Chapter 12: Fair Use
Section 106, which sets forth the exclusive rights of copyright owners, specifically provides that these rights are “[s]ubject to sections 107 through 122” of the Act, which set forth various limitations and defenses to an assertion of copyright infringement.
Perhaps the most significant of these limitations, and certainly the most litigated, is the fair use defense as provided for in § 107 of the Act:
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
In assessing fair use, courts rely heavily on the four factors set forth in the statute. The first and fourth factors tend to be the most important considerations, while the courts often downplay the role of the second factor. In assessing the first factor, courts often focus on the “transformativeness” of the accused use, whether that use was commercial in nature, and whether the use was educational or in furtherance of some other social benefit. The fourth factor considers harm to the market for both the original work and derivative versions of the original, an issue addressed in the most recent Supreme Court decision addressing fair use, Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith (excerpted below).
In Eldred v. Ashcroft, a Supreme Court decision that appeared earlier in this casebook, Justice Ginsburg referred to fair use as a “built-in … safeguard” of the principles of free speech enshrined in the First Amendment.1 She notes that the fair use defense allows the public to use not only facts and ideas contained in a copyrighted work, but also expression itself in certain circumstances, and affords considerable “latitude for scholarship and comment.”
The following cases analyze the fair use defense in a variety of contexts. When reading these cases you might find the outcomes variable, if not outright inconsistent. You are not alone—fair use is a notoriously hazy area of the law. Professor Paul Goldstein has described fair use as “the great white whale of American copyright law. Enthralling, enigmatic, protean, it endlessly fascinates us even as it defeats our every attempt to subdue it.”2 Your goal at this point is to recognize the main doctrines and arguments that come into play when the court addresses an accused infringer’s assertion of fair use.
Some things to consider when reading Campbell:
- The case arose out of the rap group 2 Live Crew’s decision to release an unauthorized, arguably parodic version of the famous 1960s rock ballad Oh, Pretty Woman. 2 Live Crew argued that its use was fair use. The Sixth Circuit held that it was not fair use, and the Supreme Court granted certiorari.
- What was the error the Sixth Circuit made, according to the Supreme Court?
- Note the Court’s emphasis on the first fair use factor, particularly the importance of whether a use is transformative. Once the Court found transformativeness, did it effectively render the other factors irrelevant?
- Understand the distinction between satire and parody, as explained by the Court, and why it matters in terms of the first fair use factor.
- Understand the distinction between a parodic and nonparodic rap version of Oh, Pretty Woman, and why it matters for purposes of the fourth fair use factor.
- In applying factor 4, the Court investigates “market substitution.” Which markets are relevant to this analysis?
- For close to 30 years, Campbell constituted the Supreme Court’s last word on fair use, and has been a very influential decision. The fair use landscape has shifted somewhat recently, thanks to Supreme Court decisions addressing fair use in 2021 and 2023, Google v. Oracle and Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, both of which appear later in this section of the casebook.
Campbell v. Acuff-Rose Music, Inc.
510 U.S. 569 (1994)
Justice SOUTER delivered the opinion of the Court.
We are called upon to decide whether 2 Live Crew’s commercial parody of Roy Orbison’s song, “Oh, Pretty Woman,” may be a fair use within the meaning of the Copyright Act of 1976, 17 U.S.C. § 107. Although the District Court granted summary judgment for 2 Live Crew, the Court of Appeals reversed, holding the defense of fair use barred by the song’s commercial character and excessive borrowing. Because we hold that a parody’s commercial character is only one element to be weighed in a fair use enquiry, and that insufficient consideration was given to the nature of parody in weighing the degree of copying, we reverse and remand.
I
In 1964, Roy Orbison and William Dees wrote a rock ballad called “Oh, Pretty Woman” and assigned their rights in it to respondent Acuff–Rose Music, Inc. Acuff–Rose registered the song for copyright protection.
Petitioners Luther R. Campbell, Christopher Wongwon, Mark Ross, and David Hobbs are collectively known as 2 Live Crew, a popular rap music group. In 1989, Campbell wrote a song entitled “Pretty Woman,” which he later described in an affidavit as intended, “through comical lyrics, to satirize the original work….” On July 5, 1989, 2 Live Crew’s manager informed Acuff–Rose that 2 Live Crew had written a parody of “Oh, Pretty Woman,” that they would afford all credit for ownership and authorship of the original song to Acuff–Rose, Dees, and Orbison, and that they were willing to pay a fee for the use they wished to make of it. Enclosed with the letter were a copy of the lyrics and a recording of 2 Live Crew’s song.–Rose’s agent refused permission, stating that “I am aware of the success enjoyed by ‘The 2 Live Crews’, but I must inform you that we cannot permit the use of a parody of ‘Oh, Pretty Woman.’” Nonetheless, in June or July 1989, 2 Live Crew released records, cassette tapes, and compact discs of “Pretty Woman” in a collection of songs entitled “As Clean As They Wanna Be.” The albums and compact discs identify the authors of “Pretty Woman” as Orbison and Dees and its publisher as Acuff–Rose.
Almost a year later, after nearly a quarter of a million copies of the recording had been sold, Acuff–Rose sued 2 Live Crew and its record company, Luke Skyywalker Records, for copyright infringement. The District Court granted summary judgment for 2 Live Crew, reasoning that the commercial purpose of 2 Live Crew’s song was no bar to fair use; that 2 Live Crew’s version was a parody, which “quickly degenerates into a play on words, substituting predictable lyrics with shocking ones” to show “how bland and banal the Orbison song” is; that 2 Live Crew had taken no more than was necessary to “conjure up” the original in order to parody it; and that it was “extremely unlikely that 2 Live Crew’s song could adversely affect the market for the original.” The District Court weighed these factors and held that 2 Live Crew’s song made fair use of Orbison’s original.
The Court of Appeals for the Sixth Circuit reversed and remanded. Although it assumed for the purpose of its opinion that 2 Live Crew’s song was a parody of the Orbison original, the Court of Appeals thought the District Court had put too little emphasis on the fact that “every commercial use … is presumptively … unfair,” Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), and it held that “the admittedly commercial nature” of the parody “requires the conclusion” that the first of four factors relevant under the statute weighs against a finding of fair use. Next, the Court of Appeals determined that, by “taking the heart of the original and making it the heart of a new work,” 2 Live Crew had, qualitatively, taken too much. Finally, after noting that the effect on the potential market for the original (and the market for derivative works) is “undoubtedly the single most important element of fair use,” Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985), the Court of Appeals faulted the District Court for “refus[ing] to indulge the presumption” that “harm for purposes of the fair use analysis has been established by the presumption attaching to commercial uses.” In sum, the court concluded that its “blatantly commercial purpose … prevents this parody from being a fair use.”
We granted certiorari, to determine whether 2 Live Crew’s commercial parody could be a fair use.
II
It is uncontested here that 2 Live Crew’s song would be an infringement of Acuff–Rose’s rights in “Oh, Pretty Woman,” under the Copyright Act of 1976, 17 U.S.C. § 106, but for a finding of fair use through parody.3 From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright’s very purpose, “[t]o promote the Progress of Science and useful Arts….” U.S. Const., Art. I, § 8, cl. 8.
In Folsom v. Marsh, Justice Story distilled the essence of law and methodology from the earlier cases: “look to the nature and objects of the selections made, the quantity and value of the materials used, and the degree in which the use may prejudice the sale, or diminish the profits, or supersede the objects, of the original work.” Thus expressed, fair use remained exclusively judge-made doctrine until the passage of the 1976 Copyright Act, in which Justice Story’s summary is discernible:
Ҥ 107. Limitations on exclusive rights: Fair use
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
Congress meant § 107 to restate the present judicial doctrine of fair use, not to change, narrow, or enlarge it in any way and intended that courts continue the common-law tradition of fair use adjudication. The fair use doctrine thus permits and requires courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.
The task is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis.
A
The first factor in a fair use enquiry is “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” The enquiry here may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting, and the like. The central purpose of this investigation is to see, in Justice Story’s words, whether the new work merely “supersede[s] the objects” of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is “transformative.” Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright, and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.
Parody has an obvious claim to transformative value, as Acuff–Rose itself does not deny. Like less ostensibly humorous forms of criticism, it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one. Parody like other comment or criticism, may claim fair use under § 107.
Modern dictionaries describe a parody as a “literary or artistic work that imitates the characteristic style of an author or a work for comic effect or ridicule,” or as a “composition in prose or verse in which the characteristic turns of thought and phrase in an author or class of authors are imitated in such a way as to make them appear ridiculous.” For the purposes of copyright law, the nub of the definitions, and the heart of any parodist’s claim to quote from existing material, is the use of some elements of a prior author’s composition to create a new one that, at least in part, comments on that author’s works. If, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger. Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing.
The fact that parody can claim legitimacy for some appropriation does not, of course, tell either parodist or judge much about where to draw the line. Like a book review quoting the copyrighted material criticized, parody may or may not be fair use, and petitioners’ suggestion that any parodic use is presumptively fair has no more justification in law or fact than the equally hopeful claim that any use for news reporting should be presumed fair .The Act has no hint of an evidentiary preference for parodists over their victims, and no workable presumption for parody could take account of the fact that parody often shades into satire when society is lampooned through its creative artifacts, or that a work may contain both parodic and nonparodic elements. Accordingly, parody, like any other use, has to work its way through the relevant factors, and be judged case by case, in light of the ends of the copyright law.
Here, the District Court held, and the Court of Appeals assumed, that 2 Live Crew’s “Pretty Woman” contains parody, commenting on and criticizing the original work, whatever it may have to say about society at large. As the District Court remarked, the words of 2 Live Crew’s song copy the original’s first line, but then quickly degenerate into a play on words, substituting predictable lyrics with shocking ones that derisively demonstrate how bland and banal the Orbison song seems to them. Judge Nelson, dissenting below, came to the same conclusion, that the 2 Live Crew song was clearly intended to ridicule the white-bread original and reminds us that sexual congress with nameless streetwalkers is not necessarily the stuff of romance and is not necessarily without its consequences. The singers (there are several) have the same thing on their minds as did the lonely man with the nasal voice, but here there is no hint of wine and roses. Although the majority below had difficulty discerning any criticism of the original in 2 Live Crew’s song, it assumed for purposes of its opinion that there was some.
We have less difficulty in finding that critical element in 2 Live Crew’s song than the Court of Appeals did, although having found it we will not take the further step of evaluating its quality. The threshold question when fair use is raised in defense of parody is whether a parodic character may reasonably be perceived. Whether, going beyond that, parody is in good taste or bad does not and should not matter to fair use. As Justice Holmes explained,
It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of [a work], outside of the narrowest and most obvious limits. At the one extreme some works of genius would be sure to miss appreciation. Their very novelty would make them repulsive until the public had learned the new language in which their author spoke.
Bleistein v. Donaldson Lithographing Co., 188 U.S. 239 (1903).
While we might not assign a high rank to the parodic element here, we think it fair to say that 2 Live Crew’s song reasonably could be perceived as commenting on the original or criticizing it, to some degree. 2 Live Crew juxtaposes the romantic musings of a man whose fantasy comes true, with degrading taunts, a bawdy demand for sex, and a sigh of relief from paternal responsibility. The later words can be taken as a comment on the naiveté of the original of an earlier day, as a rejection of its sentiment that ignores the ugliness of street life and the debasement that it signifies. It is this joinder of reference and ridicule that marks off the author’s choice of parody from the other types of comment and criticism that traditionally have had a claim to fair use protection as transformative works.
The Court of Appeals, however, immediately cut short the enquiry into 2 Live Crew’s fair use claim by confining its treatment of the first factor essentially to one relevant fact, the commercial nature of the use. In giving virtually dispositive weight to the commercial nature of the parody, the Court of Appeals erred.
The language of the statute makes clear that the commercial or nonprofit educational purpose of a work is only one element of the first factor enquiry into its purpose and character. Section 107(1) uses the term “including” to begin the dependent clause referring to commercial use, and the main clause speaks of a broader investigation into “purpose and character.” Accordingly, the mere fact that a use is educational and not for profit does not insulate it from a finding of infringement, any more than the commercial character of a use bars a finding of fairness. If, indeed, commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in the preamble paragraph of § 107, including news reporting, comment, criticism, teaching, scholarship, and research, since these activities “are generally conducted for profit in this country.” Congress could not have intended such a rule, which certainly is not inferable from the common-law cases, arising as they did from the world of letters in which Samuel Johnson could pronounce that “[n]o man but a blockhead ever wrote, except for money.”
B
The second statutory factor, “the nature of the copyrighted work,” calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied. See, e.g., Stewart v. Abend, 495 U.S., at 237–238 (contrasting fictional short story with factual works); Harper & Row, 471 U.S., at 563–564 (contrasting soon-to-be-published memoir with published speech); Sony, 464 U.S., at 455, n. 40 (contrasting motion pictures with news broadcasts); Feist, 499 U.S., at 348–351 (contrasting creative works with bare factual compilations). We agree with both the District Court and the Court of Appeals that the Orbison original’s creative expression for public dissemination falls within the core of the copyright’s protective purposes. This fact, however, is not much help in this case, or ever likely to help much in separating the fair use sheep from the infringing goats in a parody case, since parodies almost invariably copy publicly known, expressive works.
C
The third factor asks whether “the amount and substantiality of the portion used in relation to the copyrighted work as a whole” are reasonable in relation to the purpose of the copying. Here, attention turns to the persuasiveness of a parodist’s justification for the particular copying done, and the enquiry will harken back to the first of the statutory factors, for, as in prior cases, we recognize that the extent of permissible copying varies with the purpose and character of the use. The facts bearing on this factor will also tend to address the fourth, by revealing the degree to which the parody may serve as a market substitute for the original or potentially licensed derivatives.
This factor calls for thought not only about the quantity of the materials used, but about their quality and importance, too. In Harper & Row, for example, the Nation had taken only some 300 words out of President Ford’s memoirs, but we signaled the significance of the quotations in finding them to amount to “the heart of the book,” the part most likely to be newsworthy and important in licensing serialization. We agree with the Court of Appeals that whether “a substantial portion of the infringing work was copied verbatim” from the copyrighted work is a relevant question, for it may reveal a dearth of transformative character or purpose under the first factor, or a greater likelihood of market harm under the fourth; a work composed primarily of an original, particularly its heart, with little added or changed, is more likely to be a merely superseding use, fulfilling demand for the original.
Where we part company with the court below is in applying these guides to parody, and in particular to parody in the song before us. Parody presents a difficult case. Parody’s humor, or in any event its comment, necessarily springs from recognizable allusion to its object through distorted imitation. Its art lies in the tension between a known original and its parodic twin. When parody takes aim at a particular original work, the parody must be able to conjure up at least enough of that original to make the object of its critical wit recognizable. What makes for this recognition is quotation of the original’s most distinctive or memorable features, which the parodist can be sure the audience will know. Once enough has been taken to assure identification, how much more is reasonable will depend, say, on the extent to which the song’s overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original. But using some characteristic features cannot be avoided.
We think the Court of Appeals was insufficiently appreciative of parody’s need for the recognizable sight or sound when it ruled 2 Live Crew’s use unreasonable as a matter of law. It is true, of course, that 2 Live Crew copied the characteristic opening bass riff (or musical phrase) of the original, and true that the words of the first line copy the Orbison lyrics. But if quotation of the opening riff and the first line may be said to go to the “heart” of the original, the heart is also what most readily conjures up the song for parody, and it is the heart at which parody takes aim. Copying does not become excessive in relation to parodic purpose merely because the portion taken was the original’s heart. If 2 Live Crew had copied a significantly less memorable part of the original, it is difficult to see how its parodic character would have come through.
This is not, of course, to say that anyone who calls himself a parodist can skim the cream and get away scot free. In parody, as in news reporting, context is everything, and the question of fairness asks what else the parodist did besides go to the heart of the original. It is significant that 2 Live Crew not only copied the first line of the original, but thereafter departed markedly from the Orbison lyrics for its own ends. 2 Live Crew not only copied the bass riff and repeated it, but also produced otherwise distinctive sounds, interposing “scraper” noise, overlaying the music with solos in different keys, and altering the drum beat. This is not a case, then, where “a substantial portion” of the parody itself is composed of a “verbatim” copying of the original. It is not, that is, a case where the parody is so insubstantial, as compared to the copying, that the third factor must be resolved as a matter of law against the parodists.
Suffice it to say here that, as to the lyrics, we think the Court of Appeals correctly suggested that “no more was taken than necessary,” but just for that reason, we fail to see how the copying can be excessive in relation to its parodic purpose, even if the portion taken is the original’s “heart.” As to the music, we express no opinion whether repetition of the bass riff is excessive copying, and we remand to permit evaluation of the amount taken, in light of the song’s parodic purpose and character, its transformative elements, and considerations of the potential for market substitution sketched more fully below.
D
The fourth fair use factor is “the effect of the use upon the potential market for or value of the copyrighted work.” It 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. The enquiry “must take account not only of harm to the original but also of harm to the market for derivative works.”
Since fair use is an affirmative defense, its proponent would have difficulty carrying the burden of demonstrating fair use without favorable evidence about relevant markets. In moving for summary judgment, 2 Live Crew left themselves at just such a disadvantage when they failed to address the effect on the market for rap derivatives, and confined themselves to uncontroverted submissions that there was no likely effect on the market for the original. They did not, however, thereby subject themselves to the evidentiary presumption applied by the Court of Appeals. In assessing the likelihood of significant market harm, the Court of Appeals quoted from language in Sony that “if the intended use is for commercial gain, that likelihood may be presumed. But if it is for a noncommercial purpose, the likelihood must be demonstrated.” The court reasoned that because the use of the copyrighted work is wholly commercial, we presume that a likelihood of future harm to Acuff–Rose exists.” In so doing, the court resolved the fourth factor against 2 Live Crew, just as it had the first, by applying a presumption about the effect of commercial use, a presumption which as applied here we hold to be error.
No “presumption” or inference of market harm that might find support in Sony is applicable to a case involving something beyond mere duplication for commercial purposes. Sony‘s discussion of a presumption contrasts a context of verbatim copying of the original in its entirety for commercial purposes, with the noncommercial context of Sony itself (home copying of television programming). In the former circumstances, what Sony said simply makes common sense: when a commercial use amounts to mere duplication of the entirety of an original, it clearly supersedes the objects of the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur. But when, on the contrary, the second use is transformative, market substitution is at least less certain, and market harm may not be so readily inferred. Indeed, as to parody pure and simple, it is more likely that the new work will not affect the market for the original in a way cognizable under this factor, that is, by acting as a substitute for it.
We do not, of course, suggest that a parody may not harm the market at all, but when a lethal parody, like a scathing theater review, kills demand for the original, it does not produce a harm cognizable under the Copyright Act. Because parody may quite legitimately aim at garroting the original, destroying it commercially as well as artistically, the role of the courts is to distinguish between biting criticism that merely suppresses demand and copyright infringement, which usurps it.
This distinction between potentially remediable displacement and unremediable disparagement is reflected in the rule that there is no protectible derivative market for criticism. The market for potential derivative uses includes only those that creators of original works would in general develop or license others to develop. Yet the unlikelihood that creators of imaginative works will license critical reviews or lampoons of their own productions removes such uses from the very notion of a potential licensing market.
In explaining why the law recognizes no derivative market for critical works, including parody, we have, of course, been speaking of the later work as if it had nothing but a critical aspect. But the later work may have a more complex character, with effects not only in the arena of criticism but also in protectible markets for derivative works, too. In that sort of case, the law looks beyond the criticism to the other elements of the work, as it does here. 2 Live Crew’s song comprises not only parody but also rap music, and the derivative market for rap music is a proper focus of enquiry. Evidence of substantial harm to it would weigh against a finding of fair use, because the licensing of derivatives is an important economic incentive to the creation of originals.
Although 2 Live Crew submitted uncontroverted affidavits on the question of market harm to the original, neither they, nor Acuff–Rose, introduced evidence or affidavits addressing the likely effect of 2 Live Crew’s parodic rap song on the market for a nonparody, rap version of “Oh, Pretty Woman.” And while Acuff–Rose would have us find evidence of a rap market in the very facts that 2 Live Crew recorded a rap parody of “Oh, Pretty Woman” and another rap group sought a license to record a rap derivative, there was no evidence that a potential rap market was harmed in any way by 2 Live Crew’s parody, rap version. [It] is impossible to deal with the fourth factor except by recognizing that a silent record on an important factor bearing on fair use disentitled the proponent of the defense, 2 Live Crew, to summary judgment. The evidentiary hole will doubtless be plugged on remand.
III
It was error for the Court of Appeals to conclude that the commercial nature of 2 Live Crew’s parody of “Oh, Pretty Woman” rendered it presumptively unfair. No such evidentiary presumption is available to address either the first factor, the character and purpose of the use, or the fourth, market harm, in determining whether a transformative use, such as parody, is a fair one. The court also erred in holding that 2 Live Crew had necessarily copied excessively from the Orbison original, considering the parodic purpose of the use. We therefore reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.
__________
Check Your Understanding – Campbell
Question 1. According to Campbell, what is the significance of a court’s determination that the purpose and character of an otherwise infringing use is “transformative”?
Question 2. Which of the following is always treated as fair use?
Some things to consider when reading Sony:
- The portion of this decision addressing the question of indirect infringement appeared earlier in this book.
- The excerpt of Sony presented here focuses on whether consumers’ use of the VTR to record copyrighted television broadcasts is fair use. The Court finds that much of this recording is for the purpose of “time-shifting,” i.e., so that the consumer can watch the television broadcast at a later time. Take particular note of how the Court applies the four fair use factors, and the policy concerns expressed by the Court.
- Note the Court’s emphasis on “the commercial and nonprofit character of an activity” in analyzing the first and fourth factors, and its statement that at least some “commercial or profit-making” uses are presumptively unfair. Recall that in Campbell the Court pulled back from that position, holding that “[n]o such evidentiary presumption is available to address either the first factor, the character and purpose of the use, or the fourth, market harm, in determining whether a transformative use, such as parody, is a fair one.”
