commercial use – Techdirt (original) (raw)

Second Circuit Says Libraries Disincentivize Authors To Write Books By Lending Them For Free

from the this-can't-be-right dept

What would you think if an author told you they would have written a book, but they wouldn’t bother because it would be available to be borrowed for free from a library? You’d probably think they were delusional. Yet that argument has now carried the day in putting a knife into the back of the extremely useful Open Library from the Internet Archive.

The Second Circuit has upheld the lower court ruling and found that the Internet Archive’s Open Library is not fair use and therefore infringes on the copyright of publishers (we had filed an amicus brief in support of the Archive asking them to remember the fundamental purpose of copyright law and the First Amendment, which the Court ignored).

Even though this outcome was always a strong possibility, the final ruling is just incredibly damaging, especially in that it suggests that all libraries are bad for authors and cause them to no longer want to write. I only wish I were joking. Towards the end of the ruling (as we’ll get to below) it says that while having freely lent out books may help the public in the “short-term” the “long-term” consequences would be that “**there would be little motivation to produce new works.**”

Which is just all kinds of disconnected from reality. There is not a single person in the world who thinks “well, I would have written this book, except that it would be available for people to borrow for free from a library, so I guess I won’t.” Yet a three-judge panel on the Second Circuit concludes exactly that.

As you’ll recall, the Open Library is no different than a regular library. It obtains books legally (either through purchase or donation) and then lends out one-to-one copies of those books. It’s just that it lends out digital copies of them. To keep it identical to a regular library, it makes sure that only one digital copy can be lent out for every physical copy it holds. Courts have already determined that digitizing physical books is fair use, and the Open Library has been tremendously helpful to all sorts of people.

The only ones truly annoyed by this are the publishers, who have always hated libraries and have long seen the shift to digital as an open excuse to effectively harm libraries. With licensed ebooks, the publishers have jacked up the prices so that (unlike with regular books), the library can’t just buy a single copy from any supplier and lend it out. Rather, publishers have made it prohibitively expensive to get ebook licenses, which come with ridiculous restrictions on how frequently books can be lent and more.

It was clear that the only reason all the big publishers sued the Internet Archive was to put another nail in the coffin of libraries and push to keep this ebook licensing scheme grift going. Now the courts have helped.

This ruling from the Second Circuit pushed back a little bit on one of the most overbroad parts of the district court’s ruling. The judge there seemed to have decided how he was going to rule long before oral arguments even happened, as he published his ruling the very same week as the arguments, and he twisted things to favor the publishers on every single issue, even arguing that because the Internet Archive — a non-profit — asks for donations, that makes everything it does a “commercial activity.” However, this ruling is still really problematic, and arguably in significant conflict with other circuits.

The key part of the case is whether or not the Internet Archive’s scanning and lending of books is fair use. The Second Circuit says that it fails the fair use four factors test. On the question of transformative use, the Internet Archive argued that because it was using technology to make lending of books more convenient and efficient, it was clearly transformative. Unfortunately, the court disagrees:

We conclude that IA’s use of the Works is not transformative. IA creates digital copies of the Works and distributes those copies to its users in full, for free. Its digital copies do not provide criticism, commentary, or information about the originals. Nor do they “add[] something new, with a further purpose or different character, altering the [originals] with new expression, meaning or message.” Campbell, 510 U.S. at 579. Instead, IA’s digital books serve the same exact purpose as the originals: making authors’ works available to read. IA’s Free Digital Library is meant to―and does―substitute for the original Works

The panel is not convinced by the massive change in making physical books digitally lendable:

True, there is some “change” involved in the conversion of print books to digital copies. See Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104, 108 n.2 (2d Cir. 1998) (“[A] change in format . . . is not technically a transformation.”). But the degree of change does not “go beyond that required to qualify as derivative.” Warhol II, 598 U.S. at 529. Unlike transformative works, derivative works “ordinarily are those that re-present the protected aspects of the original work, i.e., its expressive content, converted into an altered form.” Google Books, 804 F.3d at 225. To be transformative, a use must do “something more than repackage or republish the original copyrighted work.” Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 96 (2d Cir. 2014); see also TVEyes, 883 F.3d at 177 (“[A] use of copyrighted material that merely repackages or republishes the original is unlikely to be deemed a fair use.” (internal quotation marks omitted)). Changing the medium of a work is a derivative use rather than a transformative one.

But, that’s not what a derivative work is? A derivative work is not scanning a book. Scanning a book is making a copy. A derivative work is something like making a movie out of a book. So, this analysis is just fundamentally wrong in saying that this is a derivative work, and thus the rest of the analysis is kinda wonky based on that error.

Tragically, the Court then undermines the important ruling in the Betamax/VCR case that found “time shifting” (recording stuff off your TV) to be fair use, even as it absolutely was repackaging the same content for the same purpose. The Court says that doesn’t matter because it “predated our use of the word ‘transformative’ as a term of art.” But that doesn’t wipe out the case as a binding precedent, even though the Court here acts as though it does.

Sony was decided long before modern technology made it possible for one to view virtually any content at any time. Put in context, the “time-shifting” permitted by the defendant’s tape recorders in Sony was a unique efficiency not widely available at the time, and certainly not offered by the plaintiff-television producer.

So because content is more widely available, this kind of shifting is no longer fair use? How does that make any sense at all?

Then the Court says (incorrectly — as we’ll explain shortly) that there’s really nothing new or different about what the Open Library does:

Here, by contrast, IA’s Free Digital Library offers few efficiencies beyond those already offered by Publishers’ own eBooks.

The problem, though, is that this isn’t quite true. Getting licensed ebooks out from libraries is a difficult and cumbersome practice and requires each library to have a vast ebook collection that none can possibly afford. As this lawsuit went down, more and more authors came out of the woodwork, explaining how research they had done for their books was only possible because of the Open Library and would have been impossible via a traditional library given the lending restrictions and availability restrictions.

The amazing writer Annalee Newitz just posted about how their recent (amazing) book on psyops was only possible by using the Open Library. Researcher/writer Molly White talks about how useful the Open Library has been to researchers and Wikipedia editors, enabling them to access content that simply isn’t readily available via regular libraries. As Jennie Rose Halperin wrote for us last year, people use the Open Library differently than regular libraries. The average user checks out a book for just 30 minutes, suggesting that it’s not actually a replacement for traditional libraries, but a useful tool for people who are doing research, as Annalee and Molly suggested with their examples.

It’s just wrong for the panel of judges to insist it’s a one-to-one replacement for libraries in terms of how it’s used by borrowers. And it’s not like libraries were complaining about this either. Libraries have been generally supportive of the Open Library (my local library has their own online catalog linked to the Open Library).

A separate way in which the Open Library is unique is that it allows writers and researchers and, well, anyone, to link directly to books, which is incredibly valuable. But the Court is not impressed, even though it barely goes into any details. It just says: “That authors of online articles may embed links to IA’s Free Digital Library does not render the Library a significantly transformative secondary use of the Works.”

From there, the Court explores whether or not the Internet Archive’s use here was commercial. The lower court said it was because, ridiculously, the Internet Archive had donation links on library pages. Thankfully, the panel here sees how problematic that would be for every non-profit:

We likewise reject the proposition that IA’s solicitation of donations renders its use of the Works commercial. IA does not solicit donations specifically in connection with its digital book lending services―nearly every page on IA’s website contains a link to “Donate” to IA. App’x 6091. Thus, as with its partnership with BWB, any link between the funds IA receives from donations and its use of the Works is too attenuated to render the use commercial. Swatch, 756 F.3d at 83. To hold otherwise would greatly restrain the ability of nonprofits to seek donations while making fair use of copyrighted works. See ASTM I, 896 F.3d at 449 (rejecting the argument that because free distribution of copyrighted industry standards enhanced a nonprofit organization’s fundraising appeal, the use was commercial).

It also disagrees that this use is commercial because there’s a referral link for people to go and buy a copy of the book, saying that’s “too attenuated”:

Any link between the funds IA receives from its partnership with BWB and its use of the Works is too attenuated for us to characterize the use as commercial on that basis

Even so, the lack of commerciality isn’t enough to protect the project on the first factor analysis, and it goes to the publishers.

On the second factor, the nature of the works, the Internet Archive tried to argue that because it was sharing knowledge from non-fiction books, this one should be neutral, favoring neither party. However, the Court says it doesn’t matter. Books are books, and so this also favors the publishers.

