The Code of Best Practices in Fair Use for Open Educational Resources reduces institutional legal risk through multiple, overlapping mechanisms: reducing the likelihood that copyright holders will sue, strengthening fair use defenses if litigation occurs, enabling access to favorable insurance coverage, reducing copyright anxiety among educators, and establishing professional consensus that courts recognize and respect. No community adopting a Code of Best Practices has suffered successful legal challenge for actions taken within the Code’s scope—a 20-year track record established by documentary filmmakers and extended through the OER Code. For nonprofit educational institutions specifically, statutory law provides extraordinary protection: employees of nonprofit educational institutions following the Code can face statutory damages reduced to $0 even if technically infringing, provided they had “reasonable grounds for belief” that their use was fair use—a finding the Code directly supports. By articulating professional consensus, implementing institutional policies, and maintaining documentation systems, educational institutions adopting the Code dramatically reduce legal exposure while maintaining ability to incorporate copyrighted materials serving pedagogical purposes.
The Historical Record: No Successful Litigation
Documentary Filmmakers’ Code: 20 Years Without Challenge
The Code of Best Practices in Fair Use for OER builds upon a proven model with extraordinary track record. Documentary filmmakers developed the first Code of Best Practices in 2005, addressing what they described as being “increasingly constrained by demands to clear rights for copyrighted material”. Over the past 20 years, this Code has established a remarkable legal precedent:
The Central Finding: No community with a Code of Best Practices has suffered successful legal challenge for actions taken within the Code’s scope.
This is not speculation or claim by advocates—it is documented empirical reality across multiple creative professions. Documentary filmmakers relying on their Code’s principles have not lost in court when challenging copyright claims. The same pattern holds for other professional communities that developed codes: academic librarians, media literacy educators, and others.
Why Codes Reduce Litigation
Several mechanisms explain why codes reduce the likelihood of legal challenge:
1. Rights Holders Recognize Professional Legitimacy: When copyright holders understand that a particular use falls within a professionally-recognized Code of Best Practices, they are far less likely to pursue aggressive enforcement. The Code signals to rights holders: “This is a professionally accepted use; litigation to prevent it may fail. Consider negotiating instead.”
2. Legal Strength of Professional Standards: “Because [transformative, appropriate-use claims within professional standards] are true, the risk of a challenge to such a use is dramatically reduced”. Rights holders recognize that litigation against professionally-approved uses is expensive and likely to fail.
3. Risk-Based Decision Making by Rights Holders: Copyright holders make strategic decisions about enforcement. When a use falls within a Code of Best Practices, the expected value of litigation decreases dramatically. Rights holders must weigh:
- Cost of litigation (attorneys, time, expert witnesses)
- Probability of success (low when use meets Code standards)
- Potential damages (may be reduced for nonprofit educators)
- Reputational cost (seen as attacking professional community)
The equation strongly favors negotiation or acceptance rather than litigation.
Statutory Protections for Nonprofit Educational Institutions
Beyond the Code itself, U.S. copyright law provides extraordinary statutory protection for nonprofit educational employees—protection that the Code directly supports.
Section 504(c)(2): Statutory Damages Elimination
The Copyright Act, at 17 U.S.C. § 504(c)(2), contains a specific provision for nonprofit educational employees:
The Law:
“The court shall remit statutory damages in any case where an infringer believed and had reasonable grounds for believing that his or her use of the copyrighted work was a fair use under section 107, if the infringer was: (i) an employee or agent of a nonprofit educational institution, library, or archives acting within the scope of their employment…”
What “Remit Statutory Damages” Means: This statutory language means that statutory damages—the financial penalties courts impose for copyright infringement—can be eliminated entirely (reduced to $0) if the employee had “reasonable grounds for belief” that their use was fair use.
The Statutory Damages Framework
To understand the significance of Section 504(c)(2) protection, understanding statutory damages is essential:
Standard Statutory Damages (for copyright infringement):
- Minimum: $750 per work infringed
- Maximum: $30,000 per work infringed
- Can be raised to $150,000 if infringement was willful
For commercial entities or for-profit institutions, these penalties are substantial. A for-profit company found to be infringing copyrighted material faces potentially devastating damages.
Nonprofit Educational Employees:
- If employee acted with “reasonable grounds for belief” that use was fair use
- Statutory damages can be reduced to $0
- This applies even if infringement is technically found
- Transforming massive financial liability into zero liability
How Section 504(c)(2) Creates Incentive for Fair Use Reliance
The statute effectively says: “If you work for a nonprofit educational institution and have reasonable grounds to believe your use was fair use, you can use copyrighted material without financial penalty, even if a court later finds some technical infringement.”
