The Interplay between Fair Use and Statutory Exceptions under the Taiwan Copyright Act and Article 13 of the TRIPS Agreement
【Chung-lun Shen／NCCU Professor】
I. The Framework and Practice of Article 13 of the TRIPS Agreement
Providing for exceptions and limitations to copyright is necessary to achieve the ultimate legislative purpose of copyright law－promoting the creative development of culture for a State. While exclusive rights incentivize the author to continue creative work in the future, allowing for exceptions and limitation to copyright provides more room for other potential creators to undertake transformative works, enriching the culture without negatively impacting upon the original author’s market interests. In the early years of copyright, when the consciousness of protecting authors had just started to garner support around the global community, the drafters of the Berne Convention  recognized the necessity of exceptions and limitations to copyright to justify its codification in law. The second paragraph of Article 9 of the Berne Convention acknowledges this necessity stating that national authorities should make provision for exceptions and limitations to allow for reproduction of copyrighted material. The provision stipulates: “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.” In legislative contexts, the provision is often referred to as the Berne three-step test. In order to apply the three-step test in an adequate and reasonable fashion to exclusive rights, the TRIPS Agreement  elevated the importance of the provisions allowing for exceptions and limitations, incorporating them into the general principles under the hierarchical system of copyright law. Under Article 13 of the TRIPS Agreement, the three-step test has been applied to bind all exclusive rights conferred in accordance with copyright law.
Under the legal harmonization led by Article 13 of the TRIPS Agreement, there are two models introducing exceptions and limitations adopted by copyright law in various jurisdictions. The first model works as a statutory exception and a limitation to copyright for specific events or circumstances where the infringing acts are exempted from liability or subject to statutory or compulsory licensing under copyright law.  The legal effect of statutory exceptions and limitations is predictable since a fact-oriented interpretation is generally preferred over the related provisions. It is efficient to apply statutory exceptions and limitations to cases of copyright infringement by merely determining if the statutory requirements are satisfied. Courts tend not to spend much time reconciling the conflicts in interests behind the statutory exceptions and limitations when tackling a specific copyright infringement dispute. On establishing the provisions of exceptions and limitations, legislators have prioritized other interests over protection of copyright, and incorporated it into the statutory requirements for such provisions. However, the model of statutory exceptions and limitations admittedly isn’t well prepared for application to new forms of use that should have been anticipated by the legislators but were not actually codified in the related provisions.
Another model takes a judicial interpretation of fair use as exempting the infringer from liability for copyright infringement in specific cases.  Although the doctrine of fair use may be codified into copyright law, the related provisions merely act as guidelines to lead the court in evaluating whether the infringing act constitutes fair use, and, as such, the infringer would not be held liable under copyright law. The guidelines still leave a lot of room for the court to follow jurisprudence of fair use to encourage the transformative use of copyrighted work to the extent that the use won’t influence the normal exploitation of the work and the legitimate market profits of the author. The discretion of the court indeed allows for flexibility in the evaluation of whether infringing acts can be justified as fair use, after balancing the interests of the author and the public. This flexibility, undeniably, comes at the price of the uncertainty in the evaluation of fair use. In contrast to the model of statutory exceptions and limitations, the legal effect of fair use merely exempts the infringer from liability for copyright infringement, without further consideration of whether statutory or compulsory licensing could work along with the model of fair use. This means that an equitable solution for the rights holder could be overlooked in specific cases.
II. The Joint Function of Fair Use and Statutory Exception under the Taiwan Copyright Act
Currently, in light of the legislative structure of the Taiwan Copyright Act, on the provisions of exceptions and limitations to copyright, Taiwan adopts a hybrid model that governs the judicially-based fair use and statutory exceptions and limitations. Taiwan followed the track of the European Community to elevate the provisions of statutory exceptions and limitations, until 1992 when the provision of fair use was codified into the Taiwan Copyright Act. The provision of fair use was imported from the fair use doctrine stipulated in Section 107 of the US Copyright Act, which contains the four-factor test for fair use. At that time, however, according to the textual interpretation, the provision of fair use served as a general principle in guiding the application of provisions on statutory limitations and exceptions. In other words, any defense on the basis of a statutory exception or limitation affirmed by the court, besides fulfilling the text requirement, must also survive the evaluation of the court under the four-factor test. In 1998, in order to consider other new types of fair use lying outside of the provisions on exceptions and limitations, the wording “other fair uses” was incorporated into Article 65 to extend the application of fair use to cover situations that lie beyond those anticipated by legislators. At that time, the four-factor test under Article 65 still functioned as the general principle to evaluate fair use and interpret the provisions on exceptions and limitations.