- Ask yourself what the difference is between a transformative use (like the parody at issue in Campbell) and a productive use (as discussed by the Sony dissent).
- What do you think about the majority’s conclusion that the evidence of record did not establish a meaningful likelihood of future harm, and the dissent’s critique of that conclusion?
Sony Corp. v. Universal City Studios, Inc.
464 U.S. 417 (1984)
Justice STEVENS delivered the opinion of the Court.
[Editor’s note: Facts and indirect infringement aspects of this decision appear earlier in this casebook. The following excerpt addresses the question of whether unauthorized time-shifting is fair use. The Court of Appeals concluded as a matter of law that the home use of a VTR was not a fair use because it was not a “productive use.”]
IV
B. Unauthorized Time-Shifting
Even unauthorized uses of a copyrighted work are not necessarily infringing. An unlicensed use of the copyright is not an infringement unless it conflicts with one of the specific exclusive rights conferred by the copyright statute. Moreover, the definition of exclusive rights in § 106 of the present Act is prefaced by the words “subject to sections 107 through 118.” Those sections describe a variety of uses of copyrighted material that “are not infringements of copyright notwithstanding the provisions of § 106.” The most pertinent in this case is § 107, the legislative endorsement of the doctrine of “fair use.”
That section identifies various factors that enable a Court to apply an “equitable rule of reason” analysis to particular claims of infringement. Although not conclusive, the first factor requires that “the commercial or nonprofit character of an activity” be weighed in any fair use decision. If the Betamax were used to make copies for a commercial or profit-making purpose, such use would presumptively be unfair. The contrary presumption is appropriate here, however, because the District Court’s findings plainly establish that time-shifting for private home use must be characterized as a noncommercial, nonprofit activity. Moreover, when one considers the nature of a televised copyrighted audiovisual work, and that timeshifting merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced does not have its ordinary effect of militating against a finding of fair use.
This is not, however, the end of the inquiry because Congress has also directed us to consider “the effect of the use upon the potential market for or value of the copyrighted work.” The purpose of copyright is to create incentives for creative effort. Even copying for noncommercial purposes may impair the copyright holder’s ability to obtain the rewards that Congress intended him to have. But a use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author’s incentive to create. The prohibition of such noncommercial uses would merely inhibit access to ideas without any countervailing benefit.
Thus, although every commercial use of copyrighted material is presumptively an unfair exploitation of the monopoly privilege that belongs to the owner of the copyright, noncommercial uses are a different matter. A challenge to a noncommercial use of a copyrighted work requires proof either that the particular use is harmful, or that if it should become widespread, it would adversely affect the potential market for the copyrighted work. Actual present harm need not be shown; such a requirement would leave the copyright holder with no defense against predictable damage. Nor is it necessary to show with certainty that future harm will result. What is necessary is a showing by a preponderance of the evidence that some meaningful likelihood of future harm exists. If the intended use is for commercial gain, that likelihood may be presumed. But if it is for a noncommercial purpose, the likelihood must be demonstrated.
In this case, respondents failed to carry their burden with regard to home time-shifting. The District Court described respondents’ evidence as follows:
Plaintiffs’ experts admitted at several points in the trial that the time-shifting without librarying would result in “not a great deal of harm.” Plaintiffs’ greatest concern about time-shifting is with “a point of important philosophy that transcends even commercial judgment.” They fear that with any Betamax usage, “invisible boundaries” are passed: “the copyright owner has lost control over his program.”
Later in its opinion, the District Court observed:
Most of plaintiffs’ predictions of harm hinge on speculation about audience viewing patterns and ratings, a measurement system which Sidney Sheinberg, MCA’s president, calls a “black art” because of the significant level of imprecision involved in the calculations.
There was no need for the District Court to say much about past harm. “Plaintiffs have admitted that no actual harm to their copyrights has occurred to date.”
On the question of potential future harm from time-shifting, the District Court offered a more detailed analysis of the evidence. It rejected respondents’ “fear that persons ‘watching’ the original telecast of a program will not be measured in the live audience and the ratings and revenues will decrease,” by observing that current measurement technology allows the Betamax audience to be reflected. It rejected respondents’ prediction “that live television or movie audiences will decrease as more people watch Betamax tapes as an alternative,” with the observation that “[t]here is no factual basis for [the underlying] assumption.” It rejected respondents’ “fear that time-shifting will reduce audiences for telecast reruns,” and concluded instead that “given current market practices, this should aid plaintiffs rather than harm them.” And it declared that respondents’ suggestion “that theater or film rental exhibition of a program will suffer because of time-shift recording of that program” “lacks merit.”
After completing that review, the District Court restated its overall conclusion several times, in several different ways. “Harm from time-shifting is speculative and, at best, minimal.” “The audience benefits from the time-shifting capability have already been discussed. It is not implausible that benefits could also accrue to plaintiffs, broadcasters, and advertisers, as the Betamax makes it possible for more persons to view their broadcasts.” “No likelihood of harm was shown at trial, and plaintiffs admitted that there had been no actual harm to date.” “Testimony at trial suggested that Betamax may require adjustments in marketing strategy, but it did not establish even a likelihood of harm.” “Television production by plaintiffs today is more profitable than it has ever been, and, in five weeks of trial, there was no concrete evidence to suggest that the Betamax will change the studios’ financial picture.”
The District Court’s conclusions are buttressed by the fact that to the extent time-shifting expands public access to freely broadcast television programs, it yields societal benefits. Earlier this year, in Community Television of Southern California v. Gottfried, S.Ct. 885, 891–892 (1983), we acknowledged the public interest in making television broadcasting more available. Concededly, that interest is not unlimited. But it supports an interpretation of the concept of “fair use” that requires the copyright holder to demonstrate some likelihood of harm before he may condemn a private act of time-shifting as a violation of federal law.
When these factors are all weighed in the “equitable rule of reason” balance, we must conclude that this record amply supports the District Court’s conclusion that home time-shifting is fair use.
Justice BLACKMUN, with whom Justice MARSHALL, Justice POWELL, and Justice REHNQUIST join, dissenting.
Copyright is based on the belief that by granting authors the exclusive rights to reproduce their works, they are given an incentive to create, and that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in “Science and the useful Arts.” The monopoly created by copyright thus rewards the individual author in order to benefit the public.
There are situations, nevertheless, in which strict enforcement of this monopoly would inhibit the very “Progress of Science and useful Arts” that copyright is intended to promote. An obvious example is the researcher or scholar whose own work depends on the ability to refer to and to quote the work of prior scholars. Obviously, no author could create a new work if he were first required to repeat the research of every author who had gone before him. The scholar, like the ordinary user, of course could be left to bargain with each copyright owner for permission to quote from or refer to prior works. But there is a crucial difference between the scholar and the ordinary user. When the ordinary user decides that the owner’s price is too high, and forgoes use of the work, only the individual is the loser. When the scholar forgoes the use of a prior work, not only does his own work suffer, but the public is deprived of his contribution to knowledge. The scholar’s work, in other words, produces external benefits from which everyone profits. In such a case, the fair use doctrine acts as a form of subsidy—albeit at the first author’s expense—to permit the second author to make limited use of the first author’s work for the public good.
A similar subsidy may be appropriate in a range of areas other than pure scholarship. The situations in which fair use is most commonly recognized are listed in § 107 itself; fair use may be found when a work is used “for purposes such as criticism, comment, news reporting, teaching, … scholarship, or research.” Each of these uses, however, reflects a common theme: each is a productive use, resulting in some added benefit to the public beyond that produced by the first author’s work. The fair use doctrine, in other words, permits works to be used for “socially laudable purposes.” I am aware of no case in which the reproduction of a copyrighted work for the sole benefit of the user has been held to be fair use.
I do not suggest, of course, that every productive use is a fair use. A finding of fair use still must depend on the facts of the individual case, and on whether, under the circumstances, it is reasonable to expect the user to bargain with the copyright owner for use of the work. The fair use doctrine must strike a balance between the dual risks created by the copyright system: on the one hand, that depriving authors of their monopoly will reduce their incentive to create, and, on the other, that granting authors a complete monopoly will reduce the creative ability of others. But when a user reproduces an entire work and uses it for its original purpose, with no added benefit to the public, the doctrine of fair use usually does not apply. There is then no need whatsoever to provide the ordinary user with a fair use subsidy at the author’s expense.
The making of a videotape recording for home viewing is an ordinary rather than a productive use of the Studios’ copyrighted works. Copyright gives the author a right to limit or even to cut off access to his work. A VTR recording creates no public benefit sufficient to justify limiting this right.
It may be tempting, as, in my view, the Court today is tempted, to stretch the doctrine of fair use so as to permit unfettered use of this new technology in order to increase access to television programming. But such an extension risks eroding the very basis of copyright law, by depriving authors of control over their works and consequently of their incentive to create.
…
I recognize, nevertheless, that there are situations where permitting even an unproductive use would have no effect on the author’s incentive to create, that is, where the use would not affect the value of, or the market for, the author’s work. Photocopying an old newspaper clipping to send to a friend may be an example; pinning a quotation on one’s bulletin board may be another. In each of these cases, the effect on the author is truly de minimis. Thus, even though these uses provide no benefit to the public at large, no purpose is served by preserving the author’s monopoly, and the use may be regarded as fair.
The Studios have identified a number of ways in which VTR recording could damage their copyrights. VTR recording could reduce their ability to market their works in movie theaters and through the rental or sale of pre-recorded videotapes or videodiscs; it also could reduce their rerun audience, and consequently the license fees available to them for repeated showings. Moreover, advertisers may be willing to pay for only “live” viewing audiences, if they believe VTR viewers will delete commercials or if rating services are unable to measure VTR use; if this is the case, VTR recording could reduce the license fees the Studios are able to charge even for first-run showings. Library-building may raise the potential for each of the types of harm identified by the Studios, and time-shifting may raise the potential for substantial harm as well.
…
The Court confidently describes time-shifting as a noncommercial, nonprofit activity. It is clear, however, that personal use of programs that have been copied without permission is not what § 107(1) protects. The intent of the section is to encourage users to engage in activities the primary benefit of which accrues to others. Time-shifting involves no such humanitarian impulse. It is likewise something of a mischaracterization of time-shifting to describe it as noncommercial in the sense that that term is used in the statute. As one commentator has observed, time-shifting is noncommercial in the same sense that stealing jewelry and wearing it—instead of reselling it—is noncommercial. Purely consumptive uses are certainly not what the fair use doctrine was designed to protect, and the awkwardness of applying the statutory language to time-shifting only makes clearer that fair use was designed to protect only uses that are productive.
__________
Check Your Understanding – Sony
Question 1. What factors led the Sony Court to conclude that the record supported the district court’s conclusion that home time-shifting is fair use?
Some things to consider when reading Author’s Guild:
- In this case, Google has been sued by the owners of copyrights in books, based on the unauthorized copying of books that occurred in connection with Google’s Library Project and its Google Books project. The decision provides a good description of these projects, and the massive amount of unauthorized copying that occurred. There is no doubt that Google’s actions constitute copyright infringement in the absence of a fair use defense.
- Make note of all the steps Google took to try to ensure that its actions constitute fair use.
- Understand the court’s fair use analysis, which is largely based on Campbell. Pay particular attention to the court’s focus on the purpose behind Google’s copying of the books and its use of the copies, such as the indexing and the display of “snippets.”
- As noted by the court, in this case Google “test[ed] the boundaries of fair use.”
- This decision could be particularly relevant to the question of whether the massive copying that has occurred for the purposes of training generative artificial intelligence (AI) models can be defended as fair use, a topic that is addressed in the generative AI section of this casebook.
- On what basis does the court conclude that Google’s purpose was transformative?
- How were the facts different in this case than in the earlier HathiTrust decision?
- Note the court’s distinction between a “transformative” fair use of the plaintiff’s work and an infringing derivative work that “transformed” the original. These two different legal meanings of “transform” will be relevant in the Andy Warhol decision that appears later in this section.
Authors Guild v. Google, Inc.
804 F.3d 202 (2d Cir. 2015)
LEVAL, Circuit Judge:
This copyright dispute tests the boundaries of fair use. Plaintiffs, who are authors of published books under copyright, sued Google, Inc. (“Google”) for copyright infringement in the United States District Court for the Southern District of New York. They appeal from the grant of summary judgment in Google’s favor. Through its Library Project and its Google Books project, acting without permission of rights holders, Google has made digital copies of tens of millions of books, including Plaintiffs’, that were submitted to it for that purpose by major libraries. Google has scanned the digital copies and established a publicly available search function. An Internet user can use this function to search without charge to determine whether the book contains a specified word or term and also see “snippets” of text containing the searched-for terms. In addition, Google has allowed the participating libraries to download and retain digital copies of the books they submit, under agreements which commit the libraries not to use their digital copies in violation of the copyright laws. These activities of Google are alleged to constitute infringement of Plaintiffs’ copyrights. Plaintiffs sought injunctive and declaratory relief as well as damages.
Google defended on the ground that its actions constitute “fair use,” which, under 17 U.S.C. § 107, is “not an infringement.” The district court agreed. Plaintiffs brought this appeal.
Plaintiffs contend the district court’s ruling was flawed in several respects. They argue: (1) Google’s digital copying of entire books, allowing users through the snippet function to read portions, is not a “transformative use” within the meaning of Campbell v. Acuff–Rose Music, Inc., 510 U.S. 569 (1994), and provides a substitute for Plaintiffs’ works; (2) notwithstanding that Google provides public access to the search and snippet functions without charge and without advertising, its ultimate commercial profit motivation and its derivation of revenue from its dominance of the world-wide Internet search market to which the books project contributes, preclude a finding of fair use; (3) even if Google’s copying and revelations of text do not infringe plaintiffs’ books, they infringe Plaintiffs’ derivative rights in search functions, depriving Plaintiffs of revenues or other benefits they would gain from licensed search markets; (4) Google’s storage of digital copies exposes Plaintiffs to the risk that hackers will make their books freely (or cheaply) available on the Internet, destroying the value of their copyrights; and (5) Google’s distribution of digital copies to participant libraries is not a transformative use, and it subjects Plaintiffs to the risk of loss of copyright revenues through access allowed by libraries. We reject these arguments and conclude that the district court correctly sustained Google’s fair use defense.
Google’s making of a digital copy to provide a search function is a transformative use, which augments public knowledge by making available information about Plaintiffs’ books without providing the public with a substantial substitute for matter protected by the Plaintiffs’ copyright interests in the original works or derivatives of them. The same is true, at least under present conditions, of Google’s provision of the snippet function. Plaintiffs’ contention that Google has usurped their opportunity to access paid and unpaid licensing markets for substantially the same functions that Google provides fails, in part because the licensing markets in fact involve very different functions than those that Google provides, and in part because an author’s derivative rights do not include an exclusive right to supply information (of the sort provided by Google) about her works. Google’s profit motivation does not in these circumstances justify denial of fair use. Google’s program does not, at this time and on the record before us, expose Plaintiffs to an unreasonable risk of loss of copyright value through incursions of hackers. Finally, Google’s provision of digital copies to participating libraries, authorizing them to make non-infringing uses, is non-infringing, and the mere speculative possibility that the libraries might allow use of their copies in an infringing manner does not make Google a contributory infringer. Plaintiffs have failed to show a material issue of fact in dispute.
We affirm the judgment.
BACKGROUND
I. Plaintiffs
The author-plaintiffs are Jim Bouton, author of Ball Four; Betty Miles, author of The Trouble with Thirteen; and Joseph Goulden, author of The Superlawyers: The Small and Powerful World of the Great Washington Law Firms. Each of them has a legal or beneficial ownership in the copyright for his or her book. Their books have been scanned without their permission by Google, which made them available to Internet users for search and snippet view on Google’s website.
II. Google Books and the Google Library Project
Google’s Library Project, which began in 2004, involves bilateral agreements between Google and a number of the world’s major research libraries. Under these agreements, the participating libraries select books from their collections to submit to Google for inclusion in the project. Google makes a digital scan of each book, extracts a machine-readable text, and creates an index of the machine-readable text of each book. Google retains the original scanned image of each book, in part so as to improve the accuracy of the machine-readable texts and indices as image-to-text conversion technologies improve.
Since 2004, Google has scanned, rendered machine-readable, and indexed more than 20 million books, including both copyrighted works and works in the public domain. The vast majority of the books are non-fiction, and most are out of print. All of the digital information created by Google in the process is stored on servers protected by the same security systems Google uses to shield its own confidential information.
The digital corpus created by the scanning of these millions of books enables the Google Books search engine. Members of the public who access the Google Books website can enter search words or terms of their own choice, receiving in response a list of all books in the database in which those terms appear, as well as the number of times the term appears in each book. A brief description of each book, entitled “About the Book,” gives some rudimentary additional information, including a list of the words and terms that appear with most frequency in the book. It sometimes provides links to buy the book online and identifies libraries where the book can be found.4 The search tool permits a researcher to identify those books, out of millions, that do, as well as those that do not, use the terms selected by the researcher. Google notes that this identifying information instantaneously supplied would otherwise not be obtainable in lifetimes of searching.
No advertising is displayed to a user of the search function. Nor does Google receive payment by reason of the searcher’s use of Google’s link to purchase the book.
The search engine also makes possible new forms of research, known as “text mining” and “data mining.” Google’s “ngrams” research tool draws on the Google Library Project corpus to furnish statistical information to Internet users about the frequency of word and phrase usage over centuries.5 This tool permits users to discern fluctuations of interest in a particular subject over time and space by showing increases and decreases in the frequency of reference and usage in different periods and different linguistic regions. It also allows researchers to comb over the tens of millions of books Google has scanned in order to examine “word frequencies, syntactic patterns, and thematic markers” and to derive information on how nomenclature, linguistic usage, and literary style have changed over time.
The Google Books search function also allows the user a limited viewing of text. In addition to telling the number of times the word or term selected by the searcher appears in the book, the search function will display a maximum of three “snippets” containing it. A snippet is a horizontal segment comprising ordinarily an eighth of a page. Each page of a conventionally formatted book in the Google Books database is divided into eight non-overlapping horizontal segments, each such horizontal segment being a snippet. (Thus, for such a book with 24 lines to a page, each snippet is comprised of three lines of text.) Each search for a particular word or term within a book will reveal the same three snippets, regardless of the number of computers from which the search is launched. Only the first usage of the term on a given page is displayed. Thus, if the top snippet of a page contains two (or more) words for which the user searches, and Google’s program is fixed to reveal that particular snippet in response to a search for either term, the second search will duplicate the snippet already revealed by the first search, rather than moving to reveal a different snippet containing the word because the first snippet was already revealed. Google’s program does not allow a searcher to increase the number of snippets revealed by repeated entry of the same search term or by entering searches from different computers. A searcher can view more than three snippets of a book by entering additional searches for different terms. However, Google makes permanently unavailable for snippet view one snippet on each page and one complete page out of every ten—a process Google calls “blacklisting.”
Google also disables snippet view entirely for types of books for which a single snippet is likely to satisfy the searcher’s present need for the book, such as dictionaries, cookbooks, and books of short poems. Finally, since 2005, Google will exclude any book altogether from snippet view at the request of the rights holder by the submission of an online form.
Under its contracts with the participating libraries, Google allows each library to download copies—of both the digital image and machine-readable versions—of the books that library submitted to Google for scanning (but not of books submitted by other libraries). This is done by giving each participating library access to the Google Return Interface (“GRIN”). The agreements between Google and the libraries, although not in all respects uniform, require the libraries to abide by copyright law in utilizing the digital copies they download and to take precautions to prevent dissemination of their digital copies to the public at large.
DISCUSSION
I. The Law of Fair Use
The ultimate goal of copyright is to expand public knowledge and understanding, which copyright seeks to achieve by giving potential creators exclusive control over copying of their works, thus giving them a financial incentive to create informative, intellectually enriching works for public consumption. This objective is clearly reflected in the Constitution’s empowerment of Congress “To promote the Progress of Science … by securing for limited Times to Authors … the exclusive Right to their respective Writings.” U.S. Const., Art. I, § 8, cl. 8 (emphasis added). Thus, while authors are undoubtedly important intended beneficiaries of copyright, the ultimate, primary intended beneficiary is the public, whose access to knowledge copyright seeks to advance by providing rewards for authorship.
For nearly three hundred years, since shortly after the birth of copyright in England in 1710, courts have recognized that, in certain circumstances, giving authors absolute control over all copying from their works would tend in some circumstances to limit, rather than expand, public knowledge. Courts thus developed the doctrine, eventually named fair use, which permits unauthorized copying in some circumstances, so as to further copyright’s very purpose, to promote the Progress of Science and useful Arts. Although well established in the common law development of copyright, fair use was not recognized in the terms of our statute until the adoption of § 107 in the Copyright Act of 1976.
Section 107, in its present form, provides:
[T]he fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
17 U.S.C. § 107. As the Supreme Court has designated fair use an affirmative defense, see Campbell, 510 U.S. at 590, the party asserting fair use bears the burden of proof.
The statute calls for case-by-case analysis and is not to be simplified with bright-line rules. Section 107’s four factors are not to be treated in isolation, one from another. All are to be explored, and the results weighed together, in light of the purposes of copyright. Each factor thus stands as part of a multifaceted assessment of the crucial question: how to define the boundary limit of the original author’s exclusive rights in order to best serve the overall objectives of the copyright law to expand public learning while protecting the incentives of authors to create for the public good.
At the same time, the Supreme Court has made clear that some of the statute’s four listed factors are more significant than others. The Court observed in Harper & Row Publishers, Inc. v. Nation Enterprises that the fourth factor, which assesses the harm the secondary use can cause to the market for, or the value of, the copyright for the original, “is undoubtedly the single most important element of fair use.” 471 U.S. 539, 566 (1985). This is consistent with the fact that the copyright is a commercial right, intended to protect the ability of authors to profit from the exclusive right to merchandise their own work.
In Campbell, the Court stressed also the importance of the first factor, the “purpose and character of the secondary use.” The more the appropriator is using the copied material for new, transformative purposes, the more it serves copyright’s goal of enriching public knowledge and the less likely it is that the appropriation will serve as a substitute for the original or its plausible derivatives, shrinking the protected market opportunities of the copyrighted work.
