The law only goes so far as to say, “These four factors (but not only these four factors) should play a role in a decision of whether or not a use is fair.”

On the one hand, that’s pretty neat: Congress saying, “Listen, people, act fairly.” One another hand, it’s ill-defined, and uncertainty does impose costs.

The problem is that the system has been bent out of whack, largely as the result of successfuly lobbying and long term international campaign tactics by the Hollywood Moguls (OK there are others but “Hollywood moguls” has a nice pejorative sound).

It will not be fixed by trying to better define the edges.

On the other hand, some cases just can’t settle. The lead paint trial in Rhode Island, which just concluded, is a great example of the rare sort of case that was of such importance that it could not settle and therefore will create a precedent. This case has been around for five years, with a trial to a hung jury three years ago, and now a retrial. All but one defendant refused to settle because they felt that a settlement would be worse than a loss, in that settlement would encourage copycat cases. Now three of the four defendants that went to trial have lost, and the issues will go up on appeal and we’ll get some answers.

What you have are powerful and organized groups throughout society who are in conflict with each other, and out of these conflicts genuine, hard-fought disputes emerge. The Sierra Club looks for cases to make precedent and to rally contributors around, and so does the American Forest and Paper Association. But these people are actually fighting each other over real disputes, and the stakes are high. And there is always a real plaintiff and a real defendant, who have injuries (and in the case of corporate defendants, shareholders) as well as principles. The cases that actually make precedent are thrown up as a result of struggle among social actors, not by agreement. Participants have poor information about what their adversaries are up to and often misunderstand the relative strengths of their own position. Judges do things that no one anticipates, based on bureaucratic pressures within the courthouse having nothing to do with the case. Lawyers make recommendations to management, which moves too slowly to implement a strategy. Management tells lawyers to carry out a plan, which is botched due to the lawyers’ failure to understand the client’s business. There’s a tremendous amount of randomness in what cases actually go to trial and up on appeal, and the posture that they arrive there, just as there is a lot of randomness whenever decisions are made under circumstances of conflict.

There are, by contrast, cases where no one has a genuine stake in the litigation, and these cases aren’t pretty. These arise in the context of class action litigation, where trial lawyers front a plaintiff’s representative for large numbers of people who supposedly each have very small injuries. The problem is that none of the plaintiffs really cares what happens. The abuses in this area are well-known—particularly in what are called “coupon settlements,” where defendant agrees to give each plaintiff a coupon worth, say, 15% off their next purchase of a product they don’t want, and the defendant also agrees to pay the plaintiffs’ lawyers’ fees- in the millions of dollars. These settlements are pay-offs. You can think of them as stick-ups, or you can think of them as bribes, but either way they are not justice for the class members or the defendants.

Remember that the judge has no power to investigate and no interest in seeking out facts that the parties don’t present to her or in devising legal theories that the parties don’t articulate. The judge is passive- she knows only what the parties tell her, and her only goal is to settle the dispute that’s in front of her. This system only works if you have parties who are really adverse- and that means people and companies that are invested in the case.

Some of the worst precedents, ironically, are made when a complex issue arises in a small-dollar case – the lawyering is often poor and slapdash, and the resulting decisions are unworkable or have bizarre consequences. But because the same issue is likely to arise again in another court, usually the bad effects are eventually limited in time or in space.

“…it’s worth noting that some of the most famous cases were somewhat collusive—they had willing plaintiffs, who deliberately acted so as to have a case. If my memory is correct, Dred Scott was a case of that sort, as was the Snopes trial.”

That aspect of the Snopes trial was just an unconfirmed internet rumor.

And the answer to that, it turns out, is yes.

For example, in Nixon v. Fitzgerald, 457 U.S. 731 (1982), the plaintiff was suing former President Nixon on a retaliatory-firing claim. The big issue in the case was whether Nixon had absolute immunity from such suits. The court of appeals said no, no absolute immunity. At that point, while the case was going up to the Supreme Court, the parties entered into a contingent settlement: Nixon paid the plaintiff $142,000, and they agreed that the plaintiff would receive an additional $28,000 if the Supreme Court affirmed the court of appeals, and no more money if the Court reversed.

The Supreme Court held that the arrangement did not make the case moot, because “[t]he limited agreement between the parties left both petitioner and respondent with a considerable financial stake in the resolution of the question presented in this Court.”

This is different from both parties honestly thinking a real case is good for them – there, they presumably mean it.

John H’s idea would be especially interesting if employed to clarify the boundaries of sexual-harassment law.

This rule is so important it’s in the constitution- courts may not hear disputes absent a genuine “case or controversy.” When George Washington was president, he asked the Supreme Court if it would give guidance on various topics and Chief Justice John Jay responded that the Court could not go beyond its narrowly defined duty of deciding specific cases that come before it.

Aside from its advantages in allowing law to develop incrementally, the case or controversy rule keeps the courts from intruding into the proper place of the legislature. Given the enormous power of judges in a common law system, the case or controversy requirement is a necessary protector of democracy. If you see a social problem that needs a remedy, then you talk to your congressman—by creating an organization that has some political muscle, if you want to have much of an effect. If you personally have been cheated out of money or denied a basic right, that’s when you bring a lawsuit. But it’s not a good idea for people to be able to choose a forum and a judge and put an important social issue before one governmental officer for decision.

You’ve hit on a serious problem that intensifies as technology increases the number of “copyright events” in the world. As other commenters rightly explain, we lack a mechanism for cheap, quick anticipatory adjudication of fair use claims. I have a paper that I’ll be posting to the web in the next month or so that proposes the creation of a Fair Use Board in the Copyright Office to hear such claims.

Under the proposal, a person could petition for a Fair Use Ruling by submitting the copyrighted work and a description of the proposed use. Notice would be served on the copyright owner, who would have an opportunity to participate. The record would be only on paper. A favorable fair use ruling would insulate the petitioner from liability but would not be a precedent that anyone else could formally rely on. These rulings would be posted on the Web, however, which would provide informal guidance for others. Appellate review of such rulings would be first by the Register of Copyrights and then in the federal courts of appeals.

My fallback proposal is that such favorable rulings could be used to limit the damages if a court were to disagree about whether a particular use was fair. David Nimmer has a proposal along these lines.

The parallel strategy is to develop “best practices” regarding fair use. While these would not have the force of law, they might be taken into account by a court when applying the law. Documentary filmmakers have taken the lead with this approach. See http://www.centerforsocialmedia.org/rock/backgrounddocs/bestpractices.pdf
This strategy is particularly useful when the issue is not about the courts but media gatekeepers the refuse to rely on fair use even in the clearest cases (E.g. Two lines from song lyrics in a scholarly book).

Best,
Mike