On July 17, 2018, the federal appeals court located in Washington, D.C. issued a ruling in a case involving an intersection of copyrighted material (standards) and non-copyrightable material (laws and regulations). The appeals court remanded the matter back to the trial court, to determine under what circumstances a non-profit organization could publish private standards as part of the organization’s publication of the laws. (American Society for Testing and Materials v. Public.Resource.Org, Inc., No. 17-7035 (D.C. Cir. July 17, 2018).)Background

The case began in 2012, with a non-profit organization named Public.Resource.Org (“PRO”) embarking on a mission “to make the law and other government materials more widely available.” Because many laws and regulations incorporate private organizations’ standards, PRO would purchase one copy of the referenced private standards and make the laws and standards publicly available at no charge on PRO’s website.

The standard-setting organizations objected, and filed a lawsuit against PRO, claiming copyright infringement among other things. PRO raised defenses that (1) by incorporating the standards into the laws/regulations, the standards lost their copyright protection; and (2) PRO’s use of the standards was “fair use” under the copyright law.

Both parties moved for summary judgment at the trial court level. The trial court granted summary judgment in favor of the standard-setting organizations, and granted an injunction against PRO’s publication of the standards. PRO appealed.

The appeals court decision

The appeals court vacated the injunction and remanded the case back to the trial court on the issue of the “fair use” affirmative defense. The U.S. copyright law lists four factors in analyzing a “fair use” claim:

(1)        the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2)        the nature of the copyrighted work;

(3)        the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

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

17 U.S.C. § 107.

In this case, the appeals court found that applying these four factors may lead to different results, depending upon the nature and extent of the incorporation (or cross-referencing) of the private standard into the law or regulation.

In the U.S., laws and regulations are not subject to copyright protection. In analyzing the “fair use” defense, the appeals court focused on the differences between a law’s requiring compliance with an entire standard, to requiring compliance with designated sections of a standard, to using standards for informational purposes.

The court analyzed each of the four factors separately. With respect to the first factor (purpose and character of use), the court stated: “Where an incorporated standard provides information essential to comprehending one’s legal duties, for example, this factor would weigh heavily in favor of permitting a nonprofit seeking to inform the public about the law to reproduce in full the relevant portions of that particular standard.” In contrast, a reference to a specific section of a standard “might justify reproducing that portion” of the particular standard. If, on the other hand, the standard would merely “help inform one’s understanding of the law” and is not essential to compliance, then “PRO’s use might be less transformative and its wholesale copying, in turn, less justified.” In other words, “whether PRO’s specific use serves that value [of informing the public about the law] must be assessed standard by standard and use by use.”

The second factor (nature of the work) similarly will require an individual analysis, although the appellate court recognized that most standards “fall at the factual end of the fact-fiction spectrum.”   Because the copyright law was intended to protect creative works rather than facts, this factor will more likely support a finding of fair use.

The third factor (amount and substantiality of use) was largely addressed by the court in the discussion above. “If PRO limits its copying to only what is required to fairly describe the standard’s legal import, this factor would weigh strongly in favor of finding fair use here, especially given that precision is ten-tenths of the law.”

Finally, with respect to the fourth factor (market impact), the appeals court rejected the claim that nonprofit PRO’s use of the standards for fund-raising was for “commercial purposes.” The court, however, stated that the standard-setting organizations “are right to suggest that there may be some adverse impact on the market for the copyrighted works PRO reproduced on its website.” That determination will also be part of the analysis on remand, but the court offered three additional guideposts for analyzing this factor:

(a)        Given that the standard-setting organizations make copies of their standards freely available in “controlled reading rooms,” how much additional harm to the market is caused by PRO?

(b)        Because standards incorporated into law are sometimes outdated, is PRO’s posting those outdated standards harming the market for current versions? For example, if a regulation specifically incorporates the 2011 standard, and an updated standard was issued in 2016, what would be the impact on the market for the 2016 version of the standard?

(c)        Can the standard-setting organizations continue to make sufficient revenues to have an adequate incentive to continue producing these standards?

The appeals court expressly did not decide whether the U.S. Constitution permits copyright to persist in works incorporated by reference into laws, or related questions such as whether updates to the references in laws/regulations mean that the previous versions of the standards could “re-acquire” copyright status.