied a presumption.

The Sixth Circuit, Justice O'Connor, basically recognized that there were no facts in this case adduced by Acuff-Rowe to show that its market for the original song had been materially impaired.

And--

Unknown Speaker: So does this mean that parody cannot be too successful?

Mr. Rogow: --No.

Parody can be successful.

You... one does not look, Justice Kennedy, at the success of the parody.

One looks at the harm to the market for the original work.

Unknown Speaker: But just the market--

--I think you're making the same point.

Go ahead.

Shouldn't the market be defined more broadly as the market for the original song in the... in the fashion in which the original song was sung.

I mean, there could be... there could be, you know, rock adaptions of waltzes and so on, and shouldn't the market be defined broadly enough to include all the possible adaptations that the copyright owner might want to... to make or to license?

Mr. Rogow: Justice Souter, I don't have any difficulty with a broad definition of the market.

What's lacking in this case is any proof that any market for the Orbison-Dees song was harmed.

All... all we have is call about it, but no proof about it.

And I think... and the rule that I'm suggesting puts this case in a trial court in this posture.

If the defendant raises the affirmative defense of fair use parody, then the first thing the defendant must show is that it is a parody, and then the four factors are certainly relevant: purpose--

Unknown Speaker: May I just interrupt you though before you get to the four factors?

Are you saying that the... that the district court could not have made any findings because of the total absence of evidence on the effect on the broader market which I described?

Mr. Rogow: --This case was decided on summary judgment on the affidavits.

Unknown Speaker: Oh, that's right, yes.

Mr. Rogow: On the affidavits that were submitted.

Unknown Speaker: So there was nothing in the affidavits on which that could have been based.

Mr. Rogow: There was nothing in the affidavits from Acuff-Rose which created a genuine issue as to material fact--

Unknown Speaker: Material fact.

Mr. Rogow: --About impairment of their market.

And the rule I'm suggesting, which is A, is this a parody.

And that's a matter of proof and that goes to the first factor, because Congress has said consider all the factors, but it doesn't limit them to those factors, purpose and character.

Purpose is parody.

Parody is important.

Parody is a creative force.

That's the purpose.

The nature of the work... purpose and character, I'm sorry.

Character, commercial.

This is commercial, so that would enter into the equation, but it should not be a presumption that completely eviscerating the rest of the factors.

And the Sixth Circuit said in the last line of its opinion:

"Because this was blatantly commercial, it cannot claim fair use. "

That simply goes too far and it does not... Harper & Row and Sony don't carry the weight assigned to it in the context of parody.

Those were copying cases.

Unknown Speaker: Mr. Rogow, I take it from what you said that you would suspend the commercial aspect of it, if we're going down this list of factors, and kind of fold that into the last factor?

Is that... does commercial have any independent significance for you, or does it really weigh in evaluating the fourth factor, that is the effect of the use on the potential market for the copyrighted work?

Mr. Rogow: Justice Ginsburg, it... it has both.

It's... obviously, the courts have had difficulty with how one uses these four factors.

But it is independently, in the first factor, something to look at; is this a commercial use, as opposed to a nonprofit use, an educational use?

The American Association of Law Schools does parodies all the time, from the time of Llewellen through Prosser, but those were not for profit educational kinds of uses.

So it would be something to look at, but it's not decisive.

The next factor, which is the nature of the work, would, in this case, tend to favor to some extent the Orbison-Dees recording because it is a creative work... work.

On the other hand, of course, the parody is creative itself, but I could give points to Orbison-Dees on the second factor.

The third factor is an interesting one in this case, the amount and substantiality of the taking.

And, of course, in a parody, in order to evoke the original, one must take a substantial part.

So in those situations we are going to have substantial taking, especially if we're talking about, as we are in this case, a parody of the original, a criticism of the original.

In this case there was taking and there is no dispute that some of the Orbison-Dees song was taken.

But the fourth factor, which this Court has said is the single most important factor, that's the key, and that's the key, I think, Mr. Chief Justice, to protecting the copyright holder's interest.

Has he or she been harmed?

Has there market been harmed or supplanted?

Unknown Speaker: Have we ever said that that's not just the single most important factor, but the absolutely determinative factor?

Mr. Rogow: You have not in the two cases, Sony and Harper & Row.

Unknown Speaker: Then how can you... then how can you assert that... that the summary judgment question was automatically determined if there was not enough evidence on that one factor?

If that's just one of many factors, I don't see how... I don't see how that can be determined.

Mr. Rogow: You're right, Justice Scalia.

But in this case it was not determined solely on the fourth factor.

The court looked at all of the factors and found on amount and copying, for example, that he took what had to be taken.

Unknown Speaker: I understand.

But you acknowledge that the mere fact that no information was in the record concerning impairment of the potential market, that alone is not determinative of the issue here?

Mr. Rogow: No, that alone cannot be.

Parody is something that has to be looked at.

There was no dispute this was a parody.

I mean, the district court did, I think, the proper analysis in this case.

What's the purpose of this work?

Parody.

What was it, the character?

Commercial, Yes.

And then went through all of the factors and found, using this Court's language, single most important factor that there was--

Unknown Speaker: Was there cross-motions for summary judgment?

Mr. Rogow: --They were not.

There was a motion to dismiss which was converted to a motion for summary judgment, Justice Ginsburg, and then Acuff-Rose opposed the motion for summary judgment which an affidavit which the district court found did not address, at all, the market impairment issue or any of the other issues.

It didn't address the parody issue.

Two... there are two affidavits--

Unknown Speaker: Well, why... why was it appropriate not to afford an opportunity to have that issue developed at trial?

Mr. Rogow: --Because Acuff-Rose failed to put forward any evidence in affidavit form that created a genuine issue as to material fact on the important factors: parody, number one.

The amount of the taking there was no dispute about.

Their affidavit of Mr. Spielman is basically uncontested.

Unknown Speaker: Well, let's concentrate on this last factor which, under your analysis, is the most critical.

Shouldn't there have been an opportunity to prove that there was a market out there that the copyright holder could have exploited?

Mr. Rogow: Only if the party opposing the motion for summary judgment had put in affidavits which were sufficient to create a genuine issue as to material doubt on that fact, but they were not put in.

This doesn't mean that in some case where there is a genuine issue of material fact on that issue, that the case will not go to trial.

It would go to trial.

Unknown Speaker: Wasn't there... wasn't there a suggestion that the copyright holder might want to exploit... exploit a rap market?

Mr. Rogow: At page 321 of the Joint Appendix there is an affidavit that was filed after the judgment was entered, although the district judge allowed the record to be supplemented, of Mr. Flowers who is a licensing agent for Acuff-Rose.

And if one reads that affidavit, there's just general talk in there about what people may like to do and what Acuff-Rose may like to do, but there's nothing that addresses... even if one gives this late-filed affidavit any credence in this case, nothing that addresses whether or not their market has been materially impaired.

Unknown Speaker: Mr. Rogow, my problem is this; I don't see how your... one is entitled to summary judgment if the legal issue in the case is to be decided by a six factor test, if the other party happens to have produced no evidence on one of the six factors?

I mean, so long as you've produced some evidence on some of the factors, isn't it... isn't it at least a matter that should then proceed to trial?

Mr. Rogow: Justice Scalia, this Court has said that fair use is a mixed question of fact and law, and on the record in this case what we have is no evidence on any of the four factors that created genuine issues as to material fact.

So it's not that one factor was disputed.

If one factor was disputed in a way that created a genuine issue as to material fact and then, in the equation, one couldn't make the fair use finding without litigating that factor, then summary judgment would not be proper.

But it was proper.

Unknown Speaker: Is fair use an affirmative defense?

Mr. Rogow: It is.

Unknown Speaker: So the burden of negating fair use in a motion for summary judgment, then, is on the person claiming the fair use?

Mr. Rogow: The ultimate burden is to show fair use as the affirmative defense as these factors unfold.

And I think this goes to the presumption, Mr. Chief Justice... when the plaintiff files the lawsuit, all the plaintiff need show is ownership of the copyright and copying, and then the burden shifts to the defendant to raise the fair use affirmative defense.

And in this case the defendant did, raising parody as a form of criticism protected by fair use under the statute, and with affidavits saying there was no material impairment of the market.

And then it shifts back to the plaintiff to burst the bubble of the presumption, if one exists, and show that there was either, A, not a parody, or, A and B, it was not a parody and it did materially impair the market.

Unknown Speaker: And what is the presumption you're talking about, the bubble bursting?

Mr. Rogow: The presumption is what the Sixth Circuit relied upon, language drawn from this Court's cases in Harper & Row, that there is a presumption of harm.

Unknown Speaker: That's not--

Mr. Rogow: That's right.

The presumption of economic harm if it is a commercial use.

But, of course, that was commercial copying, not commercial parody.

There's a difference between parody which performs a critical role in society--

Unknown Speaker: --Well, it seems to me if your view prevails, the judgment of the Sixth Circuit ought to be reversed.

But it doesn't seem to me that we ought to direct judgment here for your client, in view of the burden... the burden of proof as to fair use being on you.

Mr. Rogow: --And that burden was met, Mr. Chief Justice, by our affidavits.

The district judge found that to be so.

The dissenting judge in the Sixth Circuit found that to be so.

Indeed, in this case what happened is the summary judgment of the trial court was reversed and summary judgment was entered for Acuff-Rose on the very same record that had been tried below.

Unknown Speaker: Mr. Rogow, I'm... there's something I may not understand.

If fair use is an affirmative defense, why wasn't the obligation on your client in the summary judgment motion to plead that there was no market for derivative works to be exploited?

So that if the record is bare on that, you lose or you should have lost your summary judgment to the extent that that would influence the Court's determination.

Mr. Rogow: My client's duty in raising the affirmative defense was to put on evidence that a reasonable person or jury could listen to and believe and conclude there was no material impairment of the market.

That was done.

It was not specifically directed to other derivative markets and other derivative pleas.

Unknown Speaker: But the market to which you... you referred, I take it, in your affidavits, was simply the market for the original song in the... in the fashion, the genre in which it was originally recorded, right?

Mr. Rogow: That is correct, Justice Souter.

Unknown Speaker: It didn't address the question of a market for derivative works at all, is that correct?

Mr. Rogow: It did not.

But the opposing affidavit did not create a genuine issue with regard to that.

The closest they might try--

Unknown Speaker: Well, it may not have created a genuine issue, but it still, on the ultimate legal question, left a relevant point black, didn't it?

Mr. Rogow: --But if... but if there is no attempt by the plaintiff, really, to fill in that blank and to make that a disputed issue of fact, then the district court could give summary judgment.

Unknown Speaker: The plaintiff opposed summary judgment and I'm not clear now on your position about whose burden this fourth factor is.

If you raised the... if you raise it there, you as defense, are you now recognizing that it is... it would be your burden to show the absence of an effect on the market for the copyrighted work?

Mr. Rogow: I am, Justice Ginsburg.

Some evidence... some evidence to make that showing.

Then the burden would shift back to the plaintiff, sort of like the St. Mary's v. Honor Center--

Unknown Speaker: And what was... what was your evidence with respect to the derivative market, to rap works?

Mr. Rogow: --There was nothing that specifically addressed a derivative market for rap works.

What was--

Unknown Speaker: Suppose there would be another rap version of this composition.

Would that be a fair use?

Mr. Rogow: --Not if it was not a parody.

I mean the threshold is is this a parody.

Just simply a rap version of Oh, Pretty Woman would not qualify under the fair use doctrine.

That would be mere copying for a commercial use, and no--

Unknown Speaker: Different lyrics, some variation in the musical presentation, whose copyright... would that infringe anyone's copyright at this stage, suppose there were another version?

Mr. Rogow: --It would make out a prima facie case for the plaintiff of copyright infringement.

The defendant would then have the burden of--

Unknown Speaker: Which plaintiff?

Suppose we have a rap version now that has different lyrics than the 2 Live Crew, slightly different presentation of the music, and the claim is made this is a parody of the parody?

Mr. Rogow: --Of the parody.

That would be entitled to a fair use claim.

There's nothing the matter with making fun of the people making fun of the original.

In fact, that is, if we believe in... in creativity, if we believe in some humor--

Unknown Speaker: Does Campbell have a copyright in the parody?

Mr. Rogow: --He has a copyright on the album, which would include, presumably, the parody.

Unknown Speaker: Is the underlying theory of your case that if there is a market to be exploited, in this case 280,000 copies, and it can be exploited best through a parody, that it is essentially fair that the person who creates the parody receives 100 percent of the profit?

Mr. Rogow: No.

The thrust of my case, Justice Kennedy, is not that.

The thrust of my case is that if a parody is a creative, true parodic work, then is it... it is entitled to be called a fair use unless there is evidence that it has materially impaired or supplanted the market for the original.

The original does not hold the absolute right to preclude any other use of that original work.

And the fact that 280,000 or 2,000 records were sold is not the decisive fact here.

The decisive fact is that the court below applied a presumption that if it's commercial, it cannot be a fair use.

That simply is wrong.

Unknown Speaker: Thank you, Mr. Rogow.

Mr. Rosdeitcher.

Argument of Sidney S. Rosdeitcher

Mr. Rosdeitcher: Mr. Chief Justice, and may it please the Court:

The argument I just heard seems to have omitted three decisions of this Court.

And I'd like to talk about those three decisions, and those were Sony, Harper & Row, and Stewart v. Abend.

In each of those opinions this Court, presumably looking at the first factor, namely the factor of purpose and character of the use, stated unequivocally that every commercial use of copyrighted material is presumptively unfair.

Now, there's been no discussion of that here, and in fact it's overlooked.

In the petitioner's view once it's a parody you look to the impairment of the market.

And I'm going to come to impairment of the market, because there's substantial evidence of impairment of the derivative market, including the market for rap versions.

But I'd like to talk about the significance of that commercial presumption.

Unknown Speaker: That was in dictum, wasn't it?

That was not a holding.

Mr. Rosdeitcher: That was in dictum in... yes, it was in dictum in each of the cases.

But in Harper & Row it was not in dictum.

As I recall, in Harper & Row they applied that presumption to the work.

And it was in dictum in Sony.

And it was not in dictum in Stewart and Abend.

Indeed in Stewart v. Abend, it was applied in a very straightforward fashion.

The Court said Hitchcock and Stewart made 12 million on Rear Window and that was enough to meet the presumption.

But my view of the presumption is a little subtler than I think petitioners give us credit for, or even give the Sixth Circuit credit for.

And the Sixth Circuit could have been clearer on this, I acknowledge, but I believe that the commercial use presumption means something like this.

You have to look at the commerciality to see what purpose the so-called parodist or news reporter or critic or comment... commentator is doing.

There's a wonderful article by Judge LaValle in wnich he modestly reassesses his own opinion on the Salinger letters case, and he acknowledges he made an error.

He was ultimately reversed by the Second Circuit but he acknowledges he made an error.

He said the letters were being used for purposes of biography.

But he saw something else in reviewing the record, and that was that the letters were also being used to dazzle, to have a good read, just not for the purpose of biography, but to sell the work for the expressive value of the underlying copyrighted material.

That's what happened in Harper & Row.

The Nation was engaged in news reporting, but the court said that the Nation went further and was expressing... and was exploiting the 300 words taken verbatim from President Ford's book for their expressive value so that people would know it's Ford speaking.

Now, that's what happened here.

They took my client's music, partly for parody, let's assume that.

I will... if you want me, I can talk about the definition of parody.

Unknown Speaker: Well, we do have... we do take this case on the assumption on that there was a parody.

Mr. Rosdeitcher: And I'm accepting that.

Unknown Speaker: You dispute that.

But I think as it comes to us, we're not getting into that.

Is that right?

Mr. Rosdeitcher: I want to leave with that, yes, Your Honor.

Unknown Speaker: Yes.

Mr. Rosdeitcher: But they took the music not just for parody.

When you look at this record... and the best thing in the record is to listen to the two tapes... you see that they were doing something more.

After all, they were selling a rap album.

There's no suggestion anywhere in this record that they were selling a parody record.

They were selling a rap album to what they acknowledge, according to their expert... and I'll come to the use... utility of his affidavits.

But according to their expert, and they adopt that view, that the record was being sold to an audience... what they described as an audience of urban black youth or disaffected black urban youth.

We dispute that the parody... that the rap music is so limited.

But that's what they say.

Not that it was directed to a parody audience, but directed to a wide audience for rap music.

Rap music is danceable music.

Rap music needs music.

And they took our music.

Now how do we know that--

Unknown Speaker: Well, now, just let's stop a moment and inquire.

Suppose you had somebody who... who simply writes critical commentary... very straightforward, not a parody... about somebody else's work and he wants to sell his critical piece.

Can it be a fair use?

Mr. Rosdeitcher: --Yes.

Unknown Speaker: It's perfectly commercial.

Mr. Rosdeitcher: Yes, it can be a fair use.

Unknown Speaker: They have to rely, in part, on what was said in the original that he's... he's criticizing and writing about.

Mr. Rosdeitcher: Right, but in the... correct.

And I'm not saying that the mere fact that they made a profit is enough to change the equation.

What I'm saying is--

Unknown Speaker: And the market might be quite different for the critical work.

It might be a separate market, in a sense.

Mr. Rosdeitcher: --Yes.

But let me go back to Judge LaValle's example and then we use our example.

The author was using the Salinger letters for a biography, but as he pointed out, they went further, they took too much.

Unknown Speaker: Wait a minute, I didn't quite get it.

The Salinger letters?

Mr. Rosdeitcher: The Salinger letters case, the Second Circuit in the Southern District.

And we refer to a... we refer to the case in our brief.

Judge LaValle said that his mistake was in not recognizing that they did more than just take enough to serve the interests of biography.

They were anxious to sell the beauty and dazzling quality of the letter.

And what I'm saying in this case is it's not just that they profited from the parody.

They profited here, in addition, because they needed music and they needed dazzling, good music, and they took one of the great rock and roll classics--

Unknown Speaker: Well, that sounds like... that sounds like an argument that it shouldn't have been held to be a parody because too much was taken, and I thought we had gotten over that.

Mr. Rosdeitcher: --No, we... well, if that's, Your Honor.

Unknown Speaker: I thought we had accepted the fact that this was a parody.

Mr. Rosdeitcher: Your Honor, you can have a parody that takes too much.

That is, I can write a parody.

And, indeed, that's what I'm fearful of.

I think that is the great danger.

One can write parodic lyrics and take all the music or most of the music, and sell and sell and profit by and exploit and take advantage of the music.

And as Justice Kennedy suggested, on their conclusion that it's fair use, they get the profit, they get a copyright on their recording.

They presumably will claim a copyright on the derivative work that we can't, because it's allegedly fair use and fair game, so that anybody, any other rap artist--

Unknown Speaker: Why isn't... why isn't a parody of the whole thing more persuasive than just a few phrases?

I mean, if you're going to have parody as a fair use at all, it seems to me you might be much more effective using the whole thing than just a phrase.

Mr. Rosdeitcher: --That's because, Your Honor, I think we have to go back and do some balancing.

And this came up earlier in the Chief Justice's remarks which were made so well in Harper & Row.

But the copyright protection itself is an engine of free expression and is designed to encourage dissemination of ideas and creativity.

In this case, if you allow the taking of as much as they took... and could I take a moment to give you what I think are the salient facts to tell you what's going on?

This... what's going on in this case is not about parody.

I'll accept there's a parody there.

This case is about selling rap music by... in the words of one of the scholars that we refer to, Professor Light or Mr. Light, in an article in the South Atlantic Quarterly which is referred in our brief, much of rap is... much of rap is sold by fusing a street message, as Mr. Light says, with pop music.

And he gives a wonderful example of how this whole phenomenon started, and it gives... and it throws light on what's happened here.

There was a very famous hard rock song called Walk This Way by Aerosmith.

Another group, another rap group, Run DMC, decided that they would change that into a rap song.

They actually hired the guitarist from the Aerosmith group to do it and they did it.

They made a rap song with hard rock music and they sold it... it was the greatest rap hit, at that time, ever.

And I'd like to read you what Mr. Light concludes from this and how he describes what happened thereafter in rap.

"Rap was established as a viable pop form, at least as long as its connections to the traditional rock and roll spirit were made explicit. "

Now, that's what happened here.

Let me just review a few of the very simple facts to show you that what happened here was they took our music in order to have a free ride on our good music and make a profit from our good music.

Unknown Speaker: They did, of course, offer to pay for it, didn't they?

Mr. Rosdeitcher: Yes.

Unknown Speaker: So to the... and why didn't you accept the offer?

Mr. Rosdeitcher: Your Honor, we did not think that was the best vehicle for exploiting the market.

Unknown Speaker: You really wanted to prevent this... you really wanted to prevent this music from being distributed at all, as I understand the complaint.

Mr. Rosdeitcher: Your Honor, my client... as part of the... as part of the marketability of the copyrighted work, you have to have the right to say no.

Unknown Speaker: I understand.

Mr. Rosdeitcher: And if it is not a fair use, we had a right to say no, that this wasn't the way to best exploit the rap market.

Unknown Speaker: If you prevail... if you prevail, would it be an adequate remedy to just give you royalties for the amount of their sales?

Mr. Rosdeitcher: Your Honor, I think that would be creating a kind of compulsory license which doesn't exist in this case.

Unknown Speaker: Mr. Rosdeitcher, you... you cited Judge LaValle, and you that's an idea that he put forward, that it... even if this were found to be taking too much and therefore an infringement, it doesn't follow like the night the day that you would be entitled to stop it, does it?

Mr. Rosdeitcher: I'm sorry, Your Honor.

Unknown Speaker: It doesn't follow from the fact... even if a court held that this parody took too much and that, looking at the four factors, you win and you establish infringement.

But you have featured Judge LaValle and you know he has put forth a very interesting idea that there may be infringements that are not properly subject to injunction because you take into account the value of parody.

You take into account First Amendment concerns not simply on the liability side, but on the remedy side.

Mr. Rosdeitcher: Your Honor, I'd be... I'd be very reluctant to follow down... follow Judge LaValle all the way down that path for this reason.

Congress gave very careful consideration to--

Unknown Speaker: You take the sweet but not the bitter from him.

Mr. Rosdeitcher: --Yes.

[Laughter]

Unknown Speaker: And why is that so?

Mr. Rosdeitcher: And that is because--

Unknown Speaker: Why do you find his thinking--

Mr. Rosdeitcher: --The reason... I'm sorry.

The reason why I don't think I would take it to that length is Congress spent an enormous amount of time... my colleagues here worked on this... on the question of the compulsory license and the scope of the compulsory license.

Congress has fashioned a compulsory license.

If Congress feels that there are additional areas for compulsory licenses, I think that's an area that requires testimony from the music industry, that requires testimony from other people, from parodists, from everyone, so that legislative judgment which was made in the case of songs that do not change the fundamental character of the work are subject to a compulsory license.

Unknown Speaker: --Mr. Rosdeitcher, I assume you would have given a license if they had offered you enough money for it.

[Laughter]

I don't consider that a market failure.

They just weren't--

Mr. Rosdeitcher: That's entirely possible.

Unknown Speaker: --Willing to pay you enough to induce you to give over the song to that use.

Mr. Rosdeitcher: That is entirely possible.

And, in fact, Judge... Justice Scalia.

Unknown Speaker: Now we're talking money here, and they didn't give you what you thought was enough to make that worthwhile, so--

Mr. Rosdeitcher: Yes.

Unknown Speaker: --I thought the record was otherwise, that you gave them a flat no, you weren't--

Mr. Rosdeitcher: We gave them a flat... we gave them a flat no.

But I wanted to say--

Unknown Speaker: --You weren't willing to negotiate.

Mr. Rosdeitcher: --That the fact that in this case my client gave them a flat no doesn't mean that somebody else won't bargain.

And that question of market failure was never really explored in the record.

Unknown Speaker: Nothing in the record shows you knew that they were going to sell 248,000 copies.

Mr. Rosdeitcher: The record... what the record shows... and I think this is helpful to my notion of exploitation of the underlying work.

The record shows this background, and it's the letter attached to Mr. Campbell's affidavit which appears at page... at page 87 of the record.

The record shows that two... and this is, I think, wonderful background to this.

They started out by saying that they already had released two albums, and that they were now going to release their third.

That the two other albums were very successful commercially, that both of them had gone gold, one of them was close to platinum, that they were high up on the rap charts... not on the parody charts, on the rap music charts.

And they told us if you give us a license at the statutory rate... which, incidentally, was not applicable here because compulsory license doesn't apply... we will sell this to hundreds of thousands of new homes.

Now, they did have a track record.

They had a track record of selling lots and lots of records.

Now, my client decided that they did not think this was a good way to exploit this market and exercised their right as copyright owners to say no, a right which is absolutely essential if they are to have a marketable copyright.

I take that history and I add to that history the fact that they then took this record, they took our song... now, the amount of song has been underplayed by petitioners, it's been underplayed by the district court.

What they took was, if you... when you listen to these two tapes, the first thing you hear when you hear the Orbison and Dees record is a wonderful, powerful, dynamic, jolting guitar riff that is so famous and begins that work.

That guitar riff then is played throughout the Orbison and Dees work, and then you hear the Pretty Woman melody, which is very familiar.

They took the guitar riff.

Now, in the Orbison and Dees work they play it 10 times.

They played it 16 times.

At one point they play it 8 times.

They played it because it's one of the most wonderful, danceable, dynamic musical works of rock and roll... this record of Orbison and Dees was one of the all-time hits... and they played it over and over again to dazzle, to have a good hear, to have a good dance.

And then they say we can now profit and free ride on the genius of Roy Orbison and Bill Dees.

That's what they were about.

When they sold the record, they didn't put parody, they didn't give it another name.

They called it Pretty Woman, they dropped the word "Oh".

If you look at their letter, they think the name of our song is Pretty Woman.

They call it Pretty Woman.

They're asking for a license on Pretty Woman.

They then say... it's written by Roy Orbison and Bill Dees.

It's published by my client.

Let's talk about that in terms of market... let me turn to market, because I think that shows enough what they were trying to do.

They were trying to exploit Pretty Woman by Bill Orbison... Roy Orbison and Bill Dees.

Unknown Speaker: It seems to me it would have... if they'd been deceptive and had not revealed the true author.

Maybe I'm wrong on that, but it does seem to me that the fact they offered to pay you royalties and the fact they were candid about the true origin of the work tends to cut in their favor rather than the other way.

Maybe I'm--

Mr. Rosdeitcher: Except for this, there's... I won't dwell on this too much, but there is something disingenuous about this letter.

Luther Campbell testified that the record, that is this album, was released in June of 1989.

The letter comes to us, and if you read the letter it plainly suggests that we're coming to ask your permission.

Unknown Speaker: --They attached a check, didn't they, in fact?

Mr. Rosdeitcher: Pardon?

Unknown Speaker: Wasn't there a check?

Mr. Rosdeitcher: Later on.

As I understand, the check came later on.

In the court proceeding a year later they purported to deposit 13,000, which they said was the statutory rate, which, incidentally, did not apply, and they deposited it in court.

And the check wasn't... the check was not sent with this letter.

The check was deposited in court a year later when we sued them.

That's when the check was deposited.

Unknown Speaker: Wasn't--

--You say they purported to deposit.

I mean, how do you purport to deposit?

Mr. Rosdeitcher: I'm sorry.

They did deposit, I'm sorry.

Unknown Speaker: They did deposit.

[Laughter]

Mr. Rosdeitcher: I'm so used to purported and allegedlies, that I'm--

Unknown Speaker: Mr. Rosdeitcher, am I wrong in remembering that in one of the cases that you referred to, the Rear Window case.

Mr. Rosdeitcher: --Yes.

Unknown Speaker: Wasn't that a case where there was no injunction, there was damages but no injunction?

Mr. Rosdeitcher: Your Honor, I just don't recall.

I'd have to look at the case, but I just don't recall.

They may... that may be.

And if it please the Court, I'd like to go on to two points before I finish.

One is the impairment of the market issue and the other is the procedural posture of this case which is kind of interesting; who gets summary judgment or should anybody get summary judgment.

On the impairment of the market, the Court asked earlier was there any evidence in the record of a market for a rap version of our song.

Well, of course... of course there's evidence in the record.

There's indisputable evidence in the record.

248,000 albums, as of the date of the motion for summary judgment, containing our song were sold to a rap market.

By their letter, that's what they were aimed at and that's what they were selling to.

There's other evidence in the record, in Mr. Flowers' affidavit he reports that the Brothers Make 3 told us that they had sampled, which means they duplicated, the entire chorus section of our song to use it as a hook, meaning something catchy to attract people in a rap song that they were doing, and then they asked for a license.

And so there's evidence, plain evidence that there's a rap market for our song.