With this background, we proceed to discuss each of the statutory factors, as illuminated by Campbell and subsequent case law, in relation to the issues here in dispute.
II. The Search and Snippet View Functions
A. Factor One
(1) Transformative purpose. Campbell ‘s explanation of the first factor’s inquiry into the “purpose and character” of the secondary use focuses on whether the new work merely supersedes the objects’ of the original creation, or instead adds something new, with a further purpose. It asks, in other words, whether and to what extent the new work is “transformative.” While recognizing that a transformative use is not absolutely necessary for a finding of fair use, the opinion further explains that the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works and that such works thus lie at the heart of the fair use doctrine’s guarantee of breathing space within the confines of copyright. In other words, transformative uses tend to favor a fair use finding because a transformative use is one that communicates something new and different from the original or expands its utility, thus serving copyright’s overall objective of contributing to public knowledge.
The word “transformative” cannot be taken too literally as a sufficient key to understanding the elements of fair use. It is rather a suggestive symbol for a complex thought, and does not mean that any and all changes made to an author’s original text will necessarily support a finding of fair use. The Supreme Court’s discussion in Campbell gave important guidance on assessing when a transformative use tends to support a conclusion of fair use. The defendant in that case defended on the ground that its work was a parody of the original and that parody is a time-honored category of fair use. Explaining why parody makes a stronger, or in any event more obvious, claim of fair use than satire, the Court stated,
The heart of any parodist’s claim to quote from existing material is the use of a prior author’s composition to comment on that author’s works. If, on the contrary, the commentary has no critical bearing on the substance or style of the original composition, which the alleged infringer merely uses to get attention or to avoid the drudgery in working up something fresh, the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish). Parody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing. (emphasis added).
In other words, the would-be fair user of another’s work must have justification for the taking. A secondary author is not necessarily at liberty to make wholesale takings of the original author’s expression merely because of how well the original author’s expression would convey the secondary author’s different message. Among the best recognized justifications for copying from another’s work is to provide comment on it or criticism of it. A taking from another author’s work for the purpose of making points that have no bearing on the original may well be fair use, but the taker would need to show a justification. This part of the Supreme Court’s discussion is significant in assessing Google’s claim of fair use because, as discussed extensively below, Google’s claim of transformative purpose for copying from the works of others is to provide otherwise unavailable information about the originals.
A further complication that can result from oversimplified reliance on whether the copying involves transformation is that the word “transform” also plays a role in defining “derivative works,” over which the original rights holder retains exclusive control. Section 106 of the Act specifies the “exclusive right[ ]” of the copyright owner “(2) to prepare derivative works based upon the copyrighted work.” The statute defines derivative works largely by example, rather than explanation. The examples include “translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgement, condensation,” to which list the statute adds “any other form in which a work may be … transformed.” 17 U.S.C. § 101 (emphasis added). While such changes can be described as transformations, they do not involve the kind of transformative purpose that favors a fair use finding. The statutory definition suggests that derivative works generally involve transformations in the nature of changes of form. By contrast, copying from an original for the purpose of criticism or commentary on the original or provision of information about it, tends most clearly to satisfy Campbell ‘s notion of the “transformative” purpose involved in the analysis of Factor One.
With these considerations in mind, we first consider whether Google’s search and snippet views functions satisfy the first fair use factor with respect to Plaintiffs’ rights in their books. (The question whether these functions might infringe upon Plaintiffs’ derivative rights is discussed in the next Part.)
(2) Search Function. We have no difficulty concluding that Google’s making of a digital copy of Plaintiffs’ books for the purpose of enabling a search for identification of books containing a term of interest to the searcher involves a highly transformative purpose, in the sense intended by Campbell. Our court’s exemplary discussion in Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014) informs our ruling. That case involved a dispute that is closely related, although not identical, to this one. Authors brought claims of copyright infringement against HathiTrust, an entity formed by libraries participating in the Google Library Project to pool the digital copies of their books created for them by Google. The suit challenged various usages HathiTrust made of the digital copies. Among the challenged uses was HathiTrust’s offer to its patrons of “full-text searches,” which, very much like the search offered by Google Books to Internet users, permitted patrons of the libraries to locate in which of the digitized books specific words or phrases appeared. (HathiTrust’s search facility did not include the snippet view function, or any other display of text.) We concluded that both the making of the digital copies and the use of those copies to offer the search tool were fair uses.
Notwithstanding that the libraries had downloaded and stored complete digital copies of entire books, we noted that such copying was essential to permit searchers to identify and locate the books in which words or phrases of interest to them appeared. We concluded that the creation of a full-text searchable database is a quintessentially transformative use as the result of a word search is different in purpose, character, expression, meaning, and message from the page (and the book) from which it is drawn.
As with HathiTrust, the purpose of Google’s copying of the original copyrighted books is to make available significant information about those books, permitting a searcher to identify those that contain a word or term of interest, as well as those that do not include reference to it. In addition, through the ngrams tool, Google allows readers to learn the frequency of usage of selected words in the aggregate corpus of published books in different historical periods. We have no doubt that the purpose of this copying is the sort of transformative purpose described in Campbell as strongly favoring satisfaction of the first factor.
(3) Snippet View. Plaintiffs correctly point out that this case is significantly different from HathiTrust in that the Google Books search function allows searchers to read snippets from the book searched, whereas HathiTrust did not allow searchers to view any part of the book. Snippet view adds important value to the basic transformative search function, which tells only whether and how often the searched term appears in the book. Merely knowing that a term of interest appears in a book does not necessarily tell the searcher whether she needs to obtain the book, because it does not reveal whether the term is discussed in a manner or context falling within the scope of the searcher’s interest. For example, a searcher seeking books that explore Einstein’s theories, who finds that a particular book includes 39 usages of “Einstein,” will nonetheless conclude she can skip that book if the snippets reveal that the book speaks of “Einstein” because that is the name of the author’s cat. In contrast, the snippet will tell the searcher that this is a book she needs to obtain if the snippet shows that the author is engaging with Einstein’s theories.
Google’s division of the page into tiny snippets is designed to show the searcher just enough context surrounding the searched term to help her evaluate whether the book falls within the scope of her interest (without revealing so much as to threaten the author’s copyright interests). Snippet view thus adds importantly to the highly transformative purpose of identifying books of interest to the searcher. With respect to the first factor test, it favors a finding of fair use (unless the value of its transformative purpose is overcome by its providing text in a manner that offers a competing substitute for Plaintiffs’ books, which we discuss under factors three and four below).
(4) Google’s Commercial Motivation. Plaintiffs also contend that Google’s commercial motivation weighs in their favor under the first factor. Google’s commercial motivation distinguishes this case from HathiTrust, as the defendant in that case was a non-profit entity founded by, and acting as the representative of, libraries. Although Google has no revenues flowing directly from its operation of the Google Books functions, Plaintiffs stress that Google is profit-motivated and seeks to use its dominance of book search to fortify its overall dominance of the Internet search market, and that thereby Google indirectly reaps profits from the Google Books functions.
In explaining the first fair use factor, the Court [in Campbell] clarified that the more transformative the secondary work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. Our court has since repeatedly rejected the contention that commercial motivation should outweigh a convincing transformative purpose and absence of significant substitutive competition with the original.
While we recognize that in some circumstances, a commercial motivation on the part of the secondary user will weigh against her, especially when a persuasive transformative purpose is lacking, we see no reason in this case why Google’s overall profit motivation should prevail as a reason for denying fair use over its highly convincing transformative purpose, together with the absence of significant substitutive competition, as reasons for granting fair use. Many of the most universally accepted forms of fair use, such as news reporting and commentary, quotation in historical or analytic books, reviews of books, and performances, as well as parody, are all normally done commercially for profit.
B. Factor Two
The second fair use factor directs consideration of the “nature of the copyrighted work.” While the “transformative purpose” inquiry discussed above is conventionally treated as a part of first factor analysis, it inevitably involves the second factor as well. One cannot assess whether the copying work has an objective that differs from the original without considering both works, and their respective objectives.
The second factor has rarely played a significant role in the determination of a fair use dispute. See WILLIAM F. PATRY, PATRY ON FAIR USE § 4.1 (2015). The Supreme Court in Harper & Row made a passing observation in dictum that, “the law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy.” 471 U.S. 539, 563 (1985). Courts have sometimes speculated that this might mean that a finding of fair use is more favored when the copying is of factual works than when copying is from works of fiction. However, while the copyright does not protect facts or ideas set forth in a work, it does protect that author’s manner of expressing those facts and ideas. At least unless a persuasive fair use justification is involved, authors of factual works, like authors of fiction, should be entitled to copyright protection of their protected expression. The mere fact that the original is a factual work therefore should not imply that others may freely copy it. Those who report the news undoubtedly create factual works. It cannot seriously be argued that, for that reason, others may freely copy and re-disseminate news reports.
In considering the second factor in HathiTrust, we concluded that it was “not dispositive,” commenting that courts have hardly ever found that the second factor in isolation played a large role in explaining a fair use decision. The same is true here. While each of the three Plaintiffs’ books in this case is factual, we do not consider that as a boost to Google’s claim of fair use. If one (or all) of the plaintiff works were fiction, we do not think that would change in any way our appraisal. Nothing in this case influences us one way or the other with respect to the second factor considered in isolation. To the extent that the “nature” of the original copyrighted work necessarily combines with the “purpose and character” of the secondary work to permit assessment of whether the secondary work uses the original in a “transformative” manner, as the term is used in Campbell, the second factor favors fair use not because Plaintiffs’ works are factual, but because the secondary use transformatively provides valuable information about the original, rather than replicating protected expression in a manner that provides a meaningful substitute for the original.
C. Factor Three
The third statutory factor instructs us to consider “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” The clear implication of the third factor is that a finding of fair use is more likely when small amounts, or less important passages, are copied than when the copying is extensive, or encompasses the most important parts of the original. The obvious reason for this lies in the relationship between the third and the fourth factors. The larger the amount, or the more important the part, of the original that is copied, the greater the likelihood that the secondary work might serve as an effectively competing substitute for the original, and might therefore diminish the original rights holder’s sales and profits.
(1) Search Function. The Google Books program has made a digital copy of the entirety of each of Plaintiffs’ books. Notwithstanding the reasonable implication of Factor Three that fair use is more likely to be favored by the copying of smaller, rather than larger, portions of the original, courts have rejected any categorical rule that a copying of the entirety cannot be a fair use. Complete unchanged copying has repeatedly been found justified as fair use when the copying was reasonably appropriate to achieve the copier’s transformative purpose and was done in such a manner that it did not offer a competing substitute for the original.
In HathiTrust, our court concluded in its discussion of the third factor that “because it was reasonably necessary for the [HathiTrust Digital Library] to make use of the entirety of the works in order to enable the full-text search function, we do not believe the copying was excessive.” As with HathiTrust, not only is the copying of the totality of the original reasonably appropriate to Google’s transformative purpose, it is literally necessary to achieve that purpose. If Google copied less than the totality of the originals, its search function could not advise searchers reliably whether their searched term appears in a book (or how many times).
While Google makes an unauthorized digital copy of the entire book, it does not reveal that digital copy to the public. The copy is made to enable the search functions to reveal limited, important information about the books. With respect to the search function, Google satisfies the third factor test, as illuminated by the Supreme Court in Campbell.
(2) Snippet View. Google’s provision of snippet view makes our third factor inquiry different from that inquiry in HathiTrust. What matters in such cases is not so much “the amount and substantiality of the portion used” in making a copy, but rather the amount and substantiality of what is thereby made accessible to a public for which it may serve as a competing substitute. In HathiTrust, notwithstanding the defendant’s full-text copying, the search function revealed virtually nothing of the text of the originals to the public. Here, through the snippet view, more is revealed to searchers than in HathiTrust.
Without doubt, enabling searchers to see portions of the copied texts could have determinative effect on the fair use analysis. The larger the quantity of the copyrighted text the searcher can see and the more control the searcher can exercise over what part of the text she sees, the greater the likelihood that those revelations could serve her as an effective, free substitute for the purchase of the plaintiff’s book. We nonetheless conclude that, at least as presently structured by Google, the snippet view does not reveal matter that offers the marketplace a significantly competing substitute for the copyrighted work.
Google has constructed the snippet feature in a manner that substantially protects against its serving as an effectively competing substitute for Plaintiffs’ books. In the Background section of this opinion, we describe a variety of limitations Google imposes on the snippet function. These include the small size of the snippets (normally one eighth of a page), the blacklisting of one snippet per page and of one page in every ten, the fact that no more than three snippets are shown—and no more than one per page—for each term searched, and the fact that the same snippets are shown for a searched term no matter how many times, or from how many different computers, the term is searched. In addition, Google does not provide snippet view for types of books, such as dictionaries and cookbooks, for which viewing a small segment is likely to satisfy the searcher’s need. The result of these restrictions is, so far as the record demonstrates, that a searcher cannot succeed, even after long extended effort to multiply what can be revealed, in revealing through a snippet search what could usefully serve as a competing substitute for the original.
The blacklisting, which permanently blocks about 22% of a book’s text from snippet view, is by no means the most important of the obstacles Google has designed. While it is true that the blacklisting of 22% leaves 78% of a book theoretically accessible to a searcher, it does not follow that any large part of that 78% is in fact accessible. The other restrictions built into the program work together to ensure that, even after protracted effort over a substantial period of time, only small and randomly scattered portions of a book will be accessible. In an effort to show what large portions of text searchers can read through persistently augmented snippet searches, Plaintiffs’ counsel employed researchers over a period of weeks to do multiple word searches on Plaintiffs’ books. In no case were they able to access as much as 16% of the text, and the snippets collected were usually not sequential but scattered randomly throughout the book. Because Google’s snippets are arbitrarily and uniformly divided by lines of text, and not by complete sentences, paragraphs, or any measure dictated by content, a searcher would have great difficulty constructing a search so as to provide any extensive information about the book’s use of that term. As snippet view never reveals more than one snippet per page in response to repeated searches for the same term, it is at least difficult, and often impossible, for a searcher to gain access to more than a single snippet’s worth of an extended, continuous discussion of the term.
The fact that Plaintiffs’ searchers managed to reveal nearly 16% of the text of Plaintiffs’ books overstates the degree to which snippet view can provide a meaningful substitute. At least as important as the percentage of words of a book that are revealed is the manner and order in which they are revealed. Even if the search function revealed 100% of the words of the copyrighted book, this would be of little substitutive value if the words were revealed in alphabetical order, or any order other than the order they follow in the original book. It cannot be said that a revelation is “substantial” in the sense intended by the statute’s third factor if the revelation is in a form that communicates little of the sense of the original. The fragmentary and scattered nature of the snippets revealed, even after a determined, assiduous, time-consuming search, results in a revelation that is not “substantial,” even if it includes an aggregate 16% of the text of the book. If snippet view could be used to reveal a coherent block amounting to 16% of a book, that would raise a very different question beyond the scope of our inquiry.
D. Factor Four
The fourth fair use factor, “the effect of the [copying] use upon the potential market for or value of the copyrighted work,” focuses on whether the copy brings to the marketplace a competing substitute for the original, or its derivative, so as to deprive the rights holder of significant revenues because of the likelihood that potential purchasers may opt to acquire the copy in preference to the original. Because copyright is a commercial doctrine whose objective is to stimulate creativity among potential authors by enabling them to earn money from their creations, the fourth factor is of great importance in making a fair use assessment.
Campbell stressed the close linkage between the first and fourth factors, in that the more the copying is done to achieve a purpose that differs from the purpose of the original, the less likely it is that the copy will serve as a satisfactory substitute for the original.
However, Campbell ‘s observation as to the likelihood of a secondary use serving as an effective substitute goes only so far. Even if the purpose of the copying is for a valuably transformative purpose, such copying might nonetheless harm the value of the copyrighted original if done in a manner that results in widespread revelation of sufficiently significant portions of the original as to make available a significantly competing substitute. The question for us is whether snippet view, notwithstanding its transformative purpose, does that. We conclude that, at least as snippet view is presently constructed, it does not.
Especially in view of the fact that the normal purchase price of a book is relatively low in relation to the cost of manpower needed to secure an arbitrary assortment of randomly scattered snippets, we conclude that the snippet function does not give searchers access to effectively competing substitutes. Snippet view, at best and after a large commitment of manpower, produces discontinuous, tiny fragments, amounting in the aggregate to no more than 16% of a book. This does not threaten the rights holders with any significant harm to the value of their copyrights or diminish their harvest of copyright revenue.
We recognize that the snippet function can cause some loss of sales. There are surely instances in which a searcher’s need for access to a text will be satisfied by the snippet view, resulting in either the loss of a sale to that searcher, or reduction of demand on libraries for that title, which might have resulted in libraries purchasing additional copies. But the possibility, or even the probability or certainty, of some loss of sales does not suffice to make the copy an effectively competing substitute that would tilt the weighty fourth factor in favor of the rights holder in the original. There must be a meaningful or significant effect “upon the potential market for or value of the copyrighted work.”
Furthermore, the type of loss of sale envisioned above will generally occur in relation to interests that are not protected by the copyright. A snippet’s capacity to satisfy a searcher’s need for access to a copyrighted book will at times be because the snippet conveys a historical fact that the searcher needs to ascertain. For example, a student writing a paper on Franklin D. Roosevelt might need to learn the year Roosevelt was stricken with polio. By entering “Roosevelt polio” in a Google Books search, the student would be taken to (among numerous sites) a snippet from page 31 of Richard Thayer Goldberg’s The Making of Franklin D. Roosevelt (1981), telling that the polio attack occurred in 1921. This would satisfy the searcher’s need for the book, eliminating any need to purchase it or acquire it from a library. But what the searcher derived from the snippet was a historical fact. Author Goldberg’s copyright does not extend to the facts communicated by his book. It protects only the author’s manner of expression. Google would be entitled, without infringement of Goldberg’s copyright, to answer the student’s query about the year Roosevelt was afflicted, taking the information from Goldberg’s book.
Even if the snippet reveals some authorial expression, because of the brevity of a single snippet and the cumbersome, disjointed, and incomplete nature of the aggregation of snippets made available through snippet view, we think it would be a rare case in which the searcher’s interest in the protected aspect of the author’s work would be satisfied by what is available from snippet view, and rarer still—because of the cumbersome, disjointed, and incomplete nature of the aggregation of snippets made available through snippet view—that snippet view could provide a significant substitute for the purchase of the author’s book.
Accordingly, considering the four fair use factors in light of the goals of copyright, we conclude that Google’s making of a complete digital copy of Plaintiffs’ works for the purpose of providing the public with its search and snippet view functions (at least as snippet view is presently designed) is a fair use and does not infringe Plaintiffs’ copyrights in their books.
…
In sum, we conclude that Google’s unauthorized digitizing of copyright-protected works, creation of a search functionality, and display of snippets from those works are non-infringing fair uses. The purpose of the copying is highly transformative, the public display of text is limited, and the revelations do not provide a significant market substitute for the protected aspects of the originals. Google’s commercial nature and profit motivation do not justify denial of fair use.
The judgment of the district court is AFFIRMED.
APPENDIX A
APPENDIX B
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Check Your Understanding – Author’s Guild
Question 1. On what basis does the court in Authors Guild conclude that Google’s purpose was transformative?
Question 2. What was the most significant difference between the facts in Authors Guild and in the earlier HathiTrust decision?
Some things to consider when reading Perfect 10 v. Amazon:
- Excerpts from this case appeared earlier in the sections of this casebook addressing the public display right and indirect infringement. In the part of the decision reproduced below, the court considers whether Google’s display of thumbnail images is fair use.
- What distinguishes the facts of this case from Kelly, another case where the court found that Google’s display of thumbnail images was fair use?
- Note the court’s emphasis on the transformative nature of Google’s search engine and its benefit to the public, and the relatively little weight given to the commercial nature of Google’s activities.
- How does the fact that Perfect 10’s images were previously published impact the fair use analysis?
Perfect 10, Inc. v. Amazon.com, Inc.
508 F.3d 1146 (9th Cir. 2007)
IKUTA, Circuit Judge:
[Editor’s note: This decision appears earlier in the book in the sections on the public display right and indirect infringement. In the following section of the decision, the court considers whether Google’s display of thumbnail images is fair use.]
C. Fair Use Defense
Because Perfect 10 has succeeded in showing it would prevail in its prima facie case that Google’s thumbnail images infringe Perfect 10’s display rights, the burden shifts to Google to show that it will likely succeed in establishing an affirmative defense. Google contends that its use of thumbnails is a fair use of the images and therefore does not constitute an infringement of Perfect 10’s copyright.
The fair use defense permits the use of copyrighted works without the copyright owner’s consent under certain situations. The defense encourages and allows the development of new ideas that build on earlier ones, thus providing a necessary counterbalance to the copyright law’s goal of protecting creators’ work product.
Congress codified the common law of fair use in 17 U.S.C. § 107, which provides:
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.
In applying the fair use analysis in this case, we are guided by Kelly v. Arriba Soft Corp., which considered substantially the same use of copyrighted photographic images as is at issue here. In Kelly, a photographer brought a direct infringement claim against Arriba, the operator of an Internet search engine. The search engine provided thumbnail versions of the photographer’s images in response to search queries. We held that Arriba’s use of thumbnail images was a fair use primarily based on the transformative nature of a search engine and its benefit to the public. We also concluded that Arriba’s use of the thumbnail images did not harm the photographer’s market for his image.
In this case, the district court determined that Google’s use of thumbnails was not a fair use and distinguished Kelly. We consider these distinctions in the context of the four-factor fair use analysis.
Purpose and character of the use. The first factor, 17 U.S.C. § 107(1), requires a court to consider “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” The central purpose of this inquiry is to determine whether and to what extent the new work is “transformative.” Campbell. A work is “transformative” when the new work does not “merely supersede the objects of the original creation” but rather “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” Conversely, if the new work “supersede[s] the use of the original,” the use is likely not a fair use. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 550–51 (1985)(publishing the “heart” of an unpublished work and thus supplanting the copyright holder’s first publication right was not a fair use); see also Wall Data Inc. v. L.A. County Sheriff’s Dep’t, 447 F.3d 769, 778–82 (9th Cir.2006) (using a copy to save the cost of buying additional copies of a computer program was not a fair use).
