Intellectual Property Counselor, May 2006, p. 2

 

Orphan Works:

The Copyright Office Report*

 

Edward Samuels**

 

            As described by the Copyright Office, the orphan works problem is “the situation where the owner of a copyrighted work,” even after a “reasonably diligent effort,” “cannot be identified and located by someone who wishes to make use of the work in a manner that requires permission of the copyright owner” (Report, p. 1). Although it would seem obvious that the situation must arise with considerable regularity among those who seek to use copyrighted works, it has received remarkably little attention until the last few years. In the context of recent copyright battles, however, it has become a rallying point among those who attack recent expansions of the rights of copyright owners (about which, more later).

            On January 31, 2006, after a full year of study (including review of over 850 written responses to its notice of inquiry and three days of roundtable discussions) the United States Copyright Office issued its eagerly-awaited Report on Orphan Works. In seeming contrast to the comprehensiveness of the report (270 pages with appendices, 127 without), the statutory recommendation is refreshingly succinct: a proposed one-page amendment to add a limitation of remedies to the copyright act. The proposal, if enacted, would protect a user of a copyrighted work who, after a reasonably diligent search, is unable to locate the owner. The protection would be against liability for most forms of monetary relief, and in many cases against injunctive relief.

            Make no mistake about it: the seemingly modest proposal represents a sea change in the field of copyright law. It would make even Benjamin Cardozo proud: he was a master at concealing major social changes within the rubric of what appeared to be incremental adjustments in the existing law (in his case, the common law).  

            In this article, I will describe the Copyright Office Report and recommendations in some detail, touching upon some of the anticipated criticisms of it. I then will consider the Report in the broader context of copyright law generally.

 

I. The Copyright Office Report

 

            The full text of the Report is available for download from the Copyright Office website, http://www.copyright.gov/orphan. It’s a remarkably easy and fun read. In contrast to some of the recent technological and constitutional copyright battles, such as those over the Digital Millennium Copyright Act, any of the compulsory licenses, or the constitutional issues raised in Eldred v. Ashcroft, 537 U.S. 186 (2003) (attacking the constitutionality of extending the term of copyright to life plus 70 years), the orphan works debate is founded primarily upon common-sense concerns. For those who don’t want to read the full report, the executive summary, at pages 1-14, and the conclusions and recommendations, at pages 92-126, give a better overview than any third-party description is likely to provide. The proposed amendment, at page 127, is indispensable reading.

           

[p. 3] A. The Goals of the Orphan Works Proposal

 

            Before looking at the specifics of the Orphan Works Report, we should first consider the stated purposes of the proposal. The Report identifies “two overarching and related goals” (pp. 93-95).

 

In other words, the purpose of the system is not to encourage fruitless searches, but to make searches more productive.

           

 

In its discussion of the particular situations involving orphan works, the Copyright Office seems to assume that it will be a “rare event” for copyright owners to show up after a diligent search has failed to discover them. Whether that turns out to be the case remains to be seen.

            The Report also identifies as third and fourth considerations the continued vitality of existing exceptions and limitations to copyright generally, and efficiency in the management of a system of orphan works that is “the least burdensome on all the relevant stakeholders, such as copyright owners, users and the federal government.”

 

B. Defining Orphan Works

           

            The first conclusion of the Report is to recognize (pp. 7, 92) that “The orphan works problem is real.” Interestingly, this statement is not obvious, and it’s a major victory for recent advocates and scholars that the issue has now been officially addressed by the Copyright Office. As in so many areas of law, recognition and definition of the issue are the first steps to its resolution, and are instrumental in framing the parameters of the debate.

            Although the second formal conclusion is that “The orphan works problem is elusive to quantify and describe comprehensively” (pp. 7, 92), the Report goes a long way to do just that—quantify and describe it comprehensively. In some ways, this clarification results in a narrowing of the situations covered by the inquiry. This narrowing can be best understood by considering examples of what the Copyright Office concludes are not genuine orphan works situations.

            A copyright owner is granted exclusive rights of copyright, including rights of reproduction, distribution, the right to make derivative works, and in some cases the right to publicly perform or display. One of the traditional concomitants of exclusive rights is the right to refuse permission for others to exercise such rights, or to set licensing fees higher than the user is willing to pay. As frustrated as the user may feel, a refusal by a known copyright owner does not give rise to an orphan works situation, and there should be no requirement that the copyright owner license any particular user or be limited in the scope of remedies available to the owner. As clarified by the Copyright Office, “works whose owners are known, and situations involving those works, do not fit this definition and are not the subject of this inquiry” (p. 34). Similarly, mere difficulties in determining the copyright status of a work whose author is known are “outside the scope of this study” (p. 35).

