Cambridge University Press, Oxford University Press, and Sage Publications filed a complaint yesterday in the U.S. District Court for the Northern District of Georgia, accusing Georgia State University of violating their copyrights by making digital "course packs" available to students on the University's Library Web site. This is the first such case to involve digital distribution, but is similar to a 1991 case, Basic Books v. Kinko's and a 1992 case, Princeton University Press v. Michigan Document Services (MDS), that involved arguments over what constituted fair use for printed course packs.
The controversy stems from section 107 of the copyright act which states that fair use includes making "multiple copies for classroom use" but then goes on to say that in any particular case this must be weighed against the effect of the use upon the potential market for the work.
Both Kinko and MDS were decided in the lower courts in favor of the plaintiffs and ultimately settled, so there is no nationally binding precedent. Also, both of the previous cases involved for-profit ventures.
The publishers are a little bit ahead of the music industry here, in that they have already established a mechanism through the Copyright Clearance Center for electronic licensing of course materials, although it is not possible to tell from the Web site how much the fees would be. How this case gets decided may determine what the ultimate business model will be for unbundling chapters of books just as the music industry has grappled with unbundling of albums.