As noted in Campbell, a “transformative work” is one that alters the original work “with new expression, meaning, or message.” A use is considered transformative only where a defendant changes a plaintiff’s copyrighted work or uses the plaintiff’s copyrighted work in a different context such that the plaintiff’s work is transformed into a new creation.
Google’s use of thumbnails is highly transformative. In Kelly, we concluded that Arriba’s use of thumbnails was transformative because “Arriba’s use of the images served a different function than Kelly’s use—improving access to information on the Internet versus artistic expression.” Although an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information. Just as a “parody has an obvious claim to transformative value” because “it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one,” a search engine provides social benefit by incorporating an original work into a new work, namely, an electronic reference tool. Indeed, a search engine may be more transformative than a parody because a search engine provides an entirely new use for the original work, while a parody typically has the same entertainment purpose as the original work. In other words, a search engine puts images in a different context so that they are transformed into a new creation.
The fact that Google incorporates the entire Perfect 10 image into the search engine results does not diminish the transformative nature of Google’s use. As the district court correctly noted, we determined in Kelly that even making an exact copy of a work may be transformative so long as the copy serves a different function than the original work. For example, the First Circuit has held that the republication of photos taken for a modeling portfolio in a newspaper was transformative because the photos served to inform, as well as entertain. See Nunez v. Caribbean Int’l News Corp., 235 F.3d 18, 22–23 (1st Cir.2000). In contrast, duplicating a church’s religious book for use by a different church was not transformative. See Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1117 (9th Cir.2000). Nor was a broadcaster’s simple retransmission of a radio broadcast over telephone lines transformative, where the original radio shows were given no “new expression, meaning, or message.” Infinity Broad. Corp. v. Kirkwood, 150 F.3d 104, 108 (2d Cir.1998). Here, Google uses Perfect 10’s images in a new context to serve a different purpose.
The district court nevertheless determined that Google’s use of thumbnail images was less transformative than Arriba’s use of thumbnails in Kelly because Google’s use of thumbnails superseded Perfect 10’s right to sell its reduced-size images for use on cell phones. The district court stated that “mobile users can download and save the thumbnails displayed by Google Image Search onto their phones,” and concluded “to the extent that users may choose to download free images to their phone rather than purchase [Perfect 10’s] reduced-size images, Google’s use supersedes [Perfect 10’s].”
Additionally, the district court determined that the commercial nature of Google’s use weighed against its transformative nature. Although Kelly held that the commercial use of the photographer’s images by Arriba’s search engine was less exploitative than typical commercial use, and thus weighed only slightly against a finding of fair use, the district court here distinguished Kelly on the ground that some website owners in the AdSense program had infringing Perfect 10 images on their websites. The district court held that because Google’s thumbnails “lead users to sites that directly benefit Google’s bottom line,” the AdSense program increased the commercial nature of Google’s use of Perfect 10’s images.
In conducting our case-specific analysis of fair use in light of the purposes of copyright, we must weigh Google’s superseding and commercial uses of thumbnail images against Google’s significant transformative use, as well as the extent to which Google’s search engine promotes the purposes of copyright and serves the interests of the public. Although the district court acknowledged the “truism that search engines such as Google Image Search provide great value to the public,” the district court did not expressly consider whether this value outweighed the significance of Google’s superseding use or the commercial nature of Google’s use. The Supreme Court, however, has directed us to be mindful of the extent to which a use promotes the purposes of copyright and serves the interests of the public.
We note that the superseding use in this case is not significant at present: the district court did not find that any downloads for mobile phone use had taken place. Moreover, while Google’s use of thumbnails to direct users to AdSense partners containing infringing content adds a commercial dimension that did not exist in Kelly, the district court did not determine that this commercial element was significant. The district court stated that Google’s AdSense programs as a whole contributed “$630 million, or 46% of total revenues” to Google’s bottom line, but noted that this figure did not “break down the much smaller amount attributable to websites that contain infringing content.”
We conclude that the significantly transformative nature of Google’s search engine, particularly in light of its public benefit, outweighs Google’s superseding and commercial uses of the thumbnails in this case. In reaching this conclusion, we note the importance of analyzing fair use flexibly in light of new circumstances. We are also mindful of the Supreme Court’s direction that “the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.”
Accordingly, we disagree with the district court’s conclusion that because Google’s use of the thumbnails could supersede Perfect 10’s cell phone download use and because the use was more commercial than Arriba’s, this fair use factor weighed “slightly” in favor of Perfect 10. Instead, we conclude that the transformative nature of Google’s use is more significant than any incidental superseding use or the minor commercial aspects of Google’s search engine and website. Therefore, this factor weighs heavily in favor of Google.
The nature of the copyrighted work. With respect to the second factor, “the nature of the copyrighted work,” 17 U.S.C. § 107(2), our decision in Kelly is directly on point. There we held that the photographer’s images were “creative in nature” and thus “closer to the core of intended copyright protection than are more fact-based works.” However, because the photos appeared on the Internet before Arriba used thumbnail versions in its search engine results, this factor weighed only slightly in favor of the photographer.
Here, the district court found that Perfect 10’s images were creative but also previously published. The right of first publication is “the author’s right to control the first public appearance of his expression.” Harper & Row, 471 U.S. at 564. Because this right encompasses “the choices of when, where, and in what form first to publish a work,” an author exercises and exhausts this one-time right by publishing the work in any medium. See, e.g., Batjac Prods. Inc. v. GoodTimes Home Video Corp., 160 F.3d 1223, 1235 (9th Cir.1998) (noting, in the context of the common law right of first publication, that such a right “does not entail multiple first publication rights in every available medium”). Once Perfect 10 has exploited this commercially valuable right of first publication by putting its images on the Internet for paid subscribers, Perfect 10 is no longer entitled to the enhanced protection available for an unpublished work. Accordingly the district court did not err in holding that this factor weighed only slightly in favor of Perfect 10.6
The amount and substantiality of the portion used. “The third factor asks whether the amount and substantiality of the portion used in relation to the copyrighted work as a whole … are reasonable in relation to the purpose of the copying.” 17 U.S.C. § 107(3). In Kelly, we held Arriba’s use of the entire photographic image was reasonable in light of the purpose of a search engine. Specifically, we noted, “[i]t was necessary for Arriba to copy the entire image to allow users to recognize the image and decide whether to pursue more information about the image or the originating [website]. If Arriba only copied part of the image, it would be more difficult to identify it, thereby reducing the usefulness of the visual search engine.” Accordingly, we concluded that this factor did not weigh in favor of either party. Because the same analysis applies to Google’s use of Perfect 10’s image, the district court did not err in finding that this factor favored neither party.
Effect of use on the market. The fourth factor is “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4). In Kelly, we concluded that Arriba’s use of the thumbnail images did not harm the market for the photographer’s full-size images. We reasoned that because thumbnails were not a substitute for the full-sized images, they did not harm the photographer’s ability to sell or license his full-sized images. The district court here followed Kelly‘s reasoning, holding that Google’s use of thumbnails did not hurt Perfect 10’s market for full-size images. We agree.
Perfect 10 argues that the district court erred because the likelihood of market harm may be presumed if the intended use of an image is for commercial gain. However, this presumption does not arise when a work is transformative because “market substitution is at least less certain, and market harm may not be so readily inferred.” As previously discussed, Google’s use of thumbnails for search engine purposes is highly transformative, and so market harm cannot be presumed.
Perfect 10 also has a market for reduced-size images, an issue not considered in Kelly. The district court held that “Google’s use of thumbnails likely does harm the potential market for the downloading of [Perfect 10’s] reduced-size images onto cell phones.” The district court reasoned that persons who can obtain Perfect 10 images free of charge from Google are less likely to pay for a download, and the availability of Google’s thumbnail images would harm Perfect 10’s market for cell phone downloads. As we discussed above, the district court did not make a finding that Google users have downloaded thumbnail images for cell phone use. This potential harm to Perfect 10’s market remains hypothetical. We conclude that this factor favors neither party.
Having undertaken a case-specific analysis of all four factors, we now weigh these factors together “in light of the purposes of copyright.” In this case, Google has put Perfect 10’s thumbnail images (along with millions of other thumbnail images) to a use fundamentally different than the use intended by Perfect 10. In doing so, Google has provided a significant benefit to the public. Weighing this significant transformative use against the unproven use of Google’s thumbnails for cell phone downloads, and considering the other fair use factors, all in light of the purpose of copyright, we conclude that Google’s use of Perfect 10’s thumbnails is a fair use. We conclude that Google is likely to succeed in proving its fair use defense and, accordingly, we vacate the preliminary injunction regarding Google’s use of thumbnail images.
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Check Your Understanding – Perfect 10 v. Amazon
Question 1. True or false: The court in Perfect 10 v. Amazon found Google’s use of thumbnails to be highly transformative because a search engine transforms an image originally created to serve an entertainment, aesthetic, or informative function into a pointer directing a user to a source of information.
Question 2. What distinguishes the facts in Perfect 10 v. Amazon from Kelly v. Arriba?
Some things to consider when reading Sega:
- This is one of the first appellate decisions to analyze the fair use defense in the context of a computer program. The Supreme Court took up the issue in 2021 in Google v. Oracle, a decision that appears later in this casebook.
- The Sega court applies the fair use defense to “intermediate copying,” i.e., the reproduction of a copyrighted work as an interim step in the creation of a new work, wherein the protectible content that has been copied does not appear in the final product. Intermediate copying is sometimes a practical necessity in the analysis or reverse engineering of a copyrighted work, particularly in the case software.
- The creation of the large language models (LLMs) used in generative artificial intelligence (AI) applications has entailed intermediate copying on a massive scale, which has in turn resulted in allegations of copyright infringement. The creators of the LLMs are asserting fair use as a defense, pointing to decisions like Sega as precedent supporting the applicability of fair use to intermediate copying. See, for example, Thomson Reuters Enter. Ctr. GmbH v. Ross Intel. Inc., 2023 WL 6210901 (D. Del. Sept. 25, 2023), a decision that appears later in this casebook.
- Courts often downplay the significance of the second fair use factor, i.e., the nature of the copyrighted work. In Campbell, for example, the Court opined that the second factor is “[never] likely to help much in separating the fair use sheep from the infringing goats in a parody case.” In Authors Guild v. Google, the Ninth Circuit states that the second factor “has rarely played a significant role in the determination of a fair use dispute.” But in cases involving software, the second factor can play a more prominent role. In Sega, for example, the Ninth Circuit finds that the second factor “is important to the resolution of cases such as the one before us.” In Google v. Oracle, a 2021 Supreme Court decision that appears later in this casebook, the Court chooses to address the second factor first, highlighting its importance in the resolution of that software case.
Sega Enterprises Ltd. v. Accolade, Inc.
977 F.2d 1510 (9th Cir. 1992), as amended (Jan. 6, 1993)
REINHARDT, Circuit Judge:
We are asked to determine whether the Copyright Act permits persons who are neither copyright holders nor licensees to disassemble a copyrighted computer program in order to gain an understanding of the unprotected functional elements of the program. In light of the public policies underlying the Act, we conclude that, when the person seeking the understanding has a legitimate reason for doing so and when no other means of access to the unprotected elements exists, such disassembly is as a matter of law a fair use of the copyrighted work.
I. Background
Plaintiff-appellee Sega Enterprises, Ltd. (“Sega”), a Japanese corporation, and its subsidiary, Sega of America, develop and market video entertainment systems, including the “Genesis” console (distributed in Asia under the name “Mega–Drive”) and video game cartridges. Defendant-appellant Accolade, Inc., is an independent developer, manufacturer, and marketer of computer entertainment software, including game cartridges that are compatible with the Genesis console, as well as game cartridges that are compatible with other computer systems.
Sega licenses its copyrighted computer code and its “SEGA” trademark to a number of independent developers of computer game software. Those licensees develop and sell Genesis-compatible video games in competition with Sega. Accolade is not and never has been a licensee of Sega. Prior to rendering its own games compatible with the Genesis console, Accolade explored the possibility of entering into a licensing agreement with Sega, but abandoned the effort because the agreement would have required that Sega be the exclusive manufacturer of all games produced by Accolade.
Accolade used a two-step process to render its video games compatible with the Genesis console. First, it “reverse engineered” Sega’s video game programs in order to discover the requirements for compatibility with the Genesis console. As part of the reverse engineering process, Accolade transformed the machine-readable object code contained in commercially available copies of Sega’s game cartridges into human-readable source code using a process called “disassembly” or “decompilation”. Accolade purchased a Genesis console and three Sega game cartridges, wired a decompiler into the console circuitry, and generated printouts of the resulting source code.7 Accolade engineers studied and annotated the printouts in order to identify areas of commonality among the three game programs. They then loaded the disassembled code back into a computer, and experimented to discover the interface specifications for the Genesis console by modifying the programs and studying the results. At the end of the reverse engineering process, Accolade created a development manual that incorporated the information it had discovered about the requirements for a Genesis-compatible game. According to the Accolade employees who created the manual, the manual contained only functional descriptions of the interface requirements and did not include any of Sega’s code.
In the second stage, Accolade created its own games for the Genesis. According to Accolade, at this stage it did not copy Sega’s programs, but relied only on the information concerning interface specifications for the Genesis that was contained in its development manual. Accolade maintains that with the exception of the interface specifications, none of the code in its own games is derived in any way from its examination of Sega’s code. In 1990, Accolade released “Ishido”, a game which it had originally developed and released for use with the Macintosh and IBM personal computer systems, for use with the Genesis console.
III. Copyright Issues
Accolade raises four arguments in support of its position that disassembly of the object code in a copyrighted computer program does not constitute copyright infringement. First, it maintains that intermediate copying does not infringe the exclusive rights granted to copyright owners in section 106 of the Copyright Act unless the end product of the copying is substantially similar to the copyrighted work. Second, it argues that disassembly of object code in order to gain an understanding of the ideas and functional concepts embodied in the code is lawful under section 102(b) of the Act, which exempts ideas and functional concepts from copyright protection. Third, it suggests that disassembly is authorized by section 117 of the Act, which entitles the lawful owner of a copy of a computer program to load the program into a computer. Finally, Accolade contends that disassembly of object code in order to gain an understanding of the ideas and functional concepts embodied in the code is a fair use that is privileged by section 107 of the Act.
Neither the language of the Act nor the law of this circuit supports Accolade’s first three arguments. Accolade’s fourth argument, however, has merit. Although the question is fairly debatable, we conclude based on the policies underlying the Copyright Act that disassembly of copyrighted object code is, as a matter of law, a fair use of the copyrighted work if such disassembly provides the only means of access to those elements of the code that are not protected by copyright and the copier has a legitimate reason for seeking such access.
A. Intermediate Copying
We have previously held that the Copyright Act does not distinguish between unauthorized copies of a copyrighted work on the basis of what stage of the alleged infringer’s work the unauthorized copies represent. Walker v. University Books, 602 F.2d 859, 864 (9th Cir.1979). Our holding in Walker was based on the plain language of the Act. Section 106 grants to the copyright owner the exclusive rights “to reproduce the work in copies”, “to prepare derivative works based upon the copyrighted work”, and to authorize the preparation of copies and derivative works. 17 U.S.C. § 106(1)–(2). Section 501 provides that “[a]nyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 118 … is an infringer of the copyright.” Id. § 501(a). On its face, that language unambiguously encompasses and proscribes “intermediate copying.”
In order to constitute a “copy” for purposes of the Act, the allegedly infringing work must be fixed in some tangible form, “from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 101. The computer file generated by the disassembly program, the printouts of the disassembled code, and the computer files containing Accolade’s modifications of the code that were generated during the reverse engineering process all satisfy that requirement. The intermediate copying done by Accolade therefore falls squarely within the category of acts that are prohibited by the statute.
In light of the unambiguous language of the Act, we decline to depart from the rule set forth in Walker for copyrighted works generally. Accordingly, we hold that intermediate copying of computer object code may infringe the exclusive rights granted to the copyright owner in section 106 of the Copyright Act regardless of whether the end product of the copying also infringes those rights. If intermediate copying is permissible under the Act, authority for such copying must be found in one of the statutory provisions to which the rights granted in section 106 are subject.
B. The Idea/Expression Distinction
Accolade next contends that disassembly of computer object code does not violate the Copyright Act because it is necessary in order to gain access to the ideas and functional concepts embodied in the code, which are not protected by copyright. 17 U.S.C. § 102(b). Because humans cannot comprehend object code, it reasons, disassembly of a commercially available computer program into human-readable form should not be considered an infringement of the owner’s copyright. Insofar as Accolade suggests that disassembly of object code is lawful per se, it seeks to overturn settled law.
Accolade’s argument regarding access to ideas is, in essence, an argument that object code is not eligible for the full range of copyright protection. Although some scholarly authority supports that view, we have previously rejected it based on the language and legislative history of the Copyright Act.
As recommended by the National Commission on New Technological Uses of Copyrighted Works (CONTU), the 1980 amendments to the Copyright Act unambiguously extended copyright protection to computer programs. Pub.L. 96–517, sec. 10, 94 Stat. 3028 (1980) (codified at 17 U.S.C. §§ 101, 117); see National Commission on New Technological Uses of Copyrighted Works, Final Report 1 (1979) [CONTU Report]. The Act makes no distinction between the copyrightability of those programs which directly interact with the computer user and those which simply manage the computer system. Nor does the Act require that a work be directly accessible to humans in order to be eligible for copyright protection. Rather, it extends protection to all original works “which … can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C. § 102(a). The statutory language, read together with the CONTU report, leads inexorably to the conclusion that the copyright in a computer program extends to the object code version of the program.
C. Section 117
Section 117 of the Copyright Act allows the lawful owner of a copy of a computer program to copy or adapt the program if the new copy or adaptation “is created as an essential step in the utilization of the computer program in conjunction with a machine and … is used in no other manner.” 17 U.S.C. § 117(1). Accolade contends that section 117 authorizes disassembly of the object code in a copyrighted computer program.
Section 117 was enacted on the recommendation of CONTU, which noted that because the placement of any copyrighted work into a computer is the preparation of a copy [since the program is loaded into the computer’s memory], the law should provide that persons in rightful possession of copies of programs be able to use them freely without fear of exposure to copyright liability. We think it is clear that Accolade’s use went far beyond that contemplated by CONTU and authorized by section 117. Section 117 does not purport to protect a user who disassembles object code, converts it from assembly into source code, and makes printouts and photocopies of the refined source code version.
D. Fair Use
Accolade contend that its disassembly of copyrighted object code as a necessary step in its examination of the unprotected ideas and functional concepts embodied in the code is a fair use that is privileged by section 107 of the Act. Because, in the case before us, disassembly is the only means of gaining access to those unprotected aspects of the program, and because Accolade has a legitimate interest in gaining such access (in order to determine how to make its cartridges compatible with the Genesis console), we agree with Accolade. Where there is good reason for studying or examining the unprotected aspects of a copyrighted computer program, disassembly for purposes of such study or examination constitutes a fair use.
1.
Section 107 lists the factors to be considered in determining whether a particular use is a fair one. Those factors include:
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
17 U.S.C. § 107. The statutory factors are not exclusive. Rather, the doctrine of fair use is in essence “an equitable rule of reason.”
In determining that Accolade’s disassembly of Sega’s object code did not constitute a fair use, the district court treated the first and fourth statutory factors as dispositive, and ignored the second factor entirely. Given the nature and characteristics of Accolade’s direct use of the copied works, the ultimate use to which Accolade put the functional information it obtained, and the nature of the market for home video entertainment systems, we conclude that neither the first nor the fourth factor weighs in Sega’s favor. In fact, we conclude that both factors support Accolade’s fair use defense, as does the second factor, a factor which is important to the resolution of cases such as the one before us.
(a)
With respect to the first statutory factor, we observe initially that the fact that copying is for a commercial purpose weighs against a finding of fair use. Harper & Row, 471 U.S. at 562. However, the presumption of unfairness that arises in such cases can be rebutted by the characteristics of a particular commercial use. Further the commercial nature of a use is a matter of degree, not an absolute.
Sega argues that because Accolade copied its object code in order to produce a competing product, the Harper & Row presumption applies and precludes a finding of fair use. That analysis is far too simple and ignores a number of important considerations. We must consider other aspects of “the purpose and character of the use” as well.
The declarations of Accolade’s employees indicate, and the district court found, that Accolade copied Sega’s software solely in order to discover the functional requirements for compatibility with the Genesis console—aspects of Sega’s programs that are not protected by copyright. U.S.C. § 102(b). With respect to the video game programs contained in Accolade’s game cartridges, there is no evidence in the record that Accolade sought to avoid performing its own creative work. Indeed, most of the games that Accolade released for use with the Genesis console were originally developed for other hardware systems. Moreover, with respect to the interface procedures for the Genesis console, Accolade did not seek to avoid paying a customarily charged fee for use of those procedures, nor did it simply copy Sega’s code; rather, it wrote its own procedures based on what it had learned through disassembly. Taken together, these facts indicate that although Accolade’s ultimate purpose was the release of Genesis-compatible games for sale, its direct purpose in copying Sega’s code, and thus its direct use of the copyrighted material, was simply to study the functional requirements for Genesis compatibility so that it could modify existing games and make them usable with the Genesis console. Moreover, as we discuss below, no other method of studying those requirements was available to Accolade. On these facts, we conclude that Accolade copied Sega’s code for a legitimate, essentially non-exploitative purpose, and that the commercial aspect of its use can best be described as of minimal significance.
