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Copyright Misuse DoctrineCopyright misuse occurs when a copyright owner attempts to alter these fundamental limits “in a manner violative of the public policy embodied in the grant of copyright.” Lasercomb Am. v. Reynolds, 911 F.2d 970, 978 (4th Cir. 1990); Practice Mgmt. Info. Corp. v. AMA, 121 F.3d 516, 520 (9th Cir. 1997) (recognizing misuse where copyright is used to “secure an exclusive right or limited monopoly not granted by the Copyright Office”). Thus, Shloss v. Sweeney found a claim for copyright misuse where the copyright owner had used its copyright to obstruct use of non-copyrightable facts and use of copyrighted materials under the fair use doctrine. 515 F. Supp. 2d 1068, 1080 (N.D. Cal. 2007). Similarly, a copyright owner could commit misuse by violating one of the other public policy choices embodied in the Copyright Act, such as by using a license agreement to extend the length of its copyright monopoly. Copyright misuse can also occur when the assertion of copyright is aimed at suppressing speech.
The doctrine of misuse was first developed in patent law, which shares a common purpose with copyright law -- providing an economic incentive for creativity, and investment in creative activity, by extending to authors and inventors the right to obtain monopoly rents, for a limited time, on the sale, licensing or use their creative works or inventions.
The Supreme Court held that there is a defense of patent misuse to prevent the holders of patents from using the authority extended to them under the Patent Act to prevent competition in products that are not protected by patent. See, Morton Salt Co. v. Suppiger Co., 314 U.S. 488 (1942). Similarly, in Brulotte v. Thys Co., 379 U.S. 29 (1964), the Supreme Court held that a patent holder's attempt to collect royalties beyond the term of the patent constitutes misuse of the patent
The doctrine of patent misuse is similar to, but not identical to competition, or antitrust, analysis and it has been criticized as well as promoted (see Scheiber v. Dolby Laboratories, U.S. Court of Appeals (7thCir) for criticism).
Copyright misuse is not a defense recognized in the provisions of the federal Copyright Act, but is instead purely founded in federal case law, beginning with a 1990 case in the Fourth Circuit. The Fourth Circuit specifically tied the copyright misuse doctrine to any "use of the [copyright] to secure an exclusive right or limited monopoly not granted by the [Copyright] Office and which it is contrary to public policy to grant." Lasercomb America v. Reynolds. FN77: 911 F.2d 970, 15 USPQ2d 1846 (4th Cir. 1990). In Lasercomb the Court found copyright misuse where the holder of a copyright in computer software used a license agreement that barred licensees from using ideas contained in its software to write their own software.
In Alcatel U.S.A., Inc. v. DGI Technologies, Inc., 166 F.3d 772 (5thCir 1999) the Court found copyright misuse where the holder of a copyright in software licensed its use on the condition that the licensee also use it only in conjunction with the copyright holder's hardware. In DSC Communications Corp. v. DGI Technologies, 81 F.3d 597 (5thCir 1996) the case involved development of a competing microprocessor card.
While these cases have extended the doctrine of misuse to copyright, and have applied it in the context of computer software and hardware, these cases still basically apply a variety of competition analysis to find misuse.
August 26, 2003. The U.S. Court of Appeals (3rdCir) issued its opinion in Video Pipeline v. Buena Vista Home Entertainment, 342 F.3d 191 (3d Cir. 2003), affirming the District Court's preliminary injunction of Video Pipeline's online distribution of short clip previews of Disney movies, and rejecting Video Pipeline's affirmative defenses of fair use and copyright misuse. However, while the Appeals Court ultimately held that the copyright misuse defense fails in this case, it made new law by extending its applicability.
The dispute in the case involved Video Pipeline's internet publication of approximately two minute long "clip previews" of Disney movies, made by Video Pipeline. These clip reviews are different from the approximately two minute long "movie trailers", made by Disney, and published in Disney web sites, and licensed to other web site operators.
The defense of copyright misuse was raised in this case because Disney licensed its movie trailers subject to license terms that prohibit the licensees from using the movie trailers in a way that is "derogatory to or critical of the entertainment industry or of" Disney. That is, Disney uses the exclusive rights conferred upon it by the Copyright Act, not only to obtain a return for its creative efforts (which is consistent with the purposes of copyright protection), but also to suppress criticism (which is contrary to the purposes of copyright protection).
The Court noted that misuse "exists where the patent or copyright holder has engaged in some form of anti-competitive behavior." But, it went on to state that "More on point, however, is the underlying policy rationale for the misuse doctrine set out in the Constitution's Copyright and Patent Clause ... Put simply, our Constitution emphasizes the purpose and value of copyrights and patents. Harm caused by their misuse undermines their usefulness."
Copyright misuse is an equitable defense against copyright infringement in the United States based on the unreasonable conduct of the copyright owner.
The Court reasoned that the underlying Constitutional purpose can be undermined, not only by anticompetitive licensing terms, but also by attempts to restrict criticism.
With respect to competition, the Court wrote that "Anti-competitive licensing agreements may conflict with the purpose behind a copyright's protection by depriving the public of the would-be competitor's creativity."
With respect to suppression of criticism, the Court wrote that "A copyright holder's attempt to restrict expression that is critical of it (or of its copyrighted good, or the industry in which it operates, etc.) may, in context, subvert -- as do anti-competitive restrictions -- a copyright's policy goal to encourage the creation and dissemination to the public of creative activity."
The Court also made some other significant statements about the defense of misuse. It wrote that "Misuse is not cause to invalidate the copyright or patent, but instead ``precludes its enforcement during the period of misuse.´´" (Citing Practice Management.) Moreover, the Court wrote that "To defend on misuse grounds, the alleged infringer need not be subject to the purported misuse."
The doctrine forbids the copyright owner from attempting to secure an exclusive right or limited monopoly (usually through restrictive licensing practices) that is not granted by federal copyright law and is contrary to public policy. Finding that a copyright owner has engaged in misuse prevents the owner from enforcing his copyright through the securing of an injunction until he has "purged" himself of the misuse — i.e., ceased the restrictive practices.
Copyright misuse is not a defense recognized in the provisions of the federal Copyright Act but is instead purely founded in federal case law, beginning with a case in the Minnesota Federal District Court, M. Witmark & Sons v. Jensen, 80 F. Supp. (D. Minn. 1948). The doctrine later met with approval from the Fourth Circuit in Lasercomb v. Reynolds, 911 F.2d 970 (4th Cir. 1990). Other leading cases in the area include Assessment Technologies v. WIREdata, 350 F.3d 640 (7th Cir. 2003), and Int'l Motor Contest Assoc. Inc. v. Staley, No. 05-3080, N.D. Iowa June 19, 2006.
Copyright misuse is derived from the longstanding equitable doctrine of "unclean hands", which bars a party from asking for equitable relief (such as an injunction) against another when they have themselves acted improperly (though not necessarily illegally). Improper behaviour that may lead to a finding of copyright misuse includes (but is not limited to) anti-competitive activity. Courts are expanding the scope of the misuse.
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