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May 26, 2023

10 Takeaways from the SCOTUS Decision in AWF v. Goldsmith (Part II)

by Keith Kupferschmid

In yesterday’s blog (Part 1), we covered five of the first 10 most important takeaways from the recent Supreme Court decision in Andy Warhol Foundation (AWF) v. Goldsmith. Today, we return to cover the additional five takeaways.

6. A secondary user’s new expression, meaning, or message is relevant, but not dispositive.

One of the big issues in the case is what role “meaning and message” play in determining the first fair use factor, as it was the crux of the question presented by AWF in its petition to the Court. The confusion over the appropriate role of “meaning and message” stems from a line in Campbell, which describes a transformative use as one that “alter[s] the first [work] with new expression, meaning, or message.” The Court resolved this confusion by clarifying that “Campbell cannot be read to mean that [the first factor] weighs in favor of any use that adds some new expression, meaning, or message.” (page 28) The Court explained that the addition of any new expression, as well as any new meaning or message, is merely “relevant to whether the new use served a purpose distinct from the original, or instead superseded its objects” (page 29).

The Court also explained that if merely adding new meaning and message was sufficient for the first factor to weigh in favor of fair use in Campbell, the Court would not have had to consider the parodical nature of 2 Live Crew’s use. However, because the two works share the same purpose and the use is commercial, the effect of the new expression on the first factor analysis was insufficient to move the needle away from weighing against fair use. (page 13)

7. The first factor inquiry is an objective one.

In addition to discussing the role of the six purposes in the preamble (see takeaway five) and the role of new expression, meaning or message (see takeaway six), the Court provided additional guidance on how to evaluate the first factor. First, the Court specified that “[w]hether the purpose and character of a use weighs in favor of fair use is [] an objective inquiry into what use was made, i.e., what the user does with the original work.” (page 33). Consequently, the “meaning of a secondary work, as reasonably can be perceived, should be considered to the extent necessary…” (emphasis added) What this means in practice is that:

  • a judge should not impose their own views on the artistic significance of a work or its meaning or message (page 31 and page 2 of concurrence);
  • the subjective intent of the secondary user does not determine the purpose of the use (bottom of page 31 through the top of page 32); and
  • neither the perceived intent of the artist nor the views of a critic determine whether a work is transformative (bottom of page 32)

Ever since the Supreme Court decided Bleistein v Donaldson Lithographing more than a century ago, it has long been understood that copyright does not discriminate between higher and lower forms of art. It does not distinguish or discriminate against what someone might consider “worthy” or “unworthy” art. All forms of art that meet the standards for copyright protection are deserving of protection. That long-held principle was reiterated, and expanded upon, in the AWF decision and expanded upon. The Court made clear that not only should judges not evaluate the artistic aesthetics or merits of a particular work of art, it also stressed that the same is true for the evaluations of a particular artist. The fact that an artist may be well known or have achieved celebrity status, as Warhol has, should have no bearing on the fair use analysis. As the Court said, the granting of greater rights to works that are deemed worthy or made by a well-known creator or lesser rights to so-called “unworthy” art or art made by the street corner artist “creates a privilege that has no basis in copyright law.” (footnote 19)

8. The Court recognized the important role of licensing.

One theme that seems to be prevalent throughout the AWF decision is the Court’s clear recognition of the value of licensing and the relevance of impaired licensing revenues in the context of the fair use analysis. When a particular use is a fair use, the secondary user need not compensate or get permission from the copyright owner of the original work to use the work. When a particular use is not a fair use, that does not necessarily mean that the secondary user cannot use the work—it means that in order to do so they have to first get a license to use the work. (In fact, that is what Warhol did back in 1984.) Of course, it’s the copyright owner’s right to not license the work, but as the Court points out, license payments “are incentives for artists to create original works in the first place.” It’s what puts dinner on their table, allows them to create more works for the public to enjoy, pays for their health care and their children’s daycare expenses, and so on. So, in most instances, the user will be able to license the work and, as the Court said, compensating the copyright owner through a license will not “impoverish” the user. (page 36) That’s a scenario where everyone wins—the copyright owner, the user, and consumers.

