PRINCETON UNIVERSITY PRESS, MACMILLAN, INC., and ST. MARTIN
           'S PRESS, INC., Plaintiffs-Appellees, v. MICHIGAN DOCUMENT
           SERVICES, INC., and JAMES M. SMITH, Defendants-Appellants.

                                  No. 94-1778

              UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT


              99 F.3d 1381; 1996 U.S. App. LEXIS 29132; 1996 FED App.
           0357P (6th Cir.); 40 U.S.P.Q.2D (BNA) 1641; Copy. L. Rep. 
                                 (CCH) P27,579

                          November 8, 1996, Decided 
                            November 8, 1996, Filed

DAVID A. NELSON, Circuit Judge. This is a copyright infringement
case. The corporate defendant, Michigan Document Services, Inc., is a commercial
copyshop that reproduced substantial segments of copyrighted works of
scholarship, bound the copies into "coursepacks," and sold the coursepacks to
students for use in fulfilling reading [**2]  assignments given by professors at
the University of Michigan. The copyshop acted without permission from the
copyright holders, and the main question presented is whether the "fair use"
doctrine codified at 17 U.S.C. § 107 obviated the need to obtain such
permission.

   Answering this question "no," and finding the infringement willful, the
district court entered a summary judgment order in which the copyright holders
were granted equitable relief and were awarded damages that may have been
enhanced for willfulness.  Princeton Univ. Press v. Michigan Document Servs.,
Inc., 855 F. Supp. 905 (E.D. Mich. 1994). A three-judge panel of this court
reversed the judgment on appeal, but a majority of the active judges of the
court subsequently voted to rehear the case en banc. The appeal has now been
argued before the full court.

   We agree with the district court that the defendants' commercial exploitation
of the copyrighted materials did not constitute fair use, and we shall affirm
that branch of the district court's judgment. We believe that the district court
erred in its finding of willfulness, however, and we shall vacate the damages
award because of its possible linkage to that [**3]  finding.  [***3]

    [*1384]  I

   Thanks to relatively recent advances in technology, the coursepack -- an
artifact largely unknown to college students when the author of this opinion was
an undergraduate -- has become almost as ubiquitous at American colleges and
universities as the conventional textbook. From the standpoint of the professor
responsible for developing and teaching a particular course, the availability of
coursepacks has an obvious advantage; by selecting readings from a variety of
sources, the professor can create what amounts to an anthology perfectly
tailored to the course the professor wants to present.

   The physical production of coursepacks is typically handled by a commercial
copyshop. The professor gives the copyshop the materials of which the coursepack
is to be made up, and the copyshop does the rest. Adding a cover page and a
table of contents, perhaps, the copyshop runs off as many sets as are needed,
does the necessary binding, and sells the finished product to the professor's
students.

   Ann Arbor, the home of the University of Michigan, is also home to several
copyshops. Among them is defendant Michigan Document Services (MDS), a
corporation owned by defendant [**4]  James Smith. We are told that MDS differs
from most, if not all, of its competitors in at least one important way: it does
not request permission from, nor does it pay agreed royalties to, copyright
owners.

   Mr. Smith has been something of a crusader against the system under which his
competitors have been paying agreed royalties, or "permission fees" as they are
known in the trade. The story begins in March of 1991, when Judge Constance
Baker Motley, of the United States District Court for the Southern District of
New York, decided the first reported case involving the copyright implications
of educational coursepacks. See Basic Books, Inc. v. Kinko's Graphics Corp., 758
F. Supp. 1522 (S.D.N.Y. 1991), holding that a Kinko's copyshop had violated the
copyright statute by creating and selling coursepacks without  [***4]
permission from the publishing houses that held the copyrights. After Kinko's, 
we are told, many copyshops that had not previously requested permission from
copyright holders began to obtain such permission. Mr. Smith chose not to do so.
He consulted an attorney, and the attorney apparently advised him that while it
was "risky" not to obtain permission, there [**5]  were flaws in the Kinko's
decision. Mr. Smith also undertook his own study of the fair use doctrine,
reading what he could find on this subject in a law library. He ultimately
concluded that the Kinko's case had been wrongly decided, and he publicized this
conclusion through speeches, writings, and advertisements. His advertisements
stressed that professors whose students purchased his coursepacks would not have
to worry about delays attendant upon obtaining permission from publishers.

   Not surprisingly, Mr. Smith attracted the attention of the publishing
industry. Three publishers -- Princeton University Press, MacMillan, Inc., and
St. Martin's Press, Inc. -- eventually brought the present suit against Mr.
Smith and his corporation.

   Each of the plaintiff publishers maintains a department that processes
requests for permission to reproduce portions of copyrighted works. (In
addition, copyshops may request such permission through the Copyright Clearance
Center, a national clearinghouse.) MacMillan and St. Martin's, both of which are
for-profit companies, claim that they generally respond within two weeks to
requests for permission to make copies for classroom use. Princeton,  [**6]  a
non-profit organization, claims to respond within two to four weeks. Mr. Smith
has not put these claims to the test, and he has not paid permission fees.

   The plaintiffs allege infringement of the copyrights on six different works
that were excerpted without permission. The works in question, and the
statistics on the magnitude of the excerpts, are as follows: Nancy J. Weiss,
Farewell to the Party of Lincoln: Black Politics in the Age of FDR  [***5]   (95
pages copied, representing 30 percent of the entire book); Walter Lippmann,
Public Opinion (45 pages copied, representing 18 percent of the whole); Robert
E. Layne, Political Ideology: Why the American Common Man Believes What He Does
(78 pages, 16 percent); Roger Brown, Social Psychology (52 pages, 8 percent);
[*1385]  Milton Rokeach, The Nature of Human Values (77 pages, 18 percent);
James S. Olson and Randy Roberts, Where the Domino Fell, America and Vietnam, 
1945-1950 (17 pages, 5 percent). The extent of the copying is undisputed, and
the questions presented by the case appear to be purely legal in nature.

   II

The fair use doctrine, which creates an exception to the copyright monopoly,
"permits [and requires]  [**7]  courts to avoid rigid application of the
copyright statute when, on occasion, it would stifle the very creativity which
that law is designed to foster." Campbell v. Acuff-Rose Music, Inc., 510 U.S.
569, 114 S. Ct. 1164, 1170, 127 L. Ed. 2d 500 (1994), quoting Stewart v. Abend,
495 U.S. 207, 236, 109 L. Ed. 2d 184, 110 S. Ct. 1750 (1990). Initially
developed by the courts, the doctrine was codified at 17 U.S.C. § 107 in 1976.
Congress used the following formulation in Section 107:


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

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

     (2) the nature of the copyrighted work;  [***6]

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

     (4) the effect of the use upon the potential market for or [**8]
     value of the copyrighted work. . . ."

   This language does not provide blanket immunity for "multiple copies for
classroom use." Rather, "whether a use referred to in the first sentence of
Section 107 is a fair use in a particular case . . . depends upon the
application of the determinative factors." Campbell, 114 S. Ct. at 1170 n.9,
quoting S. Rep. No. 94-473, p.62. n1

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n1 Judge Merritt's dissent rejects this proposition and asserts, in effect,
that under the plain language of the copyright statute the making of multiple
copies for classroom use constitutes fair use ipso facto. Judge Merritt's
reading of the statute would be unassailable if Congress had said that "the use
of a copyrighted work for purposes such as teaching (including multiple copies
for classroom use) is not an infringement of copyright." But that is not what
Congress said. It said, rather, that "the fair use of a copyrighted work,
including such use [i.e. including "fair use"] . . . for purposes such as . . .
teaching (including multiple copies for classroom use) . . . is not an
infringement of copyright."

   When read in its entirety, as Judge Ryan's dissent correctly recognizes, the
quoted sentence says that fair use of a copyrighted work for purposes such as
teaching (including multiple copies for classroom use) is not an infringement.
And the statutory factors set forth in the next sentence must be considered in
determining whether the making of multiple copies for classroom use is a fair
use in "any particular case," just as the statutory factors must be considered
in determining whether any other use referred to in the first sentence is a fair
use in a particular case. To hold otherwise would be to subvert the intent
manifested in the words of the statute and confirmed in the pertinent
legislative history.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**9]

   The four statutory factors may not have been created equal. In determining
whether a use is "fair," the Supreme Court has said that the most important
factor is the fourth, the one contained in 17 U.S.C. § 107(4). See Harper & Row
Publishers, Inc. v. Nation Enters., 471 U.S. 539, 566, 85 L. Ed. 2d 588, 105 S.
Ct. 2218  [***7]  (1985), citing 3 M. Nimmer, Copyright § 13.05[A], at 13-76
(1984). (But see American Geophysical Union v. Texaco Inc., 60 F.3d 913, 926 (2d
Cir. 1994), cert. dismissed, 116 S. Ct. 592, 133 L. Ed. 2d 486 (1995),
suggesting that the Supreme Court may now have abandoned the idea that the
fourth factor is of paramount importance.) We take it that this factor, "the
effect of the use upon the potential market for or value of the copyrighted
work," is at least primus inter pares, figuratively speaking, and we shall turn
to it first.

   The burden of proof as to market effect rests with the copyright holder if
the challenged use is of a "noncommercial" nature. The alleged infringer has the
burden, on the other hand, if the challenged use is  [*1386]  "commercial" in
nature.  Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 451, 78 L.
Ed. 2d 574, 104 S. Ct. 774 (1984). In the case at bar the defendants argue that
the burden of proof [**10]  rests with the publishers because the use being
challenged is "noncommercial." We disagree.

   It is true that the use to which the materials are put by the students who
purchase the coursepacks is noncommercial in nature. But the use of the
materials by the students is not the use that the publishers are challenging.
What the publishers are challenging is the duplication of copyrighted materials
for sale by a for-profit corporation that has decided to maximize its profits --
and give itself a competitive edge over other copyshops -- by declining to pay
the royalties requested by the holders of the copyrights. n2

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n2 Two of the dissents suggest that a copyshop merely stands in the shoes of
its customers and makes no "use" of copyrighted materials that differs
materially from the use to which the copies are put by the ultimate consumer.
But subject to the fair use exception, 17 U.S.C. § 106 gives the copyright owner
the "exclusive" right "to reproduce the copyrighted work in copies . . . ." And
if the fairness of making copies depends on what the ultimate consumer does with
the copies, it is hard to see how the manufacture of pirated editions of any
copyrighted work of scholarship could ever be an unfair use. As discussed in
Part III A, infra, the dissenters' suggestion -- which proposes no limiting
principle -- runs counter to the legislative history of the Copyright Act and
has properly been rejected by the courts. [**11]   [***8]

   The defendants' use of excerpts from the books at issue here was no less
commercial in character than was The Nation magazine's use of copyrighted
material in Harper & Row, where publication of a short article containing
excerpts from the still unpublished manuscript of a book by President Ford was
held to be an unfair use. Like the students who purchased unauthorized
coursepacks, the purchasers of The Nation did not put the contents of the
magazine to commercial use -- but that did not stop the Supreme Court from
characterizing the defendant's use of the excerpts as "a publication [that] was
commercial as opposed to nonprofit. . . ." Harper & Row, 471 U.S. at 562. And
like the use that is being challenged in the case now before us, the use
challenged in Harper & Row was "presumptively an unfair exploitation of the
monopoly privilege that belongs to the owner of the copyright." Id., quoting
Sony, 464 U.S. at 451. n3

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n3 Judge Ryan's dissent maintains that there cannot be an "exploitation" of a
copyrighted work unless the exploiter assesses the work's market potential,
makes a selection based on content, and realizes a profit from the substance of
the work. But the dictionary defines "exploit" in terms that include "to take
advantage of, utilize," see Webster's Third New International Dictionary 
(Unabridged), and nothing in Harper & Row suggests that the Supreme Court
intended a narrower or more idiosyncratic meaning.

   The dissent also points out that it was magazine employees, not outsiders,
who obtained the unpublished manuscript of the Ford book and selected the
portions that were included in the offending article. But nothing turns on the
"in house" character of such activities. If a college professor had obtained the
manuscript, selected the excerpts and peddled the article on a free-lance basis,
can anyone doubt that it would have been a violation of the copyright for The 
Nation to publish the professor's article?

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**12]   [***9]

   The strength of the Sony presumption may vary according to the context in
which it arises, and the presumption disappears entirely where the challenged
use is one that transforms the original work into a new artistic creation. See
Campbell, 114 S. Ct. at 1176. Perhaps the presumption is weaker in the present
case than it would be in other contexts. There is a presumption of unfairness
here, nonetheless, and we are not persuaded that the defendants have rebutted
it.

   If we are wrong about the existence of the presumption -- if the challenged
use is not commercial, in other words, and if the plaintiff publishers have the
burden of proving an adverse effect upon either the potential market for the
copyrighted work or the potential value of the work -- we believe that the
publishers have carried the burden of proving a diminution in potential market
value.