            Once it is determined that a situation fits within the above definition of orphan works, the Copyright Office description reflects an expansive, not narrow, view of the issue. For example, the Report catalogues four specific contexts in which the orphaned works issue typically arises (pp. 36-40), and then recommends that its proposed legislation cover all such categories. The categories are (1) uses by “subsequent creators” who create new, presumably derivative or collective, copyrighted works; (2) large-scale access users, typically libraries or other non-profit institutions that are in the business of facilitating access to works generally; (3) “enthusiast” users, such as hobbyists or experts in a particular field, wishing to share a work with fellow [p. 4] enthusiasts; and (4) private users, such as family members who want to reproduce a family photograph or other copyrighted work for personal use or for a limited social group.

            The Copyright Office position is that it makes no difference which of these categories an orphan work falls into, or whether it falls within any of the categories at all; its recommendations should apply to all of the identified categories. This sounds very much like the clause in section 107, applying fair use to “purposes such as . . .” those enumerated, which is to be read (according to the definition of “including” and “such as” contained in section 101) as “illustrative,” not “limitative.” Why go to the trouble to delineate the categories at all? By concluding that its proposal covers all such categories, the Report highlights precisely how broad its own proposal is, broader than some of the other proposals discussed in the Report that would grant different degrees of protection to the different categories of works.

 

C. The Copyright Office Proposal

 

            The third formal conclusion of the report is that several existing principles of copyright law already protect narrowly defined users in contexts that may overlap with the policies for protecting users of orphan works (pp. 44-52). These special provisions include section 108(h), granting libraries the right to duplicate works that are in their final twenty years of copyright, if copies are not otherwise available for a reasonable price; section 115(b), granting performers of musical works the right to a compulsory license at a statutory fee (giving special dispensation if the owner is unable to locate the copyright owner); section 504(c)(2), limiting copyright liability for certain nonprofit users who have a reasonable belief that their use constitutes a fair use; and various protections for users against termination of transfers under sections 203 and 304.

            The Report also identifies several general principles of copyright law that protect users of works in ways that might overlap some of the orphan works considerations, or generally promote principles that are similar to those embodied in the orphan works situations (pp. 52-59). These include the idea/expression dichotomy (embodied in section 102(b)), fair use (section 107), and various other exemptions and limitations to copyright.

            Nevertheless, the fourth conclusion is that these other limitations don’t adequately protect users of orphan works, and that “legislation is necessary to provide a meaningful solution to the orphan works problem as we know it today” (pp. 7, 93).

            At pages 96 through 122, the Report walks through the specific elements of its statutory proposal. The issues divide into an analysis of what it takes to qualify for orphan works treatment, and what such treatment gets for the users of such works.

 

            1. Qualification for Orphan Works Treatment

           

            Subsection (a) of the proposed section 514 sets forth what a user will have to do in order to qualify for its protection. The basic requirement is that the user “did not locate” the owner after performing a “good faith, reasonably diligent search.” None of the basic terms is defined. While the lack of definitions might be viewed as a shortcoming of the proposal, it was a conscious decision of the Copyright Office to keep the statutory language to a minimum. Like the codification of fair use in section 107 in 1976, it is anticipated that the courts and various industries will have maximum flexibility to adapt the concepts to changing technology and circumstances. While section 514 is not, like section 107, a codification of prior law, most of the basic concepts, such as good faith and reasonableness, appear elsewhere in this and other statutes, and are the types of issues that courts typically deal with on a regular basis.

            Perhaps what is most telling about the proposal is what is left out. The Report discusses several suggestions (pp. 71-83) that emerged during the responses to the notice of inquiry and during the roundtable discussions. These included such mechanisms as establishing formal lists of required searches, such as particular Internet search engines, collective rights management organizations’ databases, or the records of the Copyright Office; maintaining an owner registry; or creating a user registry. The suggestions included lists of factors that might be weighed in the determination of reasonableness, either formally set forth in a statute or developed independently as trade guidelines. These included considerations of the age of the work; the nature of the work as published or unpublished; foreign works; and the amount of identifying information on the copy of the work. It was suggested that the nature of the use or user [p. 5] be specifically relevant, such as non-profit, educational, library, or archive users; states; or cultural and other non-commercial uses. Some proposals included the payment of a user fee, or other mechanisms to assure that payment could be made if the copyright owner showed up.

