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Intermediary Trademark Liability: A Comparative Lens

May 28, 2014 Stacey L. DoganAdd a Comment

Although we live in a global, interconnected world, legal scholarship – even scholarship about the Internet – often focuses on domestic law with little more than a nod to developments in other jurisdictions.  That’s not necessarily a bad thing; after all, theoretically robust or historically thorough works can rarely achieve their goals while surveying the landscape across multiple countries with disparate traditions and laws.  But as a student of U.S. law, I appreciate articles that explain how other legal systems are addressing issues that perplex or divide our scholars and courts.  Given the tumult over intermediary liability in recent years, comparative commentary on that topic has special salience.

In this brief (draft) article, Graeme Dinwoodie explores both structural and substantive differences in how the United States and Europe approach intermediary trademark liability in the Internet context.  To an outsider, the European web of private agreements, Community Directives, CJEU opinions, and sundry domestic laws can appear daunting and sometimes self-contradictory.  Dinwoodie puts them all into context, offering a coherent explanation of the interaction between Community law, member state law, and private ordering, and situating the overall picture within a broad normative framework.  And he contrasts that picture with the one emerging through common law in the United States.  The result is a readable, informative study of two related but distinct approaches to intermediary trademark law.

Dinwoodie begins by framing the core normative question:  how should the law balance trademark holders’ interest in enforcing their marks against society’s interest in “legitimate development of innovative technologies that allow new ways of trading in goods”?  This tension is a familiar one: from Sony through Grokster, from Inwood through eBay, courts and lawmakers have struggled with how to allocate responsibility between intellectual property holders, those who infringe their rights, and those whose behavior, product, or technology plays some role in that infringement.  Dinwoodie identifies the tension but does not resolve it, purporting to have the more modest goal of exposing the differences between the American and European approaches and discussing their relative virtues.  But the article barely conceals Dinwoodie’s preference for rules that give intermediaries at least some of the burden of policing trademark infringement online.

Structurally, there are some significant differences between the European and American approaches.  Whereas courts have shaped the U.S. law primarily through common law development, Europe has a set of Directives that offer guidance to member states in developing intermediary trademark liability rules.  Europe has also experimented with private ordering as a partial solution, with stakeholders recently entering a Memorandum of Understanding (MOU) that addresses the role of brand owners and intermediaries in combating counterfeiting online.  In other words, rather than relying exclusively on judge-made standards of intermediary liability, European policymakers and market actors have crafted rules and norms of intermediary responsibility for trademark enforcement.

Whether as a result of these structural differences or as a byproduct of Europe’s tradition of stronger unfair competition laws, the substantive rules that have emerged in Europe reflect more solicitude for trademark owners than provided by United States law.  Doctrinally, intermediaries have a superficial advantage in Europe, because the Court of Justice limits direct infringement to those who have used the mark in connection with their own advertising or sales practices.  They also benefit from Europe’s horizontal approach to Internet safe harbors.  Unlike the United States, Europe includes trademark infringement, unfair competition, and other torts in the “notice-and-takedown” system, offering service providers the same kind of immunity for these infractions as they receive under copyright law.  The safe harbor law explicitly provides that intermediaries need not actively root out infringement.

Other features of European law, however, temper the effects of these protections.  Most significantly, Article 11 of the European Enforcement Directive requires member states to ensure that “rights holders are in a position to apply for an injunction against intermediaries whose services are used by third parties to infringe an intellectual property right.”  In other words, even if they fall within the Internet safe harbor (and thus are immune from damages), intermediaries may face an injunction requiring affirmative efforts to reduce infringement on their service.  In Germany, at least, courts have ordered intermediaries to adopt technical measures such as filtering to minimize future infringement.  The threat of such an injunction no doubt played a role in bringing intermediaries to the table in negotiating the MOU, which requires them to take “appropriate, commercially reasonable and technically feasible measures” to reduce counterfeiting online.