   One test for determining market harm -- a test endorsed by the Supreme Court
in Sony, Harper & Row, and Campbell -- is evocative of Kant's categorical
imperative. "To negate fair use," the  [*1387]  Supreme Court has said, "one
need only show that if the challenged use 'should become widespread, it would 
adversely  [**13]   affect the potential market for the copyrighted work.'"
Harper & Row, 471 U.S. at 568, quoting Sony, 464 U.S. at 451 (emphasis supplied
in part). Under this test, we believe, it is reasonably clear that the plaintiff
publishers have succeeded in negating fair use.

   As noted above, most of the copyshops that compete with MDS in the sale of
coursepacks pay permission fees for the privilege of duplicating and selling
excerpts from copyrighted works. The three plaintiffs together have been
collecting permission fees at a rate approaching $ 500,000 a year. If copyshops
across the nation were to start doing what the defendants have been doing here,
this revenue stream would shrivel and the potential value of the copyrighted
works of scholarship published by the plaintiffs would be diminished
accordingly.  [***10]

   The defendants contend that it is circular to assume that a copyright holder
is entitled to permission fees and then to measure market loss by reference to
the lost fees. They argue that market harm can only be measured by lost sales of
books, not permission fees. But the circularity argument proves too much.
Imagine that the defendants set up a printing press and [**14]  made exact
reproductions -- asserting that such reproductions constituted "fair use" -- of
a book to which they did not hold the copyright. Under the defendants' logic it
would be circular for the copyright holder to argue market harm because of lost
copyright revenues, since this would assume that the copyright holder had a
right to such revenues.

   A "circularity" argument indistinguishable from that made by the defendants
here was rejected by the Second Circuit in American Geophysical, 60 F.3d at
929-31 (Jon O. Newman, C.J.), where the photocopying of scientific articles for
use by Texaco researchers was held to be an unfair use. It is true, the Second
Circuit acknowledged, that "a copyright holder can always assert some degree of
adverse effect on its potential licensing revenues as a consequence of [the
defendant's use] . . . simply because the copyright holder has not been paid a
fee to permit that particular use." Id. at 929 n.17. But such an assertion will
not carry much weight if the defendant has "filled a market niche that the
[copyright owner] simply had no interest in occupying." Id. at 930 (quoting Twin
Peaks Prods., Inc. v. Publications Int'l, Ltd., [**15]  996 F.2d 1366, 1377 (2d
Cir. 1993)). Where, on the other hand, the copyright holder clearly does have an
interest in exploiting a licensing market -- and especially where the copyright
holder has actually succeeded in doing so -- "it is appropriate that potential
licensing revenues for photocopying be considered in a fair use analysis."
American Geophysical, 60 F.3d at 930. Only "traditional, reasonable, or likely
to be developed markets" are to be considered in this connection, and even the
availability of an existing system for collecting licensing fees will not be
[***11]  conclusive.  Id. at 930-31. n4 But Congress has implicitly suggested
that licensing fees should be recognized in appropriate cases as part of the
potential market for or value of the copyrighted work, and it was primarily
because of lost licensing revenue that the Second Circuit agreed with the
finding of the district court in American Geophysical that "the publishers have
demonstrated a substantial harm to the value of their copyrights through [Texaco
's] copying." Id. at 931 (quoting the district court opinion (Pierre N. Leval,
J.) reported at 802 F. Supp. 1, 21 (S.D.N.Y. 1992)).

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n4 Although not conclusive, the existence of an established license fee
system is highly relevant:

     "It is sensible that a particular unauthorized use should be
     considered 'more fair' when there is no ready market or means to pay
     for the use, while such an unauthorized use should be considered 'less
     fair' when there is a ready market or means to pay for the use. The
     vice of circular reasoning arises only if the availability of payment
     is conclusive against fair use." Id. at 931.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**16]

   The approach followed by Judges Newman and Leval in the American Geophysical
litigation is fully consistent with the Supreme Court case law. In Harper & Row,
where there is no indication in the opinion that the challenged use caused any
diminution in sales of President Ford's memoirs, the Court found harm to the
market for the licensing of  [*1388]  excerpts. The Court's reasoning -- which
was obviously premised on the assumption that the copyright holder was entitled
to licensing fees for use of its copyrighted materials -- is no more circular
than that employed here. And in Campbell, where the Court was unwilling to
conclude that the plaintiff had lost licensing revenues under the fourth
statutory factor, the Court reasoned that a market for critical parody was not
one "that creators of original works would in general develop or license others
to develop." Campbell, 114 S. Ct. at 1178.  [***12]

   The potential uses of the copyrighted works at issue in the case before us
clearly include the selling of permission to reproduce portions of the works for
inclusion in coursepacks -- and the likelihood that publishers actually will
license such reproduction is a demonstrated fact.  [**17]  A licensing market
already exists here, as it did not in a case on which the plaintiffs rely,
Williams & Wilkins Co. v. United States, 203 Ct. Cl. 74, 487 F.2d 1345 (Ct. Cl.
1973), aff'd by an equally divided Court, 420 U.S. 376, 95 S. Ct. 1344, 43 L.
Ed. 2d 264 (1975). Thus there is no circularity in saying, as we do say, that
the potential for destruction of this market by widespread circumvention of the
plaintiffs' permission fee system is enough, under the Harper & Row test, "to
negate fair use."

   Our final point with regard to the fourth statutory factor concerns the
affidavits of the three professors who assigned one or more of the copyrighted
works to be read by their students. The defendants make much of the proposition
that these professors only assigned excerpts when they would not have required
their students to purchase the entire work. But what seems significant to us is
that none of these affidavits shows that the professor executing the affidavit
would have refrained from assigning the copyrighted work if the position taken
by the copyright holder had been sustained beforehand.

   It is true that Professor Victor Lieberman, who assigned the excerpt from the
Olson and Roberts book on America and Vietnam, raises [**18]  questions about
the workability of the permission systems of "many publishers." In 1991,
Professor Lieberman avers, a Kinko's copyshop to which he had given materials
for inclusion in a coursepack experienced serious delays in obtaining
permissions from unnamed publishers. Professor Lieberman does not say that
timely permission could not have been obtained from the publisher of the Olson
and Roberts book, however, and he does not say that he would have refrained from
assigning the work if the copyshop had been required to pay a permission fee for
it.  [***13]

   It is also true that the publisher of one of the copyrighted works in
question here (Public Opinion, by Walter Lippmann) would have turned down a
request for permission to copy the 45-page excerpt included in a coursepack
prepared to the specifications of Professor Donald Kinder. The excerpt was so
large that the publisher would have preferred that students buy the book itself,
and the work was available in an inexpensive paperback edition. But Professor
Kinder does not say that he would have refrained from assigning the excerpt from
the Lippmann book if it could not have been included in the coursepack. Neither
does he [**19]  say that he would have refrained from assigning any of the other
works mentioned in his affidavit had he known that the defendants would be
required to pay permission fees for them.

   The third professor, Michael Dawson, assigned a 95-page excerpt from the book
on black politics by Nancy Weiss. Professor Dawson does not say that a license
was not available from the publisher of the Weiss book, and he does not say that
the license fee would have deterred him from assigning the book.

   III

   In the context of nontransformative uses, at least, and except insofar as
they touch on the fourth factor, the other statutory factors seem considerably
less important. We shall deal with them relatively briefly.

   A

   As to "the purpose and character of the use, including whether such use is of
a commercial nature or is for nonprofit educational purposes," 17 U.S.C. § 107
(1), we have already explained our reasons for concluding  [*1389]  that the
challenged use is of a commercial nature.

   The defendants argue that the copying at issue here would be considered
"nonprofit educational" if done by the students or professors themselves. The
defendants also  [***14]  note that they can profitably produce multiple [**20]
copies for less than it would cost the professors or the students to make the
same number of copies. Most of the copyshops with which the defendants compete
have been paying permission fees, however, and we assume that these shops too
can perform the copying on a more cost-effective basis than the professors or
students can. This strikes us as a more significant datum than the ability of a
black market copyshop to beat the do-it-yourself cost.

   As to the proposition that it would be fair use for the students or
professors to make their own copies, the issue is by no means free from doubt.
We need not decide this question, however, for the fact is that the copying
complained of here was performed on a profit-making basis by a commercial
enterprise. And "the courts have . . . properly rejected attempts by for-profit
users to stand in the shoes of their customers making nonprofit or noncommercial
uses." Patry, Fair Use in Copyright Law, at 420 n.34. As the House Judiciary
Committee stated in its report on the 1976 legislation,

     "It would not be possible for a non-profit institution, by means of
     contractual arrangements with a commercial copying enterprise, to
     authorize the [**21]  enterprise to carry out copying and distribution
     functions that would be exempt if conducted by the non-profit
     institution itself." H.R. Rep. No. 1476, 94th Cong., 2d Sess. at 74
     (1976).

   It should be noted, finally, that the degree to which the challenged use has
transformed the original copyrighted works -- another element in the first
statutory factor -- is virtually indiscernible. If you make verbatim copies of
95 pages of a 316-page book, you have not transformed the 95 pages very much --
even if you juxtapose them to excerpts from other works and package everything
conveniently. This kind of mechanical "transformation" bears little resemblance
to the creative metamorphosis accomplished by the parodists in the Campbell
case.  [***15]

   B

   The second statutory factor, "the nature of the copyrighted work," is not in
dispute here. The defendants acknowledge that the excerpts copied for the
coursepacks contained creative material, or "expression;" it was certainly not
telephone book listings that the defendants were reproducing. This factor too
cuts against a finding of fair use.

   C

   The third statutory factor requires us to assess "the amount and
substantiality of the portion [**22]  used in relation to the copyrighted work
as a whole." Generally speaking, at least, "the larger the volume (or the
greater the importance) of what is taken, the greater the affront to the
interests of the copyright owner, and the less likely that a taking will qualify
as a fair use." Pierre N. Leval, Toward a Fair Use Standard, 103 HARV. L. REV.
1105, 1122 (1990).

   The amounts used in the case at bar -- 8,000 words in the shortest excerpt --
far exceed the 1,000-word safe harbor that we shall discuss in the next part of
this opinion. See H.R. Rep. No. 1476, 94th Cong., 2d Sess. (1976), reprinted
after 17 U.S.C.A. § 107. The defendants were using as much as 30 percent of one
copyrighted work, and in no case did they use less than 5 percent of the
copyrighted work as a whole. These percentages are not insubstantial. And to the
extent that the third factor requires some type of assessment of the "value" of
the excerpted material in relation to the entire work, the fact that the
professors thought the excerpts sufficiently important to make them required
reading strikes us as fairly convincing "evidence of the qualitative value of
the copied material." Harper & Row, 471 U.S. at [**23]  565. We have no reason
to suppose that in choosing the excerpts to be copied, the professors passed
over material that was more representative of the major ideas of the work as a
whole in  [*1390]  preference to material that was less representative.  [***16]

   The third factor may have more significance for the 95-page excerpt from the
black politics book than for the 17-page excerpt from the Vietnam book. In each
instance, however, the defendants have failed to carry their burden of proof
with respect to "amount and substantiality." n5

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n5 "Fair use serves as an affirmative defense to a claim of copyright
infringement, and thus the party claiming that its secondary use of the original
copyrighted work constitutes a fair use typically carries the burden of proof as
to all issues in the dispute." American Geophysical, 60 F.3d at 918, citing
Campbell, 114 S. Ct. at 1177.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

   IV

   We turn now to the pertinent legislative history. The general revision of the
copyright law enacted in 1976 was developed through a somewhat [**24]  unusual
process. Congress and the Register of Copyrights initiated and supervised
negotiations among interested groups -- groups that included authors,
publishers, and educators -- over specific legislative language. Most of the
language that emerged was enacted into law or was made a part of the committee
reports. See Jessica Litman, Copyright, Compromise, and Legislative History, 72
CORNELL L. REV. 857 (1987). The statutory fair use provisions are a direct
result of this process.  Id. at 876-77. So too is the "Agreement on Guidelines
for Classroom Copying in Not-for-Profit Educational Institutions With Respect to
Books and Periodicals" -- commonly called the "Classroom Guidelines" -- set out
in H.R. Rep. No. 1476 at 68-71, 94th Cong., 2d Sess. (1976). The House and
Senate conferees explicitly accepted the Classroom Guidelines "as part of their
understanding of fair use," H.R. Conf. Rep. No. 1733, 94th Cong. 2d Sess. at 70
(1976), and the Second Circuit has characterized the guidelines as "persuasive
authority . . . ." American Geophysical, 60 F.3d at 919 n.5, citing Kinko's, 758
F. Supp. at 1522-36.  [***17]

   There are strong reasons to consider this legislative [**25]  history. The
statutory factors are not models of clarity, and the fair use issue has long
been a particularly troublesome one. See Acuff-Rose Music, Inc. v. Campbell, 972
F.2d 1429, 1439 (6th Cir. 1992) (Nelson, J., dissenting), rev'd, 510 U.S. 569,
114 S. Ct. 1164, 127 L. Ed. 2d 500 (1994). Not surprisingly, courts have often
turned to the legislative history when considering fair use questions. See
Harper & Row, 471 U.S. at 549-53, where the Supreme Court looked not only to the
House report cited above, but to an earlier Senate report "discussing fair use
of photocopied materials in the classroom. . . ." And see Campbell, 114 S. Ct.
at 1170, where the Court likewise sifted through the congressional committee
reports.

