Consumers Union of United States, Inc., V. General Signal Corp: Commercial Free Speech and the Fair Use Doctrine of Copyright Clifford E

Loyola University Chicago Law Journal Volume 16 Article 4 Issue 1 Fall 1984 1984 Consumers Union of United States, Inc., v. General Signal Corp: Commercial Free Speech and the Fair Use Doctrine of Copyright Clifford E. Berman Follow this and additional works at: http://lawecommons.luc.edu/luclj Part of the First Amendment Commons, and the Intellectual Property Law Commons Recommended Citation Clifford E. Berman, Consumers Union of United States, Inc., v. General Signal Corp: Commercial Free Speech and the Fair Use Doctrine of Copyright, 16 Loy. U. Chi. L. J. 85 (1984). Available at: http://lawecommons.luc.edu/luclj/vol16/iss1/4 This Note is brought to you for free and open access by LAW eCommons. It has been accepted for inclusion in Loyola University Chicago Law Journal by an authorized administrator of LAW eCommons. For more information, please contact [email protected]. Notes Consumers Union of United States, Inc. v. General Signal Corp.: Commercial Free Speech and the Fair Use Doctrine of Copyright INTRODUCTION A grant of copyright in a creative work secures for its author a limited monopoly over the use of that work.' Unauthorized copying of a work generally constitutes infringement.2 Not all copying of an author's work, however, is deemed an infringement.' The statutorily defined defense of fair use permits copying for purposes such as criticism, news reporting, scholarship, and research.4 It has traditionally been held that the use of another's work for commercial purposes is presumptively unfair.' In fact, the Copy- 1. Copyright Act, 17 U.S.C. § 106 (1982). This section sets out the exclusive rights of the copyright owner, which include the right to reproduce copies of the work, the right to prepare derivative works, the right to distribute copies by sale, rental, lease, or lending, and in certain cases the right to perform the work publicly or display the work publicly. Congress enacted the copyright statute pursuant to U.S. Const. art. I, § 8, cl. 8, which grants Congress the power to "promot(e) the progress of science and the useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries." 2. 17 U.S.C. § 501 (1982) states that "[a]nyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 118, or who imports copies or phonorecords into the United States in violation of section 602, is an infringer of the copyright." 3. The Copyright Act lists several limitations on the exclusive rights of a copyright owner, including fair use, reproduction by libraries, exemption performances and dis- plays, secondary transmissions, and ephemeral recordings. 17 U.S.C. §§ 107-112 (1982). 4. 17 U.S.C. § 107 (1982). 5. See, e.g., Rosemont Enterprises, Inc. v. Random House, Inc., 366 F.2d 303, 309 (2d Cir. 1966), cert. denied, 385 U.S. 1009 (1967) (stating that commercial purposes do not promote the advancement of arts or sciences); Loew's, Inc. v. Columbia Broadcasting System, Inc., 131 F. Supp. 165, 174-76 (S.D. Cal. 1955), ajfd, Benny v. Loew's, Inc., 239 F.2d 532 (9th Cir. 1956), affd without an opinion by an equally divided court, 356 U.S. 43 (1958) (emphasizing the commercial nature of an infringing parody of the motion picture "Gaslight"); Conde Nast Publications, Inc. v. Vogue School of Fashion Modelling, Inc., 105 F. Supp. 325, 333 (S.D.N.Y. 1952); Henry Holt & Co. v. Liggett & Myers Tobacco Co., 23 F. Supp. 302 (E.D. Pa. 1938) (holding that the commercial nature of defendant's copying foreclosed him from copyright protection). The presumption was recently reaf- firmed by the Supreme Court in Sony Corp. v. Universal City Studios, Inc., 104 S. Ct. 774 Loyola University Law Journal [Vol. 16 right Act states that in determining whether a given use is fair, consideration should be given to whether the use is for nonprofit educational purposes rather than for commercial purposes.6 Only recently has the strict commercial standard been relaxed so that commercial uses of a copyright owner's work are no longer 'per se' unfair.7 This trend toward considering certain commercial uses as fair has paralleled the emergence of the commercial free speech doctrine.8 The first amendment's protection of free speech, like the fair use defense's protection of copying, has traditionally been ex- tended only to noncommercial settings.9 The Supreme Court has (1984), in which the Court stated that, "every commercial use of copyrighted material is presumptively . unfair .... ." Id. at 793. 6. 