The articles that we cite show that there's a vast market for rock and roll music of our kind in--

Unknown Speaker: Mr. Rosdeitcher, in the... I presume there were reviews in various periodicals of the rap version?

Does the record show that?

Mr. Rosdeitcher: --The record... unfortunately, the record doesn't show any of that, Your Honor--

Unknown Speaker: I'd be curious to know whether it was recognized in those reviews as a parody or just another rap or music.

Mr. Rosdeitcher: --Your Honor, I... if I can go off the record, I originally bought this record when I was in the running for coming onto this case.

I went into Sam Goody and I went to the rap section and I pulled this off the shelf next to 2 Live Crew's other rap songs.

That's where the... that's where it's viewed.

That's where it's sold.

So there's no question that there's a rap market and that they exploited it and that that injures us.

That injures a potential market that we have.

The standard--

Unknown Speaker: Well, counsel, do we look to the market for the original work and whether that's supplanted?

Mr. Rosdeitcher: --No.

Unknown Speaker: Do you agree that that's what we look to?

Mr. Rosdeitcher: No, if you define original work as the original Roy Orbison recording.

The original--

Unknown Speaker: And all its derivatives.

Mr. Rosdeitcher: --And all it's... if you look at all of its derivatives--

Unknown Speaker: We don't look at the market for parodies.

Mr. Rosdeitcher: --You look at the market.

In this case you look at the market for rap.

And I'm prepared to look at that market for rap because they've made a case.

They, themselves, have made the case that there is a rap market for a rap version of our rock and roll classic.

We have in the record on page... on page 326(a) and 327(a), evidence of the interest of a rap group called the Brothers Make 3 in making a rap version of our song and fusing our music.

And then the literature it replete with evidence that this is a classic way in which rap music is given a mainstream appeal.

So there is a rap market.

And then... then you have to ask yourself what's the evidence of any potential injury?

Now, they had the burden of proof here.

They did not carry the burden of proof.

They put in two affidavits Rule 56(e) required them to put in an affidavit containing facts, not conclusions.

We talk about this in our brief, but I'll briefly state this.

You can't put in an expert's affidavit and say that the expert's affidavit amounts to a fact because the expert makes a conclusion.

I thought I would read to you very briefly from the statement by... give me a moment... well, I have misplaced it.

There's a statement by... ah, here it is.

There's a statement by Justice... Judge Easterbrook talking about the requirements of Rule 56(e) for expert affidavits.

And he points out that the affidavit must do more than present something that would be admissable.

They shall, quote, set forth facts, and by implication in the case of experts who are not fact witnesses, a process of reasoning beginning from a firm foundation.

And he goes on to say that an expert who supplies nothing but a bottom line supplies nothing of value to the judicial process.

Now there... that comes from Mid-State Fertilizer v. Exchange National Bank, 877 Fed 2nd, 1333, at page 1339.

Now, that... that is exactly what you'll find when you look at Oscar Brand's and Krasilovsky's affidavit.

They talk about this having different audiences.

First of all, they're obviously talking about the Roy Orbison recording, which Mr. Brand strangely calls a country music record.

Fortunately, petitioners, who are savvy music people, themselves in their brief at page 34 and 36 recognize that the Orbison work is a classic rock and roll work.

Unknown Speaker: Counsel, the district court, it seems to me, found that the 2 Live Crew version was a parody and that Acuff-Rose could still market a rap version, that it wasn't affecting that.

Mr. Rosdeitcher: Well, he applied the wrong standard.

He did... he did two things, Your Honor.

One, he mistakenly accepted these conclusory affidavits as 56(e) affidavits.

They were not.

And so he started from the position that there were different audiences and he was wrong.

And then he said that 2 Live Crew... I mean that my client had the burden of showing that they were actually prevented.

Now, this Court made it clear in Sony, and it made it clear again... it made it clear in Sony when it set out the standards of proof.

It said in the case... on economic harm, in a case where you have commercial use... and here you have commercial use in spades.

In a case where you have--

Unknown Speaker: Well, do you think that a commercial use can ever be a fair use?

Mr. Rosdeitcher: --Yes, some commercial uses can be fair uses.

But--

Unknown Speaker: If we think the Sixth Circuit didn't give enough room at the joints, so to speak, for dealing with the commercial nature so that it's a factor, but it isn't the be all and end all, you still have to weigh it, what should we do here, send it back?

Mr. Rosdeitcher: --No, you should affirm the judgment.

You could affirm the judgment.

And if the law and the facts support the judgment of the Sixth Circuit, which we maintain they do, then under United States v. New York Telephone and other cases this Court has decided, you can firm the affirm the judgment.

Unknown Speaker: Well, I guess we could also say they were... they fell off on putting total stress on the commercial use and we think they ought to take another look.

Mr. Rosdeitcher: Can I come back to this commercial use now, then.

First of all, I think there is a situation where commercial use may actually sweep the boards on all of the factors.

In this case, we showed not just that they made a profit from the parody, but that when you take the amount they used it; the way they displayed it; how they played this music not just a background to the singing of the lyrics, but in wonderful virtuosity and displays and dazzling displays in the middle and at the end; that they were selling this music.

It reflected also in how they marketed it.

Now, in that circumstance, I believe that the... that it is not a fair use.

That is the fair use exception was never intended to reward someone--

Unknown Speaker: May I ask you one question there about the similarity of the two works and so forth?

Do you think their version changed the basic melody or fundamental character of the work, within the meaning of the statute?

Mr. Rosdeitcher: --Yes.

Unknown Speaker: It did change the melody.

Mr. Rosdeitcher: It changed it--

Unknown Speaker: But it didn't entirely supplant it.

Mr. Rosdeitcher: --It changed it but it... it effected... it created a record which would compete with any rap version we would create.

It changed it--

Unknown Speaker: What would you say if another group used a rap version but didn't change the words at all, but changed it from rock to rap?

Would that be... could they have gotten a compulsory license or would that have changed the fundamental character?

Mr. Rosdeitcher: --Probably.

I'd have to listen to it.

But it could be that another... that there could be a rap compulsory license version of our song.

I'd have to hear the song.

Unknown Speaker: But as long as there's a parody element in it, it can't be, is that it?

Mr. Rosdeitcher: Well, it could be parody.

But, you know, rap has many messages.

Rap has... rap has humor.

It has acerbic... it has an acerbic criticism of society.

According to the record, 2 Live Crew has a message--

Unknown Speaker: I understand.

But the thing that's in the back of my mind is you seem to be categorically confident that there could be no compulsory license here.

Mr. Rosdeitcher: --Yes.

Unknown Speaker: And it seems to me... I'm not quite clear on where the line between--

Mr. Rosdeitcher: Let me tell you... let me tell you why I think--

Unknown Speaker: --Does compulsory license include words or just music?

Mr. Rosdeitcher: --Yes, yes, because the--

Unknown Speaker: Just changing the words would... would destroy it, whether you changed it to make it a parody or not.

That alone would deny the compulsory license, wouldn't it?

Mr. Rosdeitcher: --Yes.

And the statute talks about an arrangement that changes the fundamental character of the work, and work is defined in the statute under section 101 as the music and the words.

So if they change either fundamentally... they plainly change the words.

Unknown Speaker: But it has... but it has to be fundamental change.

Mr. Rosdeitcher: Yes.

And changing--

Unknown Speaker: But you can't change... just leave out the "Oh" from "Oh, Pretty Woman", that wouldn't be enough?

Mr. Rosdeitcher: --No, no.

[Laughter]

Let me... I have a moment, I see.

Let me just quickly run to the procedural issue.

They're not entitled to summary judgment.

All they do is say it's fair use, that it's a parody.

They say it's a parody.

We'll accept that it's a parody.

They don't get into the commercial issue as we have done, and they don't properly look at the proper market.

They put in an affidavit which doesn't meet these standards of rule 56(e).

It's irrelevant in any event because it doesn't address derivative works, so it's worthless.

And then the question is do we... are we entitled to summary judgment.

Unknown Speaker: You didn't ask for it in the district court, did you?

Mr. Rosdeitcher: We didn't ask for it, no.

But the... the judge, relying on the judge in the... the judges in the Sixth Circuit, relying on Harper & Row, said that they could look at the record, and if the record was such that it was plain that the ultimate question here of fair use was... could be answered on undisputed facts, then you could grant summary judgment, and on that basis effectively granted summary judgment.

And I think you can do that here.

And why do I say that?

I think this is... this is probably the first copyright case that can be decided on the doctrine of res ipsa loquitur.

Res ipsa loquitur being the record that they sold, the amount of music that they took, the way that they marketed the song, which creates both the notion that they were exploited our copyrighted song on the one hand, and that they were exploiting a market which we had every right to exploit--

Unknown Speaker: Trial counsel was far less sure of that that you are, and never asked... never asked for summary judgment in the district court.

Why didn't they ask for summary judge... I don't know.

I wasn't... I wasn't there at the time.

The strategy in the district court, as I saw it from the record, was to establish issues of fact.

I, frankly, do not feel there are issues of fact and that the issues here are absolutely clear.

But they've exploited our work for a profit, they're freeriding on our music, and that, in addition, they have impaired a market which we are entitled to exploit.

And that therefore all of the factors, the first factor being predominantly commercial here because of the exploitation of this music for profit.

The second factor, which is basically conceded... but there's an additional thing to the second factor, the nature of the work.

This is music.

Music's lifeblood is adaptability.

What makes a song in the 1960's a great song may not make it a great song in the 1970's, and as the record shows and one of their briefs shows in the record, we then had the song done in the hard rock style, from the soft rock to the hard rock.

And now we're in the eighties and nineties and they've shown that you can now take that rock song and, as many rap artists have done, convert it to--

--To a rap.

Mr. Rosdeitcher: --To a rap song.

Unknown Speaker: May I ask one last question?

At the outset of your argument you acknowledge that you would agree this was a parody.

How do you define parody when you make that concession?

Mr. Rosdeitcher: I would define parody as the... some of the limiting cases do, that as a... I would limit it to parody that is critical of the underlying work, because I think that's a sensible limitation.

Unknown Speaker: In your example, I think it was Aerosmith progressed or regressed to rap.

Mr. Rosdeitcher: Yes.

[Laughter]

Unknown Speaker: What... under the definition of parody that's been submitted to us, would you not expect that it could be argued that that was a parody?

Mr. Rosdeitcher: It could be.

In fact, any change in the lyrics that's funny seems to me to be a parody.

It makes ridiculous the original situation.

It could be read back to criticize the original because if it's funny it's mocking it, poking fun at it, and therefore it would be a parody and it would be fair use and they could profit by it.

Thank you, Your Honors.

Unknown Speaker: Thank you, Mr. Rosdeitcher.

Mr. Rogow, you have 4 minutes remaining.

Rebuttal of Bruce S. Rogow

Mr. Rogow: Sony and Harper & Row frame this case.

Sony says there must be some meaningful likelihood of future harm to the copyright holder, and Harper & Row gives life to that formulation.

In Harper & Row the market was supplanted.

Time Magazine decided not to pay 12,500 to Harper & Row because the Nation had taken President Ford's words and published them, copied them without permission.

That gives, I think, the framework for deciding this case.

Meaningful likelihood of harm, there is none here.

I hear this talk about they might want to do a rap version at some point.

There's nothing to keep them from licensing a rap version.

But this is a parody--

Unknown Speaker: No, but Mr. Rosdeitcher is right that the reason people bought this record and the reason the record was sold to them was largely for the music and not for the... for the subtle parody.

Then... then they have suffered a loss.

That money should have been their money rather than your money.

Mr. Rogow: --Justice Scalia--

Unknown Speaker: You're making money from their music, if he's right about that... about that premise.

Mr. Rogow: --And there's... there's no reason to think that he is right.

This is 1 cut out of 10 on the record.

This album was not named... the 2 Live Crew album was not named Pretty Woman, it was named As Clean as They Wanna Be.

And this was 1 cut out of 10.

So this kind of argumentation about what might be, what might have... what might have occurred, why they sold it, how they sold it, is completely belied by any facts in this record; here's how they could prove their case.

Unknown Speaker: You mean it would be a different case if they had packaged this as a separate tape with only the Oh, Pretty Woman on it?

Mr. Rogow: Not... not necessarily.

We would still have fair use and we would still argue fair use.

But it would look much different in terms of how fair was it, if they were trying to confuse people.

But this is not a Lanham Act case.

This is a record that's out there.

One cut uses Oh, Pretty Woman, and makes fun of Oh, Pretty Woman.

Was that fair?

We submit it is fair unless they can show that their market was materially impaired, supplanted.

And how could they do it?

I think this is helpful.

They could do it by showing that they had someone to whom they were going to license this.

But the truth is they don't want to license this as a parody.

And one can understand that.

Most authors don't want to give a license to someone to make fun of their work--

Unknown Speaker: Don't they simply have to show that there was someone to whom they could license it?

Mr. Rogow: --And they could--

Unknown Speaker: So they don't have to have a license holder nearby.

You're talking about market, not a particular market participant.

Mr. Rogow: --They do need to show, as in Harper & Row v. Nation, that there is some meaningful likelihood that there is someone to whom they would license this.

And that is completely--

Unknown Speaker: Or you needed to you... I thought you conceded last time around that there wasn't such a thing, that this is your burden.

You have to show that there is no market that they could exploit that you have made an inroad on by virtue of this recording?

Mr. Rogow: --No, Justice Ginsburg.

I won't say that that is our total burden.

Our burden is to make some showing that this would not impair their market.

The ultimate burden is upon them to show they were injured by the loss of a market, just as Harper & Row showed they were injured by the publication in the Nation.

Unknown Speaker: Let me ask just one very brief question.

Do you think you were entitled to a compulsory license under the statute?

Mr. Rogow: No.

Unknown Speaker: You don't.

Mr. Rogow: No.

Chief Justice Rehnquist: Thank you, Mr. Rogow.

The case is submitted.

Attribution:

The Oyez Project

Featured:

Feist Publications v. Rural Tel. Serv. Co. - Oral Argument

Fri, 09 Jan 2009 14:49:41 +0000

Case:

Feist Publications v. Rural Tel. Serv. Co.

Media File:

89-1909_19910109-argument.mp3

Related Transcript:

transcript.xml

Transcript:

Argument of Kyler Knobbe

Chief Justice Rehnquist: We'll hear argument next in No. 89-1909, Feist Publications, Inc., v. Rural Telephone Service Company, Inc.--

Mr. Knobbe?

Mr. Knobbe: Knobbe, Your Honor.

Chief Justice Rehnquist: Knobbe, excuse me.

Mr. Knobbe: Thank you, Mr. Chief Justice, and may it please the Court:

This case involves the copyrightability of a phone subscriber's name, address, and telephone number as published by the phone company in its directory.

The effect of the decisions below, which came from the district of Kansas in the Tenth Circuit, is to hold that a private company cannot publish these facts in its own directory without first doing a canvas to obtain the facts from the phone subscriber.

Our position is that while the telephone company's directory may be copyrightable as a whole, the phone company's alphabetical list of names, address, and telephone numbers of its subscribers is not a work of authorship under the statute, Section 101 of the copyright act.

And that even if the alphabetical list of subscribers was somehow copyrightable as a whole, that copyright doesn't extend any protection to the preexisting facts in the list... the name, address, and telephone number.

To briefly explain the facts, the easiest way to understand them is, if you look at the joint appendix, about five pages from the back, on page 93, there's a colored map.

Unknown Speaker: 0 [inaudible].

Mr. Knobbe: Page 93 of the joint appendix, Your Honor.

That's a map of the northwest corner of the State of Kansas.

There are 15 counties, 16,000 square miles in northwest Kansas.

What each of the colors on the map represent is a different telephone directory.

Where Feist started out... the petitioner in this case... Feist started out in southwest Kansas which is just to the south of here.

Basically the scenario was the same.

There was a patchwork.

Each of these colors was a different phone directory.

And if you were in Spearville, Kansas--

Unknown Speaker: Which one is yours again?

I'm sorry.

Which color is your company?

Mr. Knobbe: --Our... Feist Publications publishes an area-wide directory for all of those colors.

What we do is put all of the colors together.

The problem was when Feist started out.

This is rural... I mean, rural not in the sense of rural telephone... but rural in the sense of non-urban.

Unknown Speaker: You didn't get my question.

Which one is rural?

Mr. Knobbe: Yellow.

Unknown Speaker: The yellow.

Mr. Knobbe: The yellow is Rural Telephone service area.

Okay.

If you were in Spearville, Kansas, where Feist started out and you wanted to call your county seat, Dodd City, Kansas, to check on your property taxes, you couldn't find the number in your directory because your directory only had the listings for your exchanges that were serviced by your phone company.

Dodd City was serviced by a different company.

So you had to dial the information operator.

What Feist's idea was to put... was to put all of these colors together into one area-wide directory, so if you were a phone subscriber, you could have access to all those listings for that area.

If you wanted to call your county seat, if you wanted to call an implement dealer two towns over--

Unknown Speaker: Well, good idea.

Mr. Knobbe: --Thank you, Your Honor.

[Laughter]

To do that... what Feist did was went to the various phone companies here and licensed their updated white page listings so he could print those in the directory.

Now, one thing that's important to note is he didn't necessarily just license the directory.

He licensed updated, white page listings, the information that's available to the directory operator.

The reason for that is, for example, if you look on the map, the directory that covers the green area in the lower left-hand corner, that directory may have came in February.

The directory that covers the red area up in the top may have came out in November.

Now a Feist directory that covers the whole area comes out in December, then the listings from the red area that came out in November, those will be fairly current.

But the listings from this green area down here, if your looking solely at the directory, are almost a year out of date.

Unknown Speaker: Counsel, did Feist leave in its directory the listings broken down by the areas you're showing or did it recompile the list into one giant alphabetical list?

Mr. Knobbe: It's in one giant alphabetical list, Your Honor.

The two directories are part--

Unknown Speaker: It's not broken down by the smaller areas?

Mr. Knobbe: --Not broken down by town.

If you wanted to call Joe Blow and you knew he lived in Jennings, Kansas--

Unknown Speaker: Uh-huh.

Mr. Knobbe: --in Feist's directory you still looked under the B's till you got to Blow.

Now, if you wanted to call Joe Blow and you were sure of where he lived.

He may have lived in Jennings or Decatur... you weren't sure... it's up in there somewhere... you could still go alphabetically to look for Blow.

All of these companies licensed their listings to Feist except for the yellow area.

That's Rural Telephone.

Unknown Speaker: Did Feist's directory show the name of the city or the name of the town?

Mr. Knobbe: Yes, Feist's directory shows the... maybe I misunderstand the question.

Unknown Speaker: Well, if you wanted to look up this person and you looked him up, could you see not only his phone number--

Mr. Knobbe: Yes.

Unknown Speaker: --and his street address, but then there would be a little--

Mr. Knobbe: His--

Unknown Speaker: --designation like OB for Oberlon or something?

Mr. Knobbe: --Well, it was his name, address, and telephone number, and in this--

Unknown Speaker: But would the address show the town?

Mr. Knobbe: --Yes, it would show the town, Your Honor.

Unknown Speaker: And so that had to be added, I take it, to the listing that was in the phone directory, because the phone directory would not have the name of the town after each little--

Mr. Knobbe: No, Your Honor, that's--

Unknown Speaker: --after each address.

Mr. Knobbe: --I wish it were so, but that's incorrect.

Unknown Speaker: All right.

Mr. Knobbe: The phone... the phone company's directory does show the name, address, and telephone number and part of the address is the town.

Unknown Speaker: In each listing or is the town just at the top of the page?

Mr. Knobbe: No.

The... what Rural's directory is... Rural Telephone's directory is also just a straight alphabetical list of every subscriber in the yellow area.

There are some differences--

Unknown Speaker: Well, let me ask the question this way.

What are the... are there any differences between each individual listing in the Feist directory and in the phone book directory?

Mr. Knobbe: --Yes, there are approximately 3,800... there are 4,935 listings that are potentially duplicates.

And there are 3,800 of them are different.

Some of the differences are in address to the extent of this.

Joe Plow, Jennings, Kansas... excuse me... Joe Blow, Jennings is what appears in the Rural directory.

Now in the Feist directory it may be Joe Blow, Route 2, Box 47, Jennings.

The town is named in the--

Unknown Speaker: All right.

Mr. Knobbe: --directory throughout.

This is not Washington, D.C. This--

Unknown Speaker: Well, do you take the position that Rural's white pages contain no protectable expression at all and somebody like Feist could just xerox it and sell it as its own?

Mr. Knobbe: --That's the position we take.

It doesn't comply with the statute under Section 101.

We have a--

Unknown Speaker: That isn't what was done here, but you take the position--

Mr. Knobbe: --No, it is not what was done here.

Unknown Speaker: --it could have been done.

Mr. Knobbe: That's correct.

But that's our position if you look at the... if you look at the statute.

Unknown Speaker: And somebody could do--

--You say it's not a compilation at all?

Mr. Knobbe: No, they're all preexisting facts.

Unknown Speaker: Oh.

Mr. Knobbe: It's simply an alphabetical list of their subscribers.

It doesn't comply... the statute is Section 101--

Unknown Speaker: Yes.

Mr. Knobbe: --which defines a compilation.

Unknown Speaker: And this is not it?

This is not a compilation?

Mr. Knobbe: This is a compilation in the normal accepted term, but it's not a compilation as defined in the statute.

Unknown Speaker: Okay.

Mr. Knobbe: It's not a copyrightable compilation.

Unknown Speaker: So I assume that somebody could just come in and xerox your directory and sell it, right?

Mr. Knobbe: If--

Unknown Speaker: You're in a pretty precarious business there.

[Laughter]

Mr. Knobbe: --I think so.

If you're looking for a handle, you know, maybe that's the handle.

Maybe the handle is xerox piracy or something of the pages.

But you can't protect the name, address, and telephone number in a simple alphabetical list.

Unknown Speaker: Well, now, what's the statutory language that you rely on, please?

Mr. Knobbe: The statutory language is in Section 101 of the copyright act.

That defines a compilation as a work formed by the collection and assembly of preexisting materials or data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.

Unknown Speaker: And you say that an alphabetical listing of phone numbers cannot be an original work of authorship?

Mr. Knobbe: It doesn't... it does... yes, I say that.

It doesn't exhibit any coordination or arrangement.

An alphabetical arrangement can't be a copyrightable thing.

That's simply the most efficient way to arrange something.

Wouldn't we have some severe problems with dictionary people and everyone else if you could copyright the alphabet?

Unknown Speaker: What about computer databases generally?

Same thing.

Mr. Knobbe: Well... same thing, but computer databases I think are really... I don't know if they're published or not.

I mean there's a lot of stuff in the amicus here about, oh, we're going to affect this... you know the sky will fall and nothing will be copyrightable.

Most computer databases are handled by license agreements.

They're protected by contract.

I contract my computer database to you and as part of that your contract says you're not going to further disseminate it or whatever.

Here we've got a published... we've got a published directory.

Unknown Speaker: Well, I mean, there is certainly some selection.

If you're adverting to the words of the statute, there certainly has been some selection here, hasn't there, of names?

Their directory selected only the names of people in the yellow areas.

Mr. Knobbe: That's their entire list of subscribership.

Unknown Speaker: Well, it may well be, but that's a selection.

They didn't publish anybody else's subscribership.

That's a selectionship, isn't it?

Mr. Knobbe: We don't think... publishing your entire list doesn't seem to be a selection to us.

Unknown Speaker: Well, sure, I've just chosen to publish my entire list and not somebody else's list.

Why isn't that selection?

Mr. Knobbe: Well--

Unknown Speaker: I could have done what you did.

They, they could have decided to put out a directory for the whole thing.

They didn't.

They said, we're going to be more selective.

We're only going to publish a list of the people in our [inaudible].

Now you may think that's not a very... what should I say... inventive selection, but it is a selection, is it not?

Mr. Knobbe: --If it's a selection, it's not a copyrightable selection.

That's our position.

Unknown Speaker: Well, okay, so what it comes to, it has to be the kind of a selection that causes... that causes the whole thing to be a work of authorship.

Mr. Knobbe: A work of authorship, yes.

Unknown Speaker: Where do we look for that... for what kind of a selection causes something to be a work worth of authorship?

Mr. Knobbe: Isn't there some type of... our position is there's some type of objective or subjective that you select... maybe we can--

Unknown Speaker: Creativity?

Is that what has to go into it?

Mr. Knobbe: --And I... we can't say creativity--

Unknown Speaker: No?

Mr. Knobbe: --because if you get into creativity what you get into... that's what the new act gets away from.

Unknown Speaker: Uh-huh.

Mr. Knobbe: Selection... if you can select the whole... the whole range of data, and that's copyrightable, okay?

Actually, as one answer, we didn't take their selection.

Unknown Speaker: Yes, but when you say selection--

Mr. Knobbe: We did the whole area, not just theirs.

Unknown Speaker: --When you say select the whole range of data, you're begging the question.

I mean, deciding what the range is is itself a selection.

You can decide to publish all the restaurants in town or you can decide to publish just the 100 best restaurants.

But either one is a selection.

You could have chosen instead of all the best restaurants in town, all... or instead of all the restaurants in town, all the restaurants in the county, or all the restaurants in the State.

No, I'm going to be more selective.

People aren't interested in all the restaurants in the State, just all the restaurants in the city.

That's a selection.

Now, why is that selection in your view not copyrightable.

But if I say, because I know what your view is... if I say just the best restaurants in town, that is.

Now why... what's the difference between those two?

Mr. Knobbe: In our view, that has made some selection, other than just publish everything.

Unknown Speaker: But I just said--

Mr. Knobbe: If I publish--

Unknown Speaker: --It doesn't publish everything.

I'm just publishing the restaurants in this city.

I've made the judgment that--

Mr. Knobbe: --All are published are facts.

Unknown Speaker: --a list of all the restaurants in the State would be useless to people.

But I know a lot of people that would want to know all the restaurants in the State capital.

So I'm being selective to that extent.

That's a selection.

Mr. Knobbe: What I've published then is I've selected just to publish all the facts, and all the facts that I've published cannot be--

Unknown Speaker: Not all the facts.

Mr. Knobbe: --are not protected.

Unknown Speaker: Just the restaurants in the State capital.

I've excluded restaurants elsewhere.

That's a selection, isn't it?

You will not concede that that's a selection?

Mr. Knobbe: I will concede that's a selection.

I won't concede that that's a copyrightable selection, because what have I done other than just publish a list of the facts?

Unknown Speaker: Well, if that's true, the Encyclopedia Britannica just publishes facts.

Can you copy that?

Mr. Knobbe: Their coordination, arrangement, selection, if they exhibit sufficient coordination, arrangement, and selection, sure that's copyrightable.

Unknown Speaker: Well, why haven't you got it here?

A variant on Justice Scalia's question is even within the service or the phone company, all the phone company publishes are the names and addresses and numbers of people who subscribe to phone service.

They don't publish the listing of everyone who lives in that town.

That's a selection.

That's not publishing all the facts about the people in that town.

It's publishing facts only about people who subscribe to phone service.

Mr. Knobbe: Yes, Your Honor.

Our position is if you publish them all, that's not.

Unknown Speaker: Does--

--Isn't your position, Mr. Knobbe, isn't your position that one should identify the author making the selection and who made the selection here?

Did the phone company make it or did the public utility which required them to list everyone make the selection?

Mr. Knobbe: Well, the public utility obviously made it because you're required to--

Unknown Speaker: So the public utility really is the author of this particular compilation?

Mr. Knobbe: --I don't think that's necessarily correct.

Unknown Speaker: It seems it would help you if it were.

[Laughter]

Mr. Knobbe: I could probably use the help.

Unknown Speaker: Because if they are the selector, then the publisher of the directory has not contributed a bit of authorship to the compilation.

It's quite different from the Encyclopedia Britannica or something else where the author decides what to go in.

Here the utility... the regulatory agency decided what would be selected.

Mr. Knobbe: If I publish... you know, here's a seating chart of the Supreme Court.

If I come in here and make this out and I select only to publish the senior-most five justices... I mean, if I select to publish here's the seating chart, haven't I just published everything?

I published all the facts.

So I don't quite understand what work of authorship I've done.

It's appears to me that the selection, coordination, and arrangement has to be like the baseball card case where the author selected the 5,000 premium cards out of there, the X case out of the Second Circuit.

Unknown Speaker: Isn't the difference that you can find out who the members of the Court are without having to consult that card.

The fact it's available elsewhere?

Whereas if we were a secret Court and the only way you could find our who we were would be by looking at a chart published by some third party, that chart would be copyrightable insofar as it was a compilation of the names, wouldn't it?

Mr. Knobbe: Yes, that it's a public fact?

I mean... yes.

Unknown Speaker: Okay, well, in this case, you're not publishing facts which are generally available to you through sources that you use.