This explicit authority to mandate filtering or other proactive enforcement efforts finds no counterpart in U.S. law.  On its face, U.S. contributory infringement law requires specific knowledge of particular acts of infringement before an intermediary has an obligation to act.  And while scholars (including myself) have argued that intermediaries’ efforts to reduce infringement have played an implicit role in case outcomes, the letter of the law requires nothing but a reactive response to notifications of infringement.  Dinwoodie suggests that this “wooden” approach to intermediary liability may miss an opportunity to place enforcement responsibility with the party best suited to enforce.

In the end, while professing neutrality, Dinwoodie clearly sees virtues in the European model.  He applauds the horizontal approach to safe harbors, welcomes the combination of legal standards and private ordering, and praises the flexibility and transparency of Europe’s largely least-cost-avoider model.  Whether the reader agrees with him or prefers the United States’ more technology-protective standard, she will come away with a better understanding of the structure and content of intermediary trademark law in both the United States and Europe.

Open and Close Innovation Regimes: An Experiment on Institutional and Organizational Design

May 2, 2014 Christopher J. Buccafusco2 comments

One of the central tensions in the institutional design of innovation regimes is the trade-off between incentives and disclosure. Innovation systems, including intellectual property systems, are created to optimize creative output by balancing ex ante incentives for initial creators with ex post disclosure of the innovation to follow-on creators and the public. According to accepted theory, the more rigorous the disclosure—in terms of when and how it occurs—the weaker the incentives. But a fascinating new experiment by Kevin Boudreau and Karim Lakhani suggests that differences in disclosure regimes can affect not just the amount of innovation but also the kind of innovation that takes place.

Boudreau and Lakhani set up a tournament on the TopCoder programming platform that involved solving a complicated algorithmic task over the course of two weeks. All members of the community were invited to participate in the tournament, and contest winners would receive cash prizes (up to $500) and reputational enhancement within the TopCoder community. The coding problem was provided by Harvard Medical School, and solutions were scored according to accuracy and speed. Importantly, the top solutions in the tournament significantly outperformed those produced within the medical school, but that’s a different paper.

Boudreau and Lakhani randomly assigned participants into different conditions based on varying disclosure regimes and tracked their behavior. The three disclosure conditions were:

• Intermediate Disclosure – Subjects could submit solutions to the contest, and, when they did, the solutions and their scores were immediately available for other subjects in the same condition to view and copy.
• No Disclosure – Subjects’ solutions to the contest were not disclosed to other subjects until the end of the two-week contest.
• Mixed – During the first week of the contest, submissions were concealed from other subjects, but, during the last week of the contest, they were open and free to copy.

For the Intermediate and Mixed conditions, subjects were asked to provide attribution to other subjects’ whose code they copied.

Cash prizes were given out at the end of the first and second weeks based on the top-scoring solutions. For the Intermediate condition, the prizes were split evenly between the subject who had the highest scoring solution and the subject who received the highest degree of attribution.

The subjects were about equally split between professional and student programmers, and they represented a broad range of skill levels. 733 subjects began the task. Of them, 124 submitted a total of 654 intermediate and final solutions. The solutions were determined to represent 56 unique combinations of programming techniques.

The authors predicted that mandatory disclosure in the Intermediate condition would reduce incentives to participate because other subjects could free-ride on the solutions of initial inventors. The data are consistent with this hypothesis: Fewer people submitted answers in the Intermediate condition than in the No Disclosure condition, and the average number of submissions and the number of self-reported hours worked were also lower by significant margins. The Mixed condition generally produced data that were between the other two conditions. Ultimately, scores in the Intermediate condition were better than those in the other conditions because subjects could borrow from high-performing solutions.

More importantly, the data also disclosed differences in how subjects solved the problem. Consistent with the authors’ hypotheses, subjects in the Intermediate condition tried fewer technical approaches and seemed to experiment less than did those in the No Disclosure condition. Once significant improvements were disclosed, other subjects in the Intermediate condition tended to borrow the successful code leading to a relatively smooth improvement curve. In the No Disclosure condition, by contrast, although new submissions were generally better than those the subjects had submitted before, they were more variable and less consistent in their improvement.