            The Copyright Office rejected all of these more rigorous attempts to pin down or limit the criteria for eligibility of orphan works treatment. The decision was intentional, to leave the orphan works doctrine as a flexible doctrine that can change with the times. Orphan works treatment should be available for all works, even unpublished works, and even foreign works. The Copyright Office specifically rejected the notion that it should develop rules pursuant to rulemaking authority (p. 109), and endorsed the notion that various concerned parties discuss and develop guidelines that may be helpful within their industries. “Participants in the various sectors would be free to develop their own voluntary guidelines for reasonable searches. Ideally these would be collaborative between user and owner groups, but they could also be separate endeavors” (p. 110).

            One specific factor that the Copyright Office did incorporate into its proposal was a requirement that the user “provide attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances.” The Report gives various reasons for such a requirement, including its effect in facilitating contact between the user and owner. Most legitimate users would presumably not object to disclosing the extent to which they have used the creative work of another, and should be encouraged to share the information that they were able to glean even from an ultimately unsuccessful search. The Report cites statistics (p. 111) indicating that the vast majority of copyright owners, even when they give permission to use their works without charge, condition such use upon attribution, so it is only fitting that the “default” situation result in a similar outcome. The Report doesn’t mention it, but the implicit recognition of the moral right of attribution in this context should assure some critics that the United States is sensitive to its moral rights obligations under Berne and the other international agreements.

 

            2. The Limitations on Remedies

 

            The proposed amendment is presented as section 514, “Limitations on Remedies: Orphan Works.” The placement of the provision in the remedies section of the statute is intentional. By “amending the remedies provision of the Copyright Act, the recommendation makes clear that it is not an exemption or limitation of general applicability, but a limitation on the remedies that might be imposed in particular circumstances with respect to a particular user” (p. 96). By limiting the recommendation to remedies, rather than altering substantive rights, the Copyright Office is trying to steer clear of any violations of international treaty obligations, particularly the Berne Convention, TRIPS, and the recent treaties negotiated under WIPO auspices (pp. 59-68).

            In subsection (b), the limitation covers two different aspects of copyright liability. Subsection (1), “Monetary Relief,” provides that “no award for monetary damages (including actual damages, statutory damages, costs or attorney’s fees) shall be made other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work.” If the use is “without any purpose of direct or indirect commercial advantage,” then “no award of monetary relief shall be made.”

            Subsection (2), “Injunctive Relief,” would bar injunctive relief when the user makes a derivative work based upon the orphan work, so long as the user pays a reasonable compensation as provided in the previous subsection. Thus, similar to other sections of the copyright act that protect derivative works creators from the exercise of termination rights under sections 203 and 304, the user would be allowed to continue “preparation and use of the derivative work.” Injunctive relief would continue to be available against users who merely reproduce a work, rather than using it to create a derivative work; but “the relief shall to the extent practicable account for any harm that the relief would cause the infringer due to the infringer’s reliance on this section in making the infringing use.”

            There are doubtless many legal pitfalls lurking in these provisions. The proposal is obviously a compromise, to balance the interests of copyright owners against those of users of orphan works, by limiting the remedy to what presumably would have resulted if the parties had actually met and negotiated a reasonable licensing fee. Undoubtedly, each side in the debate will to some extent [p. 6] be pleased, and to some extent be upset. On the one hand, users of orphan works have argued that potentially large costs, or any possibility of injunctive relief, will forever block the use of orphan works, undermining the whole point of the orphan works amendment. On the other hand, many copyright owners have argued that, without the leverage of potentially large recoveries, or of injunctive relief, it is unlikely that any copyright owner will be able to mount much of a case against an orphan works user. Where is the leverage to induce the payment of even reasonable compensation?

            Subsection (c) clarifies that “Nothing in this section shall affect rights, limitations or defenses to copyright infringement, including fair use, under this title.”

            Subsection (d) is a sunset clause, providing that “This section shall not apply to any infringement occurring after the date that is ten years from date of enactment of this Act.” At one of the early presentations on the Report, to a meeting of the New York chapter of the Copyright Society, Jule Sigall, the principal drafter of the Report, conceded that the sunset provision may not have been as clear as was intended. According to Sigall, any immunity granted to the user of an orphan work will of course have to continue beyond the ten year period, or else the whole purpose of the limitation would be defeated. But no new undertakings would be protected after the ten year period, unless Congress actively voted to continue the orphan works provision.