You're simply publishing the compilation itself or a portion of the compilation as distinguished from the situation you would be in if you went out on the streets and stopped at every house and said, do you have a phone?

If so, what is your number?

You'd have to do that in order to get into the situation that you're in when you use the analogy of the Supreme Court seating chart.

Mr. Knobbe: Well, if the answer is that a name, address, and telephone number are not a fact, that they're somehow a copyrightable authorship, that may be correct.

But a name, address, and telephone number--

Unknown Speaker: I don't think... I don't think anyone claims that to be the case.

Mr. Knobbe: --A name, address, and telephone number is a preexisting fact that under Section 103(b) that we've got the right to publish it.

If you take the opinions of this Court--

Unknown Speaker: Sure, you're got the right to publish it.

The question is have you got the right to public... have you got the right to publish it by copying their directory when that's the only way you get it?

You don't otherwise go out and find the fact yourself.

That's what raises the copyright problem, isn't it?

Mr. Knobbe: --Well, the copyright... we think it's a preexisting fact and our position would be then, the name, address, and telephone number are like the decisions of this Court.

Okay, those are public domain information.

Unknown Speaker: Well, what does the... does the statute require more than just selection?

What are the Register of Copyright's guidelines on this?

Can a simply alphabetical listing of all the data in a given area meet the Register's guidelines for what meets Section 101?

Mr. Knobbe: No, as I understand it--

Unknown Speaker: What do we have to look at here?

Mr. Knobbe: --As I understand it--

Unknown Speaker: And does it have to result ultimately in an original work of authorship?

Mr. Knobbe: --Yes, Your Honor.

Unknown Speaker: I mean, maybe it's not enough to focus on the word "selection".

Maybe the statute requires a series of things.

Mr. Knobbe: There are three portions to the statute.

Collecting and assembling, which is the sweat-of-the-brow theory that's adopted below, and that is if you put a lot of stuff together, you're an author of it.

The second portion is selection, coordination, and arrangement.

And the third is so that the work as a whole is a work of authorship.

Unknown Speaker: An original work of authorship?

Mr. Knobbe: Yes, an original work of authorship under the statute, under 101.

Unknown Speaker: And how does the Register of Contract... of Copyright [inaudible] this statute?

Mr. Knobbe: The register interprets the statute... as I understand it, there's an article by William Patry, who's a policy planning advisor with the copyright office, and in that... in that article it talks about what the copyright office does.

As I understand it... this is not part of the record... but they, for example, rejected the copyright on an alphabetical list of contributors of $2,500 or more to the Republican Party.

It's--

Unknown Speaker: What about the... what about telephone yellow pages?

Mr. Knobbe: --Telephone yellow pages--

Unknown Speaker: How about telephone books?

Mr. Knobbe: --Telephone books they copyright and there's an interesting footnote in that article which I didn't realize is the reason they copyright them is typically telephone books are a combination of material.

For example, in here there are yellow-page advertising in the telephone company's book that has art work and layout in it and that's--

Unknown Speaker: Well, a lot of telephone directories--

Mr. Knobbe: --The white--

Unknown Speaker: --are not subject from them.

They're just white pages.

Mr. Knobbe: --Yes, these... the white page only ones... that's footnote 98 of his article.

As I understand it what they do is the reason they register them is because of the sweat-of-the-brow theory, because of the split in the circuits between sweat of the brow--

Unknown Speaker: You think they're wrong about... in granting copyrights on that or in registering them?

Mr. Knobbe: --Well, no until... unless the Supreme Court tells them what they're suppose to do.

I assume that... you know, if you came out of a sweat-of-the-brow circuit like the Seventh Circuit and published a white page only directory, the copyright office would have to... I assume would have to register it.

Unknown Speaker: But you don't think... but you don't think that's a valid copyright?

Mr. Knobbe: Not, not on that portion of the directory... not on white pages only.

Unknown Speaker: Okay.

Mr. Knobbe: Now, if there are other--

Unknown Speaker: But the yellow pages are copyrightable?

Mr. Knobbe: --The yellow pages have got original art work.

They've got ad layouts in them.

They've got works of... works of authorship, and those are copyrightable.

There are some... in this directory of the phone company's, there's forward text in here.

This has how to... you know, how to dial the phone company, how to make a long distance call, a party line.

I assume Rural authored that and that's copyrightable.

But that's really not what's involved.

What's involved in this case is this little piece right here, the alphabetical list of white pages.

Yeah, it's a public domain fact.

The other statute is 103(b).

103(b) says that the copyright in a compilation, okay, extends only to the material contributed by the author as distinguished from preexisting material employed in the work and does not imply any exclusive right to that.

For example, the decision of this Court are public domain information.

As a... they're preexisting material.

If, as a compiler, I put together all the decisions of this Court dealing with copyright law, then I've got a copyright in that as a whole, but I don't have a copyright in the decision of the Court.

Unknown Speaker: Mr. Knobbe, do you think the 1976 act changed the copyrightability of a directory such as is involved here?

Mr. Knobbe: Yes, Your Honor, the '76 act included a definition of compilation in Section 101 and included a preexisting fact provision in Section 103(b).

Unknown Speaker: Do you think the kind of directory we have here would have been copyrighted... copyrightable under the law as it existed before 1976?

Mr. Knobbe: Yes, Your Honor.

I didn't research that, but I assume it--

Unknown Speaker: So then you say that you must depend then on the changes wrought in the law in the 1976--

Mr. Knobbe: --Not necessarily the changes.

Maybe the changes were only a clarification, but I'm dependent upon the statute, the words of the statute.

Unknown Speaker: --But you said a moment ago you thought it would be copyrightable under the preexisting law but it's not copyrightable under this law.

Then you must depend on the changes effected in the 1976 act, must you not?

Mr. Knobbe: Yes.

I think we're... I think my confusion is the same as the courts below, that is, this directory is copyrightable as a whole.

We're not... we're not contesting the validity of that.

What we're saying is these facts in this directory, this white page list of name, address, and telephone number, is available to subsequent compilers.

The copyright law--

Unknown Speaker: So--

Mr. Knobbe: --as I understand it is like... it's a balancing test between the public's right to information, public access, and profit to an author.

Unknown Speaker: --Well, then do you say that the Rural directory here was copyrightable?

Mr. Knobbe: Yes, Your Honor.

I think the directory is copyrightable as a whole even under the '76 act, because there is copyrightable provisions in here.

There are copyrightable yellow pages.

Unknown Speaker: Well, because there are yellow pages in it?

Mr. Knobbe: No, because--

Unknown Speaker: Otherwise you take the position that--

Mr. Knobbe: --they have original works of authorship.

There's original--

Unknown Speaker: --In the yellow pages?

Mr. Knobbe: --The yellow pages have an original work of authorship.

Unknown Speaker: I thought I understood you to say that a directory that consists only of the normal white pages is not copyrightable at all?

Mr. Knobbe: If it's solely a white page directory.

This is a combined directory.

That's why we say this directory is copyrightable as a whole.

Unknown Speaker: And that is the Rural directory--

Mr. Knobbe: This is the Rural directory and the Rural directory is on file with the clerk.

So is the Feist directory.

Unknown Speaker: --And is the Feist directory copyrightable?

Mr. Knobbe: Yes, the Feist directory is copyrightable.

Unknown Speaker: Why?

Mr. Knobbe: Because it--

Unknown Speaker: If it had just the white pages... if you had just white pages?

Mr. Knobbe: --If it had just white pages and nothing more?

No.

That's a bad example in this case, because there's some ads on the white pages, too.

But if it had just white pages and nothing more, no.

It's simply an alphabetical list of name, address, and telephone number.

It's available... it should be available to the public.

The public has access to that.

Unknown Speaker: You made the remark a moment ago, I think at the time ou were holding up the Rural directory, that all of the listing information in there was in the public domain.

What is your reason for saying that?

Mr. Knobbe: That the name, address, and telephone number... my name, address, and telephone number I assume is in the public domain.

Once I... once I make the--

Unknown Speaker: What do you mean by that statement?

Mr. Knobbe: --It's available to the public.

I have not paid the phone company to have an unlisted number, so I've allowed the phone company to give it to the directory information operator, to publish it.

It's a preexisting fact.

I have that name, address... that's my name, address, and telephone number.

So it has to be public domain information.

What else can it be?

Unknown Speaker: Well, I guess I'm not sure how you're using the term.

You seem to be using the term to mean that if the subject matter of information consents to its publication, then anything which publishes that information is in the public domain.

Is that what you mean?

Mr. Knobbe: That... yes, that if it's a fact, it's in the public domain.

Once we publish a fact, that's part of the public domain available to any later authors.

With the Court's permission I'd like to reserve my remaining time for rebuttal.

Unknown Speaker: Very well, Mr. Knobbe.

Mr. Caplinger, we'll hear now from you.

Argument of James M. Caplinger, Jr.

Mr. Caplinger: Mr. Chief Justice, and may it please the Court:

There's two issues that I would like to address in my argument today.

Number 1 is whether the Rural Telephone directory is copyrightable and specifically including the white page listing section.

And number 2, whether Feist's substantial copying of this white page listing information in the copyrighted directory is an act of copyright infringement.

Since this case hinges on statutory interpretation, the 1976 Copyright Act, I thought I would start right there.

Section 102(a) of the 1976 Copyright Act states in part that copyright extends to original works of authorship fixed in any tangible means of expression.

There were some questions of Mr. Knobbe as to did the law change in 1976 in any way.

The House report setting out the congressional intent behind the 1970 act... '76 act... states, the phrase, quote, 1909 Copyright Act.

Nothing changed in the way of copyrightability of telephone directories or other--

Unknown Speaker: Well, what changed, of course, was the definition of compilation.

Isn't that right?

Mr. Caplinger: --The--

Unknown Speaker: Don't we now have in the '76 act a definition of compilation that we have to look to?

Mr. Caplinger: --Yes, Justice O'Connor.

The--

Unknown Speaker: And we have to apply that section, 101, I take it?

Mr. Caplinger: --No, Justice O'Connor.

Unknown Speaker: No?

Mr. Caplinger: No.

Unknown Speaker: This isn't a compilation?

Mr. Caplinger: This is a compilation, but as the lower courts and other courts have unanimously found that a telephone directory is copyrightable under two sections, Section 102 of the '76 Copyright Act and 103.

Section 102, where I stated copyright extends to original works of authorship, the congressional intent sets out... well, if you look at Section 102(a), it goes on to include various items, one of which is 102(a)(1) literary works.

And on the House report, page 54, setting out the congressional intent, Congress said the term, quote, "literary works", end quote, does not connote any criterion of literary merit or qualitative value.

It includes catalogs, directories, and similar factual reference or instructional works and compilations of data.

And that's why the lower courts in this case said that Rural's telephone directory is copyrightable under Section 102 or 103.

Unknown Speaker: Well, this is a compilation.

You concede that?

Mr. Caplinger: Yes, and in [inaudible]--

Unknown Speaker: And you think we don't have to apply the definition in the act of what is a compilation?

Mr. Caplinger: --Justice O'Connor, I don't think you have to, but I would recommend that the Court do... do so.

Unknown Speaker: Well, I would think that's exactly where we'd look.

Mr. Caplinger: Well, maybe I misunderstood your question.

What... what I was saying that you can look under either one.

Directories are included in 102, but we'd also say that it's included under 103.

And 103 was added in 1976 to encompass... well, I take that back.

The 1909, the previous Federal Copyright Act, specifically set out directories.

And I believe that in my interpretation of the legislative intent, because of the creation of so many different types of catalogues, encyclopedias, and directories, especially in light of new technology encyclopedias.

Unknown Speaker: Now, you can't copyright the facts contained in the white pages, can you?

Mr. Caplinger: No.

What is--

Unknown Speaker: So what is to prevent Feist from looking at your directory and taking the listings of names and telephone numbers and including them in their own--

Mr. Caplinger: --Well, the... Justice O'Connor--

Unknown Speaker: --as factual material?

Mr. Caplinger: --Justice O'Connor, we are not alleging that the copyright in the telephone directory extends to the names... to the particular name and particular number.

What a copyright and a compilation extends to is the... is to the work of authorship on the part of the author.

Unknown Speaker: Well, what Feist did was to take the listings, names and telephone numbers, and use them in their own directory.

Mr. Caplinger: Yes, and Justice O'Connor, I'm saying that the white page listings are not preexisting material.

The name by itself.

The address by itself.

But without the telephone company being author of compiling and creating a listing... when I say listing it means all here--

Unknown Speaker: Well, didn't the telephone company, Rural, simply make an alphabetical listing of all telephone subscribers within its geographical area covered by the book?

Mr. Caplinger: --That--

Unknown Speaker: Isn't that what was done?

Mr. Caplinger: --Justice O'Connor, that was one part of the selection.

I think that to... to fully answer your question, let's look right at 103, the definition of a compilation.

And a compilation is a work formed by the collection and the assembly of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.

What Rural Telephone... just like any other telephone company... they on a day-to-day basis gather, collect, and assemble a lot of information about the subscriber.

The addresses, the towns, the types of equipment, et cetera, et cetera.

There's a lot of information they receive.

Then what they do is then they turn and they make the subjective decision of how to select, how to coordinate, and how to arrange that and how to create something that's a useable--

Unknown Speaker: Well, isn't it just an alphabetical listing by geographic area?

Mr. Caplinger: --In this particular area, yeah, that was the decision to--

Unknown Speaker: Isn't that what you have there?

Mr. Caplinger: --In this particular--

Unknown Speaker: In the white pages?

Mr. Caplinger: --Yes, in this particular annual directory we decided to put out the Rural subscriber listing in alphabetical order.

But we have 20... we have 26 different exchanges.

And if you look back on that same map that the Court was looking at earlier, we have three distinct, noncontiguous geographic areas and that Rural Telephone made the decision to... not... to put out one directory.

It could have put out 26 directories.

It decided also in putting out one alphabetical directory for its white page listings, to do that not by town but to do it interlocking, include all of the towns, all of the telephone exchanges.

It very well could have put out 26 different directories--

Unknown Speaker: Are you saying that that's the component of originality in this case?

Mr. Caplinger: --That's one of many that the telephone company subjectively decides, or decision-making which the compilation as a whole copyrightable, not the bits and pieces.

And I--

Unknown Speaker: If we can assume, and I think it's true, that the name and the address and the number are a fact that's not copyrightable--

Mr. Caplinger: --Separate.

Unknown Speaker: --what elements of originality have you added to those facts that make this a work of original authorship under 101?

Mr. Caplinger: Well, Justice Kennedy, I think that--

Unknown Speaker: You've said... you've told us one of the things, and that is you've selected the counties in this yellow area.

What else?

Mr. Caplinger: --We've--

Unknown Speaker: You've alphabetized, which I think we could talk about, but I don't think that's very original.

What else?

Mr. Caplinger: --We decided to, instead of... we decided to put them in one list instead of 26 telephone exchanges.

Unknown Speaker: Well, that just repeats what you said before.

All right.

Mr. Caplinger: Communities.

We decided to include business listings within this.

We decided that in some communities we only put the town where in other communities we put the full address.

We also decide what name, because my full name might be a fact.

But I go by several names, James, Jim, Jay, JR, et cetera.

And--

Unknown Speaker: I'm not stunned by the originality so far.

[Laughter]

Mr. Caplinger: --Well, the congressional intent behind that says that the... in dealing with the standard of original works of authorship, it says this standard does not include requirements in novelty, ingenuity, or aesthetic merit.

Unknown Speaker: Yes, but it must constitute an original work of authorship?

Mr. Caplinger: Yes.

Yes, and those decisions.

I mean, it doesn't require anything unique or novel.

All directories out there are made upon facts.

That's what a directory is.

Unknown Speaker: Well, a dictionary of quotations... there's nothing original in it in the sense of having created something.

Mr. Caplinger: Justice Kennedy, what makes that original is how you use those facts and how you present those facts.

That's where it creates an original work of authorship.

If it's simply... take the idea that, well, all this is is a book of facts.

All directories, and the encyclopedia included, are a compilation.

That's what a compilation is.

These are books of facts.

What makes them original is how the author arranges that information and that's where I believe that the petitioner here has tried to create this split in the lower courts.

I don't see a split in the lower courts.

What you have is this... supposedly this sweat-of-the-brow theory on one side, and the original act of authorship on the other side.

The original or the sweat of the brow is where the author gathers, collects, and assembles.

He gathers all this factual information.

But if he doesn't then somehow make a decision on how to put that in a compilation, it's not... it's not a useable compilation.

You have to make... after you collect this the sweat of the brow and you have all--

Unknown Speaker: He has to say, ah-hah, I am going to put this in there alphabetically.

[Laughter]

Mr. Caplinger: --No.

Unknown Speaker: He has to make that further step.

Mr. Caplinger: Justice Scalia, that is... that is one step.

Unknown Speaker: Well, my, my, that's--

Mr. Caplinger: At--

Unknown Speaker: --You think... it seems to me that we have here a statutory definition that is obviously a definition of art.

If you wanted the common meaning of compilation, you would have stopped that definition right after the first phrase.

It would read a compilation is a work formed by the collection and assembling of preexisting materials, period.

That's the normal meaning of compilation.

But the act goes on with malice aforethought and adds to that

"that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. "

All of that is added to tell us something and I think it's telling us something more than it has to be in alphabetical form.

It's an awful lot of....

Mr. Caplinger: --Well, that's... well, Justice Scalia, I think the reason that Congress added that language is that if somebody goes out and researches and accumulates a lot of facts, that alone, the labor of collecting and assembling, you can't copyright that.

What authorship is there?

What creates the original work is what you do with the information that you've gathered, collected, and assembled.

Unknown Speaker: Right.

Mr. Caplinger: And--

Unknown Speaker: What has to be done is it has to be either selected, coordinated, or arranged.

But it doesn't even end there.

It doesn't say they have to be selected, coordinated... but they have to be selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.

And we're being asked in this case to give content to what that means:

"in such a way that the resulting work constitutes an original work of authorship. "

Mr. Caplinger: --Yes.

Unknown Speaker: And what... original... you--

Mr. Caplinger: Justice Scalia--

Unknown Speaker: --disclaim any inventiveness or novelty or anything else in that?

Mr. Caplinger: --Justice Scalia, the... I know that alphabetizing this list doesn't take a lot of thought, but there are other things that went into this and in fact if it wasn't for Rural Telephone being the author of this, this information would not exist.

Yes, the names, addresses, and numbers are floating out there in bits and pieces, but they could still be floating until Rural Telephone took that information, decided... selected what it was going to include in the directory, how it was going to coordinate that directory, and how it was going to arrange that information.

And just because it is... it appears to be simple, it still meets the test under the 1976 act.

Unknown Speaker: Well, the fact that it wouldn't be available proves not... I mean you can say that of any collection and assembling of preexisting materials.

Your client could have spent a lot of time gathering all this material together.

Or take a researcher in some scientific field who spends years assembling all sorts of data.

And he has all the data.

Let's assume he has even stored all the data alphabetically and then he dies.

Now, is that... was that a copyrightable work?

Mr. Caplinger: Well, Justice Scalia--

Unknown Speaker: It would take a lot of time to reduplicate all the research he's done.

Mr. Caplinger: --Justice Scalia, in your hypothetical there, did he make a subjective decision on his selection of what information he was going to--

Unknown Speaker: Of course, anyone who selects data does that.

Mr. Caplinger: --Okay, that's one part of it.

And then he... if he makes a subjective decision on how he's going to arrange that to--

Unknown Speaker: Alphabetically he decided.

Mr. Caplinger: --Well, that was his subjective decision.

He could have put it backwards.

He could have made a cross-reference.

He could put it upside down.

He made the decision.

What the copyright law... it doesn't require inventiveness--

Unknown Speaker: All right.

Mr. Caplinger: --like the patent copyright law, because if... well, let me go back a second here.

This book, the white page listings, are copyrightable.

But that doesn't prevent, like patent law or something, from somebody else doing the same work.

They can acquire the same names, addresses, towns, numbers--

Unknown Speaker: But they have to start from scratch and go door to door and do it.

They can't draw the facts from your white pages directory to make their own directory.

Mr. Caplinger: --Justice O'Connor--

Unknown Speaker: That's your position.

Mr. Caplinger: --Justice O'Connor, under the copyright law they cannot wait till we publish this directory and then copy this information.

Unknown Speaker: Well, what about... what about a weekly news magazine where the reporters go out and research some current event like the events that occurred during Watergate and they undercover all those facts and then write about them.

Now, I assume their expression is copyrightable.

But do you think that no one else can resort to use of the facts that they uncovered?

Mr. Caplinger: Justice O'Connor, no.

I agree.

Unknown Speaker: That would be [inaudible] composition.

Mr. Caplinger: No.

Because those facts cannot be independently duplicated.

I think that that analysis is like Harper--

Unknown Speaker: Of course they can.

Any other reporter could be just as hard working and inventive.

They could go out and make the same inquiry.

Mr. Caplinger: --Well, excuse me, I thought you were referring to like the Harper and Row case of this Court in 1985, and in that particular case it involved a statement by Gerald... President Gerald Ford.

And the second publisher used that identical factual information, and this Court had to go in depth in fair use section of this copyright act.

And I think what the concerns of this Court were at that time was that there's only one statement made by the President, how can it be duplicated.

In this particular situation, this information as well as then apparently in your hypothetical, if the other person can go out on their own and collect that information and express it in their own fashion, and even if, after their own independent work, if it comes out identical, that's still not copyright infringement.

The copyright... the telephone company directory copyright does not extend to the names and addresses listed there but rather the compilation of the same, because there's nothing to prevent the other party from doing the same.

Whereas in patent law, if Feist invented something at the same time that Rural invented it.

Whoever finished inventing that first has a monopoly on it forever.

But in copyright law, if they both go out and independently create something and it just happens that it's... it comes out identical or substantially identical, there's no copyright infringement there.

What we're saying is that the white page listings information would not be here but for the telephone company gathering, collecting, and making a decision how to put this directory out and in fact each year it differs.

Unknown Speaker: Mr. Caplinger, this is to protect authors, isn't it?

Mr. Caplinger: It is.

Unknown Speaker: Who's the author of this?

Mr. Caplinger: Justice Marshall, the telephone company.

Unknown Speaker: Oh, the telephone company.

Mr. Caplinger: Yes.

Unknown Speaker: That's the author?

Mr. Caplinger: Yes.

If it wasn't... if it wasn't for the telephone company, this directory wouldn't exist.

Unknown Speaker: What individual.

I never heard of a publisher being an author.

An author's an individual, isn't he?

Mr. Caplinger: Justice Marshall, an author could be a individual, a corporation, an entity who--

Unknown Speaker: It's usually the work of an individual, isn't it?

Mr. Caplinger: --Well, customarily when you look at artwork--

Unknown Speaker: The phone company couldn't exist without this, could they?

Would you buy a phone if you didn't get a phone book?

Mr. Caplinger: --That's questionable, but--

Unknown Speaker: I mean, I just don't see all of the originality of somebody in this that just copied something out of a book... somebody's records.

Mr. Caplinger: --Well, Justice Marshall, maybe I can... and I know this Court in getting prepared to argue here today, they would like to hear how not only the law would be affected by the facts of this case, but the industry nationwide.

I think that if you went to New York City and you took NYNEX, who spent $2 million a year putting this information together.

Unknown Speaker: As a matter of fact they charge you to take you name out.

[Laughter]

Mr. Caplinger: Well... that... Justice Marshall, I know that's the position, you know, when you're representing the telephone company, everybody hates the telephone company and utilities.

But back to my point is if--

Unknown Speaker: I'm not speaking about everybody.

[Laughter]

Mr. Caplinger: --If--

Unknown Speaker: Do you want to speak about it?

[Laughter]

Mr. Caplinger: --If this Court were to find that because the bits... individual bits and pieces of this information in a directory are factual in nature and that the author's work of creating that directory, collecting, assembling, and making the decisions on how to put that out, if a defense would fly that, well, I'll wait until you put it out and spend $100,000 doing that and then I'll just copy it, like they did in this case--

Unknown Speaker: Well, just looking at the white pages alone you's still have the same number of telephone books, wouldn't you?

Because you've got a... your corporation commission compels you to publish a telephone directory annually.

So even if you don't have it copyrighted, you're going to have to do it.

Mr. Caplinger: --Justice Stevens, yes--

Unknown Speaker: And I suppose you're going to have to do it alphabetically, because otherwise nobody can use it.

Mr. Caplinger: --Well, Justice Stevens, I think that--

Unknown Speaker: Well, isn't that right?

Mr. Caplinger: --Well, we're told by the Kansas Corporation Commission to annually publish a directory.

It doesn't say what's to be include in that directory.

Unknown Speaker: Do you suppose any other form of directory would satisfy their requirement?

Have you ever seen a telephone directory of a different form than this one?

That is, the white pages?

Mr. Caplinger: Justice Stevens, yes.

And in fact in subsequent years this directory is different.

It goes back to what I was saying earlier--

Unknown Speaker: In what respect does it differ?

Mr. Caplinger: --Because of the... of this white page listing section could have been set out in 26 different alphabetical sections of the... encompassing the same listings because... in fact we have people that say that we're completely on the other side of western Kansas--

Unknown Speaker: Oh, I see what you're saying.

Mr. Caplinger: --I would like to have you prepare your book to where you have the same listings, however, I'd like A through Z for Agra, A through Z for Bolta--

Unknown Speaker: I see.

So that's your selection.

Mr. Caplinger: --Yes--

Unknown Speaker: It's not the alphabetizing, it's if you had a single telephone company with just one area of service like the City of Chicago and nothing else, say, then it would have... there would... the same telephone directory would have to be published year after year.

Mr. Caplinger: --Yes, and that would be a decision for them.

I know it hard to stand here and try to say... and try to build something, because I don't believe the alphabet or alphabetizing something takes a genius of a great work of an author.

But that's just one of a number of things that the author of this directory makes a decision on.

Unknown Speaker: Well, what other than the selection of which areas of service to be included in the directory would be different if we held it was not copyrightable?

In fact, why would your decision be any different, whether it's copyrightable or not in your decision of whether to have one directory for all areas of service or several different directories?

What difference does it make whether it's copyrighted or not?

Mr. Caplinger: I'm not sure if I understand your question.

Unknown Speaker: Well, does the copyright law protection have any impact at all on your decision as to how to assemble the white pages?

Mr. Caplinger: Yes, Justice Stevens, the copyright law expresses our contribution by the author of creating this and those listings... how those listings are listed there--

Unknown Speaker: I understand, but my question is would you create them any differently if there were no copyright law protection?

And if so, why.

Mr. Caplinger: --Well, Justice Stevens, to answer that question, there's a market for this information that if we do not put accurate, complete listing information, we're not going to sell the yellow page advertising.

Unknown Speaker: Well--

Mr. Caplinger: And in northwest Kansas, the revenue from this directory and from the yellow and white--

Unknown Speaker: --From the yellow pages.

Mr. Caplinger: --goes back to... goes into the rate base to keep the rates or affect the rates to the subscribers and the owner-members of this coop.

So you asked--

Unknown Speaker: Well, that's true whether or not there's copyright protection.

It seems to me it's equally true whether or not there's copyright protection.

The only thing your copyright protection does, as I understand it, is to give you a right to collect royalties from people who want to publish the same information and make it more broadly available to the public.

At least that's all I can see.

May I ask you--

Mr. Caplinger: --Your Honor, I'm not sure what the company did.

I think that for their service, since this company... it's a nonprofit coop and it's owned by its members, they would take whatever steps, copyrightable or not copyrightable, to provide an up-to-date, accurate telephone directory.

But it--

Unknown Speaker: --Sure, because they want people to use the service.

Mr. Caplinger: --That's right.

But it would be disturbing and it would turn the Federal copyright law as directories straight up on top of its head is... if somebody is allowed to wait until somebody puts out a compilation and then say, well, all we have to do... all we have to do is dump that information into our computer and we'll rearrange it with the stroke of a computer key and then we'll copyright it ourselves.

And in fact, white page listing information, there's a market for it.

They sell--

Unknown Speaker: And how does that... I understand that it may intrude on your revenues from the advertising yellow pages, but otherwise it doesn't have any impact on your business at all, does it?

Mr. Caplinger: --Well, we... there is--

Unknown Speaker: You're trying to use your copyright on the white pages to protect your business... the business interest in the advertising in the yellow pages.

That's what's at stake here, isn't it?

Mr. Caplinger: --Well, there is revenue produced from the white page listings.

We sell advertising in the white pages in the way of bold print.

We get revenue from that.

Extra listings we charge.

So there is... the white pages are revenue producing on their own.

But in reality you are correct.

Without up-to-date accurate white page listings, the yellow pages... it would be difficult to maintain sales.

Unknown Speaker: Are you... I take it the courts of appeals that have dealt with this are on your side.