   Although the Classroom Guidelines purport to "state the minimum and not the
maximum standards of educational fair use," they do evoke a general idea, at
least, of the type of educational copying Congress had in mind. The guidelines
allow multiple copies for classroom use provided that (1) the copying meets the
test of brevity (1,000 words, in the present context); (2) the copying meets the
test of spontaneity, under which "the inspiration and decision to use the work
and the moment [**26]  of its use for maximum teaching effectiveness [must be]
so close in time that it would be unreasonable to expect a timely reply to a
request for permission;" (3) no more than nine instances of multiple copying
take place during a term, and only a limited number of copies are made from the
works of any one author or from any one collective work; (4) each copy contains
a notice of copyright; (5) the copying does not substitute for the purchase of
"books, publishers' reprints or periodicals;" and (6) the student is not charged
any more than the actual cost of copying. The Classroom Guidelines also make
clear that unauthorized copying to create "anthologies, compilations or
collective works" is prohibited. H.R. Rep. No. 1476 at 69.

   In its systematic and premeditated character, its magnitude, its anthological
content, and its commercial  [***18]  motivation, the copying done by MDS goes
well beyond anything envisioned by the Congress that chose to incorporate the
guidelines in the legislative history. Although the guidelines do not purport
[*1391]  to be a complete and definitive statement of fair use law for
educational copying, and although they do not have the force of law, they do
provide [**27]  us general guidance. The fact that the MDS copying is light
years away from the safe harbor of the guidelines weighs against a finding of
fair use.

   Although the Congress that passed the Copyright Act in 1976 would pretty
clearly have thought it unfair for a commercial copyshop to appropriate as much
as 30 percent of a copyrighted work without paying the license fee demanded by
the copyright holder, the changes in technology and teaching practices that have
occurred over the last two decades might conceivably make Congress more
sympathetic to the defendants' position today. If the law on this point is to be
changed, however, we think the change should be made by Congress and not by the
courts.

   V

   We take as our text for the concluding part of this discussion of fair use
Justice Stewart's well-known exposition of the correct approach to "ambiguities"
(see Sony, 464 U.S. at 431-32) in the copyright law:


     "The immediate effect of our copyright law is to secure a fair return
     for an 'author's' creative labor. But the ultimate aim is, by this
     incentive, to stimulate artistic creativity for the general public
     good. 'The sole interest of the United States and the primary object
     [**28]  in conferring the monopoly,' this Court has said, 'lie in the
     general benefits derived by the public from the labors of authors.' .
     . . When technological change has rendered its literal terms
     ambiguous, the Copyright Act must be construed in light of this basic
     purpose." Twentieth Century Music Corp. v. Aiken  [***19]  422 U.S. 
     151, 156, 45 L. Ed. 2d 84, 95 S. Ct. 2040 (1975) (footnotes and 
     citations omitted).

   The defendants attach considerable weight to the assertions of numerous 
academic authors that they do not write primarily for money and that they want 
their published writings to be freely copyable. The defendants suggest that 
unlicensed copying will "stimulate artistic creativity for the general public 
good."

   This suggestion would be more persuasive if the record did not demonstrate 
that licensing income is significant to the publishers. It is the publishers who
hold the copyrights, of course -- and the publishers obviously need economic 
incentives to publish scholarly works, even if the scholars do not need direct 
economic incentives to write such works.

   The writings of most academic authors, it seems fair to say, lack the general
appeal of works by a Walter Lippmann, for example. (Lippmann is the  [**29]   
only non-academic author whose writings are involved in this case.) One suspects
that the profitability of at least some of the other books at issue here is 
marginal. If publishers cannot look forward to receiving permission fees, why 
should they continue publishing marginally profitable books at all? And how will
artistic creativity be stimulated if the diminution of economic incentives for 
publishers to publish academic works means that fewer academic works will be 
published?

   The fact that a liberal photocopying policy may be favored by many academics
who are not themselves in the publishing business has little relevance in this 
connection. As Judge Leval observed in American Geophysical,


        "It is not surprising that authors favor liberal photocopying;
     generally such authors have a far greater interest in the wide
     dissemination of their work than in royalties -- all the more so when
     they have assigned their royalties to the publisher. But the  [***20]
     authors have not risked their capital to achieve dissemination. The
     publishers have. Once an author has assigned her copyright, her
     approval or disapproval of photocopying is of no further relevance."
     802 F. Supp. at [**30]  27.

   In the case at bar the district court was not persuaded that the creation of
new works of scholarship would be stimulated by depriving publishers of the
revenue stream derived from the sale of permissions. Neither are we. On the
contrary, it seems to us, the destruction of this revenue stream can only have a
deleterious effect upon the incentive to publish academic writings.

    [*1392]  VI

   The district court's conclusion that the infringement was willful is somewhat
more problematic, in our view. The Copyright Act allows the collection of
statutory damages of between $ 500 and $ 20,000 for each work infringed.  17
U.S.C. § 504(c)(1). Where the copyright holder establishes that the infringement
is willful, the court may increase the award to not more than $ 100,000.  17
U.S.C. § 504(c)(2). If the court finds that the infringement was innocent, on
the other hand, the court may reduce the damages to not less than $ 200. Id.
Here the district court awarded $ 5,000 per work infringed, characterizing the
amount of the award as "a strong admonition from this court." 855 F. Supp. at
913.

   Willfulness, under this statutory scheme, has a rather specialized meaning.
As Professor Nimmer explains,  [**31]

     "In other contexts ['willfulness'] might simply mean an intent to
     copy, without necessarily an intent to infringe. It seems clear that
     as here used, 'willfully' means with knowledge that the defendant's
     conduct constitutes copyright infringement. Otherwise, there would be
     no point in providing specially for the reduction of minimum awards in
     the case of innocent infringement, because any infringement that was
     [***21]  nonwillful would necessarily be innocent. This seems to mean,
     then, that one who has been notified that his conduct constitutes
     copyright infringement, but who reasonably and in good faith believes
     the contrary, is not 'willful' for these purposes." Melville B. Nimmer
     & David Nimmer, 3 Nimmer on Copyright § 14.04[B][3] (1996).

   The plaintiffs do not contest the good faith of Mr. Smith's belief that his
conduct constituted fair use; only the reasonableness of that belief is
challenged. "Reasonableness," in the present context, is essentially a question
of law. The facts of the instant case are not in dispute, and the issue is
whether the copyright law supported the plaintiffs' position so clearly that the
defendants must be deemed as a matter of [**32]  law to have exhibited a
reckless disregard of the plaintiffs' property rights. We review this issue de 
novo.

   Fair use is one of the most unsettled areas of the law. The doctrine has been
said to be "so flexible as virtually to defy definition." Time Inc. v. Bernard 
Geis Assoc., 293 F. Supp. 130, 144 (S.D.N.Y. 1968). The potential for reasonable
disagreement here is illustrated by the forcefully argued dissents and the
now-vacated panel opinion. In the circumstances of this case, we cannot say that
the defendants' belief that their copying constituted fair use was so
unreasonable as to bespeak willfulness. Accordingly, we shall remand the case
for reconsideration of the statutory damages to be awarded.

   VII

   Insofar as injunctive relief is concerned, the judgment of the district court
has not been set forth on a separate document in the manner required by Rule 58,
Fed. R. Civ. P. The penultimate sentence of the concluding paragraph of the
district court's order -- a sentence evidently intended to serve the office of a
separate injunction -- reads as follows:  [***22]


     "Further, defendants are ENJOINED from copying any of plaintiffs'
     existing or future copyrighted [**33]  works without first obtaining
     the necessary permission." 855 F. Supp. at 913.


The district court clearly did not intend to prohibit the defendants from
copying without permission works not protected by copyright. We are uncertain
whether the district court gave any consideration to copying of a sort that
could not be anything other than fair use. On remand the district court should
set forth its judgment in a separate document stating the scope of the
injunction more precisely.

   Before the initial panel that heard this case -- but not before the en banc
court -- the defendants argued that the district court exceeded its powers by
enjoining them from reproduction of future copyrighted works. We do not find the
argument persuasive. The weight of authority supports the extension of
injunctive relief to future works. See, e.g., Olan Mills, Inc. v. Linn Photo Co.
, 23 F.3d 1345 (8th Cir. 1994); Pacific and Southern Co., Inc. v. Duncan, 744
F.2d 1490 (11th  [*1393]  Cir. 1984), cert. denied, 471 U.S. 1004, 85 L. Ed. 2d
161, 105 S. Ct. 1867 (1985); Basic Books, 758 F. Supp. at 1542; Melville B.
Nimmer & David Nimmer, 3 Nimmer on Copyright § 1406[B] (1995). The view taken by
these authorities seems [**34]  the better one to us.

   VIII

   The grant of summary judgment on the fair use issue is AFFIRMED. The award of
damages is VACATED, and the case is REMANDED for reconsideration of damages and
for entry of a separate judgment not inconsistent with this opinion.  [***23]

DISSENTBY: BOYCE F. MARTIN, JR.; MERRITT; RYAN

DISSENT: 

   BOYCE F. MARTIN, JR., Chief Judge, dissenting. This case presents for me one
of the more obvious examples of how laudable societal objectives, recognized by
both the Constitution and statute, have been thwarted by a decided lack of
judicial prudence. Copyright protection as embodied in the Copyright Act of 1976
is intended as a public service to both the creator and the consumer of
published works. Although the Act grants to individuals limited control over
their original works, it was drafted to stimulate the production of those
original works for the benefit of the whole nation. The fair use doctrine, which
requires unlimited public access to published works in educational settings, is
one of the essential checks on the otherwise exclusive property rights given to
copyright holders under the Copyright Act.

   Ironically, the majority's rigid statutory construction [**35]  of the
Copyright Act grants publishers the kind of power that Article I, Section 8 of
the Constitution is designed to guard against. The Copyright Clause grants
Congress the power to create copyright interests that are limited in scope.
Consequently, the Copyright Act adopted the fair use doctrine to protect society
's vested interest in the sharing of ideas and information against pursuits of
illegitimate or excessive private proprietary claims. While it may seem unjust
that publishers must share, in certain situations, their work-product with
others, free of charge, that is not some "unforeseen byproduct of a statutory
scheme;" rather, it is the "essence of copyright" and a "constitutional
requirement." Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340,
349, 113 L. Ed. 2d 358, 111 S. Ct. 1282 (1991).

   Michigan Document Services provided a service to the University of Michigan
that promoted scholarship and higher education. Michigan Document Services was
paid for its services; however, that fact does not obviate a fair use claim
under these facts. Requiring Michigan Document Services to pay permission fees
in this instance is inconsistent with the primary mission of the Copyright Act.
The individual [**36]  rights granted by the Act are subservient to  [***24]
the Act's primary objective, which is the promotion of creativity generally. We
must therefore consider the fair use provision of Section 107 of the Act in
light of the sum total of public benefits intended by copyright law. In this
instance, there is no adverse economic impact on Princeton University Press that
can outweigh the benefits provided by Michigan Document Services. Indeed, to
presume adverse economic impact, as has the majority, is to presume that the $
50,000 in fees currently earned by plaintiff is mandated by the Act in every
instance -- something I hesitate to presume.

   That the majority lends significance to the identity of the person operating
the photocopier is a profound indication that its approach is misguided. Given
the focus of the Copyright Act, the only practical difference between this case
and that of a student making his or her own copies is that commercial
photocopying is faster and more cost-effective. Censuring incidental private
sector profit reflects little of the essence of copyright law. Would the
majority require permission fees of the Professor's teaching assistant who at
times must copy,  [**37]  at the Professor's behest, copyrighted materials for
dissemination to a class, merely because such assistant is paid an hourly wage
by the Professor for this work?

   The majority's strict reading of the fair use doctrine promises to hinder
scholastic progress nationwide. By charging permission fees on this kind of job,
publishers will pass on expenses to colleges and universities that will, of
course, pass such fees on to  [*1394]  students. Students may also be harmed if
added expenses and delays cause professors to opt against creating such
specialized anthologies for their courses. Even if professors attempt to
reproduce the benefits of such a customized education, the added textbook cost
to students is likely to be prohibitive.

