Cambridge Univ. Press v. Albert

906 F.3d 1290

CAMBRIDGE UNIVERSITY PRESS, Oxford University Press, Inc., Sage Publications, Inc., Plaintiffs-Appellants,

v.J. L. ALBERT, in his official capacity as Georgia State University Associate Provost for Information Systems and Technology, Kenneth R. Bernard, Jr., in his official capacity as member of the Board of Regents of the University System of Georgia, et al., Defendants-Appellees.

No. 16-15726

United States Court of Appeals, Eleventh Circuit.

October 19, 2018

Edward B. Krugman, John H. Rains, IV, Bondurant Mixson & Elmore, Atlanta, GA, Robert Bruce Rich, Jonathan Bloom, Todd D. Larson, Randi Wolkenbreit Singer, Weil Gotshal & Manges, LLP, NEW YORK, NY, for Plaintiffs-Appellants.

Anthony B. Askew, Mary Katherine Bates, John W. Harbin, Lisa Pavento, Stephen M. Schaetzel, Meunier Carlin & Curfman, LLC, Natasha H. Moffitt, King & Spalding, LLP, Katrina M. Quicker, Baker & Hostetler, LLP, ATLANTA, GA, for Defendants-Appellees.

Nancy Evelyn Wolff, Mary Eleanor Rasenberger, Scott Jonathan Sholder, Cowan DeBaets Abrahams & Sheppard, NEW YORK, NY, Amicus Curiae for THE AUTHORS GUILD.

Ronald Gene Dove, Jr., Robert Newton Hunziker, Jr., Covington & Burling, LLP, WASHINGTON, DC, Amicus Curiae for THE COPYRIGHT ALLIANCE.

Mtichell Stoltz, Electronic Frontier Foundation, SAN FRANCISCO, CA, Amicus Curiae for AMERICAN LIBRARY ASSOCIATION, ASSOCIATION OF COLLEGE AND RESEARCH LIBRARIES, ASSOCIATION OF RESEARCH LIBRARIES.

Jennifer M. Urban, Samuelson Law, Technology & Public Policy Clinic, UC Berkeley School of Law, BERKELEY, CA, Amicus Curiae for AUTHORS ALLIANCE.

Before WILLIAM PRYOR, MARTIN, and ROSENBAUM, Circuit Judges.

WILLIAM PRYOR, Circuit Judge:

This appeal requires us to decide whether the district court misinterpreted our mandate in an earlier appeal and misapplied the defense of fair use, 17 U.S.C. § 107, in a dispute between three academic publishers and Georgia State University about the University's practice of distributing to students digital excerpts of copyrighted works without paying the publishers. After a bench trial, the district court ruled that the publishers established a prima facie case that 48 digital excerpts infringed their copyrights but that the University prevailed on an affirmative defense of fair use for 43 of those excerpts. The publishers appealed. We upheld the district court's analysis of the first and fourth fair-use factors, including its finding that widespread unlicensed use of 31 excerpts for which licenses existed could cause substantial harm to the potential markets. But we reversed and remanded for the district court to correct specific errors in its analysis of fair use. One such error was the use of a mathematical formula to balance the four statutory fair-use factors. Another was the insufficient weight the district court gave to the severe threat of market substitution. On remand, the district court ruled that the University prevailed on its fair-use defense for 44 of the 48 excerpts. Contrary to our instructions, the district court again applied a mathematical formula to balance the factors. It also revisited its market-harm analysis for the 31 licensed excerpts and found that the threat of market harm supported fair use in all but six of the 48 instances. Although the district court did not abuse its discretion when it declined to reopen the record to allow the publishers to present new evidence about the availability of digital licenses, the district court misinterpreted our earlier decision and misapplied the statutory test of fair use. We affirm in part, vacate in part, and remand with instructions.

I. BACKGROUND

We divide the background in three parts. First, we describe the facts and the original proceedings in the district court. Second, we describe our decision in the earlier appeal. Third, we describe the proceedings on remand.

A. The Facts and the Original Proceedings in the District Court

Cambridge University Press, Oxford University Press, Inc., and Sage Publications, Inc. publish academic works. Cambridge Univ. Press v. Patton (Cambridge II ), 769 F.3d 1232, 1238 (11th Cir. 2014). The publishers "market their books to professors who teach at universities and colleges" so that the professors will "assign them as required reading" for their courses and "students will purchase them." Id . at 1238–39. The publishers also sell "licenses to use excerpts of [their copyrighted] works." Id . at 1276. In the past, professors commonly assigned—and students purchased—paper "coursepacks" of licensed excerpts. Id . at 1239. But it has become more common for universities to distribute digital excerpts electronically. Id . The publishers license users "to photocopy [and to] digitally reproduce portions of their works." Id. at 1240. They offer such licenses, called "permissions," both directly and through the Copyright Clearance Center. Id .