Mr. Caplinger: Every... excuse me, Justice White, every single case since the landmark case of Leon in '37 to the most recent case of the United Telephone are... Illinois Bell--

Unknown Speaker: What was the earliest case that's on your side?

Mr. Caplinger: --Leon.

Unknown Speaker: What date was that?

Mr. Caplinger: 1937.

They call it the landmark telephone copyright case.

Unknown Speaker: And Congress didn't intend to change the definition of an original work of art in '76.

Mr. Caplinger: Justice--

Unknown Speaker: I take it they knew what the law was?

Mr. Caplinger: --That's... Justice White, that's exactly right and in fact--

Unknown Speaker: Well, does that bring us to Section 103?

Could you spend a little time going through Section 103 with us, because I take it Feist's argument is that even if this is copyrightable, the information can still be taken subject to 103(b).

Am I correct that that's the argument?

Mr. Caplinger: --Justice Kenney, in my opinion of 103 was set out--

Unknown Speaker: Justice Kennedy.

Mr. Caplinger: --I mean, Justice Kennedy.

It was set out to show that the person who goes out and collects factual information just because he collects factual information and the work as a whole in a compilation is a protected work, that doesn't mean that you now own a copyright on those noncopyrightable bits of information, such as somebody's name.

Unknown Speaker: But isn't the problem under 103(b) and the problem for the sweat-of-the-brow theory that it provides that the protection extends only to the material contributed by the author and doesn't the word material imply something different from effort?

Doesn't it imply something about the content of the work?

Mr. Caplinger: Justice Souter, my opinion as to what preexisting material means is preexisting fact--

Unknown Speaker: Well, this... I'm not talking about preexisting material.

I'm talking about the phrase that the copyright and the compilation of derivative work extends only to the material contributed by the author.

What is the material contributed by the author?

Doesn't that phrase imply that there is something about the content of the work rather than the process of compiling the work that is subject to protection?

Mr. Caplinger: --Well, Justice Souter, I think you have to go back.

103 applies to two separate works.

There's what is known as collective work, and that's what's at issue here, and then there's a derivative work.

And a derivative work is where... and this might sound strange but since this is at issue... if we take this copyrighted telephone directory and make it into a movie.

It's where you take a book and transform it to something else like a movie.

They're saying that even though you change it, that the preexisting is still, you know, copyrighted or copyrightable.

Maybe I'm not understanding your question.

Unknown Speaker: Well, it's still... unless I'm not parsing the sentence right, I think the sentence is still providing that the copyright in a compilation or derivative work, but in a compilation extends only to the material contributed by the author.

And my suggestion is that material implies something about the content of the work rather than something about the effort that goes into producing the work.

My question is, number 1, is that a fair reading of the provision, and number 2, if it is, what is the material in your directory that is contributed by the author?

Mr. Caplinger: Okay, Justice Souter, to answer that question is that the... again, the bits of factual information alone are not copyrightable.

What the contribution is of the author in the form of collective work of a compilation is the hard work or labor as you put it.

Unknown Speaker: Yes, but that's not material.

Mr. Caplinger: But the--

Unknown Speaker: That's effort.

It's thought, but it's not material.

It's not something that's on the page.

Mr. Caplinger: --Well, the preexisting... what we're saying is not preexisting material is the listing information.

And we are the author of putting that together.

We decided--

Unknown Speaker: You're saying the arrangement is not preexisting.

Mr. Caplinger: --And that's part of--

Unknown Speaker: Right.

Mr. Caplinger: --the second part of the definition.

Unknown Speaker: Does material imply arrangement?

In other words does... it seems to me they're talking about content, not order.

Mr. Caplinger: Well, the '76 laws have dealt with... deals with directories.

It's just a compilation or collection of material or factual... factual material and that--

Unknown Speaker: Let me, if I may, interrupt you.

Let me ask you a different question.

Was this particular phrase that I'm concerned with added at the time of the amendment or was that in the preexisting law?

Mr. Caplinger: --103(b)?

Unknown Speaker: Yes, the phrase referring to material contributed by the author.

Was that new?

Mr. Caplinger: I'm not sure.

I think section--

Unknown Speaker: If it was new, it could very well have had an effect on the extent to which the preexisting law, which we assume provides for copyright of such a directory, survived the amendment, wouldn't it?

Mr. Caplinger, before you sit down, just as a matter of curiosity, what is the status of the antitrust aspect of this case?

Mr. Caplinger: --The antitrust case--

Unknown Speaker: Any development yet?

Mr. Caplinger: --It is presently on appeal before the Tenth Circuit.

Unknown Speaker: And they... has it been argued?

Mr. Caplinger: No.

I filed Rural's opening brief a week ago and Mr. Knobbe's brief is due the first of March.

Unknown Speaker: One last question.

You come from Topeka, not northwestern Kansas.

I don't know what they do in Topeka, but I would be surprised if the telephone company there didn't have a directory by street addresses.

I've seen them.

Mr. Caplinger: A city directory?

Unknown Speaker: By street address, not alphabetically, and some of the questions here seem to assume that only an alphabetical arrangement is possible.

Mr. Caplinger: That's true, and you go back to the landmark case that I referred to earlier, Leon.

That's where a second publisher took the alphabetized information and flipped it around and put it by telephone number and not A through Z.

And the court said that that was still a taking of the work of a telephone company because they're the original author of that white page listing information.

And also the most recent case, Illinois Bell--

Unknown Speaker: I think you've answered the question, Mr. Caplinger.

Thank you.

Mr. Knobbe, do you have rebuttal?

You have 5 minutes remaining.

Rebuttal of Kyler Knobbe

Mr. Knobbe: Thank you, Mr. Chief Justice.

I have short points.

Perhaps when I answered your question, Mr. Chief Justice, that directories were copyrightable under the 1909 act but not under the '76 act, I misspoke.

Our position is that facts have never been copyrightable.

A point was made by Mr.--

Unknown Speaker: All these decision against you were just wrong.

Mr. Knobbe: --They're wrong under this definition of the statute.

Sweat of the brow has been rejected by the Second and the Ninth Circuit.

The main cases cited, Leon out of the Ninth and Jeweler's Circular out of the Second, have both been disavowed by those very circuits.

Unknown Speaker: Is Section 103(a) an addition to the 1976 act in 103(b)?

Mr. Knobbe: Yes, I think so, Justice Kennedy.

The point was that the information here in this phone directory would not exist without... but for Rural Telephone was Mr. Caplinger's statement... and that's the problem with the independent canvas theory, is that you can't get it anywhere else except out of the phone directory.

You can't canvas it.

It's like the opinions of this Court.

Unknown Speaker: That's very interesting, but I don't see how it has anything whatever to do with whether it's a copyrighted... I mean, that's a good argument for Congress.

Mr. Knobbe: I'll pass over it then.

Unknown Speaker: I'll make an exception for this.

Mr. Knobbe: The final point was that a copyright doesn't require inventiveness like a patent law, and I think that's correct, too.

The copyright is a limited monopoly.

It's not a patent on those facts, ideas, or public domain information.

Thank you, Your Honor.

Chief Justice Rehnquist: Thank you, Mr. Knobbe.

The case is submitted.

Unknown Speaker: The honorable court is now adjourned until Monday next at ten o'clock.

Attribution:

The OYEZ Project

Featured:

Stewart v. Abend - Oral Argument

Fri, 09 Jan 2009 14:49:21 +0000

Case:

Stewart v. Abend

Media File:

88-2102_19900109-argument.mp3

Related Transcript:

1989_88_2102_argument.xml

Transcript:

Argument of Louis P. Petrich

Chief Justice Rehnquist: We'll hear argument now in Stewart v. Abend.

Mr. Petrich.

Mr. Petrich: Mr. Chief Justice, and may it please the Court:

This case for copyright infringement requires the Court to reconcile a conflict between two competing copyrights conferred under the same section, Section 24, of the 1909 Copyright Act.

On the same essential facts of this case, both the Second and the Ninth Circuits have reached very different accommodations of these interests.

In this case, in 1942, a short story named, or entitled Rear Window, was first written and copyrighted by Cornell Woolrich in 1942.

In 1953, the actor Jimmy Stewart and the director, Alfred Hitchcock, teamed up to form a production company to make a motion picture based in part on that short story.

They obtained a prior assignment from the author of the short story, which gave them the right to make all motion picture versions of the short story, and to continue to exhibit those motion picture versions throughout the life of the original or initial term of copyright obtained by the short story author, as well as any renewal term of that author.

Unknown Speaker: That was an express assignment of the right to renew?

Mr. Petrich: Yes, Your Honor.

It's reproduced in the--

Unknown Speaker: And if the author hadn't died, could the assignee have exercised that right or would the author have had to do so?

Mr. Petrich: --It has always been the law that only the statutory successor named in the statute may exercise the right.

Unknown Speaker: So this case would be the same, in your view, if he had... never had assigned the renewal right?

Mr. Petrich: No.

If he had not assigned the renewal right, we would not claim that we had a right to use the work during his renewal term.

Unknown Speaker: Well, even if he had assigned it, you couldn't exercise it.

Mr. Petrich: We could not renew.

The law provides that only the people named in the statute may actually renew it.

Unknown Speaker: Well, what if he didn't renew it?

Mr. Petrich: Well, I misunderstood your question.

If he did not renew it, the underlying story would have gone into the public domain and anyone could use the story.

In 1954, the film company created a motion picture based on the story, adding new characters, new incidents and new dialogue.

That motion picture was separately copyrighted under Section 7 of the 1909 act.

In 1968, the author of the short story died and his copyright was renewed the following year by his executor and became effective in 1970.

In 1982, the owners of the film copyright renewed their copyright under section... the same Section 24.

And now Jimmy Stewart and Alfred Hitchcock's estate own 90 percent of the film copyright.

In 1983, relying on a decision of the Second Circuit, the film was re-released as a part of a five-film retrospective of Alfred Hitchcock films, many of which included the talents of Jimmy Stewart.

Mr. Abend, the respondent here, in the meantime, had acquired rights from the executor of the short story author and he brought this claim, contending that the death of the author before renewal, as well as the renewal by the executor, operated as a matter of copyright law and policy to terminate any rights that the films owners had to continue using their film.

Unknown Speaker: Mr. Abend is an agent?

Mr. Petrich: Well, he's listed as a literary researcher.

He has testified that he buys these rights for himself and for clients.

The district court, in this case, granted summary judgment for the defendants, relying upon the 1977 decision of Judge Friendly in the Rohauer case, which Judge Friendly described as a case of first impression on this issue.

A Ninth Circuit panel, by a split decision, reversed the district court's summary judgment in this case, and so we are here.

Both circuits, however, it's important to note, acknowledge that a reconciliation of these competing copyrights was required.

I will plan to explain why the Second Circuit's accommodation of these competing interests best resolves the competing copyright interests and policies, and why the Ninth Circuit's accommodation in this case was flawed and will result in a defeating of the policies and purposes of the Copyright Act.

Under the Second Circuit's approach as to the prior work... when the prior author dies and his statutory successor renews the copyright, the court would effect the second-chance policy of Section 24 in favor of authors by providing that all of the rights given to the derivative work owner lapse or revert and go back to the statutory successor of the prior work, with one important exception.

The owner of the derivative work would continue to have the right to exploit that derivative work which was made under license during the first term and authorized by Section 7 and would only be able to continue to exploit that work according to the limits placed on him or her by that original assignment.

This effecting of the policy actually gives the statutory successor even more than what the author would have had had he survived and renewed because, under the decision of this Court in Fred Fisher, if the author had lived three more months and had renewed the copyright in this case, as the assignment that he previously had given, would have given the movie owners the rights to continue to distribute the movie but, more importantly, to make additional motion pictures.

Unknown Speaker: xxx even if he assigned... even though he had assigned, if he had lived, could you have forced him to renew?

Mr. Petrich: We could not force him to renew.

Unknown Speaker: And you couldn't force his statutory successor to renew... I mean, his executor?

Mr. Petrich: No.

But there was a policy under the copyright that the Copyright Office had: that others could go in and renew in the name of the statutory successor.

But you had to be careful to be sure that you renewed in the name of the author if he was alive.

Unknown Speaker: Well, you couldn't do it, could you?

Mr. Petrich: I think we could.

Unknown Speaker: An assignee could have gone in and--

Mr. Petrich: Yes, we could.

We would have had a power of attorney to do so.

In fact, some courts went so far as to say that the power of attorney was even implied by the prior assignment.

But the renewal had to be in the name of that statutory successor or the author if--

Unknown Speaker: --So even if... so he could not have even... if he'd of lived he couldn't have prevented you from renewing it in his name?

Mr. Petrich: --No.

No, Your Honor, and--

Unknown Speaker: What do you mean no?

He couldn't?

Mr. Petrich: --Oh, I'm sorry.

He could not have prevented us from renewing.

And of course, why would he because he would lose all of the other rights he would have under the contract.

Unknown Speaker: Well, he's just contrary.

Mr. Petrich: Well, that could happen.

Now, as to derivative work, the Second Circuit came to a conclusion that the court would effect the Section 7 and 24 rights granted to the derivative works authors by allowing them simply to continue to use that work which they had created under license during the first term.

But it's important to note that there were limitations.

This was only applicable in a case where the derivative work had been made under license and had been made during the first term of the prior work's author.

Secondly, they would lose the right to exercise any other rights under the assignment, such as rights of exclusivity to prevent others from making motion pictures, and they would also lose the right to make additional motion pictures of their own into the second term.

And finally, they would remain subject to all of the specific limitations that were placed upon them in the original assignment.

Unknown Speaker: Under the Second Circuit's view, the owner of the Woolrich copyright could make another movie based on it, could it not?

Mr. Petrich: I'm sorry, Your Honor, could I have that again?

Unknown Speaker: Yes.

Under the Second Circuit's view... supposing Mr. Abend, who I understand owns the Woolrich short story--

Mr. Petrich: Right.

Unknown Speaker: --could he not now make another movie based on that short story?

Mr. Petrich: Absolutely.

He's the only one in the world who could make new movies based on that short story now.

He has all of those rights.

Unknown Speaker: But he could use any of the new matter that was incorporated in the Hitchcock movie?

Mr. Petrich: No, Your Honor.

Because that is still subject to copyright--

Unknown Speaker: No.

He'd have to make an entirely new motion picture of that.

Mr. Petrich: --Well, that--

Unknown Speaker: Now, he's the entire owner.

Mr. Petrich: --The problem is that only a part of the short story was used in the film.

Unknown Speaker: Right.

Mr. Petrich: He could make a literal version of the short story and have no problem from us.

There's nothing we could do about it.

Our short... our film is a revision or an augmentation of his short story.

We've added the Grace Kelly character and the Thelma Ritter character in the film--

Unknown Speaker: And he couldn't infringe those additions to the story?

Mr. Petrich: --He could not use the new matter that was added by us.

That's under Rohauer, which is the Second Circuit decision.

Any payments that might be due under the assignment, any screen credits that might be due under the assignment would all still have to be made to the statutory successor.

And as I have said, any limitations, such as limitations on the territories or the time in which the film can be shown... they would still be binding.

And in fact this would be the same... the derivative work owner in that case would be in the same place as a derivative work owner would be today under the 1976 act, if someone had exercised the statutory termination right and the statutory exception would come into play.

Unknown Speaker: Well, Mr. Petrich, I gather that the Rohauer decision has certainly not been unanimously acclaimed in the scholarly community, one might say.

Mr. Petrich: Well, Professor Nimmer hasn't liked it, but he also was counsel for the Writers Guild at one time.

Unknown Speaker: And the Registrar of Copyrights, I guess, has filed something indicating--

Mr. Petrich: Correct.

That the Writers Guild had... I'm sorry.

The Copyright Registrar has, although the Registrar has also said that this is a matter which is confusing and needs some clarification, which is our position.

Unknown Speaker: --Well, perhaps that's up to Congress.

But Congress created this unusual scheme, and apparently with the idea of letting the original artists or author benefit from whatever enhancement has developed by virtue of use of the derivative works in the interim.

Mr. Petrich: That's not altogether clear, Your Honor, because there's nothing in the record to show that... or the legislative history, that show that the 1909 act intended to discriminate in favor of one set of authors against another set of authors.

In fact, the record only shows that there was a debate about whether derivative works ought to be... ought to have a shorter term and expire at the time of the underlying author's term.

And that was given up, and instead, all the copyrights, derivative or otherwise, were given the same term.

And their rights all derive under Section 24.

They both are given two terms of 28 years.

Unknown Speaker: If the copyright holder who made the assignment had renewed, you say that he could not interfere with your plan, if he had lived?

Mr. Petrich: If he had lived, he would have or we would have had the assignment he had given us, which would give us the assigned right to make--

Unknown Speaker: Is that... do you derive that directly from the act or is that a judicial--

Mr. Petrich: --Oh, no.

No.

That was from the assignment itself.

Unknown Speaker: --Well, I know.

But that's just a... the assignment does not expire.

Is that just a judicial decision?

Mr. Petrich: That... that's based on the decision of this Court in 1943, the Fred Fisher case.

Unknown Speaker: And that assignment is an assignment?

Mr. Petrich: So that Congress intended for authors to have the right to assign their interests, including their renewal interest.

Unknown Speaker: Well, what about our later decision... which one is it... Miller?

Mr. Petrich: Miller Music.

Unknown Speaker: And it... what if assignment isn't an assignment; it's just an expectancy?

Mr. Petrich: In Miller Music, where you had a competition between an author on one side and a mere publisher on the other, it said that the clear intent of Congress was that the author's successors... in this case the author is dead... the author's successors ought to get the new renewal and they ought to get the renewal term of the--

Unknown Speaker: What if he assigned to what... in that case, what did he assign?

Mr. Petrich: --Apparently, the entire term, all the copyrights--

Unknown Speaker: Including the renewal?

Mr. Petrich: --Including the renewal.

Unknown Speaker: To the publisher?

Mr. Petrich: That's correct.

Unknown Speaker: But who... all he had was the assignment.

He didn't have a... he didn't have another copyright [inaudible].

Mr. Petrich: That's right.

The difference we say is that, in this case, we don't have author versus user.

We have author versus author.

Congress intended for all of the authors to be able to exercise their rights under Section 24 and gave all authors, equally, two terms.

And gave all authors that same second chance.

And they had to know that if they were going to have overlapping copyrights because there were going to be works that were derivative of other existing work, that there were going to be overlaps.

And they made no provision at all... no specific provision at all to say that they wanted some sort of a reversion that would prevent the copyright holder in the derivative-work situation to have a shorter term of enjoyment of his copyright.

In this case, if Mr. Abend was right, that the copyright and the film would have run from 1954 to 1970, and that he couldn't... then the movie... Hitchcock and Stewart couldn't use it.

And they couldn't use it for another 28 years, and perhaps--

Unknown Speaker: Unless they reached an agreement with the respondents to allow for the use at some compensation.

Mr. Petrich: --Well, the Ninth Circuit expressed the view that, while they understood that there were important policy reasons for reconciling these conflicting interests, they chose not to bring those policy interests into play until the remedies portion of the analysis.

And we think that's where they made the... the very grave mistake.

They started their reconciliation at the... after they decided that they would favor one set of authors over another set of authors and hold that the work was an infringement.

From in 1970... for at least another 28 years they would treat the use of the film copyright as an infringement.

And they said: That won't hurt anybody because people will just make new arrangements.

But there are reasons why they won't.

First of all, in a... in the usual copyright infringement case, an injunction is the usual remedy.

So that gives tremendous leverage to the owner of the original copyright or the underlying copyright.

And there's a great danger we think here that undermines copyright policy because if someone in the position of a short-story owner has too much leverage, he is using the monopoly power Congress gave him in the... for his short story... not to just reap the benefits of his short story.

He's not coming to us and telling us he wants to make a new movie.

He's coming to us and saying: I want what you make on your movie and on the new matter that you have put into your movie.

That's what he wants to do.

That's the game.

And there are reasons to believe that, for example, speculators that get into this field will refuse to give consent.

They have reasons not to give consent.

First of all, they have a comparatively low investment.

The plaintiff, in this case, bought his rights for $650.00.

Well, when he negotiates with somebody who has spent $2 million to make and to release a motion picture, he has considerable leverage in deciding how long he's willing to negotiate.

Secondly, the person who takes over the rights of the underlying copyright has other rights to exploit in the meantime.

He doesn't have to sit around and negotiate with the movie owner or the other derivative work owner.

He can... he gets to go back and exploit all the rights that the author originally had, in the meantime.

Unknown Speaker: May I interrupt with a question here?

Mr. Petrich: Yes, Your Honor.

Unknown Speaker: Supposing... instead of giving a right to just the derivative work of motion pictures there had been an assignment of all rights in the copyright.

Would you make the same argument?

Would you be making the same argument?

Mr. Petrich: Yes.

It wouldn't be any different if he had given us all rights of copyright.

We still, under the Second Circuit view, we'd only be left with those rights we had actually exercised.

If we had made a movie, then we could continue using the movie.

This is the same solution that Congress came up with under the 1976 act.

Unknown Speaker: So you relied primarily on the fact that you did create a new work before the first copyright term expired?

Mr. Petrich: Entirely.

We have no position... we have no position without it.

Unknown Speaker: Well, then, if that's the case, does it make any difference whether you've got a copyright on the derivative work?

Mr. Petrich: Yes.

We couldn't get a copyright without the original owner's consent.

Unknown Speaker: I know you couldn't get it.

But in order to maintain your position today, supposing you had not copyrighted the derivative work.

Would your right to use what was given to you survive?

Mr. Petrich: I don't think so because we rely entirely on the fact that we have a copyright which was... gives us rights under Section 24 of the old law.

Unknown Speaker: But the right the copyright gives you is the right to exclude others from your new matter, and you still have that right.

Mr. Petrich: Well, if we had not gotten a copyright we couldn't exclude others from using our new matter.

Unknown Speaker: But I'm suggesting that normally you can either use it or not use it at your will, as long as nobody can interfere with your right.

But your right to exclude others doesn't necessarily carry with it a right to use it yourself is what I'm saying.

Mr. Petrich: Oh, I understand that.

And what I'm saying is that you... what gives us the problem here is... that Congress apparently was thinking of giving some... giving all copyright owners a so-called second chance.

But they weren't thinking necessarily of this situation.

There's nothing in the legislative history to show that.

And so, if you just think about one copyright and you say, all right, after the person dies it reverts and goes back.

What's the harm?

Well, that's all right.

But you have harm here because there have been other copyrights that have come into existence in the meantime, and Congress specifically intended that they would have the 58 years of enjoyment.

Unknown Speaker: But you still have... I think Justice Stevens was saying you still have the value of that new copyright that's come into existence.

Let's suppose that the original short-story writer or his successors want to do a remake of the movie, Rear Window.

They'd have to come to you and pay you in order to do that remake.

Mr. Petrich: No, Your Honor.

Because they can avoid us by simply not using that which we added to the film.

Unknown Speaker: Oh, no.

But they want to have Grace Kelly and all of that.

They want to do it.

It's essentially the same plot from the movie.

They don't want a new movie; they want a remake of Rear Window.

They'd have to come to you and pay, right?

So that you would have the full value of the renewal copyright... of your copyright, the right to exclude them.

Mr. Petrich: No.

Because we don't have the right to exploit our own work.

What good is the work--

Unknown Speaker: But that's not what a copyright gives you.

Mr. Petrich: --Well, yes.

And... you're right, it doesn't give us the right to exploit our own work.

What I was trying to explain is that, because Congress wanted us to have the right, this copyright, this valuable right, it is implicit in that that the Congress did not want the so-called second-chance policy to operate in a way that would benefit one author at the expense of the other author, wouldn't want to cut off our enjoyment of our copyrights simply because it was going to, in one case, give the second chance to the original author.

We have... we are now in our second term.

We are now in the term where we're supposed to be getting our second chance, and I disagree with you, Justice Scalia.

The right to exclude someone from using a Grace Kelly character is not a very valuable right.

In fact the record shows, in this case, that Mr. Abend went out and made a deal with Home Box Office to make a new film based upon the short story without our characters.

So nothing stops him from going ahead and making new works without us.

And the--

Unknown Speaker: To get a copyright on Rear Window, did all you have to do is just make the film and present it for a copyright?

Mr. Petrich: --Yes, Your Honor.

First of all, we have to get the consent of any prior work that we are using: music, story, graphics, whatever.

Unknown Speaker: And do you have to demonstrate that... in getting your copyright that you have those permissions?

Mr. Petrich: No, Your Honor.

Unknown Speaker: The Copyright Office doesn't really care about that at all.

Mr. Petrich: No.

They're just not set up administratively to determine those things.

In any motion picture there could conceivably be dozens of works that are used in the motion picture.

In fact every motion picture today would probably see two or three and maybe as many as ten licensed songs, and they had to get permission.

And all of those songs are like little ticking bombs under this reversion theory.

Any one or two of them can go off, and now you can't use that song in the movie after the death of the composer and the renewal by his statutory successor.

Unknown Speaker: Well, now under the work made-for-hire-arrangement, presumably the motion picture industry can solve some of these problems.

Mr. Petrich: Sure.

But, for example, you can't... if you want to make a picture about the 1960s and you want to use the music that was popular in the 1960s, you don't always have that choice.

And so you use licensed music.

I think we've said in our reply brief that MCA Universal did about 250 hours of television in a couple of year periods and they used 400 licensed songs.

And one of the... as I was going to say earlier, one of the problems with the Ninth Circuit's approach is, if it is followed, is it will mean that the works from 1962 to 1978, which have not yet been renewed and are subject to renewal and are subject to reversion, people will have no interest in wanting to use them because they don't know what will happen at the time of renewal.

Unknown Speaker: Well, they will, depending on the price that they negotiate for them.

I mean I... frankly, my guess is that there isn't... there isn't a way that the author can get a lot of money without negotiating with somebody who's made the derivative work.

Mr. Petrich: But under the Ninth Circuit view, he can't give away the right to use that work in the future.

And, therefore, he's giving you grief.

Unknown Speaker: Not until within a year of--

Mr. Petrich: Correct.

Unknown Speaker: --the renewal.

Mr. Petrich: That's correct.

So you don't know and you don't always have a way to buy around that problem... for example, in this case.

There's no way that Jimmy Stewart and Hitchcock could buy from Mr. Woolrich's executor because they don't know who his executor's going to be until he dies, and until we know what the will says.

Unknown Speaker: Mr. Petrich, let's assume.

Let's stipulate that that's a very bad disposition.

The question remains whether that is the disposition that Congress enacted.

What is the text of the statute that you rely upon to say that it is not?

Mr. Petrich: We rely on the fact that Congress in Section 7 gave derivative works the same standing as copyrights, as all other copyrights.

And in fact, when we use these terms, I think we tend to make too much of the labels.

Mr. Woolrich's work, for all we know, could be a derivative work... derivative in turn of something before it.

This is a relative term.

Unknown Speaker: So that it ultimately gets back to your contention that the same standing, as all other copyrighted works, includes not only the right to exclude people--

Mr. Petrich: But the right to enjoy it.

Unknown Speaker: --but the right to use yourself.

Mr. Petrich: Exactly.

Unknown Speaker: Okay.

Well, I don't why then you even need an assignment of the renewal.

There's still two copyrights and--

Mr. Petrich: We need the right to renewal because the original owner, when he has to give us consent to make the work in the first place, at that time, he can put any restriction on us he wants.

And at that time it's negotiated, as to what restrictions or time limitations or territorial limitations one may give.

Your Honor, I think I see my time is just about up.

I'd like to reserve the rest for rebuttal.

Unknown Speaker: Very well, Mr. Petrich.

Mr. Anderson, we'll hear now from you.

Argument of Peter J. Anderson

Mr. Anderson: Mr. Chief Justice, and may it please the Court:

This action arises under the Copyright Act of 1976, not the Copyright Act of 1909.

Petitioners conceded as much in their opening brief at page 41, where they state that,

"The infringement action here arises from conduct occurring after January 1st, 1978, and is thus governed by the 1976 Copyright Act. "

Mr. Petrich has stated that the renewal copyright in the film Rear Window was created under Section 24.

That copyright was claimed in 1982 by the successors to the creator of the film, Patron, Inc. As a result, that renewal copyright was created under Section 304(a) of the Copyright Act of 1976.

Mr. Petrich has told the Court that what he wants, and what Rohauer does, is to give the same exception that subpart (c) of Section 304 gives to derivative works.

That's the exception that was created under the 1976 act to allow continued use of the underlying basic materials added or elaborated upon in a motion picture.

This is the problem with Mr. Petrich's position: His renewal copyright... his client's renewal copyright was created under Section 304(a), which contains no right to continue distribution of the film.

He nevertheless asks for the Court to imply that the exception provided in subpart (c) also applies in subpart (a).