On the third factor, the amount shared, many people think this should obviously go to the publishers, given that it’s the entire books that are lent. But in the Google Books and HathiTrust cases, the court had said that this factor just means if the use is copying more than is necessary. Thus it’s okay to copy an entire work, if that’s what is necessary for the fair use in question. As such, it seems like this should go to the Open Library. But the Court sees it differently:

IA’s use is therefore unlike the copying that took place in HathiTrust and Google Books. In those cases, the defendants scanned copyrighted books to create, among other things, searchable databases that allowed users to view snippets of text pertaining to their search terms, or to learn on which pages and with what frequency their search terms appeared in any given book. HathiTrust, 755 F.3d at 91; Google Books, 804 F.3d at 208–10. Though the defendants copied the books in their entirety, doing so was necessary to achieve a transformative, secondary purpose―the searchable databases

This seems fundamentally incorrect. The panel is really incorporating its analysis on the first factor and substituting it for any real analysis on the third. Does the third factor regarding the amount copied differ if it is or is not transformative? Then if a court gets the first factor wrong, then by definition they will also get the third factor wrong, shifting at least half of the factors on that one point. That can’t be how the test is supposed to work.

Then, finally, we have the “impact on the market” question. This and the first factor tend to be the only ones that really matter in these analyses. The Archive insisted that there was no evidence of any actual harm to publishers from the Open Library. But, the panel here says “eh, we’re pretty sure it must harm publishers.”

Here, not only is IA’s Free Digital Library likely to serve as a substitute for the originals, the undisputed evidence suggests it is intended to achieve that exact result. IA copies the Works in full and makes those copies available to the public in their entirety. It does not do this to achieve a transformative secondary purpose, but to supplant the originals. IA itself advertises its digital books as a free alternative to Publishers’ print and eBooks. See, e.g., App’x 6099 (“[T]he Open Libraries Project ensures [libraries] will not have to buy the same content over and over, simply because of a change in format.” (internal quotation marks omitted)); id. at 6100 (marketing the Free Digital Library as a way for libraries to “get free ebooks”); id. at 6099 (“You Don’t Have to Buy it Again!”). IA offers effectively the same product as Publishers―full copies of the Works―but at no cost to consumers or libraries. At least in this context, it is difficult to compete with free.

But again, this analysis totally misses the underlying difference in scanned books vs. actual ebooks. If there’s a licensed ebook available, the experience for reading is way, way better than just dealing with a scan. Publishers absolutely can compete with free in this example.

I believe that the Court here is taking the Archive’s comment about “will not have to buy” completely out of context. Their argument is that when publishers change formats this offers a way to continue lending without having to repurchase content that they’ve already got. It’s the equivalent of the “time shifting” argument that was fair use in Sony, where all they’re doing is effectively shifting formats of content they already have legal access to, which should be fair use.

Furthermore, the Internet Archive presented even stronger evidence of the lack of harm:

IA’s expert, Dr. Rasmus Jørgensen, examined OverDrive checkouts of the Works before, during, and after the National Emergency Library (IA’s COVID-era program pursuant to which it lifted its one-to-one owned-to-loaned ratio, allowing each digital book to be checked out by up to 10,000 users at a time without regard to the corresponding number of physical books in storage or in partner libraries’ possession) to assess potential harm to Publishers’ eBook licensing market. If IA’s lending were indeed a substitute for Publishers’ library eBook licenses, he theorized, then the shutdown of the NEL and reinstitution of IA’s lending controls should correspond to an increase in demand for the Works on OverDrive (the commercial service used by many libraries who license eBooks). But Dr. Jørgensen found the opposite: OverDrive checkouts of the Works decreased following the shutdown of the NEL in June 2020. From this, IA concludes that its lending “has no effect on demand for borrowing on OverDrive” and, therefore, there is “no reason to imagine, much less assume, that digital lending affects Publishers’ ebook license revenue at all.”

[….]

IA also submits the expert report of Dr. Imke Reimers, who examined the effect of IA’s lending on Amazon sales rankings for print copies of the Works. Dr. Reimers analyzed whether Amazon sales rankings changed when IA (1) first added the Work to its Free Digital Library, (2) launched the NEL, or (3) removed the Work from its Free Digital Library in response to this lawsuit. She found “no statistically significant evidence” that either inclusion in IA’s library or increased lending through the NEL harmed print sales rankings on Amazon, and that removal of the Works from IA’s Free Digital Library actually correlated with a decrease in sales rankings of the Works on Amazon. App’x 4934. From this and Dr. Jørgensen’s report, IA concludes that its Free Digital Library has no effect on Publishers’ markets for print and eBooks.

But the Court dismisses both of these, saying that there could be many reasons for the results that have nothing to do with the changes to the Archive’s lending practices. And it says that the Amazon comparison is meaningless because it was about physical books, not ebooks.

So after complaining that this evidence is weak, it accepts the publishers’ argument that they were harmed even though they presented no actual evidence to support that claim. So, weak evidence is no good for the Internet Archive and the publishers get away with presenting no evidence at all.

Although they do not provide empirical data of their own, Publishers assert that they (1) have suffered market harm due to lost eBook licensing fees and (2) will suffer market harm in the future if IA’s practices were to become widespread.

[…..]

We are likewise convinced that “unrestricted and widespread conduct of the sort engaged in by [IA] would result in a substantially adverse impact on the potential market for [the Works in Suit].” Campbell, 510 U.S. at 590 (cleaned up). IA’s Free Digital Library serves as a satisfactory substitute for the original Works. Were we to approve IA’s use of the Works, there would be little reason for consumers or libraries to pay Publishers for content they could access for free on IA’s website. See Warhol I, 11 F.4th at 50. Though Publishers have not provided empirical data to support this observation, we routinely rely on such logical inferences where appropriate in assessing the fourth fair use factor.

Again, this is wrong. I always borrow official ebooks from my library when possible, rather than the Open Library, just because the quality is so much better. I only switch over to the Open Library when such ebooks are not available via my library. But the false assumption, which the Second Circuit buys into, is that there zero difference between the files.

And that’s just fundamentally wrong.

It also seems in pretty direct conflict with what the DC Circuit said last year in the case about whether or not Public Resource could publish standards that have been incorporated into law. In that case, on this fourth factor, they found that just because identical digital copies could be downloaded, it did not mean that the market was negatively impacted. That court noted that the publishers in that case could not show any evidence of harm (indeed, in some cases, their sales had increased).

But this panel brushes that off, saying the burden of proof was on the Archive and it failed, so it doesn’t matter that the publishers offered nothing:

To the extent IA faults Publishers’ lack of empirical data, it forgets the burden of proof. Recall the broader context: Publishers have already established a prima facie case of copyright infringement. The only issue in this appeal is whether IA’s Free Digital Library constitutes a fair use of the Works. “Fair use is an affirmative defense; as such, the ultimate burden of proving that the secondary use does not compete in the relevant market is appropriately borne by the party asserting the defense: the secondary user.” Warhol I, 11 F.4th at 49. While the rightsholder may bear some initial burden of identifying relevant markets, “we have never held that the rightsholder bears the burden of showing actual market harm.” Id. Publishers need not present empirical data of their own in connection with IA’s asserted affirmative defense

Then it goes on to say that the nature of the works is different in that case, but the “nature of the works” is a different factor. So, again, this panel seems to want to keep mixing up the factors.

The final part of the ruling really is a tragic insult to the public. The Internet Archive made a final argument that the library should be allowed to continue given its substantial public benefit. But the Court, ridiculously, claims that the public gets a greater benefit from the library being shut down, and mocks the idea that expanding access to the public is all that important.

Indeed, this next section is going to do tremendous damage to fights for an open internet and against copyright maximalism and how it locks up knowledge. This whole section is basically writing the public benefit out of copyright law, even though benefiting the public is the entire purpose of copyright law. And, on top of it, it argues that libraries disincentivize authors by offering books for free. Which is crazy.

We conclude that both Publishers and the public will benefit if IA’s use is denied.

To be sure, expanding access to knowledge would, in a general sense, benefit the public. But “[a]ny copyright infringer may claim to benefit the public by increasing public access to the copyrighted work.” Harper & Row, 471 U.S. at 569. That does not alone render the infringement lawful. Indeed, the Copyright Act and its empowering constitutional authority reflect a considered judgment that “the Progress of Science and useful Arts” is best promoted by laws that protect authors’ original works and permit authors to set the terms of engagement, at least for a limited time. See Sony, 464 U.S. at 429. Doing so benefits the public “by providing rewards for authorship.” Google Books, 804 F.3d at 212. This monopolistic power is a feature, not a bug, of the Copyright Act.

Within the framework of the Copyright Act, IA’s argument regarding the public interest is shortsighted. True, libraries and consumers may reap some short-term benefits from access to free digital books, but what are the long-term consequences? If authors and creators knew that their original works could be copied and disseminated for free, there would be little motivation to produce new works. And a dearth of creative activity would undoubtedly negatively impact the public. It is this reality that the Copyright Act seeks to avoid.

That bolded line in that paragraph there is exactly what the publishers wanted: a knife in the back of libraries. It’s literally saying “sure, libraries may benefit the public, but if they continue who will continue to write?”

This is completely disconnected from reality. What authors choose not to write because their book is available to be freely borrowed from a library? None. And yet, this is now precedent in the Second Circuit.

It’s a fantasyland claim.

