POR LUIS C. SCHMIDT, SOCIO
MANAGING INTELLECTUAL PROPERTY, BRAND MANAGEMENT: SPONSORED EDITORIAL, MAY 2009.
Fair use is a legal theory used in IP law that sets out limitations to exclusive patent, trade mark or copyright rights and provides defences against allegations of IP infringement. It can be viewed as a line that divides the rights of IP owners from those of users of inventions, trade symbols and creative works. IP law is about protecting human creativity in every field, by conferring on the creator exclusive or other rights such as remuneration or moral rights. The rationale for protecting intellectual property is that by doing so we will stimulate creativity, which, in turn, will provide additional benefits to society. In keeping with this, a society agrees to protect creativity in order that something novel, distinctive or original is made which can solve a functional problem or contribute to learning or enjoyment. Ultimately, fair use stands as a balanced solution to limit undue obstacles that might otherwise result from excessive IP protection.
Fair use can arise in multiple situations, depending on the nature of copyright or systems of author’s rights. The Berne Convention has imposed a standard, supported by a so-called three-step test, stating that works can be freely copied: (1) under special situations; (2) without affecting their normal exploitation; or (3) without to prejudice the rights of authors. National laws have used the standard rule as a reference to develop their own fair use regimes. Notably, US law has emphasized that a work can be used freely when users pursue a special purpose, and when the nature of the work and the amount used permits it. The US rules support the idea that copyright exists to benefit the public at large and not only the author or publisher, and that use is justified when the use of a work furthers learning, exercise of free speech or advancement of knowledge.
Mexico’s Copyright Law is particularly strict and rigid in its application of fair use principles. One important provision states that works can be utilised without authorisation, as long as the law states it expressly and the normal exploitation of the work is not affected. However, the law has further listed exceptions to copyright rights in a manner that would probably conflict with the three-step test. The list indicates when the use of a work is fair on the grounds that it is special and will not affect copyright. Thus, every use made outside of the list would require consent. The question is whether the three-step test really works in Mexico, given that it seems to be limited to activities within the list. Regarding “normal exploitation” of works, fair use users would need to fulfil that requirement in addition to meeting the requirements set out in the list. For example, text quotation is valid to the extent that use does not affect the “normal exploitation” of the literary work being copied.
The Copyright Law mostly deals with limitations to the economic right of reproduction in literary works, including: i) text quotation, when reproduction is non-substantial and not a mere “simulation”; ii) copy of articles, photographs, illustrations or commentary, regarding so-called actual happenings, previously disclosed by the press or electronic media, and that rights holders have not reserved for their own exercise; iii) copy of parts of a work for scientific, literary or artistic critique and investigation; iv) private copying on just one occasion by an individual, academic, investigative or non-profit institution; v) copy made by libraries or archives for the purpose of preserving or security, provided that the work is out of stock, no longer catalogued or at risk of disappearing. Other limitations to the right of reproduction are: i) reproduction by virtue of drawing, photographic and audiovisual means of works that are visible from public places; ii) reproduction of software for backup or when indispensable for the operation of a licensed software; and iii) reproduction of works for obtaining ephemeral recordings, provided that any broadcasting is made as agreed by the copyright owner and broadcast entity; no simultaneous emission or transmission is made when the recording is made, and the recorded signal is recorded only once.
The provisions dealing with limitations on copyright reproduction generally apply to literary and other categories of works such as audiovisual or software. However, their scope is narrow since users require consent by the copyright holder to distribute copies of works, or publicly perform or transform them. For example, users are allowed by law to copy parts of a work for scientific critique and investigation, but would still be prevented from distributing the copies of the parts of works reproduced; making a public performance of the copied parts or of any works produced by copying the parts; or adapting the parts of works copied in their productions.
In addition to copyright reproduction rights, the Copyright Law imposes a restrictive set of limitations to the rights of distribution, public performance and transformation. The limitations to the right of distribution are: i) distribution of copies obtained by drawing, photographic, and audiovisual means of works that are visible from public places; and ii) the first sale doctrine. The limitations to the right of public performance are on public performance in systems used by video rental or sale establishments; and public performance of copies obtained by drawing, photographic, and audiovisual means of works that are visible from public places. The limitation to the right to transform regards the modification of a building constructed on the basis of an architectural plan.
