DETERMINING FAIR PRICE
NOVEMBER 1999
Under certain conditions libraries are permitted to reproduce library materials in order to replace lost, damaged, stolen, deteriorating or obsolete works in their collections. There is no permission for libraries to photocopy or scan works that do not exist in the library’s collection. In other words, Section 108(c) of the Copyright Act is not a collection-building statute but instead is a replacement section.
The statute provides that if a library has a work in its collection and that work becomes lost, damaged, stolen or is deteriorating, the library may, after it determines by reasonable investigation that an unused copy may not be obtained at a fair price. This applies to all types of works including audiovisual works. The good news is that one is not required to go onto the used book or videotape market in order to locate a replacement volume or item. The search is limited to an unused copy in Section 108(c). The statute is silent as to definitions of key concepts such as “reasonable investigation” or “fair price.” Nor is there any time limit placed on how long a librarian should search for an unused replacement.
The legislative history provides some guidance on what constitutes a reasonable effort to locate an unused replacement. According to House Report 94-1476, “The scope and nature of a reasonable investigation to determine that an unused replacement cannot be found will vary according to the circumstances of a particular situation.” It goes on to state that in the ordinary course events, a library that seeks to replace a damaged, deteriorating, lost of stolen work would first approach U.S. trade sources such as retail bookstores, wholesalers or jobbers. It that proves unsuccessful, then the librarian should contact the publisher or author, if known. Finally, one should contact an authorized reproduction service such as UMI.
Even the House Report does not define “fair price.” There are two published definitions of fair price, one from a publication of the Association of American Publishers and another from the American Library Association. In 1978, the AAP posited that a fair price was basically whatever anyone charged the library. It would be the latest suggested retail price if the work is still available from the publisher. It the work is not so available, it would be the prevailing retail price, or, if the library uses an authorized reproducing service, it is the price that service charges.[1]
The ALA publication[2] uses a three-part definition of fair price. First, it is the latest retail price, if the work is still available from the publisher. (This squares with the first part of the AAP definition). Second, the fair price of a reproduction is the cost as close as possible to the manufacturing costs plus royalty payments. While this is more helpful in determining when UMI an other authorized reproducing services price is a fair price, it is not without problems either. Authorized reproducing services simply quote a flat rate the library and there is no division of the charges into manufacturing costs versus royalty payments, so there is little way that a library can use this part of the definition to help it make a decision about fair price.
The third part of the ALA definition deals with the loss or damage to one volume of a multi-volume set when single volumes are not available for purchase. It states that it could be argued that paying a full set price in order to replace one missing volume from a set is not a fair price. This is a very logical interpretation of fair price, since no library can afford to pay a full set price to replace a single damaged volume.
What is less clear is what if the stolen or damaged material is not an entire volume but instead is only an article or two missing from a bound periodical volume. Surely, that is where the librarian would make a reasoned judgment about how much investigation to do and determine that there is no fair price to replace the article. Most librarians would then simply photocopy the article and tip it into the bound volume.
The Digital Millennium Copyright Act added the word “obsolete” to the list of reason that permit a library to reproduce a work after first trying to purchase an unused copy. Section 108(c) details when a format shall be considered obsolete – when the machine or device necessary to read or use the copy stored in that format is no longer manufactured or is no longer reasonably available in the commercial marketplace. Even with an obsolete format, one must try first by reasonable investigation to find an unused copy of the work in the desired format at a fair price before duplicating the work.
The final mention of the term “fair price” occurs in Section 108(e) when a library is reproducing either an entire work or a substantial part thereof for a user. Before the library can reproduce the work for the user, it must first determine by reasonable investigation that a copy cannot be obtained at a fair price. For Section 108(e) the word “unused” does not appear. Thus, the library must even look on the used book market before duplicating the work for a user.
For both Sections 108(c) and (e) determining what constitutes a fair price is left to the judgment of the librarian. There is neither statutory nor legislative history guidance on what is a fair price. Thus, librarians must use their bet judgment in making the determination. At the same time, librarians should make sure that they are being fair to the publisher which has a right to charge for its products and not have them reproduced by libraries when copies are available for purchase at a fair price.