Again, the Open Library works in a manner no different from any regular library from the point of view of a publisher or author. A book is purchased or donated (the publisher and the author therefore get their money) and then it can be lent out. This is literally no different than how an author is compensated from a regular library.

If the bolded comments above are true for the Open Library, they must also be true for a regular library. Yet, I guarantee that not a single author chooses not to write because their books are available in a library to be lent out for free.

This is the part that really destroys me in this ruling. It takes a completely nonsensical claim and insists that it’s true. It’s fantasyland thinking and it effectively puts the knife in the back of libraries.

I imagine the Archive will seek cert at the Supreme Court, but who knows what will happen there. The Supreme Court hasn’t been great on fair use lately. The better answer is that Congress should fix this and make it clear that copyright law blesses this kind of open digital lending, though the copyright industries would throw a shitfit if anyone even dared propose such a bill.

This ruling is a huge loss for public access to knowledge and for libraries.

Filed Under: 2nd circuit, commercial use, controlled digital lending, copyright, fair use, libraries, open library, scanning, transformative use
Companies: hachette, internet archive

Success Kid Says Transformative Use Lives

from the pump-that-fist dept

The recent publication of Griner v. King seems to have just about everything: an iconic meme (Success Kid!), a troll-ish politician, charges of political censorship, and an application of the latest big Supreme Court opinion on fair use, Warhol v. Goldsmith. Oh my!

But the most important thing for friends of fair use to know about this case is that it’s actually totally routine.

On the biggest question of fair use today—will the lower courts continue to preserve fair use rights after _Warhol?_—the opinion faithfully follows the Supreme Court’s lead and applies the same fair use approach that has served us well since 1994: the key question in fair use is whether your use serves a new, socially beneficial purpose relative to the original purpose of the work you’ve used. If it does, then by definition it will not harm the traditional market for the work(s) you use. When the public benefits from a new use, and the copyright holder suffers no cognizable harm, that’s the essence of fair use. If your purpose is more or less the same as the original and it’s for-profit, well… not-so-much.

The transformative test has allowed the blossoming of free expression and innovation in every domain of human endeavor – including documentary film and television, software development, fine art, book publishing, journalism, scholarship, and technology. Those of us who have relied upon and defended fair use in our work were relieved last year when the Supreme Court reiterated its commitment to this framework in its decision in Warhol.

That was not what attorneys for Griner argued, nor is it how Big Content has been spinning Warhol. According to Law 360 (paywalled) during oral arguments at the 8th Circuit:

“[Griner’s attorney Stephen] Doniger told [the court] that Justice Sotomayor’s opinion had made ‘commerciality’ the touchstone of evaluating whether an allegedly infringing use of a copyrighted work is “transformative” and entitled to fair use protection.”

Doniger also filed an amicus brief in Warhol on behalf of the image licensing behemoth Getty Images, among others, and no doubt that was what Getty and others hoped the Warhol court would say. But that’s not actually what happened. And it’s not what the 8th Circuit ruled in Griner v. King.

Instead, the court applied the same principles that have worked so well since Campbell, and that were endorsed once more in Warhol: the commercial nature of a use “is to be weighed against the degree to which the use has a further purpose or different character.” In other words, commerciality is only important if and to the extent that the new user’s purpose is the same or similar to the original work’s purpose. As the Supreme Court recognized in Campbell, nearly every paradigm case of fair use mentioned in the Copyright Act (criticism and commentary, news reporting, even scholarly publishing) is conducted for profit. Commerciality can’t be a litmus test for fair use. In reality, “[T]he 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.” Campbell said this, Warhol reiterated it, and so does Griner.

In Warhol, the Supreme Court found that while the iconic pop artist had certainly added new expression to photographer Lynn Goldsmith’s portrait of Prince, which he used in making his own series of portraits, his purpose in this case was essentially the same as the photographer’s: to create a commercial illustration depicting Prince to be licensed to magazines to accompany coverage of the musician. (Despite his undeniably iconic status as a fine artist, Warhol was an unabashed commercial illustrator throughout his career, and he created these portraits on assignment from Conde Nast in the 1980s.) As Justice Sotomayor explained, Warhol’s use seemed to be an example of “fair use’s bête noire”—commercial substitution.

The King Campaign’s use of the Griner meme was also substitutional, according to the 8th Circuit. The Griners had made lucrative agreements with other commercial brands to use the “Success Kid” image in advertising, the court argued, and this was a reasonable and likely market for a meme image of this kind. Critics can (and do) argue that this is a flawed analysis that may have bad policy outcomes for the use of memes, and that may be true. But what’s most important for the long-term viability of fair use as we have known it since the dawn of the internet age is that these debates are still taking place within the tried-and-true framework of transformative use. The question is not, “Is this use commercial?” but rather “Does it serve a new purpose?” Unlike the 10th Circuit’s bizarre decision in Whyte Monkee (which an en banc rehearing will hopefully roll back), the Griner v. King opinion maintains the integrity of the fair use doctrine.

Brandon Butler is executive director of Re:Create.

Filed Under: andy warhol, commercial use, copyright, fair use, griner v. king, steve king, success kid, transformative use

The Warhol Decision: How SCOTUS Forgot The First Amendment & Turned Copyright Into A Liability Time Bomb

from the an-unfair-decision dept

In his concurrence, Justice Gorsuch called the Supreme Court’s decision last week in the Andy Warhol Foundation v. Goldsmith case a narrow one of statutory interpretation, ostensibly doing nothing more than interpreting the breadth of 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”) the copyright statute lists for determining whether the use of an existing copyrighted work is fair.

But the majority’s decision, written by Justice Sotomayor, was hardly narrow; it was a decision that fundamentally rewrote the operational axis of our current copyright law. As a result, it does enormous damage to expressive freedom while also creating unprecedented and uncontrollable liability risk, even for many who may think they hold currently-valid copyrights. And it threatens to have these seismic effects with essentially no acknowledgement by the Court of this inevitable impact.

It produced this judicial grenade by misreading the statute, mangling prior precedent, and ignoring the logical implications of its analysis. But much boils down to two major errors made by the Court (as well as several other mistakes), which ultimately interrelate: ignoring the role of the First Amendment in tempering the power of copyright, and misunderstanding what “use” is at issue when analyzing fair use.

Case Background

The dispute brought before the Court arose because, back in the early 1980s, photographer Lynn Goldsmith was hired by Newsweek to take pictures of Prince. The magazine ran one of the pictures, but she still retained the copyright in the rest of the pictures she took, including in her studio. One of the latter shots was the product of a reportedly an awkward portrait sitting and led to a photograph of Prince showing him to be a “vulnerable, uncomfortable person.” Nevertheless, years later Vanity Fair licensed it from her to be “an artist reference” for another picture that would run in its magazine. The license she agreed to allowed Vanity Fair to run the resulting image once.

Vanity Fair then hired Andy Warhol to create the adapted image, which he did by creating a silkscreen portrait, altering elements of it in the process.

Warhol cropped the photo, so that Prince’s head fills the whole frame: It thus becomes “disembodied,” as if “magically suspended in space.” Id., at 174. And as before, Warhol converted the cropped photo into a higher-contrast image, incorporated into a silkscreen. That image isolated and exaggerated the darkest details of Prince’s head; it also reduced his “natural, angled position,” presenting him in a more face-forward way. Id., at 223. Warhol traced, painted, and inked, as earlier described. See supra, at 5–6. He also made a second silkscreen, based on his tracings; the ink he passed through that screen left differently colored, out-of-kilter lines around Prince’s face and hair. [Dissent at 7-8]

The final product was a picture that portrayed Prince as an “iconic, larger-than-life figure.” In addition to the purple version that ran in Vanity Fair, he also made 15 others (13 silkscreens, and two pencil sketches), which became well-known and sought-after by other licensees (although to which Goldsmith apparently was unaware). It was the orange version that, nearly twenty years after Warhol’s death, Conde Nast thought best illustrated their article about Prince, following the latter’s death.

And so, in an act that apparently deeply offended the majority, Conde Nast approached the Andy Warhol Foundation (referred to as AWF), which had acquired the copyrights Warhol had in his works after his death, to license his portrayal of Prince, instead of approaching Goldsmith to license hers. After she saw the orange picture on the cover of Conde Nast’s magazine she accused AWF of infringing her copyright. AWF sued for declaratory judgment to get the question settled, arguing that, rather than infringing, the Warhol pictures were a fair use of Goldsmith’s original. The district court found in favor of AWF, but the Second Circuit reversed after reapplying the four-factor test incorporated into the statute. The Supreme Court then took up the case to determine which court got the test right. In its decision it decided that it was the Second Circuit, and in doing so the Supreme Court got things very wrong.

Major error #1: ignoring the First Amendment’s protection of free expression

It is bizarre, in a case about fair use, to not see mentioned, even once, the words “First Amendment” anywhere in any of the 80+ pages of the majority decision, concurrence, or even Justice Kagan’s justifiably outraged dissent. After all, as the Supreme Court has itself observed in other cases, fair use is one of the “accommodations” built into the copyright law to ensure that it does not violate the First Amendment by becoming a law that impinges on free expression. Furthermore, as the dissent reminded, it also helps vindicate the goals and purpose of copyright law to get new creative works by making it possible to produce more creative works.

