Statement on Fair Use

WASHINGTON, D.C. – Internet Association President & CEO, Michael Beckerman, issued the following statement for the record in regards to the House Ways and Means Committee Subcommittee on Trade Hearing on Expanding U.S. Digital Trade and Eliminating Barriers to U.S. Digital Exports:

“Balanced copyright protections such as fair use foster innovation, promote growth, and preserve the free and open internet.  And the U.S. internet sector — as well as small businesses that use the internet to reach global customers — requires balanced copyright rules in other regions in order to do business in those markets.  Yet many countries are now engaging in new forms of digital protectionism to halt the growth of U.S. internet services.  To counter this threat, the U.S. must defend and promote a fully balanced copyright framework in its trade agreements that reflects U.S. law.  If the U.S. simply exports one part of U.S. law — strong copyright protection and enforcement — and not critical limitations and exceptions that enable the digital economy, we will put U.S. export leadership in the digital economy at risk.

“The balance at the heart of U.S. copyright law is simple.  Copyright law provides exclusive rights to authors to incentivize the creation of new works,¹ and it grants critical limitations and exceptions in laws that promote the public good through legal access to works.²  The most important of these exceptions is fair use, which allows content to be reproduced and used in ways that do not unreasonably harm the interests of the work’s author.³  Fair use enables U.S. internet services to provide snippets of news articles, show thumbnails of photos, index copies of webpages for search purposes, store and transfer information around the world via cloud services, analyze large data samples to build machine learning tools, and launch countless other current (and future) innovations.  These fair use-dependent services empower consumers, help creators connect globally, and fuel the U.S. economy.

“It is not an accident that the United States is home to the most innovative internet companies and the leading creative industries in the world.  Balanced copyright law drives the growth of these complementary industries.⁴  Creators and authors continue to thrive,⁵ while industries benefiting from fair use in the United States generate $4.5 trillion of revenue and add $2.4 trillion of value to the U.S. economy on an annual basis.⁶

“Given that 95 percent of consumers now reside in other countries, much of this growth and value-add is driven by exports of U.S. internet services, as well as exports of non-internet services and goods via U.S. internet platforms.  However, the rise of digital protectionism abroad threatens this growth.  Such threats may come as a result of intentional decisions to target U.S. internet services by laws such as ancillary copyright that take away limitations and exceptions, as USTR highlighted in its 2016 National Trade Estimate.⁷  Alternatively, these threats may emerge when a country increases its level of copyright enforcement in order to comply with trade obligations or diplomatic pressure, but fails to balance these new enforcement rules with flexible rules such as fair use.⁸  In either case, unbalanced copyright frameworks serve as significant market barriers to U.S. services.  

“To combat this trend, the U.S. must ensure that a digitally-focused trade policy is fully embedded in future trade agreements, in implementation of the Trans-Pacific Partnership (TPP), and in trade enforcement efforts.

“A number of U.S. trading partners — regardless of their system of law or level of development — already embrace fair use or other similar flexible frameworks that drive innovation in the digital environment.  Countries such as Israel, Malaysia, South Korea, the Philippines, and Singapore can and do maintain high levels of intellectual property protection and enforcement, while also providing fair use-style limitations and exceptions that meet the needs of the internet sector, content creators, and users.  Courts in these countries have not faced any significant complaints that they cannot handle the interpretive issues at stake in fair use jurisprudence.⁹  These countries have produced a significant corpus of fair use decisions and precedent that has been remarkably consistent in its articulation of the relevant principles and constraints.  In fact, one study assessing these countries found that the adoption of fair use language was associated with positive economic outcomes both for companies that depend on copyright enforcement and for companies that depend on copyright exceptions.¹⁰  

“Contrary to certain assertions, fair use does not provide a ‘blank check’ or a ‘loophole’ for countries to circumvent copyright protections.  Instead, under TPP and other agreements that incorporate the Berne Convention “three-step test,”¹¹ countries may grant exceptions for reproductions in “certain special cases” where a reproduction “does not conflict with a normal exploitation of the work” and “does not unreasonably prejudice the legitimate interests of the author.”¹²  Fair use satisfies the three-step test, given that all fair use frameworks require courts to assess whether a use damages the value or potential market of a work.  A broader, blanket exception for any kind of infringing use would not be consistent with the Berne Convention test.

“The internet industry believes the U.S. should continue to negotiate and implement trade agreements that help our trading partners modernize their copyright regimes for the digital environment.  These reforms are a win-win for content creators and consumers and will help countries build the legal certainty necessary to drive innovation and growth.”

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¹  17 U.S.C. § 106.
²  17 U.S.C. §§ 107-122.
³ 17 U.S.C. § 107.
⁴ See Ben Sheffner, MPAA and Fair Use: A Quick History, http://www.mpaa.org/mpaa-and-fair-use-a-quick-history (“Our members rely on the fair use doctrine every day when producing their movies and television shows – especially those that involve parody and news and documentary programs. . . No thinking person is ‘for’ or ‘against’ fair use in all circumstances.”).
⁵ http://www.musicbusinessworldwide.com/25-billion-the-best-number-to-happen-to-the-music-business
⁶ Thomas Rogers & Andrew Szamosszegi, Fair Use in the U.S. Economy: Economic Contribution of Industries Relying on Fair Use (CCIA: 2011).
⁷ 2016 National Trade Estimate Report on Foreign Trade Barriers, https://ustr.gov/sites/default/files/2016-NTE-Report-FINAL.pdf.
⁸ See Supplemental Comments of Computer & Communications Industry Association, In re 2016 Special 301 Review, Docket No. USTR-2015-0022. As the level of copyright enforcement in a foreign jurisdiction increases, market access issues in that jurisdiction often shift from infringement-related barriers to barriers regarding “liability for copying incidental to common Internet services and communications platforms.”
⁹ See Supplemental Comments of American University Washington College of Law – Program on Information Justice and Intellectual Property, In re 2016 Special 301 Review, Docket No. USTR-2015-0022.
¹⁰ Mike Palmedo, Firm Performance in Countries With & Without Open Copyright Exceptions, http://infojustice.org/archives/34386.
¹¹ TPP Art. 18.65.
¹² Berne Convention for the Protection of Literary and Artistic Works Art. 9.2.
¹³ See, e.g., Harper & Row v. Nation Enterprises, 471 U.S. 539 (1985) (characterizing the effect on the market as “the single most important element of fair use”).