   The Copyright Act does not suggest such a result. Rather, the fair use
doctrine contemplates the creation and free flow of information; the unhindered
flow of such  [***25]  information through, among other things, education in
turn spawns the creation and free flow of new information.

   In limiting the right to copy published works in the Copyright Act, Congress
created an exception for cases like the one before us. When I was in school, you
bought your books and [**38]  you went to the library for supplemental
information. To record this supplemental information, in order to learn and
benefit from it, you wrote it out long-hand or typed out what you needed --not
easy, but effective. Today, with the help of free enterprise and technology,
this fundamental means of obtaining information for study has been made easier.
Students may now routinely acquire inexpensive copies of the information they
need without all of the hassle. The trend of an instructor giving information to
a copying service to make a single set of copies for each student for a small
fee is just a modern approach to the classic process of education. To otherwise
enforce this statute is nonsensical. I therefore dissent.  [***26]

   MERRITT, Circuit Judge, dissenting. The copying done in this case is
permissible under the plain language of the copyright statute that allows
"multiple copies for classroom use:" "The fair use of a copyrighted work . . .
for purposes such as . . . teaching (including multiple copies for classroom use
), . . . is not an infringement of copyright." 17 U.S.C. § 107 (emphasis added).
Also, the injunction the Court has upheld exceeds the protections provided
[**39]  by the Copyright Act of 1976 regardless of whether the use was a fair
use and is so grossly overbroad that it violates the First Amendment.

   I.

   This is a case of first impression with broad consequences. Neither the
Supreme Court nor any other court of appeals has interpreted the exception
allowing "multiple copies for classroom use" found in § 107 of the copyright
statute. There is no legal precedent and no legal history that supports our
Court's reading of this phrase in a way that outlaws the widespread practice of
copying for classroom use by teachers and students.

   For academic institutions, the practical consequences of the Court's decision
in this case are highly unsatisfactory, to say the least. Anyone who makes
multiple copies for classroom use for a fee is guilty of copyright infringement
unless the portion copied is just a few paragraphs long. Chapters from a book or
articles from a journal are verboten. No longer may Kinko's and other corner
copyshops, or school bookstores, libraries and student-run booths and kiosks
copy anything for a fee except a small passage. I do not see why we should so
construe plain statutory language that on its face permits "multiple copies for
classroom use." The custom of making copies for classroom use for a fee began
during my college and law school days forty years ago and is now
well-established. I see no justification for overturning this long-established
practice.  [***27]

   I disagree with the Court's method of analyzing and explaining the statutory
language of § 107 providing a fair use exception. n1 Except for "teaching," the
statute is cast in  [*1395]  general, abstract language that allows fair use for
"criticism," "comment," "news reporting" and "research." The scope or extent of
copying allowed for these uses is left undefined. Not so for "teaching." This
purpose, and this purpose alone, is immediately followed by a definition. The
definition allows "multiple copies for classroom use" of copyrighted material.
The four factors to be considered, e.g., market effect and the portion of the
work used, are of limited assistance when the teaching use at issue fits
squarely within the specific language of the statute, i.e., "multiple copies for
classroom use." In the present case that is all we have -- "multiple copies for
classroom use."

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n1 Both the majority opinion and Judge Ryan's dissent approach the
determination of whether the use at issue here is infringing solely by use of
the four statutory factors set out in § 107. Neither the plain language of the
statute nor the case law requires that determination to be made solely on the
narrow grounds of those four factors. Because the plain language of the statute
is clear concerning "multiple copies for classroom use" and because
determinations of infringement are to be made on a case-by-case basis taking
into consideration the reasonableness of the copying from an equitable
perspective, I do not believe that the four factors are controlling. The
specific plain language should be given much more weight in this case than the
four abstract considerations of little relevance to copying for classroom use.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**41]

   There is nothing in the statute that distinguishes between copies made for
students by a third person who charges a fee for their labor and copies made by
students themselves who pay a fee only for use of the copy machine. Our
political economy generally encourages the division and specialization of labor.
There is no reason why in this instance the law should discourage high schools,
colleges, students and professors from hiring the labor of others to make their
copies any more than there is a reason to discourage lawyers from hiring
paralegals to make copies for clients and courts. The Court's distinction in
this case  [***28]  based on the division of labor -- who does the copying -is
short sighted and unsound economically.

   Our Court cites no authority for the proposition that the intervention of the
copyshop changes the outcome of the case. The Court errs by focusing on the "use
" of the materials made by the copyshop in making the copies rather than upon
the real user of the materials -- the students. Neither the District Court nor
our Court provides a rationale as to why the copyshops cannot "stand in the
shoes" of their customers in making copies for noncommercial, educational [**42]
purposes where the copying would be fair use if undertaken by the professor or
the student personally.

   Rights of copyright owners are tempered by the rights of the public. The
copyright owner has never been accorded complete control over all possible uses
of a work. Generally, "the monopoly privileges [of copyright] that Congress may
authorize are neither unlimited nor primarily designed to provide a special
private benefit," Sony Corp. of America v. Universal City Studios, Inc., 464
U.S. 417, 429, 78 L. Ed. 2d 574, 104 S. Ct. 774 (1984), a statement the Court
more fully explained as follows:


     The limited scope of the copyright holder's statutory monopoly, like
     the limited copyright duration required by the Constitution, reflects
     a balance of competing claims upon the public interest: Creative work
     is to be encouraged and rewarded, but private motivation must
     ultimately serve the cause of promoting broad public availability of
     literature, music, and the other arts . . . . When technological
     change has rendered its literal terms ambiguous, the Copyright Act
     must be construed in light of its basic purpose.


 Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 45 L. Ed. 2d 84, 95
S. Ct. 2040 (1975) (footnotes omitted).  [**43]  The public has the right to
make fair use of a copyrighted work and to exercise that right without
requesting permission from, or paying any fee  [***29]  to, the copyright
holder. The essence of copyright is the promotion of learning -- not the
enrichment of publishers.

   II.

   Even if the plain language of the statute allowing "multiple copies for
classroom use" were less clear, the Court's analysis of the fair use factors is
off base. There is nothing in the fair use analysis that casts doubt on the
plain meaning of "multiple copies for classroom use."

   Money changes hands and makes the transaction "commercial" because the
copyshop has freed the student from undertaking the physical task of copying.
The copyshop makes its money based on the number of pages copied, not the
content of those pages. The students paid the copyshop solely for the time,
effort and materials that each student would otherwise have expended in copying
the material himself or herself. The money paid is not money that would
otherwise go to the publishers.

    [*1396]  In finding the use to be "commercial," our Court cites as authority
the use by the magazine The Nation of excerpts from President Ford's book,
[**44]  a use found to be infringement. Maj. Op. at 6 (citing Harper & Row, 
Pubs., Inc. v. Nation Enterprises, 471 U.S. 539, 85 L. Ed. 2d 588, 105 S. Ct.
2218 (1985)). But the Ford excerpts were not copied from the original work on a
photocopier and distributed to a political science class for study. They were
not multiple copies for classroom use, copied "for the purposes . . . of
teaching." They were "scooped" from the Ford memoirs and published in The Nation
, a commercial publication, before Harper and Row, the copyright owner, could
publish them. The case does not interpret the classroom use exception of § 107
and has no application to the case before us.

   The statute also assesses the "amount and substantiality of the portion used
in relation to the copyrighted work as a whole." The excerpts here were a small
percentage of the total work. The District Court recognized that the excerpts
were "truly 'excerpts' and do not purport to be  [***30]  replacements for the
original works." Princeton Univ. Press v. Michigan Doc. Servs., Inc., 855 F.
Supp. 905, 910 (E.D. Mich. 1994). This factor does not weigh against a finding
of fair use, and our Court errs in reaching a contrary conclusion.

   The Court also errs in [**45]  analyzing the market effect of the classroom
copying. The Court erroneously shifts the burden of proof as to market effect to
the defendant by labeling the use "commercial" in nature. Maj. op. at 6.
Generally the burden is on the plaintiff to demonstrate the alleged harm to the
potential market value for the copyrighted work. If the challenge is to a
noncommercial use of a copyrighted work, the plaintiff must prove by a
preponderance of the evidence either that the particular use is harmful or that
if it should become widespread, it would adversely affect the potential market
for the copyrighted work. The Court shifts the burden because it fails to
acknowledge that the use in question -- making "multiple copies for classroom
use" for "teaching" purposes -precisely fits the plain language of the § 107
exception. The Court strains to relieve the plaintiffs of their normal burden of
proof. Plaintiffs have met their burden only because the Court has lifted the
burden and put it onto the shoulders of the defendant.

   Turning to the effect of the use upon the potential market for or value of
the copyrighted work, plaintiffs here have failed to demonstrate that the
photocopying done by defendant [**46]  has caused even marginal economic harm to
their publishing business. As the Court concedes, the publishers would prefer
that students purchase the publications containing the excerpts instead of
receiving photocopies of excerpts from the publications. See Maj. op. at 10 (
"the publisher would have preferred that students buy the book itself . . . .")
(emphasis added). What the publishers would "prefer" is not part of the analysis
to determine the effect on the potential market. We are to examine what the
facts tell us about the market effect. The facts demonstrate that it is only
wishful thinking on the part of the publishers  [***31]  that the professors who
assigned the works in question would have directed their students to purchase
the entire work if the excerpted portions were unavailable for copying. The
excerpts copied were a small percentage of the total work, and, as the
professors testified, it seems more likely that they would have omitted the work
altogether instead of requiring the students to purchase the entire work.

   The use complained of by plaintiffs here has been widespread for many years
and the publishers have not been able to demonstrate any significant [**47]
harm to the market for the original works during that time. The publishing
industry tried to persuade Congress in 1976 to ban the type of copying done by
defendant here. Congress declined to do so and the publishing industry has been
trying ever since to work around the language of the statute to expand its
rights.

   It is also wrong to measure the amount of economic harm to the publishers by
loss of a presumed license fee -- a criterion that assumes that the publishers
have the right to collect such fees in all cases where the user copies any
portion of published works. The majority opinion approves of this approach by
affirming the issuance of an injunction prohibiting defendant from copying any
portion  [*1397]  of plaintiffs' works. It does so without requiring a
case-by-case determination of infringement as mandated by the Supreme Court. See
discussion infra at 7-8.

   The publishers have no right to such a license fee. Simply because the
publishers have managed to make licensing fees a significant source of income
from copyshops and other users of their works does not make the income from the
licensing a factor on which we must rely in our analysis. If the publishers have
no right [**48]  to the fee in many of the instances in which they are
collecting it, we should not validate that practice by now using the income
derived from it to justify further imposition of fees. Our job is simply to
determine whether the use here falls within  [***32]  the § 107 exception for
"multiple copies for classroom use." If it does, the publisher cannot look to us
to force the copyshop to pay a fee for the copying.

   The Court states that defendant has declined to pay "agreed royalties" to the
holders of the copyrights. Maj. op. at 6. Agreed to by whom? Defendant has not
"agreed" to pay the publishers anything. It is fair to label a royalty as
"agreed to" only when the publisher has appropriately negotiated a fee with the
copyshop for use of the copy in question.

   III.

   The injunction upheld by the Court, as it stands now, extends the rights of
the copyright owners far beyond the limits prescribed by Congress. n2 It
prohibits defendant from copying any excerpts from plaintiffs' materials, both
those now in existence and any that may be published by plaintiffs in the
future, regardless of whether the entire work is appropriately protected by
copyright or whether the copying is [**49]  for classroom use or is otherwise a
fair use. The injunction prohibits defendant from copying from copyrighted works
of the plaintiffs, without regard to length, content or purpose of the copying
and without any recognition that the doctrine of fair use exists. The injunction
avoids the necessity of determining whether the copying is an infringement or a
fair use -- any copying and dissemination is forbidden. The injunction also
protects future publications of plaintiffs -- works that have not yet even been
created -- without any knowledge as to the level of copyright protection the
works would normally be afforded.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -

   n2 Although the majority has modified its original draft of the opinion to
order a remand directing the district court (1) to set out the injunction in a
separate order as required by Federal Rule of Civil Procedure 65 and (2) to set
forth "more precisely" the scope of the injunction, the remand instruction gives
virtually no guidance to the district court about curing the overbreadth of the
injunction.

- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - - [**50]
[***33]

   The gross overbreadth of the injunction appears to violate the First
Amendment. The purpose of the First Amendment is to facilitate the widest
possible dissemination of information. "From a first amendment viewpoint, the
effect of an injunction is to restrain the infringing expression altogether --
an effect which goes beyond what is necessary to secure the copyright property."
Goldstein, Copyright and the First Amendment, 70 Colum. L. Rev. 983, 1030
(1970); see also New Era Pubs. Int'l, ApS v. Henry Holt and Co., 873 F.2d 576,
595-97 (2d Cir. 1989) (Oakes, J., concurring), cert. denied, 493 U.S. 1094, 107
L. Ed. 2d 1071, 110 S. Ct. 1168 (1990) (discussing tension between First
Amendment and injunctions in copyright cases); 3 Nimmer § 14.06[B] at 14-56.2
(where public harm would result from the injunction, courts should award damages
in lieu of injunction).

