opencontentlawyer.com

As I mentioned in my last post, this is an appendix I wrote for a report looking at the use of Creative Commons licenses for (mostly) public sector organisations in the UK from back in 2005. It outlines some of the issues present with the use of the term in the CC licences. As this is taken from an earlier word processor draft that I had, there may be some minor errors or formatting difficulties with using this draft and pasting it into a WP post (and of course it’s from 2005).

Commercial versus Non-commercial Use

Defining the difference between “commercial” and “non-commercial” can be extremely difficult. Parliament considered and ultimately rejected a proposal to add “non-commercial” to a fair dealing exception during the 1988 revision because of this difficulty. [Footnote 1.] One American court, in relation to a fair use analysis, has stated that the problem with this distinction is that it “somewhat unrealistically paints the world into two corners.” [Footnote 2].

Creative Commons-style licenses, with their attendant restrictions on non-commercial use, are too new to have developed any case law construing the meaning of the term as used in the license. The question of construction of “non-commercial” in relation to Creative Commons (CC) and similar licenses may need to be focused on what the licensor (the author) intends when she uses the term “non-commercial” and what the users think when they read the restriction. When users, both as licensors and as licensees, use the term, do they refer to:

• The use of the work or the status (as a non-profit) of the organisation using it?
• Direct or indirect compensation?
• Monetary or non-monetary compensation?
• A Continental-style private copying exception?

Commercial/non-commercial issues in relation to fair dealing and fair use may not be the best place to start because they have different public policy concerns. Fair dealing and fair use as a policy balances the property rights of the copyright holder with the general public interest. The point of a Creative Commons-style license is not to grant users rights that they already have, but to grant additional rights. Fair dealing and fair use do, however, help to illustrate some of the problems with the term “non-commercial” in relation to the four areas above.

UK copyright law has only recently included the term “non-commercial” in relation to s. 29, the research and private study exception—it was added as part of the implementation of the Information Society Directive. [Footnote 3]. The statute, however, neglects to define the term. The Directive doesn’t categorically define the term either, but it does provide that whether an act is non-commercial “should be determined by that activity as such” and that “the organisational structure and the means of funding concerned are not the decisive factors in this respect.” [Footnote 4]. This is a definition based more on the use of the work rather than the status of the organisation using it—though status is still a factor. This formulation also tracks the American use of the term. [Footnote 5]. It is important to note though that the phrase “non-commercial use” to a layperson may indicate a general right to use by non-profit entities, even though the term is not used in that manner by other law.

Because s. 29 does not define the term, one treatise notes that commercial/non-commercial should be used with their “ordinary meanings”; in other words, a dictionary definition. [Footnote 6]. A dictionary definition also fits into the contract or contract-like nature of a copyright license. The Oxford English Dictionary, in relevant part, defines commercial as “[e]ngaged in commerce; trading”; “[h]aving reference to, or bearing on commerce”; and “looking toward financial profit.” [Footnote 7]. The OED definition sets up a rather broad scope for commercial activities; covering “any activity conducted with a view to making a profit.” [Footnote 8]. This definition raises the issue of whether this includes direct or indirect compensation as profit, and whether that compensation needs to be monetary or non-monetary.

Selling an object for direct profit plainly fits into the commercial category. Outside of this simple case, including indirect compensation into the analysis incorporates a wide variety of activities into the term “commercial”. In the United States, where a body of case law exists dealing with this distinction in relation to fair use and copyright, the Supreme Court states that the question is “whether the user stands to profit from exploitation of the copyrighted material without paying the customary price.” [Footnote 9]. This view places virtually any use for which there is a market as a commercial use—the “profit” is saving money by not paying the usual price. The “market view” is the same view expressed when referring to the rights holder’s “normal exploitation” of a work, which is specifically demonstrated in relation to database rights in the EU [Footnote 10] or more generally as part of the Berne convention’s “three step test”. [Footnote 11]. The “market view” is also present when examining the encroachment of licensing for photocopies in academia in the UK.

Including non-monetary compensation also broadens “commercial” to include a wider array of activities. In both a U.S. and a Finnish case, a warez group’s web site was seen as commercial because members contributed goods or services in order to receive copyrighted works. [Footnote 12]. This logic has the potential of making online file trading on a quid-pro-quo basis a commercial activity. Because most of the goods involved with Creative Commons-like licenses are digital and presumably freely available on the internet, it is not clear how much of an issue this would be—it would seem to be difficult to barter for a good that is freely available from elsewhere.

