U.S. Courts Restrict Rights to Photocopy Anthologies Summary

  • Last updated on November 10, 2022

The court ruling in the case of Basic Books, Inc. v. Kinko’s Graphics Corp. greatly restricted the commercial creation of photocopied “course packs” by requiring copy shops to obtain permissions in advance.

Summary of Event

Kinko’s Graphics Corporation Kinko’s Graphics Corporation[Kinkos Graphics Corporation] (later FedEx Kinko’s) operates photocopy shops, customarily situated near colleges and universities, around the United States. In the 1980’s, Kinko’s started a service it called “Professor Publishing” in which it assembled custom-made anthologies by photocopying preexisting materials, usually excerpts from books. These anthologies were created at the request of professors and sold to professors’ students as supplements to, and sometimes in place of, other course materials. Basic Books, Inc. v. Kinko’s Graphics Corp. (1991) Copyright law, U.S. [kw]U.S. Courts Restrict Rights to Photocopy Anthologies (Mar. 28, 1991) [kw]Courts Restrict Rights to Photocopy Anthologies, U.S. (Mar. 28, 1991) [kw]Rights to Photocopy Anthologies, U.S. Courts Restrict (Mar. 28, 1991) [kw]Photocopy Anthologies, U.S. Courts Restrict Rights to (Mar. 28, 1991) [kw]Anthologies, U.S. Courts Restrict Rights to Photocopy (Mar. 28, 1991) Basic Books, Inc. v. Kinko’s Graphics Corp. (1991) Copyright law, U.S. [g]North America;Mar. 28, 1991: U.S. Courts Restrict Rights to Photocopy Anthologies[08060] [g]United States;Mar. 28, 1991: U.S. Courts Restrict Rights to Photocopy Anthologies[08060] [c]Laws, acts, and legal history;Mar. 28, 1991: U.S. Courts Restrict Rights to Photocopy Anthologies[08060] [c]Publishing and journalism;Mar. 28, 1991: U.S. Courts Restrict Rights to Photocopy Anthologies[08060] [c]Trade and commerce;Mar. 28, 1991: U.S. Courts Restrict Rights to Photocopy Anthologies[08060] Motley, Constance Baker Koenig, Kurt Risher, Carol

Kinko’s profited handsomely from this endeavor, in part because the company often neglected to obtain, or even seek, permission from copyright holders to copy the published material that went into its course packs. In May, 1989, some of these copyright holders sued Kinko’s in federal court for copyright violation, claiming that the photocopy chain had illegally reproduced “substantial portions” of their works. The efforts of these plaintiffs, eight publishing houses, were orchestrated by the Association of American Publishers. Association of American Publishers Their suit was aimed at two New York City Kinko’s stores, one serving professors and students at Columbia University and the other serving those at New York University and the New School for Social Research.

The case was decided by Judge Constance Baker Motley, who ruled against Kinko’s on March 28, 1991, in the U.S. Federal Court for the Southern District of New York. Finding for the publishers, Judge Motley ruled that Kinko’s was guilty of copyright infringement and ordered the chain to pay $510,000 in damages in addition to the publishers’ legal fees. She also prohibited Kinko’s from selling copies of any copyrighted material—including that from nonexistent works that, on creation, would automatically be covered by copyright—without first obtaining permissions from the copyright holders and paying any required royalties.

Judge Motley rejected the defense offered by Kinko’s that its practice of producing customized course anthologies was protected by the doctrine of fair use. Fair use doctrine Fair use is an exception to the limited monopoly granted to copyright holders, authorizing reproduction, within limits, of copyrighted works without permission for such purposes as criticism, research, and teaching. Judge Motley distinguished for-profit copy shops from nonprofit educational institutions, saying that photocopied course packs do not become educational until they are in students’ hands. In the hands of copy shop operators, she said, the purpose of such anthologies is clearly commercial.

In her written opinion, Judge Motley refused to state unequivocally that the act of compiling course packs without prior permission from copyright holders is per se illegal. In the opinion, she referred frequently to the “Agreement on Guidelines in Not-for-Profit Educational Institutions,” part of the legislative history of the Copyright Act of 1976, Copyright Act (1976) which first codified the fair use doctrine. That act, together with advances in photocopying technology, arguably gave rise to parallel publishing industries such as Kinko’s. The classroom guidelines clearly state that copying shall not be used to create or to replace or substitute for anthologies, compilations, or collective works. In addition, copying shall not substitute for the purchase of books, publishers’ reprints, or periodicals. Finally, no charge was to be made to students beyond the actual cost of photocopying.