We believe that since this... the issues arise under the 1976 Copyright Act and since that act reenacts Section 24, that the Court is now bound by its decision in Miller Music.

Below, at the Ninth Circuit, the petitioners asked or suggested to the court that this Court would reconsider Miller Music.

Now they suggest to this Court that the Court should put a gloss on Miller Music.

Unknown Speaker: Decided by a very closely divided Court.

Mr. Anderson: That's true, Your Honor.

But it's been the law of the United States for the last 30 years.

It was also a natural corollary to this Court's decision in 1943 in Fred Fisher.

Unknown Speaker: Yes.

But the fact that it's a statutory decision is based on a decision by a closely divided Court... is not a basis certainly in itself for overruling it.

But it's certainly also a reason perhaps not to extend it beyond its facts.

Mr. Anderson: But it's not actually clear that this would be an extension of Miller Music beyond its facts.

In Miller Music, the Court had a publisher before it, a publisher of music, and it's clearly... it has been the practice, as this Court noted in Mills Music v. Snyder, and as the screen... excuse me, the Songwriters Guild and the Registrar of Copyrights note in their amicus briefs, that it has been the practice for a publisher to authorize derivative works based upon a grant of, for instance, the rights to the words for a song.

Unknown Speaker: There weren't two copyrights involved in Miller, were there?

Mr. Anderson: Implicitly there were.

Unknown Speaker: Well, but there were not expressly.

Mr. Anderson: Yes, Your Honor.

But as the Ninth Circuit noted, if Miller Music holds, as it does, that a grant of the entire renewal term is completely void and unenforceable against the statutory successor of the dead author, then it would be frankly hard to figure out how you could then say that the grant of some rights would be nevertheless enforced against a statutory successor.

Unknown Speaker: Well, that's an extension of Miller.

Mr. Anderson: Your Honor, we think it would actually be a complete undercutting of Miller because of the practical fact that's... publishers of music don't just get the copyrights in a completed song.

They get the copyrights in words; they get the copyrights in lyrics.

They put these things together.

Sometimes they'll commission or employ someone to add the words to existing music or whatever.

But they're always dealing with derivative works.

Unknown Speaker: Do you agree that if the author had lived and refused to renew, that the copyright could have been renewed in his name?

Mr. Anderson: Yes, Your Honor.

The copyright could have been renewed in his name, if he had refused.

Unknown Speaker: And how about if he dies and the executor refuses to renew?

Do you think he could be... then you could renew in the author's name?

Mr. Anderson: If there was privity of contract between the executor and the party compelling--

Unknown Speaker: No.

No privity of contract.

He's just an executor.

Mr. Anderson: --No.

That... and that is this Court's holding in Miller Music.

Unknown Speaker: Because it's already the... the renewal assignment is already a dead letter, is that it?

Mr. Anderson: Well, the renewal assignment is not a dead letter.

It is merely the assignment of an expectancy, as the Court stated in Miller Music.

It's not invalid; it just never came into existence.

The renewal expectancy was... what the author--

Unknown Speaker: Well, at least the executor isn't bound by it.

Mr. Anderson: --No.

The executor is not bound; neither is any of the other statutory successors who don't have a contract with the person who is--

Unknown Speaker: But the renewal is... it just expired.

The renewal assignment just expires, I guess, with the death, is that right?

Mr. Anderson: --It's worthless.

In Miller Music the court specifically said it's not invalid.

It's just a contingency that never came into fruition.

Unknown Speaker: Well, it must not mean anything unless you could go ahead and renew in the author's name unless, if the executor refused.

But you say you couldn't.

Mr. Anderson: Well, I'm not too sure I understand.

But my point is simply this.

As a practical matter, the Register of Copyrights will accept a claim for renewal, even if it is not signed by the author.

If, in this instance, the petitioners' client, or the petitioners rather... excuse me... had taken a renewal in the name of the executor of Mr. Woolrich's estate, and taken that to the Register of Copyrights, we would have filed an action to have that set aside because they had no standing, and because the executor had not in fact agreed to convey the renewal copyright in the story.

Unknown Speaker: Isn't there some tension, as lawyers say, between the Fielding case and the Miller case?

Mr. Anderson: The Fred Fisher case?

Unknown Speaker: I'm sorry.

Fred Fisher.

Yes.

Mr. Anderson: There is, Your Honor.

And as this Court I'm sure is aware, there has been a fair amount of comment that the Fred Fisher case undercut the policy that the Miller Music case actually gave effect to.

And that policy was that the author or his successors were to have a second chance at controlling the work.

In Fred Fisher what the Court said was that the person who obtained the renewal copyright did not have a copyright right to continue using the work, but they had a contract right.

And since 1943 that's been interpreted to mean that if the author does not live to renew and there's no contract right with the author's statutory successors, then in those instances the policy of a second chance is fulfilled.

Unknown Speaker: But the policy can be defeated by the author assigning the renewal right in advance of its exercise?

Mr. Anderson: Absolutely.

And that is--

Unknown Speaker: So in effect that... you know, if you say the entire policy is to give authors a second chance, Fielding does not carry that out... or rather Fisher.

So there must be some other policy involved in the act.

Mr. Anderson: --Well, there is a second policy that's been recited, and it's interesting the petitioners elevate it to the primary policy.

If you read the legislative history, there was a concern that if a work was not being used, and it didn't matter to the author, then it should go into the public domain.

And so the 28-year term was a lapsing device.

If no one bothered to sign a piece of paper and give it to the Register of Copyrights, the work went into the public domain.

That, I believe, a fair reading of the history will reveal is... was a secondary concern, that the primary concern was giving an author a second chance, which goes back to the statutes enacted in the 19th century.

The--

Unknown Speaker: Certainly one can read the Fielding opinion and not have... I'm sorry, the Fisher opinion, and not get the feeling that that was the primary purpose of the copyright.

There are several comments in the opinion about the fact that we can't import into the law a chance to give impecunious authors a second chance, when Congress hasn't put it there.

Mr. Anderson: --Actually I think, Your Honor, that a careful reading of Fred Fisher, first of all, recites the statements in the House Report 60-2222, that authors were often making unremunerative transfers because of their unability... or the inability, rather, to evaluate when they first created a work its public appeal.

And so they were in the situation where, either because they were just starting out and not established, or they didn't know if the work was going to be a success or not, that they were transferring it for a relatively small amount of money.

That discussion is repeated in Fred Fisher.

The Court does go on to say that since the 1909 act specifically allows for assignment of interest and copyright, that the court should not presume that such interests are unenforceable as a matter of public policy because to do so might prevent an author who finds himself in dire straights from granting rights to the second term.

I would note once again, though, that we are under the 1976 act and enacting... reenacting Section 304... or excuse me, Section 24 as Section 304(a) and in abrogating Fred Fisher, by making the determination right wholly inalienable, the legislature noted or... excuse me, the legislative history indicates that Congress again wanted to focus on giving the author a second chance to control his work.

If that was not the sole purpose under the 1909 act, it is clearly the sole purpose under the 1976 act.

The lapsing and going into the public domain does not apply since an author must affirmatively terminate the rights, and otherwise his copyright would continue for the full term of copyright.

The petitioners say that this is a problem because it's an author versus author instead of author versus user.

And I think that highlights a little bit of confusion that has run throughout Petitioners' briefs... the dissent Abend and in Mr. Engel's article.

The sole authority cited by Petitioners prior to 1976, asserting that the Abend rule was not actually the law.

And this confusion is that... is the confusion between the derivative work on the one hand and the matter protectable by the derivative copyright.

It is easy for Petitioners to throw up their hands and say that they can't use the film.

They are not entitled, necessarily, under the Copyright Act to use the film.

Their protection is in the new matter that they have added.

To the extent that they want protection.

A second chance to use the matter that they took from the story... they're a user.

They didn't create the story.

And although it was never briefed and it was never an issue because we did not move for an injunction, we did not try to show irreparable injury, the fact that the film has its genesis in this story was accepted.

We have not gone through and shown the Court the extent to which the film takes from the story.

Just as one example--

Unknown Speaker: Mr. Anderson, can I interrupt you for a second?

Mr. Anderson: --Absolutely.

Unknown Speaker: You're... it's true, I suppose that... well, let me put it this way.

I'm concerned about the effect of your rule on the author's ability to make a favorable marketing of his creative work when his lifetime is... one doesn't know how long he's going to live.

Say five years before the expiration of the first patent the motion picture company says: we want to spend $100 million making this gigantic epic with your story.

Is there some way you can guarantee that we can have more than five years in which to recoup our investment?

You'd have to say no, wouldn't you?

Mr. Anderson: Yeah.

You would have to say no.

The statute doesn't allow it, but it's not necessarily a practical problem.

Films are made because of the anticipation of getting a revenue... generating a revenue in the short term.

Unknown Speaker: Well, say it's done, you know, just the year before the 27th year.

Mr. Anderson: Films are often also delayed for quite a period of time before they actually are released.

It's not unusual for the negotiations for rights, the negotiations for cast to take nine or ten years.

One interesting example that was raised in petitioners brief was Singing in the Rain.

Singing in the Rain was a 1952 film that employs material, words and music, from the 1929 copyright... 1929 plus 28 means that they were in fact facing five years left in the original term of the song... well, of the words in the lyrics... two copyrights, actually.

They nevertheless made Singing in the Rain.

In our case, interestingly enough, Paramount paid--

Unknown Speaker: Well, of course, they made it at a time when they thought the Rohauer rule was the right rule.

Mr. Anderson: --That's not accurate, Your Honor.

In 1952, when Singing in the Rain was made, that was one year after G. Ricordi was decided.

G. Ricordi, which is a Second Circuit decision, said that a derivative copyright conveys no rights in the underlying work and that once the license was terminated or once there was no license, you couldn't continue to use the Puccini Opera.

It was also after Fitch v. Shubert, another case where an operatic could not be used because there was neither a copyright right or a contract right.

It was after the 1925 statement by Mr. DeWolf in his treatise that... of our exact problem.

That if the author dies before renewal, Mr. DeWolf stated that then the statutory successors could come in and bring an action for infringement, if they continued to distribute the existing work, the existing movie.

And the Motion Picture Association of America, in their brief as amicus curiae in DeSylva, they cite Mr. DeWolf as a preeminent authority of the time.

And by the way, that brief was authored by Mr. Nimmer.

Mr. Nimmer, who, Petitioners' counsel states has represented authors has also represented studios.

That was the view of the law.

In 1955, Mr. Bricker, in-house counsel to Universal Studios, said exactly the same thing.

So it's absolutely clear that this was the view of the studios.

The--

Unknown Speaker: Does that make it binding on the courts, that it was the view of the studios?

[Laughter]

Mr. Anderson: --Well, Your Honor, I think to the extent that Petitioners are claiming a lack of fairness in this result, then I think it is something that the Court should consider.

In fact, I believe in Fred Fisher the Court talked about industry practices; in DeSylva they talked about industry practices.

In some instances--

Unknown Speaker: You know, it also goes to show, I would assume, whether the skies will fall if we continue what they have assumed to be the rule.

Mr. Anderson: --And that was my second point, Your Honor.

Thank you.

That the... that movies are made in contemplation of the risk that continued rights to distribute the film are going to evaporate.

Singing in the Rain was five years.

If I could get back to the Paramount example.

Paramount Pictures paid for the production of the Rear--

Unknown Speaker: I suppose the other side of this is that maybe these all did turn out well, but there's also been some motion picture companies that have gone bankrupt over the years.

Mr. Anderson: --I know of no, and there is no indication in the record of a motion picture company that went bankrupt because of this issue.

Unknown Speaker: For this reason.

But you also don't know how many deals might have been turned down because of this concern.

The fact that they made some transactions doesn't mean that there weren't some that were turned down for... because of... because it's certainly an obvious risk of some importance.

Mr. Anderson: I understand the Court's point, and I would again note that Universal, which is the subsidiary of Petitioner MCA, never came up with a single instance of deadlock.

Clearly, if anyone can do it Universal can do it.

The amicus, who are all the other major production companies except Disney, which is not joined in the petition before this Court, no one has been able to come up with any evidence that a film evaporated because of this specter of copyright death.

Unknown Speaker: Well, didn't it even... the dissent in Miller agree that a widow and children would take precedence over the assignee of the renewal term?

Mr. Anderson: Yes, Your Honor.

The point, as I understood it, in the dissent to Miller music was that that rule should not be extended to executors.

Unknown Speaker: And that was the dissent's point?

Mr. Anderson: Yes, Your Honor.

Unknown Speaker: But is that still the case, that widows and children are especially protected?

Mr. Anderson: Yes, Your Honor.

It is still the case under the inalienable termination rights.

And it is, again, extended to authors who survive.

Authors, widows and children can come in and terminate a--

Unknown Speaker: So assignees have always had the risk of being upstaged by a widower or children?

Mr. Anderson: --Yes.

Absolutely.

That goes back even before Fred Fisher.

And Fred Fisher, although it has been criticized, was accurately precicted by the majority of the commentators.

The... if I could just make the one point about Paramount.

Paramount Pictures paid for the production of the Rear Window film... never got the copyright in the film, because what it did was it advanced the production costs so that it could be made in the name of Patron.

Patron then got the copyright.

And what Paramount got was the right to distribute the film for eight years.

So here you have a motion picture company that had the absolute--

Unknown Speaker: From who did Paramount get the right to distribute the film for eight years from?

Mr. Anderson: --From Patron.

Unknown Speaker: The Patron?

Mr. Anderson: Yes, Your Honor.

It's a relatively common practice nowadays.

So Paramount when... made this investment through Patron but knowing that it would have no right at all to exploit the film past eight years.

An agreement was reached where that was extended, but initially they were limited to an eight-year term.

So the concept that a derivative work might not be made employing existing materials because of risks that might come up in four or five, eight years, simply is not borne out by the facts or the historical record.

And as Justice O'Connor pointed out, what's more likely to happen, and I believe it will happen with the supposed conflict between pre-'78 and post-'78 works, is that you'll get the works used but the price is going to reflect the risk.

And of course, that's always been the case.

And in fact that's one of the problems with the Rohauer decision.

The price paid to Mr. Woolrich for the renewal rights reflected the risk that they would never vest.

If this Court were to adopt Rohauer, the studios, who have never paid for the rights from the statutory successors and never paid consideration that was equal to a vested right to continue to use, would nevertheless get a vested right.

Unknown Speaker: Well, did the studios pay no attention to Rohauer after it came down, when it was the only court of appeals opinion in the field?

Mr. Anderson: The petitioners and the motion picture studios who filed their amicus brief claimed that they had relied on Rohauer for the 11 years and that that should be a fact that the Court should consider.

Now, the Court did deny cert, in Rohauer, and we think that the Court should have a free hand to rule on the issue on the merits instead of what may have happened over the last 11 years.

But the points I would... the more obvious reasons why they could not have... reasonably... I'm sorry... reasonably relied on the Rohauer decision was that within two years the Ninth Circuit Court of Appeals said that Rohauer was unconvincing and did everything except knock it off the books in the Ninth Circuit.

The... also, furthermore--

Unknown Speaker: Well, all that would do was create a conflict.

I mean... the Ninth Circuit isn't superior, even in California.

Mr. Anderson: --Yes, Your Honor.

But it sure put the studios on notice that if this issue came up in the Ninth Circuit, what happened--

Unknown Speaker: It might go the other way.

Mr. Anderson: --Exactly.

Professor Nimmer immediately called the Rohauer decision plainly wrong and said that he doubted that other courts might follow it.

But on also--

Unknown Speaker: Wait.

How much weight should we give to a professor, admittedly a... respected authority in the field, calling a decision wrong?

Mr. Anderson: --My point is the weight that the studios give Mr. Nimmer.

And that weight was--

Unknown Speaker: To what extent does that bind this Court?

Mr. Anderson: --Your Honor, it's a treatise; it's a commentary.

And I'm not saying that it binds this Court.

Unknown Speaker: Well, I hope you're not.

Mr. Anderson: But I am saying that for the studios to say that they reasonably relied on Rohauer, when the premier authority in the field said that it was plainly wrong, I think that someone should think twice about how much reliance they actually did put on Rohauer.

Furthermore, Rohauer involved the showing of a preexisting print that was made... they made one videotape copy and then showed that preexisting print over a public television station.

What the petitioners have done here is made several thousand new 35-millimeter print versions of the film, and made several hundred thousand new videotape copies.

Each time they made a new copy that was an infringement of a separate and different right than the one that was involved in Rohauer.

So to say that the studios could reasonably rely on Rohauer, which was referred to as unconvincing within two years by the Ninth Circuit... by the way, also in 1977 in the Register's report, it called Rohauer one of the biggest surprises under the 1909 act.

When you have the Register saying it's a surprise; when you have Rohauer carefully noting that only one videotape was made and it was a preexisting print, for the studios then to march out boldly making thousands and thousands of new copies, distributing works in videotape form and otherwise going far beyond Rohauer, then I think that their just... their reliance on Rohauer is clearly not justified.

Unknown Speaker: Does your position differ in any way from that of the Registrar of Copyrights?

Mr. Anderson: No, Your Honor.

I think that the Registrar of Copyrights put it very well.

The only caveat I would add, though, is that there's that one language which Petitioners have tried to find shelter in... that it's a confusing area of the law.

And if I might just explain a little.

There is no doubt that some provisions of the renewal... excuse me... some of the renewal provisions are confusing.

It wasn't until within the last year that a district court squarely dealt with the issue of what happens if an author, at the beginning of the 27th year, renews the copyright and then dies and then someone else comes in... his statutory successor.

So there... it's clear... and that I think was the kind of uncertainty that was left open to construction.

And--

But as far as this issue goes, I think the Registrar hit the nail on the head when, in the brief, they say that this case presents a straightforward interpretation of Fred Fisher and Miller Music.

The petitioners' counsel has attempted to explain Rohauer, or to justify it by saying that what it does is it gives effect to the consent of the author.

And the problem... and it limits the new uses, or the continued use to that consent.

Well, there are several problems with that.

And the first one is that you can read Rohauer and you will never find the Court itself expressing that opinion.

That is the general interpretation of Rohauer because that is all that the defendant wanted.

However, in Petitioners'... at the district court level, Petitioners, in one of their memorandums, which appears as Docket Number 101 at page 19.

They--

Unknown Speaker: xxx the office created by statute?

Mr. Anderson: --Yes, it is, Your Honor.

One of the provisions of the Copyright Act provides that the administrative functions will be exercised by the Registrar of Copyrights.

I believe that section is--

Unknown Speaker: What is he supposed... what is he supposed to know about the substantive meaning of the Copyright Act?

Mr. Anderson: --Your Honor, I think the Registrar is the person... or is the person who is in charge of the administration of the Copyright Act.

For one, has to decide--

Unknown Speaker: He isn't entitled to issue regulations about what the statute means, does he?

Mr. Anderson: --They do issue guidelines or the Registrar's compendium of practice whether that is a "regulation"--

Unknown Speaker: Is the Registrar authorized to appear in court on his own, without appearing through the Solicitor General?

Mr. Anderson: --Since they have, I sure hope they are, but I... frankly, I can't answer that question.

It was not something that was either raised in Petitioners' reply or otherwise.

They have... the Registrar has nevertheless appeared and has nevertheless urged affirmance of the Ninth Circuit's decision.

The point that I was about to make was that in the district court, the petitioners said that there was no limit in Rohauer that prevented the petitioners from making remakes of their... of their film.

When we came back and said that that would... has blown Rohauer completely into... into new abuses, they back-pedaled and said: Well, what Rohauer was really trying to effect was limiting the new uses to the scope of the consent that was given by the author.

And there are some substantial problems with that.

Mr. Woolrich consented to... if Mr. Woolrich consented to remakes, why is it that Petitioners can't make remakes, if the point of Rohauer is that it gives effect to his consent?

If, as Petitioners now state, that it's limited by the extent to which they exercised their rights... well, they never exercised the right to make videotape copies.

But now they've made millions of dollars exploiting videotape copies.

So it's very, very difficult to find out intellectually where Rohauer ends and where you... what effect you give to the consent of the author, assuming that you want to give any effect to it in light of the Court's holding in Miller Music.

The... excuse me.

The other problem with Rohauer is that it gives no compensation at all to the owners of the statutory... the owners of the renewal copyrights and books.

The petitioners have said that my client received the rights to the renewal copyright for $650.00.

The actual transaction was that he was going to share with the trust... excuse me... created by Mr. Woolrich's Will, 10 percent of all monies generated.

This is a transaction that Chase Manhattan Bank handled as the trustee... that they're very happy with.

And there's been no claim of overreaching from them, although Petitioners would like to make that claim here.

The main point that I would like to make, though, is that this is not a case between Jimmy Stewart... although it's a case between Jimmy Stewart and Mr. Abend, it is not an issue solely between them, that this case will have far-reaching effects.

The vast majority of the renewal copyrights are owned by the children and the widows of authors who had films made based upon their books.

And the question is, will they participate in the profits that are generated, directly attributable to the use of the stories and novels in the second term of copyright, what the petitioners claim is an entitlement to a second chance to use their film.

As I've noted, they're confusing the use of the film with the use of the new matter.

What they're really asking for is a second chance to impose the bad bargain that the author made on his statutory successors.

Here is Mr. Abend; in another case it's going to be the next of kin of the woman who wrote Gone With the Wind or the Sound of Music or Dr. Zhivago.

Unknown Speaker: Mr. Anderson, before you get into all those other works, do you agree with the Ninth Circuit's ruling on remedy, that you have no right to an injunction?

Mr. Anderson: Well, Your Honor, the problem that I have with that is... first of all, we didn't ask for an injunction before that appeal went up.

Unknown Speaker: I'm very interested in whether you agree with the Ninth Circuit's view.

Mr. Anderson: Well, I do not agree--

Unknown Speaker: You do not agree.

Mr. Anderson: --as to our case for the simple reason... for instance, the court says that we haven't made a showing of irreparable injury.

We never were required to because we did not move for a preliminary injunction and we did not move for a temporary injunction.

We did not ask for a summary judgment.

In total, we asked only for a summary judgment because--

Unknown Speaker: You don't think the remedy is limited to just some kind of statutory damages or royalties?

You think you could actually enjoin the production to--

Mr. Anderson: --Well, Your Honor, I think that the court properly said... the Ninth Circuit properly said that injunctive relief has always been discretionary.

And I think that the amount of new matter that is included in a derivative work is one of the factors that the court could consider in a proper court... in a proper case, after a full briefing and with all the evidence, that a court might say that an injunction is an improper remedy.

Unknown Speaker: --Thank you, Mr. Anderson.

Mr. Petrich, you have four minutes remaining.

Rebuttal of Louis P. Petrich

Mr. Petrich: Thank you, Your Honor.

I wanted to comment on the fact... answer the question raised by counsel about where Rohauer ends.

It ends precisely where the present statute ends.

If the statutory successor takes over, the derivative work owner may only continue to exploit the existing work to the extent that he was given the right to do so by the original arrangement.

It would... following the Second Circuit--

Unknown Speaker: Well, let me be sure I understand that.

That's how you include the videotapes, because you said he has the right to--

Mr. Petrich: --That's right.

Unknown Speaker: --But what if... what if he hadn't produced anything?

You had the right to produce a lot of things by the original range of things.

Mr. Petrich: If we had not produced the film, we would have nothing.

Unknown Speaker: Well, then, why can you produce videotapes?

Mr. Petrich: Because they're simply a version of the film; they're just a copy.

It is--

Unknown Speaker: Well, that's the point.

They are a copy.

Mr. Petrich: But they are just additional copies.

I mean, there is no reason... if you're going to allow us to use the film, there's no reason to make us take one print around from each theater.

We have... it seems to me that it's reasonable that we have a right to make enough copies that they could be marketable in the way that the product is usually marketed.

Unknown Speaker: Well, you don't have to take one book around from one bookstore to another.

Mr. Petrich: I would hope not.

And certainly, that's not the... what Congress thought was a reasonable result in 1976, although I'm not by any means saying that what the Congress did in 1976 has to govern what is done here.

In fact I should point out that counsel is wrong.

In our brief, at page 41, we say that the fair-use issue is determined by the 1976 act because the conduct which gives rise to the fair use all occurred after 1976.

But the renewal issue and the effect of the death of the original author and the renewal by the executor all took place before 1976.

There's no way that the 1976 act could determine the effect of that 1970 renewal.

And it's not reasonable to say that Mr. Woolrich didn't get fairly compensated.

There's no record of that.

All that's in the record is that he sold five short stories to people who were willing to take a chance that they might use some of them in a film someday, and that he got a payment of $9,200, which in 1987 was worth something between $50,000 and $100,000.

It was entirely up to him whether or not he wanted to take that as a lump sum.

And for all we know, he put it in real estate and it came out better for him.

But it... I just... it's not reasonable to look backwards and try to second-guess what made Mr. Woolrich happy in 1945.

As far as the special expertise of the Registrar and Professor Nimmer, I want to point out that in 1960 the Registrar said that the... that she thought it looked like, in the case where a work... or the first term of copyright had expired by agreement, maybe you couldn't use that work any longer.

And she cited it for that... the Ricordi case... not this Court's decision in Miller Music, which had come out earlier in the year, in which she cited Ellsworth throughout her study.

She relied, not at all, on the Miller Music case.

And Professor Nimmer, who wrote the treatise on this, from 1963 to 1977 said not a word about Miller Music as being the guide in this case.

He, too, relied on the Ricordi case, which Judge Friendly pointed out had nothing to do with this case.

And in fact the re-reading of the district court's decision in Ricordi will show that Paramount Pictures, in that case, who was... in the case of Mr. Abend, conceded that the owner of the opera had the right to continue performing the opera... had the right to grant new rights.

Chief Justice Rehnquist: Thank you, Mr. Petrich.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Community For Creative Non-Violence v. Reid - Oral Argument

Sun, 06 Feb 2011 03:46:51 +0000

Case:

Community For Creative Non-Violence v. Reid

Media File:

88-293_19890329-argument.mp3

Related Transcript:

88-293_19890329-argument.xml

Transcript:

ORAL ARGUMENT OF ROBERT ALAN GARRETT ON BEHALF OF PETITIONERS

Chief Justice William H. Rehnquist: We'll hear argument first this morning in No. 88-293, Community for Creative Non-Violence, et al., versus James Earl Reid.

Mr. Garrett.

Mr. Garrett: Mr. Chief Justice, and may it please the Court:

This case, your Honors, involves a dispute over who has the rights, under the 1976 Copyright Act, to authorize reproductions of a statue entitled "Third World America".

The Community for Creative Non-violence, which is a homeless activist organization located here in Washington, originally had Third World America produced in order to serve as a symbol of the cause that they espouse and to help raise national consciousness about the plight of the homeless here in America.

Consistent with that purpose, we would like to be able to disseminate as widely as possible throughout the United States reproductions of Third World America in the form of Christmas cards, posters, and other media, and then to apply whatever revenues are generated by those reproductions to help fund the work that we do with the homeless.

Mr. Reid, however, says that we cannot do so without negotiating his permission.

Mr. Reid claims that he and he alone has the right to authorize reproductions of Third World America and to profit... and to derive any of the profits that are associated with those reproductions.

Now, there's no written agreement in this case between Reid and CCNV.

We basically had a handshake agreement.

CCNV, which depends upon volunteers to perform all of its services, asked Mr. Reid to donate his services to sculpt figures in Third World America.

Mr. Reid agreed to do so, saying that he too was concerned about the homeless.

And believing that all parties here were pursuing a common objective, we then proceeded to pay Mr. Reid $15,000 to cover his expenses, such as the rent on his studio, the various utilities, bills, the cost of his assistants, and the materials.

After the project was completed, after we had paid Mr. Reid the $15,000, and after we had given him the experience that we had of years of dealing with the homeless and our creative direction in sculpting the statue, Mr. Reid told us for the first time that his concerns for the homeless did not extend so far as to relinquishing his claim to what he considers to be the very valuable reproduction rights in Third World America.

Believing that this was inconsistent with the spirit of the arrangement that we had worked out with Mr. Reid to begin with, and believing that any revenues that should be derived from Third World America should go to the benefit of the homeless and not to the benefit of any single individual, we filed this litigation.

The issue before the Court--

Unidentified Justice: Excuse me.

It goes to some individual, either to Mr. Reid or to your organization.

If your organization chooses to give it to the homeless, that's certainly your organization's business.

You don't assume... you don't assert you're bound to give it to the homeless.

Mr. Garrett: --We will--

Unidentified Justice: You just assert you're entitled to it.

Mr. Garrett: --We will in fact use it--

Unidentified Justice: So it really isn't the homeless against Mr. Reid.

It's you against Mr. Reid, as I understand the case.

Mr. Garrett: --We will in fact use the revenues that are derived from this, your Honor, to benefit the homeless, to help fund the various programs that--

Unidentified Justice: Well, that's nice, but you don't have to.

