Be Grateful Fair Use Ain't Dead

The sailor gave at least a try
the soldier being much too wise
strategy was his strength
and not disaster

The sailor coming out again
the lady fairly lept at him
that's how it stands today
you decide if he was wise

The storyteller makes no choice
soon you will not hear his voice
his job is to shed light
and not to master

~ Grateful Dead, Terrapin Station

Lawrence Lessig brings to attention a great pro-fair use decision in Graham v Dorling Kindersley Limited. There is a great condensed outline of the case available at ©opyBites if you don’t care to read the whole opinion (and an even shorter summary is at Ars if you’re that way). The opinion is significant because of the line it draws to reign in the scope of the "potential market" prong of the fair use analysis. Obviously, fair use is a troublesome issue because it is so fact specific and decided on a case-by-case basis, but I would say that this decision gives fair use a little bit more bite.

The case revolved around a Grateful Dead coffee table book published by Dorling Kindersley Limited (DK). The book contained several images of concert posters to which The Bill Graham Archive (BKA) owns the copyright. DK had tried to license the images, but talks broke down and it published the book with without securing a license to the images. BKA sued and the Second Circuit later affirmed that DK’s use of the posters was a “fair use.”

Most importantly, the court found that the use of the posters was transformative, thus creating a “transformative market,” such that DK’s unauthorized use of the posters did not affect BKA’s primary market for the sale of poster images.

The Second Circuit found DK’s use of the images to be transformative “both when accompanied by referencing commentary and when standing alone.” The images were displayed as part of a timeline with little or no commentary attached. The court said that the posters’ original purpose was both for promoting the band and for their artistic expression and that including the images in a biographical work is “transformatively different from the original expressive purpose.” Under fair use, biographical works hold a special place because they require the inclusion of original source material (and are considered scholarly works which are an explicit exception to copyright under 17 USC 107). BKA had argued that merely using the images as part of a timeline, without more, was not transformative enough. The court rejected this claim, holding that the images serve as “historical artifacts graphically representing the fact of significant Grateful Dead concert events” that “fulfills the transformative purpose of enhancing the biographical information” in the book. Snap.

After finding a transformative use, the court found that DK’s unauthorized use of the images did not usurp BKA’s ability to develop a derivative market. This is slightly astounding because copyright owners want to claim the right to license their works for use in new markets. This is one of the main contentions behind the Authors’ Guild suit against Google: that Google should pay a licensing fee to the publishers to use their books in Book Search because licensing books to be searched online is a “potential market,” the fees from which publishers are entitled to.

The Second Circuit had this to say on the point:

[W]ere a court automatically to conclude in every case that potential licensing revenues were impermissibly impaired simply because the secondary user did not pay a fee for the right to engage in the use, the fourth fair use factor would always favor the copyright holder.

The opinion continues to state that:

[When the use of] images is transformatively different from their original expressive purpose… a copyright owner cannot prevent others from entering fair use markets merely by developing or licensing a market for [transformative uses] of its own creative work.

And:

Since DK’s use of BGA’s images falls within a transformative market, BGA does not suffer market harm due to the loss of license fees.

That’s a pretty big deal. The court is saying that once you show a transformative use (and all that that entails) the potential market prong won’t count against you unless the new use serves the consumer as a substitute or supersedes the original work. This presumably isn’t a problem if the work really is transformative, but rather than having rights in every derivative market, copyright owners can claim a right to licensing fees only in traditional, reasonable, or likely to be developed markets. Markets based on fair use seem to be beyond the scope of “potential markets.”

One question is how far can we run with this reasoning? This case deals with a printed book. Can it be extended it cover online works? Basically, DK’s use of the images in a printed book only takes away from BKA’s potential licensing market insofar as DK hasn’t paid any license fee. But what if DK’s book was available freely online? Then it could be argued that DK’s actions have caused more harm to BKA’s potential licensing market by making the images available to be easily copied (assuming they have not been published previously online). At that point, the transformative use of creating a biographical work morphs into something akin to distribution, or so it appears: you could always go photocopy DK’s printed book and get the image. It's unclear what a court would do then, but so long as DK’s use is ok, then what happens after that I don’t think should count against it.

No matter the extent that this decision applies to online works, notice that the discussion has shifted in favor of fair use. The argument has turned from focusing on the potential market to focusing on the transformative use of the material. Before, a really transformative use could be labeled unfair essentially because it deprived the copyright owner of revenue. Such would weigh against the new use in two prongs: character of use and potential market, and would tough to outweigh. Now, the transformative nature of the use is key, stressing the context of the use over the fact that someone else owns copyright to the material.

Overall, hooray for the Second Circuit and hooray for the Honorable Jane Restani who wrote the opinion.