The latest round of a potentially high-impact case in the ongoing saga of copyright has gone in favor of authors as copyright holders. On October 13, Judge Fern M. Smith of the United States District Court for the Northern District of California issued an order granting summary adjudication in favor of the plaintiffs in Joan Ryan et al. v. CARL Corporation et al. (C97-3873).
The class action suit contended that CARL Corporation, a subsidiary of The Dialog Corporation (Knight-Ridder Information, Inc. at the time of the initial complaint), violated authors' copyrights when it made copyright payments to publishers instead of authors for material where the authors held the copyright. If the ruling holds through the appellate process, the decision could not only endanger service from commercial document delivery houses, but also interlibrary loan and perhaps full-text online delivery as well, according to some observers. OCLC, for example, just announced its 85 millionth interlibrary loan transaction.
The initial complaint filed on October 22, 1997, (http://www.jmls.edu/cyber/cases/carl1.html) opened a class action complaint for copyright infringement by five freelance authors against CARL. The complaint Joan Ryan, Jim Tunney, Arlie Russell Hochschild, Lyn Hejinian, and Ronald Silliman v. CARL Corporation, its subsidiary The UnCover Company, and Knight-Ridder Information, Inc. seeks "damages, injunctive relief and restitution. Specifically, Plaintiffs seek compensatory and statutory damages ... [and] an injunction from this Court that bars the Defendants from continuing to offer for sale, to copy, and to sell Plaintiffs' copyrighted works without permission or authorization. ..." All the authors had done freelance work for publishers, but registered copyright for their individual works. Most of the work cited consists of excerpts from books re-published in magazines. The authors contend that CARL "knew, or reasonably should have known, that the magazines and journal publishers did not have the right or authorization to grant Defendants the right to copy and sell the contributing authors' works through its delivery services."
The plaintiffs want the defendants "preliminarily and permanently enjoined from offering for sale, copying, or selling any copyrighted works in connection with the Defendants' data base and article delivery services known as UNCOVER, UNCOVER EXPRESS, or any other similar services owned or operated by Defendants, without the express written permission or authorization of the copyright owners in and to each and every copyrighted work."
One point of interest is that the complaint did not cite Knight-Ridder Corporation, the deep-pockets parent of Knight-Ridder Information, Inc., at the time of filing. We confirmed with the house counsel for The Dialog Corporation that the new company has assumed the role of Knight-Ridder Information, Inc. as a named defendant in the case. Apparently liabilities go along with assets in the acquisition process.
Another point of interest, even though the case now goes into the law books as Ryan or Joan Ryan v. CARL Corporation, is that on June 15, 1998, the court granted the defendants' motion to dismiss plaintiff Joan Ryan on the ground that she did not possess the grant of copyright at the time of filing, a status that the Copyright Act requires for filing suit.
The Judge's Decision
Judge Smith considered the legal dispute in this case to turn on the meaning of the words "as part" in Section 201(c) of the Copyright Act: "Unless the parties have contracted otherwise, ‘the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series' 17 U.S.C. 201(c)." In determining the meaning of the statutory language, Judge Smith found that "although rational arguments can be made for each interpretation, plaintiffs' reading of the statute better accounts for what appears to be the intent. ... Both the language and the legislative history of section 201(c) suggest that when in doubt, courts should construe the rights of publishers narrowly rather than broadly in relation to those of authors. The statute expressly states that the holder of the copyright in the collective work is presumed ‘only' the enumerated rights."
In defense of this portion of the decision, Judge Smith cited the recent Tasini v. New York Times Co. case (http://www.jmls.edu/cyber/cases/tasini1.html), which authors lost to publishers pending appeal. In general, however, the court found Tasini "instructive but not determinative. In Tasini, authors sought compensation for the inclusion in electronic databases of their contributions to collected works. The court, relying on the ‘revision' privilege of section 201(c), determined that the publishers had the right to include the entire collected works in the databases without obtaining permission from or compensating the authors. In finding that the conversion to an electronic format was a permissible revision, the court emphasized that the publishers' selection of the articles remained, even if particular arrangement and formatting was lost. ... No reasonable argument can be made that defendants in this case are ‘revising' their collected works when they photocopy individual articles. It is true that the layout, images, and any other arrangement value added by the publishers is retained. Calling the reproduction of a single article a ‘revision' of a collected work, however, is more strained than even a flexible interpretation can withstand."
The Court recognized the trouble this decision could cause: "From the standpoint of societal efficiency, it makes more sense to allocate the right of reproduction to publishers, because publishers are easier to locate. Defendants are correct that academic use of articles will be made more difficult by the adoption of plaintiffs' construction, which will require obtaining permission from both the publisher and the author." However, trouble or not, the "Court, however, is not free to construe statutes in the manner most efficient. Instead, it must follow the intent of Congress as expressed in the terms of the statute. In this case, that compels adoption of plaintiffs' construction of section 201(c)."
The court agreed that after CARL/UnCover heard about the filing of this lawsuit, the company "immediately attempted to block plaintiffs' articles from further delivery." Nevertheless, by disregarding warnings that the article was blocked, the plaintiffs succeeded in getting copies out of CARL a few days after the filing, a month later, and even 5 months later.
The court found that the plaintiffs had standing and supported the class action claim: "Given that UnCover delivers 1,000 articles a day and pays no royalties to authors, many putative class members will have standing."
