COPYCENSE

In light of a recent correspondence with Michael K. Reddy, a colleague with whom I worked a few years ago on the Copyright Committee of the American Association of Law Libraries, I believe it is necessary to revisit the debate over whether Section 108 of the Copyright Act applies to corporate or for-profit libraries.

Unfortunately, the information I found does resolve the debate conclusively.

In a footnote to a May 2002 article about the applicability of fair use (Section 107) and the library exceptions (Section 108) in the private sector, author James S. Heller quotes a portion of the legislative history to Section 108 to support the notion that for-profit and corporate libraries can use Section 108 as a copyright limitation. Heller, a former chairman of AALL’s Copyright Committee, quotes the following language from H.Rep. 94-1476, at 75 (1976)

Isolated, spontaneous making of single photocopies by a library in a for-profit organization, without any systematic effort to substitute for photocopying for subscriptions or purchases, would be covered by section 108, even though the copies are furnished to the employees of the organization for use in their work. Similarly, for-profit libraries could participate in interlibrary arrangements for exchanges of photocopies, as long as the production or distribution was not ‘systematic’. These activities, by themselves, would ordinarily not be considered ‘for direct or indirect commercial advantages’, since the ‘advantage’ referred to in this clause must attach to the immediate commercial motivation behind the reproduction or distribution, rather than to the ultimate profit-making motivation behind the enterprise in which the library is located. On the other hand, section 108 would not excuse reproduction or distribution if there were a commercial motive behind the actual making or distributing of the copies, if multiple copies were made or distributed, or if the photocopying activities were ‘systematic’ in the sense that their aim was to substitute for subscriptions or purchases.

On the other hand, Mary Minow, editor of LibraryLaw Blog wrote the following response in March 2005 to a question about whether Section 108 applies to corporate or for-profit libraries.

[T]he issue arises as to whether a for-profit library is a Section 108 library. The Copyright Office Circular 21 (.pdf, 105 KB) discusses libraries and archives in profit-making institutions. The legislative history shows that the Senate and House differed on this point.

The Conference Report says that libraries in for-profit institutions can use Section 108 for interlibrary loan and isolated, spontaneous single copying, so long as they meet the rest of Section 108’s criteria, including not making copies for commercial motivation.

The Senate Report essentially says that 108 applies only to nonprofit libraries. It says that the “without any purpose of direct or indirect commercial advantage” language is intended to preclude libraries in profit-making organizations from making copies in furtherance of the organization’s commercial enterprise. Note: If Sect. 108 fails, you can always see if the use might qualify as Fair Use under Sect. 107.

The House Report says that a purely commercial enterprise can’t just call itself a library and then use 108. However, it finds that 108 can be used to allow isolated, spontaneous making of single copies by a library in a for-profit organization. For-profit libraries can use interlibrary loan so long as the reproduction or distribution is not “systematic” (a substitute for subscriptions or purchases) and the copies are not for immediate commercial motivation.

My own experience in talking with various corporate libraries is that many if not most take advantage of Sect. 108.

CopyCense‘s editors then went back and looked at Circular 21 (.pdf, 105 KB), issued by the U.S. Copyright Office, and found the following relevant passages.

Senate Report: Discussion of Libraries and Archives in Profit-Making Institutions

The limitation of section 108 to reproduction and distribution by libraries and archives “without any purpose of direct or indirect commercial advantage” is intended to preclude a library or archives in a profit-making organization from providing photocopies of copyrighted materials to employees engaged in furtherance of the organization’s commercial enterprise, unless such copying qualifies as a fair use, or the organization has obtained the necessary copyright licenses. A commercial organization should purchase the number of copies of a work that it requires, or obtain the consent of the copyright owner to the making of the photocopies.

…

House Report: Discussion of Libraries and Archives in Profit-Making Institutions

Under this provision, a purely commercial enterprise could not establish a collection of copyrighted works, call itself a library or archive, and engage in for-profit reproduction and distribution of photocopies. Similarly, it would not be possible for a non-profit institution, by means of contractual arrangements with a commercial copying enterprise, to authorize the enterprise to carry out copying and distribution functions that would be exempt if conducted by the non-profit institution itself.