9. This decision does not spell the end of fair use or appropriation art.

After this decision was announced, many people overreacted. They fretted that it would put an end to fair use and appropriation artists who create works by “borrowing” the creativities of others. The dissent tries to make that argument as well. But there are several reasons why it simply isn’t true. First, as the Court states:

copyright law is replete with escape valves: the idea–expression distinction; the general rule that facts may not receive protection; the requirement of originality; the legal standard for actionable copying; the limited duration of copyright; and, yes, the defense of fair use, including all its factors, such as whether the amount taken is reasonable in relation to the purpose of the use. These doctrines (and others) provide ample space for artists and other creators to use existing materials to make valuable new works.

Second, this decision does not change copyright law. It simply clarifies how the Court intended transformative use to be considered within the context of the first factor and by doing so level-sets the fair use analysis. I can understand why some users might be upset though. For many years, some users have been able to improperly benefit from a broadly expansive view of transformative use by lower courts. But the fact that the transformative use gravy train has come to a halt, and certain secondary users no longer have a free ride, is not a bad thing. It reflects a better balancing of the interests of all creators and users and the rejection of privileged classes of works and uses.

Third, this decision will not stifle creativity. Quite the opposite, in fact. This decision establishes a more balanced and thoughtful approach to fair use and, in particular, the first factor. As ardent long-time supporters of a balanced and effective fair use doctrine, if it were any other way, we too would be screaming from the rafters. But that is not the case. We could not agree more with the Court’s statement that, “If the last century of American art, literature, music, and film is any indication, the existing copyright law, of which today’s opinion is a continuation, is a powerful engine of creativity.”

10. AI Companies should reconsider their reliance on transformative use.

Artificial Intelligence (AI) companies would be wise to review the AWF decision closely. The position that generative AI ingestion of copyrighted works is a transformative use was on shaky ground before this decision was rendered. What was shaky ground has turned into a full-on tremor. Although the Court’s decision in AWF is not about AI and each fair use case is considered on its own facts, there are several portions of the Court’s decision that would seemingly apply directly to generative AI companies (and others) who may think that transformative use gives them a free pass to use copyrighted works without permission or compensation.

Some of the statements that easily could be applied to generative AI include:

  • the Court noted that simply characterizing a secondary use as “innovative, in some sense, or …creative progress consistent with the constitutional objective of copyright” is not sufficient justification to be transformative. (footnote 18)
  • the Court (agreeing with the Court of Appeals) observed that the “purpose and function of the two works at issue here is identical … in the broad sense that they are created as works of visual art.” (footnote 11) Applying this same line of reasoning to generative AI, it is clear that the purpose and function of ingested works serve the same purpose and function as any AI output. In other words, ingest a work of art, get a work of art out. Ingest music, get music out. Both serve the same purpose and function.
  • the works ingested have value to the AI companies as evidenced by their “desire to reproduce [it] without regard to [the copyright owner’s] right.” (footnote 18) Independent-to-large-scale creators and copyright owners produce high-quality works that are often ideal for ingestion by generative AI machines—and AI developers want to use and copy copyrighted works because of their value. If the expression is of no value to AI developers, then they could go someplace else to get it—and not copy high-value copyrighted works. The very reason they are using copyright protected works for training is because the value is recognized.
  • During the House Judiciary Committee’s IP Subcommittee hearing on AI held on May 17 and the U.S. Copyright Office Listening Sessions, we heard witnesses express caution about the “practical challenges” of AI companies licensing copyrighted works for ingestion and warn that licensing these works would devastate generative AI. The Court seems to counter that when it said, albeit in a different context, the following:

It will not impoverish our world to require AWF to pay Goldsmith a fraction of the proceeds from its reuse of her copyrighted work. Recall, payments like these are incentives for artists to create original works in the first place. Nor will the Court’s decision, which is consistent with longstanding principles of fair use, snuff out the light of Western civilization, returning us to the Dark Ages of a world without Titian, Shakespeare, or Richard Rodgers.

This could easily apply to AI companies without changing the meaning or intent of the sentence by simply replacing “AWF” with “AI companies” and “Goldsmith” with “copyright owners.”

Perhaps more significant than any of these points is the reduced influence that transformative use has on the entire fair use inquiry (see takeaway one) and the Court’s recognition of the importance of licensing (see takeaway eight). And of course, this is only considering factor one. Each of the other three factors are likely to weigh against fair use for AI ingestion. With at least three of the four factors weighing against fair use and transformative use no longer controlling the four-factor test, AI developers should be re-evaluating their position that ingestion of copyrighted works is fair use.

There’s probably a lot more that can be said about this very important case, but these ten takeaways highlight the most important aspects of the case—a case that no doubt will be talked about, debated, and applied by lower courts (and others) for years.

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