Here, you can browse and annotate the proposed settlement, section-by-section. … In addition, you can:

• Study our reading room of lawsuit documents
• Join the conversation in our forums
• Draft an amicus brief to the court on the wiki

This is a potentially exciting venture on two fronts. First, it may foster dialogue about the fiendishly complex settlement, which could have a huge impact on the shape of copyright law and the public domain for years to come. Because it is so complicated and doesn’t include much flash (and perhaps because so much attention is going to health care, climate change, Jon & Kate, and other pressing issues of the day), the settlement has not been as widely debated as it should be. Second, it will be another experiment in using the tools of the interactive internet to promote true civic engagement and debate.

But whether it will work depends in large part on whether people participate, so go check it out. The links posted on the site’s Introduction are a good place to start.

[T]he most difficult challenge — both to grasp and to solve — of the cloud is its effect on our freedom to innovate. The crucial legacy of the personal computer is that anyone can write code for it and give or sell that code to you — and the vendors of the PC and its operating system have no more to say about it than your phone company does about which answering machine you decide to buy. [snip] This freedom is at risk in the cloud, where the vendor of a platform has much more control over whether and how to let others write new software.

If you think about info/law very much, none of this is quite new. And as I have said before about Zittrain’s work, I think he is too pessimistic about the certainty of lockdown (after all, we were worried about the walled gardens of AOL and Compuserve too, and look what happened).

But the danger is real and must be addressed, presumably in large part by the audience who reads the Times op-ed page. JZ is such an excellent communicator and synthesizer, and he conveys the seriousness and complexity of the problem very nicely to a key audience in a format where it is difficult to do that. Go read the whole op-ed right now.

[UPDATE: Adam Thierer does not care for this op-ed at all, and has some interesting responses.]

Law students spend hundreds of thousands of dollars each year on statute books or statutory supplements for their courses. These statutory supplements, notorious for their weight and bulkiness, are compilations of subject-specific statutes and regulations, most of which are publicly available at no charge. This article discusses the advantages of digital statute books, details how the authors created a digital statute book that was used in two securities regulation courses, and evaluates the result of that experiment.

In brief, Professor Bradford created a downloadable PDF copy of the statutes and regulations needed for his Securities Regulation class.  It’s a massive document, over 2,400 pages, enough to give any law student severe spine problems if they printed it out and carried around in their backpack.  But of course, the point of the statute book being digital is that you don’t have to do that.  Furthermore, Bradford made it possible to highlight and annotate the document in Acrobat Reader.  If you’re interested in seeing it, you can download the whole thing from Bradford’s class page.

Amazon, Blount says, “is not paying anyone for audio rights.” Likely true. But, um, what rights are those? Copyright gives an author five entitlements: to reproduce copies of the book, make derivative works based on it, distribute it, perform it publicly, and display it publicly. So, let’s take them one by one. If an ebook is available through Kindle, Amazon (presumably) has the right to distribute the book, which also entails letting the end user (consumer) make copies of it. Copies: one that’s stored on the Kindle’s hard drive, and one that is loaded into RAM for display (and, perhaps, the on-screen display itself). “Displaying” a work via audio doesn’t make much logical sense, so we’re left with either public performance or derivative works as rights that the Kindle treads upon.

Is the reading a public performance? Well, let’s take Blount’s example: “the Authors Guild does not expect royalties from anybody doing non-commercial performances of ‘Goodnight Moon.’ If parents want to send their children off to bed with the voice of Kindle 2, however, it’s another matter.” While playing “Goodnight Moon” is certainly a performance, in my experience few children have bedrooms that qualify as public. What’s “public,” for copyright purposes? One of two things: it’s performing it “at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered,” or to “to transmit or otherwise communicate a performance or display of the work to [such] a place.” It may take a village to raise a child, but rarely is one involved in putting her to bed. So, public performance is out.

What about a derivative work? Well, the definition of derivative work is amazingly broad: it is any work based upon an existing work. I wonder, though, about two things: fixation, and added expression. Technically, derivative works don’t have to be fixed (unlike the requirement for copyright protection initially), but many courts read in a fixation requirement to the statute. I don’t know how the Kindle converts text to speech, but if it fixes it, it probably does so by buffering only a few words at a time, which likely isn’t enough to infringe (either because it doesn’t copy enough of the protected work, or based on fair use). Second, does reading a work aloud create a derivative? Again, the standards are minimal, and vary by Circuit: the 7th requires added originality, while the 9th requires that the work be recasted, transformed, or adapted. I’m not sure reading aloud qualifies under either of those tests, no matter how much personality Kindle’s fake voice offers. Moreover, this seems like a classic case of overlap: if reading aloud is a derivative work, it seems that the derivative works right renders the public performance right superfluous, which is in tension with our standard canons of statutory construction.

