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The Copyright Office today released a lengthy report on the orphan works issue. I expect I’ll have more to say about the document after I’ve fully digested it, but the key section is the Copyright Office’s legislative proposal. It’s a bit like skipping to the end of a mystery novel to see how it all turns out, but this represents a major step forward in the debate and merits commentary. The Copyright Office recommends the addition of a new section 514 to the Copyright Act, which would read as follows:

SECTION 514: LIMITATIONS ON REMEDIES: ORPHAN WORKS

(a) Notwithstanding sections 502 through 505, where the infringer:

(1) prior to the commencement of the infringement, performed a good faith, reasonably diligent search to locate the owner of the infringed copyright and the infringer did not locate that owner, and

(2) throughout the course of the infringement, provided attribution to the author and copyright owner of the work, if possible and as appropriate under the circumstances,

the remedies for the infringement shall be limited as set forth in subsection (b).

(b) LIMITATIONS ON REMEDIES

(1) MONETARY RELIEF

(A) no award for monetary damages (including actual damages, statutory damages, costs or attorney’s fees) shall be made other than an order requiring the infringer to pay reasonable compensation for the use of the infringed work; provided, however, that where the infringement is performed without any purpose of direct or indirect commercial advantage, such as through the sale of copies or phonorecords of the infringed work, and the infringer ceases the infringement expeditiously after receiving notice of the claim for infringement, no award of monetary relief shall be made.

(2) INJUNCTIVE RELIEF

(A) in the case where the infringer has prepared or commenced preparation of a derivative work that recasts, transforms or adapts the infringed work with a significant amount of the infringer’s expression, any injunctive or equitable relief granted by the court shall not restrain the infringer’s continued preparation and use of the derivative work, provided that the infringer makes payment of reasonable compensation to the copyright owner for such preparation and ongoing use and provides attribution to the author and copyright owner in a manner determined by the court as reasonable under the circumstances; and

(B) in all other cases, the court may impose injunctive relief to prevent or restrain the infringement in its entirety, but the relief shall to the extent practicable account for any harm that the relief would cause the infringer due to the infringer’s reliance on this section in making the infringing use.

(c) Nothing in this section shall affect rights, limitations or defenses to copyright infringement, including fair use, under this title.

(d) This section shall not apply to any infringement occurring after the date that is ten years from date of enactment of this Act.

After an initial look at the proposed statute, it appears to strike a desirable balance between lessening the risk to users of orphan works and providing appropriate compensation to resurfacing copyright holders. If this statute is enacted, the most interesting part will be the first few years, in which courts will need to:

• set the boundaries of a “reasonably diligent search”
• tell us when attribution is “appropriate under the circumstances”
• figure out how to arrive at a rate of “reasonable compensation for use of the infringed work”
• define when a derivative work includes “a significant amount of the infringer’s expression”
• decide what sort of continuing use of an infringing derivative of an orphan work is “reasonable under the circumstances”
• craft injunctions that “to the extent practicable account for any harm that the relief would cause the infringer.”

I suspect that the judicial interpretation of the proposed statute would play a significant role in the debate, ten years after its enactment, about whether to make it permanent or allow it to expire.

The proposed statute bucks the trend in copyright law to micromanage individual cases through statutory drafting. (See, e.g., 17 U.S.C. § 114.) It allows the courts to consider the most important equitable issues on a case-by-case basis — which is what courts do best. The lack of bright-line rules is likely to frustrate prospective users of orphan works in the short term, but could prove critical to the long-term utility of the statute, since, if enacted, it will be adaptable to new circumstances and new technologies.