In 2003, there was a minor revision to Article 65, wherein a 3rd and 4th paragraphs were added. This amendment did not alter the original legislative model of fair use but formed new provisions to facilitate group negotiation between the collective management organization and users about the scope of fair use by referring to the four-factor test.
The current basis for fair use was formed in 2014 with the revision of the overall systematic structure of provisions of exception and limitation to enhance the efficiency of application by ensuring the flexibility of fair use and the stability of interpretation on exception and limitation. The amendment was proposed in order to distinguish fair use from acts subject to statutory exceptions and limitations. Under the newly amended provisions, exceptions and limitations (Articles 44-63) should be applied independently of the four-factor test for fair use, unless the wording of the provisions includes “a reasonable scope”. In other words, the four-factor test is used to check whether the requirement of “a reasonable scope” is satisfied, and has stopped serving as the general principle for determination of exceptions and limitations after the revision to the provisions. In the latest amendment, the nexus between the fair use doctrine and the provisions for exceptions and limitations has been intentionally weakened. As well as the wording “reasonable scope”, the fair use doctrine eventually formed a parallel track to the provisions of exception and limitation under the Taiwan Copyright Act.
Under the current Taiwan Copyright Act, “reasonable scope”, as presented in some provisions of exception and limitation, is not the only term which merits further interpretation. Article 49, for example, contains the phrase “within the scope necessary to report” but no criteria for how this should be judged are laid out in the text of the provisions.  As a result, if a dispute arises over the necessary scope for reportage to exempt journalists from copyright liability due to unauthorized use of the copyrighted work, the court has become the exclusive authority with the power to interpret the necessary scope without any need to interpret Article 49. The uncertainty of this term has substantially weakened the function of the provisions of exceptions and limitations expected to facilitate a more definite track than the fair use doctrine, especially when the four-factor test can’t be applied on the grounds that the related wording doesn’t make reference to “reasonable scope”.
III. Reflection on the case of the wig-grab photo
The concern referred to above has had a real impact on judicial cases, among which, “the wig-grab photo” case is representative in terms of the Taiwan Copyright Act.  To further his political petition, Mr. H removed a wig worn by Congressman C in the main hall of the Control Yuan to embarrass C. A reporter, T, hired by news company U took a photo of this incident. The news company subsequently published this picture in its daily print edition on December 16th, 1998. C took legal action against H to ask for damages, in light of an alleged violation of personality rights, as protected by civil law. After the suit concluded, the Taiwan High Court handed down a verdict, awarding compensation of NT$300,000.
Without seeking authorization from news company U, another daily newspaper published the aforesaid picture in their print edition on August 25, 2000, to report the final decision of the Taiwan High Court. A news website run by company ND also published the photo on their publicly-accessible website to report the story. The unauthorized copy of the photo was reproduced by news company U, from the copy printed on the business card of Mr. H.
On learning of the unauthorized publication of the aforesaid picture, news company U brought a lawsuit against newspaper A for infringement of copyright and sought a permanent injunction on moral grounds and damages of NT$500,000 according to Articles 84, 85, and 88.