Even if we assume that the Kindle fixes an entire copy of the ebook as part of its text-to-speech conversion, is that a violation? After all, Amazon is allowed to make several copies of the ebook already (on the hard drive and in RAM, remember), so what’s one more? That’s really a contract issue that depends on the agreement between Amazon and the copyright owner (author or publisher).

Blount’s argument is, at heart, one that sounds in John Locke’s labor-desert theory: Amazon has created new value, and likely new demand, for authors’ books, and so they should share in the reward. But why? Amazon did the hard work here, and the Kindle is probably going to be a huge driver for sales of books generally. Authors already have incentives to produce books. Won’t taking away some of Amazon’s returns reduce incentives for future innovators? Here’s a thought experiment: I invent a new way to make an existing product even more worthwhile — say, I write a software program that makes Windows incredibly simple to use, or a way to make Spam taste like sirloin. Sales of Windows, or Spam, are going to go up. Should I write a check to Microsoft or Hormel? Obviously not. So, why is it different just because we’re throwing copyright around?

This is a land grab. It’s ill-advised. Blount’s argument is wrong as a matter of copyright law and just plain dumb as a way of relating to a product that will make authors richer. Better head back to the locker room, Roy.

Rant: It’s a little frustrating to read the comments on the Slashdot post about the case. There’s just so much FUD out there about fair use. Even reading the relevant statute – 17 U.S.C. 107 – isn’t all that helpful, not just because its test is a non-exclusive four-factor totality of the circumstances test, but also because the 1976 Copyright Act was intended to codify, not supplant, the well-developed common law regarding fair use. When I teach Copyright, I tell the students that I think making predictions about what is or is not fair use (when you’re representing someone as counsel) is just about malpractice. It’s very hard for experienced attorneys to assess fair use (as the debate over the Lexicon case proves). For those in the Slashdot crowd who think it’s straightforward, or formulaic, I hope you don’t rely on those perceptions in making actual decisions about copyright. OK, Rant off.

• At p. 39, the court argues that a parody isn’t a derivative work. I think that’s incorrect: many (if not most) parodies are substantially similar to the original, and are saved by fair use, not because they fall outside the definition of derivative work. The court elaborates a bit more carefully in FN17 on the substantial similarity point, but I still think this is inaccurate.
• At 40, the court simply holds that the Lexicon isn’t an unauthorized abridgement without ever really defining what an abridgement is. Wouldn’t Cliffs Notes count as abridgements? (Maybe not, but parsing statutory language requires more precision than this section offers.)
• Most oddly, at 40, the court holds that the Lexicon isn’t a derivative work. It’s correct that the Lexicon may not fall into one of the statutory categories, but those are expressly illustrative and not exhaustive. If it’s not a derivative work, what is it? Something sui generis? A poorly-formed copy? The decision really goes off the rails here without sufficient care in thinking about what a derivative work actually is. I believe the Second Circuit’s characterization of derivative works is much broader than Judge Patterson does.
• FN18 on page 40 is interesting, but I disagree with it. The court seems to treat derivative works and works of fair use as mutually exclusive. I don’t think that’s right. The Wind Done Gone is clearly a derivative work of Gone With the Wind, but the 11th Circuit also held that it’s protected as fair use. This strikes me as getting the analytical procedure out of order. It should be: 1) Is there substantial similarity? 2) Does the accused work add new expression, either with new material or via new arrangement / editing / etc.? If the answers to those two questions are “Yes,” then we’re dealing with a derivative work that is prima facie infringing. Then and only then do we ask 3), is this new derivative immunized under fair use? If the answer is yes, then we’ve a derivative work that is also a work of fair use.
• At 44, the court states that the Lexicon “does not supplant” the Potter novels. But this is in some tension with the earlier analysis about substantial similarity: the Lexicon summarizes the plot, and indeed the character development, of the 7 books rather thoroughly. Someone who wants the Potter novel experience won’t use the Lexicon as a market substitute, but someone who wants the gist of the Potter story arc might well do so.
• At 49-50, the court does a good job of pointing out how weak the “Lexicon as scholarship” argument is. It notes that the Lexicon does not consistently document or refer readers back to the locations of facts in the Potter novels. I would have thought this would also affect the market substitution analysis. This also comes up at 54, in the discussion of the Lexicon’s liberal use of Rowling’s evocative writing in some of its entries.
• A minor gripe: why doesn’t the court analyze the statutory factors in the order in which 17 U.S.C. 107 presents them? It’s not required, but most of us are used to marching through the analysis in the same way the statute does.
• At 59-60, it’s refreshing to see the court set limits on the scope of the derivative works right (though the court doesn’t think of it this way): authors don’t get to exclude competitors from secondary markets just because they want or plan to enter them. The hard part, of course, is determining which markets the author does get to monopolize. And it’s a nice bit of market-based evidence to point out that HarperCollins probably wouldn’t produce a Chronicles of Narnia encyclopedia if it would cannibalize sales of C.S. Lewis’s novels – but that calculus might be wrong. What if the drop in revenues were outweighed by sales of encyclopedias? Still, a nice analytical point.