The court agreed with CARL Corporation that the company needed more time to conduct further discovery to support its second affirmative defense, contending that the authors may have granted authority to the publishers with whom CARL dealt. "Further discovery would be needed to determine whether plaintiffs had transferred licenses to publishers, who then lawfully transferred them to defendants."
What Does It Mean?
If upheld, this case would seem to mean that document delivery operations could not rely on permissions from publishers to transfer rights; they would have to ask both publishers and authors. CARL's UnCover database covers over 17,000 journals from thousands of publishers, but the task of acquiring permissions from that range of concerns pales before the task of pursuing individual authors for the over 8 million articles in the database, with 5,000 more pouring in each day.
We interviewed Ward Shaw, chairman and CEO of the CARL Corporation, about the effect of the case. He considered it a very difficult ruling, to put it mildly. In a rather plaintive aside, Shaw wondered why authors should choose to pick on CARL as a target, one of the few document delivery services that has made a public effort to pay authors through the National Writers Union author registry. Daniel Reidy, one of the attorneys for the plaintiffs, regarded this move as merely an attempt by CARL to ward off bad publicity.
Shaw recognized that most publishers do not make a general practice of getting specific or explicit transfer of rights from authors. "The net effect of the ruling would be to substantially limit the control of publishers on collected works," he said. "It makes it nearly impossible for companies like UnCover to do business, but it also applies to publishers putting things on Web sites. Interlibrary loan would be another big problem, though they have relied on fair use before permission. In any case, an indemnity from the Copyright Clearance Center would not be worth much after this ruling, unless they have the authors on their side."
Shaw predicted that the authors might regret the effect of such a decision in time, saying, "Most people see this as a great thing for authors, but in fact it means publishers would campaign particularly hard for a negotiation of transfer for all rights before they'll publish, with subsidiary rights becoming more important. This could particularly affect scholarly publishing where there are always more articles than outlets. This would not be a good thing for authors if it ended up making it harder for them to control anything."
Looking further down the road, we asked Shaw whether the outcome from such a ruling might prove favorable in time if it moved authors, particularly scholarly ones, to connect directly to their readers using the Web and hopefully at more reasonable prices than scholarly publishers now charge. Shaw agreed such a development might have its advantages, but "only if we could build an ASCAP [American Society for Composers and Publishers] or BMI clearinghouse-type structure for handling author payments." However, Shaw reminded us that the National Writers Union's registry has not proved very successful so far, at least in terms of growth.
In any case, Shaw faces a real dilemma if this ruling holds. "UnCover deals with 6,000 publishers, but probably 6 million authors," he said. "And what about multiple authorships? I can see it now. One article with seven or eight authors, which is common in scholarly publications, and we'd have to get permissions from all of them plus the publishers. Give me a break. Two would be dead, three retired and living in Bimini, and the last one can't stand the other five anymore. Probably all of them had a falling out with the publisher who has since merged with another company or gone out of business."
Plaintiffs' attorney Reidy painted a less dire picture. With certification as a class and a decision in their favor by the federal judiciary, Reidy hopes that resolution of the case would lead to the establishment of a fund from CARL/UnCover to which writers could file claims for payment.
Reidy sees the case as defending the rights of the true creators in a changing publishing market. "As electronic markets develop, though they're still in their infancy, freelance authors have become aware of this market, aware of the additional value beyond initial publication," he said. "Basically, freelance authors should not be left holding an empty bag. If publishers want additional revenue from additional outlets, then authors should have to grant the rights or get extra pay. What we're doing is protecting rights."
Over the next few months, the plaintiffs will seek certification as a class action, according to Reidy. Though the judge spoke favorably of their status as a class in the current decision, the process will involve a series of motions. They will also continue with the discovery process. Apparently a somewhat peripheral conflict has emerged in the case concerning CARL's practices in storing articles it scans initially onto optical discs for quicker distribution to future orders. According to Reidy, CARL's management told the court and the plaintiffs that they only followed this practice with full publisher permission. Later investigations revealed that CARL stored most if not all the articles it scanned on discs, with or without permission, although the head of CARL claimed ignorance of this practice.
As one would expect of an ardent advocate, Reidy tends to portray CARL as larger and more dangerous than most information industry analysts would. For example, he suspects that CARL's parent, Dialog, is planning to integrate CARL document delivery, specifically its optical disc "anthology" of articles, into new products. Since Dialog has never managed to integrate the full text it carries online with matching citations or abstracts in the other files it carries, such radical advances in product design would seem rather unlikely.
In any case, CARL will continue to fight the matter. According to Shaw, the company plans to appeal this ruling to the Ninth Circuit for certification and expects the matter to come to trial in late 1999. (Meanwhile, the Tasini case continues the appellate process in the Second Circuit.) CARL and its parent, Dialog, have deeper pockets for this kind of lengthy litigation. Reidy told us that the plaintiffs' attorneys have taken the case on contingency and receive no financial support from the National Writers Union, for one. However, they are dedicated to an aggressive representation for their clients, according to Reidy.
The plaintiffs appear to have strong legal representation. When we spoke with John Shuff from Robins, Kaplan, Miller & Ciresi and asked him about the durability of their commitment to the contingency-funded case, he pointed to the traditions of his firm. This firm represented the defendants in the Bhopal gas leak case as well as the Minnesota case that became the first tobacco case to go to trial.
(Our thanks for linkable cites to full-text background materials in this article go to John Marshall Law School's Center for Information Technology and Privacy Law, http://www.jmls.edu/cyber.)