In summary, when subjects can view each others’ code, innovation tends to be more path-dependent and to happen more rapidly and successfully than when there is no disclosure. But when innovation systems are closed, people tend to participate more, and they tend to try a wider variety of solution strategies.

In previous research, these authors have explained how open-access innovation systems succeed in the face of diminished extrinsic incentives. This experiment provides valuable insight into the relative merits of open- and closed-access systems. Open-access systems will, all else equal, have advantages when creators have significant intrinsic incentives and when the innovation problem has one or few optimal solutions.

Closed-access systems, by contrast, will prove comparatively beneficial when the system must provide independent innovation incentives and when the problem involves a wide variety of successful solutions. The experiment’s contribution, then, is not to resolve the debate about open versus closed innovation but rather to help policymakers and organizations predict which kind of system will tend to be most beneficial.

The experiment also suggests helpful ways of thinking about the scope of Intellectual Property rights in terms of follow-on innovation. For example, strong derivative-works rights in copyright law create a relatively closed innovation system compared to patent law’s regime of blocking patents. If we think of the areas of copyright creativity as exhibiting a large variety of optimal solutions, then the closed-innovation system may help prevent path-dependence and encourage innovation (evidence from the movie industry not withstanding). Future research could test this hypothesis.

As with any experiment, many questions remain. Boudreau and Lakhani’s incentives manipulation is not as clean as could be hoped, both because payouts in the Intermediate condition are lower and because attribution in the No Disclosure condition is effectively unavailable. Accordingly, it is difficult to make causal arguments about the relationship between the disclosure regime and incentives. In addition, although the Intermediate condition produces lower participation incentives for subjects who expect to be high performing, it creates higher participation incentives for subjects who expect to be low performing because they can simply borrow from high-scoring submissions at the end of the game.

Interestingly, there seems to be surprisingly little borrowing, which could suggest a number of curious features about the experiment: Perhaps only high-skill subjects are capable of borrowing and/or there may be social norms against certain kinds of borrowing even though it is technically allowed. And, as always, there are questions about the representativeness of the sample. Subjects were likely disproportionately men, and they were also likely ones with significant open-source experience where they may have internalized the norms of that community. On the other hand, TopCoder bills itself as “A Place to Compete,” which may have primed competitive behaviors rather than sharing behaviors.

Ultimately, Boudreau and Lakhani have produced an exciting new contribution to intellectual property and innovation research.

How Copyright Prevents Us From Getting the Books We Want

Mar 31, 2014 Christopher J. SprigmanAdd a Comment

Back in mid-2013, Paul Heald posted to SSRN a short paper that already has had far more impact than academic papers usually have on the public debate over copyright policy. That paper, How Copyright Makes Books and Music Disappear (and How Secondary Liability Rules Help Resurrect Old Songs), employed a clever methodology to see whether copyright facilitates the continued availability and distribution of books and music. Encouraging the production of new works is, of course, copyright’s principal justification. But some have contended that copyright is also necessary to encourage continued exploitation and maintenance of older works. We find an example in the late Jack Valenti, who, as head of the Motion Picture Association of America, in 1995 made the argument before the Senate Judiciary Committee that it was necessary to extend the copyright term in part to provide continued incentives for the exploitation of older works. “A public domain work is an orphan,” Valenti testified. “No one is responsible for its life.” And of course if no one is responsible for keeping a creative work alive, it will, Valenti suggests, die.

Is that argument right? Enter Paul Heald. Heald’s 2013 article employs a set of clever methodologies to test whether copyright did, indeed, facilitate the continued availability of creative works—in Heald’s article, books and music.  With respect to books, Heald constructed a random sample of 2300 books on Amazon, arranged them in groups according to the decade in which they were published, and counted them. Here are his findings:

© 2013 by Paul Heald. All rights reserved. Reprinted with permission of Paul Heald.

