Orphan Works Report Released

By Eric Goldman

The Copyright Office released its report on orphan works. It concludes:

“* The orphan works problem is real.

* The orphan works problem is elusive to quantify and describe comprehensively.

* Some orphan works situations may be addressed by existing copyright law, but many are not.

* Legislation is necessary to provide a meaningful solution to the orphan works problem as we know it today.”

The Copyright Office’s resulting proposal is interesting. If the secondary user can’t find the owner after a reasonably diligent search and provides attribution, then the damages for infringement would be limited to “reasonable compensation” (and if the secondary use is non-commercial, then no damages if the user stops quickly), and no injunction could block the continued exploitation of derivative works. If the secondary user identifies the owner, then this provision wouldn’t apply even if the owner is unresponsive. I’ve attached the proposed amendment language below.

My initial reaction is that there is a lot to commend this proposal. It addresses one of the big problems of copyright law–the across-the-board strict liability standard–by providing a more robust defense for those trying to do the right thing. (The current defense of “innocent infringement” offers little comfort to secondary users–there’s still a lot of money on the table in an infringement claim).

The proposal also helps protect the investment that secondary users make into derivative works from being subject to an injunction-driven hold-up game. In a sense, this proposal contemplates a court-determined licensing fee where the parties couldn’t identify themselves to negotiate a fee directly.

However, the proposal doesn’t go far enough in theory or practice. In theory, it still leaves secondary users on the hook for infringement and some damages even if they did everything they could to find the owner. Even under this relaxed damages standards, secondary users still can’t accurately estimate the amount they might owe for their use; this uncertainty still inhibits investments.

In practice, the squishy standards of reasonable diligence and reasonable compensation leave plenty of room for judges to smack down secondary users. How much diligence will be enough? What will be reasonable compensation? The report contemplates that there will be many situations where reasonable compensation will be zero. However, based on the erratic applications of copyright law in the courts, I’m confident some copyright-maximalist judges will never see an infringement claim that doesn’t warrant some compensation. And the “reasonable compensation” standard still leaves plenty of upside for judges to calculate large damages if they choose.

Despite these theoretical and practical gripes, I think this proposal would be far superior to our current standards. On that basis, I’d favor its implementation even if the theoretical and practical limits aren’t corrected.

The proposed amendment:

SECTION 514: LIMITATIONS ON REMEDIES: ORPHAN WORKS

(a) Notwithstanding sections 502 through 505, where the infringer:

(1) prior to the commencement of the infringement, performed a good faith, reasonably diligent search to locate the owner of the infringed copyright and the infringer did not locate that owner, and

(2) throughout the course of the infringement, provided attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances, the remedies for the infringement shall be limited as set forth in subsection (b).

(b) LIMITATIONS ON REMEDIES

(1) MONETARY RELIEF

(A) 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; provided, however, that where the infringement is performed without any purpose of direct or indirect

commercial advantage, such as through the sale of copies or phonorecords of the infringed work, and the infringer ceases the infringement expeditiously after receiving notice of the claim for infringement, no award of monetary relief shall be made.

(2) INJUNCTIVE RELIEF

(A) in the case where the infringer has prepared or commenced preparation of a derivative work that recasts, transforms or adapts the infringed work with a significant amount of the infringer’s expression, any injunctive or equitable relief granted by the

court shall not restrain the infringer’s continued preparation and use of the derivative work, provided that the infringer makes payment of reasonable compensation to the copyright owner for such preparation and ongoing use and provides attribution to the author and copyright owner in a manner determined by the court as reasonable under the circumstances; and

(B) in all other cases, the court may impose injunctive relief to prevent or restrain the infringement in its entirety, 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.

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

(d) This section shall not apply to any infringement occurring after the date that is ten years from date of enactment of this Act.

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