Court Orders

But what about the concept of "fair use"? Most of us learned in school that it was okay to copy a magazine article for research purposes, as long as we weren't going to make money from it. But that was an academic setting, not business. When a newsletter or journal article actually or potentially helps your business prosper, that's commercial use.

For centuries, courts have recognized the right of authors to protect their work from being appropriated by others. The federal Copyright Act of 1976 codified both copyright law and the long-standing doctrine of "fair use," which moderates the copyright holder's rights by allowing a limited amount of material to be copyrighted under certain circumstances. These include criticism, comment, news reporting, teaching, scholarship and research. The law states that determining whether a given instance of copying is fair use involves four factors:

1. The purpose and character of the use, including whether it's for commercial or nonprofit, educational purposes

2. The nature of the copyrighted work

3. What proportion of the entire copyrighted work is duplicated

4. The effect of the use upon the potential market for or value of the copyrighted work

In the Texaco case, the company and the publisher agreed to limit the issues in the case to whether the researchers' photocopying practice was fair use. And because Texaco had nearly 500 scientists, all encouraged to copy journal articles for their files, the company and the publisher agreed to ask the court for a ruling based on the photocopying practices of one Texaco researcher, chosen at random. (This approach saved both sides from years of discovery and legal expenses.) Texaco argued that the researcher's copies were made in pursuit of scientific and scholarly research, so the practice counted as fair use.

Measuring the use of eight articles found in the researcher's files against each of the four factors, the court disagreed. The court noted the purpose of the use was not to contribute to the researcher's knowledge but to help the company develop profitable products. While the nature of the copyrighted work--fact-based scientific articles--makes it more likely to be subject to fair use than a highly creative piece, the publisher was able to show that the lost subscription and licensing revenue had significantly harmed the value of its copyright.

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This article was originally published in the January 1998 print edition of Entrepreneur with the headline: Copycats.

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