Neighbouring rights of performing artists, phonogram (sound recording) producers, broadcast entities, book publishers and video recording producers are also subject to limitations in the following circumstances. First, when use is not made for the purpose of direct gain, which would likely extend to forms of utilizing that entail an indirect gain; secondly when users employ for news reporting short fragments of performances – as fixed or reproduced – phonograms, broadcast signals, books, or video recordings; and thirdly when users reproduce performances, phonograms, broadcast signals, books or video recordings under the same conditions that limit the reproductions of works.
Limitations become stricter when somebody owns copyright on various works – or copyright and neighbouring rights – in connection with a given subject matter. This would apply, for example, to a TV producer and broadcaster who own copyright rights on TV programmes as well as neighbouring rights on the TV signals carrying the programmes. It would be difficult for competitors to provide free broadcasts of the protected broadcasts and signals, since it would not only have to deal with the narrow application of copyright limitations, but of neighbouring rights as well.
Parody is not expressly mentioned in the Copyright Law as a limitation to copyright or neighbouring rights. At first glance, it should not be allowed – even under the three-step test – considering that parody is not listed as a permitted form of use under the law. However, parody could be regarded as an implied limitation supported by the constitutional right of free speech. In any event, parody of a work or character will only be possible to the extent that it involves humour and social criticism. Likewise, the three-step test criteria should be fulfilled, in that the parody should be made under special circumstances and without affecting copyright or neighbouring rights (sometimes users have invoked parody to hide their real intent to free-ride or misappropriate copyright or neighbouring rights or to disparage by way of libel or slander). Under the copyright law, users have to be fully respectful of copyright moral rights and not attempt to threaten the integrity of the work or character subject to the parody, including making any alteration or modification representing destruction.
Fair use on the internet
Since April 2009, Congress has studied a bill for protecting rights of users on the internet. Among other things, the draft law incorporates a chapter laying down limitations to copyright rights in digital environments as well as the rights in sound and video recordings. Among the relevant parts of the draft law can be found: i) a right of users to make transitional copies of works obtained from the internet into the random access memories of computers. However, this right would conflict with certain provisions of the Copyright Law that protect works against ephemeral copying; ii) a software backup right, which appears to repeat the provision of the Copyright Law; iii) a right to copy video or sound recordings into the memory of computers, including the digitalisation of analogue recordings; iv) reproduction of photographic and literary works accessible over the internet for private purposes; and v) a recognition of so-called flexible licences that follow the Creative Commons guidelines or the rules in similar schemes. It is expected that the draft law will face strong opposition from authors and the cultural industries.
Trade mark law
The concept of fair use has not developed in trade mark law to the same extent as it has under copyright law. However, as in copyright law, society can have a legitimate interest in trade marked symbols for reasons other than those that the law protects. Society may consider that it is important to be able to use trade marks for purposes that are essentially non-distinctive or that do not cause confusion among consumers. Accordingly, in general terms, users are implicitly authorized by the law to print on their products or packages the trade marks of products or services that have been used to make their own. Mexico’s trade mark law is not explicit about the limits to this right. However, it has worked in practice, perhaps as in copyright law, based on the constitutional rights of free speech. Trade mark law does not confer an express limitation provision, nor does it stipulate parameters in connection with the limitation. There is no such three-step test doctrine in the Paris Convention, and therefore there are no indications when the free use of trade marks begins to be ordinary, harming or abusive. In the end, the governing rules can simply be based on the rules of reason and fairness.
Parody is also an issue for trade mark law. The questions raised in the trade mark field are similar to those in the area of copyright law, although they are principally centred on consumer confusion and other trade mark law theories. Under trade mark law parody has been justified when a consumer can differentiate between the original and the parodied trade mark. Parody principles apply equally to trade marks, in particular those that limit parody to humour and criticism. Mexico’s Trade Mark Law does not address parody directly, but appears to recognise it as a limitation or defence in favour of users. This defence does not cover use as a distinctive symbol in trade but does cover use as an artistic expression or even in commerce, where it is a non-disparaging reference in acomparative advertisement or similar form. Constitutional rights of free speech allow parody as it also has permitted it in connection with works-of-authorship and character performances. Thus, artists or scholars can “use” trade marks for humorous criticism exclusively, as long as they do not target the trade mark owner itself, but use the trade mark to highlight a social problem or situation. Likewise, competitors of the trade mark owner or consumers of the trade marked product or service can both rely on the parody limitation to defend themselves from infringement claims.