            In the final section of the Report (pp. 122-26), the Copyright Office “applies” the recommendation to the four major orphan works categories it earlier identified. Not surprisingly, it concludes that the proposal succeeds in achieving the goals set out in the Report.

 

II. The Orphan Works Issue in the Broader Copyright Context

 

A. The Orphan Works Issue as a Response to Changing Copyright Law

 

            The Report characterizes the orphan works issue as, “in some respects, a result of the omnibus revision to the U.S. copyright law in the Copyright Act of 1976” (p. 41). In that Act and subsequent amendments (particularly the Berne Implementation Act of 1988), Congress has swung the copyright pendulum to favor copyright owners over users by eliminating the copyright formalities that previously tripped up many a copyright claimant.

            The prerequisites, first eased in the 1976 Act, and then eliminated as prerequisites in the 1988 amendment, were notice, registration, and renewal. Since these formalities required positive action by copyright owners, they tended to eliminate from the copyright realm as many as 85 to 90% of created works. And since the very acts of notice, registration and renewal provided at least some public record of copyright claimants, users were more often than not able to locate copyright owners if they wanted to obtain permission to use the works. In short, orphan works were not a particular problem under the earlier U.S. copyright law.

            Although the purpose of the 1976 Act and the subsequent liberalizing amendments was to protect creators against inadvertently losing rights in their works, I doubt that this concern alone would ever have led the United States to drop the system of formalities. What tipped the scale was that the rest of the world had discarded all such formalities, and the leading international copyright treaty, the Berne Convention, required that member nations abandon formalities as prerequisites to copyright. Thus, in order to join the international copyright community, the United States was pretty well forced to make the change, begun in the 1976 Act and completed with the Berne Implementation Act of 1988.

            At the same time, there have been other copyright developments that have exacerbated the orphan works problem. By extending the term of copyright from fifty-six years from the date of publication (in the prior act of 1909), to life of the author plus fifty years (in the 1976 Act), then to life of the author plus seventy years (in the Copyright Term Extension Act of 1998), works received automatic protection for a longer and longer time, drastically diminishing the number of works going into the public domain under the prior law. The lengthening terms of copyright for subsisting works (75 years and 95 years) effectively means that works have not gone into the public domain as a result of expiration of copyright since 1923.

            These procedural developments come on top of earlier expansions of remedies in the sphere of copyright. [p. 7] Remedies range from recovery of profits lost by a copyright owner as a result of infringement, to profits made by a copyright infringer, to “statutory damages” available to a copyright owner even without proof of damage, to injunctive relief (granted in a surprisingly large number of cases), even to destruction of infringing works in some cases. In addition, copyright owners are entitled to recover attorneys’ fees, which can be substantial (although plaintiffs do take the risk that a court may instead grant attorneys’ fees to a winning defendant in a copyright action).

            The risk of a copyright infringement suit and the wide range of potential exposure to liability has led to a situation in which well-advised copyright users will forego use of works rather than take the chance of losing a lawsuit.

 

B. The Orphan Works Issue as Part of the Anti-Copyright Agenda

 

            The entire philosophy of copyright, as embodied in the copyright clause of the Constitution, is to encourage the creation of works by granting authors certain exclusive rights in their works. It is from these exclusive rights that authors are able to generate income, either by charging fees for permission to use their works, or by selling the exclusive rights to others who will be in a position to exploit the works for economic gain. As with most systems that depend upon private ownership to promote public good, the copyright system presumes that there will be negotiations between copyright owners and copyright users, based upon an open market.

            Ironically, the recent strengthening of the copyright owners’ rights has occurred at the same time as new technologies—from home audio and tape recorders to photocopiers to scanners to computers to the Internet—have tremendously expanded the ability of users to reproduce, distribute, perform, display, and alter copyrighted works. The Internet, in particular, now promises to make available more works to more users, in more powerful ways, than any technology since the invention of the modern printing press.

            In this new environment, copyright scholarship has taken a direction interestingly counter to the recent trend. Back in the days when the obstacles to copyright owners were great, the majority of academic articles, it seemed, argued in favor of an expansion of protection. Now that the pendulum has shifted so far in favor of copyright owners, the academic community seems to have jumped to the other side. The vast majority of legal writings in the field have taken a decidedly anti-copyright tone. The more reasonable members of this community are not against the existence of copyright, but vehemently oppose the tremendous expansion of rights that they claim has swung too far in favor of copyright owners, and against what they perceive as the public interest.