We further note that we are free to consider the public benefit resulting from a particular use notwithstanding the fact that the alleged infringer may gain commercially. Public benefit need not be direct or tangible, but may arise because the challenged use serves a public interest. In the case before us, Accolade’s identification of the functional requirements for Genesis compatibility has led to an increase in the number of independently designed video game programs offered for use with the Genesis console. It is precisely this growth in creative expression, based on the dissemination of other creative works and the unprotected ideas contained in those works, that the Copyright Act was intended to promote. The fact that Genesis-compatible video games are not scholarly works, but works offered for sale on the market, does not alter our judgment in this regard. We conclude that given the purpose and character of Accolade’s use of Sega’s video game programs, the presumption of unfairness has been overcome and the first statutory factor weighs in favor of Accolade.
(b)
As applied, the fourth statutory factor, effect on the potential market for the copyrighted work, bears a close relationship to the “purpose and character” inquiry in that it, too, accommodates the distinction between the copying of works in order to make independent creative expression possible and the simple exploitation of another’s creative efforts. We must, of course, inquire whether, if the challenged use should become widespread, it would adversely affect the potential market for the copyrighted work, by diminishing potential sales, interfering with marketability, or usurping the market.
By facilitating the entry of a new competitor, the first lawful one that is not a Sega licensee, Accolade’s disassembly of Sega’s software undoubtedly “affected” the market for Genesis-compatible games in an indirect fashion. There is no basis for assuming that Accolade’s “Ishido” has significantly affected the market for Sega’s “Altered Beast”, since a consumer might easily purchase both; nor does it seem unlikely that a consumer particularly interested in sports might purchase both Accolade’s “Mike Ditka Power Football” and Sega’s “Joe Montana Football”, particularly if the games are, as Accolade contends, not substantially similar. In any event, an attempt to monopolize the market by making it impossible for others to compete runs counter to the statutory purpose of promoting creative expression and cannot constitute a strong equitable basis for resisting the invocation of the fair use doctrine. Thus, we conclude that the fourth statutory factor weighs in Accolade’s, not Sega’s, favor, notwithstanding the minor economic loss Sega may suffer.
(c)
The second statutory factor, the nature of the copyrighted work, reflects the fact that not all copyrighted works are entitled to the same level of protection. The protection established by the Copyright Act for original works of authorship does not extend to the ideas underlying a work or to the functional or factual aspects of the work. 17 U.S.C. § 102(b).
Computer programs pose unique problems for the application of the “idea/expression distinction” that determines the extent of copyright protection. To the extent that there are many possible ways of accomplishing a given task or fulfilling a particular market demand, the programmer’s choice of program structure and design may be highly creative and idiosyncratic. However, computer programs are, in essence, utilitarian articles—articles that accomplish tasks. As such, they contain many logical, structural, and visual display elements that are dictated by the function to be performed, by considerations of efficiency, or by external factors such as compatibility requirements and industry demands. Computer Assoc. Int’l, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir.1992) (“CAI ”). In some circumstances, even the exact set of commands used by the programmer is deemed functional rather than creative for purposes of copyright. When specific instructions, even though previously copyrighted, are the only and essential means of accomplishing a given task, their later use by another will not amount to infringement.
Sega argues that even if many elements of its video game programs are properly characterized as functional and therefore not protected by copyright, Accolade copied protected expression. Sega is correct. The record makes clear that disassembly is wholesale copying. Because computer programs are also unique among copyrighted works in the form in which they are distributed for public use, however, Sega’s observation does not bring us much closer to a resolution of the dispute.
The unprotected aspects of most functional works are readily accessible to the human eye. The systems described in accounting textbooks or the basic structural concepts embodied in architectural plans, to give two examples, can be easily copied without also copying any of the protected, expressive aspects of the original works. Computer programs, however, are typically distributed for public use in object code form, embedded in a silicon chip or on a floppy disk. For that reason, humans often cannot gain access to the unprotected ideas and functional concepts contained in object code without disassembling that code—i.e., making copies.
The district court suggested that Accolade could have avoided a copyright infringement suit by programming in a “clean room”. That finding is clearly erroneous. A “clean room” is a procedure used in the computer industry in order to prevent direct copying of a competitor’s code during the development of a competing product. Programmers in clean rooms are provided only with the functional specifications for the desired program. The use of a clean room would not have avoided the need for disassembly because disassembly was necessary in order to discover the functional specifications for a Genesis-compatible game.
The record clearly establishes that disassembly of the object code in Sega’s video game cartridges was necessary in order to understand the functional requirements for Genesis compatibility. The interface procedures for the Genesis console are distributed for public use only in object code form, and are not visible to the user during operation of the video game program. Because object code cannot be read by humans, it must be disassembled, either by hand or by machine. Disassembly of object code necessarily entails copying. Those facts dictate our analysis of the second statutory fair use factor. If disassembly of copyrighted object code is per se an unfair use, the owner of the copyright gains a de facto monopoly over the functional aspects of his work—aspects that were expressly denied copyright protection by Congress. U.S.C. § 102(b).
Because Sega’s video game programs contain unprotected aspects that cannot be examined without copying, we afford them a lower degree of protection than more traditional literary works. In light of all the considerations discussed above, we conclude that the second statutory factor also weighs in favor of Accolade.
(d)
As to the third statutory factor, Accolade disassembled entire programs written by Sega. Accordingly, the third factor weighs against Accolade. The fact that an entire work was copied does not, however, preclude a finding a fair use. Sony Corp., 464 U.S. at 449–50. In fact, where the ultimate (as opposed to direct) use is as limited as it was here, the factor is of very little weight.
(e)
In summary, careful analysis of the purpose and characteristics of Accolade’s use of Sega’s video game programs, the nature of the computer programs involved, and the nature of the market for video game cartridges yields the conclusion that the first, second, and fourth statutory fair use factors weigh in favor of Accolade, while only the third weighs in favor of Sega, and even then only slightly. Accordingly, Accolade clearly has by far the better case on the fair use issue.
We are not unaware of the fact that to those used to considering copyright issues in more traditional contexts, our result may seem incongruous at first blush. To oversimplify, the record establishes that Accolade, a commercial competitor of Sega, engaged in wholesale copying of Sega’s copyrighted code as a preliminary step in the development of a competing product. However, the key to this case is that we are dealing with computer software, a relatively unexplored area in the world of copyright law. We must avoid the temptation of trying to force the proverbial square peg into a round hole.
In determining whether a challenged use of copyrighted material is fair, a court must keep in mind the public policy underlying the Copyright Act. The immediate effect of our copyright law is to secure a fair return for an author’s creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good. When technological change has rendered an aspect or application of the Copyright Act ambiguous, the Copyright Act must be construed in light of this basic purpose. As discussed above, the fact that computer programs are distributed for public use in object code form often precludes public access to the ideas and functional concepts contained in those programs, and thus confers on the copyright owner a de facto monopoly over those ideas and functional concepts. That result defeats the fundamental purpose of the Copyright Act—to encourage the production of original works by protecting the expressive elements of those works while leaving the ideas, facts, and functional concepts in the public domain for others to build on.
(f)
We conclude that where disassembly is the only way to gain access to the ideas and functional elements embodied in a copyrighted computer program and where there is a legitimate reason for seeking such access, disassembly is a fair use of the copyrighted work, as a matter of law. Our conclusion does not, of course, insulate Accolade from a claim of copyright infringement with respect to its finished products. Sega has reserved the right to raise such a claim, and it may do so on remand.
__________
Check Your Understanding – Sega
Question 1. Why did the court find that Accolade’s disassembly of the object code in Sega’s copyrighted computer program did not constitute copyright infringement?
Question 2. According to the Sega court, under what circumstances is the unauthorized disassembly of a copyrighted computer program in order to gain an understanding of the unprotected functional elements of the program fair use as a matter of law?
Question 3. Which of the statutory fair use factors was found to weigh against Accolade?
Some things to consider when reading Google v. Oracle:
- This represents the first time the Supreme Court has taken up the fair use defense since it decided Campbell in 1994, and is the Court’s only decision that directly addresses fair use in the context of computer software.
- The Google v. Oracle decision is long and involves a great deal of quite technical discussion of the software involved. The author of this casebook has edited the case down quite substantially, in an attempt to retain the holding and significant legal aspects of the decision, while treating the copyrighted subject matter at issue at a relatively high level of abstraction. Those with the interest are encouraged to read the full length decision, including the dissent by Justice Thomas.
- As noted above in the “things to consider” section appearing before the Sega decision, courts often downplay the significance of the second fair use factor, i.e., the nature of the copyrighted work. In software cases, however, it can play a more prominent role in deciding a question of fair use. We see an example of this in Google v. Oracle, as highlighted by the fact that the Court chooses to address the second statutory factor first.
- Many would say that the decision emphasizes the transformative nature of the use and deemphasizes commerciality. What do you think?
- What role does the good faith (or bad-faith) of an infringer have in the fair use analysis?
- It was probably significant that the Court believed that much of the value in the copied code lay not in its expressive qualities, but rather “because users, including programmers, are just used to it. . . . We have no reason to believe that the Copyright Act seeks to protect third parties’ investment in learning how to operate a created work.”
Google LLC v. Oracle Am., Inc.
593 U.S. 1 (2021)
Justice BREYER delivered the opinion of the Court.
Oracle America, Inc., is the current owner of a copyright in Java SE, a computer program that uses the popular Java computer programming language. Google, without permission, has copied a portion of that program, a portion that enables a programmer to call up prewritten software that, together with the computer’s hardware, will carry out a large number of specific tasks. We hold that the copying here at issue constituted a fair use. Hence, Google’s copying did not violate the copyright law.
I
In 2005, Google acquired Android, Inc., a startup firm that hoped to become involved in smartphone software. Google sought, through Android, to develop a software platform for mobile devices like smartphones. A platform provides the necessary infrastructure for computer programmers to develop new programs and applications. One might think of a software platform as a kind of factory floor where computer programmers (analogous to autoorkers, designers, or manufacturers) might come, use sets of tools found there, and create new applications for use in, say, smartphones.
Google envisioned an Android platform that was free and open, such that software developers could use the tools found there free of charge. Its idea was that more and more developers using its Android platform would develop ever more Android-based applications, all of which would make Google’s Android-based smartphones more attractive to ultimate consumers. Consumers would then buy and use ever more of those phones. That vision required attracting a sizeable number of skilled programmers.
At that time, many software developers understood and wrote programs using the Java programming language, a language invented by Sun Microsystems (Oracles predecessor). About six million programmers had spent considerable time learning, and then using, the Java language. Many of those programmers used Sun’s own popular Java SE platform to develop new programs primarily for use in desktop and laptop computers. That platform allowed developers using the Java language to write programs that were able to run on any desktop or laptop computer, regardless of the underlying hardware.
Shortly after acquiring the Android firm, Google began talks with Sun about the possibility of licensing the entire Java platform for its new smartphone technology. Google’s negotiations with Sun broke down. Google then built its own platform.
The record indicates that roughly 100 Google engineers worked for more than three years to create Google’s Android platform software. In doing so, Google tailored the Android platform to smartphone technology, which differs from desktop and laptop computers in important ways. A smartphone, for instance, may run on a more limited battery or take advantage of GPS technology. The Android platform offered programmers the ability to program for that environment. To build the platform, Google wrote millions of lines of new code. Because Google wanted millions of programmers, familiar with Java, to be able easily to work with its new Android platform, it also copied roughly 11,500 lines of [declaring code] from the Java SE program. The copied lines of [declaring code] are part of a tool called an Application Programming Interface, or API.8
In doing so, Google copied that portion of the Sun Java API that allowed programmers expert in the Java programming language to use the “task calling” system that they had already learned. By using the same declaring code for those packages, programmers using the Android platform can rely on the method calls that they are already familiar with to call up particular tasks (e.g., determining which of two integers is the greater); but Google’s own implementing programs carry out those tasks. Without that copying, programmers would need to learn an entirely new system to call up the same tasks.
We add that the Android platform has been successful. Within five years of its release in 2007, Android-based devices claimed a large share of the United States market. As of 2015, Android sales produced more than $42 billion in revenue.
In 2010 Oracle Corporation bought Sun. Soon thereafter Oracle brought this lawsuit in the United States District Court for the Northern District of California.
[Editor’s note: The Federal Circuit ultimately held that Google’s use of the declaring code contained in the Java API packages was not a fair use. It wrote that “[t]here is nothing fair about taking a copyrighted work verbatim and using it for the same purpose and function as the original in a competing platform.” Google successfully petitioned for certiorari.]
III
A copyright holder cannot prevent another person from making a “fair use” of copyrighted material. 17 U.S.C. § 107.
We have described the “fair use” doctrine, originating in the courts, as an equitable rule of reason that permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster. The statutory provision that embodies the doctrine indicates, rather than dictates, how courts should apply it. The provision says:
“[T]he fair use of a copyrighted work, … for purposes such as criticism, comment, news reporting, teaching … scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work. § 107.
We have understood the provision to set forth general principles, the application of which requires judicial balancing, depending upon relevant circumstances, including “significant changes in technology.” Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 430 (1984).
The language of § 107, the “fair use” provision, reflects its judge-made origins. That background, as well as modern courts’ use of the doctrine, makes clear that the concept is flexible, that courts must apply it in light of the sometimes conflicting aims of copyright law, and that its application may well vary depending upon context. Thus, copyright’s protection may be stronger where the copyrighted material is fiction, not fact, where it consists of a motion picture rather than a news broadcast, or where it serves an artistic rather than a utilitarian function. Similarly, courts have held that in some circumstances, say, where copyrightable material is bound up with uncopyrightable material, copyright protection is “thin.”
Generically speaking, computer programs differ from books, films, and many other “literary works” in that such programs almost always serve functional purposes. These and other differences have led at least some judges to complain that “applying copyright law to computer programs is like assembling a jigsaw puzzle whose pieces do not quite fit.” Lotus Development Corp. v. Borland Int’l, Inc., 49 F.3d 807, 820 (C.A.1 1995) (BOUDIN, J., concurring).
These differences also led Congress to think long and hard about whether to grant computer programs copyright protection. In 1974, Congress established a National Commission on New Technological Uses of Copyrighted Works (CONTU) to look into the matter. After several years of research, CONTU concluded that the “availability of copyright protection for computer programs is desirable.” Final Report 11 (July 31, 1978). At the same time, it recognized that computer programs had unique features. Mindful of not “unduly burdening users of programs and the general public,” it wrote that copyright “should not grant anyone more economic power than is necessary to achieve the incentive to create.” And it believed that copyright’s existing doctrines (e.g., fair use), applied by courts on a case-by-case basis, could prevent holders from using copyright to stifle innovation. Congress then wrote computer program protection into the law.
The upshot, in our view, is that fair use can play an important role in determining the lawful scope of a computer program copyright, such as the copyright at issue here. It can help to distinguish among technologies. It can distinguish between expressive and functional features of computer code where those features are mixed. It can focus on the legitimate need to provide incentives to produce copyrighted material while examining the extent to which yet further protection creates unrelated or illegitimate harms in other markets or to the development of other products. In a word, it can carry out its basic purpose of providing a context-based check that can help to keep a copyright monopoly within its lawful bounds.
Just as fair use distinguishes among books and films, which are indisputably subjects of copyright, so too must it draw lines among computer programs. And just as fair use takes account of the market in which scripts and paintings are bought and sold, so too must it consider the realities of how technological works are created and disseminated.
VI
We shall consider the four factors set forth in the fair use statute as we find them applicable to the kind of computer programs before us. For expository purposes, we begin with the second.
A. “The Nature of the Copyrighted Work”
[Editor’s note: The court explained that the declaring code that Google had copied labels and organizes tasks, and analogized this organization to “file cabinets, drawers, and files.”]
The declaring code at issue here resembles other copyrighted works in that it is part of a computer program. Congress has specified that computer programs are subjects of copyright. It differs, however, from many other kinds of copyrightable computer code. It is inextricably bound together with a general system, the division of computing tasks, that no one claims is a proper subject of copyright. It is inextricably bound up with the idea of organizing tasks into what we have called cabinets, drawers, and files, an idea that is also not copyrightable. It is inextricably bound up with the use of specific commands known to programmers, known here as method calls (such as java.lang.Math.max, etc.), that Oracle does not here contest.
The declaring code differs to some degree from the mine run of computer programs. Like other computer programs, it is functional in nature. But unlike many other programs, its use is inherently bound together with uncopyrightable ideas (general task division and organization) and new creative expression (Android’s implementing code). Unlike many other programs, its value in significant part derives from the value that those who do not hold copyrights, namely, computer programmers, invest of their own time and effort to learn the API’s system. And unlike many other programs, its value lies in its efforts to encourage programmers to learn and to use that system so that they will use (and continue to use) Sun-related implementing programs that Google did not copy.
In our view, for the reasons just described, the declaring code is, if copyrightable at all, further than are most computer programs (such as the implementing code) from the core of copyright. That fact diminishes the fear, expressed by both the dissent and the Federal Circuit, that application of “fair use” here would seriously undermine the general copyright protection that Congress provided for computer programs. And it means that this factor, “the nature of the copyrighted work,” points in the direction of fair use.
B. “The Purpose and Character of the Use”
Google copied portions of the Sun Java API precisely, and it did so in part for the same reason that Sun created those portions, namely, to enable programmers to call up implementing programs that would accomplish particular tasks. But since virtually any unauthorized use of a copyrighted computer program (say, for teaching or research) would do the same, to stop here would severely limit the scope of fair use in the functional context of computer programs. Rather, in determining whether a use is “transformative,” we must go further and examine the copying’s more specifically described “purpose[s]” and “character.” 17 U.S.C. § 107(1).
Here Google’s use of the Sun Java API seeks to create new products. It seeks to expand the use and usefulness of Android-based smartphones. Its new product offers programmers a highly creative and innovative tool for a smartphone environment. To the extent that Google used parts of the Sun Java API to create a new platform that could be readily used by programmers, its use was consistent with that creative “progress” that is the basic constitutional objective of copyright itself.
The jury heard that Google limited its use of the Sun Java API to tasks and specific programming demands related to Android. It copied the API (which Sun created for use in desktop and laptop computers) only insofar as needed to include tasks that would be useful in smartphone programs. And it did so only insofar as needed to allow programmers to call upon those tasks without discarding a portion of a familiar programming language and learning a new one. To repeat, Google, through Android, provided a new collection of tasks operating in a distinct and different computing environment. Those tasks were carried out through the use of new implementing code (that Google wrote) designed to operate within that new environment.
The record here demonstrates the numerous ways in which reimplementing an interface can further the development of computer programs. The jury heard that shared interfaces are necessary for different programs to speak to each other. It heard that the reimplementation of interfaces is necessary if programmers are to be able to use their acquired skills. It heard that the reuse of APIs is common in the industry. It heard that Sun itself had used pre-existing interfaces in creating Java. And it heard that Sun executives thought that widespread use of the Java programming language, including use on a smartphone platform, would benefit the company.
These and related facts convince us that the “purpose and character” of Google’s copying was transformative—to the point where this factor too weighs in favor of fair use.
There are two other considerations that are often taken up under the first factor: commerciality and good faith. The text of § 107 includes various noncommercial uses, such as teaching and scholarship, as paradigmatic examples of privileged copying. There is no doubt that a finding that copying was not commercial in nature tips the scales in favor of fair use. But the inverse is not necessarily true, as many common fair uses are indisputably commercial. For instance, the text of § 107 includes examples like “news reporting,” which is often done for commercial profit. So even though Google’s use was a commercial endeavor, that is not dispositive of the first factor, particularly in light of the inherently transformative role that the reimplementation played in the new Android system.
As for bad faith, our decision in Campbell expressed some skepticism about whether bad faith has any role in a fair use analysis. We find this skepticism justifiable, as copyright is not a privilege reserved for the well-behaved. We have no occasion here to say whether good faith is as a general matter a helpful inquiry. We simply note that given the strength of the other factors pointing toward fair use and the jury finding in Google’s favor on hotly contested evidence, that factbound consideration is not determinative in this context.
C. “The Amount and Substantiality of the Portion Used”
If one considers the declaring code in isolation, the quantitative amount of what Google copied was large. Google copied the declaring code for 37 packages of the Sun Java API, totaling approximately 11,500 lines of code. Those lines of code amount to virtually all the declaring code needed to call up hundreds of different tasks. On the other hand, if one considers the entire set of software material in the Sun Java API, the quantitative amount copied was small. The total set of Sun Java API computer code, including implementing code, amounted to 2.86 million lines, of which the copied 11,500 lines were only 0.4 percent.
Several features of Google’s copying suggest that the better way to look at the numbers is to take into account the several million lines that Google did not copy. For one thing, the Sun Java API is inseparably bound to those task-implementing lines. Its purpose is to call them up. For another, Google copied those lines not because of their creativity, their beauty, or even (in a sense) because of their purpose. It copied them because programmers had already learned to work with the Sun Java API’s system, and it would have been difficult, perhaps prohibitively so, to attract programmers to build its Android smartphone system without them. Further, Google’s basic purpose was to create a different task-related system for a different computing environment (smartphones) and to create a platform—the Android platform—that would help achieve and popularize that objective. The “substantiality” factor will generally weigh in favor of fair use where, as here, the amount of copying was tethered to a valid, and transformative, purpose.
We consequently believe that this “substantiality” factor weighs in favor of fair use.
D. Market Effects
The fourth statutory factor focuses upon the “effect” of the copying in the “market for or value of the copyrighted work.” 17 U.S.C. § 107(4). Consideration of this factor, at least where computer programs are at issue, can prove more complex than at first it may seem. It can require a court to consider the amount of money that the copyright owner might lose.
But a potential loss of revenue is not the whole story. We here must consider not just the amount but also the source of the loss. Further, we must take into account the public benefits the copying will likely produce. Are those benefits, for example, related to copyright’s concern for the creative production of new expression? Are they comparatively important, or unimportant, when compared with dollar amounts likely lost (taking into account as well the nature of the source of the loss)?
We do not say that these questions are always relevant to the application of fair use, not even in the world of computer programs. Nor do we say that these questions are the only questions a court might ask. But we do find them relevant here in helping to determine the likely market effects of Google’s reimplementation.