This case tees up hard copyright questions. What is the boundary of the term of art “derivative work”? How broad should an author’s control be over secondary, non-scholarly works treating her expression? How should courts deal with inventorying of “fictional facts”? This opinion resolves some of these questions in the Lexicon case, but I feel less certain it answers them for future plaintiffs. RDR is ably assisted by Stanford’s Fair Use Project, and hopefully we’ll see an appeal to the Second Circuit that expands some of this thinking.

In short:

• the plaintiffs claim the Lexicon violates Rowling’s copyrights in her novels and that the book’s cover blurb with her praise of the Web site violates federal and NY state trademark law;
• the defendants respond that the book doesn’t infringe Rowling’s copyrights and, even if it did, it’s protected by fair use, and also that there’s no TM violation;
• I think the book infringes Rowling’s copyrights, that the use isn’t fair, that the trademark claim is weak, that the plaintiffs will win on the copyright claim, and that this outcome is a good thing.
• Documents are available from the Justia search engine and also from the CIS Fair Use Project site. (Props to Brandy Karl for the links, though she’ll disagree vehemently with my reasoning.)

See below the jump for my analysis on the copyright issues. (I’ll defer the TM analysis for a day or so since I’m technically still on spring break and already feel like a nerd for writing this much.)

1. Copyright Infringement?

First, Rowling and Warner Bros. have to show a prima facie case for infringement – in other words, is it plausible to think RDR and Vander Ark have violated copyright law? To prove a violation of the reproduction right, Rowling / WB need to show 1) access by RDR / VA to the Potter works (easy) and 2) similarities between the Lexicon book and the Potter works that demonstrate copying of protected material. Since the Lexicon is nearly an encyclopedia of the Potter world, point 2 seems a lock. Thus, absent a defense, liability for infringement seems easy. (To be precise, there seem to be at least 3 theories for copyright infringement: 1) violation of the 106(1) reproduction right, for copying characters, plot, dialogue, etc. from the books and movies; 2) violation of the 106(2) derivative works right, for recasting or modifying the Potter works; and 3) violation of the 106(3) distribution right, for distributing the infringing works. Since there haven’t been public sales yet of the Lexicon book, claim 3 of these seems the weakest link.)

2. Fair Use?

Assume Rowling / WB make out a prima facie case for infringement. RDR and VA might still be off the hook if their use of the Potter works is fair under 17 U.S.C. 107. Congress set up 4 non-exclusive factors to evaluate a fair use claim: what is the purpose and character of that use (is it transformative)? What is the nature of the copyrighted work? How much – amount and substantiality – of the copyrighted work is used? And what effect will that use have on actual and potential markets for the work? (Importantly, these are non-exclusive factors – courts are free to find and use others – and there’s no explicit guide to weighing them. Fair use is like gumbo: you dump everything in together, mix it, simmer, and see how it tastes in the end. Lawyers call this a “standard” rather than a “rule” – “don’t drive too fast” versus “don’t drive faster than 55 mph.”)

I want to take these 4 factors out of order. Start with amount and substantiality (factor 3). The Lexicon incorporates a lot – if not most – of the Potter works. It’s an encyclopedia – if it wasn’t comprehensive, it wouldn’t be worth much. So, there’s significant copying from a quantitative perspective. Qualitative analysis seems somewhat less damning, since the book is more judicious about quotes from the sources, but it still clearly cuts against RDR / VA: there’s substantial copying of important expression. So, factor 3 cuts against the defense.