   In sum, the injunction imposed here -- an injunction that provides blanket
copyright protection for all the works of a given publisher without regard to
the limitations on copyright protection -- is overbroad. The injunction is
inappropriate because it prohibits the public from using defendant's copyshop
for noninfringing copying of plaintiffs'  [**51]  works.  [***34]

   RYAN, Circuit Judge, dissenting. It is clear from the application of the four
fair use factors of 17 U.S.C. § 107 that MDS's copying of the publishers'
copyrighted works in this case is fair use and, thus, no infringement of the
publishers' rights. Indeed, it is a use which is merely an aspect of the
professors' and students' classroom use, and, only in the narrowest and most
technical  [*1398]  sense, a use of a separate genre under section 107. And, so,
I must dissent from the majority's contrary view and, in expressing my
understanding of the matter, I shall identify three important subissues on which
I think my colleagues' analysis has led them to mistakenly conclude that MDS's
activity is not a fair use of the publishers' materials.

   In my judgment, my colleagues have erred in

     1. focusing on the loss of permission fees in evaluating "market
     effect" under section 107(4);

     2. finding that the evidence supports the conclusion that permission
     fees provide an important incentive to authors to create new works or
     to publishers to publish new works; and

     3. using legislative history, specifically the "Classroom Guidelines,"
     to decide the issue of classroom [**52]  use.

   I.

   Professors may make the judgment that only fractional portions of much larger
copyrighted works need to be examined by their students to explain the theories,
facts, and historical developments in which the professors are interested, or
that the selected excerpted materials are not central to the professors'
classroom purpose. In such an instance, the professors may conclude that the
educational benefit to the students does not justify requiring the students to
purchase the entire original work. Rather than omit the materials entirely, the
professors could, of course, make a reference copy of the excerpted portions and
[***35]  produce multiple copies of the relevant sections for their students.
Alternatively, they might require their students to spend their own time going
to the library, waiting their turn to gain access to sometimes scarce library
reserve materials, going to the coin operated photocopying machines, and making
their own copies, a practice that the publishers have not challenged. However,
in the circumstances of this case, the professors, presumably as a service to
the students, requested MDS to copy and assemble from a number of works excerpts
[**53]  identified by the professors as beneficial for their students to read.
MDS apparently produces better copies and at less cost than individual
professors or students could.

   The professors select the materials to be copied and deliver them to MDS with
an estimate of the number of students expected in the course. The professors
then assign the material to students enrolled in a particular class and inform
them that they may purchase the required materials in coursepack form at MDS if
they wish to do so. In the alternative, students are free to make copies of the
excerpted material at the library themselves, to copy the material from other
students, or to purchase the whole of the original work in which the assigned
text appears.

   MDS prepares a master copy of all the materials selected by the professor,
creates a table of contents, identifies excerpts by author and name of the
underlying work, numbers the pages, and then binds the copied excerpts together.
These coursepacks are sold only to students for use in a particular course; they
are not sold to the general public. Any copies that are not purchased are simply
discarded. The coursepacks are priced on a per-page basis, regardless [**54]  of
the contents of the page. The fee for a page reproducing copyrighted materials
is the same as the fee for a blank page. The professors receive no commissions
or other economic benefit from delivering coursepack materials to MDS.  [***36]

   We are specifically concerned in this case with six excerpts extracted from
works to which plaintiffs hold the copyrights. Following the direction of
several professors who brought the excerpts to the defendants for copying, MDS
assembled the excerpts, along with other materials not at issue in this suit,
into three coursepacks. The excerpts copied ranged from 17 to 95 pages, or 5% to
30%, of the original works. Each of the requesting professors signed a
declaration stating that he does not request copies of excerpts where he would
otherwise have assigned the entire work to his students.

   Each of the plaintiff publishers operates a department that receives and
processes requests for permission to use any of that  [*1399]  publisher's
copyrighted works. The plaintiff publishers usually charge a fee for allowing
others to copy portions of their works and generally share these fees with the
authors. Sometimes the publishers grant permission to copy without [**55]
charge, and other times they deny permission entirely.

   II.

   The Copyright Act both establishes a general grant of monopoly powers to
holders of copyrights and codifies the "fair use" doctrine as an exception to
that broad grant. Section 106 of the Copyright Act confers exclusive rights upon
individual creators to distribute and produce their original copyrighted work
and "derivative works based upon the copyrighted work." 17 U.S.C. § 106.
However, section 107 carves out an exception to the exclusive rights conferred
in section 106, permitting members of the public to use copyrighted works for
"fair" purposes.  17 U.S.C. § 107. Whether a challenged use qualifies as a "fair
use" is to be determined by considering section 107's four fair use factors,
which are set forth in the majority opinion, as well as any other relevant
considerations. The four fair use factors, and any other relevant factors, must
be applied and weighed together "in light of the purposes of copyright"
protection.  Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 114 S. Ct. 1164,
1171, 127 L. Ed. 2d 500  [***37]  (1994) (citing Pierre N. Leval, Toward a Fair
Use Standard, 103 HARV. L. REV. 1104, 1110-11 (1990)).

   "The primary objective [**56]  of copyright is not to reward the labor of
authors, but 'to promote the Progress of Science and useful Arts.'" Feist 
Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 349, 113 L. Ed. 2d
358, 111 S. Ct. 1282 (1991) (quoting U.S. CONST. art. I, § 8, cl. 8). This court
has explained:


     Copyrights provide an incentive for the creation of works by
     protecting the owner's use of his or her intellectual creation,
     allowing creators to reap the material rewards of their efforts.
     However, because not every use of a work undermines this underlying
     rationale of copyright law, and because some uses of copyrighted works
     are desirable for policy reasons, the courts have long held that many
     uses of a copyrighted work do not infringe upon the copyright.


 National Rifle Ass'n of Am. v. Handgun Control Fed'n of Ohio, 15 F.3d 559, 561
(6th Cir.), cert. denied, 130 L. Ed. 2d 26, 115 S. Ct. 71 (1994). Although
monopoly protection of the financial interests of inventors and authors is
sometimes necessary "to stimulate creativity and authorship, excessively broad
protection would stifle, rather than advance," intellectual progress. Leval,
supra, at 1109. For progress in "Science and useful Arts" to occur, others must
be permitted [**57]  to build upon and refer to the creations of prior thinkers.

   Thus, the "fair use" concept embodied in section 107 may be understood
generally to permit a secondary use that "serves the copyright objective of
stimulating productive thought and public instruction without excessively
diminishing the incentives for creativity." Leval, supra, at 1110. An evaluation
of fair use therefore "involves a difficult balance between the interests of
authors and inventors in the control and exploitation of their writings and
discoveries on the one hand, and society's competing interest in the free flow
of ideas, information, and commerce on the other hand." Sony Corp. of Am. v.  
[***38]  Universal City Studios, Inc., 464 U.S. 417, 429, 78 L. Ed. 2d 574, 104
S. Ct. 774 (1984). Although section 107 mentions "teaching" and "multiple copies
for classroom use" as possible fair uses, "the mere fact that a use is
educational and not for profit does not insulate it from a finding of
infringement." Campbell, 114 S. Ct. at 1174. Thus, I agree with the majority
that the production and use of the coursepacks must be examined under all four
factors enumerated in section 107.

   III.

   A.

   At the very outset, it is critical [**58]  to understand, as I have earlier
stated, that MDS's "use" of this copyrighted material is of the same essential
character as "use" by a student who chooses to personally make a photocopy
[*1400]  of the designated excerpts. There are two differences: 1) the student
will further "use" the material in the classroom; and 2) MDS does the copying
for the student for a profit.

   The question that must ultimately be answered is whether that which is a fair
use for a student--copying--is not a fair use if done for the student by
another, and for a profit.

   Plainly, the Copyright Act explicitly anticipates that use of a work by
"reproduction in copies . . . for purposes such as . . . teaching (including
multiple copies for classroom use)," will sometimes be a fair use even though
teaching is commonly conducted for profit.  17 U.S.C. § 107.

   Thus, MDS's copying of materials, which indisputably are for "teaching
(including multiple copies for classroom use)," must be tested for fair use
under the four "factors to be considered" in section 107. Id.

   The first factor that courts must evaluate in a fair use determination is
"the purpose and character of the use, including whether such use is of a
commercial [**59]  nature or is for nonprofit educational purposes." 17 U.S.C. §
107(1).  [***39]

   There are two parts to section 107's first factor: (1) the degree to which
the challenged use has transformed the original, and (2) the profit or nonprofit
character of the use. Both a non-transformative use determination and a
"commercial" use determination weigh against a finding of fair use, though by no
means conclusively.

   The "purpose and character of the use" is examined to determine whether the
questioned use would tend to advance or to thwart the goals of copyright law.
The inquiry into the transformative aspect of the use assesses the likely
benefit to society from the use--the more the original work has been
transformed, the more likely it is that a distinct and valuable new product has
been created. The inquiry into the profit or nonprofit aspect of the use
assesses both the likely benefit to society and the likelihood that the use will
threaten the creators' incentives. Users with purely financial purposes are more
likely to use the work for personal gain rather than other, socially laudable
goals, and are more likely to be capturing the same economic rewards that
motivated the creators [**60]  of the original work. Thus, the ultimate inquiry
under the first fair use factor is whether the type of use being challenged is,
by its nature, likely to benefit society without excessively diminishing the
incentives to create new works.

   i.

   Ordinarily, analysis of transformative character under the first prong of the
first factor centers on "whether the new work merely 'supersedes the objects' of
the original creation . . . or instead adds something new, with a further
purpose or different character, altering the first with new expression, meaning,
or message; it asks, in other words, whether and to what extent the new work is
'transformative.'" Campbell, 114 S. Ct. at 1171 (citations omitted). But in this
case there is no occasion to address the transformative aspect because that
inquiry is not conducted at all in the case of multiple copies for classroom
use. The Supreme Court has noted in dicta that  [***40]  "the obvious statutory
exception to this focus on transformative uses is the straight reproduction of
multiple copies for classroom distribution." Campbell, 114 S. Ct. at 1171 n.11.
Thus, although the transformative value of the coursepacks is slight, it [**61]
does not in any respect weigh against MDS's reproduction of excerpts for
classroom use.

   ii.

   The second prong of the first fair use factor asks whether the purpose of the
use is commercial or nonprofit and educational. Id. at 1174. The "fact that a
publication [is] commercial as opposed to nonprofit is a separate factor that
tends to weigh against a finding of fair use." Harper & Row, Publishers, Inc. v.
Nation Enterprises, 471 U.S. 539, 562, 85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985).
The point here "is not whether the sole motive of the use is monetary gain but
whether the user stands to profit from exploitation of the copyrighted material
without paying the customary price." Id. In my judgment, a party profits
[*1401]  from "exploiting copyrighted material" when it assesses the marketable
potential of copyrighted material, selects material based on its content in
order to reproduce those portions that will attract customers, and therefore
profits from the substance of the copyrighted work.

   As a preliminary matter, we must first decide whose use of the coursepacks
must be evaluated. The majority accepts the publishers' position that the only
relevant "use" under the first factor is MDS's sale [**62]  of the coursepacks
to students, not the use of the purchased coursepacks by the professors and
students. Having limited its inquiry to MDS's mechanical reproduction of the
excerpts and for-profit charge for the technology and labor required to
reproduce the relevant pages, the majority easily finds that the copyshop's "use
" of the copyrighted works is "commercial." I do not find support for this
abbreviated analysis in either the statutory text or the case law.

   Certainly nothing in the language of the statute supports the majority's
decision to analyze the copyshop's  [***41]  production of multiple copies of
the excerpts as a "use" completely independent from the classroom use of those
copies. MDS, considered apart from the professors and students, does not "use"
the "copyrighted work" in the sense primarily addressed in section 107; it uses
a "master copy" of the excerpted material delivered to it by the professor, copy
paper, ink, photocopying machines, mechanical binders, and related production
materials to make the number of copies the professor has ordered. MDS could not
care less whether Professor X asks it to copy selections from Walter Lippmann's
Public Opinion or the [**63]  1996 University of Michigan Varsity Football
roster. Either material is copied at a few cents a page, and MDS does not "use"
the information from either--at least, not in the sense plainly contemplated by
Congress in any of the language of section 107.