At the Taiwan Intellectual Property Court of First Instance the court judged in favor of the defendant, justifying infringement in terms of how it could be demonstrated as securing the public interest on information exchange. On the first factor under the second paragraph of Article 65  , the copyrighted picture was used merely for the purpose of journalistic communication to remind the public of the incident and of the resulting litigation, even though the unauthorized publishing would be expected to boost the sale of newspapers. On the second factor, the court stated that the copyrighted picture was a photographic work. On the third factor, the court focused upon the percentage of coverage of the newspaper page used for the publication of the picture concerned, and judged it to be a low percentage.  Finally, on the fourth factor, the court didn’t find any evidence proposed by the plaintiff to prove the publication of the picture concerned had negatively influenced the potential market or current value of the picture that could normally be exploited by the plaintiff. The case was appealed to the Taiwan IP Court of Second Instance. The court affirmed the holding of the court of first instance in respect to the defense on the basis of fair use, and rejected the dichotomy between commercial and non-commercial use which it alleged distorts the application of the fair use doctrine. The court was concerned as to whether the purpose and character of use was conducive to the public interest or enhanced the development of national culture. The court held that since Article 49 was designed to promote the free dissemination of information and ensure free and diversified speech, it works in tandem with Article 65 to form the authority of fair use for this case.
The Supreme Court distinguished the limitations and exceptions to copyright from fair use to hold that the effect of limitations of exceptions is admitted provided that the required elements are satisfied without the need to consider the factors for fair use, unless there is the wording “reasonable scope” under the provision. The wording of Article 49 merely addresses the “necessary scope”. Application of this provision, therefore, should not be subject to the four-factor test under Article 65. Article 49 is limited to a question of perception during the reporting of events.
The Supreme Court was critical of the decision made by the IP Court of Second Instance, however, on the grounds of the lower court’s failure to interpret Article 49 correctly, especially in terms of the manner in which the appellant accessed the photographic work in this case, and what the necessary scope for reporting the event was.
After the case was remanded to the IP Court of Second Instance, the court followed the Supreme Court’s holding, admitting the independent application of Article 49, but found that the picture concerned published by the appellant came from a copy belonging to a competitor, and was not reproduced by accessing the work during the reporting of the event. As to how to decide the necessary scope for reporting the event, the court ruled that the factors, including the character and purpose of the content, substitution effect, types and percentage of use, necessity of use for the purpose of reporting and transformation of use, should be considered. Obviously, the test for “necessary scope” was substantially similar to the one for “reasonable scope”, according to the author’s observation.
After considering these factors, relying upon the substitution effect of use without transformation and the necessity of use for the purposes of reporting, the court held for the appellant, rejecting the application of Article 49 in this case.  Even though the court shifted its focus to the fair use doctrine under Article 65, the result was no different. The case went to the Supreme Court again on appeal. The Supreme Court affirmed the IP Court’s decision except on the issue of whether the responsible person for the appellant participated in the infringing act.
Judicial practice regarding the independent application of Article 49, distinct from the evaluation of the fair use doctrine, is highly supportive of the legislative purpose of current copyright law. Nonetheless, in view of the IP court’s analogous holding borrowed from the application of the four-factor test on “necessary scope”, the interpretation inevitably will lead to confusion surrounding the literal meaning of “necessary scope” with that of “reasonable scope”. Further, analogous application of the four-factor test also reflects the latest amendment of the Taiwan Copyright Act which does not apply the four-factor test except in instances where the wording “reasonable scope” is used. In the future amendment to the Copyright Act, it is the responsibility of legislators to review again whether the complete separation of the four-factor test from the provisions of exception and limitation is fully merited for an efficient and flexible legislative model for the Taiwan Copyright Act.
Finally, it is worth noting that the issue of transformative use has also garnered attention from the public in terms of the evaluation of fair use. Although judicial practice recognizes the significance of transformative use for application of the four-factor test, the line between transformative use and transformation of media for use is quite blurry.  The latter should be exclusively reserved for cases in which the authorization of the copyright owner has been given to avoid infringing upon the reproduction right under copyright law. Moreover, according to the text of Paragraph 2 of Article 65, the four factors stipulated are not exhaustive and the court, at its discretion, may admit fair-use defenses based upon tests with more than the original four factors. But what factors may be produced by the court to function with factors 1-4 for the evaluation of fair use? If the interpretation of other extra factors contradicts the original four factors, how can fair use be evaluated overall? Only the court will be able to answer these questions in future judgments.