The law does not grant artists (and authors and composers and so on) exclusive rights—that is, monopolies—for their own sake. It does so to foster creativity—“[t]o promote the [p]rogress” of both arts and science. U. S. Const., Art. I, §8, cl. 8. And for that same reason, the law also protects the fair use of copyrighted material. Both Congress and the courts have long recognized that an overly stringent copyright regime actually “stifle[s]” creativity by preventing artists from building on the work of others. Stewart v. Abend, 495 U. S. 207, 236 (1990) (internal quotation marks omitted); see Campbell, 510 U. S., at 578–579. For, let’s be honest, artists don’t create all on their own; they cannot do what they do without borrowing from or otherwise making use of the work of others. That is the way artistry of all kinds—visual, musical, literary—happens (as it is the way knowledge and invention generally develop). The fair-use test’s first factor responds to that truth: As understood in our precedent, it provides “breathing space” for artists to use existing materials to make fundamentally new works, for the public’s enjoyment and benefit. Id., at 579. In now remaking that factor, and thus constricting fair use’s boundaries, the majority hampers creative progress and undermines creative freedom. [Dissent at 3-4].

Without fair use, copyright can easily become a tool of censorship, where a copyright holder can effectively say no to subsequent expression. And yet such a reality is what this Court now invites, with an obstinate obliviousness, refusing to see (or, as Kagan complains, care) that the Warhol picture did express something new that the original Goldsmith picture did not.

For it is not just that the majority does not realize how much Warhol added; it is that the majority does not care. In adopting that posture of indifference, the majority does something novel (though in law, unlike in art, it is rarely a good thing to be transformative). Before today, we assessed “the purpose and character” of a copier’s use by asking the following question: Does the work “add[] something new, with a further purpose or different character, altering the [original] with new expression, meaning, or message”? Campbell v. Acuff-Rose Music, Inc., 510 U. S. 569, 579 (1994); see Google, 593 U. S., at ___ (slip op., at 24). When it did so to a significant degree, we called the work “transformative” and held that the fair-use test’s first factor favored the copier (though other factors could outweigh that one). But today’s decision—all the majority’s protestations notwithstanding—leaves our first-factor inquiry in shambles. The majority holds that because Warhol licensed his work to a magazine—as Goldsmith sometimes also did—the first factor goes against him. See, e.g., ante, at 35. It does not matter how different the Warhol is from the original photo—how much “new expression, meaning, or message” he added. It does not matter that the silkscreen and the photo do not have the same aesthetic characteristics and do not convey the same meaning. It does not matter that be cause of those dissimilarities, the magazine publisher did not view the one as a substitute for the other. All that matters is that Warhol and the publisher entered into a licensing transaction, similar to one Goldsmith might have done. Because the artist had such a commercial purpose, all the creativity in the world could not save him. [Dissent at 2-3].

As Kagan noted, the majority instead fixated not on the expressive qualities of these works, which fair use is about enabling, but on an artificial definition of a particular market opportunity both the original and later work could conceivably profit from – in this case as pictures a magazine could conceivably license to illustrate an article about Prince.

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. [Majority at 12-13]

In discounting the expressive differences between the two pictures, commerciality has now overtaken expressiveness as the pivot point upon which “fair use” is based, with catastrophic consequences for subsequent expression.

For one thing, it effectively means that expression can only freely be made for free. If expression builds upon a work that came earlier (and, as Kagan reminded in an above excerpt, most new works are likely to in some form), as soon as that new expression is monetized, per this decision the expressive quality of the new work immediately becomes subordinated to that profit motive in assessing whether it constitutes a fair use. Thus expression made for free will be more protected from infringement liability as a fair use than expression made for money, or, to put it another way, monetized expression will be less protected than non-monetized expression. While in certain circumstances commercial speech has been afforded less protection than non-commercial speech, those circumstances are not present here, nor does the majority argue that they are. The Court does not propose that licensed expression is somehow akin, for instance, to an advertisement, which might get less protection than expression without a commercial quality to its message. The problem with this decision, as the dissent complains, is that the Court pays no attention to the actual message in the expression at all. It doesn’t care what it has to say, and its decision sets up a situation where the exact same message gets more or less protection depending on whether it is monetized. It is more akin to a newspaper getting First Amendment protection if it is given away for free, and less if it is sold, but we know from more than 200 years of history that distinction is not something the First Amendment allows. Indeed, how could it, because people often need to be able to profit from their expression in order to continue to be able to produce it. In fact, the importance of monetization is what animates copyright law in the first place, to make sure that people can profit from their expression! And yet, according to the majority, per that same copyright law, if they want to, the law now makes that expression legally vulnerable.

It also means that, while expression made for money may be less constitutionally protected, expression that is not may end up less statutorily protected by the copyright law. The way the majority elevates the fair use inquiry on market impact means that an original work that is not monetized would have less ability to stop a derivative work than one that is. The majority decision sets up the situation where, for example, two photographers could have their works adapted by an artist like Warhol, but the one that commercially licensed theirs would be more able to shut down the later work than the one who didn’t, simply by virtue of potentially incurring a hit to the marketability of their work. Such is the byproduct of subordinating the importance of new meaning to a measure of commercial impact when inquiring into transformativeness.

Ignoring the new expression conveyed by the new work also impacts other expressive interests as well. Conde Nast had a magazine article to illustrate and wanted to find a picture of Prince that best fulfilled its editorial needs. Yet the upshot to the majority decision is that it was apparently not allowed to make that choice. Goldsmith gets to block it, even as the original creation of the Warhol image might still be deemed fair use until the very moment it is licensed. At that point, Goldsmith suddenly is given the power to foreclose the possibility of anyone improving upon the original, no matter how much those improvements add. The majority does not see those limitations as an issue however because it does not seem to see her portrayal as any different than Warhol’s in any meaningful way.

According to the dissent, the fact that a magazine editor might prefer one image to the other must mean the secondary use is transformative, either because it has a different aesthetic or conveys a different message. Post, at 10. […] [T]he editors of People, Rolling Stone, and Time chose a variety of different photos of Prince for their memorial issues. […] Some black and white; some depicting Prince’s “ ‘corporeality’ ”; some “realistic” or “humanistic.” Post, at 9, 16 (KAGAN, J., dissenting). These variations in aesthetics did not stop the photos from serving the same essential purpose of depicting Prince in a magazine commemorating his life and career. [Majority at 23]

In response Kagan wrote that it’s a good thing the majority isn’t in the magazine business, being so dismissive about the need for Conde Nast to have these choices available to it, choices which copyright law is supposed to make possible by encouraging there to be new works saying new things.

Suppose you were the editor of Vanity Fair or Condé Nast, publishing an article about Prince. You need, of course, some kind of picture. An employee comes to you with two options: the Goldsmith photo, the Warhol portrait. Would you say that you don’t really care? That the employee is free to flip a coin? In the majority’s view, you apparently would. Its opinion, as further discussed below, is built on the idea that both are just “portraits of Prince” that may equivalently be “used to depict Prince in magazine stories about Prince.” Ante, at 12–13; see ante, at 22–23, and n. 11, 27, n. 15, 33, 35. All I can say is that it’s a good thing the majority isn’t in the magazine business. Of course you would care! You would be drawn aesthetically to one, or instead to the other. You would want to convey the message of one, or instead of the other. The point here is not that one is better and the other worse. The point is that they are fundamentally different. You would see them not as “substitute[s],” but as divergent ways to (in the majority’s mantra) “illustrate a magazine about Prince with a portrait of Prince.” Ante, at 15, 33; see ante, at 22–23, and n. 11, 27, n. 15, 35. Or else you (like the majority) would not have much of a future in magazine publishing. [Dissent at 10].

Even when the majority does pay lip service to the expressive quality of the second work, it still fatally undervalues the importance of that quality. And part of the problem may be the majority’s fundamental misreading of the statute, where it describes the right of a copyright holder to control the creation of derivative works. The majority notes in passing that this provision is subject to the limitations of the fair use provision. But ultimately it elevates this right of the copyright holder to control above the right of another to transform a work as a fair use.