Judge Motley’s opinion indicated that although Kinko’s violated these mandates, other assemblers of photocopied customized anthologies might be able to survive a fair use analysis balancing the interests of copyright users against those of copyright holders. The difficulty with this loophole is that although the 1976 Copyright Act codifies fair use, it does not define the doctrine, which was evolved through the accretion of generations of judicial decisions, each of them weighing different sets of facts. Section 107 of the 1976 Copyright Act, devoted to fair use, provides only a list of nonexclusive factors to be balanced in reaching a determination of whether a secondary use of copyrighted material is permissible. These factors include the purpose and character of the use (such as whether the use is of a commercial nature or is for nonprofit educational purposes), the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use on the potential market for or value of the copyrighted work.

Judge Motley devoted five and one-half pages of her opinion to analyses of these and other factors. Few copy shops can devote the time and resources needed to make such refined analyses with regard to each of the copyrighted works they use. As the judge herself acknowledged, the anthology form of the course packs militates against a finding of fair use, in that it implies a period of planning that could also accommodate the process of seeking permissions.

Judge Motley found that only one of the fair use factors, the nature of the copyrighted work, weighed in favor of Kinko’s. The books infringed in the suit were factual in nature, and the scope of fair use is greater with regard to factual works. With regard to other factors, however, the judge’s opinion was damning. Not only was the use of copyrighted materials by Kinko’s unquestionably commercial, the chain made no transformative use of—no changes to—the materials it copied. Kinko’s also copied substantial portions of the copyrighted works, almost always entire chapters meant to stand alone as complete representations of the concepts they explored. This extensive unauthorized copying clearly diminished the market for the works excerpted in the course packs.

The effect of the copying was especially detrimental to out-of-print works. Judge Motley rejected the argument that as these books were no longer available, there was no market for them, finding instead that the damage to out-of-print works was pronounced precisely because permissions fees might provide the only income for the holders of copyrights for these works.

Finally, Judge Motley discarded the “fair use by reason by necessity” argument offered by Kinko’s—that is, the argument that following permissions procedures would inhibit the educational process. Although the costliness of texts and rapid changes in course subject matter were good rationales for the use of customized course anthologies, Kinko’s was unable to produce even one witness who could testify that he or she would be unable to teach effectively if Kinko’s had to seek and pay for permissions in order to produce class packets.

Significance

Kinko’s first reacted to the decision against it by initiating a program called “Partners in Education,” which was intended to permit the continuation of its course-pack business by providing a more efficient method of clearing permissions. “Partners in Education” was, however, dependent on publishers’ willingness to sign blanket permissions agreements that would allow Kinko’s to reproduce their works at will. Understandably, publishers balked at granting such open-ended licenses, and they were supported by the stance of the American Association of Publishers, which insisted that its members need to protect their right to object to copying.

Ultimately, Kinko’s announced that it was discontinuing its course-pack service, choosing instead to focus on the needs of the commercial nonacademic market, such as photo and document transfer and electronic publishing services. The continuing demand for customized course anthologies did not, however, go unmet. The decision in Basic Books v. Kinko’s essentially deprived commercial copy shops of the fair use exemption, and many such operations ceased after 1991. Meanwhile, however, increasing numbers of campus bookstores—seeking to take advantage of the loophole left open by Judge Motley—stepped up their own course-pack services, and some have reportedly been highly lucrative. In addition, publishers themselves became involved in the business of creating their own customized anthologies.

An underground market for course packs also developed. The Copyright Clearance Center, Copyright Clearance Center which acts as the agent for numerous publishers in processing permissions requests, has estimated that 60 percent of the course packs produced commercially do not conform to the requirements set out in Judge Motley’s decision. Some professors get around the Kinko’s ruling by handing out a limited number of master copies of course anthologies to students, who then copy them on their own. In another variation on this technique, professors place course materials on reserve in college libraries, resulting in increased profits to companies licensing copying machines to such institutions. In all such cases, publishers never see the permissions fees to which they are legally entitled.

Basic Books v. Kinko’s was the first case involving the relationship between education and electronic copying to go to trial since the new copyright law went into effect in January, 1978, but it was not the first case brought. In 1983, New York University settled a similar copyright infringement case out of court. It appears that even the decision in Kinko’s, however, did not put an end to such litigation. In 1993, three publishers filed suit in U.S. district court in Michigan against James M. Smith, Smith, James M. owner of Michigan Document Services, Michigan Document Services which operated five photocopying stores that produced course packs. After concluding that the permissions process was too expensive and cumbersome and that royalty rates were too high, Smith began charging an arbitrary royalty fee of one cent per page and forwarding those payments to publishers.

Smith’s tactics point up some of the difficulties that developed in the wake of Basic Books v. Kinko’s. One of the case’s primary effects was to increase the number of permissions requests dramatically, to the point where some publishers became so inundated that they were unable to process requests in a timely fashion. In addition, the costs of processing such requests sometimes outstripped publishers’ royalty revenues. As a result, many publishers signed on with the Copyright Clearance Center, which established an Academic Permissions Service to cope with the profusion of requests created by the Kinko’s decision.

