Coursepacks and Copyright Fees: It Doesn’t Matter Who Presses “Copy”

If you’ve ever felt the sting of paying a hefty sum for a coursepack, then you might have wondered if there wasn’t some way to cut costs. After all, the paper and ink that went into producing that coursepack could not have cost that much. So what drives up the cost? For each copyrighted work contained in a coursepack, a royalty fee must be paid to the publisher of the work, and these fees substantially inflate the cost of coursepacks.

A recent case before a Federal court in the Eastern District of Michigan addressed the question of whether a commercial copy shop could avoid payment of copyright fees by having the students themselves make copies of the coursepack materials. Blackwell Publishing, Inc. v. Excel Research Group, LLC, No. 07-12731, 2009 U.S. Dist. LEXIS 95452 (E.D. Mich. Oct. 14, 2009) (hereinafter “Excel”). Excel Research Group, a commercial copy shop serving the professors and students of the University of Michigan, attempted to find a way to avoid payment of publishers’ copyright fees thereby allowing it to pass substantial savings (generally, 50% or more) on to students. The procedure Excel used in handling coursepacks was fairly simple: Excel maintained a master copy of the coursepack materials submitted to it by the professor; upon request from a student, an Excel staff member would hand the master copy to the student who would make one copy using Excel’s copy machines; the student paid Excel. Each student would sign a form stating that the student was making a copy for educational purposes. Excel paid no copyright fees to the publishers.

Not surprisingly, the publishers sued claiming that Excel violated their exclusive rights of reproduction and distribution under the Copyright Act. 17 U.S.C. § 106. Excel asserted several defenses denying liability for copyright infringement, all of which were rejected by the court. First, the court rejected Excel’s argument that the copying was permissible pursuant to written licensing agreements between the publishers and the University. Next, the court addressed Excel’s argument that the students were the ones doing the copying and therefore it is the students, not Excel, committing infringement. The court acknowledged that the Copyright Act does not explicitly provide for secondary liability for infringement committed by another. However, the court was convinced based on the facts that this was not mere student copying; rather, Excel, who maintained control over the entire copying process, was the source of the reproduction and therefore could be held liable. Furthermore, Excel violated the publishers’ distribution rights by giving students a master copy of the coursepack and accepting payment from students for copying. This, the court reasoned, was enough to show direct infringement by Excel apart from the role of the students.

Excel’s main argument as to why it could not be held liable for copyright infringement was that the copying constituted fair use. The fair use doctrine inserts some flexibility into copyright law and provides that “the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” 17 U.S.C. § 107. The publishers pointed to a Sixth Circuit case, also involving a copy shop selling coursepacks to students, which unequivocally held that the fair use doctrine, including the phrase “multiple copies for classroom use,” does not provide blanket immunity for an accused infringer. Princeton Univ. Press v. Mich. Doc. Servs., Inc., 99 F.3d 1381, 1385 (6th Cir. 1996) (en banc), cert. denied, 520 U.S. 1156 (1997) (hereinafter “MDS”). As in MDS, the Excel court applied the following four factor test set out in the Copyright Act to determine whether the copying qualified as fair use:

(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;

(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 value of the copyrighted work. . . .

17 U.S.C. § 107.

The Excel court examined each factor individually, relying heavily on the reasoning and analysis in MDS. First, the court considered the purpose and character of the use. Excel argued that the use of the copied material by the students was nonprofit and educational. However, the court agreed with the publishers that the challenged use was not that of the students but rather that of Excel. The court was vehement that Excel’s argument ignored the key fact – that Excel profited from the copying. Following MDS, the Excel court reasoned that a commercial user may not step into the shoes of its customers in order to assert that the use is nonprofit. Although the students themselves were doing the copying, the circumstances under which the copying took place cannot be ignored. The court held that Excel’s use was “unmistakably commercial.”

As to the second factor, the nature of the copyrighted work, the court held that it could not be seriously disputed that the copied material was creative in nature. The third factor, the amount and substantiality of the reproduced portion of the work, also weighed against a finding of fair use. Again adopting the reasoning in MDS, the court held that the fact that the professors selected the copied material as required reading was persuasive evidence of its qualitative value.

The fourth factor examines the effect of the use on the market value of the copyrighted work. Excel admitted that not paying copyright fees enabled it to charge students a lower fee for coursepacks than a traditional copy shop. The court concluded that by not paying a fee while other commercial users do, Excel’s actions adversely impact the marketplace.

All four of the statutory factors weighed against a finding of fair use. The court was not swayed by Excel’s argument that this was a case of protected student copying; clearly, this was a scheme specifically devised to avoid payment of copyright fees in order to gain a competitive edge in the marketplace. Ultimately, the court held that Excel’s actions infringed on the publishers’ copyrights and that the protections offered by copyright law “should not turn on who presses the start button on a copier.” Excel at *20.