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. [Majority at 16]

It is true that these provisions are in tension, and that others being able to make fair uses of works can seem to obviate the utility of a right to control derivatives, which is a prospect the majority seems deeply concerned about. But such an outcome is okay, and what the statute says is supposed to happen. It parses out to say that fair use allows for transformative second works, and the derivative right exists to restrain any that are not. And when the fair use provision is read with the First Amendment and its role protecting expression top of mind it makes sense to prioritize these provisions in this way. The majority, however, condemns the dissent for interpreting the statute this way:

The dissent thus misses the forest for a tree. Its single-minded focus on the value of copying ignores the value of original works. It ignores the statute’s focus on the specific use alleged to be infringing. See n. 10, supra. It waves away the statute’s concern for derivative works. Supra, at 28–29, and n. 17. It fails to appreciate Campbell’s nuance. Supra, at 29–30, 34, n. 21. And it disregards this Court’s repeated emphasis on justification. Supra, at 29–30, and n. 18, 34, n. 21. The result of these omissions is an account of fair use that is unbalanced in theory and, perhaps relatedly, in tone. The dissent’s conclusion—that whenever a use adds new meaning or message, or constitutes creative progress in the opinion of a critic or judge, the first fair use factor weighs in its favor—does not follow from its basic premise. Fair use instead strikes a balance between original works and secondary uses based in part on objective indicia of the use’s purpose and character, including whether the use is commercial and, importantly, the reasons for copying. [Majority at 37]

The concurrence further sticks in the knife, ironically complaining that, “We aren’t normally in the business of putting a statute ‘at war with itself'” when its interpretation of how these two provisions play out together does just that.

[T]he copyright statute expressly protects a copyright holder’s exclusive right to create “derivative works” that “transfor[m]” or “adap[t]” his original work. §§101, 106(2). So saying that a later user of a copyrighted work “transformed” its message and endowed it with a “new aesthetic” cannot automatically mean he has made fair use of it. Contra, post, at 1–2, 22–23, 34–36 (KAGAN, J., dissenting). To hold otherwise would risk making a nonsense of the statutory scheme—suggesting that transformative uses of originals belong to the copyright holder (under §106) but that others may simultaneously claim those transformative uses for themselves (under §107). [Concurrence at3]

But it is the dissent that has the better the argument. Copyright law is not supposed to be about the “value” of the original work but about the value in making sure we can get more new works. By dismissing the tempering the First Amendment is supposed to supply to the copyright act via the fair use provision and its focus on new expression, the majority effectively rewrote the statute to make the derivative right the priority, at the expense of the role fair use had to play in making sure more expression is created.

Major error #2: focusing on the wrong use in considering fair use

As discussed above, the consequences of the majority’s indifference to the expressive quality of the second work are plenty significant on their own. But they are especially significant when compounded with the majority’s second error, which the first error seems to have encouraged it to commit by replacing the concerns the Court should have had for whether the second work reflected new expression with the concerns it instead had for whether the second work ever competed monetarily with the first.

In short: it made the majority lose sight of which use it was supposed to care about.

Although the decision regularly (and correctly) acknowledges that fair use is about the “copier’s use” of the original work, it based its analysis on a separate use entirely, and one not even done by the copier himself: the licensing of the subsequent work to Conde Nast. [Majority at 21 (“Only that last use, however, AWF’s commercial licensing of Orange Prince to Condé Nast, is alleged to be infringing.”)]. As the dissent observes, this is not the use the Court is supposed to be looking at, per the statute.

The majority seeks some statutory backing in what it describes as §107’s reference to the “specific ‘use’ ” of a work “alleged to be ‘an infringement.’ ” Ante, at 20; see also ante, at 2, 4 (GORSUCH, J., concurring). Because the challenged use here is a licensing (so says the majority), all that matters is that Goldsmith engaged in similar commercial transactions. But the majority is both rewriting and splicing the statute. The key part of the statute simply asks whether the “use made of a [copyrighted] work” is fair. (The term “alleged infringement,” which the majority banks on, nowhere exists in the text; indeed, all the statute say about infringement, and in a separate sentence, is that a fair use doesn’t count as one.) The statute—that is, the actual one—thus focuses attention on what the copier does with the underlying work. So when the statute more particularly asks (in factor 1) about the “purpose and character of the use”—meaning again, the “use made of [the copyrighted] work”—it is asking to what end, and with what result, the copier made use of the original. And that necessarily involves the issue of transformation—more specifically here, how Warhol’s silkscreen transformed Goldsmith’s photo. [Dissent at 20-21]

Not only did that mistaken focus skew the underlying commerciality analysis the majority relied upon, but the analytical error is one that threatens to invite all sorts of chaos, including for copyright holders.

What the Court has done, effectively, is create a sort of Schrodinger’s Infringement, because in divorcing the fair use analysis from the act of copying the original work, and tying it instead to how the later work is exploited (including through the exercise of the exclusive rights it may be entitled to by its own copyright), the majority has created a situation where the exact same work can either be fair use or infringing depending on how it is used later. Including much later, decades and decades later, and by someone who was not the copier, who may himself be long gone. In the wake of this decision, infringement liability can lay in wait for years and years before the use of a work may trigger it when any of the rights its own copyright provides are exercised. Which does not bode well for any copyright holder of any work that might somehow incorporate something of another that came first – which, as Kagan pointed out, is basically all of them.

The particular facts of this case highlight the problem. Back in the 1980s, everyone relevant to this case was still alive. By 2016, when Conde Nast went to license the Warhol picture, Prince was dead and, more importantly, Warhol himself had been dead for nearly 20 years. Which, importantly, means that it wasn’t he himself trying to license the picture. Instead it was AWF who did. But it also wasn’t AWF who had made the copy of the original work – that was done by Warhol himself.

The Court keeps referring to AWF as Warhol’s “successor-in-interest” but muddles exactly what it is a successor to. In passing, the Court acknowledges that it is effectively the assignee of Warhol’s copyrights (which he can’t own anymore, since he’s not alive). But running through this entire decision is the unstated conclusion by the Court that it was the successor to more than just Warhol’s copyrights; it was the successor to his liability.

And that’s why this case turns copyright law into a ticking liability time bomb for everyone, including copyright holders. Because we’re not talking about a liability model where someone tries to use a work that is always inherently infringing. Indeed, the Court even acknowledges that Warhol’s work might not always be infringing! [Concurrence at 6 (“If, for example, the Foundation had sought to display Mr. Warhol’s image of Prince in a nonprofit museum or a for-profit book commenting on 20th-century art, the purpose and character of that use might well point to fair use.”)]

Instead the majority misinterprets the Campbell case, which addressed the use of the original work in making the follow-on one, to create a species of work that can be created without issue but that subsequently may sometimes be infringing, and then with it a liability model where an assignee of a copyright for one of these sometimes-infringing second works must stand in the shoes of the copier to answer for it. And then give an answer based not upon what the copier thought he was doing in making a copy but in what the later copyright holder intended to do with the work they now own.

And it is not an esoteric species the Court has created. As the dissent drove home, many new works build on something that came before. Which means that these new works, including works original enough to be entitled to their own copyrights (as Warhol’s were!), incorporate something that came before. And if that something was still under copyright, then there is a lurking lawsuit waiting for a use of that second work that happens to compete in the market for the original, and that threat is there for the entire, potentially lengthy duration of its existence. As this case illustrates, such a lawsuit might not strike for decades, including long after any of the relevant people involved may still be alive and able to defend their own transformative uses.

If works can be fair uses one day and infringing years in the future, it creates tremendous uncertainty and deters any follow-on creator from making new works off of previous ones, which fair use is supposed to affirmatively allow and even encourage. The value of any such works they might manage to create would also be less, because they might not be able to exploit them as fully as the statute might otherwise allow if they are effectively barred them from certain markets the original works might occupy. And it would encumber the value of their own copyrights by making them risky for others to acquire if those copyrights may turn out to be a source of liability, thus impacting these creators economically in exactly the same detrimental way that the majority insists copyright is supposed to protect creators from and disincentivizing their creativity. [Dissent at 25 (“So when the majority denies follow-on artists the full reward of their creativity, it diminishes their incentive to create.”)]

These implications are why the statute only makes sense when fair use is an inquiry into the use of the original because that is what we need to know was a fair or infringing use of that original work. And it is also why, first and foremost, we always need to ask what the new work did that the original didn’t. Because if the answer is, like in this case, to say something new that the original did not, then that new meaning will always be present no matter how that work is later used. (In fact, as the dissent argues, it may even be why the second work is used.)

It is also why the majority focusing on the wrong use so doomed this case. What the majority notes in passing in footnote 9 should have been the end of it:

AWF sought a declaratory judgment that would cover the original Prince Series works, but Goldsmith has abandoned all claims to relief other than her claim as to the 2016 Condé Nast license and her request for prospective relief as to similar commercial licensing. Brief for Respondents 3, 17–18; Tr. of Oral Arg. 80–82 [Majority at 21]

AWF sued to make sure that Warhol’s copying of the Goldsmith’s picture was a fair use. It does not appear that Goldsmith disputed that it was. Her dispute was about a later use of the later Warhol work, even though its underlying legitimacy was no longer in question once she dropped her claims. Her invitation to the courts to shift the focus from an inquiry into Warhol’s copying to an inquiry about the later use of the orange Prince picture was an invitation the Supreme Court (and even Second Circuit) should have declined because it doesn’t even seem to be the answer to the lawsuit AWF filed – her dropping of her claims challenging Warhol’s copying was.