UK law doesn’t provide for a general right to make private copies, and allowing non-commercial use would seem to track the Continental concept of private copying—Article 5(2)(b) of the InfoSoc directive. This term could explicitly permit the technically-infringing-but-as-a-practical-matter-unenforceable activities that many people perform every day. Rather than have these activities infringe, Continental systems institute equipment levies to ensure that rights holders receive “fair compensation”. Problems with this framework may arise in the future as technology allows more and more enforcement of restrictions on these everyday activities.

Conclusion and Recommendations

In the end, judicial construction of the term “non-commercial” would likely involve an inquiry into all of the circumstances surrounding a transaction and then considering all of the factors together. Using the market or normal exploitation approach and including non-monetary compensation greatly extends the reach of what is “commercial”. This has two primary affects: (1) many activities may be seen as commercial that were not intended by licensor or are not obvious to the licensee, and (2) licensors have a greater chance of being able to stop an activity because of the broad reach of their potential markets. The market or normal exploitation form of commercial use therefore only gives up uses which are difficult to enforce and don’t currently earn revenue. This approach, however, seems rather narrow.

CC-style licensing concentrates on more liberal notions of use and distribution—users are encouraged to distribute the works in ways that affect the market or normal exploitation—such as P2P systems. Limiting the term commercial to direct monetary compensation may better fit the goals of Creative Commons-like licensing, but, as demonstrated, it is not necessarily the only reading of the term. Creative Commons recognises this issue, and as an example, the generic (US) Creative Commons license defines non-commercial as:

[A]ny manner that is primarily intended for or directed toward commercial advantage or private monetary compensation. The exchange of the Work for other copyrighted works by means of digital file-sharing or otherwise shall not be considered to be intended for or directed toward commercial advantage or private monetary compensation, provided there is no payment of any monetary compensation in connection with the exchange of copyrighted works. [Footnote 14 - JH note that the licensing structure has changed since 2005 but the language has stayed the same].

The above clause attempts to limit “non-commercial” to direct monetary compensation, and to eliminate any judicial construction of the term to include exchanging works as payment.

It may be advantageous to determine what users feel should be the standard for non-commercial use. Some situations that might be indicative of their views on the subject might be:

• Whether they would consider a website hosting CC-licensed content with advertising, such as Google Ad Words, as non-commercial use.
• Whether they would consider Pay Pal tip jars or other similar donation programs as non-commercial.
• Whether recovering only the actual costs of distribution would be non-commercial, such as charging the cost of a blank CD-R for physical distributions of CC-licensed music.
• Whether recovery of actual operating costs for hosting the material (bandwidth charges, etc) would be considered non-commercial.
• Whether a television station could broadcast CC-licensed material without including advertisements.
• Whether a teacher copying the work for distribution to a class would be non-commercial.
• Whether advertising for a non-profit would be non-commercial.

These situations would help determine what users, both licensors and licensees, mean when they encounter the term “non-commercial”, and consequently whether the licenses fit their intent.

Footnotes.

1. For CDPA s.29 Research and Private Study. See Cornish and Llewelyn at 443, 511
2. Salinger v. Random House, Inc. , 650 F. Supp. 413, 425 (S.D.N.Y. 1986); See Nimmer on Copyright 13.05 [A][1][c]. The court was addressing fair use factor, 17 U.S.C. 107(1) “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes”
3. Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society.
4. Id. Recital (42).
5. Nimmer on Copyright 13.05 [A][1][c].
6. Copinger and Skone James on Copyright 9-28.
7. OED.com “commercial”.
8. Copinger and Skone James 9-28.
9. Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562 (1985).
10. The British Horseracing Board Ltd v. William Hill Organisation Ltd (Case C-203/02) 9 November 2004.
11. Exceptions must (1) be confined to certain special cases; (2) not conflict with the normal exploitation of a work; and (3) not unreasonably prejudice the legitimate interests of the right holder.
12. United States v Slater, 348 F3d 666 (2003, CA7 Ill); Adobe Systems Inc. and Others v. Tomi Kristian Kaajamaa Supreme Court, Helsinki 1 November 1999 [2001] E.C.D.R. 1.
13. See Egypt v Gamal-Eldin [1996] 2 All ER 237, EAT(construing commercial activity as a balancing test in relation to sovereign immunity).
14. “Attribution Non-commercial” 4(b) @: <http://creativecommons.org/licenses/by-nc/2.0/legalcode> [JH addition in 2008 - note that the new "generic" is the unported licence available at http://creativecommons.org/licenses/by-nc/3.0/legalcode ]