Mr. Garrett: --That is correct, your Honor.

Unidentified Justice: And Mr. Reid could come in and say the same thing.

It wouldn't make any difference to the case.

Mr. Garrett: Our only purpose, your Honor, is to serve the homeless.

The only programs that we run are for the homeless.

There is no other place that we will use the--

Unidentified Justice: But that has nothing to do with this case.

Your legal position would be unchanged if you were going to use the money to... whatever... for any other purpose, right?

Mr. Garrett: --That is correct, your Honor.

Unidentified Justice: Okay.

Mr. Garrett: The legal issue before the Court is whether during that seven-week period that Mr. Reid worked full-time on the Third World America project he and CCNV had an employment relationship within the meaning of the work-for-hire provisions of the 1976 Copyright Act.

In resolving this issue, the Court will effectively establish guidelines for determining the circumstances under which one who hires an artist to produce a work will be the copyright owner of that work absent a written agreement to the contrary.

Unidentified Justice: Mr. Garrett, I take it the principle to be established, though, has far-reaching consequences and would affect software programs commissioned by a company or employer.

Mr. Garrett: That is correct, Justice O'Connor.

Unidentified Justice: And written work and research that's ordered to be produced by someone.

Mr. Garrett: Yes, your Honor.

I think from various amici briefs that have been filed in this case it is clear that the issue to be decided here has ramifications well beyond our organization and extends generally throughout the entire copyright community.

After our two-day bench trial, the district court found that we had the right to artistic control of the production of Third World America.

In applying what has been referred to as the historic control standard that had originally been developed by the courts under the 1909 Copyright Act the district court held that there was a work-for-hire employment relationship between CCNV and Reid and, thus, Third World America is a work-for-hire.

Now, before the district court, the choice of the standard to be applied under the 1976 Act was essentially non-controversial.

Both Mr. Reid and CCNV agreed that that was the standard by which one determines an employment relationship not only under the 1909 Act but under the 1976 Act which, of course, we were proceeding under.

The case was therefore tried on the basis that there really was no dispute between the parties as to the legal standard.

The district court, as I said, applying that standard held that this is a work-for-hire.

And no one disputes in this case... and, indeed, the D.C. Circuit did not dispute... that if one applies that historic control standard, that this is a work-for-hire employment relationship.

Now, rather, the dispute that has come before this Court turns on whether that standard, the historic standard, is the correct standard under the 1976 Copyright Act.

We agree with the position of the Second, the Seventh and Fourth Circuits, as well as Professor Nimmer, that the historic standard is indeed the correct standard and the district court acted properly in applying it in this case here.

Reid and his various amici, however, have suggested that Congress abandon the historic test of the 1976 Act and they have provided to this Court a variety of different possibilities of tests that the Court could adopt in place of the old historic test.

One interesting fact from our perspective is that neither Mr. Reid not, with one exception, any of his amici, actually urged that this Court adopt the standard on which they won before the D.C. Circuit, which was essentially an agency law standard.

Now, we believe that the reason that so much distance has been placed between the court of appeals agency law standard and the historic standard is that there really is not much difference between the two.

Both turn on the right-to-control.

Now, while there may be some differences that are unexplained by the court of appeals below and by the Fifth Circuit which also adopted that test, again, they basically are going to be looking at the same totality of circumstances to determine whether the hiring party here has the right-to-control.

Unidentified Justice: Well, Mr. Garrett, I take it the Register of Copyrights supports your... the Respondent's view here.

Mr. Garrett: That is correct, Justice O'Connor.

Unidentified Justice: And presumably there would be some deference owing, perhaps, to the Register's understanding of the copyright law?

Mr. Garrett: Your Honor, as we have pointed out in our brief, for a period of almost ten years following the passage of the 1976 Copyright Act the Copyright Office agreed with our position, that it is a right-to-control standard that determines whether there is an employment relationship under the meaning of not only the 1909 Act but the 1976 Copyright Act.

They took that position consistently in communications with Congress and in various publications that they made to the public.

And had the Copyright Office maintained that position consistently, I would agree with you, your Honor, that he should be entitled to some deference.

But they haven't done that.

A couple of weeks ago, in the context of filing amicus brief in this case, the Copyright Office announced for the first time that it was switching from the historic standard to what they call a formal salaried employee approach.

Unidentified Justice: Mr. Garrett, can you tell me your proposed standard.

You say it's right-to-control, but the Respondent's really assert that what you're applying is a de facto control.

Is your test whether control could be asserted or could have been asserted, or whether it in fact was asserted?

Mr. Garrett: Justice Scalia, our position is the historic test, and the historic test is a right-to-control test.

As we point out on page 19 of our brief, it is a right-to-control test.

But the fact of the matter is that in a litigation context that we have here and in most of the cases that arise in the work-for-hire doctrine it's going to be very difficult to establish that right without showing actual supervision and control.

Actual control.

And, in fact, that is what happened in this case.

Much of the testimony that was heard by the district court over the two-day bench trial focused on actual control in order to establish that right-to-control.

But it is right-to-control.

Unidentified Justice: May I ask you another question?

You say there is not much difference between your right-to-control standard and the common law employee standard.

You say they're pretty much the same.

Mr. Garrett: Yes, your Honor, in the sense that they both turn on concepts of right-to-control.

Unidentified Justice: But I... you see, I understand what you mean by right-to-control, the right-to-control the product.

Whether the statute should have these characteristics and what not.

And I don't think that's at all what the common law agent... master/servant law means by right-to-control.

That is to say, even... even if... even if you nave no right to... even if you rave the right-to-control the product, the individual may still be an independent contractor.

You can tell the independent contractor,

"I want the wall with eight angles. "

then you may change your mind and say,

"No, I want it with nine angles. "

And he has to do your bidding.

But he could still be an independent contractor.

What is needed is the right-to-control his physical activity.

To tell him,

"I want you to put the bricks in this way. "

"Knock off at 12:00, come back at 2:00. "

and so forth.

And you're not asserting anything like that.

You're just asserting the right-to-control the nature of the work.

That's quite different from the master/servant law... common law, as I understand it.

Mr. Garrett: Justice Scalia, I believe you are correct.

And that is the difference, as one... as we would see it.

They both turn on the right-to-control.

They both talk about looking at the totality of the circumstances to determine whether some kind of control is present.

Ours is control of the artistic production here.

It is the test, as Professor Nimmer notes in his treatise, that is a variant of the agency law standard.

It is one that has been adopted, really, to serve the purposes and policies underlying the Copyright Act, as opposed to serving the purposes and policies underlying tort law or agency law.

Unidentified Justice: One would think when he uses the word "employee" in a statute that it would connote that brand new thing which is nothing like... which is nothing like what it means at common law.

Mr. Garrett: The position that we take, your Honor, is that this is not a brand new thing that is being connoted here, that this is a test of employment that had been developed under the 1909 Copyright Act and applied for a number of years by the courts.

And that when Congress chose to use the word 101 of the 1976 Act, it was basically carrying forward the same test of employment that had existed prior to the Act.

The position taken by the Copyright Office and Mr. Reid, however, is that it wasn't, even adopting your common law agency stance, but rather some type of formal salaried employee approach.

Unidentified Justice: Do you see the Copyright Office as taking a third approach as between the court of appeals here and the Fifth Circuit on the one hand and then still the courts of appeals that you rely on?

Mr. Garrett: Yes, your Honor.

It's a third approach.

It's an approach that is styled as a formal salaried employee approach.

In fact, the approach that the Copyright Office takes is somewhat different from the approach that Mr. Reid takes and somewhat different from the approach that was taken by the Ninth Circuit in the recent Dumas decision, and it's somewhat different from the approaches taken by various of the amici in this case.

They are all united under the rubric of a formal salaried employee approach, but each has his own slightly different version of what is a formal salaried employee.

And in our view, none of those versions was a version that was adopted by Congress when it adopted the 1976 Act.

Our view is that Congress carried over into the 1976 Act the historic standard.

Unidentified Justice: Well, most of the scholarly writers on the subject, as pointed out by the court of appeals' opinion that we're reviewing here, supported the view, and do support the view, that works made for hire within the meaning of the statutory definition are limited to salaried or like employees and do not include independent contractors even if their work is closely supervised or controlled.

Mr. Garrett: Well, your Honor, unfortunately the court of appeals does not point out, nor does Mr. Reid or any of his amici, that Professor Nimmer takes a quite different view.

Unidentified Justice: Well, he stands almost alone in the scholarly writing in taking that view.

I... I--

Mr. Garrett: I would respectfully disagree, your Honor.

He have cited in our reply or brief, on the final two pages or so, a number of other commentators who also take the same position that we do in this case.

Unidentified Justice: --Of course, Nimmer is a respected... long-respected voice in the copyright field, isn't he?

Mr. Garrett: He certainly is, your Honor, and this court has on other occasions certainly looked to his treatise to help understand the copyright laws.

The basic concern in this case, as in any case with statutory interpretation, is, of course, starting with the language of the Act.

I think the position of Mr. Reid and the Copyright Office and the other amici in this case, is that Congress in fact changed the law in the 1976 Act because it adopted a definition of the term "work-for-hire" for the first time.

There was no such definition in the 1909 Act.

The 1909 Act, however, said in the case of a work-for-hire, the employer is considered to be the copyright owner of the work.

That was Section 26.

In Section 201 of the 1976 Act Congress said in the case of a work made for hire, it is the employer or other person for whom the work has been prepared who is the copyright owner.

And I think it's that simple comparison of language that suggests what Congress was doing in the 1976 Act was adding an entirely different category, a new category, the definition of work made for hire.

Not those that are prepared by employers... or, by employees acting within the scope of employment.

But, rather, those that are being prepared for someone other than the employer.

What they were referring to there was, of course, what eventually became subdivision 2 of Section 101 dealing with commission works.

The essence of the argument on the other side is that Congress, by dealing with this category of commissioned works in Section 101, had effectively abrogated the old historic right-to-control standard.

And we submit that that's not the case.

There is a great deal of controversy over what kinds of works ought to be considered commissioned works and treated as works for hire.

But throughout that controversy there was no suggestion... and there is no suggestion anywhere in either the Act itself, in the reports accompanying the Act, in the Congressional debates, the hearings, the Register of Copyright Office report... that suggests that the old historic standard is being abandoned and replaced by something called "formal salaried employee" simply because Congress was choosing to deal with commissioned works.

Congress did make a change in the 1976 Act.

It dealt with commissioned works and established law, or clarified the law, and changed the law in some respects, that had developed under the 1909 Act with respect to commissioned works.

But It did not change the law that had developed under this right-to-control test.

Unidentified Justice: Why didn't they just say right-to-control?

I mean, if what you say is true, find it extraordinary that they should choose to describe this... what you call this old law by the phrase

"a work prepared by an employee within the scope of his or her employment. "

That's just a very strange way to say that.

Mr. Garrett: Well, I--

Unidentified Justice: They could have said right-to-control... they could have said.

Mr. Garrett: --They could have said formal salaried employee.

They could--

Unidentified Justice: I agree.

Mr. Garrett: --have said continuous salaried--

Unidentified Justice: I agree with you that too.

I'm with you on that one.

Mr. Garrett: --But they didn't.

Our view is, your Honor, that having said 1976, and that is the right-to-control test.

Unidentified Justice: That's not what it meant in the law.

I mean, what it meant in the law was... was master/servant.

Mr. Garrett: You're correct, as a general matter, your Honor.

But I'm talking about what it meant in the copyright law.

We're dealing here with a special... a term that has had its own meaning developed in the copyright law, which is a variant of the meaning that it has developed over the years and the agency law.

And I say they both derive from the notion of right... right-to-control here.

Unidentified Justice: Of course, to the extent that one who pays for the work really is concerned about protecting his or her artistic contribution, I suppose that under the statutory scheme that person who hires can simply contract.

I know hindsight is always difficult to deal with, but in this... in this situation you had the perfect right to contract with the sculptor to say that the copyright would be exclusively yours.

Mr. Garrett: You're absolutely correct.

Unidentified Justice: And that's a very simple statutory scheme.

Mr. Garrett: You're absolutely correct, your Honor.

This problem can be dealt with by contract by the parties.

As I said at the outset of my argument, what you're dealing with here, the situation is in which the parties have not dealt with it by contract.

We are establishing, and the Court is establishing... and the Court is disserting, more precisely, the guidelines that Congress established in the 1976 Act.

And, given the number of amici who participated in this case, this is obviously not a problem that is... that is where there is no contracts.

It's no obviously a problem that's simply limited to our particular factual situation where we have a voluntary society dealing with an artist who presumably knew what contract or copyright law means and who never took the time to either tell us that he was reserving for himself the copyright or what he intended to do with the work afterwards.

But you are right.

It can be dealt with by a contract here.

One of the problems that is noted by Mr. Reid and the Copyright Office is that this is a right-to-control test.

It is a test that is going to result in artists, freelance, artists always giving up their rights.

It is an easy test to satisfy.

And that is not our case.

I think one has to distinguish, as the courts have distinguished, between the right-to-control and supervision and direction, and the right to simply approve or reject a work.

The right-to-control test is not a difficult... or, is a difficult test to meet in the facts of the case.

They were met here, as the district court found, at the--

Unidentified Justice: Are you saying the right-to-control test as traditionally applied in master/servant law, workmen's compensation, that sort of thing, to define a distinction between an employee and an independent contractor?

Mr. Garrett: --No, your Honor.

I am saying that it's the right-to-control test, the right-to-control the artistic production, as Justice Scalia noted at the outset, which as Professor Nimmer notes, is a variation of the--

Unidentified Justice: Well, then you have a very difficult time with the word 1, it seems to me.

Mr. Garrett: --Well, our position, your Honor, is that the term 1909 Copyright Act to encompass this right-to-control test, a right to artistic control, a right to supervise the manner in which the work is performed.

That is the test that the district court applied in this case, and found that it was satisfied.

Unidentified Justice: Mr. Garrett, I do think that... for me, at least... it's important to your case that the word pre-76 old law, as you call it in that sense.

And I'm not sure that's true.

One of your major authorities for what the old law was, is Varmer, his 1958 study.

And the part of that study that you choose to italicize because you think it's so crucial is the following sentence.

21 of your brief.

Mr. Garrett: Yes, sir.

Unidentified Justice: "Underlying this distinction between", that is, between employer/employee and commissioned products,

"is the premise that an employer generally gives more direction and exercises more control over the work of his employee than does a commissioner with respect to the work of an independent contractor. "

I read that to say that the reason the copyright law has drawn the line at the old master/servant line is that generally speaking the master exercises more control.

But the criterion is master/servant.

The reason we've selected that criterion is because he generally exercises more control over the artistic product.

But that's not the test.

That's how I would read Varmer anyway.

Mr. Garrett: I think Varmer recognizes that there are situations in which that control is not going to be exercised, and that's why he uses the term "generally".

It is, as we said earlier, a right-to-control test.

What has been done here is simply to adopt the standard under the old law that had some meaning for copyright law.

What we're talking about in a copyright law is encouraging creative activity... encouraging creativity, the type of creativity that we think CCNV has supplied in this particular case.

The test that the courts had applied was one of right-to-control that artistic production.

Unidentified Justice: I think the court of appeals, though, agreed with you that prior to 1976 the right-to-control test had predominated?

Mr. Garrett: Yes, your Honor.

The view of the court of appeals, however, was that that test had been changed in the 1976 Act.

Unidentified Justice: By the Act?

Mr. Garrett: By the Act.

By the fact that Congress in Section 101 subdivision (2) dealt with commissioned works.

Our view is that that's all Congress dealt with in Section 101(2), is with commissioned works.

It was not intending to abrogate a standard that had already existed in the law here.

Unidentified Justice: And that standard, under the prior Act, was an interpretation of employee or employer?

Which?

Mr. Garrett: The only word used in the 1909 Copyright Act was "employer", your Honor.

Unidentified Justice: Employer.

Mr. Garrett: The courts, however, had taught generally in terms of right... in terms of the employment relationship, as Professor Nimmer notes in his 1963-1976 versions of the Treatise on Copyright Law.

The... Much of what has been discussed by the Copyright Office and Mr. Reid goes to the concern of predictability and really policy arguments that have been raised here.

The notion that the control test is one that is unpredictable and, therefore, should not be adopted.

Our view, of course, is that the test is no more or less predictable than it was prior to the 1976 Act.

It is no more or less predictable than the agency law control standards.

And, indeed, when one looks at the Ninth Circuit case, the Dumas case which lists a whole series of factors that one looks at in order to determine even formal salaried employment relationship, our test, the historic test, is no more or less predictable than that either.

Questions of predictability are questions that ought to be addressed, if at all, to Congress.

Congress, of course, has been presented with the formal salaried employee argument by various amici participating in this case ever since the year 1982.

Our position is that's the first year in which that particular test has ever been surfaced before Congress.

If they feel that this is a better test, it's Congress that should be the one to adopt it.

Now, they didn't do so in the 1976 Act.

With your Honor's permission, I would like to reserve the remainder of my time for rebuttal, please.

Chief Justice William H. Rehnquist: Very well, Mr. Garrett.

I neglected to say at the opening of this session that Justice Brennan is unavoidably absent due to a death in the family.

He will participate in today's cases on the basis of the transcripts and the tapes.

Mr. Kaufman.

ORAL ARGUMENT OF JOSHUA KAUFMAN ON BEHALF OF RESPONDENT

Mr. Kaufman: Mr. Chief Justice, and may it please the Court:

In the fall of 1985 Mitch Snyder called James Reid.

They had two conversations on the phone.

Mr. Reid then agreed to create a work of art for CCNV.

At the inception of their relationship James Earl Reid was an independent contractor and he was going to create a commission.

And that is true under any standard or any test.

Section 2 of the work-for-hire definition deals with commissions.

It lists nine very specific categories of works which can be deemed works for hire when created by independent contractors.

Sculpture is not one of those nine works or categories listed.

It also requires a writing.

There was no writing in this case.

No work-for-hire situation, relationship, was created under the language of the Act.

As the Ninth Circuit just found in Dumas, it one holds himself out as an independent contractor, the commissioner is on notice, and that they must take certain actions to insure that the Section 2 requirements are fulfilled.

James Earl Reid--

Unidentified Justice: Mr. Kaufman, how do you distinguish the test used by the Ninth Circuit in Dumas from that used by the CACC in the opinion we're reviewing?

Mr. Kaufman: --I think that the Dumas test provides a greater degree of predictability.

The salaried formal employee and the agency test are slightly different.

There are certainly areas of overlap but we look to--

Unidentified Justice: The Ninth Circuit would say unless you're a salaried employee... that's it?

Mr. Kaufman: --It looks at Section 1, an employee within the scope of his or her employment.

And that's an employee.

It looks at the ordinary meaning of the word, the one that is understood by most people, and that's where they stop.

In Section 2 it deals with independent contractors and commissions.

And those are very understood words.

A commission--

Unidentified Justice: You think the Ninth Circuit would not look to the old common law of master/servant?

Mr. Kaufman: --No, I do not.

I think only where that would apply to a salaried employee.

But I think it's a different criteria and I think they look at the most common ordinary use, the most predictable use.

Unidentified Justice: And what standard do you suggest is proper?

Mr. Kaufman: We believe that the Dumas test is the best standard.

We believe it provides the greatest predictability.

Unidentified Justice: So you don't support the standard adopted by the CADC?

Mr. Kaufman: We believe they came to the correct conclusion and we think that it is the second-best test.

Compared to the Aldon test it is by far superior.

But we think that the Dumas test, as recently enunciated just a month ago, does provide the best test of the three that are before the courts by the various circuits.

Unidentified Justice: Well, can you give an example of a case which would come out differently as between the D.C. and the Ninth Circuits?

Mr. Kaufman: The situation where you would have someone who would be an agent but nut a salaried employee.

Unidentified Justice: What about a piece worker?

Mr. Kaufman: You would have a... a piece worker... under the agency which we look at respondeat superior perhaps a piece worker where they don't have FICA withholdings and you don't get some of the other benefits... but they are under the control, the ten categories of control that are set out in the restatement, you might have a situation... and probably not regularly but not infrequently... where you would not have some indicia of formal salaried employees, workmen's comp, like I said, withholding, FICA, and some of those others, but would satisfy the various control tests.

Unidentified Justice: Mr. Kaufman, I don't really agree with you that the common meaning of employee is salaried employee.

I think when you mention employee to the person in the street the first they think of is a salaried employee.

Just as if you mention a dog, the first thing they think of is an animal with four legs and a tail.

But I have a dog that doesn't have a tail and nobody thinks it isn't a dog.

[Laughter]

And I think if you describe... if you describe to somebody on the street a pieceworker, as Justice White just suggested, let's say somebody that works for the International Ladies' Garment workers Union but gets paid instead of per... you know, by the hour, by the number of dresses that he or she completes.

I don't think the person would think that that person suddenly is no longer an employee.

I think you've snatched this concept of hourly wages just out of the air.

Most employees are like that but I don't... I don't know that that's a common meaning of employee.

Mr. Kaufman: Well, I don't think that a formal salaried employee is... the method of payment in the sense of a salary is merely a weekly... it could be based on a long-term job.

It could be based on piece.

It could be on commissions, commission and salary.

There are many ways that a formal salaried employee--

Unidentified Justice: What about the people that your client hired to help him in... in doing this statue?

Suppose he told them,

"I just want you to help me on this one job and don't you to help me on any others. "

"And I'm going to pay you $500 for the whole job. "

"I want you to follow my instructions. "

"Where I tell you to curve, you curve. "

"Where I tell you to make a sharp corner, you do that. "

"You report to work when I tell you. "

"You leave when I tell you. "

They are not employees within the meaning that you would urge upon us, right?

Mr. Kaufman: --No, they would not be employees.

They would--

Unidentified Justice: Well, that's very strange.

Mr. Kaufman: --Under agency law they probably would, but not under the formal salaried--

Unidentified Justice: I think even the man in the street would consider them employees, plus the traditional legal connotation of employee.

Mr. Kaufman: --We think they would fall outside this definition.

Unidentified Justice: But the statute says employee within the scope of his or her employment.

So, you have to read something else into that language--

Mr. Kaufman: Correct.

Unidentified Justice: --for your view.

Mr. Kaufman: You have a full-time salaried employee... let's assume they work 9:00 to 5:00 or whatever the hours are.

Unidentified Justice: Well, I suppose that just includes wages too, doesn't it?

Mr. Kaufman: Pardon me?

Unidentified Justice: That just includes what would be called wages, I suppose.

Mr. Kaufman: Salary would be wages, yes.

Well, whatever they would be.

Unidentified Justice: Okay.

Mr. Kaufman: They could be commissions.

It could be... but--

Unidentified Justice: Excuse me.

Who doesn't work for wages?

I mean, if that's all you mean by salaried.

You mean it just excludes those who are working for free?

Mr. Kaufman: --No.

You can have many different forms of wages.

You look at the entire picture to see... when they are an employee, you look at the various criteria that Dumas has set out.

You look for the various aspects of benefits, taxes--

Unidentified Justice: Well, you've given me a whole new theory.

I thought salaried meant what salaried normally means, you get paid on a regular basis.

Weekly, monthly, annually.

Not by the piece.

Mr. Kaufman: --But if your long-term relationship with your employer is based on a piece salary, on a commissioned salary, you can be on salary and commission both.

I'm not looking at it in the sense of... I don't believe the Dumas court looked at it that it has to be that you're paid biweekly for a salary.

A salary can take many different forms.

And as long as it is there on a regular--

Unidentified Justice: Including commission?

Mr. Kaufman: --Of course.

You can have people on--

Unidentified Justice: Oh, boy.

Mr. Kaufman: --a commission as well as a... you know, you get paid "x" dollars an hour plus a commission and be a regular salaried employee.

Yes.

Unidentified Justice: I thought they were opposites.

You know, do you work on salary or you want commission?

I work on commission.

You're telling me it's at the same.

Salary is anything.

Mr. Kaufman: As long as it maintains a regular type of pattern, it could be a salary.

Yes.

Unidentified Justice: I don't think you had an opportunity to finish answering justice O'Connor's question.

Mr. Kaufman: That's correct, your Honor.

Under the salaried employee test or under the definition... excuse me... of the copyright law, you nave the opportunity to work for your employer within the scope of the employment from the 9:00 to 5:00 position, and if you create something outside of that scope, it is the creator's.

It is not the employer's.

That's one of the interesting problems with the test presented by Petitioner.

It's that everything created under their test, by definition, becomes part of the scope of the employment.

There is nothing that you can create as part of the relationship that outside the scope of employment, thus, rendering the second half of the definition meaningless.

One of the interesting points when we were discussing... Petitioner was bringing up the issue of this historic definition.

It was historic... it was in existence for nine years, from 1966 to 1975.

Prior to 1966 independent contractors were never considered employees under the work-for-hire doctrine.

And if the Court looks at the legislative history of this case, which is very similar to the legislative history in Mills Music which you ruled on, it was the same legislative history, and it took place in 1965.

In 1965 independent contractors were not employees within the scope of employment.

There were other problems with them.

And it was the law in 1965 which is what was enacted in 1976.

The legislative history for this law was very unique.

What happened was that we had a 1909 Act that was becoming rapidly obsolete because of the technological advances.

Many special interest groups were before the Congress and they could not pass legislation.

There was a legislative gridlock, so to speak.

So Congress, through its agent, the Copyright Office, went out on a different trail to break this impasse.

What they did was they commissioned studies and reports.

And then they brought all the players together.

The Copyright Office picked representatives who they felt represented the various interests, sat them down, and forced them to negotiate together until they came up with a consensus.

And this consensus... and this type of process happened in cable, fair use, termination, manufacturing clauses.

It is replete throughout the whole process.

And those compromises is what was enacted into law in 1976.

In 1965 the termination and the work-for-hire hearings all took place and ended.

And in 1976 when the law was enacted, it was almost identical language that came out of these negotiations and hearings in 1965.

That is the language in the statute.

And the law at the time did not have independent contractors, employees for hire.

That came afterwards.

That was not what was before the Congress.

It was not the compromise, as part of the compromise which they adopted.

And that is clear from the case law and from all the different participants at the hearings.

We cite extensive quotes.

And it didn't matter which side of the table they were on, be in industry or the artists, they all used the term "employee" as a formal salaried employee.

We think that is what was meant at the time.

Unidentified Justice: You have a statement in your brief that says,

"when interpreting the meaning of the statute, one looks to the ordinary meaning of the words used. "

Mr. Kaufman: And we believe that the Dumas court was correct in looking at it as the salaried employee.

I know Judge--

Unidentified Justice: Is that the... you can't really believe that that's the ordinary meaning of employee.

Just salaried employees?

Mr. Kaufman: --I think when people are... the ordinary meaning of the word "salaried employee"--

Unidentified Justice: But you're willing to go by that then, to take the ordinary meaning of the word rather than what's revealed in the hearings or something like that?

Mr. Kaufman: --No.

I think the hearings are in sync with that.

When they... if you look at the language of the participants in the hearings and the cases prior to 1965, you'll see they used the term "employee" in the formal sense of the word.

And they had... again, we have quotes in there where they talk about how... oh, we don't have to put these people on the payroll and make them salaried people, that would be such a problem, and so on.

And it is... the record is replete with references to salaried employees, and that's what the case law also was in 1965.

I do believe that the man on the street, if you say to them the ordinary meaning of who is an employee, they think of the very traditional relationship of somebody who goes to work 9:00 to 5:00, gets benefits, taxes withheld.

I think that's what people think of as an employee.

I think agency... the definition of agency is very widely used but it's a lawyer's definition of the word.

It is not the ordinary common... I think when you take a step back--

Unidentified Justice: Mr. Kaufman, do you take the position that the employee must nave been an employee before the arrangement for the particular work of art was made?

Mr. Kaufman: --Either before or that was part of the negotiations at the outset of it.

You can go to somebody, hire them as a formal employee so that the work that is created afterwards can be--

Unidentified Justice: Can you provide in the agreement that he'll be discharged when the work is completed?

Mr. Kaufman: --If it's for a sufficient amount of time.

Unidentified Justice: Supposing in this case, say, it takes five months to build this work of art.

Supposing at the start when they talked about $15,000, they said,

"We'll pay you $3,000 on the first of each month. "

and by then you've already indicated you'll be through with the job.

And we'll pay you that amount no matter what time you finish but presumably within the time.

Would the artist have been an employee then?

Mr. Kaufman: It depends on the rest of the contract.

Will they be getting other benefits?

Unidentified Justice: Well, the rest of the contract is we want you... you know, we want to get this work of art done and--

Mr. Kaufman: No.

Then they would be--

Unidentified Justice: --and we want you to prepare it the way we designed it.

