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July 2014: Copyright Litigation Update

July 01, 2014
Business Litigation Reports

Courts Take More Expansive View of Copyright Fair Use. Due to increasing globalization and constant advances in technology, there exists today an unprecedented level of access to copyrightable material, which in turn has led to an ever-evolving copyright landscape. Today, for example, a television show broadcast in the United Kingdom might be watched online in the United States minutes later; an artist might sell her prints around the world through a virtual store; and a recorded audio sound bite from a company’s stockholder meeting might go viral within milliseconds.

While the Copyright Act provides robust protection to authors to help prevent unauthorized copying of their works, Section 107 of the Copyright Act provides that “fair use” of a copyrighted work, such as copying “for purposes such as criticism, comment, news reporting, teaching … , scholarship, or research, is not an infringement.” 17 U.S.C. § 107. In determining whether a use is fair, courts often focus on the first statutory factor: “the purpose and character of the use,” id. § 107(1)—that is, whether the work is being used in a different manner or for a different purpose from the original, and thus is “transformative.” Two recent cases demonstrate how the United States Court of Appeals for the Second Circuit is adopting an increasingly expansive view of the type of uses that are likely to be considered fair.

Last year, in Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013), Prince, an “appropriation artist,” incorporated photographer Cariou’s copyrighted photographs into his own art by tearing the photographs out of a book, pinning them onto pieces of plywood, and altering them in various ways—from merely painting over facial features to largely obscuring the photos themselves. Id. at 699-700. In responding to Cariou’s allegations of copyright infringement, Prince claimed that his uses of the photographs were protected as transformative fair uses. The Second Circuit largely agreed, ruling that most of Prince’s uses were transformative, and thus fair, because he employed “an entirely different aesthetic from Cariou’s photographs,” and his “composition, presentation, scale, color palette, and media are fundamentally different and new compared to the photographs.” Id. at 706.

In finding Prince’s use transformative, the court clarified two important aspects of fair-use analysis. First, the court held that the “law imposes no requirement that a [secondary] work comment on the original or its author in order to be considered transformative,” and that the universe of fair uses is not limited to the examples in the preamble of Section 107. Id. Second, the court ruled that whether a use is transformative is based not on the secondary user’s subjective intent, but rather on how the work “may ‘reasonably be perceived’” by the public—that is, an objective test. Id. at 707. Both of these clarifications serve to broaden the potential universe of acceptable fair use. A secondary use need not make any comment on the original, or even be created with a fair-use intent; rather, any alteration to the expressive content or message of a work, whether intended by the secondary author or not, may be transformative.

Earlier this year, the Second Circuit further expanded the universe of potential fair uses when it found a commercial, non-transformative use to be fair. In Swatch Group Management Services Ltd. v. Bloomberg L.P., 742 F.3d 17 (2d Cir. 2014), amended by --- F.3d ---, 2014 WL 2219162 (2d Cir. May 30, 2014), privately-held media company Bloomberg obtained an unauthorized sound recording of a Swatch Group investor meeting and distributed it to its paying subscribers. Swatch Group alleged that Bloomberg’s dissemination of the sound recording infringed its copyright, while Bloomberg claimed that the dissemination was protected as fair use. The court began by noting that Bloomberg’s purpose “was to make important financial information about Swatch Group available to investors and analysts,” and that “such public dissemination of financial information serves this public purpose in the nature of news reporting,” one of the examples enumerated in Section 107 as consistent with fair use. Id. at *6. Further, the court found that “regardless of how transformative the use is,” the first factor favored fair use for two reasons. Id. at *9. First, “copying the exact spoken performance of Swatch Group’s executives was reasonably necessary to convey their full meaning,” thereby serving “the interest of accuracy, not privacy.” Id. (internal quotation marks omitted). Second, copying “to communicate factual information … in no way diminished Swatch Group’s ability to communicate with analysts, and thus caused no harm to Swatch’s copyright interests.” Id. This ruling further clarifies the important role of fair use in copyright jurisprudence. Even where a secondary use may be commercial and nontransformative, and copies the original in its entirety, it may nonetheless be protected as fair use where an important public purpose is implicated.

Together, these cases suggest that the Second Circuit is moving toward broader acceptance of uses as fair, recognizing that strong copyright protections must give way to legitimate secondary uses that are in the public interest.