Of course, just how close to the edge will, again, vary standard by standard. Where the consequence of the incorporation by reference is virtually indistinguishable from a situation in which the standard had been expressly copied into law, this factor weighs heavily in favor of fair use. But where the incorporation does not lend to such easy substitution, fair use is harder to justify.
The third fair use factor asks about “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” 17 U.S.C. § 107(3). The Supreme Court has explained that “the extent of permissible copying varies with the purpose and character of the use” and characterized the relevant inquiry as whether “‘the amount and substantiality of the portion used[’] … are reasonable in relation to the purpose of the copying.” Campbell, 510 U.S. at 586–87, 114 S.Ct. 1164 (quoting 17 U.S.C. § 107(3)). As this language makes clear, this inquiry is ill-suited to wholesale resolution. Rather, PRO’s copying must be considered standard by standard in light of its purpose of informing the public about the specific incorporation at issue. If PRO limits its copying to only what is required to fairly describe the standard’s legal import, this factor would weigh strongly in favor of finding fair use here, especially given that precision is ten-tenths of the law.
To see why this is so, consider once more the power source specification referred to in 46 C.F.R. § 39.2009(a). It requires compliance with “Article 406.9 and 501-145” of the 2011 National Electrical Code. Id. § 39.2009(a)(1)(iii)(B). This incorporation would likely justify posting the specific text of only those two provisions of that version of the National Electrical Code but not, as might have been the case here, multiple versions of the entire code. By contrast, the labeling requirement for biodiesel refers more generally to biodiesel “that meets ASTM D975 diesel specifications,” see 42 U.S.C. § 17021(b)(1), suggesting, in that case, that a greater amount of the standard’s text might be fairly reproduced. And where the incorporation merely makes reference to an external standard, but that standard does not govern any conduct, perhaps the copier’s purpose could be achieved with only a paraphrase or a summary. The district court engaged in no such analysis, and we lack a sufficient record to do so in the first instance.
The fourth fair use factor—“the effect of the use upon the potential market for or value of the copyrighted work,” 17 U.S.C. § 107(4)—“requires courts to consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also ‘whether unrestricted and widespread conduct of the sort engaged in by the defendant … would result in a substantially adverse impact on the potential market’ for the original.” Campbell, 510 U.S. at 590, 114 S.Ct. 1164 (alteration in original) (quoting 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.05[A][4], at 13–102.61 (1993) (footnotes omitted)). In evaluating this factor, the court “must take account not only of harm to the original but also of harm to the market for derivative works.” Harper & Row, 471 U.S. at 568, 105 S.Ct. 2218.
Letting this factor carry the day, the district court inferred that “[w]hen [PRO] engages in ‘mere duplication for commercial purposes,’ as here, a harm to the potential market for the copyrighted works may be inferred,” and concluded that PRO’s commercial use precluded its fair use defense. ASTM, 2017 WL 473822, at *18 (quoting Campbell, 510 U.S. at 591, 114 S.Ct. 1164), For the reasons stated above, however, PRO’s use was not for “commercial purposes,” and so the district