It's our idea and we want you to build this work of art.

Mr. Kaufman: --No, I don't believe if it was

"go create it and we'll give you $3,000 at the beginning of every month. "

--I think he's an--

Unidentified Justice: No, not "go create".

Prepare it in accordance with our conception of the plan.

Mr. Kaufman: --I still think that's an independent contractor.

If they said, come into our shop where you can accrue benefits, we'll do workmen's comp, we'll do withholdings and the other indicia of salaried employee--

Unidentified Justice: Do you think you need workmen's comp and withholding?

Mr. Kaufman: --They vary... withholdings, workmen's comp, and how they treat their other employees.

Do they give them vacations?

Unidentified Justice: Well, their other employees don't get anything in this particular organization.

Under that test it seems to me you might well not be so successful--

Mr. Kaufman: The--

Unidentified Justice: --Because they don't treat other employees by paying... by taking withholding and all the rest of it.

Mr. Kaufman: --They may not have any employees, is what I believe.

They have volunteers and people who are independent contractors who do their work.

But I don't think any of the people who volunteer for CCNV are employees.

No.

I think there has to be an employment relationship, not a volunteer relationship.

Unidentified Justice: Mr. Kaufman, can I ask you about your assertion earlier that we should adopt your interpretation because only that gives meaning to the phrase

"within the scope of his or her employment. "

in the statute.

I don't know... let's go back to the example earlier.

You acknowledged that if your... if the workers that your client hired were just paid by the job.

Say,

"Work for me and I'll give you $500 and I want you to follow my directions. "

You acknowledged that they would not be employees under your interpretation.

Mr. Kaufman: Correct.

Unidentified Justice: Don't you think the meaning of

"within the scope of his or her employment. "

would be clear under an ordinary... if you adopted the court of appeals' interpretation here and used agency, ordinary agency principles, wouldn't it be clear what

"within the scope of their employment. "

means?

Anything they did in connection with the statue would be covered.

If they created some new statute on their own at home, it would be outside the scope of their employment.

I don't see the problem.

Mr. Kaufman: Under the agency law test, scope of employment has meaning.

Under the Aldon test, it has none, is what we're saying.

Unidentified Justice: Under the Aldon test.

Mr. Kaufman: The Aldon test, the test proposed by the Petitioners--

Unidentified Justice: I see.

I see.

Mr. Kaufman: --supervision.

Then it has no meaning.

Under agency it absolutely has... meaning.

Unidentified Justice: Okay.

How about under your test?

Mr. Kaufman: Under our test it certainly has a meaning.

At 5:00 it's... the scope of employment is--

Unidentified Justice: Well, I take it that... should we be very upset about this case?

After all, the statute allows you to contract any way you want to.

Just word of mouth... is that so frequent and pervasive that--

Mr. Kaufman: --What is important here... word of mouth in this area is very, very pervasive.

And what we are doing is requiring people under our test, or even under the agency law test... requiring people to negotiate up front their contract so a commissioning party cannot come in through the back end after the fact and say,

"Oh, I supervised him directly. "

The artist says, "No, you didn't".

"Yes, I did".

And it's this hijack the copyright at the end.

They have negotiate.

The commission party, the businesses have to go to the creators and say up front this is what we want and this is what we will pay.

And you do not allow this back door hijacking.

Unidentified Justice: --But, of course, if Mr. Snyder had a homeless lawyer with him, he might have contracted for--

Mr. Kaufman: And so he should have if that was his intent.

The burden is on the people, the commissioning parties under the Copyright Law... and the '76 Act is replete where the leveling of the playing field is recognized, where the artist and the creators have been at a disadvantage.

Unidentified Justice: --You're talking about Section 2 now?

Mr. Kaufman: Yes.

And if you want to obtain a copyright, if you want to obtain the rights... the rights that you want to obtain from a creator must be negotiated up front, not after the fact.

It cannot be... you cannot make an independent contractor, unknown to himself, inadvertently an employee, which is what they're test will allow.

And that, I propose--

Unidentified Justice: --suppose an employer and an employee could agree that the copyright would be owned by the employee?

Mr. Kaufman: --There are provisions for that.

However, under this direction and supervision test, you could even have a situation where a salaried employee, if he was not directed and supervised by his employer might be able to claim,

"Well, I wasn't directed and supervised. "

"That's the standard. "

"It's mine. "

even though it was created in the scope of employment.

And we think that's an absurd result, but it is a result that can occur under the Aldon test, not under the other tests.

The Aldon test doesn't work.

The other two tests do work and we think the Dumas test is the most predictable of all of the tests and is the most in sync with the legislative history and is the one that we hope that the court adopts.

Thank you very much.

Chief Justice William H. Rehnquist: Thank you, Mr. Kaufman.

Mr. Robbins.

ORAL ARGUMENT OF LAWRENCE S. ROBBINS AS AMICUS CURIAE, SUPPORTING RESPONDENT

Mr. Robbins: Thank you.

Mr. Chief Justice, and may it please the Court:

In October 1985 when Mr. Snyder called Mr. Reid on the phone and proposed that he sculpt the three human figures for the statue Third World America, the two men had never met before.

They'd never done any business before.

And except for suing each other, they've done no business since the statue was created.

[Laughter]

In short, their entire relationship was defined by the particular project that Mr. Reid agreed to create.

That kind of relationship is what I think most people mean by the word "commission".

Indeed, Mr. Snyder used himself no fewer than eight times at trial to describe his relationship with Reid.

That is the same word that Mr. Snyder's trial counsel used when he summed up the trial, and it's the precise finding made by the trail court when it explained that

"Third World America was commissioned by CCNV and made on commission by the artist. "

Now, as it happens, there was a provision in the work made for hire definition that speaks directly to commissioned works.

And the Court has not heard very much about that provision this morning.

That subsection, which is Subsection 2, states that specially ordered or commissioned works will be treated as works made for hire when they satisfy both of two conditions.

That they fall within the nine enumerated categories, and that there is a writing executed by the parties.

The position of the Register of Copyrights in this case is simple and straightforward.

The word 2 should be taken at its word, should be given its plain and literal meaning.

And when that meaning is honored, it's perfectly clear that Third World America is a commissioned work.

The court need not struggle with the various historical definitions of the word "employee" because this is a case about the word "commission".

And if--

Unidentified Justice: But we should struggle with the various historical definitions of "commission"?

[Laughter]

Mr. Robbins: --Well, I think, Mr. Chief Justice, that in fact that is... if it's a struggle at all... is a rather lesser struggle.

And I think that it has a word that embraces more uniformity and a wider acceptance.

And the fact of the matter is that this relationship, where an artist is engaged to sculpt a particular project and nothing more, is what I think most people take the word "commission" to mean, and it's perfectly clear that that's what the draftsmen of this statute took the word to mean.

Unidentified Justice: Well, Mr. Robbins--

--Mr. Robbins, these are not mutually exclusive categories.

A thing can be both specially... you could specially commission an employee to do a job.

Mr. Robbins: Well, I think, Justice Stevens, that it is... it is theoretically possible to have these categories be overlapping in part.

Unidentified Justice: What I mean, it's reading the language... that it's linguistically possible.

Mr. Robbins: There is no question that it is linguistically possible.

I think--

Unidentified Justice: And if it's as clear as you say it is, the thing that I'd just like you to talk about for a minute is how is it that the Register of Copyright and Professor Nimmer got it so wrong for so many years?

Mr. Robbins: --Well, let me address the subject I can address with more authority--

Unidentified Justice: All right.

Mr. Robbins: --how it is that the Register of Copyrights got it wrong.

It's our view that the Register of Copyrights did get it wrong.

But for so long is something that I might want to quarrel with.

It is true that--

Unidentified Justice: Six years.

Mr. Robbins: --It is true that in response to inquiries from Congress in the mid-80s the Register of Copyrights offered a position quoting from Nimmer that is at odds with his present one.

I think, however, that if you look back to the position of the Register when these provisions were in fact being adopted, when they were being negotiated, and when the understanding of the parties was fresh, the Register's position was very much like its present one.

But, in any event, in light of this litigation the Register has revisited the issue in detail and frankly has disavowed those previous filings.

Unidentified Justice: Oh, I don't question the authority of the Register to change his or her mind.

But it just... if it's as perfectly clear as we all seem to think it is on the face of the plain language, it's kind of hard to understand how anybody could have made a mistake.

Mr. Robbins: Well, it wouldn't be the first time that words end up having a plain meaning as to which other people disagree.

But I'd like to talk a little bit about Subsection 2 because the thing that is as clear as anything else--

Unidentified Justice: But would you first explain to me your earlier statement, that we can just do this on the basis of Subsection 2 alone.

I can't understand... I could understand that if Subsection 2 said it includes... work-for-hire includes special ordered or commissioned works only if they come within these nine categories.

But it doesn't... it doesn't say that.

It says it happens to include those special-ordered or commissioned works.

It doesn't say it does not include any other special-ordered or commissioned work.

So you're ultimately driven back to one, aren't you, to see whether it comes within one?

Mr. Robbins: --No.

Unidentified Justice: No?

Mr. Robbins: Justice Scalia, I think that's not correct.

And the reason it's not correct is that if there is nothing else clear from the history of Subsection 2, as reflected in the accompanying House report both in the '76 Act and in all the prior revisions, the fact is clear that the nine categories were intended to be the only ways, the only kinds of commissioned works that could ever become works made for hire.

And the central fallacy of Petitioner's argument this morning is that even if you fail to come in with one of those nine categories, Subsection 2 will get you to the promised land under their test.

Even if you're a sculptor and you're not within the nine categories, why, then, you can still become a work made for hire if you satisfy what they call the historic standard, which, by the way, is as historic as 1966 in the Second Circuit's Brattleboro decision--

Unidentified Justice: Well--

Mr. Robbins: --and goes back no further than that.

Unidentified Justice: --The... However clear you think a commission is, the claim here in this case, and which the court of appeals certainly ruled on... the claim is that this is a work-for-hire because there was an employment relationship.

We have to rule on that claim.

Mr. Robbins: My understanding, Justice White, is in fact that the court of appeals held that it was not a work made for hire because they--

Unidentified Justice: I understand that.

Mr. Robbins: --the court construing Subsection 1 under the--

Unidentified Justice: I know.

They construed it.

And you say we don't even need to.

The court below did and I would think we would have to because the claim is here by the Petitioner that... that there was an employment relationship.

Mr. Robbins: --That's--

Unidentified Justice: We certainly have to dispose of that... rule on that claim.

Mr. Robbins: --Well, Justice White, we have offered what we think the correct interpretation of Subsection 1 is.

But I think--

Unidentified Justice: And so you struggled with what an employee is, eh?

Mr. Robbins: --Well, we've done our best.

[Laughter]

Unidentified Justice: Well, I guess we have to too.

Mr. Robbins: But... but--

Unidentified Justice: Well, may I ask on that point.

You urged, apparently, in the brief that we adopt the Dumas view.

And yet that is a little more difficult to do under the language than the common law master/servant approach.

Mr. Robbins: --No, I don't think so, Justice O'Connor.

I think the reason we agree with the Dumas construction of Subsection 1 is that that is the conception of the employee that the draftsmen of Subsection 1 had in mind.

This so-called historic right-to-control test is something that emerged in 1966 when these provisions were set in stone by the people who came up with them.

And they were then enacted in whole cloth by Congress 11 years later, much as the derivatives works exception was handled by Congress in the Mills Music situation.

But the fact of the matter is that in Subsection 2 those nine categories were intended to be exclusive.

If this was a commissioned work, as that word was understood in its common parlance, then you had to satisfy Subsection 2.

And if you didn't, it was simply not a work made for hire.

The central fallacy of Petitioners' argument is that it gives commissioned works another way to become a work made for hire, and there is nothing clearer than that is precisely what the draftsmen sought to avoid.

Unidentified Justice: Well, they could have been so clear if they had said one... a work made for hire is, one, a work other than a special ordered or commissioned work prepared by an employee within the scope of his employment, or, two, a work specially ordered or commissioned for use, blah, blah, blah.

You just want us to read in that language into 1, which just isn't there.

Mr. Robbins: Justice Scalia, I won't quarrel with the fact that Congress and the draftsmen could have done a better job, and maybe someday they will.

Unidentified Justice: A better job of embodying your views.

Mr. Robbins: I'm sorry?

Unidentified Justice: A better job of embodying your views.

[Laughter]

Mr. Robbins: Well, I think they could have done a better job of embodying their own views.

I think that we are as faithful as we can to what they had in mind.

The accompanying House report, for example, says, Justice Scalia, that Subsection 2 is a compromise intended to divide commissioned works between those that could be and could not be works made for hire.

The only... I think... sensible way to read that language is that if you're not in Subsection 2 and you're commissioned, you're not a work made for hire.

They're not.

They are commissioned.

It's not a work made for hire.

It's just that simple.

Chief Justice William H. Rehnquist: Thank you, Mr. Robbins.

Mr. Garrett, you have four minutes remaining.

REBUTTAL ARGUMENT OF ROBERT ALAN GARRETT ON BEHALF OF PETITIONERS

Mr. Garrett: Both Mr. Reid and the Government here refer to the historic standard as one that was adopted only nine years prior to the 1976 Copyright Act.

They're both wrong.

If you take a look at the very first edition of Nimmer on Copyright in 1963, you will see that even there he talks about the right-to-control standard as being a standard well ingrained in the copyright laws, and cites cases going back a number of years.

We cited cases in our brief going back as far as 1937 dealing with right-to-control standard.

Furthermore, if you take a look at the letter that the Register of Copyright sent to Congress back in 1986, you'll see that he refers... and this is on page 2(a) of the Appendix of our Reply Brief... as this being a standard that has been part of our copyright laws for almost a hundred years.

Unidentified Justice: That depends on what all those old cases were referring to when they said right-to-control.

I mean, you can describe the master/servant rule as a right-to-control rule also.

Mr. Garrett: That is correct, your Honor.

But I think--

Unidentified Justice: You have to assume that they're using right-to-control in the very narrow sense that you're using it.

Not right-to-control physical activities but just to control the product, the outcome.

Mr. Garrett: --I believe that the courts were using it, your Honor, in the various cases that we cite in our brief in the sense of right-to-control the artistic production of the work.

Something that has meaning to what copyright law is all about.

Not what chisel you use, but rather how you produce the particular statue.

The kinds of contributions that we, CCNV, made in this particular case.

That is exactly what they were referring to.

And there was no question in the district court's mind when it went to trial in this case that that was the kind of standard it was asked to look at.

Indeed, that's the standard that Mr. Reid said we should look at, and that's the standard that he found was satisfied in this particular case.

And our view, your honors, is that there is going to be a new standard.

And we talk about all of the different standards in our briefs that Mr. Reid's amici have adopted.

This morning I have heard yet additional criteria and additional factors that one should look at in order to determine whether an employment relationship should be met.

But the fact of the matter is that none of these tests... none of these tests... was before the district court when we went to trial.

We all went on the basis of the historic right-to-control test.

And we believe that's the correct test.

But, if this Court is going to adopt different test, as the court of appeals below did, then we ask that, at the very least, that this case be sent back to the district court so the district court can evaluate the relationship of the parties in light of whatever new-found standard is adopted here.

That is exactly the approach the court has taken in other cases that we cite in our brief, Kelly v. Southern Railway, for example, a case very much like this one where a different standard was adopted by the court of appeals to determine who was an employee.

That was applied at the district court level.

This Court held that the court of appeals was right with its standard, but sent it back so that the district court could evaluate the facts of the case under that standard.

Unidentified Justice: Is it--

--The court of appeals remanded here, didn't it?

Mr. Garrett: But not on the work-for-hire issue, your Honor.

Unidentified Justice: Joint?

Mr. Garrett: It remanded on the joint work theory--

Unidentified Justice: On the joint work--

Mr. Garrett: --which is entirely different.

Unidentified Justice: --But is it really at all questionable, Mr. Garrett, whether if you adopt the court of appeals' theory of the common law master/servant rule that your client was not a servant?

That... that... I'm sorry... that the artist here was not a servant?

Mr. Garrett: Well, I would--

Unidentified Justice: That CCNV could not tell him what chisel to use, couldn't tell him when to come into work, and so forth.

Mr. Garrett: --I would respectfully disagree, your Honor.

Unidentified Justice: Really?

Mr. Garrett: We spent a good portion of our brief talking about all of the agency law cases and why we feel that there are factors of this case that would in fact satisfy those standards.

And, furthermore, your Honor, if we had known that this was going to be an agency law type of an approach, as opposed to the historic approach, it's possible that we would have put our case on differently than we did.

The fact of the matter is we did control a great deal of the manner in which the artist in this case worked here.

We set guidelines.

Thank you very much, Chief Justice.

Chief Justice William H. Rehnquist: Thank you, Mr. Garrett.

The case is submitted.

Attribution:

The OYEZ Project

Featured:

Harper & Row, Publishers, Inc. v. Nation Enterprises - Oral Argument

Fri, 31 Aug 2012 18:29:19 +0000

Case:

Harper & Row, Publishers, Inc. v. Nation Enterprises

Media File:

83-1632_19841106-argument

Related Transcript:

83-1632_19841106-argument

Transcript:

ORAL ARGUMENT BY EDWARD A. MILLER, ESQ. ON BEHALF OF PETITIONERS

Chief Justice Warren E. Burger: We'll hear arguments next in Harper and Row against Nation Enterprises.

Mr. Miller, I think you may proceed whenever you're ready.

Edward A. Miller: Thank you, Mr. Chief Justice, and may it please the Court.

This case presents two important issues concerning the relationship between copyright and First Amendment interests.

Chief Justice Warren E. Burger: Would you raise your voice a little.

Edward A. Miller: Yes.

First, does the First Amendment require that the scope of protection for a copyrighted work of non-fiction dealing with news and history be narrowed?

Secondly, does the policy in the Fair Use case, does the policy of facilitating the harvest of knowledge call for a sanction for the use of an unpublished manuscript that the author himself is about to publish?

The case also raises the question of whether the court below heard, first of all, in failing to consider that the manuscript was unpublished; and secondly, in failing to consider that the user added nothing at all to the material that he published.

In February of 1977, shortly after leaving office, President Ford signed a publishing agreement with Harper & Row and the Reader's Digest to publish his memoirs.

President Ford retained an experienced writer, Trevor Armbrister, to assist him in that task, and the work began almost at once on a project that was to take two years, that is, the writing of the book.

The District Court has detailed findings of the extensive work that went into that, and I'll just mention one or two of those facts.

Trevor Armbrister met with President Ford on 200 separate occasions for interviews, and each of those interviews lasted two hours each.

Those interviews were taped and they were typed up, and they resulted in 3600 legal sized transcripts pages of those interviews.

Trevor Armbrister took that material--

Unidentified Justice: Do you have any idea of how many words to the page?

Edward A. Miller: --No, Your Honor, I don't.

I don't know how many there were.

Trevor Armbrister took that material and he took material of almost equal mass from his interviews with others, together with a mountain of material from public records and the like, and then out of that he prepared a manuscript for President Ford.

President Ford reviewed that manuscript word for word, and he then reviewed three subsequent revisions word for word before finally giving his okay for the manuscript to be published.

In March, 1979, approximately two years later, Harper & Row's subsidiary right department began to contact newspapers and magazines to ascertain if any of them were interested in publishing excerpts from this book prior to book publication, a right that is referred to in the book publishing trade as "first serial rights".

In circulating that manuscript, the subsidiary rights department secured a confidentiality agreement from each of the firms to whom it was given.

Eventually an agreement was signed with Time Magazine whereby Time agreed to publish excerpts from Chapters 1 and 3 of the book, a 7500-word excerpt which was to appear in the Time Magazine issue that was to go on sale on April 16th, 1979.

That agreement was entered into in the middle of March, 1979.

The agreement also provided that if for any reason material from Chapters 1 and 3 of the manuscript were published prior to Time's publication, Time would have the right to renegotiate the second installment of the advance, which was $12,500.

Approximately two weeks later, a copy of the manuscript found its way into the hands of the editor of The Nation Magazine.

The editor testified that he did not solicit it and did not pay for it.

He has never revealed who the source was, but he has acknowledged that he knew that the source had no authority to give it to him.

Working quickly over a weekend, he rushed into print with an article that was derived almost exclusively from the memoirs.

Eighty percent of it was from the memoirs, and what wasn't from the memoirs was either introduction or conclusion, or a few transition sentences.

The article quoted verbatim from several portions of the manuscript.

It included President Ford's summary of the underlying philosophy for pardoning Nixon.

It included a vivid description of--

Unidentified Justice: You say, Mr. Miller, that it included President Ford's summary of his reasons for the pardon, do you mean by that that it quoted directly or that it simply paraphrased?

Edward A. Miller: --There was a quote in which President Ford summarized his overall philosophy.

In fact, he predated to the time when he was in law school, and he said that the basic underlying philosophy that governed my decision here was the fact that public policy sometimes has to take precedence over the rule of law, then he went on and expanded that somewhat, and that was quoted verbatim.

That particular passage was quoted verbatim.

He also quoted verbatim a vivid description of Nixon's--

Unidentified Justice: Was that material available anywhere else?

Edward A. Miller: --President Ford's--

Unidentified Justice: In prior speeches, or articles?

Edward A. Miller: --That particular material was the material that President Ford created as he wrote the book, and that particular material was not available.

It also included President Ford's assessment of Nixon's character, which President Ford had written out in longhand during that interviewing process that I described, and that also was copied verbatim by Nation in the article.

Unidentified Justice: Mr. Miller, do you take the position that the copyright allows President Ford to license publication of those facts, or just his written expression or choice of words in expressing?

Edward A. Miller: Just his expression, Justice O'Connor, as that term has been defined traditionally in the copyright courts.

Unidentified Justice: How many total words were quoted, actually quoted?

Edward A. Miller: How many were quoted?

There was approximately 1800 words altogether derived from the manuscript, and about 700, I think, were quoted and the balance were paraphrased.

Unidentified Justice: Seven hundred were quoted?

Edward A. Miller: Yes.

The balance constitutes paraphrase of the material in the manuscript.

Unidentified Justice: How many did the Court of Appeals think were quoted?

Edward A. Miller: The Court of Appeals did a stripping away exercise, and ended up with 300 words that in their view represented copyrightable expression.

Unidentified Justice: Whose word should we take?

Edward A. Miller: Well, Your Honor, Justice White, I think--

Unidentified Justice: Do we have to count them?

Edward A. Miller: --I think it is not a question of counting.

I think that the problem is that the majority--

Unidentified Justice: You say that it included a summary of his philosophy going back to law school, an assessment of President Nixon's character.

If it gets down to 300 words, that is getting pretty short to cover those fields, isn't it?

Edward A. Miller: --Your Honor, I think that 300 words of expression should be protected, certainly in a manuscript that hasn't been published yet.

But, if I can address your point, it is not really a question of counting words, I think, it is a question of the fact that the majority applied the wrong standards in determining copyrightability, and that is one of the major points we make on the copyrightability.

Unidentified Justice: The copyright Act applies to works, as I understand it, not to words.

Is that correct?

Edward A. Miller: Yes, Justice Powell.

Unidentified Justice: It uses the term "works", doesn't it?

Edward A. Miller: I think the Copyright Act applies to protect expression, and expression has been defined in cases to include the following, this is a reading from a Second Circuit case: What is protected is the manner of expression, the author's analysis or interpretation of events, the way he structures his material and marshals his facts, his choice of words, and the emphasis he gives to the particular developments.

"That is a quote from the Second Circuit opinion in Wainwright, and that was the definition of expression. "

The majority in this case didn't follow that definition in determining what was copyrightable in the copied portions of the manuscript.

What the majority did, was they said, expression is limited to barest elements, to literal copying, to the ordering and choice of the words themselves.

We submit that traditional copyright cases have always recognized that copyright protection for expression goes beyond just the literal words themselves, to protect, as the dissent noted in this case, selection, arrangement, emphasis, and anything else that makes original.

Unidentified Justice: Mr. Miller, it isn't just a question that he who reads may count as to how many words were copyrightable, is that the Court of Appeals had one view of copyrightability, and I take it that you have a somewhat broader view, and that is why you reach a higher number.

Edward A. Miller: That's correct.

That's correct, Justice Rehnquist, that is the reason for the difference.

The majority applied, we submit, an incorrect standard in a second respect.

They adopted a dissection--

Unidentified Justice: I take it that you would say that even there was not a single instance in this story that you could identify as a literal quote, you would think that there could be a violation of copyright.

Edward A. Miller: --I think it is certainly possible, Justice White, that there could be a violation in that situation, but that, of course, isn't the situation here.

Here there was use of exact language.

Indeed, the editor of The Nation Magazine testified that he took this passage, he said, because that was Ford's own way of saying it.

He took another passage, he said, because of the absolutely certainty with which Ford addressed himself.

He took still another passage because... he quoted it because it was a much more powerful statement for the reader.

Unidentified Justice: Mr. Miller, do you think that the fact that it was an unpublished work expands your definition of what is protectable under the copyright law, or is the fact that it was unpublished in your view just one element of determining Fair Use?

Edward A. Miller: I think the fact that it wasn't published doesn't expand the scope of what is protectable, but it is certainly a very important factor in determining Fair Use.

Unidentified Justice: Mr. Miller, it would be helpful to me, in trying to focus on the difference between your two positions, if you could identify one or two of the passages that you think are clearly copyrightable, and they think are not, because talking in generalities, it is always a little hard to focus on what the difference is.

Edward A. Miller: President Ford has a discussion in the book that describes his discussions with Alexander Haig during that eight-day period prior to the time that he became President.

He covered a lot of that same material in the Hungate testimony, but the material in the book, if you compare the two, has quite a different emphasis from what it has in Hungate.

The material in the book includes President Ford's subjective feelings about those events.

He tells how, for example, President Nixon had reassured him over many months that he would ultimately prevail, and that the facts would justify him.

He says how hurt he was, the deep hurt that he had when that material was revealed.

He includes also the reaction of his aides to Alexander Haig's discussion of the pardon, and how they reacted to that.

All of that creates a subjective... it gives the subjective feelings that Ford had during those things.

President Ford testified in his deposition that what he tried to add to the book was the more subjective, the more personal feelings that went through his mind for the time the pardon became a possibility.

Unidentified Justice: One of the examples that you have given, I guess, is this written statement that President Ford read to General Haig over the telephone, I guess it was.

Is there a dispute between you as to whether that particular writing was copyrightable?

Edward A. Miller: No, there really isn't because our position, and I think the District Court's position was that the totality of Ford's expression is copyrightable.

Unidentified Justice: Just take the quote itself, is that in your view copyrightable?

Edward A. Miller: The quote itself, Your Honor, don't I think it was copyrightable, but we are not so contending in this case.

Unidentified Justice: Is see.

Edward A. Miller: The reason why it is not copyrightable, and we are not contending it is, is that the quote itself was disclosed.

It is the same thing that President Ford said in the Hungate testimony, and that would get into a very difficult question, copyright protection for government work.

Unidentified Justice: Let me be sure I understand your entire position.

You are saying that that statement as a part of his general description of that particular event was copyrightable?

Edward A. Miller: Yes.

Unidentified Justice: I see.

Edward A. Miller: Still another example, Your Honor, President Ford describes many factors that influenced him in granting the pardon, the advice that he received from various people, and the advice that he received from Henry Ruth, and so forth and so on.

Our position is that the totality of that expression, including the advice and the reaction that Ford had to it represents Ford's expression.

The Nation position, as I understand it, is that what one should do in determining copyrightability is to look at each of those little pieces of advice separately and say, well, this is not copyrightable, and therefore that is not entitled to further consideration.

We both agree that the Ruth Memorandum per se is not copyrightable.

We urge that President Ford's entire expression, including the Ruth Memorandum and the impact it had on him, represents copyrightable expression as it has been traditionally viewed by the courts--

Unidentified Justice: Let me ask just one other question here.

On some of these example, do you think the that President Ford is not an ordinary author affects the determination of the copyrightability of some of this material?

In other words, there is newsworthiness in the fact that he was the President of United States when he had these views, as distinguished from someone else who might just have been narrating about them.

Edward A. Miller: --Your Honor, I don't think that that fact should affect copyrightability.

I think it might affect Fair Use, but after the book is published.

I think our position is that before the book is published, President Ford ought to have the same right that any author has, the right of first publication.

President Ford took two years to write this book.

This harvest of knowledge that was so important to the majority in which we concur, that harvest of knowledge came about because President Ford spent two years writing the book.

We submit that having put that effort, he's entitled to the right that the copyright laws have given him, namely, the right of first publication.

I would like to also just go back to the copyrightability point.

The majority, in addition to the two other factors that I mentioned, also gave no consideration to the paraphrasing here, stating that paraphrasing is the equivalent of copying only if the copier has copied virtually the entire work.