This protection is extraordinarily powerful because it:
- Removes primary financial deterrent: Most copyright concerns stem from fear of massive damages. Section 504(c)(2) eliminates that fear for nonprofit educators.
- Encourages professional judgment: The law trusts nonprofit educators to make reasonable fair use determinations. It says: “Make the determination in good faith; we will protect you if challenged.”
- Aligns with educational mission: Protection applies specifically to employees acting within scope of employment—educational work.
The “Reasonable Grounds for Belief” Standard
The protection hinges on demonstrating “reasonable grounds for belief” that the use was fair use. This is where the Code of Best Practices becomes crucial.
What Demonstrates “Reasonable Grounds”:
- Careful analysis of the four fair use factors
- Reliance on professional standards and best practices
- Institutional policy supporting fair use
- Documentation of the analysis
- Following Code principles
How Code Supports This:
- Code articulates professional consensus that fair use applies in specific scenarios
- Relying on Code demonstrates educator was not reckless or careless
- Courts recognize codes as establishing “reasonable grounds” standard
- Documentation against Code framework provides clear evidence
Practical Example:
An OER creator incorporates a copyrighted photograph under fair use analysis. If sued, the creator can argue: “I carefully analyzed fair use factors, consulted the Code of Best Practices, determined the use was transformative and appropriate, and documented my reasoning. I had reasonable grounds for belief that this was fair use.”
Even if a court finds some technical issue with the fair use claim, Section 504(c)(2) protection applies, eliminating statutory damages.
How the Code Reduces Legal Risk Across Multiple Dimensions
The Code’s risk reduction operates through interconnected mechanisms:
1. Reduces Likelihood of Copyright Challenge
Mechanism: Rights holders make litigation decisions based on expected outcomes. When they see a use falls within a professionally-recognized Code, they perceive lower probability of success.
Empirical Evidence: Documentary Filmmakers’ Code, adopted in 2005, was followed by dramatic shift in rights holder behavior. Rather than aggressive enforcement against fair use claims, rights holders became more willing to negotiate or accept documented fair use assertions.
For Institutions: Organizations explicitly adopting Code of Best Practices for OER create clear signal that they understand fair use and act professionally. This reduces rights holders’ inclination to sue.
2. Supports Statutory Damages Defense
Mechanism: Code compliance provides documentation of “reasonable grounds for belief” in fair use, enabling Section 504(c)(2) statutory damages elimination.
How It Works:
- Educator follows Code principles
- Uses fair use checklist to document analysis
- If sued, presents Code compliance as evidence of “reasonable grounds”
- Court recognizes Code as professional standard
- Statutory damages reduced to $0 or minimal amount
Institutional Advantage: Nonprofit institutions can literally eliminate financial penalties for good-faith Code-based fair use determinations—even if courts later find technical infringement.
3. Strengthens Fair Use Arguments in Litigation
Mechanism: Courts recognize and respect professional community standards. Codes provide precisely that: formal articulation of professional consensus.
How Courts Use Codes:
- “Although a code cannot control the judicial interpretation of fair use, it helps courts to become familiar with best practices in a professional community when called upon to rule on fair use”
- Courts ask: “Did defendant act in accordance with professional standards?” Codes make clear what those standards are
- “Courts care what affected communities think about fair use”
Litigation Advantage: If dispute reaches court, Code compliance strengthens fair use defense. Judges are more likely to find fair use when use meets professional community standards documented in Code.
4. Enables Insurance Coverage
Mechanism: Insurance companies assess risk when considering coverage. Codes reduce perceived risk dramatically.
Historical Example: Before documentary filmmakers adopted Code, insurance companies actively avoided covering fair use claims—viewing fair use as too uncertain and risky. After Code adoption, “errors-and-omissions insurers began routinely accepting fair use claims”.
This represents fundamental shift: insurers moved from “we won’t cover fair use risk” to “we will cover well-documented fair use risk”.
For Educational Institutions: As OER adoption grows and Code becomes known, insurance companies are likely to follow the documentary filmmakers’ model. Institutions demonstrating Code compliance can expect:
- Lower insurance premiums for fair use coverage
- Easier access to liability coverage
- Better terms and conditions
Practical Impact: Insurance companies viewing fair use as manageable risk means institutions can budget for liability coverage rather than paying prohibitive rates or being denied coverage entirely.
5. Reduces Copyright Anxiety
The Problem: Research shows that over 60% of educators refrain from using copyrighted materials despite fair use protections, and 25% of higher education respondents have abandoned projects due to copyright anxiety. This “chilling effect” undermines educational quality.
Root Cause: Without clear guidance, educators assume copyrighted materials are risky. Institutional support is uncertain. Legal frameworks feel inaccessible.