17 U.S.C. § 107 (1982) requires consideration of "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." It is implied by this factor that nonprofit educational uses do not injure the copyright owner's market while commercial users will impair the author's market and are therefore unfair. Under certain circumstances, however, educational uses can also be intended primarily for commercial gain at the expense of the copyright owner. See, e.g., MacMillan Co. v. King, 223 F. 862 (D. Mass. 1914), in which an outline of a college text, though educational in nature, appropriated so much of the text that the students did not need to buy the text. This commercial injury dictated a finding of copyright infringement. Id. at 867-68. 7. In Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171 (5th Cir. 1980), the court stated that the commercial nature of the use "is certainly not decisive" on the issue of fair use. Id. at 1175. Similarly, the court in Harper & Row Publishers, Inc. v. Nation Enterprises, 220 U.S.P.Q. (BNA) 321 (2d Cir. 1983), stated that "the fact that profit was involved is, without more, legally irrelevant. Id. at 332. The legislative history of the Copyright Act of 1976 states: This amendment is not intended to be interpreted as any sort of not-for-profit limitation on educational uses of copyrighted works. It is an express recogni- tion that, as under the present law, the commercial and non-profit character of an activity, while not conclusive with respect to fair use, can and should be weighed along with other factors in fair use decisions. H.R. REP. No. 1476, 94th Cong., 2d Sess. 66, reprinted in 1976 U.S. CODE CONG. & AD. NEWS 5659, 5679. 8. See generally Farber, Commercial Speech and First Amendment Theory, 74 Nw. U.L. REV. 372 (1979); Jackson and Jeffries, Commercial Speech: Economic Due Process and the First Amendment, 65 VA. L. REV. 1 (1979); Note, First Amendment Protection for Commercial Speech: An Optical Illusion?, 31 U. FLA. L. REV. 799 (1979); Note, The First Amendment in the Marketplace: Commercial Free Speech and the Value of Free Expression, 39 GEO. WASH. L. REV. 429 (1971). 9. For example, the Supreme Court held that the first amendment imposes no restric- tions on government in regard to regulating purely commercial speech in Valentine v. Chrestensen, 316 U.S. 52 (1942). Moreover, in Pittsburgh Press Co. v. Pittsburgh Comm. on Human Relations, 413 U.S. 376 (1973), the Supreme Court held that help- wanted ads were not protectible because they did not express an opinion, but merely offered possible employment. Id. at 385. Speech which did "no more than propose a commercial transaction" was held to be unprotected. Id. See infra notes 46-49 and accompanying text. 1984] Consumers Union v. General Signal Corp. recently recognized, however, that commercial forms of speech, such as advertising, may serve not only to advance the financial goals of the speaker, but also to educate the consuming public.' 0 Thus, commercial speech has been accorded first amendment protection. I The recent decision in Consumers Union of United States, Inc. v. General Signal Corp.,2 was the first to combine the doctrines of fair use and commercial free speech. Consumers Union involved the Regina Vacuum Company's use of favorable copyrighted lan- guage from a Consumer Reports article in its advertising.'3 The Court of Appeals for the Second Circuit found that Regina's advertising served the important educational function of informing the public of Consumer Reports' findings. '4 Thus, the defense of commercial free speech dictated that this use be declared fair. The Consumers Union decision could have the effect of offering a full-scale grant to freely infringe copyright.1 5 Since the fair use 10. Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748 (1976). The Court held that a consumer's interest in commercial information "may be as keen, if not keener by far, than his interest in the day's most urgent political debate." Id. at 763. See infra notes 53-57 and accompanying text. 11. 425 U.S. at 770. See also Bigelow v. Virginia, 421 U.S. 809 (1975) (which ex- tended first amendment protection to an advertisement for legal abortions, despite its commercial nature). 12. 724 F.2d 1044 (2d Cir. 1983), reh'g en banc denied, 730 F.2d 47 (2d Cir. 1984), cert. denied, 105 S.Ct. 100 (1984). Although Consumers Union is the first case to combine the defenses of commercial free speech and fair use, it is not the first case to consider the impact of commercial free speech on copyright law. The district court in Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 445 F. Supp. 875 (S.D. Fla. 1978) afl'd on other grounds, 626 F.2d 1171 (5th Cir.

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