Men are fond of power, especially over what they call their own; and all men conspired to make the powers of property as extensive as possible.
--Lord Kames¹

[The] zealous defense of the copyright owner's prerogative will, I fear, stifle the broad dissemination of ideas and information copyright is intended to nurture.
--Justice Brennan²

I.    Introduction

¶ 1         Here comes the breaking news: the American fair use doctrine may have violated the so-called three-step test, a core minimum standard for copyright protection, originally created under an amendment to the Berne Convention. Why? According to a recent World Trade Organization (WTO) panel's decision,³ the three-step test requires that any given limitation on copyright be "clearly defined" and "narrow in its scope and reach."⁴ Therefore, the broad and flexible nature of the fair use doctrine may render it violative of the three-step test. The very power wielded by the three-step test, much to the surprise and shame of American jurists, can indeed ring the death knell for the fair use doctrine which was proudly and indigenously invented in the United States.

¶ 2         To be sure, as the strongest supporter of enhancing international copyright protection, the United States is not the only country that is facing the imminent three-step test challenge. In fact, the challenge looms large for all European Union (EU) members. For example, in a recent decision, a Dutch court boldly asserted that "the limitation or restriction imposed on the copyright . . . will only be applicable if [the] preconditions [set out in the three-step test] are met."⁵

¶ 3         Historically, the three-step test was not imbued with such sweeping power. Rather, it was generally designed to shield authors' reproduction rights under the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention).⁶ Yet, with the recent proliferation of international, regional, and bilateral treaties associated with copyright protection, the three-step test has been hailed as the panacea for measuring the legality of all limitations on copyright. For example, the test is incorporated into the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs Agreement)⁷, the World Intellectual Property Organization (WIPO) Copyright Treaty (WCT),⁸ and the WIPO Performances and Phonograms Treaty (WPPT).⁹ Based upon its tripartite conjunctive structure, the three-step test mandates that copyright limitations shall: (1) be confined to certain special cases; (2) not conflict with a normal exploitation of the work; and (3) not unreasonably prejudice the legitimate interests of the right holder.

¶ 4         While the three-step test has been widely adopted as a one-size-fits-all standard measuring the validity of limitations on copyright,¹⁰ the creation of copyright limitations is a highly dynamic legal process that embodies a host of economic, social, cultural and political values. This is because copyrights "are limited in nature and must ultimately serve the public good."¹¹ Underneath the limitations on copyright lies the state's police power to regulate the exercise of property rights in order to "advance a substantive conception of a just and attractive intellectual culture."¹² Hence, "[b]oth property and liberty," surely including copyright, "are held on such reasonable conditions as may be imposed by the governing power of the [s]tate."¹³ To be sure, the state's exercise of such police power inextricably implicates a close examination of "the safety, health, morals and general welfare of the public."¹⁴ The pluralistic nature of this examination, in turn, begs the question of whether simply reducing normative deliberation to a monistic calculus, such as the three-step test, will provide a desirable benchmark for evaluating the validity of all copyright limitations. The following two questions are of paramount importance when considering the desirability of supporting the three-step test's recent heyday.

¶ 5         First and foremost, is the three-step test a legitimate rule per se? Judging from a textual reading of the three-step test, it is patently clear that the touchstone of the test is a single rhetorical mode which deems copyright holders' economic interests unquestionably sacred and virtuous. Yet the rhetorical mode of this type would definitely give rise to the concern that, by acting as merely the agents of copyright holders' interest, the architects of the three-step test might have swept matters concerning public interest under the rug of their negotiating table. This places at risk the set of public interest-oriented copyright limitations that have been traditionally adopted in national copyright systems.¹⁵ When it comes to developing countries, "[a] central question is whether the exemptions and limitations within the existing framework of international rules allow developing countries to set the right balance in protecting copyright [while] addressing their special development needs."¹⁶ If the three-step test were indeed a copyright-holder centered standard, its implementation would surely discourage developing countries' initiatives to tap into copyrighted works to facilitate the realization of their development agendas.

¶ 6         The second question concerns whether the three-step test is capable of creating a dynamic, public-welfare oriented adaptation of the traditional copyright limitations, which could be applied to the novel circumstances of copyright exploitation that is facilitated by advances in digital technology. It seems that the expansion of the three-step test has been premised upon the notion that the more easily a copy can be made and disseminated, the smaller the scope of copyright limitations should be. Indeed, the three-step test has acted as a catalyst for narrowing the scope of copyright limitations.¹⁷ Nonetheless, others take the stance that the ultimate value of technology and copyright law lies in the well-being of the public at large, arguing that it is not necessary to shrink the scope of copyright limitations in the context of digital technology. Given the myriad opportunities for enhanced access to information and the flourishing of new business models for exploiting copyrighted works,¹⁸ the limitations on copyright should be carved out in a broad manner.¹⁹ Among the various proposals offered, the most powerful is the alternative compensation system (ACS) invented by Professor William Fisher.²⁰ To bring this proposal to fruition, he suggests that a new list of broad-based copyright limitations should be added into national and international copyright law.²¹

¶ 7         This article argues that the inquiry into the legitimacy of the three-step test affords the very vehicle through which all the aforementioned questions could be reconsidered in a critical way. Based on an analysis of the relevant problems underlying this rule, I contend that the three-step test, as the final arbiter of the validity of copyright limitations, has gone too far in shielding the sanctity of copyrights. As I will demonstrate, the three-step test reeks of fundamental misconceptions, unfounded absoluteness, and unnecessary arbitrariness, making it the Achilles' heel of the copyright regime. I therefore introduce a proposal to reshape the three-step test.

¶ 8         To this end, Part II provides a historical review of how the three-step test, a rule initially laid down to shield the reproduction right in the analog world, has been made applicable to the whole bundle of exclusive rights provided for in the current multilateral and bilateral copyright treaties and national copyright laws.

¶ 9         Part III demonstrates that the three-step test wields the power to strike down copyright limitations that promote public interest. Based on the construction of the three-step test rendered by the WTO Panel Report on Section 110(5) of the U.S. Copyright Act, this Part first elucidates the nature and scope of each condition set out in the three-step test and shows how the test might be applied in measuring the legality of copyright limitations. It then demonstrates that the copyright limitations made vulnerable by the three-step test include the U.S. fair use doctrine, the copyright misuse doctrine, the U.K. public interest defense, and the private use exemption and reverse engineering exemption available in almost all jurisdictions.

¶ 10         Based upon the foregoing exploration of the nature and scope of the three-step test, Part IV encourages the "creative destruction"²² approach, in order to reconstruct this standard in a manner conducive to the promotion and protection of the public interest. It is suggested that the three-step test should be replaced by a new test that would fully integrate public interest into its ambit: "Members may provide limitations on the exclusive rights, provided that such limitations take account of the legitimate interests of right holders and of third parties."

¶ 11         More importantly, the reshaping of the three-step test, as I will argue in Part IV, necessitates a careful re-examination of the conventional wisdom of copyright law in general and the nature of copyright limitations in particular. This examination will inquire into how we might re-imagine the legal status of users in the field of copyright law and whether right holders should take on certain social responsibilities such as a quid pro quo for being granted exclusive rights. In this sense, the inquiry into how we could reshape the three-step test also provides a window on the potential alterations to the traditional theoretical and structural landscape of copyright law.

II.    Universalizing the Three-Step Test: A Historical Perspective

¶ 12         The 1967 WIPO Stockholm Conference, aimed at revising the Berne Convention, planted the seed of the three-step test. Prior to the Stockholm Conference, the right of reproduction, although recognized as the most fundamental right accorded to authors, was not expressly provided for in the Berne Convention.²³ This loophole resulted in a conundrum for international copyright protection, because Berne Union members "were free to impose whatever restrictions they wished on reproduction rights, or even to deny protection altogether."²⁴ High on the agenda of the Stockholm Conference, therefore, was to set out a specific provision concerning the reproduction right in the Berne Convention.²⁵ Indeed, it was this effort that created the opportunity to usher the three-step test into the arena of international copyright law.

¶ 13         To bring this legislative agenda to fruition, the preparatory work for the Stockholm Conference mapped out guidelines for modifying the Berne Convention with respect to the right of reproduction. On the one hand, it was proposed that a broad-based reproduction right be created to shield copyright holders' economic interest.²⁶ On the other hand, the Conference recognized that "a satisfactory formula would have to be found for the inevitable exceptions to this right."²⁷ To these ends, the Study Group commissioned by the Conference submitted that the new provision should entail a sweeping definition of the reproduction right integrated with a general benchmark for allowable limitations. Accordingly, the proposed provision stated that "it should be a matter for legislation in countries of the Union, having regard to the provisions of this Convention, to limit the recognition and the exercising of [reproduction] right, for specified purposes and on the condition that these purposes should not enter into economic competition with [the] works."²⁸ This proposal is the precursor of the three-step test.

¶ 14         As the pre-Conference discussions proceeded, the variety of preexisting limitations on the reproduction right provided for in national copyright laws²⁹ made it difficult to design a uniform rule that would govern the imposition of limitations. The 1965 Committee of Governmental Experts, after careful scrutiny, suggested a somewhat different provision that would be presented at the Stockholm Conference. The draft provision provided that:

(1) Authors of literary and artistic works protected by this Convention shall have the exclusive right of authorizing the reproduction of these works, in any manner or form.

(2) It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works
(a) for private use;
(b) for judicial or administrative purposes;
(c) in certain particular cases where the reproduction is not contrary to the legitimate interests of the author and does not conflict with a normal exploitation of the work.³⁰

¶ 15         Compared with the Study Group's suggestion, the above proposal embraced a stricter test with the inclusion of an additional benchmark - "not contrary to the legitimate interests of the author."³¹ At the same time, it explicitly itemized, as shown above, two kinds of specific limitations that were allowed to be carved out in national copyright laws. This proposal, however, was not deemed fully tailored to the varied needs of participating countries at the Conference, leading to a bitter dispute over how it could be reformulated. Generally speaking, there were three types of proposals that were considered at the Stockholm Conference:

To restrict the specific limitations set forth in the draft provision. For example, the French delegation suggested that the expression "private use" be replaced by "individual or family use."³² The proposal of this type was made by a wide range of delegations, including Germany,³³ Italy,³⁴ and the Netherlands.³⁵

To extend the scope of the permissible limitations set forth in the draft provision. This proposal was made by India,³⁶ Rumania,³⁷ and South Africa,³⁸ in order to open the door for countries to impose compulsory licenses on the reproduction right. Particularly, the Indian delegation forcefully argued that the provision of compulsory licensing would promote "public interest"³⁹ and prevent "the growth of monopolies and the creation of obstacles to the spread of knowledge and culture."⁴⁰

To narrow the scope of the permissible limitations set forth in the draft provision. The United Kingdom held the position that the specific limitations listed in the draft provision should be eliminated and the possible limitations adopted by countries should be circumscribed by their proposed test - " in certain special cases where the reproduction does not unreasonably prejudice the legitimate interests of the authors."⁴¹

¶ 16         In the midst of this vehement debate, it seemed that the U.K. proposal evinced the capability of "embrac[ing] all possible exceptions within a single generalized exception,"⁴² and therefore won the full support of the Main Committee of the Conference.⁴³ This gave birth to Article 9 (2) of the Berne Convention which is now widely referred to as the three-step test:

It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.

¶ 17         In the context of the Berne Convention, it is self-evident that the three-step test is designed to be applicable only to limitations on the right of reproduction.⁴⁴ Therefore, it does not create any parameters for carving out potential limitations on other categories of economic rights, for example, the so-called minor reservations,⁴⁵ nor does it apply to moral rights under the Berne Convention.⁴⁶ More importantly, the three-step test, as shown by its negotiating history, does not govern the specific limitations on reproduction rights that are scattered in various parts of the Berne Convention,⁴⁷ including its Appendix's compulsory licensing provisions.

¶ 18         It should be noted that the three-step test, as its negotiating history shows, is founded upon the following twin objectives. First, it tacitly allows Berne signatories to retain the limitations on reproduction rights that they had carved out before the Stockholm Conference. As the Study Group bluntly pointed out before the Stockholm Conference, "it should not be forgotten that domestic laws already contained a series of exceptions in favor of various public and cultural interests and that it would be vain to suppose that countries would be ready at this stage to abolish these exceptions to any appreciable extent."⁴⁸ Second, the three-step test expressly emphasizes the priority of protecting the right holder's economic interest. Although a moderate diversity of the existing copyright limitations were accommodated, there was indeed a bottom line underpinning the Berne Convention: the sustained operation of these limitations should trump the right holder's economic interest. Therefore, the three-step test directly constrains Berne members' powers to relax the standards for users to avail themselves of these limitations or to carve out any new limitations.

¶ 19         Despite the WIPO's strenuous efforts to improve the international intellectual property system since its inception, a string of treaties administered by this organization has lacked the teeth to provide comprehensive and up-to-date minimum standards for the protection and, in particular, the enforcement of intellectual property at an international level. At the same time, as many developed countries marched toward knowledge-based economies, intellectual property gradually became the pivot of their increased global competitiveness. The confluence of these factors gathered the very momentum of integrating intellectual property as an indispensable part of the new international trade regime wrought by the Uruguay Round of multinational trade negotiation. After seven years of bargaining, the TRIPs Agreement ushered in brand-new building blocks for the international protection of intellectual property which are parallel to the WIPO mechanism.

¶ 20         The culmination of the TRIPs Agreement achieved, among other things, a vast expansion of the scope of the three-step test. Based upon some modifications of its precursor contained in the Berne Convention,⁴⁹ the three-step test became a universal minimum standard governing the imposition of limitations on the protections of copyright,⁵⁰ trademarks,⁵¹ industrial designs,⁵² and patents.⁵³

¶ 21         In the sphere of copyright, looming large over the discussion of how to incorporate the three-step test into the TRIPs Agreement was the proposal to constrain the application of compulsory licensing. For example, the Brussels Draft, in addition to the three-step test, provided that "[t]ranslation and reproduction licenses permitted under the Appendix to the Berne Convention (1971) shall not be granted where the legitimate local needs of a Party could be met by voluntary actions of right holders but for obstacles resulting from measures taken by the government of that Party."⁵⁴ Moreover, the July 1990 Draft expressly prohibited the granting of compulsory licenses for private use of computer software, set out new conditions for invoking compulsory licensing under the Berne Appendix, and emphasized the need of creating a new mechanism aimed at ensuring prompt payment of licensing fees.⁵⁵ However, all these additional limitations were abandoned at the final stage of adopting the TRIPS Agreement,⁵⁶ leading to direct inclusion of the three-step test into Article 13 which provides that:

Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.⁵⁷

¶ 22         The three-step test's expansion facilitated by the TRIPs Agreement has profound implications for the strengthening of copyright protection. First and foremost, the three-step test becomes applicable to the whole bundle of the exclusive economic rights vested in authors, including the rental right, a new right set forth in the TRIPs Agreement. The architecture of the TRIPs Agreement is based on the Berne Convention. By incorporating the Berne Convention,⁵⁸ the TRIPs Agreement mandates that all limitations eroding authors' exclusive economic rights under the Berne Convention and TRIPs Agreement should be subject to the three-step test. In so doing, the TRIPs Agreement sets additional parameters for the imposition of limitations not governed by Article 9(2) dealing only with the reproduction right. Nevertheless, it should be noted that the TRIPs Agreement does not make the three-step test applicable to authors' moral rights provided for in the Berne Convention.⁵⁹ Nor does it apply to the economic rights vested in performers, phonogram producers and broadcasting organizations under the TRIPs Agreement⁶⁰ and the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations.⁶¹

¶ 23         Second, drawing upon the rules set out in international trade law, the TRIPs Agreement puts teeth into the three-step test. First, the combination of the most-favored-nation treatment⁶² and the national treatment⁶³ prohibits any discriminatory standards that impose limitations upon copyrights on the basis of right holders' geographic locations. This increases the possibility of harmonizing the copyright limitations carved out in national copyright laws. Second, the notification and review mechanisms are set up to keep the TRIPs Council informed of the changes made to members' national laws and regulations⁶⁴ and to enable the TRIPs Council to review their potential compatibility with the Agreement.⁶⁵ These procedures definitely enhance the transparency of national legislation with respect to copyright limitations and of the ways in which they are enforced. Third, and most importantly, the trade dispute settlement mechanism can order a member to modify or repeal any given limitation on copyright provided that a violation of the three-step test is found. This fosters increased compliance with the test and provides the very dynamics to the copyright regime under the TRIPs Agreement.

¶ 24         The last decade of the twentieth century witnessed a flurry of unprecedented advances in digital technology, whose power has revolutionized the conventional way of exploiting works and has, in turn, rocked the very foundation of copyright protection and enforcement in the analog world. In the course of the Uruguay Round negotiations on the TRIPS Agreement, no forward-looking heed was paid to cope with the potential challenge posed by digital technology to the protection and enforcement of copyright. Therefore, digital copyright protection is not specifically addressed by the TRIPs Agreement. On the other hand, the very fear of being marginalized by the WTO in the arena of international protection of intellectual property pushed the WIPO to tap into the new treaty-making opportunities to regain its status as the premier global intellectual property regime. The culmination of the WCT and WPPT at the 1996 WIPO Diplomatic Conference that convened in Geneva generally brought the international copyright law on par with the developments in digital technology. In so doing, the WCT and WPPT mainly set out provisions protecting the new right of making available,⁶⁶ and the use of technological measures⁶⁷ and rights management information⁶⁸ by right holders.

¶ 25         Parallel to the issues associated with the expansion of copyright protection was the way in which the scope of copyright limitations could be readjusted. Because the three-step test had been incorporated into the TRIPs Agreement, it seemed undoubtedly workable that this test should also be inserted into the then-proposed WCT and WPPT.⁶⁹ Article 10 of the WCT provides that:

(1) Contracting Parties may, in their national legislation, provide for limitations of or exceptions to the rights granted to authors of literary and artistic works under this Treaty in certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.

(2) Contracting Parties shall, when applying the Berne Convention, confine any limitations of or exceptions to rights provided for therein to certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.⁷⁰

¶ 26         At the same time, capitalizing on the three-step test, Article 16 of the WPPT provides a similar provision. Taking account of the indentical language used in these two provisions, the integration of the three-step test into the WCT and WPPT carries significant ramifications for strengthening international protection of copyright.

¶ 27         To be sure, the inception of the WCT and WPPT represents the biggest leap forward in expanding the scope of the three-step test. First, akin to the TRIPs Agreement, the WCT and WPPT make the three-step test applicable to all the copyrights originally provided for in the Berne Convention. Second, the three-step test targets any limitations that constrain the exercise of the new economic rights (e.g. the right of making available) as well as the broadened reproduction right under the WCT and WPPT.⁷¹ Third, the WPPT, which partially updates the Rome Convention, incorporates the three-step test as the check on members' discretion in carving out limitations on the economic rights vested in performers and phonogram producers. Hence, the three-step test has, for the first time, entered the most entrepreneurial sphere of copyright law, namely, the set of rights granted to performers, phonogram producers and broadcasting organizations. Fourth, the three-step test has been channeled into the field of moral rights protection afforded by the WCT and WPPT. Unlike the TRIPs Agreement, these two treaties embrace an adequate protection of moral rights by simply connecting them to the Berne Convention without expressly denying the need for moral rights protection⁷² or setting out specific provisions for shielding right holders' moral interests.⁷³

¶ 28         The WCT and WPPT may have also facilitated the use of the three-step test to evaluate any limitations on the protection of technological measures. At the 1996 Diplomatic Conference, the delegation from Singapore, for example, raised the question of whether the three-step test could be applicable to the limitations on the protection of technological measures.⁷⁴ But it seemed this concern did not attract the attention of other participating delegations and therefore no clear response was made at the Conference. One might argue that the general structure of the WCT and WPPT implies that no such application is allowed. This is because the provisions containing the test are put before those associated with the protection of technological measures. Yet, one can reach the contrary conclusion based on the spirit of the treaty, which attaches great importance to the effective and adequate protection of digital copyright.⁷⁵ Against this backdrop, it seems that the scope of the three-step test in this respect hinges upon how the nature of legal protection of technological measures is perceived. If one thinks that this form of protection confers a new exclusive right upon creators⁷⁶ or provides a new cause for filing an action,⁷⁷ the three-step test can certainly come into play. Conversely, if one sees it as granting a paracopyright,⁷⁸ the result would be different because the three-step test can and should be applied only within the sphere of pure "copyrights" provided in the WCT and WPPT.

¶ 29         Interestingly, the expansion of the three-step test at the international level has triggered a rapid incorporation of this test into regional and national copyright treaties or laws so as to strengthen copyright protection in the digital age.

¶ 30         The North American Free Trade Agreement (NAFTA)⁷⁹ for the first time built a systematic framework for intellectual property protection under regional trade agreement. On the one hand, the inception of NAFTA gave the momentum to the final conclusion of the TRIPs Agreement. On the other hand, as NAFTA provides broader protection of intellectual property than the TRIPs Agreement: it laid the foundation for setting up TRIPs-plus standards in the future free trade agreements.

¶ 31         Not surprisingly, the three-step test was incorporated into NAFTA's copyright provisions.⁸⁰ Since NAFTA is a trade agreement, its inclusion of the three-step test produces the same results as the TRIPs Agreement. However, the scope of the exclusive rights provided in NAFTA is broader than that of the TRIPs Agreement. The three-step test under NAFTA, therefore, governs the imposition of limitations on the exclusive rights that are not prescribed in the TRIPS Agreement, e.g. the right of importation.⁸¹

¶ 32         In 2001, the EU adopted the Directive on Harmonization of Certain Aspects Copyright and Related Rights in the Information Society⁸² aimed at enhancing the copyright harmonization and implementing the WCT and WPPT within the EU members.⁸³ One of the Directive's striking features is its enumeration of copyright limitations that may be carved out in each EU member's domestic copyright law. First, the Directive itemizes an exhaustive string of the specific limitations on copyright.⁸⁴ Second, the Directive expressly prescribes that the three-step test governs the imposition of these limitation in EU members' domestic law.⁸⁵ Third, it channels the three-step test into⁸⁶ the Directive on Rental and Lending Rights.⁸⁷

¶ 33         The inclusion of the three-step test into the EU Copyright Directive represents a leap forward in sharpening the three-step test's power. Unlike NAFTA, the Directive taps into the three-step test's potential to constrain national legislative power that may curtail digital copyright.⁸⁸ More importantly, the Directive encourages domestic courts in EU members to directly invoke the three-step test when dealing with any disputes associated with copyright limitations.⁸⁹ Currently, courts in the Netherlands⁹⁰ and France⁹¹ have directly applied the three-step test.

¶ 34         The past couple of years have seen a proliferation of free trade agreements (FTAs) that enhance intellectual property protection at the regional or bilateral level. Generally speaking, the U.S. has played a leading role in capitalizing on FTAs so as to ratchet up standards for copyright protection and enforcement. On the other hand, the U.S. has been confronted with the intense pressure from the international campaign against stringent intellectual property (IP) standards led by developing countries and NGOs.⁹² As an alternative to a multilateralism approach to copyright protection, the bilateralism approach provides the most efficient vehicle with which the U.S. can exert the maximum leverage to create higher IP standards than those set forth in the TRIPs Agreement and WIPO Treaties 1996.

¶ 35         Although strategy of this type was utilized a couple of years ago,⁹³ it was not until the recent proliferation of FTAs concluded between the U.S. and her trading partners, including Singapore, Chile, Australia, Central American countries, and Morocco, that the far-reaching and stringent standards for IP protection and enforcement have been formally created.

¶ 36         Not surprisingly, the three-step test has been inserted in these FTAs, all of which are solely designed for the protection of digital copyright. By tapping into the convergence of authors' rights and related/neighboring rights and the simplified entitlements vested in right holders, these recently-concluded FTAs significantly simplify the legal framework for copyright protection. Drawing upon the WCT and WPPT, copyright provisions set out in the FTAs primarily deals with the cluster of exclusive rights that are core to the protection of copyright in the digital environment, including the rights of reproduction,⁹⁴ communication to the public,⁹⁵ and distribution.⁹⁶ Therefore, the three-step test governs the scope of the limitations that can be carved out on these rights enjoyed by authors, performers and phonogram producers. More importantly, FTAs set forth WCT and WPPT-plus standards. For example, it is mandated that temporary copies should be protected in the member states.

¶ 37         The recently overhauled Chinese copyright law marks the first time that the three-step test has been embedded into the letters of municipal copyright law. The Regulations for the Implementation of the Copyright Law, revised in 2002, introduces a quasi three-step test aimed at providing guidance to courts in considering the legality of the use of limitations permitted by the Copyright Law 2001. Pursuant to Article 21 of the Copyright Regulations 2002, the use of published works on the grounds of fair dealing exemptions or compulsory licenses should neither "conflict with the normal exploitation of the work" nor "unreasonably prejudice the legitimate interests of the author."⁹⁷ In light of the fact that the Copyright Law 2001 embraces a closed list of limitations and specifies the circumstances in which the public can use the works, the limitations are generally formulated in a manner compatible with first condition of the three-step test, namely "in certain special cases."⁹⁸

¶ 38         This Part sketched the trajectory of the expansion of the three-step test in the realm of the international, regional and national copyright laws. What has been ushered in is the transformation of the three-step test from a rule applied in the narrow sphere of the reproduction right into a core standard governing the manner in which limitations on various categories of copyrights could be carved out. Throughout this transformation process, the architects of copyright law, however, have been preoccupied with the notion that copyright law should be shaped as a utilitarian instrument aimed at solely protecting copyright holders' interests.

III.    Three-Step Test's Chilling Effects

¶ 39         In this Part, I consider whether the three-step test wields the power to strike down certain public interest-oriented limitations on copyright. The WTO Panel Report on Section 110(5) of the U.S. Copyright Act⁹⁹ marks the first time the international adjudicative body has interpreted the three-step test.¹⁰⁰ The Panel Report elucidates the nature and scope of the three-step test and provides insightful guidance to how the test could be applied in measuring the legality of copyright limitations. This Part, therefore, first considers whether the copyright limitations selected below, for example the fair use doctrine, can meet the conditions set out in the three-step test. Moreover, this inquiry only examines the validity of a selected limitation on copyright by comparing it with only one condition set forth in the three-step test. This is because the three-step test is applied in a cumulative manner and thus the violation of any condition set forth therein would result in invalidation of the copyright limitation concerned.

¶ 40         The first part of the three-step test mandates that the limitations on copyright shall be "confined to certain special cases."¹⁰¹ According to the Panel Report, this condition implicates the following three elements as essential. First, limitations on copyright provided for in national legislation should be "clearly defined."¹⁰² This requirement "guarantees a sufficient degree of legal certainty."¹⁰³ Nonetheless, it is not necessary for national legislation to "identify explicitly each and every possible situation to which the exception could apply, provided that the scope of the exception is known and particularized."¹⁰⁴

¶ 41         Second, a limitation on copyright should also be "narrow in its scope and reach."¹⁰⁵ This means a limitation "must be limited in its field of application or exceptional in its scope."¹⁰⁶ Put differently, in order to guarantee a sufficient degree of legal certainty, a limitation should be maintained in a quantitatively and qualitatively narrow way.¹⁰⁷

¶ 42         Third, the examination of public policies underlying a limitation is not a necessary part of the inquiry into whether the first condition of the three-step test is met.¹⁰⁸ A finding that the abovementioned two requirements are met will suffice to show a given limitation's compliance with the first prong of the three-step test, even if no public policy underlying the limitation in question can be discerned.¹⁰⁹ However, the avowed public policy purpose embodied in the limitation "may be useful from a factual perspective for making inferences about the scope of a limitation or exception or the clarity of its definition."¹¹⁰ This means that the public policy scrutiny is of "subsidiary relevance" to the inquiry into whether the first condition of the three-step test is met. For example, the Panel Report, after examining the public policy Section 110(5) of the U.S. Copyright Act, concluded that its legislative history "indicate an intention of establishing an exception with a narrow scope."¹¹¹

¶ 43         It seems that the first prong of the three-step test is construed by the Panel Report in a correct way. Both the EU and the U.S., the two parties involved in the dispute, admitted that a copyright limitation must be "clearly defined and narrow in its scope and reach" in order to achieve the full compliance with first condition.¹¹² Moreover, the Panel Report's construction has won overwhelming support by commentators. For instance, Jane Ginsburg argues that the first prong of the three-step test only accommodates limitations that "are sufficiently narrow" and there is no need to pursue "normative inquiry" into the underlying public policy.¹¹³ Sam Ricketson changed his original position that the first prong entails the inquiry into "some reason of public policy."¹¹⁴ After learning of the Panel Report's construction, he now "find[s] it difficult and indeed, unnecessary, to maintain [his] earlier interpretation of the expression 'certain special cases' as requiring also that these have an underlying public policy justification."¹¹⁵ The Panel Report's construction of the first prong of the three-step test appears reasonable.

¶ 44         The condition that requires copyright limitations be "clearly defined" and "narrow in scope and reach" calls into question whether the first prong of the three-step test will strike down copyright limitations that are by nature flexible and open-ended. This section examines whether the fair use doctrine is in line with the three-step test. To so do, it first maps the nature and scope of the fair use doctrine as codified in section 107 of the U.S. Copyright Act of 1976. It then juxtaposes section 107 and relevant judicial decisions with the first prong of the three-step test in order to show whether the fair use doctrine is "clearly defined" and "narrow in scope and reach."

¶ 45         First and foremost, the legislative purpose behind section 107 connotes that the codification of the fair use doctrine is by no means intended to shape the finely-grained contours of the doctrine.

¶ 46         Historically, the fair use doctrine was first announced in U.S. copyright law by Folsom v. Marsh,¹¹⁶ a decision written by Justice Story in 1841. Since then, gallons of ink in a host of cases have been devoted to delineating the proper contours of this doctrine.¹¹⁷ Over one hundred years of judicial development and commentary on the nature of the fair use doctrine, however, has not produced a consistent and clear-cut definition of the doctrine,¹¹⁸ giving rise to a "long controversy over the related problems of fair use . . . ."¹¹⁹ It was not until 1976 that this judicially-made doctrine was given express statutory recognition in the U.S. Copyright Act. Obviously, the codification aimed to dispel the discrepancies in the judicial construction of the fair use doctrine so as to inject some degree of certainty and predictability into its application.¹²⁰

¶ 47         While the codification was indeed imbued with the aforementioned ambition, Congress nevertheless did not intend to shape the fair use doctrine as "bright-line rules"¹²¹ governing the resolution of all the tricky problems that are likely to cloud the judicial ruling. The reasons why Congress preserved the malleability of the doctrine are twofold.

¶ 48         First and foremost, the fair use doctrine is seen as "an equitable rule of reason."¹²² Thus, it is impossible to render a "generally applicable definition," given that "each case raising the question must be decided on its own facts."¹²³

¶ 49         Second, the fair use doctrine is also regarded as an embodiment of "law and fact."¹²⁴ As a panacea for evaluating the lawfulness of the use of works, the doctrine per se should be capable of dealing with an ocean of different circumstances under which the access to and use of works are achieved. Therefore, "the endless variety of situations and combinations of circumstances that can arise in particular cases precludes the formulation of exact rules in the statute."¹²⁵

¶ 50         The combination of these two factors led the Congress to shy away from proffering a finely-grained definition of the fair use doctrine.¹²⁶ On the one hand, section 107 was supposed to itemize merely the relevant factors gleaned from prior judicial experience dealing with fair use issues.¹²⁷ In this sense, the codification was not intended to "change, narrow, or enlarge [the doctrine] in any way."¹²⁸ At the same time, a parallel objective of the codification was to make the wording of section 107 flexible and broad enough to confer upon courts the considerable discretion to "adapt the doctrine to particular situations on a case-by-case basis."¹²⁹ On this basis, section 107 is designed to work in tandem with the judiciary so as to accommodate new technological innovations.¹³⁰

¶ 51         Informed by the aforementioned legislative purpose of codifying the fair use doctrine, the structure of section 107 is inevitably shaped in a flexible and open-ended manner. On the one hand, the list of the specific examples of presumptively fair use, i.e. criticism, comment, news reporting, teaching, scholarship, or research,¹³¹ is ostensibly non-exhaustive.¹³² This is because Congress intended to preserve the broad and fact-specific nature of the fair use doctrine¹³³ while also directing the courts to base their fair use analyses on the consideration of the four factors listed in the other part of section 107.¹³⁴

¶ 52         Moreover, section 107 tacitly allows courts to instill into their fair use analyses any relevant factors other than the four specifically listed in section 107. In doing so, it does not provide any hint on the benchmark with which courts can channel additional factors into the fair use analysis. Hence, ample latitude has been left to courts to decide that other relevant factors can be brought in play. To date, courts have considered "public benefit,"¹³⁵ "First Amendment,"¹³⁶ and the way in which the defendant use the allegedly infringing work¹³⁷ as additional factors.

¶ 53         The inconsistencies in the courts' constructions of the four factors itemized in section 107 further heighten the ambiguity that surrounds the fair use doctrine.

¶ 54         The first factor directs courts to consider the purpose and character of the secondary use. In this respect, courts routinely weigh by either of the two criteria - whether the allegedly infringing copies are made for a commercial or noncommercial use and whether copies serve a transformative purpose. In some cases, the defendant's state of mind has also been taken into account. In considering these sub-factors, however, courts have not dispelled any "murky waters" lingering in this area of their fair use analyses.

(i)                 The Commercial/Noncommercial Distinction

¶ 55         With respect to nature of commercial purpose, Harper & Row and its progeny center their inquiries on "whether the user stands to profit from exploitation of the copyrighted material without paying the customary price."¹³⁸ Therefore, a user's indirect profit-making motivation,¹³⁹ including the purposes of gaining illegitimate cost-saving,¹⁴⁰ as well as recognition among his peers and authorship credit,¹⁴¹ is sufficient to prove the commercial nature of the use. Alternatively, Sony viewed direct profit-making motivation as the only key factor for drawing the dividing line between the commercial or noncommercial use of works, rejecting the analogy of "jewel theft"¹⁴² which lends support to the Harper & Row approach.¹⁴³

¶ 56         Regarding the extent to which the commerciality factor can determine the outcome of fair use analysis, Sony¹⁴⁴ and Harper & Row¹⁴⁵ held that any commercial use of works ought to be regarded as "presumptively unfair." A series of later decisions,¹⁴⁶ including Campbell, however, did not accept this conclusion and contended that "hard evidentiary presumption"¹⁴⁷ of this type "would swallow nearly all of the illustrative uses listed in the preamble paragraph of § 107 . . . ."¹⁴⁸ Furthermore, it was submitted that commercial or noncommercial character of a work "is not conclusive," and this factor shall be "weighed along with others in fair use decisions."¹⁴⁹

(ii)               Transformative/Nontransformative Use Distinction

¶ 57         Whether the use of works is transformative in nature is reckoned as a crucial factor in deciding a potential finding of fair use.¹⁵⁰ Transformative use, according to Campbell, consists of the acts of "add[ing] something new, with a further purpose or different character, [and alteration of] the first with new expression, meaning, or message."¹⁵¹ Yet, Campbell did not articulate a benchmark for measuring the degree to which the use of work is "transformative" enough to be regarded as fair use. The absence of such a benchmark leads courts to swing between whether transformative use should be strictly be confined to the direct alteration of the original work at issue¹⁵² - which adds considerably new content to the original¹⁵³ - or broadly include the use of work that simply adds new purposes and characters to the original.¹⁵⁴

(iii)              Defendant's state of mind

¶ 58         Swayed by the notion of "fairness" which underpins the fair use doctrine,¹⁵⁵Harper & Row states that "[f]air use presupposes good faith and fair dealing,"¹⁵⁶ making it impossible for users with "unclean hands"¹⁵⁷ to invoking fair use defense.¹⁵⁸ On the contrary, other courts have stated that bad faith is no bar to finding fair use. It is suggested in Campbell that good faith should not be a factor in weighing fair use defense.¹⁵⁹ Following Campbell, the court in NXIVM Corp. v. Ross Institute, held that "[f]air play is no defense to infringement . . . bad faith should be no obstacle to fair use."¹⁶⁰

¶ 59         The second factor listed in section 107 directs the courts to consider "the nature of the copyrighted work." It seems that this factor is less contentious. Courts routinely examine two issues: whether the work is published or not and whether the work is factual or creative.¹⁶¹

¶ 60         The third factor is the consideration of "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." Although courts do not set up any ceiling for the amount of taking, they divide with regard to the quantitative and qualitative standards that are embraced for gauging the third factor.

¶ 61         As to the quantitative standard, first of all, there is split as to whether wholesale copying would be allowed. Sony and some other decisions held that fair use can accommodate verbatim copying of the entire work.¹⁶² In sharp contrast, guided by Harper & Row,¹⁶³ some courts have insisted that "[w]hile 'wholesale copying does not preclude fair use per se,' copying an entire work 'militates against a finding of fair use.'"¹⁶⁴ Moreover, the use of the quantitative standard has led to a further rift over the permissible amount of taking in the case of parody. While near-verbatim copying of the popular song "Pretty Woman"¹⁶⁵ and the substantial appropriation of the famous novel "Gone with the Wind"¹⁶⁶ is allowed, copying of a well-known principal character of "the Nightmare film series" into a music video is deemed too excessive to be within the limit of the third factor.¹⁶⁷ With respect to graphic images, wholesale copying of Barbie and Mickey Mouse generates different legal consequences. While the former was deemed to fall within the ambit of the third factor,¹⁶⁸ the latter was not.¹⁶⁹

¶ 62         On the other hand, swing positions as to the qualitative standard have appeared in fair use decisions. It seems that the majority of court judgments are in agreement about the inference that the qualitative standard, rather than the quantitative standard, governs the third factor analysis.¹⁷⁰ Accordingly, if the copied portion is unquestionably the heart of the copyrighted work, even a small amount of copying would tilt the third factor against the defendant.¹⁷¹ Some other courts, however, do not buy into this position. To them, the near-verbatim copying as well as taking the heart of the work for parodic purpose could be justified because parodists need to "conjure up" the original work.¹⁷² In Campbell decision's terms, "the extent of permissible copying varies with the purpose and character of the use."¹⁷³

¶ 63         The fourth factor begs the question of "effect of the use upon the potential market for value of the copyrighted work."¹⁷⁴ The trajectory of judgments shows that no principled way to analyze this factor has been produced by courts. Generally speaking, courts' decisions fall into four camps in the spectrum of their analysis: (1) far left; (2) left; (3) center; and (4) right.¹⁷⁵

¶ 64         The first two camps center upon the examination of the economic impact on copyright holders' current market rather than potential market or both. The "far left" judgments chiefly rule that, even if the user enters into economic competition with the copyright holder, no economic losses incurred on the latter can be assumed or ascertained. This is because the fourth factor does not allow the right holder to weed out the legitimate competition mounted by the user.¹⁷⁶ On the other hand, the "left" group decisions reckon that "[i]t is wrong to measure the detriment to plaintiff by loss of presumed royalty income - a standard which necessarily assumes that plaintiff had a right to issue licenses."¹⁷⁷ Therefore, the fourth factor scrutiny should be limited to the impact on the current market.¹⁷⁸

¶ 65         The "center" group decisions consider the economic impact on both the current and potential markets, or the potential market alone. For example, Harper & Row holds that the fourth factor inquiry "must take account not only of harm to the original but also of harm to the market for derivative works."¹⁷⁹ With respect to the noncommercial use of works, Sony centers upon the consideration of the impact on the potential market.¹⁸⁰ According to this group of decisions, the inquiry into the "some meaningful likelihood of future harm"¹⁸¹ is sufficient. Therefore, it seems that the right holder needs to demonstrate that there is a very strong likelihood that the potential market will be "traditional, reasonable, or likely to be developed . . . ."¹⁸² A showing of only a tenuous connection between the current and potential markets would not necessarily result in the harm on the potential market. Nor can the potential market be presumed to exist.

¶ 66         The "right" group decisions envision that the harm to the potential market is the core of the fourth factor inquiry. In Iowa State University Research Foundation, Inc. v. American Broadcasting,¹⁸³ the Second Circuit held that the defendant's copying and subsequent broadcast of a small portion of a student-produced film biography of a champion wrestler usurped an extremely significant market that was then controlled by the defendant and other derivative market in which the plaintiff could license their film.¹⁸⁴ Yet, before making such an inference, the court did not inquire into whether the plaintiff had any intention to exploit the film in question through licensing agreement. Rather, it seems that the court assumes that once the work is finished, its derivative market does necessarily exist. It seems that such an assumption has been tacitly accepted by UMG Recordings v. MP3.com¹⁸⁵ and L.A. Times v. Free Republic,¹⁸⁶ in which the court did not examine whether the plaintiffs had the intention to open up the derivative market envisaged by the court before the suits were filed.

¶ 67         Judging from section 107's legislative purpose and structure and the discrepancies in courts' approaches to apply the four factors, the fair use doctrine is indeed vague, flexible and open-ended. Not surprisingly, it has been lamented that "the issue of fair use . . . is the most troublesome in the whole law of copyright . . . ."¹⁸⁷ and "[n]o doctrine in copyright is less determinate than fair use."¹⁸⁸ This suggests the fair use doctrine is incapable of acting as well-shaped radar "separating the fair use sheep from the infringing goats . . . ."¹⁸⁹ Therefore, the malleability of the fair use doctrine, as many commentators have pointed out, runs sharply counter to the letter and spirit of the first prong of the three-step test.¹⁹⁰

¶ 68         The fair use doctrine's violation of the first prong of the three-step test begs the question of whether the uncodified common-law doctrines constraining the exercise of copyright runs afoul of the first prong. As Justice Souter has pointed out, the "[c]ommon-law method tends to pay respect instead to detail, seeking to understand old principles afresh by new examples and new counterexamples."¹⁹¹ Common-law doctrines are generally flexible and open-ended in nature, and thereby are vulnerable to the three-step test challenge. As will be shown below, at stake are the copyright misuse doctrine and public interest defense, two quintessential common-law doctrines available in both the U.S. and U.K.

¶ 69         Compared with the long-entrenched fair use doctrine, the copyright misuse doctrine is a relatively "young" defense aimed at neutralizing the monopolistic control of works that may well run contrary to the promotion of public interest. Drawing upon the equitable doctrine of unclean hands¹⁹² and the patent misuse doctrine,¹⁹³Lasercomb America, Inc. v. Reynolds¹⁹⁴ for the first time stated that misuse of copyright was a valid defense to copyright infringement. As long as the right holder uses his copyright "in a manner violative of the public policy embodied in the grant of a copyright."¹⁹⁵ his conduct would amount to copyright misuse and therefore the defendant in question would not be held liable for the alleged infringing act.¹⁹⁶ Since then, the copyright misuse doctrine has been applied to the cases in which the right holder is deemed abusing economic rights, e.g. leveraging monopoly to commit anti-competitive action that facilitates the control of the areas outside the monopoly,¹⁹⁷ or abusing judicial process including lodging an action to achieve an "improper extension and overstatement" of copyright.¹⁹⁸

¶ 70         At the same time, courts have made clear certain standards for determining misuse of copyright. For example, there is no need for the defendant to prove whether the copyright holder has violated antitrust law¹⁹⁹ or whether the injury was caused by the purported conduct of copyright misuse.²⁰⁰ Yet the copyright misuse doctrine is still fraught with uncertainties. As Goldstein has pointed out, this doctrine "is still in its infancy . . . and the challenge for courts is to mark the doctrine's boundaries with some measure of predictability."²⁰¹

¶ 71         The uncertainty surrounding the copyright misuse doctrine, by and large, stems from the potentially indeterminate nature of the copyright law's public policy, the violation of which results in misuse of copyright. One should note that the public policy underlying copyright law, for example "to increase the store of human knowledge and arts"²⁰² or "to stimulate artistic creativity for the general public good,"²⁰³ is, by its nature, very broad. This gives rise to at least three problems, all of which make the copyright misuse doctrine relatively unpredictable and amorphous.²⁰⁴

¶ 72         First, it remains unclear as to what specific types of improper exercise of copyright can constitute misuse of the concerned right. As with the fair use doctrine, courts are reluctant to finalize a complete list that contains various copyright misuse acts. While some courts would spontaneously find misuse of copyright without the petition for such a finding made by the party in question,²⁰⁵ some are not inclined to do so even when a right holder's violation of copyright public policy has been found.²⁰⁶

¶ 73         Second, the role of public policy in the copyright misuse adjudication seems relatively fluid. For example, one decision on copyright misuse was not rendered based upon the consideration of copyright public policy which underpins the copyright misuse doctrine.²⁰⁷

¶ 74         Third, puzzles and perplexities still persist throughout the inquiry into the extent to which an improper exercise of copyright would result in the violation of public policy. The court in Video Pipeline held that the right holder's act of restricting the user's right to level criticism on its copyrighted films did not amount to a violation of public policy. In so doing, the court, however, narrowly focused its lens on this single scenario.²⁰⁸ The court did not broadly consider whether this type of conduct, although lawful in its view, if commonplace in subsequent similar licensing practices (e.g. applicable to every other licensee), would actually suppress public criticism on works and thereby trigger a violation of the copyright law public policy that promotes free speech.

¶ 75         In the United Kingdom, the public interest defense concerns the "case where it is in the public interest that the words in respect of which another has copyright should be published without any sanction."²⁰⁹ Considerable uncertainty, however, surrounds this defense. First, courts in the United Kingdom do not consistently hold that the public interest defense is indeed a general defense available to a defendant in a given infringement action. Hyde Park Residence Ltd v. Yelland²¹⁰ is generally seen as the borderline case about whether the public interest defense actually exists or not. The public interest defense, according to the pre-Yelland decisions, acted as a general defense against copyright infringement claim.²¹¹ However, the court in Yelland simply ruled that no such general defense is available in the United Kingdom copyright system.²¹² In a post-Yelland decision, Ashdown v. Telegraph Group Ltd.,²¹³ although the court affirmed the availability of the public interest defense,²¹⁴ it reasoned that this defense could be invoked merely in "very rare" circumstances.²¹⁵ Second, even if Yelland can be seen as having been overruled by Ashdown, it does not necessarily mean that courts in the United Kingdom have drawn clear-cut contours of the public interest defense in a way that affords sufficient certainty and predictability in its application. For instance, courts have not elucidated the type of, and the extent to which, information can be disclosed or published without authorization. The definitional problem with the public interest defense stems largely from the fact that "public interest," the essence on which this defense is based upon, is not amenable to precise definition.²¹⁶ Accordingly, commentators have observed that

[The public interest] defense would be too unpredictable. That is, even if we can trust judges to arrive at the right result in any given case, the overall effect of such a defense would be to make the law uncertain. From this perspective, abandoning the relative certainty of the statutory permitted acts is a high price to pay for the flexibility.²¹⁷

¶ 76         Pursuant to the second condition of the three-step test, any limitation on copyright should not "conflict with a normal exploitation of the work."²¹⁸ The Panel Report first held that normal exploitation involves "less than full use of an exclusive right" by the copyright holder.²¹⁹ Moreover, normal exploitation "should be judged for each exclusive right individually."²²⁰ The non-absolute nature of copyright and the severability of the exercise of rights, therefore, are seen as the premise to scrutinize whether the second condition of the three-step test is met.

¶ 77         Having said that, the Panel Report concluded that a conflict with normal exploitation of the work would arise when the privileged user enters into "economic competition" with the concerned right holder. The "economic competition" should be capable of preventing the right holder from "normally extract[ing] economic value" from his copyright, thereby depriving him of "significant or tangible commercial gains."²²¹ Furthermore, the Report pointed out that in examining the copyright holder's commercial losses wrought by the privileged use of works, both of their gains in the current as well as potential markets should be integrally taken in account. In this regard, the Panel elaborated three standards to consider the extent to which the economic competition between users and right holders would amount to the conflict with a normal exploitation of the work:

The current exploitation of works refers to those that presently produce "significant or tangible revenue" to right holders.²²² With respect to the potential exploitation of works, only under circumstances in which the use of a work is likely to generate "considerable economic or practical importance" for the right holder can the use fall into the ambit of the "normal exploitation."²²³

There is a need to consider the extent to which actual users, together with potential users, would become the beneficiaries of the allegedly invalid limitation on copyright.²²⁴

A normal exploitation of works has the dynamics of expanding the copyright control commensurate with technological and market developments.²²⁵ The privileged use's effect on the potential market that is opened up by technological development for new ways of exploiting works, or the changes in consumer preferences, should be taken into consideration.²²⁶

¶ 78         To sum up, a violation of the second prong of the three-step test will be triggered if any given limitation on copyright causes the right holder to suffer "significant or tangible" commercial losses in either the current or potential market. Because of the use of the term "tangible,"²²⁷ the threshold for violating the second condition may be relatively low. As long as a "noticeable effect"²²⁸ on market substitution can be detected, a given limitation would be invalidated by the second prong. In other words, only those limitations that cause a de minimis economic loss to the copyright holder can survive the second prong's test. Since the Panel Report centers on the protection of right holders' economic interests and pays no heed to the users' interests, public policy analysis simply plays no role in inquiring into the compliance with the second prong.

¶ 79         Furthermore, the negotiating history of the three-step test lends strong support to the Panel Report's construction of the second prong. As the record of the Stockholm Conference shows, the architects of the three-step test reasoned that "it was obvious that all forms of exploiting a work which had, or were likely to acquire, considerable economic or practical importance must in principle be reserved to the authors."²²⁹ On the other hand, the Panel Report's construction based upon "economic normative considerations" has won firm support from leading commentators in the area of copyright law, though they point out that the Report fails to embrace "non-economic 'public policy' considerations."²³⁰

¶ 80         Commentators have demonstrated that the second prong of the three-step test may strike down the copyright limitation that permits classroom performance²³¹ and the fair use exemption that permits copying, translation and display of newspaper excerpts.²³² My inquiry into the chilling effects of the second prong of the three-step test, therefore, centers upon the other copyright limitations that permit private copying and reverse engineering for software interoperability.

¶ 81         In the shadow of the second prong of the three-step test, the first limitation on copyright that will come under fire is the one that allows users to copy works for the private use purpose. To a large extent, there is de facto and de jure recognition of the limitation with respect to private copying. The reasons for the continuous existence of this limitation are twofold. On the one hand, it is believed that private copying has almost no adverse effect on the right holder's normal exploitation of copyright.²³³ This creates little incentive for the right holder to sue individual users. In the analog world, the confluence of the inconvenience to copy works, the limited scope of disseminating copies, and the unavoidable degradation in the quality of copies,²³⁴ naturally creates the so-called "state-of-the-art" limitation²³⁵ on reproducing and disseminating works. At the same time, it largely impels consumers to purchase the works, rather than copy them. Therefore, copyright law or courts take a rather lenient view of private copying. On the other hand, copyright holders are faced with the virtually insurmountable difficulty in wiping out private copying. In most circumstances, people make copies in a place that is not accessible to others. Therefore, it is prohibitively costly for copyright holders to detect and then sue individual users, making it almost impossible for them to have door-to-door enforcement of copyright.

¶ 82         The arrival of the digital age, however, has fundamentally altered the landscape that fits the private copying exemption comfortably into whole picture of copyright law. The driving force making this exemption in direct conflict with the normal exploitation of works is derived from the following two shifts in copyright law.

¶ 83         Advances in digital technology pave the way for ushering in new forms of economic rights aimed at vesting in copyright holders increased control over private copying. With the inception of the WCT and WPPT, copyright holders may apply technological measures to protect their work. These forms of copyright protection increase the right holders' ability to pursue the new business model of exploiting works. Unlike the traditional communication right regulating non-interactive and point-to-multipoint dissemination of works, the new right enables copyright holders to communicate their works on an interactive and point-to-point basis. This permits them to authorize "members of the public" to access protected subject-matter from "a place and at a time individually chosen by them."²³⁶ The ramifications of setting up this new right are twofold: first, the use of works for time or place-shifting purpose should now generally come under copyright control; and second, the concept of "the public" has been broadened in a way that it incorporates many, if not all, who make noncommercial use of works in a private setting. At the same time, the legal protection of technological measures forbids non-permissive circumvention of access-and-copying control.²³⁷ This unprecedented form of copyright protection, to a large extent, legally closes the door for exempting users from making private copies.

¶ 84         By and large, the commercial versus noncommercial distinction acts a crucial benchmark for drawing the line between the public and private use of works.²³⁸ This is because private use is routinely noncommercial in nature and occasions almost no economic harm to the marketability of works of authorship. Therefore, courts have found those involved in the use of works for noncommercial purposes not liable for infringement. For instance, the Sony court ruled that "time-shifting" of copyrighted television shows with video tape recorders (VTR) constituted fair use²³⁹ primarily because it did not have negative effects on the current, and in particular, the potential market for the copyrighted works.²⁴⁰ Relying upon Sony, the court in Recording Industry Ass'n of America v. Diamond Multimedia Systems²⁴¹ held that copying for space-shifting purpose is "paradigmatic noncommercial personal use entirely consistent with the purposes of the [Copyright] Act."²⁴²

¶ 85         However, it seems that the Sony-based vision of the impact of private copying on potential market for copyrighted works has been undermined by courts dealing with recent cases on private copying issues. The court in Napster took a leap forward in redefining the line between commercial and non-commercial uses. It held that "commercial use is demonstrated by a showing that repeated and exploitative unauthorized copies of copyrighted works were made to save the expense of purchasing authorized copies."²⁴³ Indeed, Napster promotes the idea that, in the digital age, copyright should be extended "into every corner where consumers derive value from literary and artistic works."²⁴⁴ This way of setting up the commercial/noncommercial dichotomy, by and large, sounds the death knell for the private use exemption that allows for the use of works for time-shifting or space-shifting purpose.

¶ 86         The combination of the aforementioned two aspects of the shift in the landscape of copyright law definitely erodes the traditional adoption of private use. In fact, the private use exemption plays a catalytic role in usurping copyright holders' normal exploitation of works, making it violative of the second prong of the three-step test. In this regard, Ginsburg and Gaubiac bluntly point out that private copying exemption violates the second prong of the three-step test:

[The] feature [of exploiting works] illustrates the potential anomaly of recognizing a private copying exemption in the digital world: individual copies can no longer be considered de minimis. Private copying in perfect copies does substitute for sales of the work . . . . If there is a market for private copying, then unauthorized private copying would conflict with this norm. Because more and more works are marketed directly to end users, private copying should no longer be characterized as "certain special cases": it is becoming a leading mode of exploitation. As a result, Berne member nations might be foreclosed from authorizing private copying in the digital environment.²⁴⁵

¶ 87         Computer programs are generally distributed in machine-readable object code form.²⁴⁶ Their human-readable source code form, however, is locked up in software developers' pockets. This definitely gives rise to the problem that, if the source code is not accessible to other software developers, there are no linkages interconnecting various kinds of computer programs in the web of digital world. Hence, the spontaneous efforts to build up the necessary "bridges" for the interoperable applications of object codes are of critical importance to sustaining and enhancing a healthy digital environment. In order to bring this objective to fruition, reverse engineering for software interoperability enables the architects of digital technology to decompile or disassemble object code. By and large, this limitation on copyright would blossom into enhanced development of new software and further produce positive externalities for consumer welfare in the digital age.²⁴⁷

¶ 88         Nevertheless, this limitation is highly vulnerable to the challenge posed by the second part of the three-step test. It can be argued, in the WTO Panel Report's terms, that it breeds and facilitates the "economic competition" between the developer and decompiler of the software in question, occasioning the loss of "significant or tangible revenue" to the former.²⁴⁸

¶ 89         Under the Panel's construction of the second prong, the loss of royalties suffered by software developers calls into question the validity of the copyright limitation that allows reverse engineering for software interoperability purpose. To be sure, software developers' investments in developing computer programs would justifiably allow them to offer business licensing of the interfaces to those who want to make their software compatible with the original programs. Instead of reverse engineering, the "decompiler" can actually enter into licensing agreement with the copyright owner of the software. As long as the terms of the licensing agreement are reasonable, achieving interoperability would not turn out to be prohibitively costly for many software developers. Indeed, reasonable licensing practice of this type has been deemed legally acceptable. In Atari Games Corp. v. Nintendo of America Inc., the court held that the licensing terms laid down by the copyright holder were lawful and could not be subject to a copyright misuse challenge.²⁴⁹ By decompiling the computer program at issue, the defendant presumptively caused irreparable harm to the right holder of the computer program.²⁵⁰Atari Games epitomizes the software developers' legitimate interest in the marketing channel of software through licensing their program code to the "latecomers." It also would close a loophole in Sega Enterprises v. Accolade: the failure to consider both direct and indirect harm to the software developer's licensing market.²⁵¹

¶ 90         However, in the case where copyright holders leverage their monopoly by setting up unreasonable licensing terms, copyright misuse doctrine can be brought into play to remedy the potential hardships faced by other software developers.²⁵² To be sure, for those who choose to keep their software's interfaces closed, these measures are carried out "not only as a defensive measure against the [software] being commoditized, but as an offensive measure to capture the market."²⁵³ This business strategy allows firms to achieve exclusivity of their products in the market. Drawing up the "network effects,"²⁵⁴ the copyright owner can enhance market penetration and dominance. Opening the door to the reverse engineering, however, would definitely kill this business strategy even in its very embryonic stage. Therefore, in the face of significant economic losses, copyright owners like Sega²⁵⁵ and Sony²⁵⁶ had to wage lawsuits against the "decompilers."

¶ 91         In these two disputes, courts found the "decompilers" not liable partly because no significantly adverse impact on the original software developer's market could be ascertained.²⁵⁷ This conclusion, however, is not compelling per se and is incongruous with the second prong of the three-step test. First, courts seemed to assume that a certain degree of economic loss occasioned by the competition was no bar to finding fair use. Nonetheless, as the "tangible" economic loss could be definitely perceived in these two cases, it is hard to deny that the "decompilers" did not adversely affect the normal exploitation of the programs at issue. Second, even though no significant harm was caused to the current market of the software developers, it does not necessarily follow that their potential market would not suffer significant economic loss. The three-step test compels the consideration of the harm to the potential market, by at least taking into account the potential users who would become eligible beneficiary of the limitation, and the potential economic loss to the right holders. Opening the door to the initial reverse engineering would necessarily allow a succession of followers to decompile the software. As the number of "decompilers" increase, it is very likely that right holder will suffer significant economic loss due to the drop in product price or number of purchasing consumers.²⁵⁸

¶ 92         Therefore, by standing in the shoe of consumers, both Sega²⁵⁹ and Sony v. Connectix²⁶⁰ opened the door for reverse engineering for interoperability purposes based upon consumer welfare. By contrast, the second prong of the three-step test, according to the Panel's interpretation, centers solely on shielding copyright holders' economic interests. The need to consider countervailing interests, such as consumer welfare, is by no means embedded into the second prong. Without being tempered by such a consideration, its focus on shielding copyright holders' economic interests can surely strike down the limitation that permits reverse engineering for software interoperability. As one commentator bluntly pointed out, "[a] WTO panel could find that the ability to freely decompile a computer program under Sega conflicts with copyright owner's ability to license its programs for that purpose, or that its use in the creation of a noninfringing, but nevertheless competing, work conflicts with the normal exploitation of the original program."²⁶¹

¶ 93         As to the third prong of the three-step test, which provides that a limitation shall not "unreasonably prejudice the legitimate interests of the right holder," the Panel Report set out three conditions that copyright limitations should satisfy.

¶ 94         First, broader than the economic interests, right holders' "legitimate interests" cover those "that are justifiable in the light of the objectives that underlie the protection of exclusive rights."²⁶² This connotes that, moral rights, albeit estranged from the TRIPs regime, can be seen as the part of right holders' legitimate interests.

¶ 95         Second, right holders' legitimate interests are unreasonably prejudiced "if an exception or limitation causes or has the potential to cause an unreasonable loss of income" to the right holder.²⁶³ In computing the said loss of income, the panel reiterates that both actual and potential effects on the right holder's market should be taken into consideration.²⁶⁴

¶ 96         Third, unreasonable prejudice can be offset by the payment of compensation from the entrenched compulsory licensing system.²⁶⁵ In this regard, the third prong of the three-step test "highlight[s] the need for care, moderation, and constraint in constructing any compulsory licensing scheme under national law."²⁶⁶

¶ 97         Since the Panel Report admitted that the above approach is incomplete and conservative,²⁶⁷ weighing the validity of a copyright limitation based upon economic loss suffered by the right holder, therefore, does not foreclose the other means by which "unreasonable prejudice" can be measured. If the three-step test is brought into play in the context of the WCT and WPPT, one possible inquiry that may arise on the horizon is to examine whether the limitation in question would constitute unreasonable prejudicial to right holders' "honor or reputation," that is, the moral interests embodied in their moral rights.

¶ 98         However, one should note the third prong of the three-step test is a relatively lenient standard. On the one hand, the "unreasonable prejudice" standard is generally far less strong and strict than the "normal exploitation" standard set out in the second prong of the three-step test. On the other hand, it is prescribed that an appropriate payment of compensation which is potentially lower than that under the "normal exploitation" standard, can redress the "unreasonable prejudice" effect.²⁶⁸

¶ 99         Although the Panel Report does not elaborate on the normative content of the "legitimate interests" that the objectives of the copyright law support, it seems that two points are quite clear. First, "an author would not have a 'legitimate' interest in preventing publication of an unfavorable book review,"²⁶⁹ for this act runs afoul of the free speech right that copyright law supports. Second, allowing the transformative use serves the objective of the copyright law and therefore might not be deemed violative of the third condition of the three-step test. This is because "the more a right-holder's assertion of rights tends to prevent others making transformative uses of it, the less likely that assertion is to involve 'legitimate' interest."²⁷⁰ Hence, it seems that public policy scrutiny is embedded into the third prong of the three-step test, in determining the scope of "legitimate uses."

IV.    The Creative Destruction of the Three-Step Test

¶ 100         Given the three-step test's chilling effect on the existence of the above-mentioned limitations on copyright,²⁷¹ this Part delves into how the test could be changed in a manner conducive to the protection and promotion of public interest. To do so, I propose that the three-step test should be replaced by the following new test:

Members may provide limitations on the exclusive rights, provided that such limitations take account of the legitimate interests of right holders and of third parties.

¶ 101         The creative destruction of the three-step test,²⁷² as shown above, is put forward on the basis of Article 17 of the TRIPs Agreement, which prescribes the condition with which "exceptions to the rights conferred by a trademark" should comply.²⁷³ Moreover, the test sets forth two interdependent conditions. On the one hand, copyright holders' legitimate interests should not be "unreasonably prejudiced." Put differently, the legitimacy of any given limitation on copyright hinges partly upon the condition that it would not be unreasonably prejudicial to the right holders' legitimate interests. On the other hand, users' legitimate interests that underpin the imposition of copyright limitations should be fully taken into account when the three-step test is invoked. From this perspective, the new test fully embraces the public policy scrutiny as an indispensable standard of review. In this sense, my proposal designed to reshape the three-step test is entirely different from those put forward by Ruth Okediji²⁷⁴ and Daniel Gervais.²⁷⁵

¶ 102         In the following discussion, I expound on the reasons why the three-step test should be replaced by the new test proposed above. To do so, the first section considers the problems inherent into the first prong of the three-step test, while the next two sections explore the ways in which the second prong of the test goes astray by not opening the door for public policy scrutiny. The last section then discusses the extent to which the new test put forward above would facilitate the realization of the development agenda.

¶ 103         In addition to the aforementioned objectives, the following discussion aims to give a response to some leading copyright commentators' proposition that the public policy consideration should not be integrated into the review of copyright limitations based upon three-step test, particularly its first prong.²⁷⁶ In my opinion, they ostensibly erred in arguing so as they turn a blind eye to the fact that the mandate of public policy scrutiny has already been set out in other quasi three-step tests under the TRIPs Agreement.²⁷⁷ More importantly, I will provide a set of new perspectives to demonstrate that their proposition is fundamentally myopic and entirely based upon a misguided perception of the nature of copyright law in general and copyright limitations in particular.

¶ 104         As shown in Part III, since the first prong of the three-step test requires the any limitation on copyright should be "clearly defined" and "narrow in scope and reach,"²⁷⁸ it wields the power to strike down the fair use doctrine and some other common-law doctrines, all of which are flexible and open-ended in nature. In response to the possible demise of these public interest-oriented doctrines, this section questions the desirability of conferring such sweeping power upon the three-step test. To do so, I argue that, given the pervasive indeterminacy inherent into legal norms, it is unrealistic and meaningless to set up the standard as stringent as the first prong of the three-step test does.

¶ 105         In The Concept of Law, Hart forcefully contends that a number of legal norms, to a large extent, are vague and indeterminate. He labels this phenomenon as "open texture" problem that is rooted into the fabric of legal system. "Whichever device, precedent or legislation, is chosen for the communication of standards of behavior, these, however smoothly they work over the great mass of ordinary cases, will, at some point where their application is in question, prove indeterminate; they will have what has been termed an open texture."²⁷⁹

¶ 106         The reasons why "open texture" is seen as an inherent characteristic of the legal system could be understood from the following three perspectives: linguistic indeterminacy, the limit in human capacities, and the structural need to keep the legal machinery in motion.

¶ 107         Language is the vehicle through which law conveys its regulatory signals to the public at large. Therefore, linguistic determinacy forms the basis of legal determinacy which acts as the engine generating predictability for people involved in the enterprise of building law and complying with law. Yet language per se, under many circumstances, is fraught with uncertainties and indeterminacies which undermine its signaling function. Hence, as long as the linguistic indeterminacy persists, the seeds of the open texture problem would keep flowing around in the ocean of legal norms.

¶ 108         Drawing on the philosophical theory of language established by Wittgenstein²⁸⁰ and Waismann,²⁸¹ Hart explicates the ways in which linguistic indeterminacy brings about the open texture of law. "[I]n the case of legislation, as a general feature of human language[,] uncertainty at the borderline is the price to be paid for the use of general classifying terms in any form of communication concerning matters of fact. Natural languages like English are when so used irreducibly open-textured."²⁸²

¶ 109         Clearly, Hart reckons that "[v]agueness is an ineradicable feature of our everyday language, and its pervasiveness in the law is the most commonly invoked reason for thinking that the law is indeterminate."²⁸³

¶ 110         Locating everyday social life in the ocean of legal norms with the company of tens of millions of "lighthouses" (regulatory signals) does not necessarily mean that we comfortably "dwell in possibility."²⁸⁴ Rather, we still dwell in impossibility due to the limits in human abilities²⁸⁵ in foreseeing what will occur in future and then figuring out how we can deal with them beforehand. Hence, the letters of the law, no matter how general or specific they are, do not provide definite and exhaustive answers in order to sidestep any future legal pitfalls. Accordingly, Hohfeld observed that "[t]he strictly fundamental legal relations are, after all, sui generis; and thus it is that attempts at formal definition are always unsatisfactory, if not altogether useless."²⁸⁶

¶ 111         Hart, in explicating law's "open texture" problem, was fully mindful of the correlation between legal indeterminacy and the limits in human abilities, as he straightforwardly acknowledged that "we are men, not gods."²⁸⁷ To Hart, the limits in human abilities to clear away the cloud of legal indeterminacy is attributable to the two handicaps we the human beings unfortunately suffer:

It is a feature of the human predicament (and so of the legislative one) that we labor under two connected handicaps whenever we seek to regulate, unambiguously and in advance, some sphere of conduct by means of general standards to be used without further official direction on particular occasions. The first handicap is our relative ignorance of fact: the second is our relative indeterminacy of aim.²⁸⁸

¶ 112         Patently, these two handicaps, in Hart's vision, are the very roots of the open-textured nature of law. This is because "human legislators can have [no] knowledge of all possible combinations of circumstances which the future may bring. This inability to anticipate brings with it a relative indeterminacy of aim."²⁸⁹ In this respect, Hart himself unwittingly generalizes Justice Marshall's emphatic expounding of indeterminacy as the inherent nature of constitutional law to the universe of law:

It was impossible for the framers of the constitution to specify, prospectively, all these means, both because it would have involved an immense variety of details, and because it would have been impossible for them to foresee the infinite variety of circumstances, in such an unexampled state of political society as ours, for ever changing and for ever improving. How unwise would it have been, to legislate immutably for exigencies which had not then occurred, and which must have been foreseen but dimly and imperfectly!²⁹⁰

¶ 113         To be sure, the whole legal system deals with the nuances and complexities embedded into the web of human behaviors which are fraught with uncertainties and indeterminacies.²⁹¹ The structure of a legal system, therefore, should and must be designed in a manner sufficiently responsive to an ocean of ever-changing circumstances and unpredictable factors that occur in the social machinery.²⁹² This is because a legal system that accommodates "allocations of institutional responsibility" should be understood as "a rich, fluid, and evolving set of norms for effective governance and dispute resolution, not as a positivist system of fixed and determinate rules."²⁹³ From this perspective, a certain degree of flexibility and fluidity of legal norms, to a large extent, stems from the structural need to maintain the legal system open and broad enough to grapple with an extremely wide range of legal matters. Such flexibility within particular applications of legal norms helps to stabilize the legal system as a whole.

¶ 114         The design of constitutional law epitomizes the "open texture" problem derived from the structural need of legal system. In order to promote governmental efficiency and to prevent tyranny,²⁹⁴ the notion of separation of powers becomes the heart of modern constitutional law which distributes power horizontally and vertically. However, in U.S., the constitutional framework of power separation "has been sufficiently flexible over the past two centuries"²⁹⁵ in that "[t]he enumeration [of power] presupposes something not enumerated."²⁹⁶ The reason to do so was expounded by McCulloch v. Maryland:

A constitution, to contain an accurate detail of all the subdivisions of which its great powers will admit, and of all the means by which they may be carried into execution, would partake of the prolixity of a legal code, and could scarcely be embraced by the human mind . . . . That this idea was entertained by the framers of the American constitution, is not only to be inferred from the nature of the instrument, but from the language.²⁹⁷

¶ 115         Moreover, in United States v. Lopez,²⁹⁸ Justice Rehnquist highlighted the structural need-based reasons why the Commerce Clause has been operated within the framework of legal indeterminacy ever since the judiciary's duty "to say what the law is" was declared by Marbury v. Madison:²⁹⁹

Admittedly, a determination whether an intrastate activity is commercial or noncommercial may in some cases result in legal uncertainty. But, so long as Congress' authority is limited to those powers enumerated in the Constitution, and so long as those enumerated powers are interpreted as having judicially enforceable outer limits, congressional legislation under the Commerce Clause always will engender 'legal uncertainty.' . . . The Constitution mandates this uncertainty by withholding from Congress a plenary police power that would authorize enactment of every type of legislation . . . . Any possible benefit from eliminating this "legal uncertainty" would be at the expense of the Constitution's system of enumerated powers.³⁰⁰

¶ 116         The problem of legal indeterminacy, as the foregoing discussion showed, is inherently pervasive in the letters of law. In this respect, commentators have boldly proclaimed that "[legal] certainty is only an illusion,"³⁰¹ and "law is necessarily vague."³⁰² While the radical indeterminacy of law as the critical legal scholarship suggests³⁰³ is still contestable, the fact that law has different degrees of moderate indeterminacy is now universally accepted.³⁰⁴

¶ 117         When it comes to copyright law, there are legal norms that are determinate on its face. For example, it is prescribed that the term of copyright spans to life of author plus seventy years after his death. Yet the copyright statute, by and large, is awash with a host of vague standards and concepts, many of which form the lifeblood of copyright protection. As a threshold standard for copyright protection, the idea/expression dichotomy exemplifies the "open texture" problem inherent into copyright statutes.

¶ 118         The idea/expression dichotomy³⁰⁵ teaches that only the expression of ideas, rather than ideas, is copyrightable. Yet charting the boundaries between idea and expression is no easy work in many cases. On the one hand, while the idea/expression dichotomy is hailed as a universal standard for setting the threshold of copyright protection, no efforts as to what elements of works would fall into the two baskets of "idea" and "expression" respectively, have ever been done in any national and international copyright law. The absence of this kind of line-drawing effort stems from the fact that the making of such "tangible baskets" is entirely beyond the human capacities. Given the extremely rich, fast-changing, ever-expanding nature of the pluralist society, it is impossible for legislators to exhaust all the past, current and future circumstances in which ideas are created, and then draw the dividing line for every category of ideas and their expressions. Hence Judge Hand lamented that "[n]obody has ever been able to fix [the] boundary [between idea and expression], and nobody ever can."³⁰⁶ Moreover, one should note that the creation of "ideas" defies any artificial interference into the universe of innovation and creativity. Indeed, ideas are created by the sparks of human mind that know no boundaries and are kindled by the spirit of freedom of thinking.

¶ 119         On the other hand, it seems that the nature of many non-literary forms of works renders it increasingly difficult to perceive the dividing line between idea and expression. For example, with respect to the artistic work, it becomes routinely hard to determine what is the "idea" conveyed therein and what is the "expression" that functions to communicate such "idea" to the public. The court in Mannion v. Coors Brewing Co.,³⁰⁷ gives up the attempt to carry out the typical line-drawing effort to deal with the idea/expression dichotomy. It simply acknowledges that the distinction between idea and expression "breaks down" in the case of artistic work:

For one thing, it is impossible in most cases to speak of the particular "idea" captured, embodied, or conveyed by a work of art because every observer will have a different interpretation. Furthermore, it is not clear that there is any real distinction between the idea in a work of art and its expression. An artist's idea, among other things, is to depict a particular subject in a particular way. As a demonstration, a number of cases from this Circuit have observed that a photographer's "conception" of his subject is copyrightable. By "conception," the courts must mean originality in the rendition, timing, and creation of the subject - for that is what copyright protects in photography. But the word "conception" is a cousin of "concept," and both are akin to "idea." In other words, those elements of a photograph, or indeed, any work of visual art protected by copyright, could just as easily be labeled "idea" as "expression."³⁰⁸

¶ 120         Given the aforementioned factors, courts facing the task of differentiating between idea and expression have been tormented by dealing with the pitfall of drawing such a dividing line. As a result, there is no shortage of the statement echoing in courtrooms which laments that the idea/expression dichotomy is "elusive"³⁰⁹ and "an imprecise tool."³¹⁰ Against this backdrop, William Patry initiates a postmodernist critique of the mechanical interpretation of the idea/expression dichotomy:

[W]e are better off if we appreciate that the idea-expression dichotomy is not an analytical tool; it is not a test; "idea" and "expression" are simply labels that reflect that some material is protected and some isn't, and that determination is always after-the-fact . . . . "Idea" and "expression" are not categories that have content; they do not express set characteristics; they are just metaphors by which we pretend we are reasoning a priori, when in truth we are engaged in fact-finding.³¹¹

¶ 121         To be sure, the idea/expression dichotomy is by no means the single standard that has no clear contours in the realm of copyright law. A host of other standards like "originality," "fixation," and so forth, have bedeviled the rule-makers in a way that they make the copyright law's reservoir full of poorly-shaped "filters." For example, in the Da Vinci Code case, Justice Smith simply acknowledged that "originality" as the threshold standard for copyright protection is "potentially confusing."³¹² Also, "the test for infringement of a copyright" is deemed "of necessity vague."³¹³ Yet these standards tacitly allow courts to adjust the shape of the "filters" in response to specific facts involved in hard cases. This is exactly what Hart envisions as to the role of courts/judges in dealing with legal indeterminacy when adjudicating hard cases. In this respect, he succinctly concluded that "[t]he open texture of law means that there are, indeed, areas of conduct where much must be left to be developed by courts or officials striking a balance, in the light of circumstances, between competing interests which vary in weight from case to case."³¹⁴

¶ 122         Generally speaking, there are two competing modes of copyright limitations. The fair use doctrine, representative of the first mode, is embedded with the broad and flexible approach to carve out limitations on copyright. As long as the general conditions are met, any unauthorized act of using works would be exempted from the potential liability. Thus, the doctrine per se does not set out the whole range of the privileged uses of works. Apart from the United States, several other countries have adopted³¹⁵ or are considering to the feasibility of including this doctrine in their copyright systems.³¹⁶ By contrast, the second mode, represented by the EU Copyright Directive, itemizes an exhaustive list of specific limitations on copyright and prescribes specific conditions under which each limitation could be invoked. The privileged use of works, under this carefully designed regulatory hierarchy, should closely follow the specifics of instructions given by the law. Equipped with the pre-set detailed limits, the radar screen of the latter mode of law is designed to facilitate rapid detection of those users who have gone beyond the preview of allowable uses.

¶ 123         As demonstrated in Part III, the first mode runs afoul of the requirements set forth in the first prong of the three-step test, namely copyright limitations should be "clearly defined" and "narrow in scope and reach."³¹⁷ By contrast, it seems that the second mode could square comfortably with the first prong of the three-step test, given its endeavors to keep the legal rules "clearly defined" and "narrow in scope and reach." Therefore, such requirements contained in the first prong would potentially bring about a radical shift in the legislative structure of copyright law simply by forcing countries who accept the first mode to embrace the second mode.

¶ 124         Given the pervasiveness of legal indeterminacy in legal norms in general and copyright statutes in particular, one would naturally question whether the three-step test is a legally sound and reasonable enough to be instilled the sweeping power to weed out the first mode of copyright limitations. To do so, one would need to consider whether the first mode of copyright limitations, represented by the fair use doctrine, is consistent with the fundamental justifications for the existence of open texture of law.

¶ 125         First, as language is the vehicle through which copyright limitations are put in motion, linguistic indeterminacy necessarily begets the open-texture problem for the fair use doctrine. This also means that even the second mode of copyright limitations would necessarily suffer from the open-texture problem no matter how earnestly the legislators draft the law in painstaking detail with respect to the ways in which specific conditions should be met.

¶ 126         Second, the legislative inability to foresee and deal with all potential circumstances makes it understandable that the fair use doctrine is structured in an open-ended and flexible manner. In contrast with the second mode, the indeterminacy carried by fair use doctrine becomes the advantage of first mode. This is because the fair use doctrine's open-ended nature has the advantage of adapting copyright limitations to potentially novel ways of exploiting works, making the framework of copyright law largely coterminous with the needed legislative changes spawned by continuous development in technology.³¹⁸

¶ 127         Third, since copyright law is dealing with complicated and ever-changing legal relation in exploiting works of authorship, it is natural that a certain degree of flexibility ought to be imbedded into its whole legislative framework. More importantly, copyright limitations are geared to serve public interest which is not amenable to definition because of the heterogeneity and variety of general human needs it conveys.³¹⁹ For example, framers of the United States Constitution were unsure about what "freedom of speech" means; Benjamin Franklin acknowledged that "few of us, I believe, have distinct Ideas of Its Nature and Extent."³²⁰ Moreover, Justice Rehnquist straightforwardly pointed out that "the 'liberty' specially protected by the Fourteenth Amendment - never fully clarified, to be sure, and perhaps not capable of being fully clarified."³²¹ In dealing with the case concerning the public interest defense, Judge Mance inferred that "the circumstances in which the public interest may override copyright are probably not capable of precise categorization or definition."³²² Therefore, there is a structural need to keep the copyright limitations flexible enough to accommodate the malleability of "public interest."

¶ 128         Having said that, it seems that the first prong of the three-step test, imbued with the power to strike copyright limitations carved out in the first mode, is utterly at odds with the phenomenon of open texture which is the intrinsic hallmark of the legal system in general and copyright law in particular. More importantly, it should be pointed out that the three-step test per se is no "bright line"³²³ rule and therefore is fraught with uncertainties.³²⁴ For example, at the Stockholm Conference, the Israeli delegation reminded the delegation of the uncertainty that surrounds the words "in certain particular cases," "legitimate interests," and "normal exploitation."³²⁵ As long as legal indeterminacy is the "gene" inherent into the legal system and could not be eliminated within the boundaries of human capabilities, it is safe to draw the conclusion that the first prong of the three-step test is founded upon the misconception that all the open-texture problems underlying copyright limitations should be "genetically modifiable and modified" by national legislators.

¶ 129         The inquiry into the legitimacy of the second prong of the three-step test begs the question of whether it is valid for the test to fill up its gravitational field solely with the instruments whose mission is to protect copyright holders' interests. In other words, should the need to protect the interest of the users at large be integrated into the test's skein? This section delves into the extent to which users' interests ought to be protected under the framework of copyright law. First of all, I explore the ways in which users' rights could be fit into the landscape of copyright law in general and copyright limitations in particular. In contrast to the approaches embraced by recent literature discussing the status of users' rights in copyright law,³²⁶ I capitalize on rights discourse in the framework of human rights law to explore the importance of users' rights in the field of copyright law. Second, I center my inquiry into the nature of copyright limitations and the extent to which users' interests can and should be embedded into them. In so doing, I question the legitimacy of the second prong of the three-step test by demonstrating that it leaves too little room for the protection of users' rights in its measuring the legality of the limitations on copyright.

¶ 130         Human rights law provides an excellent framework within which rights talk concerning intellectual products could be animated in a way to bring about a more lucid and intimate understanding of the nature of competing rights enjoyed by creators and users. Based upon the major international human rights treaties, e.g. the Universal Declaration of Human Rights (UDHR), International Covenant on Economic, Social and Cultural Rights (CESCR), and International Covenant on Civil and Political Rights (ICCPR), the following discussion itemizes and canvasses the major human rights enjoyed by creators and users respectively.

¶ 131         According to UDHR and CESCR, "[e]veryone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author."³²⁷ Therefore, the creators of original works shall be entitled to this form of human right, namely the right to benefit from the protection of creative work. Intellectual property in general and copyright in particular, are afforded with limited term of protection and can be waived, licensed and transferred in most circumstances. By contrast, human rights represent the "timeless expressions of fundamental entitlements of the human person"³²⁸ and are by nature inalienable. From this perspective, copyright together with other forms of intellectual property, therefore, does not fit comfortably into the human rights skein.³²⁹ Yet copyright is indispensable and the most important vehicle through which the right to benefit from the protection of creative work is respected, protected and fulfilled. In this sense, copyright can be seen at least as a quasi-human right. On the other hand, a large number of users who create new works by tapping into others' intellectual fruits can and should become the beneficiaries of the same human rights protection.

¶ 132         While human rights law provides affirmative protection of creators' interest in their intellectual products, it does not necessarily follow that users of copyrighted works are powerless. Rather, they are conferred upon a series of human rights, the conferral of which is not conditioned by their identity as users of copyrighted works. Among the whole bundle of human rights they enjoy, the following four categories of rights, in my view, are the most relevant to the rights talk associated with copyright law.

¶ 133         The freedom "to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers"³³⁰ is hailed as one of the fundamental human rights universally enjoyed by all human beings.

¶ 134         On the one hand, it has been universally accepted that government shall be prohibited from abridging the freedom of speech.³³¹ The ban of this type guarantees the negative liberty for all human beings, insulating them from unwarranted coercion that suppresses their speech. Mill contends that the "peculiar evil of silencing the expression of an opinion is that it is robbing the human race, posterity as well as the existing generation - those who dissent from the opinion, still more than those who hold it."³³² Therefore, censoring speech would always lead to public silence and further breed the abuse of power by the government. From this perspective, without governmental intervention, people can freely search for the light of truth. According to Justice Holmes, "the best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out."³³³ Regarding Holmes's "marketplace of ideas" metaphor, Justice Brandeis further added that "freedom to think as you will and to speak as you think are means indispensable to the discovery and spread of political truth."³³⁴ Hence, serving as essential checking value on government's power, free speech is of paramount importance to the building and enhancing of democratic society.

¶ 135         On the other hand, the free speech right further promotes the realization of the positive freedom for all human beings, providing them with sufficient "breathing room" for expressing their own ideas. Facilitated by the practice that "debate on public issues should be uninhibited, robust, and wide-open,"³³⁵ free speech protection hugely promotes autonomy. As Justice Thurgood Marshall pointed out, free speech "serves not only the needs of the polity but also those of the human spirit - a spirit that demands self-expression."³³⁶ By experiencing self-expression and self-determination,³³⁷ people "acquire intelligence, integrity, sensitivity, and generous devotion to the general welfare."³³⁸ Moreover, the protection of free speech is essential to the fostering of tolerance which enhances the solidarity and coherence of our society. This is because the free speech principle "involves a special act of carving out one area of social interaction for extraordinary self-restraint, the purpose of which is to develop and demonstrate a social capacity to control feelings evoked by a host of social encounters."³³⁹ Indeed, nurturing tolerance contributes to shaping "the intellectual character of the society."³⁴⁰

¶ 136         People are nurtured and cultivated by education throughout their life. From this perspective, education is indeed "a necessity of life."³⁴¹ The right to education, therefore, is heralded as one of the fundamental human rights, as it is declared that "[e]veryone has the right to education."³⁴²

¶ 137         The negative liberty dimension of the right to education indicates that the state has the affirmative duty to facilitate the development of education at various levels. Pursuant to the Universal Declaration of Human Rights,"[e]ducation shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit."³⁴³ Moreover, the International Covenant on Economic, Social and Cultural Rights elaborates the additional duties for the state to promote and protect the right to education:

[T]he Fundamental education shall be encouraged or intensified as far as possible for those persons who have not received or completed the whole period of their primary education; The development of a system of schools at all levels shall be actively pursued, an adequate fellowship system shall be established, and the material conditions of teaching staff shall be continuously improved.³⁴⁴

¶ 138         On the other hand, the right to education has its "positive liberty" dimension. Education, in De Tocqueville's vein, is capable of "arousing a sleeping population, and of giving it passions and knowledge which it does not possess."³⁴⁵ In Brown v. Board of Education,³⁴⁶ education is seen as "a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment."³⁴⁷ Consequently, Brown forcefully concludes that education forms "the very foundation of good citizenship."³⁴⁸ Indeed, the "positive liberty" dimension of the right to education is highlighted by the Universal Declaration of Human Rights. It is stated that:

Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.³⁴⁹

¶ 139         "Human development is a cultural process. As a biological species, humans are defined in terms of our cultural participation."³⁵⁰ Indeed, this vision of human development lays the very foundation for the human right to cultural participation.³⁵¹

¶ 140         On the one hand, the state should facilitate rather than impede individuals' freedom to cultural participation. The Universal Declaration of Human Rights places much emphasis on the requirement that states should allow citizens to enjoy full latitude in "freely [participating] in the cultural life of the community."³⁵² In this sense, cultural participation is the very realm of life that is free of unreasonable state surveillance, interference, and coercion. Moreover, under the International Covenant on Economic, Social and Cultural Rights, states shall adopt various measures to "achieve the full realization of [the] right [to cultural participation]."³⁵³ The measures include "those necessary for the conservation, the development and the diffusion of science and culture."³⁵⁴ Moreover, states shall "respect the freedom indispensable for scientific research and creative activity."³⁵⁵

¶ 141         On the other hand, the very freedom to take part in the cultural life enhances the human ability to think and provides numerous bridges that culturally connects individual from all various walks of life. Thus, the right to cultural participation nurtures human functional capabilities of "[b]eing able to use imagination and thought in connection with experiencing and producing self-expressive works and events of one's own choice, religious, literary, musical, and so forth."³⁵⁶

¶ 142         The intervening one hundred years have witnessed an unprecedented shift in human life brought about by scientific and technological developments. To be sure, the development of science and technology serves to promoting human well-being and provides people with enhanced capabilities to pursue their own good life. As the convenience afforded by science and technology has become an indispensable part of human life, the right "to share in scientific advancement and its benefits" has been enshrined in human rights treaties.³⁵⁷ The "negative and positive liberties" dimensions of this right are closely akin to those of the right to cultural participation.³⁵⁸

¶ 143         "Can we create meaning for our lives without demeaning the lives of others?"³⁵⁹ Indeed, behind this perplexing metaphysical question lies a phenomenon called "conflict of rights." From a utilitarian perspective, human beings have an inherent inclination to fulfill their desires, maximize their satisfaction, and minimize their pain and suffering. "[T]he grand governing law of human nature" is, Mill reckoned, to "render the persons and properties of human beings subservient to our pleasures."³⁶⁰ The society as a whole, therefore, is formed by individuals who seek ultimate utility from their environments. Yet, resources available are scarce and cannot do justice to all the desires harbored by utilitarianism-minded persons. Hence, conflict of rights is inevitable when the interested parties claim they have stronger interest in certain resources than others do. Indeed, conflicts of rights are pervasive in an increasingly pluralistic society, due to the diversity and heterogeneity of people's values and beliefs.

¶ 144         When it comes to copyright law, the conflict of rights enjoyed by creators and users respectively looms large in the everyday production, dissemination and consumption of copyrighted works. As a set of exclusive rights vested in creators, copyrights would surely prevent users from reproducing and distributing works of authorship. However, users can assert that, without being allowed to take any of the above actions, their human rights to freedom of expression, education, cultural participation, and the benefit from scientific and technological development would be unquestionably undermined and eroded. This because the fulfillment or realization of these human rights, as they argue, cannot be achieved without being given an appropriate degree of freedom to use the copyrighted work concerned. For example, a parodist who affirmatively exercises his free speech right,³⁶¹ as Justice Souter has pointed out, would necessarily need to "'conjure up' the original in order to parody it."³⁶²

¶ 145         Against this backdrop, copyright legislators and policymakers "confront the issues at stake and can then settle the question by choosing between the competing interests in the way which best satisfies us."³⁶³ The limitations on copyright, therefore, are designed by copyright legislators and policymakers to deal with the conflict of rights in this context. Guided by the principle that "[t]he primary objective of copyright is not to reward the labor of authors, but '[t]o promote the Progress of Science and useful Arts,'"³⁶⁴ they exercise the state police power to intervene in many circumstances, if not all, giving the trump card to users' rights and thereby setting out limitations to circumscribe the exercise of copyrights and to facilitate the materialization of users' human rights. In this sense, the limitations on copyright could be seen as users' privileges,³⁶⁵ because the state allows them to act affirmatively to use works for the purpose of fulfilling their underlying human rights. According to Hohfeldian Jural Relations, "a privilege is the opposite of a duty, and the correlative of a 'no-right.'"³⁶⁶ Therefore, in Hohfeld's terms, a user has the privilege to use a work. As long as he acts within the boundaries of the permission conferred by the state, the copyright holder can not interfere with such use of his work. In other words, the user in question has no duty (to the right holder) not to use the work.

¶ 146         The aforementioned decision adopted by the state reflects the notion that "the right of the owner to use his property is not absolute . . . . [U]ses, once harmless, may, owing to changed conditions, seriously threaten the public welfare."³⁶⁷ Against this backdrop, "the legislature has power to prohibit such uses . . . and the power to prohibit extends alike to the manner, the character and the purpose of the use."³⁶⁸

¶ 147         In granting users the privilege to use copyrighted works, the state has two arrows on its quiver. On the one hand, the state can grant fair-use type privileges. By doing so, it allows users to invade an entitlement without the right holder's consent and allows users to escape paying the damages to the right holder. Alternatively, the state can grant a less strong privilege that allows users to copy works without the right holder's authorization yet with the requirement to pay an appropriate amount of remuneration to the right holder. In short, the granting of two types of privileges largely reflects the notion that the fundamental rights including the right to private property can be reasonably restricted by "lawful regulations necessary or proper for the mutual good of all."³⁶⁹

¶ 148         However, the making of the above-mentioned limitations on copyright necessarily begs the question of the extent to which state's exercise of police power is legitimate. Put differently, given that the governmental power should be limited in any given democratic society, there is a need to set up a mechanism as the check on the state's exercise of its police power to invade copyright, which is a species of private property. To gauge the legitimacy of the exercise of state power in this regard, there are three types of tests which have been widely deployed as standards of review in the framework the American constitutional law:

Strict scrutiny.³⁷⁰ Any given limitation on copyright is deemed lawful if it is proved necessary to achieve its objective a compelling government purpose. Under this test, the government needs to prove that there is a compelling governmental interest to carve out the limitation and it has taken the least restrictive measures to achieve the governmental interest in protecting certain kinds of human rights enjoyed by users.

Intermediate scrutiny.³⁷¹ Any given limitation on copyright is deemed lawful if it is proved substantially related to an important government purpose. Under this test, the government needs to prove that there is an important governmental interest to carve out the limitation and a substantial correlation between the limitation on copyright and the governmental interest in protecting certain kinds of human rights enjoyed by users.

Rational basis test.³⁷² Any given limitation on copyright is deemed lawful if it is proved rationally related to a legitimate government purpose. Under this test, the government needs to prove that there is a legitimate governmental interest to carve out the limitation and a rational correlation between the limitation on copyright and the governmental interest in protecting certain kinds of human rights enjoyed by users.

¶ 149         Among the above three tests, in my opinion, the last one - rational basis test - is the most reasonable to become the check on the state's exercise of its police power. The reasons for choosing the last test - minimum level of scrutiny and most deferential to government policies - are as follows.

¶ 150         First, compared with tangible property, copyright as a species of intangible property has much stronger direct relation to the public at large.³⁷³ When it comes to tangible property, the private/public distinction may be applicable in that it has no public goods nature. On the contrary, the private/public distinction may not fit comfortably into the sphere of intellectual products due to their nature of being public goods. Generally speaking, intellectual products can be consumed by different users at the same time, and each user's consumption of the product does not diminish its quality. On the other hand, the public goods nature of intellectual products indicates that they have a much closer correlation to public interest than tangible property. Given their eminence in each user's daily life, intellectual products, albeit subject to creators' proprietary control, have taken their roots deep into users' capabilities to think, to study, and to express their own ideas. As Justice Thurgood Marshall has pointed out, "Ownership does not always mean absolute dominion. The more an owner, for his advantage, opens up his property for use by the public in general, the more do his rights become circumscribed by the statutory and constitutional rights of those who use it."³⁷⁴ Hence, copyrights in intellectual products shall enjoy much lower level of protection than tangible property does, and the state has stronger police power to regulate the former property rights than the latter.

¶ 151         Second, users' human rights, which the state intends to protect, carry the fundamental values of our human society. The promotion and protection of human rights, as the Universal Declaration of Human Rights has stated, is to fulfill "the inherent dignity and [the] equal and inalienable rights of all members of the human family."³⁷⁵ To do so, we human beings collaborate with one another with the mutual intention to lay "the foundation of freedom, justice and peace in the world."³⁷⁶ From this perspective, human rights protection is "the highest aspiration of the common people."³⁷⁷ Moreover, if we see human rights as "the function of man,"³⁷⁸ human development is formed by "a combination of various 'doing and beings,' with quality of life to be assessed in terms of the capability to achieve valuable functionings."³⁷⁹ Therefore, the promotion of human rights is to facilitate the pursuit of happiness as "a virtuous activity of the soul,"³⁸⁰ and further to fulfill the value of functioning as a real "social being."³⁸¹ In turn, the capability approach to human rights protection directs "government to think from the start about what obstacles there are to full and effective empowerment for all citizens, and to devise measures that address these obstacles."³⁸² As "knowledge, information and communication are at the core of human progress, endeavor, and well-being" in the digital age,³⁸³ the government has a very strong legitimate interest in allowing users' human rights to override creators' copyrights in certain circumstances.

¶ 152         Third, certain eminent domain cases lend strong support to rational basis test. First, they infer that courts should show sufficient deference to government's public policy for taking property on the grounds of public use. For example, in Kelo v. City of New London,³⁸⁴ Justice Stevens emphatically argued the case for deferential standard of review, by concluding that "[w]ithout exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field . . . . For more than a century, our public use jurisprudence has wisely eschewed rigid formulas and intrusive scrutiny in favor of affording legislatures broad latitude in determining what public needs justify the use of the takings power."³⁸⁵ Second, the rational basis test has been overwhelmingly employed in the eminent domain cases.³⁸⁶ In Kelo, Justice Kennedy's concurring opinion contended that "demanding level of scrutiny . . . is not required simply because the purpose of the taking is economic development."³⁸⁷ In other words, in the case involving taking property for economic development which benefits the public at large, the rational basis test could be presumptively applicable. The ruling of Kelo in this regard, therefore, indicates that invading property rights for the general public interests should not be subject to a high level of scrutiny. The deferential standard of review is appropriate because protecting public interest is of paramount importance to the development of the society as a whole. This practice can also be applied to measuring the legitimacy of the state's exercise of police power to lay down limitations on copyright, because copyright, as shown above, has an intimate connection to the promotion of public interest. Moreover, the protection of users' human rights, in many cases, is exceedingly significant to promote freedom and justice in our society.

¶ 153         When weighing competing interests, some courts come to the erroneous conclusion that copyright as a form of property is necessarily stronger than users' rights. In Eldred v. Ashcroft,³⁸⁸ while the lower court's holding that copyrights are "categorically immune from challenges under the First Amendment" was rejected,³⁸⁹ Justice Ginsburg, who penned the majority opinion, denied to examine whether the expansion of copyright at issue would impinge upon users' free speech rights. She argued that the presence of the built-in mechanisms in the realm of copyright law, including the fair use exemptions, have already reconciled the conflict of rights in the area of copyright law. More importantly, she offered the perspective as to how the potential conflict between copyright and free speech right could be addressed:

The First Amendment securely protects the freedom to make - or decline to make - one's own speech; it bears less heavily when speakers assert the right to make other people's speeches. When, as in this case, Congress has not altered the traditional contours of copyright protection, further First Amendment scrutiny is unnecessary.³⁹⁰

¶ 154         Yet one can easily note that the Court's very reluctance to revisit whether the so-called "built-in First Amendment accommodations" would sufficiently protect users' free speech rights is actually based upon the dubious premise that the free speech right is necessarily inferior to property right when the two are in conflict with each other. Thus the Court implicitly embraces the premise that the fair use exemption acts merely as the "affirmative defense" available to users in the proceedings. The "affirmative defense" premise, however, would give rise to the problem that users' rights are automatically "ranked" lower than copyrights.

¶ 155         In treating users' rights "with indifference,"³⁹¹ Justice Ginsburg entirely neglected Justice Brandeis' concurring opinion in Whitney v. California, which emphatically argued that "[t]he fact that speech is likely to result in some violence or in destruction of property is not enough to justify its suppression."³⁹² Moreover, she also turned a blind eye to Marsh v. Alabama, which forcefully argued the case for the primacy of free speech rights over property rights:

To act as good citizens they must be informed. In order to enable them to be properly informed their information must be uncensored. There is no more reason for depriving these people of the liberties guaranteed by the First and Fourteenth Amendments than there is for curtailing these freedoms with respect to any other citizen . . . . When we balance the Constitutional rights of owners of property against those of the people to enjoy freedom of press and religion, as we must here, we remain mindful of the fact that the latter occupy a preferred position.³⁹³

¶ 156         Furthermore, courts in Europe have dealt specifically with the conflict between copyright and free speech rights, holding that the latter right can take precedence over the former in the cases concerned. In Ashdown v. Telegraph,³⁹⁴ a watershed decision on the U.K. public interest defense, Lord Phillips explicitly stated that free speech right can override copyright, stating, "[n]ow that the Human Rights Act 1998 is in force, there is the clearest public interest in giving effect to the right of freedom of expression in those rare cases where this right trumps the rights conferred by the [U.K. Copyright, Designs and Patents Act 1988]."³⁹⁵

¶ 157         In addition, based upon Article 10 of the European Human Rights Convention, which provides that freedom of expression is a fundamental right, Church of Scientology v. XS4ALL³⁹⁶ ruled that the right to freedom of expression could trump copyright at issue.

¶ 158         The combination of the aforementioned cases clearly indicates that the free speech right can override property rights under some circumstances. They teach that, in considering rights enjoyed by copyright holders and users, courts should not presuppose that copyright is necessarily stronger than users' rights. By envisioning that fair use is merely the affirmative defense available to users, courts actually water down the importance of protecting public interest. In stark contrast, putting fair use exemptions into the "power station" that produces the "electricity" formed of users' privileges, means that courts should be fully mindful of and adequately sympathetic to the importance of protecting users' human rights. This is because granting privileges of this type aims to provide breathing room to users, thereby obviating the chilling effects of proprietary control on users' enjoyment of human rights to freedom of expression, education, cultural participation, and so forth.

¶ 159         To sum up, limitations on copyright are vehicles through which users' fundamental rights could be respected, protected and fulfilled in the case where such rights are in conflict with creators' copyrights. Careful and intimate consideration of users' fundamental rights that lay the foundation for the state's public policy, as the lesson drawn from Eldred teaches, must be necessitated in gauging the validity and legitimacy of any given copyright limitation. Yet the second prong of the three-step test, by focusing solely on the scrutiny over whether copyright holders' interest is adequately protected, completely places such kind of consideration outside its orbit. For example, the second prong of the three-step test can simply strike down section 110(5)(B) of the U.S. Copyright Act on the grounds that it fosters economic competition between right holders and the beneficiaries of this copyright limitation.³⁹⁷ However, this "death sentence" decision was made without any consideration of the fact that section 110(5)(B) is imbued with great free speech value.³⁹⁸ Moreover, it seems that the second prong of the three-step test together with its first prong creates the strict scrutiny test for measuring the validity of any given limitation on copyright. The strict scrutiny test, as this section demonstrates, is an improper standard of review that is capable of striking down public interest-oriented limitations on copyright.

¶ 160         The inquiry into the legitimacy of the second prong of the three-step test begs another question of whether it is appropriate for test to keep itself estranged from the scrutiny of the extent to which copyright holders have the social responsibilities in return for being granted a set of exclusive rights. Based upon the above discussion on the protection of users' fundamental rights, this section considers the grounds upon which social responsibilities ought to be imposed upon copyright holders. It then argues that, while wrestling with the formula restricting the scope of copyright limitations, the architects of three-step test unfortunately turned a blind eye to the social responsibilities that should have been imposed upon copyright holders.

¶ 161         Human beings are not insulated from one another; rather, we live in a social web of interdependence and cooperation. The synergy sparked by human interaction and collaboration provides the very momentum to sustain and enhance the machinery of human society. From this perspective, Nussbaum points out that it is "reciprocity" that forms the fundamental nature of human life:

¶ 162         The core idea of [human nature] is that of the human being as a dignified free being who shapes his or her own life in cooperation and reciprocity with others, rather than being passively shaped or pushed around by the world in the manner of a "flock" or "herd" animal.³⁹⁹

¶ 163         Moreover, in the realm of societal relations, "reciprocity" can be seen as "a moral virtue." As a moral principle to which human beings should themselves subscribe, it teaches that "[w]e ought to be disposed, as a mater of moral obligation, to return good in proportion to the good we receive, and to make reparation from the harm we have done."⁴⁰⁰

¶ 164         When it comes to legal relations, Hart famously made the following statement by drawing on the principle of reciprocity: "When any number of persons conduct any joint enterprise according to rules, and thus restrict their liberty, those who have submitted to these restrictions when required have a right to similar submission from those who have benefited by their submission."⁴⁰¹

¶ 165         Obviously, Hart sees legal relations as the joint social enterprise collectively pursued by people with the aim to achieve the common good. In a reciprocity-based society, the mutual responsibility to act in accordance with legal rules is entrenched as a crucial vehicle through which law can be capitalized on so as to advance the social development in a healthy way. When it comes to the field of property, Hart's vision of joint social enterprise is buttressed by Rawlsian political principle of reciprocity:

[I]n a property-owning democracy the aim is to carry out the idea of society as a fair system of cooperation over time among citizens as free and equal persons . . . . To see the full force of the difference principle it should be taken in the context of property-owning democracy (or of a liberal socialist regime) and not a welfare state: it is a principle of reciprocity, or mutuality, for society seen as fair system of cooperation among free and equal citizens from one generation to the next.⁴⁰²

¶ 166         The very importance placed by Rawls in the above statement is indeed the "natural duties [of] mutual respect."⁴⁰³ According to him, only through entrenching the principle of reciprocity deep into the fabric of property protection system can the institution of democracy allow freedom and equality to flower. Consequently, the maxim that "[e]very man is bound to use his own property in such a manner as not to injure the [rights] of his neighbor"⁴⁰⁴ becomes the very motto in the so-called property-owning democracy. More importantly, property-owning democracy based upon the principle of reciprocity should be engineered to produce fair equality of opportunity for citizens. This means that property owners shall cooperatively participate in the joint scheme of redistributing opportunities with others.⁴⁰⁵

¶ 167         Copyright law is also a joint enterprise in which creators and users work together in the social machinery to achieve law's ultimate aim of promoting the general public interest.⁴⁰⁶ Within this joint enterprise, users submit themselves to copyright law which requires them to respect the copyright vested in creators. In this way, they contribute to the progress of science and useful arts, because the protection of copyright promoted by users' showing of respect for such form of property rights would result in sustained and enhanced provision of works by creators. This would further foster a flowering of knowledge for human development.