   If the words used in section 107 are to be given their primary and generally
accepted meaning, particularly in the context of the balance of the Copyright
Act, it is obvious that the use that is to be evaluated for fairness in this
case is the use to which the protected substantive text is put, not the
mechanical process of copying it. Congress specifically identified "teaching
(including multiple copies for classroom use)," § 107 (emphasis added), as an
illustration of a possible fair use. Consequently, the act of copying (implicit
in "multiple copies") is within the illustrative use of "teaching." MDS is not
in the business of making copies of protected work in order to fill up
warehouses or please the logging industry; it makes the copies only for
classroom use. Neither the language of section 107 nor simple common sense
warrant examining the production of multiple copies in a vacuum and ignoring
their educational [**64]  use on the facts of this case.

   The majority claims that the Supreme Court's reasoning in Harper & Row 
Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562, 85 L. Ed. 2d 588, 105
S. Ct. 2218 (1985), supports its decision to ignore the professors' and students
' use of the coursepacks and focus exclusively on MDS's use. The difficulty with
this  [***42]  approach is that the two situations are not parallel. In Harper &
Row, the copyright holder of President Ford's unpublished memoirs sold the right
to publish the first excerpts of the unpublished work to Time Magazine. Before
Time Magazine could publish the excerpts, a competitor, The Nation Magazine,
obtained an illicit copy of the manuscript and published a short article
directly quoting some of President Ford's juiciest revelations. The Nation 
Magazine, in which the challenged article appeared, was, of course, sold to the
general public. Time Magazine refused to fulfill its contract to pay the
copyright holder for the right to use the memoirs since its "exclusive" right of
"first publication" had already been "scooped." The majority opinion declares:
"Like the students who purchased unauthorized coursepacks, the purchasers of The
[**65]   Nation did not put the contents of the magazine to commercial use --
but that did not stop the Supreme Court from characterizing [The Nation magazine
's] use of excerpts as 'a publication [that] was commercial as opposed to
nonprofit. . . .'" Maj. op. at 7 (citation omitted). The majority's intended
parallel does not bear close scrutiny.

    [*1402]  There are two critical facts that distinguish Harper & Row from
this case. First, in Harper & Row, the profit-seeking entity that sold excerpts
to the nonprofit users--the members of the general public who purchased the
magazine and "used" the copied material to educate themselves--was the same
entity that obtained the original manuscript and selected portions for
reproduction. Thus, The Nation Magazine both directed the copying and profited
from the copying. That is not this case. Here, a nonprofit entity (the
professors) obtained the originals and selected portions for reproduction. The
professors directed the copying but did not profit; MDS profited but did not
direct what was to be copied. Second, in Harper & Row, the profit-seeking
defendant, The Nation Magazine, carefully selected the material to be copied
[**66]  for its content/substance and sought to profit from the 
content/substance of the material that it reproduced, not from the mechanical
service of reproduction itself. In this case, on the other hand, the  [***43]
profit-seeking defendant, MDS, neither selected the material to be copied for
its content/substance nor sought to profit from the copyrighted material because
of its substance; its purpose was to profit only from the mechanical services of
photoreproduction and assembly.

   With these distinctions in mind, I would approach the "commercial purpose"
determination under section 107's first factor in a different way than the
majority does. A use is "commercial" within the meaning of section 107 if the
user seeks to profit from "exploiting" the copyrighted material.  Harper & Row,
471 U.S. at 562. Profiting from exploiting copyrighted material requires more
than profit obtained from a mechanical service. Profiting from exploiting
copyrighted material involves an active role in assessing the value of,
selecting, and marketing copied material based on its substance. In Harper & Row
, the defendant magazine assessed the value of President Ford's original work,
[**67]  selected the portions it believed to be the most "powerful," advertised,
sold, and profited from the sale of the unauthorized copies, based on their
substance. Harper & Row would be of some relevance to the market value component
of this case only if MDS were selecting excerpts by assessing their commercial
value to the public, assembling coursepacks for its own purposes, and marketing
the coursepacks to professors or to the public without paying for the
copyrighted materials. But that is not what MDS does or did. MDS's profit is
attributable entirely to its provision of a mechanical service--running
materials of value to others and selected by others through its photocopying
machines and binding them. Because MDS made no attempt to assess the value of
what it copied and did not select the materials for its copying services, it did
not "exploit the copyrighted material without paying the customary price," as
that was done in the Harper & Row case.

   Certainly it is true that MDS "uses" the copyright work in the sense that it
copies the copyrighted material that is handed to it by the professors. But it
does not "use" the  [***44]  material independent of the university [**68]
professors' and students' use; it is a participant in their use and its profits
are derived only from photoreproduction services the students pay it to perform.

   The business of producing and selling coursepacks is more properly viewed as
the commercial exploitation of professional copying technologies and of the
inability of academic parties to reproduce printed materials efficiently, not
the exploitation of copyrighted, creative materials. The copyshop is a printer,
engaging solely in the business of reproducing images on paper at the direction
of others. Because MDS does not control the length or substance of the excerpts
that it copies, its profit motive does not provide information about the
tendency of its activity to impinge upon the rightful territory of authors and
does not interfere with the incentives orchestrated by the Copyright Act. The
for-profit nature of MDS's service does not weigh against a finding of fair use
because MDS, the for-profit actor, does not represent an institutional threat to
authors and publishers' rightful profits.

   The for-profit or nonprofit educational users whose purposes are linked to
the authors' and publishers' incentives and therefore [**69]  must be analyzed
under this factor are  [*1403]  the professors and students. The professors and
students clearly do use Lippmann's work. The professors use Lippmann's ideas in
meeting their professional obligation to teach their students, and the students
use Lippmann's ideas in their effort to master the concepts of the course to
which Lippmann's ideas pertain. The professors and students' classroom use of
the excerpts of copyrighted material appears to be nonprofit. Although the
professors and students are, in some sense, engaged in a for-profit
endeavor--the professors teach for money and the students attend classes to
obtain a commercially valuable degree--the purpose and character of the
professors and students' use is not, on the facts of record in this case, "of a
commercial nature." If "commerciality" meant only that the user employed the
material while engaged in activity  [***45]  for profit, this one characteristic
"would swallow nearly all of the illustrative uses listed in the preamble
paragraph of § 107, including news reporting, comment, criticism, teaching,
scholarship, and research, since these activities 'are generally conducted for
profit in this country.'" Campbell, [**70]  114 S. Ct. at 1173 (quoting Harper &
Row, 471 U.S. at 592). As I have said, the significant question in the first
factor's inquiry into the purpose and character of the use is whether the
copyrighted material is being exploited for profit without paying the customary
price. The answer might well be affirmative if there were evidence that the
professors were receiving commissions from the copyshop based on the number and
length of coursepack orders that they placed; in such a case, the professors
would be profiting from their decision to assign excerpts and would represent a
commercially-motivated systemic threat to the authors and publishers' incentives
to create new works.

   An assessment of the distinction between for-profit activity and exploitation
is critical because the Supreme Court has commanded that we examine "'the nature
and objects of the selections made'" in view of "the examples given in the
preamble to § 107" and the purposes of copyright protection--that is, to promote
science and the arts.  Campbell, 114 S. Ct. at 1171 (emphasis added) (quoting
Folsom v. Marsh, 9 F. Cas. 342, 348 (No. 4,901) (CCD Mass. 1841)). Additionally,
in determining whether [**71]  MDS's use is commercial, it is important to bear
in mind the practical effect of such a finding, not just in the analysis
conducted under the first factor but in the impact that a finding of "commercial
" or "educational" has in the analysis conducted under the fourth factor, which
considers "the effect of the use upon the potential market for or value of the
copyrighted work . . . ." 17 U.S.C. § 107(4). A conclusion that a use is
"commercial" weighs against a finding of fair use and, in fact, creates a
"presumption" of market harm in the fourth fair use factor.  Sony, 464 U.S. at
451. I conclude that the use of coursepacks in this case is not "commercial"
within the meaning of section 107(1)'s  [***46]  "purpose and character of the
use" language alone, but I am even more convinced that it is not "commercial" in
view of section 107(4)'s "market harm" language: "the effect of the use upon the
potential market for or value of the copyrighted work . . . ." § 107(4).

   The Supreme Court has explained the presumption of market harm as follows:

     The purpose of copyright is to create incentives for creative effort.
     Even copying for noncommercial purposes may impair the copyright
     [**72]  holder's ability to obtain the rewards that Congress intended
     him to have. But a use that has no demonstrable effect upon the
     potential market for, or the value of, the copyrighted work need not
     be prohibited in order to protect the author's incentive to create.
     The prohibition of such noncommercial uses would merely inhibit access
     to ideas without any countervailing benefit.[] Thus, although every
     commercial use of copyrighted material is presumptively an unfair
     exploitation of the monopoly privilege that belongs to the owner of
     the copyright, noncommercial uses are a different matter. A challenge
     to a noncommercial use of a copyrighted work requires proof either
     that the particular use is harmful, or that if it should become
     widespread, it would adversely affect the potential market for the
     copyrighted work.


 Sony, 464 U.S. at 450-51 (footnote omitted).

    [*1404]  To repeat, the content of the coursepacks was not controlled by MDS
but by the professors; and "the nature and objects of the selections made" by
the professors were plainly nonprofit and educational. Campbell, 114 S. Ct. at
1171 (internal quotation marks and citation omitted). The professors selected
excerpts,  [**73]  not out of any motive for financial gain, but solely in order
to enrich the educational experiences of their students. MDS made no selections;
its motives for the activity that is challenged by the plaintiffs are not
relevant.  [***47]

   It is consistent with the copyright scheme to find the use of these
coursepacks to be noncommercial, to presume that they do not inflict market
harm, and to require the publishers to prove that MDS's use is harmful to the
value of the copyrighted works. Presuming that MDS's copying is not harmful to
the value of the copyrighted works is appropriate because the identity and
content of the excerpts is controlled entirely by persons whose motives are
purely educational. Only where the use of copyrighted materials is directed by
those seeking financial gain from the substance-based selection is it
appropriate to presume that the secondary user is capturing profits that the
creators of the works expected to capture and that may be important to
maintaining incentives to create new original works. Similarly, the secondary
product is appropriately viewed with suspicion--and presumed to upset the
creator's incentives--when the party driving the use [**74]  is primarily
seeking to profit from its selections; where the selector acts in order to
enrich his own coffers, it is less likely that society will benefit from his
actions more than it will suffer from the resulting disincentives to create new
works.

   With regard to the professor-directed creation of coursepacks, it is not
appropriate to presume that the practice of excerpting some materials harms the
authors' rightful market and secures a benefit only to the excerpters. The more
reasonable presumption is that society benefits from the additional circulation
of ideas in the educational setting when those who direct the practice have no
personal financial interests that would drive them to copy beyond the parameters
of purely educational, and fair, use. The professors have no financial reason to
copy mere excerpts when the entire works should be assigned, and their
selections should not be presumed to harm the market for the original works and
lessen the incentives for authors to write or publishers to publish new works.
Rather, such harm must be demonstrated. Society benefits when professors provide
diverse materials that are not central to the course but that may enrich or
broaden [**75]  the base of knowledge of the students. Society is not benefitted
by  [***48]  establishing a presumption that discourages professors from
exposing their students to anything but complete original works even when most
of the work is irrelevant to the pedagogical purposes, and students are not
benefitted or authors/ publishers justly compensated if students are required to
purchase entire works in order to read the 5% or 30% of the work that is
relevant to the course.

   And so, in my view, the majority's market harm analysis is fatally flawed: If
market harm is presumed when excerpts are selected by professors and market harm
is proven when fees are not paid, we have ceded benefits entirely to copyright
holders when we are actually required to engage in "a sensitive balancing of
interests," Sony, 464 U.S. at 455 n.40, between "the interests of authors . . .
in the control and exploitation of their writings . . . on the one hand, and
society's competing interest in the free flow of ideas, information, and
commerce on the other hand." Id. at 429. The majority apparently does not really
accept the firmly established principle that copyright monopoly privileges "are
neither [**76]  unlimited nor primarily designed to provide a special private
benefit[; rather, the privileges exist to achieve] an important public purpose .
. . to motivate the creative activity of authors [and] to give the public
appropriate access to their work product." Id.

   The coursepacks fit within the exception to the "transformative" quality
requirement, and the predominant character of the use of excerpts in coursepacks
is not commercial but "nonprofit educational." The first factor therefore favors
a finding of fair use.

    [*1405]  B.

   The second fair use factor, "the nature of the copyrighted work," 17 U.S.C. §
107(2), recognizes that fair use is more difficult to establish when the work
being used is at "the core of intended copyright protection." Campbell, 114 S.
Ct. at 1175. Factual compilations, such as telephone book listings and football
rosters, with only a small element  [***49]  of creativity and originality may
be used more freely than creative works.  Feist, 499 U.S. at 348-51. I agree
with the majority that the materials copied in this case are much closer to the
core of work protected by copyright than to the mere compilations of raw data in
the [**77]  phone books in Feist.