Georgia State University, a public university in Atlanta, Georgia, provides several ways to distribute excerpts of copyrighted works to students. The University pays to use licensed excerpts in paper coursepacks that the University bookstore assembles and sells to students. Id . at 1241 & n.4. The University also maintains two systems for electronic distribution of course materials, "ERes" and "uLearn." Id . at 1239. Both programs enable University personnel to upload digital copies of excerpts to University servers and allow students enrolled in a course to download the excerpts. Id . Neither the University, see id. at 1238, nor the students, see id. at 1240, pay for the use of the digital excerpts. This approach is "popular." Id ."For example, during the Spring 2009 term, paper coursepacks were offered for only about fifteen courses, while instructors in hundreds of courses made readings available on ERes." Id.

In 2008, the publishers filed a complaint against officials of the University for direct, contributory, and vicarious copyright infringement, 17 U.S.C. §§ 106, 501(a) ; see also Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. , 545 U.S. 913, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005) (acknowledging limited third-party liability for copyright violations), and sought declaratory and injunctive relief. Cambridge II , 769 F.3d at 1241–42 & n.6. The publishers alleged a pattern and practice of distributing substantial unlicensed excerpts of their copyrighted works, and they sought to prove their claims based on a representative sample of infringements. Id. at 1241–42. The University asserted an affirmative defense of fair use, 17 U.S.C. § 107. Cambridge II , 769 F.3d at 1242.

After a bench trial, the district court ruled that the University infringed the copyrights of the publishers in five instances. See Cambridge Univ. Press v. Becker (Cambridge I ), 863 F.Supp.2d 1190, 1363–64 (N.D. Ga. 2012). The district court found that the publishers established a prima facie case for 48 instances of infringement. See Cambridge II , 769 F.3d at 1237. But it ruled that the University established its fair-use defense for 43 of the excerpts. Id . We summarize its conclusions as relevant to this appeal.

The Copyright Act enumerates four "factors to be considered" in finding that "the use made of a work in any particular case is a fair use" instead of an infringement. 17 U.S.C. § 107. The first factor is "the purpose and character of the use, including whether [it] is of a commercial nature or is for nonprofit educational purposes." Id. § 107(1). The second factor is "the nature of the copyrighted work." Id. § 107(2). The third factor is "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." Id. § 107(3). And the fourth factor is "the effect of the use upon the potential market for or value of the copyrighted work." Id. § 107(4).

The district court found that "factor one strongly favor[ed]" a finding of fair use for every excerpt because the University's copying was for nonprofit educational uses. Cambridge I , 863 F.Supp.2d at 1225. It found that factor two "favor[ed]" fair use for every excerpt because the academic works were "informational in nature." Id . at 1226–27. It found that factor three favored fair use for 35 excerpts each of which was less than 10 percent or one chapter of the original work but favored infringement for 13 excerpts that exceeded those bounds. Cambridge II , 769 F.3d at 1251. And it found that factor four "strongly favored" a finding of copyright infringement for 31 excerpts for which digital permissions were available and "favored" fair use for 17 excerpts for which the publishers failed to prove the availability of digital permissions. Id.

In its overall analysis of fair use for each excerpt, the district court "g[ave] each of the four factors equal weight" and "treat[ed] the four factors as a simple mathematical formula." Id. at 1260. That is, the district court simply "add[ed] up" its findings whether each factor favored fair use or infringement for each excerpt. Id . It found that "fair use applied whenever at least three of the four factors favored [the University]." Id. at 1251. But when it initially weighed the factors together in its overall analysis for some excerpts, the district court found a tie, with factor one strongly favoring fair use, factor two favoring fair use, factor three favoring infringement, and factor four strongly favoring infringement. See Cambridge I , 863 F.Supp.2d at 1260, 1263, 1268, 1274, 1278, 1358, 1362. For seven such excerpts, the district court broke the ties by reconsidering the weight of the third factor, the fourth factor, or both. See id. at 1260, 1263–64, 1268–69, 1274, 1278, 1358–59, 1362–63. It found that evidence of the amount of past permissions revenues "strengthen[ed]" the showing in favor of infringement on the fourth factor in four instances, id. at 1260, 1268, 1278, 1363, but that it "undercut[ ]" the weight of the showing in two instances, id. at 1264, 1274. It did not change any of its findings that factor four favored...