If you hadn’t already seen Heald’s article, the shape of this graph should surprise you.  You would probably expect that the number of books from Amazon would be highest in the most recent decade, 2000–2010, and would decline continuously as one moves to the left in the graph—i.e., further into the past. On average, books are, all things equal, less valuable as they age, so we should expect to see fewer older books on Amazon relative to newer ones.

But that’s not what we see.  Instead, we see a period from roughly 1930 to 1990, where books just seem to disappear. And we see a large number of quite old books on Amazon. There are many from the late-19th century and the first two decades of the 20th century.  Indeed, there are far more new editions from the 1880s on Amazon than from the 1980s.

What on earth is causing this odd pattern? In a word: copyright. All books published before 1923 are out of copyright and in the public domain. And a variety of publishers are engaging in a thriving business of publishing these out-of-copyright works—and so they’re available on Amazon. In contrast, a large fraction of the more recent works—the ones under copyright—simply disappear. Maybe they’ll spring back to life when (or if?) their copyright expires. But for now, copyright doesn’t seem to be doing anything to facilitate the continued availability of these books. In fact, copyright seems to be causing some books to disappear.

Heald does a similar analysis for music, and this analysis too shows that copyright causes music to disappear, relative to music in the public domain. The effect is less pronounced than in the case of books, but it is still there.

In short, Heald’s paper placed a big question mark after the “continued availability” justification for copyright. If we care about works remaining available, then copyright, in fact, seems to be hurting and not helping.

Now Heald is back with a follow-up paper, The Demand for Out-of-Print Works and Their (Un)Availability in Alternative Markets, that takes on the most important question raised by his first: Should we be concerned that copyright appears to make works disappear? If there is no consumer demand for these disappeared works, then possibly not. But if there is consumer demand for the works that copyright kills, then we should care because that demand is not being met.

Heald employs a number of tests to determine whether there is consumer demand for the books that copyright makes disappear. Read the article if you want a full account, but it is worthwhile to give a couple of highlights.  In a particularly nifty part of the paper, Heald compares books available on Amazon with those available on the biggest used books website. The graph is instructive:

© 2014 by Paul Heald. All rights reserved. Reprinted with permission of Paul Heald.

That gap between the red (Amazon) and blue (used book) curves suggest that used book sellers take advantage of a market in many books that copyright has made disappear from new book shelves, which suggests that there is consumer demand for these books.

Heald then examines other possible ways that the market may provide access to works that copyright has made disappear. For music, Heald looks to see whether copyright owners are digitizing out-of-print records and either selling them on iTunes or posting them on YouTube. The answer, hearteningly, appears to be yes. Unfortunately, the picture for books is much less reassuring. As usual, Heald’s chart speaks more clearly than words:

© 2014 by Paul Heald. All rights reserved. Reprinted with permission of Paul Heald.

Look at the number of popular songs from 1923–32 that are on iTunes—almost all of them. But then look at the number of popular books from the same period that are offered as eBooks—less than 40%. Many of these books are not available on Amazon in paper form. Nor are they distributed digitally.

So why the difference between the music and book publishing industries when it comes to the availability of older titles still under copyright? I’ll leave that as a mystery—and I hope your unslaked curiosity will lead you to read Heald’s article. It is well worth your time.

Copyright as a Chill on Innovation

Feb 28, 2014 Pamela SamuelsonAdd a Comment

Sony’s Betamax was the first reprography technology to attract a copyright infringement lawsuit. Little did copyright experts back then realize how much of a harbinger of the future the Betamax would turn out to be. Countless technologies since then designed, like the Betamax, to enable personal use copying of in-copyright works have come to market. Had the Supreme Court outlawed the Betamax, few of these technologies would have seen the light of day.