   The second factor, on these facts, does little more than confirm that the
works at issue are protected by copyright and may only be used "fairly." Thus,
the fair use examination properly proceeds to factors three and four to
determine whether this use of the excerpts is fair.

   C.

   The third factor considers "the amount and substantiality of the portion used
in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). I will not
comment at length on this issue but will only note that I believe the majority
has misunderstood this factor. The majority reasons that "to the extent that the
third factor requires some type of assessment of the 'value' of the excerpted
material in relation to the entire work, the fact that the professors thought
the excerpts sufficiently important to make them required reading strikes us as
fairly convincing 'evidence of the qualitative value of the copied material.'"
Maj. op. at 15 (citation omitted). However, the fact that the professors
required students to read the excerpts says nothing whatsoever about the
"substantiality" of the excerpted material in relation to the entire work. To
the extent that the professors'  [**78]  decision to excerpt the material has
any meaning, it suggests that the excerpts stand separate from the entire work,
not that they are central and substantial to the entire work. The strongest
inference is that the unassigned balance of the work bears minimal relevance to
the assigned excerpt; if it were otherwise, the whole would likely have been
assigned.

   Additionally, I am puzzled by the majority's statement that the third factor
may have more significance for the 95-page excerpt that is 30 percent of the
entire work than for  [***50]  the 17-page excerpt that is 5 percent of the
entire work, but that in each instance, the third factor weighs against a
finding of fair use. The majority apparently sees no important analytical
difference between a 30% excerpt and a 5% excerpt. There is no bright-line rule
to tell us how large of an excerpt renders it unfair as a matter of law, nor how
small an excerpt is so small as to be conclusively fair. In Sony, the Court
found the use to be fair even though the entire work was reproduced, whereas in
Harper & Row the use was found to be unfair even though only 300 words of
copyrighted material--an insubstantial portion of President [**79]  Ford's
memoirs--were reproduced without permission.

   The third factor turns not only on the quantity of the materials used, but
also on their quality and importance.  Campbell, 114 S. Ct. at 1175.

   In the context of a musical parody's use of a copyrighted song, the Supreme
Court interpreted this factor to assess whether the quantity and value of the
materials used were reasonable in relation to the purpose of the copying, noting
that "the extent of permissible copying varies with the purpose and character of
the use." Id. As the Supreme Court acknowledged, "the facts bearing on this
factor will also tend to address the fourth [factor, which evaluates market
effect], by revealing the degree to which the parody may serve as a market
substitute for the original or potentially licensed derivatives." Id. Thus, we
should ask whether such substantial portions of a copyrighted work were used
that a coursepack supersedes the copyrighted work, "fulfilling demand for the
original." Id. at 1176.

   There is no evidence whatsoever that any of the six excerpts in the
coursepacks are so substantial as to supersede the original works. The only
evidence of record is the  [*1406]  professors' declarations [**80]  that they
do not excerpt material when they would otherwise assign the entire work and the
expressed preference of one publisher to have the entire work assigned rather
than excerpted. The publishers have submitted a declaration stating that, in
accordance  [***51]  with established practices, permission would have been
denied, even if sought, with regard to the excerpt from Public Opinion, by
Walter Lippmann. The publisher considers the excerpt so lengthy and the
published edition sufficiently inexpensive that the book should have been
purchased rather than copied with permission, for a fee. The declarant opined
that copying 46 pages would adversely affect book sales, but offered no factual
support for this statement. The fact that the publisher would prefer the book to
be purchased is not relevant to the third-factor analysis. Each of the
professors who delivered the materials to MDS signed a statement that he would
not otherwise have assigned the copyrighted work to the class. Nothing in the
record contradicts these declarations.

   The majority appears to dismiss these declarations only because the
professors did not further declare that they would not have assigned coursepacks
[**81]  that included the cost of a minimal permission fee; "what seems
significant to us is that none of these affidavits shows that the professor
executing the affidavit would have refrained from assigning the copyrighted work
if the position taken by the copyright holder had been sustained beforehand. . .
. [The professors do] not say that [they] would have refrained from assigning"
the contested works if they had known that the copyshop had been required to pay
a permission fee. Maj. op. at 12. Indeed, they did not say that; and there are a
good many other things about the assigned excerpts that they did not say. But
those unstated matters do not diminish in any way the truth or the force of what
was said. This court should not expect the professors to assert that had the
publishers done what they have no right to do, the professors would not have
assigned the materials. If the publishers have the right to charge one penny per
page copied, they also have the right to charge $ 50 per page copied. It is
irrelevant and unknowable to ask how high the fees charged for permission would
have to be before the professors would not assign the excerpts if the copyshop
paid permission fees.  [***52]   [**82]

   The lengthiest excerpt used in one of the coursepacks comprised 30% of
Farewell to the Party of Lincoln: Black Politics in the Age of FDR, by Nancy J.
Weiss, the original copyrighted work. Other excerpts ranged from 5% to 18% of
the original works. There is no evidence to suggest that even the 30% selected
from Weiss's book extracted the heart of the work rather than just those
portions that the professor deemed instructive for his limited classroom
purposes. The record is simply silent on the point. Cf.  Harper & Row, 471 U.S.
at 565-66. Given the uncontroverted declarations of the professors that they
would not have assigned the original works even if copied excerpts were not
available, there is no basis to conclude that the portions extracted from the
copyrighted works were so substantial that the resulting coursepacks superseded
the originals. As the district court noted, the six excerpts at issue in this
case "are truly 'excerpts,' and do not purport to be replacements for the
original works." Princeton, 855 F. Supp. at 910.

   There is absolutely no evidence in the record to support a finding that the
copyrighted works at issue were excerpted so substantially that the [**83]
coursepacks superseded the original works or otherwise exceeded the proper
educational purposes that could justify the reproduction. Thus, the third factor
favors a finding of fair use.

   D.

   The fourth fair use factor is "the effect of the use upon the potential
market for or value of the copyrighted work." 17 U.S.C. § 107(4). Under this
factor, courts must consider the extent of market harm caused by the particular
actions of the alleged infringer and "whether unrestricted and widespread
conduct of the sort engaged in by the defendant . . . would result in a
substantially adverse impact on the potential market for the original." Campbell
, 114 S. Ct. at 1177 (internal quotation marks omitted).  [*1407]  The fourth
factor is the single most important element of fair use, Harper & Row, 471 U.S.
at 566, and "must take  [***53]  account not only of harm to the original but
also of harm to the market for derivative works." Id. at 568.

   I have concluded that analysis under the first factor establishes the
character of the use of coursepacks as noncommercial, and that, therefore, a
proper analysis under the fourth factor begins with a rebuttable resumption that
the plaintiffs have [**84]  suffered no market harm and thus have the burden of
proof on market effect. See part III.A.ii., supra. But, even in the absence of a
presumption against market effect, the fourth factor, correctly construed,
weighs in favor of a finding of fair use on the record before us.

   For plaintiffs to prevail, there must be at least a meaningful likelihood
that future harm to a potential market for the copyrighted works will occur. In
Sony, the Court held:


     A challenge to a noncommercial use of a copyrighted work requires
     proof either that the particular use is harmful, or that if it should
     become widespread, it would adversely affect the potential market for
     the copyrighted work. . . . What is necessary is a showing by a
     preponderance of the evidence that some meaningful likelihood of
     future harm exists.


 Sony, 464 U.S. at 450-51. Works or uses that creators of original works would
"in general develop or license others to develop" make up the market for
potential derivative uses.  Campbell, 114 S. Ct. at 1178. The plaintiffs
certainly have not demonstrated that the coursepacks affected the market for the
original copyrighted works. Neither have they presented [**85]  any evidence of
likely harm to their potential market for derivative works, such as published
anthologies. Remarkably, they have limited their showing of "market effect" to
the loss of permission fees that they would like to receive from copyshops like
MDS. But that is not a "market harm" within the meaning of section 107(4). To
prove entitlement to permission fees,  [***54]  the publishers must show market
harm and the market harm they claim is the loss of permission fees. MDS's
coursepacks would inflict "market harm" if they damaged the value of the
original work or the value of derivative products such as coursepacks the
publishers might wish to market.

   The original panel opinion, now vacated, stated:


     Evidence of lost permission fees does not bear on market effect. The
     right to permission fees is precisely what is at issue here. It is
     circular to argue that a use is unfair, and a fee therefore required,
     on the basis that the publisher is otherwise deprived of a fee.


 Princeton Univ. Press v. Michigan Document Services, 74 F.3d 1512, 1996 WL
54741, at * 11 (6th Cir. 1996), reh'g granted, 74 F.3d 1528 (6th Cir. 1996). The
majority [**86]  now claims that this charge of circular reasoning "proves too
much." The majority asks the reader to


     imagine that the defendants set up a printing press and made exact
     reproductions -- asserting that such reproductions constituted "fair
     use" -- of a book to which they did not hold the copyright. Under the
     defendants' logic it would be circular for the copyright holder to
     argue market harm because of lost copyright revenues, since this would
     assume that the copyright holder had a right to such revenues.

Maj. op. at 9.

   The majority's logic would always yield a conclusion that the market had been
harmed because any fees that a copyright holder could extract from a user if the
use were found to be unfair would be "lost" if the use were instead found to be
"fair use." The majority acknowledges that "a copyright owner will normally be
able to complain that an asserted fair use may cause some loss of revenues in
potential licensing fees" but resolves this problem by  [***55]  restricting its
consideration of the loss of permission fees to the case of derivative markets
that are "'traditional, reasonable, or likely to be developed markets.'" Maj.
op. at 10 (quoting [**87]  American Geophysical Union v. Texaco, 60 F.3d 913,
930-31 (2d Cir.), cert. dismissed, 133 L. Ed. 2d 486, 116 S. Ct. 594  [*1408]
(1995)). Under this approach, the majority would find that the copyright holders
' monopoly over potential uses of the copyrighted works at issue in Princeton
includes "the selling of permission to reproduce portions of the works for
inclusion in coursepacks -- and the likelihood that publishers actually will
license such reproduction is a demonstrated fact." Maj. op. at 11.

   The majority cites Harper & Row and Campbell as support for its reasoning
that the mere loss of licensing fees--to which the copyright holder may or may
not be entitled--is proof of market harm. The majority notes that in Harper & 
Row, the plaintiff did not challenge a use (the unauthorized article's direct
quotes) based on its impact on sales of the entire work (the not-yet-published
memoirs) but based on its harm to the market for the licensing of excerpts.
There is a subtle but important distinction to be made between the facts in
Harper & Row and the facts in this case. In Harper & Row there was proof that
the copyright holder conceived of a potential derivative work (the planned
[**88]  Time Magazine articles) and took meaningful steps to aid in the creation
of that derivative work and to capture profits from that creation. The value of
the planned derivative work was harmed by the defendants' unauthorized use of
the original work; the copyright holder lost its contract with Time Magazine
--and concomitant fees--for the exclusive right to print prepublication excerpts
of President Ford's memoirs when The Nation Magazine illicitly obtained a copy
of the unpublished manuscript and produced a short article quoting from the
heart of the manuscript. Thus, in Harper & Row, the value of the original work
in a derivative market that was targeted by the copyright holder was harmed by
the unauthorized use of the work. There is no similar evidence of injury to the
value of a work in this case.  [***56]

   First, there is no evidence that the publishers, here, planned to create any
products for a derivative market; no evidence, for instance, that the copyright
holders sought to publish or license a competing compilation of excerpts to
attract the interest, for instance, of the students in Professor Dawson's
interdisciplinary course "Black Americans [**89]  and the Political System."
Second, even if there was evidence that the publishers had contemplated such a
product, there is no evidence that the publishers' derivative compilation would
be devalued by defendant's production of coursepacks; that is, there is no
evidence that such a compilation would earn less because of the existence of
coursepacks. In Campbell, 114 S. Ct. at 1178-79, for instance, the Court
declined to find market harm based solely on undisputed evidence that the
unauthorized user created a profitable product--rap-parody--from the original;
the Court noted that the rap-parody version was not shown to affect the market
for an authorized, non-parodic rap version of the original. It might at first
appear that the publishers are, by definition, able to design and market a
collection of excerpts and that the existence of other, unauthorized,
collections will necessarily replace some of the authorized copies and thereby
leach profits that the publishers could otherwise capture. However, neither the
facts on this record nor any case law support such a leap in logic.