The reference to “indirect commercial advantage” has raised questions as to the status of photocopying done by or for libraries or archival collections within industrial, profitmaking, or proprietary institutions (such as the research and development departments of chemical, pharmaceutical, automobile, and oil corporations, the library of a propriatary [sic] hospital, the collections owned by a law or medical partnership, etc.).

Isolated, spontaneous making of single photocopies by a library in a for-profit organization, without any systematic effort to substitute photocopying for subscriptions or purchases, would be covered by section 108, even though the copies are furnished to the employees of the organization for use in their work. Similarly, for-profit libraries could participate in interlibrary arrangements for exchange of photocopies, as long as the reproduction or distribution was not “systematic.” These activities, by themselves, would ordinarily not be considered “for direct or indirect commercial advantage,” since the “advantage” referred to in this clause must attach to the immediate commercial motivation behind the reproduction or distribution itself, rather than to the ultimate profit-making motivation behind the enterprise in which the library is located. On the other hand, section 108 would not excuse reproduction or distribution if there were a commercial motive behind the actual making or distributing of the copies, if multiple copies were made or distributed, or if the photocopying activities were “systematic” in the sense that their aim was to substitute for subscriptions or purchases.

…

Conference Report: Discussion of Libraries and Archives in Profit-Making Institutions

Another point of interpretation involves the meaning of “indirect commercial advantage,” as used in section 108 (a)(1), in the case of libraries or archival collections within industrial, profit-making, or proprietary institutions. As long as the library or archives meets the criteria in section 108(a) and the other requirements of the section, including the prohibitions against multiple and systematic copying in subsection (g), the conferees consider that the isolated, spontaneous making of single photocopies by a library or archives in a for-profit organization without any commercial motivation, or participation by such a library or archives in interlibrary arrangements, would come within the scope of section 108.

In summary, the Senate report says corporate libraries do not qualify for Section 108; the House report strongly suggests that a corporate library would qualify for Section 108 if the copies were made in “isolated” circumstances; and the Conference report says a corporate library would qualify for Section 108 if that library “meets the criteria in section 108(a).” Among that criteria in Section 108(a) is a requirement that “the collections of the library or archives are (i) open to the public, or (ii) available not only to researchers affiliated with the library or archives or with the institution of which it is a part, but also to other persons doing research in a specialized field.”

There are legitimate arguments that support corporate libraries’ eligibility for and disqualification from the Section 108 limitation. And given this new information, it seems like our initial assessment that corporate libraries do not qualify for the Section 108 limitation simply because “most of a corporate library’s activities are done for ‘direct or indirect commercial advantage'” was based upon analyzing a set of resources that was narrower than the additional information that has been presented in this article. We regret this error.

But this additional information neither proves conclusively that corporate libraries or libraries in for-profit institutions may use Section 108 as a copyright limitation, nor does it prove conclusively that corporate libraries may not use Section 108 as a copyright limitation. At the end of the day, it seems we have a draw. Therefore, we see no reason to change our initial conclusion that “corporate libraries probably do not qualify to use the Section 108 copyright limitation.” In reasserting our conclusion, we recognize that reasonable people can, and will continue to, disagree on this point.

As always, however, corporate libraries and libraries in for-profit institutions may use the fair use doctrine as a possible copyright limitation.

CopyCense personnel will be attending the public hearing that the Section 108 Study Group hearing is convening in Washington, DC on March 16. We hope that the Study Group discusses the applicability of Section 108 in the corporate environment.

Editor’s Note: Our original story, “Library Copying in the Digital Age,” has been updated to include this additional commentary. Further, that story’s “Resources” section has been updated to include the additional sources listed below.

See also:

K. Matthew Dames. Library Copying in the Digital Age. CopyCense. Jan. 31, 2006.

LibraryLaw Blog. Follow Up Questions and Answers for Last Week’s ALA Copyright Webcast. March 10, 2005.

James S. Heller. Copyright, Fair Use and the For-Profit Sector. Information Outlook. May 2002.

Kenneth D. Crews. Digital Libraries and the Application of Section 108 of the U.S. Copyright Act. Dec. 6, 2001.

James S. Heller. Where Have You Gone Fair Use: Document Delivery in the For-Profit Sector. Information Outlook. January 2000.

U.S. Copyright Office. Reproductions of Copyrighted Works by Educators and Librarians (Circular 21). (.pdf, 105 KB) September 1995.

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