The most significant pro-innovation decision was Supreme Court’s Sony Betamax decision. It created a safe harbor for technologies with substantial non-infringing uses. Entrepreneurs and venture capitalists have heavily relied on this safe harbor as a shield against copyright owner lawsuits. Yet, notwithstanding this safe harbor, copyright owners have had some successes in shutting down some systems, most notably, the peer-to-peer file-sharing platform Napster.

It stands to reason that decisions such as Napster would have some chilling effect on the development of copy-facilitating technologies. But how much of a chilling effect has there been? Some would point to products and services such as SlingBox and Cablevision’s remote DVR feature and say “not much.”

Antitrust and innovation scholar Michael Carrier decided to do some empirical research to investigate whether technological innovation has, in fact, been chilled by decisions such as Napster. He conducted qualitative interviews with 31 CEOs, co-founders and vice presidents of technology firms, venture capitalists (VCs), and recording industry executives. The results of his research are reported in this Wisconsin article, which I like a lot.

One reason I liked the article was because it confirmed my longstanding suspicion that the prospect of extremely large awards of statutory damages does have a chilling effect on the development of some edgy technologies. Because statutory damages can be awarded in any amount between $750 and $150,000 per infringed work and because copy-facilitating technologies can generally be used to interact with millions of works, copyright lawsuits put technology firms at risk for billions and sometimes trillions of dollars in statutory damages. For instance, when Viacom charged YouTube with infringing 160,000 works, it exposed YouTube and its corporate parent Google to up to $24 billion in damages. While a company such as Google has the financial resources to fight this kind of claim, small startups are more likely to fold than to let themselves become distracted by litigation and spend precious VC resources on lawyers.

But a better reason to like the article is the fascinating story Carrier and his interviewees tell about the mindset of the record labels about Napster and the technology “wasteland” caused by the Napster decision.

The lesson that record labels should have learned from Napster’s phenomenal (if short-lived) success was that consumers wanted choice—to be able to buy a single song instead of a whole album—and if it was easy and convenient to get what they wanted, they would become customers for a whole new way of doing business. Had the record labels settled with Napster, they would have benefited from the new digital market and earned billions from the centralized peer-to-peer service that Napster wanted to offer.

The labels were used to treating record stores as their customers, not the people who actually buy and play music. Radio play, record clubs, and retail were the focus of the labels’ attention. They thought that the Internet was a fad, or a problem to be eradicated. They were unwilling to allow anyone to create a business on the back of their content. They believed that if they didn’t like a distribution technology, it would go away because they wouldn’t license it. They coveted control above all. When the labels began to venture into the digital music space themselves, they wanted to charge $3.25 a track, which was completely unrealistic.

Some of Carrier’s interviewees thought that the courts had reached the right decision in the Napster case, but questioned the breadth of the injunction, which required 100% effectiveness in filtering out infringing content and not just the use of best efforts, thereby making it impossible to do anything in the digital music space. One interviewee asserted that in the ten years after the Napster decision, iTunes was the only innovation in the digital music marketplace. Many more innovations would have occurred but for the rigidity of the Napster ruling and the risk of personal liability for infringement by tech company executives and VCs.

The role of copyright in promoting innovation was recently highlighted in the Department of Commerce’s Green Paper on “Copyright Policy, Creativity and Innovation in the Digital Economy” (July 2013). It aspires to present a balanced agenda of copyright reform ideas that will promote innovation. It is an encouraging sign that the Green Paper identifies statutory damage risks in secondary liability cases as a policy issue that should be addressed. Reforming statutory damages would not entirely eliminate the risks that copyright would chill innovation, but it would go a long way toward that goal.

Quantifying the Copyright-Innovation Interference

Jan 28, 2014 Dotan OliarAdd a Comment

The constitution empowers Congress to promote the useful and the expressive arts, which Congress does through the laws governing patents and copyrights. But, promoting one may sometimes retard the other. This happens in the context of new technologies of copying and dissemination, such as the photocopier, VTR, the MP3 player, and file-sharing networks. Imposing copyright liability on the makers and users of these technologies encourages copyright owners but may discourage innovators. Shielding such makers and users from liability encourages technological innovation but may retard expressive creativity. How should we strike this trade-off, either in general or in particular cases?