But with that shift in her focus the case did not end there, and instead of cleaning up the mess the Second Circuit made (it got the use wrong too) an officious Supreme Court has now left us with a pile of new questions that are not answered by its decision, including what happens next, in this case or any others sure to follow in its path. For instance, if Conde Nast had not already licensed and printed the Warhol picture, would it still be able to make that choice to publish it? Can any other magazine?

If a magazine can still run it, is Goldsmith entitled to remuneration if it does? The majority seems to suggest that she’s entitled to a “portion” of the proceeds, but how much is that portion? Under what theory does she get just a portion, if the work is infringing? Does the Court mean to say that she is allowed to control all the uses of the picture? Which ones? Does she effectively now own it? If she doesn’t own it, what does AWF still own? And if she is entitled to some economic benefit from the use of the orange Prince picture, does that not make her unjustly enriched by Warhol’s later creativity that imbued the picture with the new meaning Conde Nast was attracted to? After all, the thing about the picture that Conde Nast wanted wasn’t the thing that she put there, or else it could have licensed her picture. What Conde Nast wanted was what Warhol had put there, and as part of a transformation that the majority itself acknowledges could still be fair use. Is his creativity something that she should be able to profit from?

The majority avoided these questions because it never asked them nor any of the other questions it should have been asking. By only looking at the later use of Warhol’s work, and never inquiring as to what made his work even something that anyone would want to use, the Court has created an unnavigable nightmare for everyone.

Filed Under: 1st amendment, andy warhol, commercial use, copyright, fair use, free speech, licensing, lynn goldsmith, prince, supreme court
Companies: andy warhol foundation, conde nast

Content Moderation Case Study: Vimeo Moderates Uploads Of 'Commercial-Use' Videos Using Unclear Guidelines (2009)

from the what-is-commercial-use dept

Summary: Vimeo, the video-hosting website created by CollegeHumor’s parent company in 2004, has always presented itself as a destination for creators who wished to free themselves from YouTube’s limitations and aggressive monetization. Vimeo remains ad-free, supporting itself with subscription fees.

Other efforts were made to distance Vimeo from YouTube. Its fairly aggressive content policy forbade plenty of things that were acceptable on Google’s platform, including videos promoting commercial services.

The terms of service didn’t explicitly forbid content that related to commercial services but were not attempts to sell services directly to other Vimeo users, but user experience consultant Paul Boag found his videos targeted by Vimeo and given a week to move them to another hosting service. While some videos of Boag’s rode the edge of the terms of service ban on commercial videos, others provided nothing more than marketing advice or reviews of browser plugins.

At that point, Vimeo also banned the embedding of hosted content on sites that also served up ads. Unfortunately for Boag, his own site contained ads, making it a violation of the terms of service to embed his own videos on his own site. And this rule wasn’t set in stone: Vimeo rather unhelpfully clarified it did allow embedding on some sites with ads, but it was a decision only Vimeo could make.

Vimeo players cannot appear on domains running ads, its a decision we made in the beginning and have been going back and forth with allowing or disallowing it, but so far we cannot allow it unless it is with one of our partners.

Decisions to be made by Vimeo:

Questions and policy implications to consider:

Resolution: Paul Boag’s videos were removed and Boag chose to use a different platform to host his content, rather than continue to struggle with Vimeo’s unclear content policies.

A few years later, Vimeo changed course and began allowing Pro users to upload content that was considered a violation of its terms of service in 2009. The restrictions on commercial-use content have since been rolled back even further, forbidding users from posting only certain kinds of commercial-use content:

_We do not allow content that promotes:

* Illegal schemes (like Pyramid/Ponzi schemes) * Businesses that promise wealth with little or no effort * Unregistered securities offerings (absent a legal basis) * Illegal products or services * Products or services (even if legal) using deceptive marketing practices * In addition, users may not use Vimeo.com?s messaging capabilities for unsolicited direct marketing purposes.

Originally posted on the Trust & Safety Foundation website.

Filed Under: commercial use, content moderation
Companies: vimeo

Another Nail In The Coffin For Fair Use: TVEyes Agrees Not To Carry Fox News

from the disappointing dept

The saga of TVEyes and its battles for fair use is over, and unfortunately fair use has lost. Following the news that the Supreme Court had refused to hear its appeal of a weird and troubling ruling by the 2nd Circuit, the company has now ended its ongoing lawsuit with Fox by agreeing to no longer carry Fox News content on its service.

If you don’t recall, TVEyes was a very useful media monitoring service used by tons of journalists and politicians to effectively search and find content that was airing on TV. Fox had sued, claiming that this was both infringement and a violation of the obsolete “hot news” doctrine. The court easily rejected the hot news claim, and the district court originally (and correctly) found in favor of TVEyes, saying that its service was clearly fair use (even as it was being used for profitable purposes). The key point: TVEyes was transformative. It wasn’t offering a competing service, but rather (similar to Google books) helping people search and find content that they might not otherwise find.

A later ruling, however, found that only parts of TVEyes service was truly fair use. It could archive content — but allowing downloading and sharing of clips failed the fair use test. Eventually, that resulted in an incredibly restrictive permanent injunction against the company, and an appeal that favored Fox News, again focusing on the feature that allowed users to download and share clips.

That’s what was petitioned to the Supreme Court, and having lost that, TVEyes faced an expensive lower court process to determine how much it would need to pay in damages. This settlement, and an agreement to drop Fox News from its service entirely, avoids that.

From a “public good” perspective, however, this is a horrific result. It means that copyright will make it that much more difficult for the media and politicians to follow and report on what Fox News is doing. While anyone can watch and record Fox News itself, losing the useful features of TVEyes will surely make it that much more difficult for there to be effective media monitoring of the cable news network. That’s not a good public policy result. Indeed, this case really has little to do with copyright at all. Again, TVEyes was not competing with Fox News in anyway, but copyright has now been used to make it that much more difficult for anyone to hold Fox News accountable.

And at a time when there is growing evidence of the role that Fox News in particular has played in today’s societal mess, that seems like a huge loss for society.

Filed Under: commercial use, copyright, fair use, media monitoring, supreme court
Companies: fox, tveyes

In 'N Out Uses A Bullshit Pop-Up Every Five Years Strategy Just To Lock Up Its Australian Trademark

from the pop-up,-pop-down dept

When we recently discussed the rather odd story of the famous burger chain In ‘N Out suing an Australian burger joint over trademark concerns despite having no storefront presence in the country, there was one aspect of it glossed over in the source link and omitted by me that really deserves some fleshing out. You see, like here in America, Australian trademark law has a provision that you actually must be using the mark in question in order to retain it. More specifically, use must be established every five years in order to keep the trademark valid. Given that In ‘N Out operates no storefronts in Australia, readers rightly wondered how it was possible that the company even had a valid trademark to wield in its trademark battle.

The answer to that question is as cynical as it is perverse. It turns out that In ‘N Out turns up so-called “pop-up” storefronts for its chain in Australia and a few other countries every so often, specifically to keep just barely within the trademark law provisions.

In Australia, in particular, trademark laws have a “use it or lose” quality to them. If they are not used within a five-year span of time, companies could lose protection for their names and logos. International businesses, though they may never create a fully running branch overseas, could be vulnerable to someone else taking their ideas in other countries if they apply for a trademark. This would dilute the brand in a whole host of ways. To avoid the misfortune of Burger King, who lost its trademark and had to become Hungry Jack’s, In-N-Out found a workaround to establishing a permanent presence in the Land Down Under by simply hosting pop-ups every so often to use their trademark in the country.

Cynical, as I said, and a serious perversion of the purpose of trademark laws generally. The entire point of trademark protections is to keep customers informed as to the source of goods purchased and the affiliations of the companies from which they purchase them. Remember that the context of this story and the chain’s lawsuit is the existence of a single burger joint calling itself “Down ‘N Out.” While there is clear homage to In ‘N Out, the burger joint does nothing to convince the public that it’s part of the California chain.

So, instead of serving the public good by staving off confusion, what this gaming of Australia’s trademark law does instead is to simply lock up language similar to the In ‘N Out name by maintaining an insultingly limited presence in the country’s market. In ‘N Out does not operate these pop-ups in order to server the Australian market. Rather, they operate them specifically so as to deny that Australian market its sort of business. These pop-ups have, ahem, popped up for years, with no sign of In ‘N Out even considering having any real storefront presence anywhere in the country. Instead, the pop-ups serve only as an excuse to file lawsuits such as it did against Down ‘N Out.

Whatever you might think of In ‘N Out’s actual trademark claim in its lawsuit, that’s truly about as cynical as it gets.