   The fact is that the plaintiffs are not able to create a market for the
product that MDS produces. To [**90]  the extent that MDS serves a market at
all, it is one created by the individual professors who have determined which
excerpts from which writers they wish to comprise the required reading for a
particular course. If the publishers decided to create an anthology of excerpts
from its copyrighted works on, for example, "The Black Experience," it would not
fill the market niche created by Professor X who is interested in very different
materials. Indeed, the publishers do not claim to have lost an account for
customized materials with a specific professor because of a copyshop coursepack;
nor do they claim to be prepared  [***57]  to enter this highly-customized
market. The argument that the publishers seek to enter the derivative market of
customized materials by licensing MDS and other copyshops, who create such
compilations, and that MDS's publication of unauthorized compilations interferes
with their ability to obtain licensing fees from other copyshops simply returns
the publishers to their original circular argument  [*1409]  that they are
entitled to permission fees, in part, because they are losing permission fees.

   The publishers do not identify potentially marketable specialty materials
[**91]  and license copyshops to produce the compilations as true derivative
works; rather, the publishers reject any active role in identifying potential
derivative markets or creating derivative works and seek to impose a
tax/surcharge on the unique compilations that are designed by individual
professors and assembled by MDS for use in a specific course. Thus, the facts do
not suggest that the value of any conceived derivative work has been damaged by
the defendant's production of coursepacks. The key distinction is between simple
economic detriment to the copyright holder when permission fees are not paid by
the user--a "harm" that will always be present--and harm to the value of a
product--either the original work or a derivative product--that the copyright
holder seeks to market. Application of the value/detriment distinction serves
the purposes of the Copyright Act as the established/reasonable definition
advanced by the majority does not.

   The guiding principle of the Copyright Act is that the financial earnings of
original works be channeled exclusively to the creators of the works
insofar--and only insofar--as they are necessary to motivate the creation of
original works and [**92]  do not excessively impede the advancement of science
and the arts through the public dissemination of knowledge, research,
scholarship, news-reporting, teaching, criticism, and the like. The copyright
holder's statutory monopoly does not encompass profits from derivative works
that the copyright holders do not  [***58]  themselves seek to market or that do
not harm the value of works that the copyright holders do seek to market; the
monopoly privileges need not include these profits because these profits do not
function as incentives to prospective creators.

   Here, there is no indication of harm to the market of the original
copyrighted works. There is no evidence that the coursepacks act as a substitute
for purchase of the entire works. MDS has alleged that no sale of a copyrighted
book has been lost to the publishers because of the coursepacks, and MDS has
submitted declarations from professors stating that the professors do not
request excerpts when they would otherwise assign the entire work. Because the
professors would not have assigned the original works in any case, the students
who purchased coursepacks were not a demonstrable market diverted from
purchasing the works. If [**93]  it had any effect at all, use of the excerpted
materials enhanced the prospect that the original works might later be of
interest to the student. Students might purchase the copyrighted works when, for
example, taking other courses in the same discipline, conducting more extensive
research into a subject touched upon in an excerpt, or doing graduate work in a
broader field to which the excerpted material later appeared relevant and was
recalled. The publishers have produced no evidence that any sale of an original
work has been lost.

   Nor is there any indication of harm to a derivative market from which authors
or their publishers expected to receive profits that were necessary to their
respective decisions to write or publish the original works. As I have said, the
publishers do not claim that they sought to publish compilations or anthologies
but were thwarted by the existence of the coursepacks. There is no evidence that
the publishers are interested in or capable of customizing their copyrighted
works to accommodate the specific, limited, and frequently updated requests of
individual professors. There is no evidence even that the publishers seek to
license the compilation of excerpts [**94]  by a third party who is  [***59]
equipped to assemble the compilations but refuses to do so without an agreement
that the publishers grant it exclusive rights to publish the excerpts. Thus,
there is no evidence that the value of the copyrighted works in a potential
market was harmed in any way by the production of the coursepacks challenged in
this case.

   Therefore, I would conclude that there is no evidence of market effect and
that the fourth, and most important factor, weighs decisively in favor of "fair
use."

   E.

   I disagree with the majority's conclusion that copyshop permission fees
provide an  [*1410]  important incentive to authors and publishers. The
right--and its parameters--to monopolize profits from original works is created
by statute and limited to those profits that provide necessary incentives to the
creation of new works without unduly impeding the flow of information in the
public, especially where the free flow of information serves socially
significant functions, including teaching through multiple copies for classroom
use.

   More than one hundred authors declared on the record that they write for
professional and personal reasons such as making a contribution to [**95]  a
particular discipline, providing an opportunity for colleagues to evaluate and
critique the authors' ideas and theories, enhancing the authors' professional
reputations, and improving career opportunities. These declarants stated that
the receipt of immediate monetary compensation such as a share of licensing fees
is not their primary incentive to write. The declarants advocate wide
dissemination of excerpts from their works via coursepacks without imposition of
permission fees where the works in their entirety would not have been assigned
in any case. The fact that incentives for producing higher education materials
may not revolve around monetary compensation is highly relevant. The inclusion
of excerpts in coursepacks without the payment  [***60]  of permission fees does
not deprive authors of the rewards that the record indicates authors value, such
as recognition.

   The majority dismisses the motives of the authors--the actual creators--and
concludes that what matters is the incentives to the publishers who hold the
copyrights. The majority further concludes, without any evidence, that the
licensing income from the permission-to-copy market is significant to publishers
in [**96]  individual cases, and that publishers need the economic incentive of
licensing fees to publish academic works. The majority speculates: "If
publishers cannot look forward to receiving permission fees, why should they
continue publishing marginally profitable books at all? And how will artistic
creativity be stimulated if the diminution of economic incentives for publishers
to publish academic works means that fewer academic works will be published?"
Maj. op. at 19-20.

   Despite the initial appeal of this reasoning, it is far from clear that the
licensing income is significant to publishers in their decisions about whether
to publish marginally profitable books. The fact that licensing income provides
some welcome income in the aggregate does not mean that it provides an incentive
to publishers to act in individual cases. There is, in fact, no indication that
the paltry permission fees affect the publishers' decisions about whether to
publish in individual cases. Given that the per-page fee currently demanded by
publishers--and, until now, successfully extracted from other copyshops perhaps
too timid to "make a federal case" of the issue--is so small that it is almost
inconceivable that [**97]  this fee, or the anticipation of this fee, affects in
any meaningful way the publishers' decisions about whether to publish any given
work. MDS's use of the copyrighted works appears to have no impact on incentives
to authors to create new works, and may even provide authors incentive to write,
thereby advancing the progress of science and the arts. But, like the majority,
I speculate on the matter; there is no evidence in the record, either way.
[***61]

   Finally, a word about the majority's argument that the unenacted legislative
history of the Copyright Act instructs us that the MDS's copying function is not
a fair use under the enacted provisions of sections 106 and 107.

   F.

   The majority opinion stresses the fact that Congress "initiated and
supervised negotiations among interested groups -- groups that included authors,
publishers, and educators -- over specific legislative language [and that m]ost
of the language that emerged was enacted into law or was made a part of the
committee reports." Maj. op. at 16. However, what were not "enacted into law,"
but only made a part of the conference committee reports, are the Classroom
Guidelines upon which the majority so [**98]  heavily relies to decide how the
language enacted into law applies. Indisputably, the Classroom Guidelines assure
educators that nonprofit copying  [*1411]  for educational purposes of "not more
than 1,000 words" is fair use when "the inspiration and decision to use the work
and the moment of its use for maximum teaching effectiveness are so close in
time that it would be unreasonable to expect a timely reply to a request for
permission." H.R. REP. NO. 1476 at 68-71. The Classroom Guidelines "prohibit[] .
. . copying . . . used to create . . . anthologies, compilations or collective
works." H.R. REP. NO. 1476 at 69. But, as the majority opinion acknowledges,
that language did not survive congressional debate and was not enacted into law.

   Despite the well-settled rule that legislative history is irrelevant and
inappropriate to consider except to clarify an ambiguity in the text of a
statute, the majority relies upon the legislative history without identifying
any ambiguity in the statute, but only because "the statutory factors are not
models of clarity, . . . the fair use issue has long been a particularly
troublesome one . . . , [and other] courts have often turned to the legislative
history [**99]  when considering fair use questions." Maj. op. at 17. I wish to
emphasize in the  [***62]  strongest terms that it is entirely inappropriate to
rely on the Copyright Act's legislative history at all.

   As Justice Scalia has observed, "The greatest defect of legislative history
is its illegitimacy. We are governed by laws, not by the intentions of
legislators." Conroy v. Aniskoff, Jr., 507 U.S. 511, 519, 123 L. Ed. 2d 229, 113
S. Ct. 1562 (1993) (Scalia, J., concurring). The Classroom Guidelines do not
become more authoritative by their adoption into a Committee Report. "It is the
statute, and not the Committee Report, which is the authoritative expression of
the law." City of Chicago v. Environmental Defense Fund, 511 U.S. 328, 114 S.
Ct. 1588, 1593, 128 L. Ed. 2d 302 (1994). We may not permit the statutory text
enacted by both Houses of Congress and signed by the President "to be expanded
or contracted by the statements of individual legislators or committees during
the course of the enactment process." West Virginia Univ. Hosps., Inc. v. Casey,
499 U.S. 83, 98-99, 113 L. Ed. 2d 68, 111 S. Ct. 1138 (1991). That the Classroom
Guidelines are not law should be reason enough for this court to refrain from
using them to find infringement, but this is not the only reason to reject
[**100]  out of hand arguments based on legislative history. Committee Reports
are unreliable "as a genuine indicator of congressional intent" and "as a safe
predictor of judicial construction." Wisconsin Pub. Intervenor v. Mortier, 501
U.S. 597, 617, 115 L. Ed. 2d 532, 111 S. Ct. 2476, (1991) (Scalia, J.,
concurring). Committee Reports do not accurately indicate congressional intent
because they do not "necessarily say anything about what Congress as a whole
thought," even if all the members of the Committee "actually adverted to the
interpretive point at issue . . . [and] were in unanimous agreement on the
point." Id. at 620. The members of Congress who voted for the statutory language
of section 107 could have had any variety of understandings about the
application of the fair use factors; all we know for certain is that the full
House, the full Senate, and the President, pursuant to the procedures prescribed
by the Constitution, enacted into law the text of section 107, and did not enact
the standards of the Classroom Guidelines.  Id. at 621. Committee Reports do not
reliably further consistent judicial construction. I  [***63]  subscribe
wholeheartedly to Judge Harold Leventhal's observation that "the [**101]  use of
legislative history [is] the equivalent of entering a crowded cocktail party and
looking over the heads of the guests for one's friends." Conroy, 507 U.S. at 519
(Scalia, J., concurring). "We use [Committee Reports] when it is convenient, and
ignore them when it is not." Mortier, 501 U.S. at 617.

   The statutory language of section 107, like most statutory language, may not
be a "model of clarity," and the fair use issue, like many issues of law we
face, may be a difficult or "troublesome" one, but neither of these
inconveniences is a substitute for the requisite ambiguity that, alone,
justifies recourse to legislative history.

   Our duty in this case, as in all cases that require application of a statute,
is to apply the broad dictates of the statute to the unique factual situations
presented by the evidence. The fact that the Supreme Court  [*1412]  has
indulged in explanatory side-references to the Classroom Guidelines, see, e.g.,
Campbell, 114 S. Ct. at 1170; Harper & Row, 471 U.S. at 549-53, does not
diminish in any measure the rule that legislative history is not a proper source
of authority for this court when the language of the statute is not analogous.
[**102]  It is particularly inappropriate to rely on the specific language of
the Classroom Guidelines as an interpretive tool when we know that members of
Congress actually considered the language and rejected it in favor of the very
language now claimed to lack clarity. The majority substitutes language
contained only in pre-enactment political maneuvering of Congress for our
obligation to rely, as we are required to do, on the rich body of case law that
properly guides our application of the statutory factors to the specific facts
of a case. In Campbell, 114 S. Ct. at 1170, the Court noted that "the task is
not to be simplified with bright-line rules, for the statute, like the doctrine
it recognizes, calls for case-by-case analysis."  [***64]

   The case for copyright infringement is very weak indeed if the court must
rely on the unenacted theater of Committee Reports to find infringement. The
fact that Congress saw fit, very likely in the interests of political
expediency, to pay unusual deference to the "agreement" of interested parties
about what they would like the law to be, even to the point of declaring (but
not in the statute) that the parties' agreement was part of the [**103]
committee's "understanding" of fair use, does not affect the rule of
construction that binds this court.

   In sum, even if the four statutory factors of section 107 are not "models of
clarity" and their application to the facts of this case is "troublesome"--a
challenge of the kind federal appellate judges are paid to face every day--the
four factors are not ambiguous. Therefore, we may not properly resort to
legislative history. I am satisfied to rely exclusively upon the evidence and
lack of evidence on the record before us and the plain language of the Copyright
Act and its construction in the case law; and they lead me to conclude that MDS
's compilation into coursepacks of excerpts selected by professors is a "fair
use" of the copyrighted materials.

   IV.

   For all the foregoing reasons, I conclude that MDS did not infringe upon the
copyrights of the publishers.