In Georgia State University E-Reserves Case, Eleventh Circuit Endorses Flexible Approach to Fair Use

On Friday, October 17, 2014, the Eleventh Circuit released its long-awaited decision in the Georgia State University (GSU) e-reserves case. Some key takeaways from the decision include:

• Affirms that fair use is applied on a case-by-case basis;
• Rejects bright-line rules, such as using a ten-percent-or-one-chapter rule to allow fair use (a rule that the district court adopted);
• Affirms that even if a use is non-transformative, a nonprofit educational purpose can still favor fair use;
• Rejects the coursepack copying cases as applicable;
• Finds that a publisher’s failure to offer a license will tend to weigh in favor of fair use in terms of the fourth fair use factor; and
• Gives weight to a publisher’s incentive to publish, rather than focusing on the author’s incentive to create.

Another positive aspect of the case is the Eleventh Circuit’s discussion of the purpose of copyright, affirming the fact (as has long been held by the Supreme Court) that copyright is not a natural right of the author, but rather, is designed to stimulate creativity and progress for the public good. Nancy Sims has an excellent analysis of the court’s ruling covering what she liked and didn’t like from the opinion.

It is important to note that while the case has been reversed and remanded, the Eleventh Circuit did not rule against GSU. Instead, the Eleventh Circuit directed the district court to revisit its fair use analysis and not to take an arithmetic approach to the four fair use factors (rejecting the notion that if three of the factors favor fair use, but one disfavors fair use, then fair use will always apply).

In fact, most of the publishers’ arguments were actually rejected by the Eleventh Circuit. Kevin Smith has a great summary of five arguments advanced by the publishers that were ultimately rejected by the Eleventh Circuit.

Thus, e-reserves remain alive and well, though the exact policies on fair use for e-reserves at some institutions may need to be revisited in light of this case, particularly those that rely on a checklist. Although the Eleventh Circuit’s methodology is binding only on Alabama, Florida and Georgia, this case is persuasive authority in other jurisdictions.

Here’s what the court had to say on each of the four use factors:

Factor One (the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes): While GSU’s use was non-transformative, the nonprofit educational purpose of the e-reserves favors fair use.

The Eleventh Circuit upheld the district court’s finding on the first factor, determining that while the use of the Plaintiffs’ works was not transformative, the first factor favored GSU nonetheless. The court noted that the excerpts posted in the e-reserve system were verbatim copies converted into a digital form and were used for the same intrinsic purpose as the works. However, because GSU’s use was for a nonprofit educational purpose rather than a commercial purpose, the first factor favored GSU.

In finding that GSU’s use was for a nonprofit educational purpose, the court noted that the Supreme Court and Congress have favored fair use for educational purposes. The Eleventh Circuit noted that the user was a nonprofit educational institution and that the use of the works was clearly for educational purposes. It discussed the ways that GSU could have profited from the use or “commercially exploited” the work, but concluded that while Defendants could have profited from the use of the works (for example through collection of student tuition and fees) such reasoning is circular because any unlicensed use of a copyrighted work results in profit to the user and thus no use would qualify as nonprofit under the first factor. The Eleventh Circuit noted that GSU’s use of the works “provides a broader public benefit—furthering the education of students at a public university.” In sum, “despite the recent focus on transformativeness under the first factor, use for teaching purposes by a nonprofit, educational institution such as Defendants’ favors a finding of fair use under the first factor, despite the nontransformative nature of the use.”

Factor Two (nature of the copyrighted work): Factual works may include original expressive contents and relay more than bare facts, but this factor is of relatively little importance.

Here, the Eleventh Circuit states that highly creative works are entitled to greater protection, while the use of factual or informational work is more likely to favor fair use. The Eleventh Circuit rejected the district court’s holding that the second factor favored fair use in every instance because of the factual nature of the works-at-issue and f