Filed Under: australia, commercial use, pop up, trademark
Companies: in-n-out

The 2nd Circuit Contributes To Fair Use Week With An Odd And Problematic Ruling On TVEyes

from the fair-us-has-no-predictive-value dept

For years, we’ve quoted a copyright lawyer/law professor who once noted that the standards for fair use are an almost total crapshoot: nearly any case can have almost any result, depending on the judge (and sometimes jury) in the case. Even though there are “four factors” that must be evaluated, judges will often bend over backwards to twist those four factors to get to their desired result. Some might argue that this is a good thing in giving judges discretion in coming up with the “right” solution. But, it also means that there’s little real “guidance” on fair use for people who wish to make use of it. And that’s a huge problem, as it discourages and suppresses many innovations that might otherwise be quite useful.

Case in point: earlier this week the 2nd Circuit rejected a lower court decision in the Fox News v. TVEyes case. If you don’t recall, TVEyes provides a useful media monitoring service that records basically all TV and radio, and makes the collections searchable and accessible. It’s a useful tool for other media companies (which want to use clips), for large PR firms tracking mentions, and for a variety of other uses as well. The initial ruling was a big win for fair use (even when done for profit) and against Fox News’ assertion of the obsolete doctrine of “Hot News” misappropriation. That was good. However, that initial ruling only covered some aspects of TVEyes’ operations — mainly the searching and indexing. A second ruling was more of a mixed bag, saying that archiving the content was fair use, but allowing downloading the content and “date and time search” (as opposed to content search) was not fair use.

Some of this was appealed up to the 2nd circuit — specifically that second ruling saying parts of the service were not fair use. Thankfully, Fox didn’t even bother appealing the “hot news” ruling or the “fair use on index search” ruling. As you’d expect, the court runs through a four factors test, and as noted above, the analysis is… weird. Once again, it seems clear that the court decided Fox should win and then bent its four factors analysis to make that happen. The court separates out TVEyes operations into two things: “Search” and “Watch.” Whereas the lower court separated out “Watch” into various components, here the court decides that the entire “Watch” part is not fair use, and thus there’s no need to examine the components (the “Search” part remains covered by fair use — which, again, Fox did not challenge).

First, the court explores “the purpose and character” of the use, and whether or not its transformative, which would lean towards fair use. Much of the discussion focuses on the Google Books case, in which the same court found that Google scanning books and making them searchable was transformative and thus, fair use. Here, the court notes the similarities that make TVEyes transformative, which is a good start:

TVEyes?s copying of Fox?s content for use in the Watch function is similarly transformative insofar as it enables users to isolate, from an ocean of programming, material that is responsive to their interests and needs, and to access that material with targeted precision. It enables nearly instant access to a subset of material??and to information about the material??that would otherwise be irretrievable, or else retrievable only through prohibitively inconvenient or inefficient means.

Sony Corporation of America vs. Universal City Studios, Inc. is instructive. See 464 U.S. 417 (1984). In Sony, a television customer, who (by virtue of owning a television set) had acquired authorization to watch a program when it was broadcast, recorded it in order to watch it instead at a later, more convenient time. That was held to be a fair use. While Sony was decided before ?transformative? became a term of art, the apparent reasoning was that a secondary use may be a fair use if it utilizes technology to achieve the transformative purpose of improving the efficiency of delivering content without unreasonably encroaching on the commercial entitlements of the rights holder.

The Watch function certainly qualifies as technology that achieves the transformative purpose of enhancing efficiency: it enables TVEyes?s clients to view all of the Fox programming that (over the prior thirty?two days) discussed a particular topic of interest to them, without having to monitor thirty?two days of programming in order to catch each relevant discussion; and it eliminates the clients? need even to view entire programs, because the ten most relevant minutes are presented to them. Much like the television customer in Sony, TVEyes clients can view the Fox programming they want at a time and place that is convenient to them, rather than at the time and place of broadcast. For these reasons, TVEyes?s Watch function is at least somewhat transformative.

Of course the “at least somewhat” qualifier on “transformative” should be a foreshadowing of what comes next. First, the court notes that the commercial nature of TVEyes walks back at least some of its fair use argument, but concludes the first factor goes into TVEyes’ corner “albeit slightly.”

On the 2nd factor, “the nature of the copyrighted work,” the court correctly notes that this is kind of a superfluous factor that almost never matters in any copyright lawsuit. The 3rd factor is a big one: “the amount and substantiality of the portion used.” In the Google Books ruling, this same court correctly and usefully pointed out that this is not about the “percentage of the overall” that is used, but rather if the user was using more than is necessary for the use at hand. Under that understanding, it would seem that this should lean towards TVEyes’ position, since it would need to offer up all the content as part of its service. But the court feels otherwise.

This factor clearly favors Fox because TVEyes makes available virtually the entirety of the Fox programming that TVEyes users want to see and hear. While ?courts have rejected any categorical rule that a copying of the entirety cannot be a fair use,? ?a finding of fair use is [less] likely . . . when the copying is extensive, or encompasses the most important parts of the original.? Id. at 221. In this respect, the TVEyes Watch function is radically dissimilar to the service at issue in Google Books.

What kills TVEyes here in the Google Books comparison is that Google Books had a “snippet” function that only showed parts of the book, rather than the whole thing:

Google?s snippet function was designed to ensure that users could see only a very small piece of a book?s contents. Each snippet was three lines of text, constituting approximately one?eighth of a page; a viewer could see at most three snippets per book for any searched term, and no more than one per page. Users were prevented from performing repeated searches to find multiple snippets that could be compiled into a coherent block of text. Approximately 22% of a book?s text was ?blacklist[ed]?: no snippet could be shown from those pages. Id. at 222. And snippets were not available at all for such books as dictionaries or cookbooks, in which a snippet might convey all the information that a searcher was likely to need. While the snippets allowed a user to judge whether a book was responsive to the user?s needs, they were abbreviated to ensure that it would be nearly impossible for a user to see a meaningful exposition of what the author originally intended to convey to readers.

TVEyes redistributes Fox?s news programming in ten?minute clips, which??given the brevity of the average news segment on a particular topic??likely provide TVEyes?s users with all of the Fox programming that they seek and the entirety of the message conveyed by Fox to authorized viewers of the original. Cf. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 564?65 (1985) (finding no fair use when the copying involved only about 300 words, but the portion copied was ?the heart of the book?). TVEyes?s use of Fox?s content is therefore both ?extensive? and inclusive of all that is ?important? from the copyrighted work.

TVEyes was hoping that by cutting things down to 10 minute clips that would support the fair use snippets argument, but it didn’t really fly.

The fourth factor is where things get really odd and potentially dangerous to fair use. This is “the effect on the market,” which is often the determining factor on fair use. For many (though, thankfully not all) courts, if they see that you’re somehow diminishing the original market, you lose on fair use. Many copyright holders have tried to obliterate all fair use cases by basically arguing that the fact that a for-profit entity is making use of their work proves there’s a market for the works, and thus only the copyright holder should be entitled to that market, or else the user is clearly diminishing the market (even if the copyright holder is not even in that market). In short “if there’s a market anywhere related to this content, the copyright holder should own that entire market.” Many courts have rejected that line of thinking as it effectively obliterates fair use. But… not this court.

The success of the TVEyes business model demonstrates that deep?pocketed consumers are willing to pay well for a service that allows them to search for and view selected television clips, and that this market is worth millions of dollars in the aggregate. Consequently, there is a plausibly exploitable market for such access to televised content, and it is proper to consider whether TVEyes displaces potential Fox revenues when TVEyes allows its clients to watch Fox?s copyrighted content without Fox?s permission.

Such displacement does occur. Since the ability to re?distribute Fox?s content in the manner that TVEyes does is clearly of value to TVEyes, it (or a similar service) should be willing to pay Fox for the right to offer the content. By providing Fox?s content to TVEyes clients without payment to Fox, TVEyes is in effect depriving Fox of licensing revenues from TVEyes or from similar entities. And Fox itself might wish to exploit the market for such a service rather than license it to others. TVEyes has thus ?usurp[ed] a market that properly belongs to the copyright?holder.? Kirkwood, 150 F.3d at 110. It is of no moment that TVEyes allegedly approached Fox for a license but was rebuffed: the failure to strike a deal satisfactory to both parties does not give TVEyes the right to copy Fox?s copyrighted material without payment.

In short, by selling access to Fox?s audiovisual content without a license, TVEyes deprives Fox of revenues to which Fox is entitled as the copyright holder. Therefore, the fourth factor favors Fox.

That’s… bad. This will undoubtedly be quoted in lots of other copyright/fair use cases, and used to argue that any successful market involving the fair use of a copyright-covered work will deprive the copyright holder of license revenue. As EFF notes in its analysis of the ruling, this appears to completely ignore a fundamental principle of how fair use works:

If use of someone?s words was contingent on the permission of the person who said them, you would never be able to critique what was being said. Fair use allows the use of copyrighted material without permission for this very reason. It?s not in the interest of anyone to license out clips of their material for the purpose of it being debunked, which is why the service provided by TVEyes is so valuable.