We submit that the cases don't support that interpretation of a copyright.

In essence, the majority imposed these... applied these limited restrictions on copyrightability because of its belief that to do otherwise would give President Ford a monopoly over facts.

We submit that that is not true.

It would only give President Ford protection for his expression of those facts.

Furthermore, that protection is not unlimited.

It is protection that is subject to the requirements of the Fair Use doctrine.

On the Fair Use doctrine--

Unidentified Justice: Do I understand you to say that if President Ford, in his memoirs, revealed that an event that no one had ever known about before and he described that event, do you say that no one could reveal that event without violating his copyright?

Edward A. Miller: --They could certainly reveal the information, but they couldn't take his expression.

Unidentified Justice: Yes.

It is just a question of when in the process of revealing the event, they are close enough to his expression to get in trouble?

Edward A. Miller: That's correct.

That's correct, Justice White, and we submit that the majority, in making that determination, applied a number of standards that--

Unidentified Justice: Such as it has to be a literal quote, or something.

Edward A. Miller: --It has to be a literal quote, and such as--

Unidentified Justice: You say, it can also violate if it is just a paraphrase.

Edward A. Miller: --That's correct.

Unidentified Justice: How do you recognize a paraphrase when you meet it on the street?

Edward A. Miller: Justice White, I think it is a question of looking at the material and exercising judgment.

Unidentified Justice: As to whether it is practically the same thing as the quote?

Edward A. Miller: What I think the District Court did in this case was the District Court took the Ford material and compared it in its totality with what The Nation did, and said, overall this is substantially similar and, therefore, infringement.

Unidentified Justice: Substantially similar, that is your test?

Edward A. Miller: That is the test of infringement, yes, and I think that's the test that has to be applied when you are dealing with paraphrase.

Unidentified Justice: Paraphrase then includes the idea that even though there is not literal quotation, there is so much similarity in arrangement, the sentence structure, and that sort of thing?

Edward A. Miller: That's correct.

That's correct, Justice Rehnquist.

On the Fair Use branch of the case, we urge that the fundamental flaw of the court, or a fundamental flaw of the court was in its belief that in some way a decision was required in order to facilitate the harvest of knowledge so essential to a democratic state.

Unidentified Justice: Mr. Miller, could I interrupt once more.

I'm sorry, but I just want to be sure.

Is there anything that tells us which 300 words the Court of Appeals and your opponent agree are copyrightable, and which words you agree are not copyrightable?

Do we have anything that really tells us?

Edward A. Miller: I think in The Nation sentence by sentence analysis, they have a chart, which is in the Joint Appendix, and they have a little red line underneath the stuff that they say or concede is possibly expression, or they are arguable expressions, or something like that.

I think that that is probably where the 300 words comes from.

It is probably the count of the material that The Nation conceded was expression.

Unidentified Justice: Conversely, everything in yellow you contend is copyrightable.

Edward A. Miller: Really, everything in yellow is what we contend was copyrightable.

Unidentified Justice: Is that the total question, that it is copyrightable?

I thought there might have been an awful lot of things in the memoirs that were copyrightable, but the claim is there that there was no violation because it was a paraphrase.

Isn't part of the holding below that there wasn't a violation of the copyright because it was only a paraphrase?

Edward A. Miller: That was part of the holding below, and our contention is that the majority shouldn't have dismissed paraphrasing so lightly because it can indeed--

Unidentified Justice: Do you say that... The court below said 300, and you say 700?

Edward A. Miller: --No.

I think that everything that is yellowed in our Appendix C to the cert petition, which comes to about 1800 words, was in fact copied from the--

Unidentified Justice: You are just saying, because it was a violation of copyrightable material?

Edward A. Miller: --Yes, that is correct.

Unidentified Justice: Eighteen hundred words.

Edward A. Miller: Yes.

Unidentified Justice: When you say 1800 words were copied, do you say that every one of those 1800 words was copyrightable?

Edward A. Miller: Yes.

Unidentified Justice: It is just as though President Ford used those words.

Edward A. Miller: Yes, that's correct.

As I said, the court below acted on the premise or the underlying philosophy that the decision was necessary in order to facilitate the harvest of knowledge so necessary to a democratic state.

But the material was about to be harvested by President Ford himself, and nothing that The Nation did in any way facilitated that.

What The Nation did was to arrogate to itself author's right of first publication.

Author Ford had spent two years writing this book, and The Nation took it upon itself to be the first publisher or, to use The Nation's words,

"to scoop the President on his own memoirs. "

As I think I have already suggested, the majority believed that this policy of facilitating the harvest of knowledge was somehow at odds with the Copyright Act.

We submit that it is not.

The Copyright Act indeed has that very same purpose, to reward authors so that authors will go cut and spend the time and effort necessary to write their books so that the public will have the benefit of that.

Unidentified Justice: So that they'll get some royalties.

Edward A. Miller: And so that they'll get some royalties, too.

But the Copyright Act provides an economic incentive, and the real underlying purpose of that is the purpose that the public will get the benefit of their writings.

I would like to just talk briefly about the legislative history of the Copyright Act because that makes clear that the fact that work is unpublished means that the Fair Use doctrine has narrow applicability.

The court disregarded that completely.

That statement that the author's right of first publication ought to prevail appears in committee reports, the 1966 and '67 House report.

It appears in the '76... the '75 Senate report.

It didn't appear in the final House report only for one reason, and that is that the parties had gotten together and agreed on specific guidelines.

But the House went out of its way to refer to its earlier discussion, and to say, we still think that that earlier discussion has validity, and it still has value for an analysis of the various aspects of the problem.

Mr. Chief Justice, if I have some time left, I would like to reserve it for rebuttal.

Chief Justice Warren E. Burger: Very well.

Mr. Abrams.

ORAL ARGUMENT OF FLOYD ABRAMS, ESQ. ON BEHALF OF THE RESPONDENT

Floyd Abrams: Mr. Chief Justice, and may it please the Court.

The copyright law protects works of authorship, and President Ford wrote a book which was properly copyrighted.

We have never disputed the fact that the book was copyrightable in its totality, and copyrighted.

The copyright law also, as Mr. Miller said, does not protect facts, and it doesn't protect certain other things as to which we seem not to be in disagreement, for example, government works.

It does not protect other information of one sort or another.

Unidentified Justice: It does protect, doesn't it, Mr. Abrams, a particular method of describing a fact.

Floyd Abrams: It protects expression, Justice Renquist, which indeed is very often a way of describing a fact.

It doesn't protect ideas.

It doesn't protect facts.

It does protect, as the Second Circuit said, the structure and mosaic of a work, but it doesn't protect expression.

The Second Circuit went through a process of looking to see what part of what was before it was the sort of thing as to which President Ford could bring a law suit on against The Nation.

Let me give you, if I may, first the numbers, which some members of the court have asked for, in terms of quotations and the like.

We deal here with a manuscript of 655 pages written by President Ford, approximately 200,000 words.

We deal with an article by The Nation of three pages of a total of 2250 words.

Unidentified Justice: So the real comparison is between 300 words.

Floyd Abrams: That is the starting cut, I think.

There are cases in other areas in which a small amount of words has been held to violate the copyright law.

There are other cases, Betamax, in which 100 percent does not violate.

It does depend upon the case, but we are starting out, I think, fairly, talking about, if we are right, and if the Second Circuit is right in saying that it is 300 words, in comparing the 300 words to the book or, if you will, to the chapters, which relate to the--

Unidentified Justice: How about to the Time excerpt?

Floyd Abrams: --The Time excerpt wasn't in existence, and never got written, Your Honor.

Mr. Navasky didn't have that or knowledge of it, so I can't compare it to that.

Unidentified Justice: So he never saw that.

Floyd Abrams: Yes, sir, he never saw it, and so far as I know it never came into existence at all.

Unidentified Justice: Do the 300 words represent just the direct quotes?

Floyd Abrams: The 300 words represent direct quotes.

Unidentified Justice: Do you not concede that paraphrasing other words could constitute a copyright violation?

Floyd Abrams: I do concede that, Justice O'Connor.

It seems to me, and indeed the law says, that if you track something slavishly enough, it can indeed constitute a copyright violation, and there are lots of cases in which parties have just about literally tracked what someone else wrote, and put in a little word here and there, the Wainwright case in the Second Circuit.

Unidentified Justice: And perhaps this case.

Floyd Abrams: I hope not, Your Honor.

0 [Generallaughter.]

The Wainwright case in the Second Circuit seems to me an example of what is not involved here.

The Wainwright case is a case in which a financial publisher went out and collected all the recommendations to prospective buyers by Kitty Peabody sayings and in the news article, so called, was Kitty Peabody said today this, they said that, they said that, and they said that.

It was the totality of what they were saying.

It was a practice of what they were doing again and again in article after article.

I think that there is a word or two words to describe what The Nation was engaged in today, it is news reporting.

One may like it or not, but it is the sort of thing which for Fair Use purposes, which I haven't reached yet Congress defined as a paradigmatic example of what is protected.

Unidentified Justice: Why are direct quotes or direct paraphrasing of an author's expression essential to news reporting?

Why can't they be rewritten?

Floyd Abrams: It can be rewritten less well, less probingly, less meaningfully.

There was expert testimony on that very subject.

All the testimony was, both in the amount that was used, and in the nature of the quotations that were used, I mean literally all of it thought that it was reasonable in journalistic terms, and that it was reasonable from the point of view of authors.

Mr. Halberstam, for example, testifying, as all the experts did, uncontradicted, gave examples of that.

Unidentified Justice: Didn't Mr. Navasky himself testify that the words quoted had a definitive quality and were a more powerful statement than he himself could have written.

Isn't that the very essence of what is protected?

Floyd Abrams: Justice O'Connor, those words are protected, and we agree with that.

That is where we get to 300 words, that at least is a common ground as regards sore of the words.

How Mr. Nixon looked in the hospital, for example, that is pure expression.

We don't have any disagreement with that.

What President Ford learned or says that he learned at Yale Law School is expression, and we don't have any quarrel with that.

That is how we get to 300 words.

Where we disagree... where we disagree on numbers or where the Second Circuit is not the same as what my brother here has said to you today is how to do the counting, how to do the analysis of that.

Unidentified Justice: But you also say that that 300 can be published under the rubric of Fair Use.

Floyd Abrams: Yes, sir.

As a matter of Fair Use, we argue that the 300 words, as a matter of law--

Unidentified Justice: Even if it is the essence of the article.

Floyd Abrams: --It is not the essence of the article.

The essence of the article, as all agree, is the story of the pardon by one president of his predecessor president, who in fact appointed him.

Unidentified Justice: Mr. Abrams, did the editor of The Nation know that Time Magazine was going to publish an article on the book?

Floyd Abrams: By the time the article was published in The Nation, he was aware that Time Magazine was going to publish something.

He didn't know what, and he wasn't aware of that at the time that he received the manuscript.

Unidentified Justice: He was trying to scoop the publication by Time in the vernacular of the news business?

Floyd Abrams: In a sense, Mr. Navasky testified that he wanted to be first, yes, sir, and he testified that he wanted to be first because he wanted to put his own perspective on it.

Unidentified Justice: Did Mr. Navasky contribute anything to the article itself, beyond what he obtained from the Ford manuscript?

Floyd Abrams: Yes, Your Honor.

Unidentified Justice: Besides condensation.

Floyd Abrams: Two things.

One is summarized.

If news reporting is presumptively protected.

Unidentified Justice: Were any of his ideas incorporated into that?

Floyd Abrams: In one way they were, Your Honor.

Mr. Navasky testified that by his selection and choice of the material with respect to the pardon, he thought that a reader would come out, when you strip of expression, as Mr. Navasky did, when you strip what President Ford was saying of how he felt, which Mr. Navasky generally did, that you come out with a view of the pardon which involved at least a strong sense that it may have been the result of improper behavior.

Unidentified Justice: You characterize this as objective reporting or editorializing?

Floyd Abrams: I have to say, Justice Powell, I think it's some of both.

It is a summary on the one hand, and it is a summary to make a point on the other.

What I would certainly characterize it as is news reporting.

One of the areas that the District Court erred in was in passing a sort of judgment on it.

He said that it was "poor" journalism.

One of the things that we have urged on you in our briefs is that, be that as it may, whatever Mr. Navasky might think or, if I may, what any of us might think here, that's not the business of courts.

Unidentified Justice: Why did you have all the expert witnesses, then, in the District Court testifying that something was journalistically proper if courts can't review that?

Floyd Abrams: What we called them for was to deal with various aspects of Fair Use.

Courts can deal with the Fair Use factors, and anything that is relevant to Fair Use.

Unidentified Justice: I thought you said they testified that something was done well from a journalistic standpoint.

Floyd Abrams: They testified to the amount that was taken, for example, Part III of Fair Use, they didn't take any more than was necessary.

It was honorable and reasonable.

That, we thought, was a matter for expert opinion.

I went perhaps farther than I had to in having experts testify that the information wasn't only news, but was newsworthy.

Maybe we didn't have to do that.

But we were not making the case, and we made it very clear to the court again and again, that our view at least was that the standard to he applied was not whether it was a great news story, but whether it was really a news story.

What the Second Circuit said was, the question is when a party comes before a court, and is arguing Fair Use and saying this is "news reporting", the question is, is that true or not?

Is it a pretext or not to say that.

In Wainwright, the Second Circuit said that it was a pretext.

You can't just say that it's news reporting and make it news reporting.

It matters because news reporting is set forth by Congress, at least, as an example of what is presumptively protected as Fair Use.

It doesn't answer all the questions, but it's a start once one gets to Fair Use analysis.

Unidentified Justice: I hope you have a good litmus paper test to identify news as compared to what is newsworthy.

Floyd Abrams: We got into, Justice White, arguments about whether something has to be news.

Unidentified Justice: You suggest that there is a lot of news that's not newsworthy.

Floyd Abrams: I suggest that news doesn't have to be new, and that was one of the areas we drifted off on to at trial.

Unidentified Justice: Did you say that this was also commercial valuable material that was taken?

Floyd Abrams: As any book is, Your Honor, sure.

I don't have any doubt that Harper & Row wanted to sell what it had, and that it did so.

Unidentified Justice: The question is commercially valuable to The Nation?

Floyd Abrams: I don't know if anything is really commercially valuable to The Nation, Your Honor.

0 [Generallaughter.]

Unidentified Justice: I am talking to the party to this action, and not the country with a small "n".

Floyd Abrams: I am sorry, I meant the magazine.

All I meant was the magazine.

I suppose in a sense, at least I would have to concede, there's nothing in the record, that Mr. Navasky may have hoped long range it would be a good thing for the magazine, and that eventually they would sell more copies.

They sold 418 copies of this altogether on newsstands, so it's not the sort of thing one would ordinarily think of in terms of magazines or newspapers.

If I might, Your Honor, though, I'd like to continue a proposal your question with the question of what is copyrightable and what's not, because essentially what the Second Circuit did was to say, we look at this in two ways.

First, we see what is it that we're supposed to count, so to speak.

The whole work is copyrighted.

I say again, there is no question about that, President Ford wrote a copyrightable work.

But it's clear, and we don't disagree with our opponents, that we are entitled as a general matter to make what Professor Latman called "unlimited use" of material in that copyrighted work which is not copyrighted subject to however this court comes out on the issue of structure, mosaic, or whatever.

Justice Stevens asked earlier for some examples and, if I may, I would like to just cite one or two to give you an example of where we think the court can look to make a decision as to whether the Second Circuit approach was a correct approach.

At page 633 of the Joint Appendix, in the midst of our paragraph by paragraph analysis of the article, we quote from the article in paragraph 4... of The Nation article.

Paragraph 4 of The Nation article says, and I will just paraphrase it now, that Ford's account contained significant new details on the negotiations and consideration when the subject was first broached to him by General Haig on August 1st, 1974.

General Haig revealed that the newly transcribed White House tapes were the equivalent of the smoking gun, et cetera.

That came from what we then annex immediately after page 633, which is pages 634, 635, 636, and 637.

It was, I would use the word, news, if you went to say condensed, paraphrased, it was a report about that aspect of what President Ford did.

The same thing is true of the example that Mr. Miller cited.

I think it is a good example of the Ruth Memorandum.

At page 654 of the Joint Appendix, there is a paragraph from The Nation article in which The Nation wrote that the precipitating factor in Ford's decision was a series of secret meetings.

Then they go down to say that Ford's cites a memorandum from Henry Ruth as being especially persuasive.

"Ruth had written".

Where we disagree is this.

President Ford never owned the Ruth Memorandum, and we believe that he doesn't own it today.

What the District Court said was that when you put the Ruth Memorandum together with how President Ford used it, the totality was protected, and that is why we get to 700 words, because they include the Ruth Memorandum in the 700 words.

Our position is that the totality doctrine is absolutely unprecedented in copyright law, and terribly dangerous because that doctrine would, in fact, give Harper & Row a monopoly of the story of the pardon of President Nixon by President Ford.

I want to add one thing to it.

They're right when they say that the monopoly they would get is the monopoly in President Ford's version of that story.

That's true.

Mr. Navasky could have gone out and written a whole article about the pardon, but his article was about President Ford's version of the pardon.

What I believe their argument comes down to is that that sort of article cannot be written about at least published work without violating the copyright law.

That's what it is, because if you once say, you can't paraphrase, what you are saying is, you can't report what the books says about that, what happened next.

There were events that happened one after another.

If you say that the Ruth memorandum gets scores of--

Unidentified Justice: Mr. Abrams.

Floyd Abrams: --Yes, Your Honor.

Unidentified Justice: I didn't understand your opponent to go that far in his concept of paraphrasing, that simply a relating of the same of the factual account would would automatically be described as paraphrasing.

Floyd Abrams: I don't understand him to go that far in paraphrasing, Your Honor.

I understand that when you put together... It is my view, at least, that when you put together their argument about paraphrasing with the lower court's ruling about the totality of the work, when you put all that together, what you are seeing is, for example, an entirety of the depiction of the pardon.

There are 19 paragraphs in The Nation article, all of that, they say, what, comes from, it is about President Ford's version of the pardon.

It is one thing to say, we can't do that at all, but as Mr. Miller said in response to a question that he was asked by Mr. Justice White, it is not based on the amount of words that he is talking about.

His position and the lower court's position was that when you looked at it all together, this was President Ford's version, this was his depiction of the pardon.

Our position is that this was an article about President Ford's depiction of the pardon.

I agree that if this depiction had gotten so close at such length so that like Wainwright this was just a fraud, we would have a different case.

Unidentified Justice: When you say, 30 chapters--

Floyd Abrams: No, sir, that is exactly what I am conceding my client was not allowed to do, was to take a chapter out of the book and change a few words.

Unidentified Justice: --Or 300 words out of the book if he is simply--

Floyd Abrams: When you start to get down, Justice Renquist, to 300 words, then I think you have to apply standard Fair Use analysis.

Unidentified Justice: --Okay.

You say, a chapter, let's say, a chapter of ten pages, 300 words to a page, 3,000 words.

There you say that Harper & Row is protected.

You say if you get down to one page, you have to apply the Fair Use analysis.

Is there any line in-between there?

Floyd Abrams: I should have said, I misspoke a moment ago, you have to use Fair Use analysis no matter what you get down to.

All I am saying is that first you have to see what it is that you are looking at, what is the fair document, what is the fair amount of words, or whatever, that you are looking at, then you apply fair use analysis.

Is there a line that you use?

I think you start with what Congress said.

Congress gave four factors to look at, they are not exclusive.

Unidentified Justice: The first publication right is not a factor for consideration in Fair Use?

Floyd Abrams: I think pre-publication, Justice O'Connor, can be a factor in a particular type of case.

For example, if this were a case--

Unidentified Justice: What about this case?

Floyd Abrams: --This case, no.

We don't think the factor that it is pre-publication is a factor in this case.

We read the legislative history differently than our friends, but not just that.

We look at a statute which, when it wants to, distinguishes between published and unpublished works, and that is what the copyright law does in Section 104 and 108, 302 and 412.

Congress said in a number of situation, we are going to treat published and unpublished works in a different way, but that is not that they did here.

We look at a statute which says, news reporting is a paradigmatic example of Fair Use.

We think, and the Second Circuit on this was unanimous, that what was involved here was news reporting.

Unidentified Justice: Do you think the right of first publication is a right encompassed under Section 106 of the law?

Floyd Abrams: Yes.

I have no doubt at all that the right of first publication is a right subject to Fair Use.

Everything is subject to Fair Use, that is what 106 says, that is is subject to 107.

So when one applies Fair Use, it seems to me one looks at what Congress said.

You look at the nature of the use, and our answer, and the Second Circuit's answer was news reporting.

If you look at the nature of the underlying work, it is heavily factual, the certainly heavily factual nature of the work in terms of what Mr. Navasky was looking at and using.

No personal stories, no vignettes, no stuff which you can take from a book like that.

You look at the question of how much did he take for the use, and we have undisputed--

Unidentified Justice: Do you look at the negative effect on the potential market and value?

Floyd Abrams: --Yes, that is the fourth factor, and you certainly look at that.

Unidentified Justice: Wouldn't that be a factor here to worry about?

Floyd Abrams: It is a factor here but only if the negative effect was caused by taking copyrightable material.

If you once say that we are right, that they are allowed to write a summary, a news article, or whatever, about the pardon, then if Time cancelled because the news was lost, that's not something that is compensable at law.

If Time cancelled because of the expression that is something which would be compensable, at least that would be a factor against us.

What the Second Circuit said looking at this, looking at what it got it down to after it looked at what was copyrightable in terms of what was involved here, we had a situation, the Second Circuit said, in which it can't be the case.

What Time cancelled about was the description of President Ford's Yale Law School.

Everyone agreed that what the article was about was about the pardon, and that the main thrust of the article that Time wanted was material about the pardon.

So on that factor as well, we don't lose.

In any event, we think we win, as the Second Circuit said, on the first three factors.

Unidentified Justice: Would you repeat what you have said about the first factor, whether or not publication was for commercial purposes rather than for non-profit, educational purposes.

This was certainly commercial, wasn't it?

Floyd Abrams: This is commercial as opposed to educational, Your Honor.

Unidentified Justice: Is it not commercial in every sense in that you knew that the material would be published by Time in a matter of a couple of weeks?

Floyd Abrams: I think the commercial relates to my client and not Time.

But I would concede in any event, Justice Powell, that if the first factor requires a simple choice between whether it is commercial or educational, as the language is--

Unidentified Justice: You flunk that test.

Floyd Abrams: --We don't flunk it, Your Honor, because we view it as a sort of a sliding scale necessarily.

How can news reporting be stated by Congress to be a paradigmatic example of Fair Use in a case where the publisher would fail stage one.

Unidentified Justice: Yours is educational for profit.

Floyd Abrams: It is hopefully for profits, Justice Marshall, but it's news reporting.

That is why I pause a little, Justice Powell, before saying that it is simply commercial.

It is not like running it for an advertisement, for example.

It seems to me that when Congress comes right out and says that news reporting is presumptively protected, we have to give some meaning to that, and the meaning, we can't, it seems to me, say that notwithstanding that news reporting is listed in so many words by Congress in Section 107 as an example of Fair Use, that every example of news reporting in every newspaper here today fails stage one if they sell it for a profit.

That is why I think the only sensible reading, if I may, of Section 1 is to say that what Congress did was to give two examples.

On one side of the scale, it is pure commercial, and on the other side it is pure educational.

Unidentified Justice: But you do start with copyrighted material, don't you, which is a little different from most news reporting.

Floyd Abrams: It really isn't, Your Honor.

Unidentified Justice: This was copyrighted, wasn't it?

Floyd Abrams: I'm sorry.

Unidentified Justice: Was the book copyrighted?

Floyd Abrams: The book was copyrighted.

What is not unusual is for... President Ford uses the doctrine of Fair Use.

His book is filled with quotations of what other people have said, and it is only protected because of the Fair Use doctrine.

If Mr. Ruth, for example, owned his memo... he doesn't because it is a U.S. memo, the same with President Ford, he is not the owner of the memo... it would only be Fair Use to allow President Ford to quote it, even though it may have been copyrighted.

Unidentified Justice: Yes, but the kind of Fair Use example you give of President Ford is in the context of a work which bears the imprint... the individual imprint of an author.

Here this Nation thing didn't really add anything original to what is found in the Ford Memoirs.

Floyd Abrams: Your Honor, if we are right for the moment, if I am persuasive for the moment with respect to the pre-publication and post-publication issue, if one just puts that to the side for the moment, it is inconceivable to me that anyone would say that this article, this very article, published after publication of the Ford Memoirs, violates the copyright law.

It is inconceivable because of the amount quoted, because of all the factors which we ordinarily take account of in Fair Use.

I understand, it is more than a relevant, it is a very central question to this case when one talks about pre-publication and post-publication, but in terms of whether it is that unusual to have long quotations or to have an article like this.

Book reviews are filled with much more in quotation than this.

Unidentified Justice: Yes, but most book reviews contain the reviewer's appraisal of the work as a piece of literature.

Floyd Abrams: News articles on books just published frequently do not, new articles about books about politics in particular.

A book like this is a political event.

It is a president reflecting and stating what happened during his presidency.

It is news in and of itself, and we have testimony on that.

These things are not in dispute on this record at least.

Everyone has testified as to that.

There was no cross-examination.

There were no counter-witnesses as to that.

It does happen, and it happens with some frequency that that a news article will be written about a book.

The question, to be sure, the question is, supposed it happened before publication, what difference does that make?

We cite our legislative history, and we cite more than legislative history.

We cite the statute to you which doesn't say what Mr. Miller wants it to have said, but it doesn't say it.

We cite cases to you which say, in common law, that it didn't make any difference.

The Hemingway case, for example.

We cite Professor Nimmer's book to you which says, the leading authority on copyright, that at common law the fact was that pre-publication, Fair Use applied... not that it did rot apply, that it did apply in common law.

We cite more recent cases, the Am-Law case in the Second Circuit just a few weeks ago, which rather routinely, Judge Winter went ahead with an unpublished work and applied the standard, and all the factors under Fair Use.

If we are wrong about published and unpublished work, if that's dispositive as Mr. Miller argues, we have a lot of troubles in this case, but if we are right about that--

Unidentified Justice: I understood your opponent to concede that Fair Use was a proper question for inquiry here, but he takes the view that whether it is a first publication is a factor to be considered under Fair Use.

You say, it's not.

Floyd Abrams: --I think he goes farther.

Unidentified Justice: Is that the essence of the difference?

Floyd Abrams: I don't think so, Justice O'Connor.

His position in his brief is that Fair Use is precluded absent extraordinary circumstances in a pre-publication situation, and that is not our view at all.

If it were that, for example, under Section 101 of the copyright law, every time a program was or television, or a play is performed, you would have to have extraordinary circumstances to have a review of it because under the copyright law, that's not a publication.

So that's what we are saying here.

We think what the Second Circuit did as a matter of analysis was right in first saying, what is copyrightable, what are we talking about here, and then saying, 300 words, in the circumstances of this factual book, is Fair Use.

Unidentified Justice: Mr. Abrams, you got us up to 700 words with that memorandum.

Your opponent says that he is really talking about 1800 words.

Are the 700 included in the 1800 words, or is the 1800 in addition to that?

Floyd Abrams: No.

Of the entirety of the Nation article of 2250 words--

Unidentified Justice: Yes.

Floyd Abrams: --the amount quoted is about 700 words--

Unidentified Justice: Yes.

Floyd Abrams: --Our opponents say that an additional 1100 words were paraphrased.

Unidentified Justice: I got you.

Floyd Abrams: There is no argument about 400 words... about the other 700 words.

Unidentified Justice: Thank you.

Thank you.

Chief Justice Warren E. Burger: Do you have anything further, Mr. Miller.

Edward A. Miller: I have no rebuttal.

Unidentified Justice: Mr. Miller, may I ask one question, please.

If the article were published in The Nation after the publication of President Ford's book, would that be a copyright violation?

Edward A. Miller: Justice O'Connor, if that happened, there would be one significant change in one of the Fair Use factors, and a possible change in the other.

Unidentified Justice: Yes or no, a violation or not?

Edward A. Miller: It could be, but I can't answer yes or no because it would depend upon the economic impact of the use.

A significant factor that would change is that it would be a published manuscript.

If he did this after the book came out, I don't know whether it would have caused economic harm, and I think that would be a significant factor.

By doing it before the book came out, he caused us to lose the benefit of the first serial license deal that we made.

It is possible that if he came out with his article after the book came out that it wouldn't receive very much attention because, after all, he didn't add anything to what President Ford said in the article.

Thank you.

Chief Justice Warren E. Burger: Thank you.

Gentlemen, the case is submitted.

Unidentified Justice: The Honorable Court is now adjourned until tomorrow at 10:00.

Featured: