Insurers Tune In to Fair Use Best Practices

One of the most frustrating obstacles to fair use of copyrighted content has been the failure of insurers to recognize the fair use doctrine. Typically, insurers have demanded that every scrap of copyrighted material be “cleared” — that is, licensed — which requires would-be users to (1) exert a lot of logistical effort to locate rightsholders, (2) beg them for permission, and (3) often pay exorbitant fees charged for even minor uses of content. When fair use applies, of course, neither permission nor payment should be required. This state of affairs has been especially damaging in the realm of documentary film, where it is well-nigh impossible to have your work distributed, either in theaters or through broadcast outlets, without carrying errors and omissions (“E&O”) insurance.

Two related institutions affiliated with American University, the Center for Social Media and the Program on Intellectual Property in the Public Interest, prepared a fantastic joint report [PDF] a few years ago highlighting this problem, and then followed it up with action: they gathered documentary filmmakers’ groups to draft a Statement of Best Practices explaining when filmmakers are entitled to invoke fair use. One function of the Statement is to serve as an accessible handbook for filmmakers. But another is to create some recognized standards that would give comfort to the risk-averse gatekeepers who prevent documentarians from relying on fair use — insurers prominent among them.

Well, it worked! One of the major E&O insurers has now begun accepting adherence to the Best Practices as an acceptable substitute for the license-everything mandate of the past. This is further demonstration that the “best practices” model has potential to help give life to fair use rights in other areas — as we suggested in last year’s Berkman Center white paper on copyright and digital content in education. I understand that there are other communities of content users gathering to develop their own versions of best practices. This may well be a powerful approach to preserving fair use without direct legal action. Stay tuned…

Update & Clarification: It has been pointed out to me that this post could make it seem as if the insurer just accepts the filmmaker’s promise that all unlicensed uses of content qualify as fair use and adhere to the Best Practices. I didn’t intend to suggest quite that. As the more detailed post to which I linked makes clear, there must also be an “appropriate lawyer’s letter” ratifying this fair use analysis. Such an arrangement still represents a big improvement over the previous situation, where fair use was, for all practical purposes, unavailable.

6 Responses to “Insurers Tune In to Fair Use Best Practices”

  1. I’m glad there’s progress here, but I wonder how much of the refusal to acknowledge fair use is based on risk aversion – even if the insured wins the case, the insurance company still has to pay for the defense. Why take that risk when you can impose an externality on the insured at the outset that costlessly brings risk down to zero?

  2. Michael:

    Good point. I agree that defense costs are definitely part of the equation here. One partial response is that there is competition among E&O insurers and that, if filmmakers have a choice (as they now do) they will gravitate toward policies that allow them to take advantage of fair use. And importantly, a filmmaker who actually adheres to the Best Practices will have a strong fair use case — so much so that I am skeptical whether rightsholders would really follow through on a threat to sue. Nonetheless, defense costs remain, as always, an obstacle.

  3. […] Bill McGeveran recounts an important milestone in the application of the fair use doctrine:¬† An E&O insurance carrier has written a policy on a work — a documentary film — whose use of copyrighted material is supported by the fair use doctrine, as elaborated by the Statement on Best Practices prepared by the Center for Social Media at American University¬†(with significant help from documentary filmmakers themselves and the IP faculty at the Washington College of Law at AU), and as applied in this instance by a lawyer willing to put his or her own firm’s E&O policy on the line. […]

  4. Film Insurers Recognize Fair Use….

  5. […] I reported last week the great news that a major insurer agreed to provide coverage against copyright liability for documentary films that rely on the fair use doctrine in accordance with the Documentary Filmmakers’ Statement of Best Practices in Fair Use (as certified by a lawyer’s letter). […]

  6. […] So far, 2007 has been a year filled with an unusual amount of good copyright news for consumers and creators. First came the news (well covered by Bill, here and here) that, after years of resistance, E&O insurers were finally willing to cover documentary films that had not cleared rights to clips from earlier works that appeared in the film so long as the filmmaker reasonably concludes (and a lawyer agrees) that the clips are fair use. […]