Jonathan Band, over at the Disruptive Competition Project finds more to like in the ruling — specifically citing the fact that much of the ruling upholds the important fair use parameters set forth in the Google Books ruling and doesn’t really mess with those. He also doesn’t seem as bothered by that fourth factor analysis, but does worry about one aspect of the transformative analysis: the part that cites the Sony Betamax ruling:

In support of its transformativeness conclusion, the panel cited the Supreme Court?s Betamax decision, which found that consumers? time shifting of television programming was a fair use. The panel stated that

Betamax?s ?apparent reasoning was that a secondary use may be a fair use if it utilizes technology to achieve the transformative purpose of improving the efficiency of delivering content without unreasonably encroaching on the commercial entitlements of the rights holder.? However, most observers don?t view Betamax as a transformative use. And there is no reason to treat Betamax as a transformative use case; transformativeness is not a requirement for fair use. The panel?s odd reading of Betamax compelled a concurring decision by Judge Kaplan (a district court judge sitting by designation) that strongly disagreed with this interpretation. Indeed, the panel itself was not that convinced by its reasoning. Later in its first factor discussion, it acknowledged that ?the Watch function has only a modest transformative character because, notwithstanding the transformative manner in which it delivers content, it essentially republishes that content unaltered from its original form, with no ?new expression, meaning or message.??

The other issue that the court reviewed was the incredibly broad permanent injunction that the district court had issued on TVEyes after finding some of its service not to be fair use. Without much discussion, the 2nd Circuit notes that since that injunction was based on mistakes about what was fair use, it’s sending that back to the lower court to review.

It is possible that this will all get appealed to the Supreme Court, though it’s not at all clear that this is a case the Supreme Court would actually take (and, there’s an argument that a majority of the Supreme Court may be fans of Fox News, in which case, Fox may get something of an edge…). However, this does seem like yet another in a long list of copyright cases, where we see useful innovations likely killed off by copyright. Having a system for professionals to monitor the media and make use of it is incredibly useful. And yet, with this ruling such things can be massively restricted. And, on top of that, with the language in the 4th factor above, we should all be worried about what other innovations will now be shut down (or never even started) going forward.

Filed Under: archiving, commercial use, copyright, fair use, search, watch
Companies: fox, tveyes

Ridiculous German Court Ruling Means Linking Online Is Now A Liability

Earlier this year, we wrote about a crazy decision in the EU Court of Justice, that determined mere links could be direct infringement on commercial websites (with “commercial” being not well defined). Now as various courts in the EU try to put this ruling into practice, they’re already making a mess of it. In particular, a German case has set an impossible standard for a site, finding a site to have infringed on the copyrights of a photographer for merely linking to a photograph. And the backstory here is even crazier.

The image in question was originally uploaded to Wikimedia Commons by the photographer and put under a Creative Commons license (unfortunately, no one seems to name which CC license). And then this happened:

This picture was then modified by an unknown third person, who added UFOs to the picture that appear to be flying above the building. This new picture was uploaded by the third person on his website.

The defendant operates a website where he publishes and sells educational material that he creates. In the imprint of this website, the defendant posted a sentence that included the word ?UFO?, which linked to the modified ?UFO-Version? of the claimant?s picture. Clicking on the word ?UFO? a new browser window in which the ?UFO-Version? of the picture was shown would be opened.

The photographer deemed that this constituted an infringing use of his work and brought the defendant to court.

Now, let’s just review this because we’re already stretching all sorts of concepts to the point of breaking. The photographer uploaded an image under a CC license to Wikimedia Commons. Someone else modified it. Someone else — operating a site that sells educational materials — merely linked to the modified image from the word “UFO” — and that’s who gets sued.

This seems like a classic “Steve Dallas Lawsuit” in which the target is a corporate entity because “that’s where the money is” even if it makes no sense at all for the liability to be applied there.

And here’s the really nutty part: the German court agreed because of that insane CJEU ruling that says a “commercial site” should be assumed to know the copyright status of everything they link to. So merely linking to this silly modified photograph, the site itself becomes liable for direct infringement. That’s insane. Yes, (depending on the CC license in question), it’s entirely possible that the modified version was infringing, but that’s no reason to make a site that merely links to that image liable for direct infringement over it.

At this point, if you run a “commercial” website in Europe that links off site to anything, you have a tremendous liability hanging over your head due to the insanities of copyright law.

Filed Under: cjeu, commercial use, eu, germany, knowledge, liability, linking

DailyDirt: Speedy Deliveries Coming Via Robots

from the urls-we-dig-up dept

The FAA hasn’t exactly been quick to figure out how its going to regulate drones, and its current rules are a bit of an arbitrary mess of trying to determine what “commercial use” really means and how to register pilots and/or the UAVs they fly. Still, plenty of projects are moving forward with plans to use (semi-)autonomous robots to deliver packages more efficiently and quickly.

After you’ve finished checking out those links, take a look at our Daily Deals for cool gadgets and other awesome stuff.

Filed Under: class g airspace, commercial use, drones, faa, multicopter, robotics, robots, tacocopter, uav
Companies: alphabet, google, starship technologies

Authors Guild Argues That Google Books Should Be Infringing Because Aaron Swartz

from the wait,-what?!? dept

The saga of the Authors Guild v. Google Books continues to make its way through the courts. This has been going on for years and years, and we don’t need to rehash all of the background, other than a few of the more recent situations. Last year, the case went to the 2nd Circuit appeals court, supposedly to discuss the Authors Guild’s desire to make its case into a class action lawsuit. However, the appeals court judges basically ignored that issue, and said it was meaningless since it seemed pretty clear that Google Books was fair use. Thus, it sent the case back to the lower court asking it to determine if Google Books is fair use. The argument is that, if it’s fair use, whether or not it’s a class action is moot. The lower court dutifully declared Google Books fair use a year ago.

Now the case is back before the appeals court as the Authors Guild is insisting loudly that it’s not fair use. Thankfully, the judges appear to be very, very skeptical. Perhaps this isn’t a surprise, since they were the ones who last year were so focused on the fair use point. It seems clear that Judge Pierre Leval — known for his support of fair use — wasn’t very interested in the Authors Guild bringing up false arguments that because Google makes money, Google Books can’t be fair use:

In his argument Wednesday, attorney Paul Smith quickly sought to differentiate the Guild?s case against Google from its unsuccessful HathiTrust case, citing Google?s commercial nature. But almost immediately, Judge Pierre Leval shut him down, telling Smith he would not succeed by arguing that Google?s commercial nature precluded fair use. Smith, however, pressed on, arguing that Google?s scanning deprived authors of a potential market to license books for search. Again, Leval pushed back, noting the transformative nature of the use is what mattered, not whether somebody might potentially pay to make that use.

Another summary, from Courthouse News, notes that Leval compared Google to the NY Times:

Leval warned that Smith “would lose” the case if his argument was premised on the fact that “Google, like The New York Times, is a profit-motivated enterprise.”

It makes no difference that, unlike Google, the Times stands to gain “dwindling, small profits” as opposed to Google’s billions, he added.

Leval also, thankfully, was pretty clear in rejecting the idea that just because publishers could find someone to license a work it means everything needs to be licensed:

Smith argued that Google’s business model prevented authors from licensing their books to companies like Microsoft, which he said was creating a licensed database before Google Books arrived.

“The test is not how transformative is the use,” Smith said. “The test is this the type of use that would be licensed.”

Strongly disagreeing with that point, Leval said. “You’d always find someone who would be willing to pay [a licensing fee] to avoid a lawsuit.”

However, the craziest argument of all came from the Authors Guild’s lawyers in which they tried to point to Aaron Swartz as a reason why Google Books shouldn’t be fair use. The argument here is a bit convoluted: Google points out that it only shows snippets, not large swaths of scanned text. The Authors Guild then counters that maybe, just maybe, some enterprising hacker might figure out how to break into the backend and release all the text… because Aaron Swartz:

Google Books avoids copyright violations by only allowing users to read portions of books that match their searches, but the Authors Guild raised the possibility of hacker disseminating the digitized books in full.

Waxman emphasized that this has never happened in the history of Google Books.

In rebuttal, Smith said that he mentioned this concern in light of “an MIT student” distributing academic articles from a university database because he believed, “Information should be free.”

This is clearly a reference to Swartz, but it’s wrong in all sorts of ways (including that Swartz was never an MIT student). Swartz also never “distributed” those academic articles. He merely downloaded them. It’s unclear if he actually intended to distribute them or not. He also didn’t hack the system. He had full access to the articles he was downloading. And he didn’t do it because “information should be free.” As we’ve noted, that phrase tends to be a bogus strawman that copyright system supporters toss up to mock anyone who is in favor of fixing copyright law’s problems.

No matter what, it clearly has no relevance whatsoever to the case at hand and whether or not book scanning to create a searchable index is fair use. The Authors Guild has been flailing about wildly for a while, and dredging up Aaron Swartz just seems to show how ridiculously desperate it’s become.

Filed Under: aaron swartz, book scanning, commercial use, copyright, fair use, google books, pierre leval, transformative use
Companies: authors guild, google