¶ 168         According to the principle of reciprocity, as long as users act in a manner respectful of copyright, creators should and must be required to do something positive to the promotion and protection of users' rights. In this sense, the grant of copyright to creators therefore intrinsically entails the social responsibilities imposed upon them. Put differently, users can thereby forcefully petition creators to exercise their rights in a manner conducive to the pursuit of public good. From this perspective, copyright holders are required to come to terms with the socially beneficial use of their works by the public at large. Under certain circumstances, they are further required to facilitate such kind of use of copyrighted works.

¶ 169         Intellectual products are public goods in that they can be consumed in a nonexclusive and nonrivalrous manner. As economists have pointed out, however, the maker of intellectual products suffers from the so-called free-rider problem.⁴⁰⁷ When the number of free riders keeps increasing, intellectual products "are likely to be produced at socially suboptimal levels,"⁴⁰⁸ for the makers of such products would not reap the rewards of their investments due to the competition brought about by free riders.⁴⁰⁹ Market failure occurs in this context because resources for producing intellectual products are not allocated to the person who directly and positively contributes to making such products. Given the risk of a potentially inadequate provision of intellectual products, the government confers exclusive rights, including copyright, upon creators, as one of the means of dealing with the public goods problem.⁴¹⁰ Through the grant of monopoly in the form of property rights, the government aims to ameliorate the adverse effects arising from the competition wrought by free-riders of intellectual products. In this sense, conferring copyright is tapped into as the means to the ends of fostering efficiency in producing, disseminating and exploiting intellectual products.

¶ 170         Yet one should note that the efficiency-oriented approach to address the public goods problem is by no means free of problems. Efficiency, as economists themselves have acknowledged, at times leads to inequality in the distribution of wealth among citizens. As Gregory Mankiw observed, "efficiency refers to the size of the economic pie, and equity refers to how the pie is divided. Often, when government policies are being designed, these two goals conflict."⁴¹¹ In this regard, Felix Cohen, one of the foremost American legal realists, provided a fresh insight into the potential inequality wrought by the monopolization of public goods:

Language is socially useful apart from law, as air is socially useful, but neither language nor air is a source of economic wealth unless some people are prevented from using these resources in ways that are permitted to other people. That is to say, property is a function of inequality . . . . So, if courts prevent a man from exploiting certain forms of language which another has already begun to exploit, the second user will be at the economic disadvantage of having to pay the first user for the privilege of using similar language or else of having to use the less appealing language (generally) in presenting his [expressions] to the public.⁴¹²

¶ 171         Indeed, this vision of the negative externalities produced by property approach to deal with public goods problems, is also applicable to copyright protection of works, for language used in any given work is the "bread and butter" used by people to bring to fruition of the self-expression need. Against a backdrop of monopolistic control over the expressions of ideas, at stake are users' rights to free speech, education, cultural participation and so on.

¶ 172         Therefore, monopolistic control over expressive words gives rise to unequal distribution of public goods between copyright right holders and users. As Justice Bradley pointed out in his dissenting opinion in the Slaughter-House case, "[the] granting of monopolies lies, or exclusive privileges to individuals or corporations, is an invasion of the right of others to choose a lawful calling, and an infringement of personal liberty."⁴¹³ Without any social welfare oriented measures counteracting this inequality problem, users are destined to be marginalized in the digital age. From this perspective, it is likely that copyright provides economic protection for creators at the expense of public interest and social welfare relating to the use of works of authorship. In order to counteract the foregoing inequality problem occasioned by proprietary control of expressive words, imposing social responsibilities upon copyright holders is a means of achieving a "broad notion of equity" that copyright law is designed to serve.⁴¹⁴

¶ 173         From the perspective of the Lockean natural rights justification for property protection, the equality-based social responsibilities are twofold. First, Locke's theory teaches that the right to property, as the monopoly in a common mixed human labor, can sustain only if "there is enough and as good left in common for others."⁴¹⁵ This is widely known as "sufficiency proviso." Central to this provision is the assumption that the eligibility to become a property owner depends upon whether others are left with sufficient opportunities to use the common. In this respect, a property owner has the social responsibility to eliminate the negative effects (occasioned by his exclusive possession of certain products) on others' well-being, which is in turn dependent upon a reasonable degree of the availability of such products. This is because those who claim property rights in certain products "should not do harm to other peoples' claim to the common."⁴¹⁶ If one does not carry out the social responsibilities in question before or after being conferred with exclusive rights in certain products, he would surely be ineligible to be vested with property rights. As copyright is a form of property right, the social responsibility requirement should also apply to copyright holders. In this respect, Gordon's explication of the "sufficiency proviso" lends strong support to the social responsibility requirement as the quid pro quo for the grant of exclusive rights to creators:

The provision that "enough and as good [be] left" lies at the center of natural rights justification for copyright protection: that creators should have property in their original works, only provided that such grant of property does no harm to other person's equal abilities to create or to draw upon the preexisting cultural matrix and scientific heritage. All persons are equal and have an equal right to the common.⁴¹⁷

¶ 174         Second, the creators' social responsibilities to use the works in a socially beneficial manner is also based on the Locke's "no-spoilation" proviso which envisaged by him as the inherent requirement for laborers' continuous enjoyment of the property right in a common mixed with their labor: "[I]f either the Grass or his Inclosure rotted on the ground, or the Fruit of his planting perished without gathering, and laying up, this part of Earth, notwithstanding his Inclosure, was still to be looked on as Waste, and might be the Possession of any other."⁴¹⁸

¶ 175         The "no spoilation" proviso, therefore, makes clear that a person's property right can be invalidated "if he fails to exercise it or exercises it in such a ways as to prevent the [property] from ever being useful in any way to anyone at all."⁴¹⁹ In this sense, the owner of property shall not use property in a manner harmful to the promotion of social well-being. This proviso, when applied to copyright, requires that the creators, as the holders of copyrights, shall not abuse their exclusive rights in ways that unreasonably constrain users' exercises of their pertinent human rights.

¶ 176         In Eldred, the Supreme Court acknowledged that social responsibilities are imposed upon right holders as the quid pro quo for vesting them with patent rights.⁴²⁰ Yet, it rejected that the same idea could be applied to copyright.⁴²¹ In doing so, the Court based its denial on the distinction between the protections afforded to copyright and patent.

We note [that] patents and copyrights do not entail the same exchange, and that our references to a quid pro quo typically appear in the patent context . . . . [C]opyright gives the holder no monopoly on any knowledge. A reader of an author's writing may make full use of any fact or idea she acquires from her reading. The grant of a patent, on the other hand, does prevent full use by others of the inventor's knowledge.⁴²²

¶ 177         Yet the Supreme Court's reasoning of whether the social responsibilities should be imposed upon copyright holders is flawed in that a simple juxtaposition of patent and copyright rights can not necessarily lead to the foregoing conclusion. Without digging deep into other aspects of the nature of copyright protection and its accompanying social problems as discussed in the above two subsections, the Court's ruling against the requirement of social responsibilities is unquestionably dubious. With the recent expansion of copyright protection, it is not necessarily true that the protection afforded to copyright holders, according to the letters of copyright law, does not enable them to monopolize any knowledge. As Sega has pointed out, "the fact that computer programs are distributed for public use in object code form often precludes public access to the ideas and functional concepts contained in those programs, and thus confers on the copyright owner a de facto monopoly over those ideas and functional concepts."⁴²³ Moreover, the Court failed to bear in mind that the legal protection of technological measures and non-original databases actually confers monopoly over ideas upon right holders.

¶ 178         On the other hand, in overemphasizing the distinction between patent and copyright protections, the Court failed to realize the very fact that copyright holders, in effect, wield the power to exercise their rights in a manner contrary to the public interests. While it is clear that the exclusivity of patent rights is generally stronger than that of copyright, it does not necessarily follow that the public are no longer vulnerable to the misuse of copyright committed by copyright holders in various instances. Indeed, the copyright misuse doctrine is actually the outgrowth the judicial effort to bring a halt to the copyright holders' monopolistic behaviors. In this sense, the doctrine is instrumental in curbing the copyright holder's power in exercising its rights in a way that it runs counter to the ultimate aim of copyright law, i.e. "to stimulate artistic creativity for the general public good." While great importance was attached to the line between patent and copyright protections, the Supreme Court skirted around the crucial issue as to whether the copyright may well be exercised in way contrary to the public interest. Worse still, it failed to realize that the copyright misuse doctrine is borrowed from its counterpart in the patent law. In Lasercomb, the Fourth Circuit invented the copyright misuse doctrine on the basis of the vision that the monopolies possessed by the holders of patents and copyright are relatively similar in nature:

It is significant [that] the framers of our Constitution . . . considered in tandem [the] property rights protectable by copyrights and those protectable by patents. In giving Congress the power to create copyright and patent laws, the framers combined the two concepts in one clause, stating a unitary purpose-to promote progress . . . . [S]ince copyright and patent law serve parallel public interests, a "misuse" defense should apply to infringement actions brought to vindicate either right . . . . [T]he similarity of the policies underlying patent and copyright is great and historically has been consistently recognized. Both patent law and copyright law seek to increase the store of human knowledge and arts by rewarding inventors and authors with the exclusive rights to their works for a limited time. At the same time, the granted monopoly power does not extend to property not covered by the patent or copyright.⁴²⁴

¶ 179         Therefore, by relying upon the distinction between copyright and patent, the Court turned a blind eye to the common nature shared by these two forms of intellectual property: the monopolistic control of subject matter concerned breeds abuse of rights. From this perspective, if the social responsibility requirement applies to patent, the Supreme Court can not and should not rule out the same requirement for copyright.

¶ 180         To sum up, the above discussion demonstrated that social responsibility is the very quid pro quo for granting a bundle of exclusive rights to creators.⁴²⁵ The consideration of the social responsibilities that are imposed upon copyright holders is essential to the healthy development of copyright law. This is because law can not be advanced in the single direction to enhance copyright holders' interests. The building of copyright holders' social responsibilities is intended to facilitate pursuit of copyright law's ultimate value. It is critically important that such responsibilities are be woven into the fabric of copyright law. Akin to Eldred, the second prong of the three-step test, however, alienates copyright holders' social responsibilities from scrutiny of the validity of any given limitation on copyright.

V.    Conclusions

¶ 181         In Mending Wall, Robert Frost poetically rejected the hard-headed notion that "[g]ood fences make good neighbors."⁴²⁶ He thought that those who are zealous in building good fences would sadly "mov[e] in darkness."⁴²⁷ Indeed, what is implied in Frost's lamentation is that the so-called "good fences" protecting property rights would not necessarily make a community awash with vibrancy, exuberance and coherence. Some eighty years later, by stating the case for "building communities without building walls,"⁴²⁸ Jerry Frug forcefully reminds us again that "good fences" are by no means the very nostrum to "make good neighbors."

¶ 182         The arrival of the digital age ushers globally-connected information superhighways into the universe of human flourishing, mainstreaming and electrifying information as the lifeblood of any given knowledge-based society. Thus, a robust flow of information has become the electricity that provides the very energy to allow a host of new ideas to flower beyond the orbit of conventional wisdom. Yet one should bear in mind that technology, if manipulated by certain kind of centralized power, may well act as the invisible "wall," bringing a halt to the flowing of information which reaches the hearts and minds of people at a lightning speech in the digital age.⁴²⁹

¶ 183         Copyright law might well represent one strand of such kind of centralized power, in that it "regulates expressive activity."⁴³⁰ In this regard, it has been pointed out that, while digital technology interconnects people at all corners of the world into a digital global village, "[c]opyright has emerged as one of the most important means of regulating the international flow of ideas and knowledge-based products."⁴³¹ Hence both international and national copyright laws "affec[t] the gains are shared, and in doing so affect[] the pace of development within less developed countries."⁴³²

¶ 184         By and large, the three-step test has become the catalyst for the continued strengthening of copyright protection at the international, regional and national levels. As this article has shown, the expansion of the three-step test has been premised on the rhetoric that the unprecedented convenience of having access to and making use of works afforded by digital technology, would necessarily mean that the copyright protection should be beefed up by significantly narrowing down the scope of the limitations on copyright. Put in Justice Breyer's vein, we can boil down the dangers of keeping this test intact as follows:

[The three-step test] will cause serious expression-related harm. It will likely restrict traditional dissemination of copyrighted works. It will likely inhibit new forms of dissemination through the use of new technology. It threatens to interfere with efforts to preserve our . . . historical and cultural heritage and efforts to use that heritage, say, to educate our . . . children. It is easy to understand how the statute might benefit the private financial interests of corporations or heirs who own existing copyrights. But [we] cannot find any constitutionally legitimate, copyright-related way in which the statute will benefit the public. Indeed, in respect to existing works, the serious public harm and the virtually nonexistent public benefit could not be more clear.⁴³³

¶ 185         The copyright holder-centered premise upon which copyright law has been advanced, however, is fundamentally flawed. As shown in this article, the promotion and protection of users' interests is indeed the heart of copyright law. Copyright limitations, as the privileges granted to users and the social responsibilities imposed upon right holders, are engineered to protect users' human rights so as to foster an enhanced promotion of free speech, education, cultural participation, and so on. Indeed, this perspective opens up a new vision of the nature of copyright limitations and of the way in which the current right holder-centered copyright law could be altered. The change of the three-step test, therefore, can be seen as the first crucial step to usher in user-centered copyright law. By rooting out the substantive and structural defects inherent into the three-step test, the creative destruction model put forward in this article would open a new chapter of tapping into the role of copyright in advancing the dissemination of information and further delivering on the promise to afford an enhanced promotion of public interest. As a new idea, it yet reflects a two-hundred-year-old wisdom that has sunk to the bottom of the pool of copyright thoughts: "a man may fairly adopt part of the work of another; he may so make use of another's labors for the promotion of science, and the benefit of the public."⁴³⁴

¶ 186         To be sure, the recent amendment to the TRIPs Agreement triumphantly brought about the global coalition against patent protection that has been anti-humanitarian,⁴³⁵ and may spark the aura of "creative destruction" of the three-step test. This world-wide campaign clearly shows that, as long as people are united together with a steadfast commitment to combating an illegitimate rule, the hurdle to usher in a paradigm shift is by no means insurmountable.⁴³⁶

¶ 187         Hence, it is highly time for us to create a revolutionary earthquake to break down the very foundation on which the three-step test is founded. We shall also bear in mind that our post-earthquake task is to build up the user-centered copyright law which grants broader privileges to users and imposes social responsibilities upon right holders. Armed with a resounding denial of the right holder-centered copyright law, our Manifesto for waging this "revolution" urges that "Users of copyrighted works in all countries, unite!"⁴³⁷

ENDNOTES