Now, nature of the copyrighted work: the Potter books / films are published, which helps a fair use claim, but they’re fictional, which hurts, since fictional works get greater (”thicker”) copyright protection. Factor 3 goes against the defense.

Market analysis: generally, market analysis (factor 4) vies with transformation (factor 1) for pride of place. The two also interrelate: the more transformative a new work, the more market harm to the copyrighted work courts are likely to tolerate. Here, market analysis has to be speculative: the book hasn’t been published yet. So, Rowling / WB have to project likelihood of harm, mostly by focusing on Rowling’s plans to write her own encyclopedia. (Interestingly, for you copyright geeks, note that this approach – by now the standard for courts in copyright cases – tracks Justice Blackmun’s dissent in Sony for market analysis, not the majority opinion by Justice Stevens. It’s a nice example of how a clear (though snippy) dissent can influence, significantly, future legal analysis.) Rowling’s lawyers clearly overstep by arguing that “[not] every person who purchases the [RDR/VA] Book [would] purchase a second encyclopedia, even if it is written by Ms. Rowling.” (Mem. in Support of Prelim. Inj. at 24.) The test isn’t any market harm, but rather the level of market harm relative to other considerations. My own take is that the market factor also cuts against RDR/VA, but that’s mostly because I don’t think the new Lexicon book adds much in the way of transformative elements, and hence we should be less willing to tolerate displacement of sales of the Potter books / movies, or future sales of a Rowling encyclopedia.

Finally, transformation. The RDR/VA Memorandum opposing a preliminary injunction sets out several arguments that the new book is transformative: it creates a reference tool, like a search engine (citing Perfect 10 v. Amazon and, by implication, Kelly v. Arriba Soft); it organizes a voluminous, scattered Potter universe into an easy-to-use supplement; it adds commentary and analysis of the Potter works; it unpacks obscure references and allusions; and brings in substantial outside research. The memorandum implicitly takes up economic concerns under the market (4th) factor here also, calling the Lexicon book an economic complement rather than a substitute. (See p. 12.)

For transformation, let’s dispose quickly of a red herring: RDR/VA’s work – and it’s extensive – in cataloging and assembling information about the Potter world gets zero weight in fair use analysis. Feist makes this clear: “sweat of the brow” copyright is dead – you get no protection for your work because of the effort involved in pulling it together. Rather, the key is the new expression you add – or, here, the new transformative expression. And I don’t think there’s enough of it.

The search engine analogy is intriguing but flawed. The Web operates largely on an implied license model: we let Google index sites (unless they opt out via ROBOTS.TXT) because society needs search engines and the transaction costs of negotiating a license with each site owner are prohibitive. Moreover, as Kelly points out, there’s no deliberate targeting of a specific work – search engines scoop up everything. And finally, indexing via search engines helps rather than hurts copyright owners: the thumbnail images in Kelly and Perfect 10 didn’t compete with the full-size originals, but instead pointed consumers to them. (And if I link to Perfect 10’s Web site, thereby pointing you to it, this blog goes from PG to NC-17 really fast.) The Lexicon book can advance this argument somewhat – it will probably drive some sales of the original Potter works, as most derivatives do – but it’s clearly less powerful than for search engines.

The best argument for RDR/VA is the outside research and the analysis / commentary. This isn’t a trivial argument, and I do want to protect non-academic research. But my subjective analysis is that, in the Second Circuit, there isn’t enough original analysis / criticism / commentary to save the Lexicon book. The primary purpose of the work isn’t to critique the Potter world; it’s to provide a guide to it. We might ask, as Justice Blackmun did, whether this work is “productive”: does it add sufficient value to society to tolerate its harms to Rowling / WB’s copyrights, and to the implied harm the precedent would do to other copyright owners? In short, does the Lexicon generate positive externalities? The answer is “Yes,” but I think Castle Rock, Twin Peaks, and Paramount v. Carol Publishing (11 F. Supp. 2d 329 (SDNY 1998)) show that the Second Circuit employs rather stringent standards for transformation that cut against a reference or supplementary work. In the end, I think the first factor – is the work transformative? – also cuts against RDR/VA.