As to the likely amount of loss, the jury could have found that Android did not harm the actual or potential markets for Java SE. And it could have found that Sun itself (now Oracle) would not have been able to enter those markets successfully whether Google did, or did not, copy a part of its API. First, evidence at trial demonstrated that, regardless of Android’s smartphone technology, Sun was poorly positioned to succeed in the mobile phone market. The jury heard ample evidence that Java SE’s primary market was laptops and desktops. It also heard that Sun’s many efforts to move into the mobile phone market had proved unsuccessful. As far back as 2006, prior to Android’s release, Sun’s executives projected declining revenue for mobile phones because of emerging smartphone technology. When Sun’s former CEO was asked directly whether Sun’s failure to build a smartphone was attributable to Google’s development of Android, he answered that it was not. Given the evidence showing that Sun was beset by business challenges in developing a mobile phone product, the jury was entitled to agree with that assessment.
Second, the jury was repeatedly told that devices using Google’s Android platform were different in kind from those that licensed Sun’s technology. For instance, witnesses explained that the broader industry distinguished between smartphones and simpler “feature phones.” As to the specific devices that used Sun-created software, the jury heard that one of these phones lacked a touchscreen, while another did not have a QWERTY keyboard. For other mobile devices, the evidence showed that simpler products, like the Kindle, used Java software, while more advanced technology, like the Kindle Fire, were built on the Android operating system. This record evidence demonstrates that, rather than just repurposing Sun’s code from larger computers to smaller computers, Google’s Android platform was part of a distinct (and more advanced) market than Java software.
Looking to these important differences, Google’s economic expert told the jury that Android was not a market substitute for Java’s software.
Finally, the jury also heard evidence that Sun foresaw a benefit from the broader use of the Java programming language in a new platform like Android, as it would further expand the network of Java-trained programmers. In other words, the jury could have understood Android and Java SE as operating in two distinct markets. And because there are two markets at issue, programmers learning the Java language to work in one market (smartphones) are then able to bring those talents to the other market (laptops).
On the other hand, Google’s copying helped Google make a vast amount of money from its Android platform. And enforcement of the Sun Java API copyright might give Oracle a significant share of these funds. It is important, however, to consider why and how Oracle might have become entitled to this money. When a new interface, like an API or a spreadsheet program, first comes on the market, it may attract new users because of its expressive qualities, such as a better visual screen or because of its superior functionality. As time passes, however, it may be valuable for a different reason, namely, because users, including programmers, are just used to it. They have already learned how to work with it. See Lotus Development Corp., 49 F.3d at 821 (BOUDIN, J., concurring).
The record here is filled with evidence that this factor accounts for Google’s desire to use the Sun Java API. This source of Android’s profitability has much to do with third parties’ (say, programmers’) investment in Sun Java programs. It has correspondingly less to do with Sun’s investment in creating the Sun Java API. We have no reason to believe that the Copyright Act seeks to protect third parties’ investment in learning how to operate a created work.
Finally, given programmers’ investment in learning the Sun Java API, to allow enforcement of Oracle’s copyright here would risk harm to the public. Given the costs and difficulties of producing alternative APIs with similar appeal to programmers, allowing enforcement here would make of the Sun Java API’s declaring code a lock limiting the future creativity of new programs. Oracle alone would hold the key. The result could well prove highly profitable to Oracle (or other firms holding a copyright in computer interfaces). But those profits could well flow from creative improvements, new applications, and new uses developed by users who have learned to work with that interface. To that extent, the lock would interfere with, not further, copyright’s basic creativity objectives. After all, copyright supplies the economic incentive to both create and disseminate ideas, and the reimplementation of a user interface allows creative new computer code to more easily enter the market.
The uncertain nature of Sun’s ability to compete in Android’s market place, the sources of its lost revenue, and the risk of creativity-related harms to the public, when taken together, convince that this fourth factor—market effects—also weighs in favor of fair use.
* * *
The fact that computer programs are primarily functional makes it difficult to apply traditional copyright concepts in that technological world. See Lotus Development Corp., 49 F.3d at 820 (BOUDIN, J., concurring). In doing so here, we have not changed the nature of those concepts. We do not overturn or modify our earlier cases involving fair use—cases, for example, that involve “knockoff ” products, journalistic writings, and parodies. Rather, we here recognize that application of a copyright doctrine such as fair use has long proved a cooperative effort of Legislatures and courts, and that Congress, in our view, intended that it so continue. As such, we have looked to the principles set forth in the fair use statute, § 107, and set forth in our earlier cases, and applied them to this different kind of copyrighted work.
We reach the conclusion that in this case, where Google reimplemented a user interface, taking only what was needed to allow users to put their accrued talents to work in a new and transformative program, Google’s copying of the Sun Java API was a fair use of that material as a matter of law. The Federal Circuit’s contrary judgment is reversed, and the case is remanded for further proceedings in conformity with this opinion.
[Dissenting opinion of Justice THOMAS, with whom Justice ALITO joined, is omitted]
_______
Check Your Understanding – Google v. Oracle
Question 1. In Google v. Oracle, which of the following considerations was given the most weight in the Court’s fair use analysis?
Question 2. In Google v. Oracle, how did Oracle’s declaring code differ from a typical computer program, according to the Court?
Question 3. True or false: Google v. Oracle calls into question the relevance of good or bad faith in a fair use analysis.
Questions 4. What was the significance of the Court’s conclusion in Google v. Oracle that Android’s profitability has more to do with programmers’ investment in Sun Java programs than with Sun’s investment in creating the Sun Java API?
Some things to consider when reading Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith:
- As of the time this casebook is being updated, this decision represents the Supreme Court’s last word on fair use. It came out only two years after Google v. Oracle.
- It is probably quite significant that the case was limited to the question of whether AWF’s “commercial licensing” of Andy Warhol’s work qualified for the fair use defense, and the Court did not consider the fair use implications of the creation, distribution, or display of his presumably infringing works.
- Note the significance the Court attributes to the fact that the Copyright Act explicitly protects derivative works, and that the statutory definition of derivative work explicitly uses the word “transformed.”
- Note the Court’s discussion of a scenario in which a derivative work that borrows heavily from an original work might nonetheless constitute fair use.
- Consider the implications for commercial photographers if the Court were to deem AWF’s commercial licensing of the work to be fair use.
- One of the issues in this case is who should decide whether a defendant’s use is transformative. When you compare Goldsmith’s original photograph with Warhol’s Orange Prince do you personally see much of a difference? Should it matter that art critics consider the two works to convey very different messages?
- The commercial nature of AWF’s use plays an important role in the Court’s decision in this case. Has this been true for the other cases you have read, including Google v. Oracle?
Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith
598 U.S. 508 (2023)
Justice SOTOMAYOR delivered the opinion of the Court.
This copyright case involves not one, but two artists. The first, Andy Warhol, is well known. His images of products like Campbell’s soup cans and of celebrities like Marilyn Monroe appear in museums around the world. Warhol’s contribution to contemporary art is undeniable.
The second, Lynn Goldsmith, is less well known. But she too was a trailblazer. Goldsmith began a career in rock-and-roll photography when there were few women in the genre. Her award-winning concert and portrait images, however, shot to the top. Goldsmith’s work appeared in Life, Time, Rolling Stone, and People magazines, not to mention the National Portrait Gallery and the Museum of Modern Art. She captured some of the 20th century’s greatest rock stars: Bob Dylan, Mick Jagger, Patti Smith, Bruce Springsteen, and, as relevant here, Prince.
In 1984, Vanity Fair sought to license one of Goldsmith’s Prince photographs for use as an “artist reference.” The magazine wanted the photograph to help illustrate a story about the musician. Goldsmith agreed, on the condition that the use of her photo be for “one time” only. The artist Vanity Fair hired was Andy Warhol. Warhol made a silkscreen using Goldsmith’s photo, and Vanity Fair published the resulting image alongside an article about Prince. The magazine credited Goldsmith for the “source photograph,” and it paid her $400.
Warhol, however, did not stop there. From Goldsmith’s photograph, he derived 15 additional works. Later, the Andy Warhol Foundation for the Visual Arts, Inc. (AWF) licensed one of those works to Condé Nast, again for the purpose of illustrating a magazine story about Prince. AWF came away with $10,000. Goldsmith received nothing.
When Goldsmith informed AWF that she believed its use of her photograph infringed her copyright, AWF sued her. The District Court granted summary judgment for AWF on its assertion of “fair use,” 17 U.S.C. § 107, but the Court of Appeals for the Second Circuit reversed. In this Court, the sole question presented is whether the first fair use factor, “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes,” § 107(1), weighs in favor of AWF’s recent commercial licensing to Condé Nast. On that narrow issue, and limited to the challenged use, the Court agrees with the Second Circuit: The first factor favors Goldsmith, not AWF.
I
Lynn Goldsmith is a professional photographer. Her specialty is concert and portrait photography of musicians. At age 16, Goldsmith got one of her first shots: an image of the Beatles’ “trendy boots” before the band performed live on The Ed Sullivan Show. S. Michel, Rock Portraits, N. Y. Times, Dec. 2, 2007, p. G64. Within 10 years, Goldsmith had photographed everyone from Led Zeppelin to James Brown (the latter in concert in Kinshasa, no less). At that time, Goldsmith “had few female peers.” Ibid. But she was a self-starter. She quickly became “a leading rock photographer” in an era “when women on the scene were largely dismissed as groupies.” Ibid.
In 1981, Goldsmith convinced Newsweek magazine to hire her to photograph Prince Rogers Nelson, then an “up and coming” and “hot young musician.” Newsweek agreed, and Goldsmith took photos of Prince in concert at the Palladium in New York City and in her studio on West 36th Street. Newsweek ran one of the concert photos, together with an article titled “The Naughty Prince of Rock.” Goldsmith retained the other photos. She holds copyright in all of them.
One of Goldsmith’s studio photographs, a black and white portrait of Prince, is the original copyrighted work at issue in this case. See fig. 1, infra.
Figure 1. A black and white portrait photograph of Prince taken in 1981 by Lynn Goldsmith.
In 1984, Goldsmith, through her agency, licensed that photograph to Vanity Fair to serve as an “artist reference for an illustration” in the magazine. The terms of the license were that the illustration was “to be published in Vanity Fair November 1984 issue. It can appear one time full page and one time under one quarter page. No other usage right granted.” Goldsmith was to receive $400 and a source credit.
To make the illustration, Vanity Fair hired pop artist Andy Warhol. Warhol was already a major figure in American art, known among other things for his silkscreen portraits of celebrities. From Goldsmith’s photograph, Warhol created a silkscreen portrait of Prince, which appeared alongside an article about Prince in the November 1984 issue of Vanity Fair. The article, titled “Purple Fame,” is primarily about the “sexual style” of the new celebrity and his music. Goldsmith received her $400 fee, and Vanity Fair credited her for the “source photograph.” Warhol received an unspecified amount.
Figure 2. A purple silkscreen portrait of Prince created in 1984 by Andy Warhol to illustrate an article in Vanity Fair
In addition to the single illustration authorized by the Vanity Fair license, Warhol created 15 other works based on Goldsmith’s photograph: 13 silkscreen prints and two pencil drawings. The works are collectively referred to as the “Prince Series.” Goldsmith did not know about the Prince Series until 2016, when she saw the image of an orange silkscreen portrait of Prince (“Orange Prince”) on the cover of a magazine published by Vanity Fair’s parent company, Condé Nast. See fig. 3, infra.
Figure 3. An orange silkscreen portrait of Prince on the cover of a special edition magazine published in 2016 by Condé Nast.
By that time, Warhol had died, and the Prince Series had passed to the Andy Warhol Foundation for the Visual Arts, Inc. AWF no longer possesses the works,9 but it asserts copyright in them. It has licensed images of the works for commercial and editorial uses. In particular, after Prince died in 2016, Condé Nast contacted AWF about the possibility of reusing the 1984 Vanity Fair image for a special edition magazine that would commemorate Prince. Once AWF informed Condé Nast about the other Prince Series images, however, Condé Nast obtained a license to publish Orange Prince instead. The magazine, titled “The Genius of Prince,” is a tribute to “Prince Rogers Nelson, 1958–2016.” It is “devoted to Prince.” Condé Nast paid AWF $10,000 for the license. Goldsmith received neither a fee nor a source credit.
Remember that Goldsmith, too, had licensed her Prince images to magazines such as Newsweek, to accompany a story about the musician, and Vanity Fair, to serve as an artist reference. But that was not all. Between 1981 and 2016, Goldsmith’s photos of Prince appeared on or between the covers of People, Readers Digest, Guitar World, and Musician magazines.
Figure 4. One of Lynn Goldsmith’s photographs of Prince on the cover of Musician magazine.
People magazine, in fact, paid Goldsmith $1,000 to use one of her copyrighted photographs in a special collector’s edition, “Celebrating Prince: 1958–2016,” just after Prince died. People’s tribute, like Condé Nast’s, honors the life and music of Prince. Other magazines, including Rolling Stone and Time, also released special editions. See fig. 5, infra. All of them depicted Prince on the cover. All of them used a copyrighted photograph in service of that object. And all of them (except Condé Nast) credited the photographer.
Figure 5. Four special edition magazines commemorating Prince after he died in 2016.
When Goldsmith saw Orange Prince on the cover of Condé Nast’s special edition magazine, she recognized her work. “It’s the photograph,” she later testified. Orange Prince crops, flattens, traces, and colors the photo but otherwise does not alter it. See fig. 6, infra.
Figure 6. Warhol’s orange silkscreen portrait of Prince superimposed on Goldsmith’s portrait photograph.
Goldsmith notified AWF of her belief that it had infringed her copyright. AWF then sued Goldsmith and her agency for a declaratory judgment of noninfringement or, in the alternative, fair use. Goldsmith counterclaimed for infringement.
The District Court granted summary judgment for AWF. The court considered the four fair use factors enumerated in 17 U.S.C. § 107 and held that the Prince Series works made fair use of Goldsmith’s photograph. As to the first factor, the works were “transformative” because, looking at them and the photograph “side-by-side,” they “have a different character, give Goldsmith’s photograph a new expression, and employ new aesthetics with creative and communicative results distinct from Goldsmith’s.” In particular, the works “can reasonably be perceived to have transformed Prince from a vulnerable, uncomfortable person to an iconic, larger-than-life figure,” such that “each Prince Series work is immediately recognizable as a ‘Warhol’ rather than as a photograph of Prince.” Although the second factor, the nature of Goldsmith’s copyrighted work (creative and unpublished), “would ordinarily weigh in [her] favor … , this factor [was] of limited importance because the Prince Series works are transformative.” The third factor, the amount and substantiality of the portion used in relation to the copyrighted work, favored AWF because, according to the District Court, “Warhol removed nearly all the photograph’s protectible elements in creating the Prince Series.” Finally, the fourth factor likewise favored AWF because “the Prince Series works are not market substitutes that have harmed—or have the potential to harm—Goldsmith.”
The Court of Appeals for the Second Circuit reversed and remanded. It held that all four fair use factors favored Goldsmith. On the first factor, “the purpose and character of the use,” § 107(1), the Court of Appeals rejected the notion that “any secondary work that adds a new aesthetic or new expression to its source material is necessarily transformative.” The question was, instead, “whether the secondary work’s use of its source material is in service of a fundamentally different and new artistic purpose and character.” Such “transformative purpose and character must, at bare minimum, comprise something more than the imposition of another artist’s style on the primary work.” Here, however, “the overarching purpose and function of the two works at issue … is identical, not merely in the broad sense that they are created as works of visual art, but also in the narrow but essential sense that they are portraits of the same person.” The Court of Appeals also rejected the District Court’s logic that “ ‘each Prince Series work’ ” is transformative because it “ ‘is immediately recognizable as a “Warhol,” ’ ” which the Court of Appeals believed would “create a celebrity-plagiarist privilege.”
On the other three factors, the Court of Appeals found that the creative and unpublished nature of Goldsmith’s photograph favored her, that the amount and substantiality of the portion taken (here, “the ‘essence’ ” of the photograph) was not reasonable in relation to the purpose of the use, id., at 45–47; and that AWF’s commercial licensing encroached on Goldsmith’s protected market to license her photograph “to publications for editorial purposes and to other artists to create derivative works,” id., at 48–51. The court noted that there was “no material dispute that both Goldsmith and AWF have sought to license (and indeed have successfully licensed) their respective depictions of Prince to popular print magazines to accompany articles about him.”
Finally, although the District Court had not reached the issue, the Court of Appeals rejected AWF’s argument that the Prince Series works were not substantially similar to Goldsmith’s photograph.
Judge Jacobs concurred. He stressed that the Court of Appeals’ holding “d[id] not consider, let alone decide, whether the infringement here encumbers the original Prince Series works.” Instead, “the only use at issue” was “the Foundation’s commercial licensing” of images of the Prince Series.
II
AWF does not challenge the Court of Appeals’ holding that Goldsmith’s photograph and the Prince Series works are substantially similar. The question here is whether AWF can defend against a claim of copyright infringement because it made “fair use” of Goldsmith’s photograph. 17 U.S.C. § 107.
Although the Court of Appeals analyzed each fair use factor, the only question before this Court is whether the court below correctly held that the first factor, “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes,” § 107(1), weighs in Goldsmith’s favor. AWF contends that the Prince Series works are “transformative,” and that the first factor therefore weighs in its favor, because the works convey a different meaning or message than the photograph. The Court of Appeals erred, according to AWF, by not considering that new expression.
But the first fair use factor instead focuses on whether an allegedly infringing use has a further purpose or different character, which is a matter of degree, and the degree of difference must be weighed against other considerations, like commercialism. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994). Although new expression may be relevant to whether a copying use has a sufficiently distinct purpose or character, it is not, without more, dispositive of the first factor.
Here, the specific use of Goldsmith’s photograph alleged to infringe her copyright is AWF’s licensing of Orange Prince to Condé Nast. As portraits of Prince used to depict Prince in magazine stories about Prince, the original photograph and AWF’s copying use of it share substantially the same purpose. Moreover, the copying use is of a commercial nature. Even though Orange Prince adds new expression to Goldsmith’s photograph, as the District Court found, this Court agrees with the Court of Appeals that, in the context of the challenged use, the first fair use factor still favors Goldsmith.
A
The Copyright Act encourages creativity by granting to the author of an original work a bundle of exclusive rights. The Act, however, reflects a balance of competing claims upon the public interest: Creative work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of promoting broad public availability of literature, music, and the other arts. Copyright thus trades off the benefits of incentives to create against the costs of restrictions on copying. The Act, for example, limits the duration of copyright, §§ 302–305, as required by the Constitution; makes facts and ideas uncopyrightable, § 102; and limits the scope of copyright owners’ exclusive rights, §§ 107–122.
This balancing act between creativity and availability (including for use in new works) is reflected in one such limitation, the defense of “fair use.”
The fair use doctrine “permits courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.” Stewart v. Abend, 495 U.S. 207, 236 (1990) (internal quotation marks omitted). The Act’s fair use provision, in turn, “set[s] forth general principles, the application of which requires judicial balancing, depending upon relevant circumstances.” Google LLC v. Oracle America, Inc., 141 S.Ct. 1183, 1197 (2021). Because those principles apply across a wide range of copyrightable material, from books to photographs to software, fair use is a flexible concept, and its application may well vary depending on context. For example, in applying the fair use provision, copyright’s protection may be stronger where the copyrighted material … serves an artistic rather than a utilitarian function.
1
The first fair use factor is “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” § 107(1). This factor considers the reasons for, and nature of, the copier’s use of an original work. The “central” question it asks is “whether the new work merely ‘supersede[s] the objects’ of the original creation … (‘supplanting’ the original), or instead adds something new, with a further purpose or different character.” Campbell, 510 U.S. at 579. In that way, the first factor relates to the problem of substitution—copyright’s bête noire. The use of an original work to achieve a purpose that is the same as, or highly similar to, that of the original work is more likely to substitute for, or supplant, the work.
Consider the “purposes” listed in the preamble paragraph of § 107: “criticism, comment, news reporting, teaching …, scholarship, or research.” Although the examples given are “ ‘illustrative and not limitative,’ ” they reflect “the sorts of copying that courts and Congress most commonly ha[ve] found to be fair uses,” and so may guide the first factor inquiry. Campbell, 510 U.S. at 577–578 (quoting § 101). As the Court of Appeals observed, the “examples are easily understood,” as they contemplate the use of an original work to “serv[e] a manifestly different purpose from the [work] itself.” 11 F.4th at 37. Criticism of a work, for instance, ordinarily does not supersede the objects of, or supplant, the work. Rather, it uses the work to serve a distinct end.
Not every instance will be clear cut, however. Whether a use shares the purpose or character of an original work, or instead has a further purpose or different character, is a matter of degree. Most copying has some further purpose, in the sense that copying is socially useful ex post. Many secondary works add something new. That alone does not render such uses fair. Rather, the first factor (which is just one factor in a larger analysis) asks “whether and to what extent” the use at issue has a purpose or character different from the original. Campbell, 510 U.S. at 579 (emphasis added). The larger the difference, the more likely the first factor weighs in favor of fair use. The smaller the difference, the less likely.
A use that has a further purpose or different character is said to be “ ‘transformative.’ ” Ibid. (quoting P. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1111 (1990) (hereinafter Leval)). As before, “transformativeness” is a matter of degree. See Campbell, 510 U.S. at 579. That is important because the word “transform,” though not included in § 107, appears elsewhere in the Copyright Act. The statute defines derivative works, which the copyright owner has “the exclusive righ[t]” to prepare, § 106(2), to include “any other form in which a work may be recast, transformed, or adapted,” § 101. In other words, the owner has a right to derivative transformations of her work. Such transformations may be substantial, like the adaptation of a book into a movie. To be sure, this right is “[s]ubject to” fair use. § 106; see also § 107. The two are not mutually exclusive. But an overbroad concept of transformative use, one that includes any further purpose, or any different character, would narrow the copyright owner’s exclusive right to create derivative works. To preserve that right, the degree of transformation required to make “transformative” use of an original must go beyond that required to qualify as a derivative.
