13. Sony Corp vs.

Universal Studios

Facts: Sony Corporation of America manufactured and sold the "Betamax" home video tape recorder
(VTR). Universal City Studios owned the copyrights to television programs broadcast on public airwaves.
Universal sued Sony for copyright infringement, alleging that because consumers used Sony's Betamax to
record Universal's copyrighted works, Sony was liable for the copyright infringement allegedly
committed by those consumers in violation of the Copyright Act. Universal sought monetary damages, an
equitable accounting of profits, and an injunction against the manufacturing and marketing of the VTR's.
The District Court denied all relief, holding that the noncommercial home use recording of material
broadcast over the public airwaves was a fair use of copyrighted works and did not constitute copyright
infringement.

Issue: Does Sony's sale of "Betamax" video tape recorders to the general public constitute contributory
infringement of copyrighted public broadcasts under the Copyright Act?

Ruling: No. The Court held that the sale of the VTR's to the general public does not constitute
contributory infringement of [Universal's] copyrights." The Court concluded that there was a significant
likelihood that a substantial number of copyright holders who license their works for free public
broadcasts would not object to having their broadcasts time-shifted by private viewers and that Universal
failed to show that time-shifting would cause non-minimal harm to the potential market for, or the value
of, their copyrighted works. Accordingly, the sale of copying equipment does not constitute contributory
infringement if the product is widely used for legitimate, unobjectionable purposes, or, indeed, is merely
capable of substantial non-infringing uses.

14. Harper & Row vs. Nation Enterprises

Facts: Former President Gerald Ford contracted with Harper & Row, Publishers, Inc. to publish his
memoirs. Harper & Row negotiated a prepublication agreement with Time Magazine for the right to
excerpt 7,500 words from Ford's account of his pardon of former President Richard Nixon. Before Time
released its article, an unauthorized source provided The Nation Magazine with the unpublished Ford
manuscript. Subsequently, The Nation, using approximately 300 words from the manuscript, scooped
Time. Harper & Row sued The Nation, alleging violations of the Copyright Revision Act of 1976. The
District Court held that The Nation's use of the copyrighted material constituted infringement. In
reversing, the Court of Appeals held that Nation's use of the copyrighted material was sanctioned as a fair
use.

Issue: Does publication of parts of a work soon to be published qualify as fair use?

Ruling: No. Publication of parts of a work soon to be published does not qualify as fair use. The idea
behind the fair use doctrine as it was framed in the common law was that one using a copyrighted work
should not have to get a copyright holder’s permission to use the copyrighted work in a case where a
reasonable copyright holder would in fact grant permission.

Section 107 of the Copyright Act, which codified the doctrine, expressly noted in its legislative history
that it was not meant to change the common law. As for reasonableness, it is not reasonable to expect a
copyright holder to let another person “scoop” it by publishing his material ahead of time. Regarding the
language of § 107, the section lists four points to consider in applying the doctrine. The two factors most
relevant here are purpose of the use and effect on the market. Usually, a fair use will not be one of
economic competition with the copyright holder, which is exactly what prior publication of a copyrighted
work is. In addition, the effect on the market of such a use is shown by what happened here: it greatly
decreases the market value of the copyrighted work. Therefore, the conclusion in this case, and in almost
all cases, is that prior publication of a work pending publication will not be a fair use.