4-0 looks like a clean sweep, as the Red Sox have demonstrated. If Judge Patterson disagrees with my analysis (not that he’ll ever learn about it!) on factors 1 or 4, it’s a closer call, as the inverse relationship between these factors would help the defendants. But I don’t think that’s likely.

Is this a good outcome? I think so. Remember that the 4 factors are non-exclusive. I’d argue Judge Patterson should consider an additional factor here: behavior by the copyright owner. Rowling has been supportive – very much so – of the Lexicon as long as it remained on-line and relatively non-commercial. To the degree that free speech concerns arise in this case (as the memo in opposition of the injunction argues, at p. 6), Rowling’s conduct mitigates those worries. (Eldred v. Ashcroft, which establishes fair use as constitutionally necessary, also notes there’s a difference between making one’s own speech and making someone else’s speech; 537 U.S. 186, 221 (2003).) She’s allowing this information to be presented to her fans and the public in general, while trying to minimize financial harm to her works. Copyright is often presented as a balance between incentives to produce and access to that production; here, Rowling’s approach seems to find that balance. When a use is commercial, it is slightly disfavored for fair use (copyright geeks: compare Sony’s presumption here with Campbell’s tacit repudiation of that position), though courts recognize that even fair use has to pay the bills. As a derivative work becomes more transformative, I think we should tolerate greater commerciality (because there’s less risk of substitution for the original), but where a copyright owner wields her legal entitlements not to block a derivative (as Acuff-Rose tried to block 2 Live Crew’s parody of Roy Orbison) but to cabin its economic impact, I think we should give that approach greater deference. In short, we want to encourage good behavior by copyright owners. (The plaintiffs and defendants take up this question: RDR/VA notes that Rowling/WB haven’t sued other compendiums, and Rowling/WB point out that we don’t want to press copyright owners to police fanfic in the same way that TM owners police their marks.)

As I’ve written, I would favor a change in the law that would immunize derivative works, and other, smarter folks advocate changes that would do away with injunctions in favor of a compulsory license / revenue-sharing scheme. But with the current state of the law, I think the Lexicon loses. In Potter terms, though, I think this is a triumph for Dumbledore’s Army, and not for the Death Eaters.

Stay tuned!

The facts: Warner Bros. and J.K. Rowling are suing RDR Books, which plans to publish its Harry Potter Lexicon in book format. Stanford’s Fair Use Project is representing RDR (which is based here in Michigan). The article is quite one-sided; it paints Rowling as a copyright absolutist and a bad actor. (Let’s overlook her generally tolerant attitude towards fan fiction and her stated intent to donate profits from her competing encyclopedia to charity, and that she objected to the Lexicon only once its author and RDR sought to profit from it.)

But what really annoys me is that the article’s author, Joe Nocera, makes an embarrassingly simple mistake of copyright law. He writes, “the law absolutely allows anyone to create something new based on someone else’s art.” No, Joe, sorry. That’s called a “derivative work,” and the Copyright Act gives that entitlement to the copyright owner, exclusively. (See 17 U.S.C. 106(2).) So, if you write a trivia book with questions and answers about the Harry Potter stories, you infringe Ms. Rowling’s copyright. (See Castle Rock Entertainment v. Carol Publishing Group.)

I argue that this is a bad idea on economic grounds in a piece coming out shortly. But there’s no question about the state of the law currently, and Nocera does a journalistic disservice by pretending otherwise. I’m all for the Fair Use Project – as a prof, I depend on fair use – but I think the fair use claim here is weak at best. (On the critical fourth factor under 17 U.S.C. 107, this is obviously usurping Rowling’s stated plans to develop her own encyclopedia, and Lucasfilm has made a nice pile of change by licensing Star Wars encyclopedias. Note, though, that Tim Wu disagrees.)

The permission-based culture of copyright is obnoxious, and often undesirable – the torture / “24″ episode Nocera cites is a great example (note that the filmmaker, Alex Gibney, sought permission from Fox, and was denied – similar to Wendy Gordon’s view of fair use as a market failure). But it doesn’t help to misstate the law to suit one’s story, and it doesn’t help to focus fire on copyright holders such as Rowling, who have generally been supportive (or at least tolerant) of alternative uses of their characters (unlike Anne Rice, say). In copyright, as everywhere else, it’s best not to shoot your friends.

At least I’m awake now.

Edit (19 Feb. 2008): I changed 106(3) to 106(2) above; my typo indicated the distribution right, rather than the derivative works right as I intended. Props to Tom Sharpe for catching this!