This question has long been a major issue in copyright law and scholarship.¹ To know what the right policy is, we should have some sense of the degree to which incentives to create content are diminished, if at all, in the face of the new technology. Indeed, much empirical work surrounding the file-sharing litigation has studied the effect file-sharing had on music sales. This body of literature contains diverse views, and the debate on the empirics is sometimes as heated as the one on the theory and policy side.²

Joel Waldfogel’s paper is a recent and valuable contribution to the empirical literature. I like it lots because it takes a new approach to quantifying the digital age’s net effect on incentives to create expressive works. Waldfogel does not believe that quantifying the reduction in copyright owners’ revenue is the most important question. Technological change may reduce the amount that copyright owners can receive for their content, but technological change may also reduce copyright owners’ cost of producing and disseminating content. If the latter effect is greater than the first, technological change may actually enhance incentives to create. To know whether and what kind of legal intervention is needed, we need to determine which effect is greater. The paper tries to quantify the technology’s net effect on incentives to create by looking at what has happened to the quality of sound recordings produced since the advent of online file-sharing in 1999.

The paper does so by constructing three original measures for the quality of music over time. One is an index of the volume of high quality music since the 1960s. It is based on critics’ retrospective lists of the best works over various time periods (e.g., Rolling Stone’s 2004 list of the 500 best albums based on 273 critics and expert musicians opinions, or Pitchfork Media’s 200 best albums of the 2000s etc.). It contains 88 rankings of either songs or albums from Anglophone countries. Two additional indices track the quality of music from different vintages using data on record sales (relating to RIAA’s gold and platinum certifications awarded between 1958-2010) and airplay data (during 2004–2008 of songs originally released in previous years). Here, the assumption is that higher quality music should generate more sales and airplays over time, surviving longer in the market. These two indices evaluate vintages of music by the extent to which records from a particular year continue to sell, or to be played, years later.

Below are graphs of two of the music quality indices over time (the certifications graph is very similar to the airplay one, both being measures of public enjoyment):

© 2012 by The University of Chicago & Joel Waldfogel. All rights reserved. Reprinted with permission of the University of Chicago and Joel Waldfogel.

© 2012 by The University of Chicago & Joel Waldfogel. All rights reserved. Reprinted with permission of the University of Chicago and Joel Waldfogel.

The paper finds that these indices—measures of music quality—are consistent with each other, and that there’s no evidence that the quality of music declined in the years since Napster. The paper’s certifications and airplay data indices suggest that music quality has rather increased substantially since 1999 (as is shown on the last graph above). The paper concludes by suggesting that its findings are relevant to policymakers setting the strength of copyright protection.

Several assumptions need to be made before using the paper for policymaking, and I would like to note two. First, one would have to accept the indices as good measures for industry output. One could question, however, whether this is so. Clearly, altering the measure for quality may alter the findings of what happened to that quality over time, and thus may alter the policy implications. For example, the finding that music quality increased significantly post-Napster is borne by two of the paper’s indices (the airplay and the certification indices) but not by the third (the experts’ index). It would thus be interesting to see whether the finding of non-decreasing music quality is robust to the use of other measures of quality.

But even assuming that the paper’s findings are robust to alternative measures of quality, another issue remains: What policy implications is one to draw from the paper’s findings? Here, the paper provides qualified guidance. One possibility, implicitly suggested at the conclusion of the paper, is that policymakers should not strengthen copyright protections since copyright owners’ reduced revenue (and potentially profit) was not associated with a decline in the quality of the music industry’s output. The paper’s findings, however, cannot support such a conclusion unequivocally. The years just prior to Napster’s advent and since were characterized not only by technological change, but also by legal change. By and large, copyrights have been strengthened over the time period. We cannot know whether incentives would have remained the same but for the legal change. Perhaps enhancing copyright owners’ rights was necessary to keep production levels constant. It is also possible that a lesser, or a greater, invigoration of copyrights would have enhanced music quality. Largely abstracting away from legal change, the paper leaves these possibilities open.

