Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and Its Predecessors
![handle is hein.journals/clr82 and id is 1622 raw text is: Fair Use as Market Failure: A Structural and Economic
Analysis of the Betamax Case and its Predecessors
Wendy J. Gordon*
In the recent and much publicized Universal City Studios, Inc. v. Sony
Corp. ofAmerica (Betamax) case,' the Court of Appeals for the Ninth Circuit
held that persons who make videotapes of copyrighted television programs in
the privacy of their homes should be considered to be copyright infringers.2
Basic to the court's reasoning was a misunderstanding of the fair use
doctrine. Called the most troublesome [doctrine] in the whole law of copy-
right,'3 fair use renders noninfringing certain uses of copyrighted material
that might technically violate the statute, but which do not violate the statute's
basic purposes.
The Ninth Circuit took the position that fair use could only protect
users who were productive second authors, and not persons who were making
ordinary or intrinsic use like the home videotapers.4 In doing so, the circuit
court rejected explicitly the economically oriented approach to fair use
adopted by the Court of Claims in Williams & Wilkins Co. v. United States.5
In its opinion in Williams & Wilkins, which was affirmed by an equally
divided Supreme Court in 1975,6 the Court of Claims held that massive
photocopying efforts by libraries could in some circumstances constitute fair
use.7 The Supreme Court has recently granted certiorari in the Betamax case,8
*Associate Professor of Law, Western New England College School of Law (on leave of
absence with Weil, Gotshal, & Manges for the academic year 1982-83). A.B. 1971, Cornell
University; J.D. 1975, University of Pennsylvania Law School. The views expressed herein are
solely those of the author.
I would like to thank Professors Bruce A. Ackerman of the Columbia University School of
Law, Robert A. Gorman of the University of Pennsylvania Law School, and Warren F. Schwartz
of the Georgetown University Law Center for their helpful comments on earlier versions of this
Article. Responsibility for all errors, of course, rests with me. The Article was prepared with the
aid of a research grant from Western New England College School of Law. Students Anne Cohen,
Patrick Lang and Charles Stephenson provided valuable research assistance.
The Article is dedicated to Norman W. Bernstein.
1. 659 F.2d 963 (9th Cir. 1981), cert. granted, 102 S. Ct. 2926 (1982) (No. 81-1687).
2. Id. at 969.
3. Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661, 662 (2d Cir. 1939) (per curiam). The
complexity of the issues underlying fair use has been recognized since its inception. See, e.g.,
Folsom v. Marsh, 9 F. Cas. 342, 344-45 (C.C.D. Mass. 1841) (No. 4901).
4. Universal City Studios, 659 F.2d at 970; see also id. at 971 (new technology strains the fair
use doctrine in removing control of access from the author). The court relied there on a
thoughtful work by Leon Seltzer. Seltzer, Exemptions and Fair Use in Copyright: The Exclusive
Rights Tensions in the New Copyright Act, 24 Bull. Copyright Soc'y 215 (1977), reprinted in L.
Seltzer, Exemptions and Fair Use In Copyright (1978).
5. 487 F.2d 1345 (Ct. Cl. 1973), aff'd by an equally divided court, 420 U.S. 376 (1975) (per
curiam).
6. 420 U.S. 376 (1975) (per curiam).
7. The Williams & Wilkins opinion is discussed infra notes 249-88 and accompanying text.
8. Sony Corp. of America v. Universal City Studios, Inc., 102 S. Ct. 2926 (1982) (No. 81-
1687.
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Fair Use as Market Failure: A Structural and Economic Analysis of the Betamax Case and Its Predecessors
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