Unprecedented settlement in Israel clearly delineates fair digital use

For the first time in Israel, a settlement (a copy of which is available here, in Hebrew) enables institutions of higher education to use books and articles for teaching purposes without remuneration, and instantiates clear substantive rules for the ‘fair use’ doctrine specified in the Israeli Copyright Law. 
The Hebrew University in Jerusalem, Schocken Publishing House and the Bialik Institute reached a settlement agreement in their lawsuit. The settlement allows the University to copy works, or parts of works, to a reasonable extent necessary for teaching purposes, without the need for prior permission and at no charge. 
The parties, however, are divided in their interpretation of the settlement: Ha’aretz, with which Schocken Publishers are affiliated, posted an online article (titled “Hebrew University to compensate Schocken Publishers and the Bialik Institute for copyright infringement”; the article, in Hebrew, is available here), highlighting the fact that as part of the settlement, the publisher was paid 300,000 NIS (approximately US $85,000). 
Contrarily, the Israeli Universities' "Accessible Education Forum" (its Hebrew website is available here) states that the settlement is a “historic landmark”, in that it allows essential leeway for institutions of higher education within the instructional framework, while respecting copyrights.
Law.co.il suggests first understanding the settlement agreement as formulated, with subsequent interpretive comments:
Settlement: The University will pay the plaintiff publishers 300,000 NIS, “Taking into account the contribution of the publishers in addressing the matter, as well as the legal expenses they incurred, and considering the claims of the publishers regarding previous occasions where the University overstepped the boundaries of fair use. Without admitting to the publishers' claims, as a gesture of good will and beyond the letter of the law.” Upon payment, the publishers renounce any and all previous claims regarding the Hebrew University’s prior uses of their works.
Law.co.il comments: The payment made was not only to cover legal expenses, and exceeds the amounts customarily paid for expenses in settlement agreements. That said, it is undoubtedly clear that the amount reflects compensation for past events and not future usage rights. And so the use permitted for the Universities (as detailed below), is exempted from additional payment, as per the language of the settlement agreement. The institutions of higher education correctly view the settlement as an important milestone (even if describing it as “historic” is somewhat excessive).
Settlement: The University is entitled to use books and articles published by the plaintiffs, without receiving prior permission and without additional payment - when used in their computer systems or for course reading material (anthologies). The scope of use allowed is 20% of the book for one course or course reading material, while articles may be used in their entirety. Such scope is considered fair use.
Law.co.il comments:
The settlement formulates clear-cut rules with regard to the principles of fair use, which are, by nature, vague and open to interpretation. This provides the University certainty as to the scale of use of the plaintiff's protected works. It largely adopts the principles outlined by the “Accessible Education Forum” prior to the suit. No less important - this use is not conditional upon payment or prior permission.
Access to the computerized materials will be restricted only to students enrolled in the course, for the course duration and subsequent exam period, and will be controlled through username and password. Access will also be given to members of the faculty and administration. When accessing the materials, students will be presented with a comment stating that they are required to respect copyrights and to refrain from forwarding the materials.
Law.co.il comments:
There is no real limitation here for the University, if any. On the contrary: a clear expression of the University's stated intent to protect copyrights.
Settlement: Reading material anthologies will be prepared only on demand and will be sold only to students enrolled in the relevant course, at a price not to exceed the cost of their production. In general, the University will encourage use of the computer system over the use of hardcopies.
Law.co.il comments:
Charging for copyrighted material may be an indication of the lack of fair use. Here, the parties have agreed that it will not be an indication of such, as long as the price charged reflects the cost of production. On one hand, who can really calculate the actual cost? On the other hand, it’s unlikely that the University will seek to turn this into a business.
Settlement: The settlement does not apply to e-books. Fair use regarding e-books will be discussed in the future.
Law.co.il comments: The future belongs to electronic books even if it is still lingering in the Hebrew University. Perhaps this is the reason the publishers were encouraged to resolve the dispute amicably. With that said, it remains unclear what the substantive difference is (regarding fair use) between a printed book and an e-book, if such a difference exists.
Settlement: Because of the innovative nature of the settlement, the parties recognize that mishaps may occur during its implementation. As such, the settlement includes a mechanism for auditing and reporting.
Law.co.il comments:
We don’t have a comment for everything… Well, anyway, it is evident that the parties are proceeding cautiously, which is a good approach. They don’t want to engage in another legal battle anytime soon.
Settlement: The term of the settlement is four years. Toward the end of the four year period, the parties will examine its implementation and will either extend the agreement or make the necessary amendments, taking into account, among other things, academic and technological advancements. If they fail to reach an understanding, the agreement will expire on December 31, 2017 and each party may maintain its claims, without the provisions of the settlement being considered precedential.
Law.co.il comments:
Life experience teaches us that whoever agreed that a certain scope of use will be considered fair, will encounter difficulties in convincing the court in 2018 that said scope is not considered fair - contractual text be what it may. But it will be interesting to see how things develop in four years’ time.
Conclusion: law.co.il believes that the settlement is an important accomplishment for educational institutions, for the reasons outlined above. The publishers are not left empty-handed, but the compensation they receive is for past infringements. The settlement will serve as a touchstone through which fair use will be reviewed, certainly in relation to educational institutions, and quite possibly in other contexts as well.
The Hebrew University was represented by Advocate Tamir Afori; The publishers that filed suit were represented by Lieblich-Moser law firm.