Code Solution: “Simply by articulating their consensus on this subject, [educators] have already lowered the risk associated with these activities”. When an institution adopts the Code:
- Educators see professional consensus: “My peers have determined this is fair use; I’m not alone”
- Institution signals support: “We understand fair use; we will back reasonable decisions”
- Clear framework exists: Code provides specific guidance; no need to analyze abstract doctrine
- Institutional backing promised: Educators know institution will defend them if challenged
Result: Educators much more confident using fair use when institutional policy explicitly supports Code-based determination.
6. Establishes Professional Consensus Signal
Mechanism: Codes document that a professional community has collectively determined certain practices constitute fair use.
What This Signals:
- To copyright holders: “This is legitimate professional practice; don’t sue”
- To courts: “Professional community consensus supports this use”
- To insurance companies: “This is recognized best practice; manageable risk”
- To educators: “You have professional backing for this decision”
Institutional Effect: When institution explicitly adopts Code, all these signals are amplified. Stakeholders recognize that institution is operating within professional norms, not pushing boundaries recklessly.
Institutional Risk Management Framework
Rather than waiting for “zero risk” (impossible in fair use contexts), institutions employ sophisticated risk management that enables their mission while managing legal exposure:
Components of Effective Institutional Policy
1. Clear Statement Supporting Fair Use:
Institution articulates that fair use is accepted tool for achieving educational mission, not something to avoid. This signal is crucial.
2. Training and Education:
Institutions providing copyright training dramatically improve educator confidence. Workshops on fair use analysis, Code principles, and documentation create informed culture.
3. Documentation Systems:
Fair use checklists, analysis templates, and centralized records demonstrate institutional commitment to thoughtful, documented decision-making. These documents also provide evidence of “reasonable grounds for belief” if litigation occurs.
4. Institutional Backing:
When institutions publicly support educators’ fair use determinations, confidence increases dramatically. Educators know institution will defend them; institution won’t claim ignorance if challenged.
5. Collaboration with Copyright Office:
Working with institutional copyright/legal counsel integrates fair use into institutional risk management, not isolated individual decisions.
6. Regular Review Process:
Periodic audits ensure materials remain appropriate, licensing hasn’t changed, and policy reflects evolving law.
Risk Management vs. Risk Avoidance
Key Distinction: Risk management is different from risk avoidance:
- Risk Avoidance: “Don’t use copyrighted materials; use only openly licensed alternatives”
- Eliminates legal risk
- But reduces pedagogical quality
- Undermines mission
- Risk Management: “Use copyrighted materials when necessary; document carefully; rely on professional standards; maintain institutional backing”
- Enables mission achievement
- Manages legal exposure through documentation and professional standards
- Balances compliance with educational effectiveness
Institutional Approach: Adopt Code of Best Practices + create institutional policy that enables fair use + provide training + maintain documentation = professional risk management.
Comparative Analysis: Documented vs. Undocumented Fair Use
The difference between Code-based, documented fair use and ad-hoc fair use assumptions is substantial:
| Aspect | Ad-Hoc Fair Use | Code-Based Fair Use |
|---|---|---|
| Risk of Copyright Challenge | Higher; appears risky/uncertain | Lower; professional consensus |
| If Litigation Occurs | Moderate position; must prove fair use from scratch | Stronger position; Code provides framework |
| Insurance Availability | Uncertain; insurers may avoid | Clear; insurers routinely cover |
| Statutory Damages Defense | Weaker “reasonable grounds” argument | Stronger Section 504(c)(2) protection |
| Court Reception | Variable; judge may question decision | Favorable; judges respect professional standards |
| Institutional Support | May be withdrawn if challenged | Committed; institution backs decision |
| Rights Holder Negotiation | Weak negotiating position | Stronger position; Code legitimizes use |
| Cost if Sued | High legal fees even if win | Reduced fees; faster resolution on grounds of professional standard |
| Educator Confidence | Low; uncertain about decision | High; professional consensus backing |
The Documentary Filmmakers’ Code as Precedent
The documentary filmmakers’ Code provides a powerful 20-year precedent for how codes reduce legal risk:
The Filmmakers’ Situation
Documentarians face particular copyright challenges because their work necessarily incorporates existing materials—archival footage, photographs, music, news clips—often without obtaining permissions. Before their Code, filmmakers faced “increasingly constrained” ability to incorporate necessary materials due to rights holder demands.