In an effort to alleviate the permissions bottleneck, which persisted both at individual publishing houses and at the Copyright Clearance Center, some copyright users turned to computer technology. Xerox Corporation began work on a system called Docutech, which would hold textbooks and other materials in electronic memory until an individual student ordered a customized course pack. PUBNET Permissions, PUBNET Permissions an electronic copyright request system, became available to college bookstores in September, 1991.

Systems such as PUBNET are designed to make the permissions process not only faster but also cheaper. Royalty rates directly charged by publishers can vary widely, from nothing to exorbitant amounts per page. Rates charged by the Copyright Clearance Center can be even higher, because the center charges copyright holders a percentage of all the payments it collects, in addition to registration and annual fees. Kurt Koenig, vice president and general counsel for Kinko’s, suggested that a licensing arrangement similar to that employed by the American Society of Composers, Authors, and Publishers (ASCAP) might provide a salutary alternative to the high administrative costs charged by the Copyright Clearance Center.

Regardless of the development of new alternatives, the need for affordable, flexible-format course packs remains, prompting both producers and consumers of these products to agitate for changes in the copyright laws. According to course-pack advocates, these changes should acknowledge the special nature of these products and permit the repeated use of copyrighted materials in customized class anthologies in exchange for reasonable royalties. In addition, they should eliminate the need for judicial determination of what constitutes fair use. As numerous commentators have pointed out, technological developments in such areas as electronic publishing have only intensified the need for rules that clearly designate the use of copyrighted materials as educational throughout the process of producing course packs. Basic Books, Inc. v. Kinko’s Graphics Corp. (1991) Copyright law, U.S.

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Crews, Kenneth D. “Federal Court’s Ruling Against Photocopying Chain Will Not Destroy ’Fair Use.’” Chronicle of Higher Education 37 (April 17, 1991): A48. Analyzes Judge Motley’s opinion and argues that it allows fair use to continue to exist in academic environments. Also makes the case that the ruling may stimulate innovation in academic text delivery.
  • citation-type="booksimple"

    xlink:type="simple">Kozak, Ellen M. Every Writer’s Guide to Copyright and Publishing Law. 3d ed. New York: Henry Holt, 2004. Handbook designed for writers provides clear background information on U.S. copyright law and revisions in the law over time. Includes index.
  • citation-type="booksimple"

    xlink:type="simple">Magner, Denise K. “Copy Shops, Publishers Still Seek Common Ground on Permissions Process.” Chronicle of Higher Education 39 (June 16, 1993): A15-A16. Details the lawsuit against James M. Smith as well as other reactions to and difficulties associated with the Kinko’s decision.
  • citation-type="booksimple"

    xlink:type="simple">Orfalea, Paul, and Ann Marsh. Copy This! Lessons from a Hyperactive Dyslexic Who Turned a Bright Idea into One of America’s Best Companies. New York: Workman, 2005. Kinko’s founder Orfalea mixes memoir with business advice in this interesting work. Includes some discussion of the copyright-related lawsuits faced by the company.
  • citation-type="booksimple"

    xlink:type="simple">Reid, Calvin. “Kinko’s Solicits Publishers to Sign Blanket Agreements for Copying.” Publishers Weekly 238 (May 17, 1991): 8-9. Explores Kinko’s reactions in the marketplace to the ramifications of the decision against the copying company.
  • citation-type="booksimple"

    xlink:type="simple">Reuter, Madalynne. “Judge Rules Kinko’s Infringes Copyrights.” Publishers Weekly 238 (April 12, 1991): 10. Brief but well-written news item sets forth the facts of the case with clarity.
  • citation-type="booksimple"

    xlink:type="simple">Strong, William S. The Copyright Book: A Practical Guide. 4th ed. Cambridge, Mass.: MIT Press, 1998. Provides a straightforward presentation of the rights and responsibilities connected with copyright law, addressed to the average citizen. In addition to being revised every few years (this is the third update of the fourth edition), the work is supplemented more frequently by unbound updates.
  • citation-type="booksimple"

    xlink:type="simple">Tackett, Raymond. “Copyright Law Needs to Include ’Fair Use’ for Course Materials.” Chronicle of Higher Education 38 (February 12, 1992): B3-B40. Opinion piece chronicles the author’s difficulties in obtaining permissions in the wake of the Kinko’s decision and argues for modification of the definition of fair use to accommodate the need for course packets.
  • citation-type="booksimple"

    xlink:type="simple">Turner, Judith Axler. “Eight Publishers Charge Copyright Violation, Sue Copying Chain.” Chronicle of Higher Education 35 (May 3, 1989): A1, A21. Early story lays out the initial positions of the antagonists in the case.

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