Utility-Expanding Fair Use

By Jacob Victor. Full Text. 

Copyright’s fair use doctrine is increasingly applied to large-scale uses of creative works by new digital technologies, such as the Google Books Project. Such technologies—which the Second Circuit has recently come to call “utility-expanding”—allow the public to more productively use or efficiently access books, articles, music, films, and other copyrighted content. This is new terrain for the fair use doctrine, which has more commonly been applied to the use of a work in the service of new creative expression.

This Article examines the relationship between utility-expanding technologies, fair use, and copyright’s overall policy agenda. Even though utility-expanding technologies often benefit the public, many also threaten to harm copyright owners’ dissemination markets and thus potentially undermine copyright’s overall goal of financially incentivizing cultural creation. Reflecting this tension, some recent cases have found that an access-enhancing technology was “transformative” and of benefit to the public but not fair use because of market harm to the copyright owner. In the absence of a fair use determination, technology developers can be subject to restrictive licensing demands from copyright owners or risk an injunction and a high damages award, threatening the growth and adoption of new services.

As fair use appears to be an increasingly unwieldy framework for legitimizing the full range of utility-expanding technologies, this Article suggests an alternative approach: compulsory licensing. Indeed, Congress previously developed compulsory licensing systems for certain technologies that benefit the public by increasing the availability and accessibility of copyrighted works but posed some risk of market harm to copyright owners. In particular, the creation of the compulsory license for digital radio provides useful insight into the relationship between utility-expanding technologies and copyright’s policy agenda. Rather than providing no compensation to copyright owners (as fair use does) or a market-based price (as is the norm in copyright licensing markets) this regime used policy-oriented price-setting criteria explicitly designed to identify royalty rates that would allow new disseminators to flourish but still ensure that rightsholders were compensated. The Article identifies some ways a similar policy-oriented compulsory licensing approach could be implemented within copyright’s current remedies regime for those utility-expanding technologies that do not warrant a fair use finding.