For example, this Court in Campbell considered whether parody may be fair use. In holding that it may, the Court explained that “parody has an obvious claim to transformative value” because “it can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one.” The use at issue in Campbell was 2 Live Crew’s copying of certain lyrics and musical elements from Roy Orbison’s song, “Oh, Pretty Woman,” to create a rap derivative titled “Pretty Woman.” Without a doubt, 2 Live Crew transformed Orbison’s song by adding new lyrics and musical elements, such that “Pretty Woman” had a new message and different aesthetic than “Oh, Pretty Woman.” Indeed, the whole genre of music changed from rock ballad to rap. That was not enough for the first factor to weigh in favor of fair use, however. The Court found it necessary to determine whether 2 Live Crew’s transformation of Orbison’s song rose to the level of parody, a distinct purpose of commenting on the original or criticizing it.
Distinguishing between parody (which targets an author or work for humor or ridicule) and satire (which ridicules society but does not necessarily target an author or work), the Court further explained that “[p]arody needs to mimic an original to make its point, and so has some claim to use the creation of its victim’s (or collective victims’) imagination, whereas satire can stand on its own two feet and so requires justification for the very act of borrowing.” More generally, when “commentary has no critical bearing on the substance or style of the original composition, … the claim to fairness in borrowing from another’s work diminishes accordingly (if it does not vanish), and other factors, like the extent of its commerciality, loom larger.”
This discussion illustrates two important points: First, the fact that a use is commercial as opposed to nonprofit is an additional element of the first factor. The commercial nature of the use is not dispositive. But it is relevant. As the Court explained in Campbell, it is to be weighed against the degree to which the use has a further purpose or different character.
Second, the first factor also relates to the justification for the use. In a broad sense, a use that has a distinct purpose is justified because it furthers the goal of copyright, namely, to promote the progress of science and the arts, without diminishing the incentive to create. A use that shares the purpose of a copyrighted work, by contrast, is more likely to provide the public with a substantial substitute for matter protected by the copyright owner’s interests in the original work or derivatives of it, which undermines the goal of copyright.
In a narrower sense, a use may be justified because copying is reasonably necessary to achieve the user’s new purpose. Parody, for example, “needs to mimic an original to make its point.” Campbell. Similarly, other commentary or criticism that targets an original work may have compelling reason to “ ‘conjure up’ ” the original by borrowing from it. An independent justification like this is particularly relevant to assessing fair use where an original work and copying use share the same or highly similar purposes, or where wide dissemination of a secondary work would otherwise run the risk of substitution for the original or licensed derivatives of it.
In sum, the first fair use factor considers whether the use of a copyrighted work has a further purpose or different character, which is a matter of degree, and the degree of difference must be balanced against the commercial nature of the use. If an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copying.
2
The fair use provision, and the first factor in particular, requires an analysis of the specific “use” of a copyrighted work that is alleged to be “an infringement.” § 107. The same copying may be fair when used for one purpose but not another. See Campbell, 510 U.S. at 585 (contrasting the use of a copyrighted work “to advertise a product, even in a parody,” with “the sale of a parody for its own sake, let alone one performed a single time by students in school”); Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984) (contrasting the recording of TV “for a commercial or profit-making purpose” with “private home use”).
Here, Goldsmith’s copyrighted photograph has been used in multiple ways: After Goldsmith licensed the photograph to Vanity Fair to serve as an artist reference, Warhol used the photograph to create the Vanity Fair illustration and the other Prince Series works. Vanity Fair then used the photograph, pursuant to the license, when it published Warhol’s illustration in 1984. Finally, AWF used the photograph when it licensed an image of Warhol’s Orange Prince to Condé Nast in 2016. Only that last use, however, AWF’s commercial licensing of Orange Prince to Condé Nast, is alleged to be infringing. We limit our analysis accordingly.10 In particular, the Court expresses no opinion as to the creation, display, or sale of any of the original Prince Series works.
A typical use of a celebrity photograph is to accompany stories about the celebrity, often in magazines. For example, Goldsmith licensed her photographs of Prince to illustrate stories about Prince in magazines such as Newsweek, Vanity Fair, and People. She even licensed her photographs for that purpose after Prince died in 2016. A photographer may also license her creative work to serve as a reference for an artist, like Goldsmith did in 1984 when Vanity Fair wanted an image of Prince created by Warhol to illustrate an article about Prince. As noted by the Court of Appeals, Goldsmith introduced “uncontroverted” evidence “that photographers generally license others to create stylized derivatives of their work in the vein of the Prince Series.” In fact, Warhol himself paid to license photographs for some of his artistic renditions. Such licenses, for photographs or derivatives of them, are how photographers like Goldsmith make a living. They provide an economic incentive to create original works, which is the goal of copyright.
In 2016, AWF licensed an image of Orange Prince to Condé Nast to appear on the cover of a commemorative edition magazine about Prince. The edition, titled “The Genius of Prince,” celebrates the life and work of “Prince Rogers Nelson, 1958–2016.” It is undisputed here that the edition is “devoted to Prince.” In addition to AWF’s image on the cover, the magazine contains numerous concert and studio photographs of Prince. In that context, the purpose of the image is substantially the same as that of Goldsmith’s photograph. Both are portraits of Prince used in magazines to illustrate stories about Prince. Such “environment[s] are not “distinct and different.” Google, 141 S.Ct. at 1203. AWF’s licensing of the Orange Prince image thus “ ‘supersede[d] the objects,’ ” Campbell, 510 U.S. at 579, i.e., shared the objectives, of Goldsmith’s photograph, even if the two were not perfect substitutes.
The use also “is of a commercial nature.” § 107(1). Just as Goldsmith licensed her photograph to Vanity Fair for $400, AWF licensed Orange Prince to Condé Nast for $10,000. The undisputed commercial character of AWF’s use, though not dispositive, tends to weigh against a finding of fair use.
Taken together, these two elements—that Goldsmith’s photograph and AWF’s 2016 licensing of Orange Prince share substantially the same purpose, and that AWF’s use of Goldsmith’s photo was of a commercial nature—counsel against fair use, absent some other justification for copying. That is, although a use’s transformativeness may outweigh its commercial character, here, both elements point in the same direction.
The foregoing does not mean, however, that derivative works borrowing heavily from an original cannot be fair uses. In Google, the Court suggested that “[a]n ‘artistic painting’ might, for example, fall within the scope of fair use even though it precisely replicates a copyrighted ‘advertising logo to make a comment about consumerism.’ ” 141 S.Ct. at 1203 (quoting 4 M. Nimmer & D. Nimmer, Copyright § 13.05[A][1][b] (2019), in turn quoting N. Netanel, Making Sense of Fair Use, 15 Lewis & Clark L. Rev. 715, 746 (2011) (some internal quotation marks omitted)). That suggestion refers to Warhol’s works that incorporate advertising logos, such as the Campbell’s Soup Cans series. See fig. 7, infra.
Figure 7. A print based on the Campbell’s soup can, one of Warhol’s works that replicates a copyrighted advertising logo.
Yet not all of Warhol’s works, nor all uses of them, give rise to the same fair use analysis. In fact, Soup Cans well illustrates the distinction drawn here. The purpose of Campbell’s logo is to advertise soup. Warhol’s canvases do not share that purpose. Rather, the Soup Cans series uses Campbell’s copyrighted work for an artistic commentary on consumerism, a purpose that is orthogonal to advertising soup. The use therefore does not supersede the objects of the advertising logo.
Moreover, a further justification for Warhol’s use of Campbell’s logo is apparent. His Soup Cans series targets the logo. That is, the original copyrighted work is, at least in part, the object of Warhol’s commentary. It is the very nature of Campbell’s copyrighted logo—well known to the public, designed to be reproduced, and a symbol of an everyday item for mass consumption—that enables the commentary. Hence, the use of the copyrighted work not only serves a completely different purpose, to comment on consumerism rather than to advertise soup, it also “conjures up” the original work to “she[d] light” on the work itself, not just the subject of the work. Campbell. Here, by contrast, AWF’s use of Goldsmith’s photograph does not target the photograph, nor has AWF offered another compelling justification for the use.
B
AWF contends, however, that the purpose and character of its use of Goldsmith’s photograph weighs in favor of fair use because Warhol’s silkscreen image of the photograph, like the Campbell’s Soup Cans series, has a new meaning or message. The District Court, for example, understood the Prince Series works to portray Prince as “an iconic, larger-than-life figure.” AWF also asserts that the works are a comment on celebrity. In particular, “Warhol’s Prince Series conveys the dehumanizing nature of celebrity.” According to AWF, that new meaning or message, which the Court of Appeals ignored, makes the use “transformative” in the fair use sense. We disagree.
1
Campbell did describe a transformative use as one that “alter[s] the first [work] with new expression, meaning, or message.” That description paraphrased Judge Leval’s law review article, which referred to “new information, new aesthetics, new insights and understandings.” But Campbell cannot be read to mean that § 107(1) weighs in favor of any use that adds some new expression, meaning, or message.
Otherwise, “transformative use” would swallow the copyright owner’s exclusive right to prepare derivative works. Many derivative works, including musical arrangements, film and stage adaptions, sequels, spinoffs, and others that “recast, transfor[m] or adap[t]” the original, § 101, add new expression, meaning or message, or provide new information, new aesthetics, new insights and understandings. That is an intractable problem for AWF’s interpretation of transformative use. The first fair use factor would not weigh in favor of a commercial remix of Prince’s “Purple Rain” just because the remix added new expression or had a different aesthetic. A film or musical adaptation, like that of Alice Walker’s The Color Purple, might win awards for its “significant creative contribution”; alter the meaning of a classic novel; and add “important new expression,” such as images, performances, original music, and lyrics. But that does not in itself dispense with the need for licensing.
Campbell is again instructive. 2 Live Crew’s version of Orbison’s song easily conveyed a new meaning or message. It also had a different aesthetic. Yet the Court went further, examining whether and to what extent 2 Live Crew’s song had the parodic purpose of “commenting on the original or criticizing it.” Parody is, of course, a kind of message. Moreover, the Court considered what the words of the songs might have meant to determine whether parody “reasonably could be perceived.” But new meaning or message was not sufficient. If it had been, the Court could have made quick work of the first fair use factor. Instead, meaning or message was simply relevant to whether the new use served a purpose distinct from the original, or instead superseded its objects. That was, and is, the “central” question under the first factor.
2
The District Court determined that “[t]he Prince Series works can reasonably be perceived to have transformed Prince from a vulnerable, uncomfortable person to an iconic, larger-than-life figure.”
Granting the District Court’s conclusion that Orange Prince reasonably can be perceived to portray Prince as iconic, whereas Goldsmith’s portrayal is photorealistic, that difference must be evaluated in the context of the specific use at issue. The use is AWF’s commercial licensing of Orange Prince to appear on the cover of Condé Nast’s special commemorative edition. The purpose of that use is, still, to illustrate a magazine about Prince with a portrait of Prince. Although the purpose could be more specifically described as illustrating a magazine about Prince with a portrait of Prince, one that portrays Prince somewhat differently from Goldsmith’s photograph (yet has no critical bearing on her photograph), that degree of difference is not enough for the first factor to favor AWF, given the specific context of the use.
To hold otherwise would potentially authorize a range of commercial copying of photographs, to be used for purposes that are substantially the same as those of the originals. As long as the user somehow portrays the subject of the photograph differently, he could make modest alterations to the original, sell it to an outlet to accompany a story about the subject, and claim transformative use. Many photographs will be open to various interpretations. A subject as open to interpretation as the human face, for example, reasonably can be perceived as conveying several possible meanings. The application of an artist’s characteristic style to bring out a particular meaning that was available in the photograph is less likely to constitute a “further purpose” as Campbell used the term.
III
Lynn Goldsmith’s original works, like those of other photographers, are entitled to copyright protection, even against famous artists. Such protection includes the right to prepare derivative works that transform the original. The use of a copyrighted work may nevertheless be fair if, among other things, the use has a purpose and character that is sufficiently distinct from the original. In this case, however, Goldsmith’s original photograph of Prince, and AWF’s copying use of that photograph in an image licensed to a special edition magazine devoted to Prince, share substantially the same purpose, and the use is of a commercial nature. AWF has offered no other persuasive justification for its unauthorized use of the photograph. Therefore, the “purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes,” § 107(1), weighs in Goldsmith’s favor.
[Concurring opinion of Justice Gorsuch (in which Justice Jackson joined) and dissenting opinion of Justice Kagan (in which Chief Justice Roberts joined) omitted]
________
Check Your Understanding – Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith
Question 1. According to Warhol, what is the problem with an over-broad concept of transformative use that includes any further purpose, or any different character.
Question 2. According to Warhol, which of the following considerations would tend to justify an otherwise infringing use, and thus weigh in favor fair use?
Question 3. According to Warhol, which of the following considerations would tend toward a finding of fair use when the otherwise infringing use is a derivative work that precisely replicates the original?
Some things to consider when reading Am. Soc’y for Testing & Materials:
- The prevailing party in this case, the accused infringer Public.Resource.Org, was also the prevailing party in the Supreme Court’s 2020 decision in Georgia v. Public.Resource.Org, Inc., which appears in the “government works” subsection of this casebook.
- The court cites Google v. Oracle for the proposition that its analysis of market effects must balance any monetary losses to the copyright holders against any “public benefits” of the copying. This harkens back to the discussion of “productive uses” in Sony.
- Are there any potential negative policy implications of the decision?
- A portion of this decision appears in the remedies section of this casebook.
Am. Soc’y for Testing & Materials v. Public.Resource.Org, Inc.
82 F.4th 1262 (D.C. Cir. 2023)
Katsas, Circuit Judge:
Many private organizations develop and copyright suggested technical standards for an industry, product, or problem. Federal and state governments often incorporate such standards into law. This case presents the question whether third parties may make the incorporated standards available for free online. We hold that the non-commercial dissemination of such standards, as incorporated by reference into law, constitutes fair use and thus cannot support liability for copyright infringement.
I
Three standard-developing organizations raised copyright infringement claims against a defendant for posting online their copyrighted standards, as incorporated into law. The district court granted summary judgment to the organizations, but we reversed and remanded for further factual development. Am. Soc’y for Testing & Materials v. Public.Resource.Org, Inc., 896 F.3d 437 (D.C. Cir. 2018) (ASTM II). On remand, the district court held that the non-commercial posting of standards incorporated by reference into law is fair use.
ASTM II gave detailed background information on standard-developing organizations, incorporation by reference, and the genesis of this dispute. 896 F.3d at 440–45. We give only a brief overview here.
A
Various private organizations promulgate standards establishing best practices for their respective industries or products. These organizations copyright their standards and generate revenue by selling copies. For example, the National Fire Protection Association (NFPA), one plaintiff in this suit, develops standards addressing the prevention of fire, electrical, and related hazards. One such standard, NFPA 10, addresses the design, inspection, maintenance, and testing of portable fire extinguishers. The NFPA sells hard copies of its standards as well as a subscription service that allows digital access.
Federal agencies may incorporate privately developed standards into law by referencing them in agency rulemaking. Incorporation by reference (IBR) in a published rule allows agencies to satisfy the requirement to publish rules in the Federal Register without reproducing the standards themselves. 5 U.S.C. § 552(a)(1). The Code of Federal Regulations contains more than 27,000 incorporations of privately developed standards by reference. See Standards Incorporated by Reference Database, Nat’l Inst. of Safety & Tech., https://sibr.nist.gov [perma.cc/W4BN-HLZG] (last visited Aug. 30, 2023). For example, 29 C.F.R. § 1915.507(b)(1) requires shipyard operators to select, maintain, and test portable fire extinguishers in accordance with NFPA 10, which is incorporated by reference in 29 C.F.R. § 1915.5(i)(6). States and municipalities also have incorporated thousands of standards by reference into their regulations.
Congress has authorized and encouraged the use of IBR because it allows agencies to avoid duplication of effort and helps conform legal standards to industry best practices. See, e.g., National Technology Transfer and Advancement Act of 1995, Pub. L. No. 104-113, § 12(d)(1), 110 Stat. 775, 783. The Office of the Federal Register has promulgated regulations and guidance governing the IBR process. See 1 C.F.R. §§ 51.1–11. As its IBR Handbook explains, “the legal effect of IBR is that the referenced material is treated as if it were published in the Federal Register and the CFR. When IBRed, this material has the force and effect of law.”
B
The plaintiffs in this case are three standard-developing organizations: the American Society for Testing and Materials (ASTM), the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE), and the NFPA. The defendant, Public.Resource.Org, is a non-profit group that disseminates legal and other materials. It has posted on its websites copies of hundreds of incorporated standards—including standards produced and copyrighted by the plaintiffs. As a result, any internet user may view, download, or print these standards for free.
In 2013, the plaintiffs sued Public Resource for copyright infringement. The plaintiffs moved for summary judgment on their claims as to nine of the disputed standards. The district court granted the motion and enjoined Public Resource from posting these standards. The court rejected a defense that posting incorporated standards constitutes fair use. ASTM v. Public.Resource.Org, Inc., No. 13-cv-1215, 2017 WL 473822 (D.D.C. Feb. 2, 2017) (ASTM I).
This Court reversed and remanded for further consideration of the fair-use defense. We faulted the parties for failing to distinguish among the disputed standards in conducting the fair-use analysis, and we instructed the parties on remand to “develop a fuller record regarding the nature of each of the standards at issue, the way in which they are incorporated, and the manner and extent to which they were copied.” We provided several guideposts for the fair-use analysis, three of which tended to favor the defense. But given the differences among the disputed standards and the thinness of the record before us, we thought it prudent to remand the case for the district court to further develop the factual record and weigh the factors as applied to Public Resource’s use of each standard in the first instance.
On remand, the parties developed more information about 217 incorporated standards. Each of them has been superseded as a recommended industry standard, yet most remain incorporated into law. On cross-motions for summary judgment, the district court held that the posting of 184 standards was fair use, the posting of 32 standards was not fair use, and the posting of one standard was fair use in part. ASTM v. Public.Resource.Org, Inc., 597 F. Supp. 3d 213 (D.D.C. 2022) (ASTM III). In a nutshell, the court found fair use as to the posting of standards incorporated into law and infringement as to the standards not so incorporated. The court’s opinion included a 187-page, single-spaced appendix separately analyzing each of the disputed standards. Despite finding infringement as to the unincorporated standards, the court denied injunctive relief based on its finding that Public Resource intends to post only incorporated standards and thus would voluntarily take down unincorporated ones in response to an infringement determination.
The plaintiffs appealed, but Public Resource did not.
II
Fair use is an affirmative defense to a claim of copyright infringement. Originally a creature of common law, it is now codified at 17 U.S.C. § 107, which provides:
[T]he fair use of a copyrighted work … for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
Fair-use analysis is highly fact-intensive, and the four enumerated factors are not exclusive.
The district court separately analyzed the four factors for each of the 217 standards at issue, but its bottom line was straightforward: Public Resource’s copying of material incorporated by reference into law, for free dissemination to the public, was fair use. We agree.
A
1
The first three factors strongly support holding that Public Resource’s posting of incorporated standards was fair use, as our opinion in ASTM II suggested.
The first factor is “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” 17 U.S.C. § 107(1). This factor “focuses on whether an allegedly infringing use has a further purpose or different character, which is a matter of degree, and the degree of difference must be weighed against other considerations, like commercialism.” Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023). It supports the defense here for two reasons.
First, Public Resource’s use is for nonprofit, educational purposes. In ASTM II, we held that Public Resource—which disseminates the disputed materials for free—is engaged in a nonprofit as opposed to commercial use. Since then, the Supreme Court confirmed the importance of that conclusion: “There is no doubt that a finding that copying was not commercial in nature tips the scales in favor of fair use.” Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183, 1204 (2021).
Second, Public Resource’s use is transformative because it serves a different purpose than the plaintiffs’ works. In Warhol, the Supreme Court stressed that “the first factor … asks whether and to what extent the use at issue has a purpose or character different from the original.” The plaintiffs seek to advance science and industry by producing standards reflecting industry or engineering best practices. For example, ASHRAE says its mission is to “advance the arts and sciences of heating, ventilation, air conditioning and refrigeration to serve humanity and promote a sustainable world.” Public Resource’s mission in republishing the standards is very different—to provide the public with a free and comprehensive repository of the law. This distinction is fundamental: Public Resource publishes only what the law is, not what industry groups may regard as current best practices. And although the standards at issue have been superseded or withdrawn as private standards, they remain important to someone trying to figure out what the law is (or, in the case of standards prospectively repealed or amended as law, what law governs disputes about past conduct).
The distinction between standards as best practices and standards as law matters even though Public Resource does not alter or add to the standards. A secondary work can be transformative in function or purpose without altering or actually adding to the original work. Consider news reporters, who must faithfully reproduce an original work without alteration. A reporter’s message (“this is what they said”) is very different from the original message (“this is what you should believe”). The same principle applies here: Public Resource’s message (“this is the law”) is very different from the plaintiffs’ message (“these are current best practices for the engineering of buildings and products”).
The second fair-use factor is “the nature of the copyrighted work.” 17 U.S.C. § 107(2). It “calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied.” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 586 (1994). Application of this factor often depends on whether the work is factual or fictional, for the law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy.
This factor strongly supports a finding of fair use. Standards fall at the factual end of the fact-fiction spectrum, which counsels in favor of finding fair use. Moreover, legal text falls plainly outside the realm of copyright protection. And because incorporated standards have legal force, they too fall, at best, at the outer edge of copyright’s protective purposes. Finally, 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. Following this guidance, the district court correctly concluded that if a standard is incorporated into law without limitation, the result is virtually indistinguishable from a situation in which the standard had been expressly copied into law, so the second factor thus weighs heavily in favor of fair use.
The third fair-use factor considers “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” 17 U.S.C. § 107(3). It turns on whether the extent of the copying is “reasonable in relation to the purpose of the copying.” Campbell, 510 U.S. at 586. Public Resource’s copying must be considered in light of its purpose of informing the public about the specific incorporation at issue.
