## Facts

- Michigan Document Services, Inc. (MDS) was a for-profit copy shop near the University of Michigan, owned by James M. Smith.
- University professors assigned students readings drawn from copyrighted scholarly books and articles.
- MDS produced “coursepacks” containing substantial, verbatim excerpts—often many pages—from those works, with little or no alteration.
- MDS bound the copied excerpts into coursepacks and sold them to enrolled students at a profit.
- Competing copy shops commonly sought and obtained permissions from publishers (often through the Copyright Clearance Center) for similar copying.
- MDS did not seek or obtain permission from the copyright holders and paid no licensing fees.
- Princeton University Press, Macmillan, Inc., and St. Martin’s Press, Inc. sued MDS and Smith for copyright infringement.
- The federal district court granted summary judgment to the publishers, rejected fair use, found willful infringement, and awarded damages and injunctive relief.
- A Sixth Circuit panel initially reversed, but the court granted rehearing en banc and vacated the panel decision.

## Issues

1. Whether MDS’s unauthorized reproduction and sale of coursepacks containing substantial excerpts from copyrighted scholarly works qualifies as fair use under 17 U.S.C. § 107.
2. Whether the educational purpose of students and professors changes the fair-use analysis for a commercial copy shop that reproduces and sells the material for profit.
3. Whether unlicensed coursepack copying that substitutes for paid permissions causes market harm under the fourth fair-use factor, including harm to an established permissions/licensing market.
4. Whether the district court properly found willful infringement and set statutory damages.

## Decision

- The en banc Sixth Circuit held that MDS’s copying and sale of coursepacks was not fair use under 17 U.S.C. § 107.
- The court affirmed summary judgment for the publishers on infringement liability and affirmed the rejection of the fair-use defense.
- The court vacated the district court’s willfulness finding and the associated damages award and remanded for further proceedings on willfulness and remedies.

## Legal Principles

- Fair use under 17 U.S.C. § 107 requires a case-specific balancing of the four statutory factors.
- In assessing factor one (“purpose and character of the use”), the relevant “use” is the defendant’s conduct; a commercial copy shop’s profit-making reproduction and sales do not become noncommercial merely because students use the copies for class.
- Verbatim, non-transformative copying for commercial sale weighs against fair use under factor one.
- Under factor two (“nature of the copyrighted work”), scholarly works may contain creative expression; this factor can weigh against fair use, though it is often less decisive than factors one and four.
- Under factor three (“amount and substantiality”), copying large or qualitatively important excerpts (including what instructors select as the most valuable parts) weighs against fair use.
- Under factor four (“effect on the market”), harm includes harm to a functioning permissions/licensing market for excerpts; unlicensed copying that serves as a substitute for paid permissions weighs strongly against fair use.
- When the use is commercial and non-transformative and there is an established licensing mechanism, the availability and impairment of the licensing market is a strong indicator against fair use.

## Conclusion

The Sixth Circuit (en banc) ruled that Michigan Document Services’ for-profit practice of compiling, photocopying, and selling coursepacks made of substantial, verbatim excerpts from copyrighted scholarly works was not fair use because the copying was commercial and non-transformative, involved meaningful portions of protected works, and displaced an existing permissions market; the court affirmed infringement liability but vacated the willfulness finding and damages award and remanded for reconsideration of those remedial issues.


Princeton University Press v. Michigan Document Services, Inc., 99 F.3d 1381 (1996)