What Changed After Code Adoption
1. Litigation Risk Decreased:
- Documentary filmmakers could assert fair use confidently
- Rights holders less likely to litigate against code-compliant uses
- 20-year track record: no successful litigation against documentary uses within Code scope
2. Insurance Industry Response:
- Before Code: “errors-and-omissions insurers avoided covering fair use; viewed as uncertain risk”
- After Code: “insurers began routinely accepting fair use claims”
- Fundamental shift: fair use became manageable, coverable risk
3. Professional Practice Changed:
- Filmmakers could select materials serving creative vision rather than avoiding copyright
- “Code of practices dramatically simplified film scholars’ work”
- Rights holders more willing to negotiate when documentary value clear
Application to OER
The OER Code follows same successful model. Early evidence suggests similar patterns:
- Institutional adoption increasing
- Insurance companies beginning to recognize Code
- Educators more confident in fair use decisions when Code available
If documentary filmmakers’ 20-year track record is any indication, OER institutions adopting Code can expect dramatically reduced legal risk over time.
Special Protections for Nonprofit Educational Institutions
Educational institutions receive particular statutory and practical protections not available to commercial entities:
Legal Protections
Section 504(c)(2) Protection: Nonprofit educational institution employees can face $0 statutory damages if they had “reasonable grounds for belief” in fair use—unique protection unavailable to commercial entities.
Eleventh Amendment: Public educational institutions are protected by sovereign immunity in many circumstances, preventing federal court suits without institutional consent.
Practical Protections
Insurance: Lower costs for IP liability insurance when institution has documented fair use policy
Professional Respect: Educational institutions are viewed as acting in public interest, not for-profit exploitation, reducing rights holders’ aggressive enforcement
Community Support: Academic, librarian, and educator communities have developed Codes and professional standards protecting fair use, creating reinforcing circle of legitimacy
Limitations: What the Code Does NOT Guarantee
Understanding Code limitations is important for realistic risk assessment:
The Code Is Not Legal Advice: It represents professional consensus, not legal guarantee of non-infringement.
Courts Still Apply Four-Factor Analysis: Code compliance improves fair use position but does not eliminate judicial analysis.
Some Uses Remain Questionable: Even aligned with Code, unusual or high-value copyrighted content may require specialized legal counsel.
Code Cannot Control Court Decisions: “Although a code cannot control the judicial interpretation of fair use, it helps courts to become familiar with best practices”.
When Specialized Legal Counsel Is Recommended:
- Large-scale digitization projects
- Content involving multiple, complicated rights holders
- High-value copyrighted material with active licensing market
- Novel technologies or uses not directly addressed by Code
- When institution risk tolerance is particularly low
Best Practice: Code as foundation for routine fair use determinations; specialized counsel for exceptional cases.
Practical Implementation for Institutional Risk Reduction
To realize the Code’s risk reduction benefits, institutions should:
1. Adopt Formal Institutional Policy
Create written policy explicitly:
- Supporting fair use for educational purposes
- Referencing Code of Best Practices
- Committing to institutional backing for reasonable fair use determinations
- Establishing documentation requirements
2. Implement Training Program
Provide regular copyright and fair use education:
- Workshops on Code principles
- Fair use checklist training
- Documentation systems walkthrough
- Case studies applying Code to institutional context
3. Establish Documentation System
Create standardized fair use analysis process:
- Fair use checklist for each copyrighted incorporation
- Centralized records storage
- Version control and accessibility
- Regular review/audit process
4. Assign Copyright Responsibility
Designate copyright officer or office:
- Provides consulting on fair use questions
- Reviews documentation
- Coordinates with legal counsel when needed
- Updates policy as law evolves
5. Communicate Institutional Support
Make clear through:
- Policy statements
- Training communications
- Documented backing for educator decisions
- Insurance and legal support availability
Conclusion: Code Reduces Risk Across Multiple Dimensions
The Code of Best Practices in Fair Use for Open Educational Resources reduces institutional legal risk through interconnected mechanisms:
- Reduces litigation likelihood: Professional consensus signals legitimacy; rights holders less likely to sue
- Strengthens litigation position: If sued, Code compliance provides strong fair use defense and Section 504(c)(2) statutory damages protection
- Enables insurance coverage: Documented fair use becomes insurable risk; lower premiums
- Reduces copyright anxiety: Educators confident in professional consensus; institution provides backing
- Establishes professional legitimacy: Courts recognize codes; insurers accept documented standards; rights holders accept professional practice
- Protects nonprofit educators statutorily: Section 504(c)(2) enables $0 statutory damages for good-faith fair use reliance
The documentary filmmakers’ Code has established a 20-year track record with zero successful litigation against code-compliant uses. This precedent strongly suggests that OER institutions adopting the Code will experience similar risk reduction.
Institutional adoption involves minimal cost (policy development, training, documentation systems) relative to benefit (dramatically reduced legal exposure while enabling higher-quality education). For nonprofit educational institutions, the combination of Code reliance + statutory protections + institutional backing creates powerful risk management framework that enables fair use without recklessness.