This factor strongly supports fair use because the standards at issue have been incorporated and thus have the force of law. Public Resource posts standards that government agencies have incorporated into law—no more and no less. If an agency has given legal effect to an entire standard, then its entire reproduction is reasonable in relation to the purpose of the copying, which is to provide the public with a free and comprehensive repository of the law. Given the “nature” of the works at issue, “the fact that the entire work is reproduced does not have its ordinary effect of militating against a finding of fair use.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 449–50 (1984).
2
The plaintiffs make two principal objections to this analysis of the first three fair-use factors.
First, they argue that the district court ignored important differences among three different categories of incorporated text. The first category includes portions of standards essential to comprehending legal duties—for example, NFPA 10’s provision for portable fire extinguishers to be inspected monthly, given the federal regulation requiring shipyard operators to follow that standard, 29 C.F.R. § 1915.507(b)(1). The second category includes standards prescribing how compliance may be assessed, also known as reference procedures. For example, 40 C.F.R. § 86.113-04(a)(1) states that the maximum permissible lead content in certain gasoline is 0.05 grams of lead per gallon as measured by the test procedure in ASTM D3237, which is incorporated by reference. The third category includes material that does not directly prescribe necessary or sufficient conditions for complying with a legal duty—introductory or background material, for example, along with material addressing contexts other than the focus of the incorporating regulation. For example, a regulation governing the operation of veterans’ cemeteries incorporates NFPA 101 by reference and requires covered cemeteries to meet the standard’s applicable architectural and structural requirements. 38 C.F.R. § 39.63(a)(1). Yet NFPA 101 also provides standards for houses, schools, and many other kinds of structures.
The plaintiffs argue that under ASTM II, Public Resource may copy the first category of material but not the other two. In ASTM II, we did stress that material in the first category has the strongest claim to fair use. But we did not hold that material in the other categories has no such claim. Rather, we explained that, if an entity is “distributing copies of the law for purposes of facilitating public access,” the most important question is what material counts as “law.” And all material that has been validly incorporated by reference carries the force of law and is treated as having been published in the Federal Register and Code of Federal Regulations, regardless of where it falls among the three categories. See 5 U.S.C. § 552(a)(1).
Moreover, because law is interpreted contextually, even explanatory and background material will aid in understanding and interpreting legal duties—especially when the promulgating agency references it. Courts routinely consult congressional findings, statements of purpose, and other background material enacted by Congress to decipher the meaning of ambiguous statutory provisions. See A. Scalia & B. Garner, Reading Law: The Interpretation of Legal Texts 218 (2012). The introductory and background material of an incorporated standard—along with rules addressing how the standard operates in other contexts besides the one directly at issue—may prove similarly important for resolving ambiguities in the portions of standards that set forth the directly binding legal obligations.
The plaintiffs argue that, because they make standards available for free in online reading rooms, Public Resource’s use cannot be transformative. Yet all but one of these rooms opened after Public Resource began posting incorporated standards. Moreover, the plaintiffs’ reading rooms do not provide equivalent or even convenient access to the incorporated standards. Among other things, text is not searchable, cannot be printed or downloaded, and cannot be magnified without becoming blurry. Often, a reader can view only a portion of each page at a time and, upon zooming in, must scroll from right to left to read a single line of text. Public Resource’s postings suffer from none of these shortcomings.
B
The fourth fair-use factor is “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4).
The plaintiffs press heavily on what seems to be a common-sense inference: If users can download an identical copy of an incorporated standard for free, few will pay to buy the standard. Despite its intuitive appeal, this argument overlooks the fact that the plaintiffs regularly update their standards—including all 185 standards at issue in this appeal. And regulators apparently are much less nimble in updating the incorporations. So, many of the builders, engineers, and other regular consumers of the plaintiffs’ standards may simply purchase up-to-date versions as a matter of course. Moreover, some evidence casts doubt on the plaintiffs’ claims of significant market injury. Public Resource has been posting incorporated standards for fifteen years. Yet the plaintiffs have been unable to produce any economic analysis showing that Public Resource’s activity has harmed any relevant market for their standards. To the contrary, ASTM’s sales have increased over that time; NFPA’s sales have decreased in recent years but are cyclical with publications; and ASHRAE has not pointed to any evidence of its harm.
The plaintiffs’ primary evidence of harm is an expert report opining that Public Resource’s activities could put the plaintiffs’ revenues at risk. Yet although the report qualitatively describes harms the plaintiffs could suffer, it makes no serious attempt to quantify past or future harms. We find it telling that the plaintiffs do not provide any quantifiable evidence, and instead rely on conclusory assertions and speculation long after Public Resource first began posting the standards.
Finally, our analysis of market effects must balance any monetary losses to the copyright holders against any “public benefits” of the copying. Oracle, 141 S. Ct. at 1206. Thus, even if Public Resource’s postings were likely to lower demand for the plaintiffs’ standards, we would also have to consider the substantial public benefits of free and easy access to the law. As the Supreme Court recently confirmed: “Every citizen is presumed to know the law, and it needs no argument to show that all should have free access” to it. Georgia v. Public.Resource.Org., Inc., 140 S. Ct. 1498 (2020) (cleaned up).
We conclude that the fourth fair-use factor does not significantly tip the balance one way or the other. Common sense suggests that free online access to many of the plaintiffs’ standards would tamp down the demand for their works. But there are reasons to doubt this claim, the record evidence does not strongly support it, and the countervailing public benefits are substantial.
* * * *
In sum, the first three factors under section 107 strongly favor fair use, and the fourth is equivocal. We thus conclude that Public Resource’s non-commercial posting of incorporated standards is fair use.
________
Check Your Understanding – Am. Soc’y for Testing & Materials
Question 1. In Am. Soc’y for Testing & Materials, what was the significance of the “public benefits” that flowed from Public Resource’s copying?
Some things to consider when reading Philpot:
- The defendant in this case, a news website, used a photo that was published on Wikimedia Commons under a Creative Commons license, and the article in which the photo appeared apparently only generated a few dollars of revenue. Why is it being found liable for infringement, and what are the consequences? What could the news website have done differently to avoid all this?
- This case was decided shortly after the Supreme Court decided Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith. Do you think this could have influenced the outcome?
- Why did the court reject the district court’s conclusion that the use of the photo was transformative?
- Note the significance of the court’s presumption that “a cognizable market harm exists when a commercial use is not transformative but instead amounts to mere duplication of the entirety of an original.”
Philpot v. Indep. J. Rev.
92 F.4th 252 (4th Cir. 2024)
WYNN, Circuit Judge:
Photographer Larry Philpot brought a copyright-infringement claim against news website Independent Journal Review (“IJR”) after IJR used his photograph of musician Ted Nugent in an online article. IJR moved for summary judgment, raising the affirmative defense that, pursuant to 17 U.S.C. § 107, its use of the photo constituted “fair use” under the Copyright Act. It alternatively argued that Philpot’s copyright registration was invalid.
Philpot cross-moved for summary judgment, contending in relevant part that his registration was valid and that IJR’s use was not fair use. Although the district court found a dispute of material fact as to whether the copyright registration was valid, it granted summary judgment to IJR on “fair use” grounds. Philpot appeals the denial of summary judgment to him as to the copyright registration and the grant of summary judgment to IJR as to “fair use.”
We conclude that IJR’s use of the photo was not “fair use.” And we conclude that Philpot is entitled to summary judgment on the validity of the copyright registration. Therefore, we reverse and remand for further proceedings consistent with this opinion.
I.
The facts, which are undisputed except as noted, are as follows. Philpot is a professional concert photographer who took a photograph of Nugent performing in July 2013 (the “Photo”). On August 15, 2013, pursuant to the copyright-registration procedure outlined in 17 U.S.C. § 408, Philpot submitted the Photo for registration with the United States Copyright Office as part of a collection of unpublished works. The Copyright Office issued Philpot a registration certificate on August 21, 2013. The next month, Philpot also published the Photo on Wikimedia Commons11 under a Creative Commons license.12 The license specified that anyone could use the Photo for free so long as they provided the following attribution: “Photo Credit: Larry Philpot of www.soundstagephotography.com.”3
Additionally, on August 8, 2013, Philpot entered into a photograph licensing agreement with nonparty AXS TV (“the Agreement”), under which Philpot granted AXS TV a two-year license to inspect at least 1,000 of Philpot’s photos in order to select twelve to curate for licensing. The Agreement provided that AXS TV’s license to the 1,000 photos would become effective upon Philpot’s email delivery of the 1,000 photos to AXS TV. On September 10, 2023, Philpot emailed AXS TV a batch of photos that included the Nugent Photo.
The Agreement provided that AXS TV would pay Philpot a photo licensing fee of $4,500. Philpot also testified in his deposition that his standard photo licensing fee is $3,500. However, in at least one instance, he permitted a magazine to use a photo for free when it was unwilling to pay his “standard fee,” under the condition that it included his desired attribution.
In 2016, IJR posted an article titled “15 Signs Your Daddy Was a Conservative.” Under Sign 5, “He hearts ‘The Nuge’ ”—referring to Ted Nugent—the article featured the Photo. The article did not include the required attribution. Instead, the article contained only a hyperlink to Nugent’s Wikipedia page. Through that link, users could then access the Wiki Commons site where the Photograph was hosted with all the required attribution information. The article generated approximately $2 to $3 in advertising revenue for IJR based on the number of page views it received.
In May 2020, Philpot sued IJR for copyright infringement. IJR moved for summary judgment, raising the affirmative defense of fair use under the Copyright Act pursuant to 17 U.S.C. § 107, and alternatively raising the defense that Philpot’s registration was invalid. For his part, Philpot also moved for partial summary judgment, arguing in relevant part that his registration was valid and that IJR’s use of the photo did not meet the requirements for the application of the fair-use affirmative defense. The district court determined there was a genuine dispute of material fact as to the validity of Philpot’s copyright registration—precluding summary judgment for either party on that issue—but it ultimately granted IJR’s motion for summary judgment on fair-use grounds. It accordingly denied Philpot’s motion for summary judgment. Philpot timely appealed.
III.
We begin with the district court’s determination that IJR was entitled to summary judgment based on fair use. As Philpot is the nonmoving party on this issue, we view the facts and draw all reasonable inferences therefrom in the light most favorable to him.
Section 106 of the Copyright Act grants a bundle of exclusive rights to the owner of the copyright, including the rights to publish, copy, and distribute the author’s work. These rights, however, are subject to a list of statutory exceptions, including the exception for fair use provided in 17 U.S.C. § 107. Fair use is a complete defense to copyright infringement. That is to say, “the fair use of a copyrighted work … is not an infringement of copyright.” (quoting 17 U.S.C. § 107).
To determine whether a secondary use of a copyrighted work constitutes fair use, courts consider four statutory factors: “(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994) (quoting 17 U.S.C. § 107). All four factors must be “explored, and the results weighed together, in light of the purposes of copyright.” Considering these factors in turn, we hold that IJR’s use of Philpot’s Photo did not constitute fair use.
A.
The first fair use factor, the “purpose and character of the use,” requires us to consider whether the secondary use of the Photo was (a) transformative and (b) of a commercial nature or for nonprofit educational purposes. See Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508, 527–33 (2023). While the first fair use factor most clearly weighs in favor of fair use if the use was transformative and noncommercial, “the more transformative the new work, the less will be the significance of other factors, like commercialism.” Campbell, 510 U.S. at 579. Because for the reasons stated below, we believe that IJR’s use was non-transformative and commercial, we conclude that the first factor weighs strongly against fair use.
1.
We first consider whether IJR’s use was transformative. A secondary use is transformative when it has a “further purpose or different character” than the original work. Warhol, 598 U.S. at 525 (quoting Campbell, 510 U.S. at 579, 114 S.Ct. 116 4). The preamble to section 107 of the Copyright Act identifies criticism, comment, and news reporting as examples of transformative uses. Because many secondary works add something new, the determination of transformative use is a matter of degree. Warhol, 598 U.S. at 528–29. The larger the difference, the more likely the first factor weighs in favor of fair use. The smaller the difference, the less likely.
The Supreme Court’s recent opinion in Andy Warhol Foundation for the Visual Arts v. Goldsmith provides helpful guidance. There, photographer Lynn Goldsmith took photos of the entertainer Prince, and subsequently licensed them to magazines to accompany stories about the musician. The prolific visual artist Andy Warhol created a derivative work of one of Goldsmith’s photos, dubbed “Orange Prince.” The Andy Warhol Foundation then licensed Orange Prince to a magazine for the cover of its commemorative edition about Prince. When Goldsmith informed the Foundation that she believed its use of her photograph infringed her copyright, the Foundation sued her.
The Supreme Court granted certiorari to consider the “narrow issue” of whether the first fair use factor weighed in favor of the Foundation. It held that it did not. In so holding, the Court noted that a typical use of a celebrity photograph is to accompany stories about the celebrity. It then held that even if Orange Prince added new expression to the original photo, the magazine’s use was not transformative because the purpose of both works was to illustrate stories about Prince.
Like the magazine’s use of Orange Prince in Warhol, IJR’s use of the Photo was not transformative. Here, as in Warhol, Philpot took the Photo to capture a “portrait” of Nugent, and IJR used the Photo to “depict” the musician. Accordingly, the two uses shared substantially the same purpose. Indeed, IJR has less of a case for “transformative” use than the Andy Warhol Foundation did in Warhol. Unlike the orange dubbing in that case, IJR did not alter or add new expression to the Nugent Photo beyond cropping the negative space:
Original photo
IJR’s use
See also Brammer v. Violent Hues Prods., LLC, 922 F.3d 255, 263 (4th Cir. 2019) (holding a use was not transformative where “[t]he only obvious change [the defendant] made to the Photo’s content was to crop it so as to remove negative space,” which “does not alter the original with ‘new expression, meaning or message.’ ” (quoting Campbell, 510 U.S. at 579)).
The district court found that IJR’s use was transformative because it placed the Photo in a new context, a list of “Signs Your Daddy Was a Conservative.” But that reasoning resembles the argument that this Court rejected in Brammer v. Violent Hues Productions. In that case, a film company used a photo of the Washington, D.C., neighborhood Adams Morgan in an online advertisement for a Virginia film and music festival. The photo was included alongside a list of D.C.-area tourist attractions with the caption “Adams Morgan, DC.” The photographer who shot the photo had originally created it for use as a commercial stock image with the caption “Adams Morgan at Night.” He sued the film company for copyright infringement, and the issue on appeal was whether the fair use defense applied.
This Court held the fair use defense did not apply. In assessing whether the film company’s use was transformative, this Court held that even if a copyrighted work is placed in a “new context to serve a different purpose” than the original work—there, the different purpose of listing tourist attractions for an advertisement—in order to be transformative, “the secondary use still must generate a societal benefit by imbuing the original with new function or meaning.” Because the film company in Brammer “used the Photo expressly for its content—that is, to depict Adams Morgan”—its use did not imbue the photo with a new function or meaning and thus was not transformative. Likewise here, Philpot took the Photo to identify Nugent. IJR used the Photo for precisely the same reason: to depict “The Nuge.” Accordingly, IJR’s secondary use of the Photo did not add new meaning or function that would render its use transformative. Because IJR’s use of the Photo did not add new purpose or meaning, and only minimal alteration, the use was not transformative. This weighs against a finding of fair use.
2.
Having concluded that IJR’s use was non-transformative, we next consider whether the secondary use was of a commercial nature or for nonprofit educational purposes. 17 U.S.C. § 107(1). The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price. Harper & Row, 471 U.S. at 562.
According to IJR’s Financial Interest Disclosure Statement, it is a C corporation, and therefore a for-profit corporation. While IJR does not charge readers to view its articles, it obtains revenue from advertising, and it earned some advertising revenue—albeit only $2 to $3—based on the number of views of the article that used the Photo. Further, IJR’s use of the Photo was exploitative: Philpot licensed the Photo, and IJR did not pay the customary price of direct attribution to Philpot.
To be sure, the article was not especially profitable for IJR. But the salient question is whether IJR stood to profit, not whether it was particularly successful at that venture. Thus, IJR’s use of the Photo was commercial.
Because IJR’s use of the Photo was non-transformative and commercial, the first factor of the fair use analysis counsels strongly against fair use.
B.
The district court made no mention of the second and third factors of the fair use analysis, but both weigh against fair use.
The second fair use factor considers the “nature of the copyrighted work.” 17 U.S.C. § 107(2). In assessing the copyrighted work’s nature, we consider the extent to which it is creative. As a basic matter, photographs are generally viewed as creative, aesthetic expressions and have long received thick copyright protection, even where they capture images of reality and regardless of their publication status. And here, Philpot made several creative choices in capturing the Photo, including selecting the subject matter, angle of photography, exposure, composition, framing, location, and exact moment of creation. Thus, the Photo merits thick copyright protection, and the second factor weighs against fair use.
The third fair use factor considers “the amount and substantiality of the portion used in relation to the copyrighted work as a whole.” 17 U.S.C. § 107(3). This factor weighs against fair use where a significant percentage of the copyrighted work was copied, or where the copied portion essentially was the “heart” of the copyrighted work. Both are true here: IJR copied a significant percentage of the Photo in its article, and it only cropped out the negative space while keeping the Photo’s expressive features, or the “heart” of the work. Thus, the second and third factors weigh against fair use.
C.
The fourth and final factor also weighs against fair use. The fourth factor considers “the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107(4). In analyzing this factor, we 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.
IJR argues that because Philpot permits free use of the Photo, he failed to show any financial harm to the Photo’s potential market. But that argument ignores the general rule that we presume a cognizable market harm exists when a commercial use is not transformative but instead amounts to mere duplication of the entirety of an original. That presumption applies here: IJR made commercial use of the Photo and duplicated the “heart of the work,” while only removing the negative space. As a result, Philpot need not demonstrate that the licensing market for his photo would be depressed should IJR’s behavior become widespread.
Moreover, even though Philpot does not need to make this showing, he has done so here. The evidence viewed in the light most favorable to him reveals that if IJR’s challenged use becomes uninterrupted and widespread, it would adversely affect the “potential market” for the Photo. Philpot is a freelance professional photographer who specializes in capturing musicians in concert. His market is thus the universe of music and celebrity audiences. And IJR’s use was the paradigmatic example of Philpot’s reasonable market: licensing to media outlets. If IJR’s behavior in copying Philpot’s photography to depict musicians for a commercial purpose without payment or attribution became widespread, Philpot’s potential market would likely decrease.
Certainly, Philpot offers the use of some photos in exchange for nothing more than proper attribution. But “[t]he copyright law does not require a copyright owner to charge a fee for the use of his works[;] … the owner of a copyright may well have economic or noneconomic reasons for permitting certain kinds of copying to occur without receiving direct compensation from the copier.” Sony, 464 U.S. at 447 n.28. Moreover, Philpot has introduced evidence that his standard licensing fee is $3,500, and that AXS TV paid Philpot $4,500 to license his photos, including the Nugent Photo. Philpot, then, relies on attributions or payments from users of his images to sustain himself in the world of concert photography. This factor, like the preceding factors, thus weighs against fair use.
In sum, all four factors weigh against a finding of fair use. Therefore, we hold that IJR’s use of the Photo was not fair use and the district court erred in granting summary judgment to IJR on that basis and in denying Philpot’s motion for summary judgment on IJR’s fair use defense.
IV.
[The court held that IJR had not pointed to any inaccuracy in Philpot’s copyright registration, and thus Philpot was entitled to summary judgment on IJR’s defense of copyright invalidity.]
V.
Because IJR’s use of the Photo was not fair use and Philpot’s copyright registration was valid as a matter of law, we reverse the district court’s grant of summary judgment to IJR—and its denial of summary judgment to Philpot—on those issues. We remand for further proceedings consistent with this opinion.
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Check Your Understanding – Philpot
Question 1. In Philpot, why did the Fourth Circuit reject the district court’s conclusion that the use of the photo was transformative?
FOOTNOTES:
1 Eldred v. Ashcroft, 537 U.S. 186, 219–20 (2003).
2 Paul Goldstein, Fair Use in Context, 31 Colum. J.L. & Arts 433, 433 (2008). See also Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 477 (1984) (Justice Blackmun’s dissent pointing out the fair use doctrine’s “absence of clear standards.”).
3 2 Live Crew concedes that it is not entitled to a compulsory license under § 115 because its arrangement changes “the basic melody or fundamental character” of the original. § 115(a)(2).
4 Appendix A exhibits, as an example, a web page that would be revealed to a searcher who entered the phase “fair use,” showing snippets from Alan Latman, Robert A. Gorman, & Jane C. Ginsburg, Copyright for the Eighties (1985).
5 Appendix B exhibits the ngram for the phrase “fair use.”
6 Google contends that Perfect 10’s photographic images are less creative and less deserving of protection than the images of the American West in Kelly because Perfect 10 boasts of its un-retouched photos showing the natural beauty of its models. Having reviewed the record, we conclude that the district court’s finding that Perfect 10’s photographs “consistently reflect professional, skillful, and sometimes tasteful artistry” is not clearly erroneous. We agree with the district court that there is no basis for concluding that photos of the American West are more deserving of protection than photos of nude models.
7 This is the “intermediate copying” – note that Accolade’s employees only used the copied code to create a manual that contained functional descriptions of the interface requirements and did not include any of Sega’s code.
8 The decision discusses other types of code, but the focus of the fair use analysis is the 11,500 lines of declaring code that Google copied from the Sun Java API packages.
9 AWF sold 12 of the works to collectors and galleries, and it transferred custody of the remaining four works to the Andy Warhol Museum in Pittsburgh.
10 Editor’s note: 16 U.S.C. § 106 provides that “[t]he owner of copyright under this title has the exclusive rights to do and to authorize any of the following….” (emphasis added).
11 Wikimedia Commons is a freely licensed media file repository. Any individual can upload a media file—images, sounds, or videos—to the Wikimedia repository for free. Each uploaded media file has its own webpage, akin to its own Wikipedia page. The page contains a notice that any user can then use the media file for free, if they follow the licensing requirements listed on its page.
12 A Creative Commons license is a simple, standardized copyright license that anyone can use to license their work. The copyright holder designates their work as governed by a Creative Commons license, and anyone may use the work provided they adhere to the terms of the license.