But these two remarks should not take away from Waldfogel’s substantial contribution to the literature. Rather, they are to acknowledge how much he has pushed the ball forward and how much more insight can be gained on the intersection of copyright law and technological innovation if more research is conducted following his approach.

Fair Use in Context

Dec 17, 2013 Michael W. CarrollAdd a Comment

When is a use of a copyrighted work a fair use? This issue has grown in significance with the increase in the economic value of copyrighted works and in the ways in which users can distribute, rework, or otherwise borrow from copyrighted works. The fair-use inquiry is contextual, formally focusing on the nature and purpose of a use, the creative nature of the work, the amount of the work used, and the effect of the use on the copyright owner’s ability to economically exploit the work. For some, fair use’s attention to context renders it an unreliable ally for the diligent user.

However, a number of commentators, including this one,³ have argued that the multifactor inquiry does not lead truly to “case-by-case” adjudication. Instead, the principles of fair use protect certain identifiable patterns or bundles of uses with soft rules while remaining sufficiently open textured to balance interests implicated by new or emerging patterns of use. Others have gone further. My colleagues Peter Jaszi and Patricia Aufderheide have worked with creative communities to identify and articulate best practices in fair use in the context of their patterns of use as described in their recent book Reclaiming Fair Use.

Comes now Michael Donaldson to articulate the soft rule—or in his words the “safe harbor”—that applies when one seeks to make a fair use of a copyrighted work in a new work of non-fiction. Donaldson’s analysis flows not only from his reading of judicial opinions but also from his practice counseling clients and providing formal opinions of counsel that make reliance on fair use an insurable risk for documentary filmmakers, among others.

His article is a worthwhile read for many reasons. On its own terms, the article yields an important and useful insight into the unstated rules of decision that courts use when applying fair use in this context. Donaldson helpfully, and in my view, correctly, identifies the real concerns that animate decision-making. He argues that a fair-use decision-maker is likely to ask the following three questions about the use of a copyrighted work or “asset” in a new work of non-fiction:

1. Does the asset illustrate or support a point that the creator is trying to make in the new work?

2. Does the creator of the new work use only as much of the asset as is reasonably appropriate to illustrate or support the point being made?

3. Is the connection between the point being made and the asset being used to illustrate or support the point clear to the average viewer?

Donaldson argues that when the answer to all three questions is affirmative, the use is within the fair use “safe harbor.” He is careful to also argue that a use may still be a fair use even when the answer to one or more of the questions is “no,” but then the fair-use analysis becomes more context-specific. Additionally, he addresses a number of issues that frequently arise in fair-use decision-making—such as whether the user or copyright owner is acting in good faith or whether the parties discussed a possible license for the use—and argues that these usually serve as distractions. Finally, Donaldson provides an extensive appendix that identifies the cases on which he relies and summarizes how they fare under his three-question test. This is a thoughtful and thought-provoking piece, and scholars and practitioners would do well to engage with Donaldson’s arguments even if they disagree with his particular reformulation of the fair-use inquiry.

This article also is useful to scholars and teachers who seek to better understand the real decision-making process masked by the mechanical jurisprudence that multifactor tests like Section 107 of the Copyright Act or the likelihood-of-confusion test under the Lanham Act sometimes produces (particularly in the latter case). Donaldson presents a model for translating a test that purports to weigh and balance a range of considerations into a more directive inquiry that focuses attention on the facts that really matter in the analysis.

Finally, this article demonstrates how open-ended standards designed to allocate entitlements between private and public interests in intellectual property law can be, and have been, tailored through interpretation to provide a more fine-grained balance than could be readily achieved through legislation. As a result, this article should have appeal both for those interested in the specific application of fair use in the context of non-fiction adaptations and for those who may be inspired to adapt this mode of analysis for other multi-factor legal tests.