            Putting their academics to work, many scholars have filed amicus briefs in major copyright cases, generally arguing against too large an expansion of copyright. One recent example was the Eldred v. Ashcroft case, 537 U.S. 186 (2003), in which Prof. Lawrence Lessig and a large number of his colleagues argued that the expansion of the copyright term from life plus fifty to life plus seventy years was unconstitutional.

            Copyright has become highly controversial, with the sides no more likely to compromise than are pro-abortion and anti-abortion advocates. Companies highly invested in the intellectual property industries look on with horror as the younger generation blatantly proceeds to “Rip. Mix. Burn.” (as advocated in a recent Apple ad campaign)—or infringe (as the companies see it). At the same time, the younger generation of MP3 users can’t figure out why the established companies don’t “get it,” that their business models are dead, and adopt a new system more friendly to the users of creative works.

            The orphan works issue may present a rare opportunity for the pro- and anti-copyright forces to unite, to reestablish the balance that may have been lost in recent years between the interests of copyright owners and copyright users. Unlike some of the other issues raised by the anti-copyright advocates, the orphan works argument seems to have hit a responsive chord, even within the traditional copyright community. Judging by some of the testimony presented at the roundtable discussions, and by some of the early responses to the Report (for example, the response at a recent meeting of the New York chapter of the Copyright Society, usually about as pro-copyright an audience as one could find), there is a remarkable consensus that the orphan works issue is real, and that it warrants a measured response, [p. 8] much along the lines recommended by the Copyright Office in its Report.

 

C. The Road Ahead

 

            As concluded by the Copyright Office, the orphan works issue is real, and it deserves attention. Even if you are a pro-copyright advocate, I would argue that it is the better part of valor to recognize the legitimacy of the concerns, and support a reasonable attempt to deal with the problem. In the battleground of the copyright wars, winner-take-all solutions only lead to further conflict. What is needed are solutions that resolve individual problems as they arise, without having the copyright owner forfeit the copyright, or the copyright user forego all further use.

            The Copyright Office Report and proposal represents a reasonable compromise, modeled on the fair use approach, couched in general terms, relying upon the parties, the courts, and the concerned trade associations to develop further guidelines for use in the particular industries. I sincerely hope that this approach can lead to an early adoption of the legislative solution proposed in the Report.

            The Copyright Office Report is not the law, and there’s plenty of opportunity to derail the proposal as it works its way through the Congressional gristmill. I need mention only one example as a cautionary tale. The World Intellectual Property Organization adopted two treaties in 1996, calling for “legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty,” and for protection of “Rights Management Information.” The treaties dealt with the issue in general terms, embodying their protections in about a page of text. By the time Congress had passed what became the Digital Millennium Copyright Act of 1998, the definitions, clarifications, exclusions, exclusions to exclusions, and regulatory details went on for dozens of pages, nearly unintelligible to the uninitiated. Hardly anyone has been satisfied with the result.

            Although the Copyright Office Report does consider some of the international implications of its proposal, the international analysis is perhaps its weakest component. It was the copyright amendments adopted by Congress in the 1970s and 1990s, largely in response to international copyright concerns, that led to the expansion of rights that arguably got us into the orphan works dilemma in the first place. By characterizing its proposal as one ostensibly governing “remedies,” it attempts to duck the tough international questions about whether the limitation it proposes is consistent with the letter or the spirit of Berne and other recent international agreements. Some critics argue that it is quixotic to think that any “immunities” or limitations of remedy granted in one country could provide enough assurance in an international marketplace to achieve the goals of the orphan works proposal. On the other hand, we can’t dictate international law. The Copyright Office approach seems to be, let’s develop a workable solution. If the United States succeeds, we might very well establish a model that the rest of the world can follow.

            Despite the Copyright Office’s characterization of its proposal as a modest one, it indeed represents a sea change in the perception of copyright, every bit as significant as the sea change that resulted from the elimination of copyright formalities in the first place. It is entirely possible that the copyright industries will be so afraid of any changes that they either kill the proposal, or, more likely, amend it to death. My advice to the industries: cooperate in the adoption of the balanced Copyright Office proposal. Jump to the front of the parade, and embrace it as a reasonable compromise that will ultimately make copyright a stronger system, more deserving of the respect of a new generation of copyright users. Let’s embrace what appears to be a rare opportunity to build a reasonable middle ground in the copyright wars. •



*  Copyright 2006, Edward Samuels. All rights reserved. Reprinted with permission.

** Edward Samuels is an Intellectual Property Consultant in New York. He is the author of The Illustrated Story of Copyright (St. Martin's Press 2000). For more information, please visit his Web site at <www.edwardsamuels.com>.

 

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