Author: Keith Kupferschmid

Where and how should we draw the line between protectable and non-protectable AI-generated works?

There is little doubt that most of the focus relating to the impact of artificial intelligence (AI) on copyright is on whether use of copyrighted works by AI companies for ingestion/training purposes qualifies as a fair use. But coming in a very close second is the issue of whether works that are created, in whole or in part, using generative artificial intelligence (GAI) may be protected by copyright.

On the spectrum of copyrightability, there is one extreme in which a work is generated with no human creativity and thus not protectable—for example, a photograph produced by a camera triggered by a monkey. At the other extreme is where a work is wholly created by a human and is protectable. Those cases are not difficult.

The more difficult cases are those that lie in the middle of this spectrum, where we encounter complex questions about where to draw the line between an AI-aided work that is and is not protectable by copyright law. Sitting in this gray area are:

• works generated by AI with human assistance, such as when someone makes adjustments to names and phrases in a short story that was initially generated by an AI tool, and
• works created by humans with AI assistance, for example, like when an author using an AI tool to fix the grammar in a short story she wrote.

But even those examples are just two points in a broad spectrum of AI-assisted works that will vary depending on the facts and scope of the interactions between the AI tool and the human creator.

Works Wholly Generated by AI Should Not be Protected by Copyright

The Copyright Clause of the Constitution grants Congress the power “[t]o promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” The Clause does not support the claim that the Constitution permits copyright protection for non-humans. Central to the Copyright Clause is the concept of creator incentivization, which is not applicable to machines that do not need or comprehend incentivization.

As the U.S. District Court for the District of Columbia recently explained in Thaler v. Perlmutter:

“The act of human creation—and how to best encourage human individuals to engage in that creation, and thereby promote science and the useful arts—was thus central to American copyright from its very inception. Non-human actors need no incentivization with the promise of exclusive rights under United States law, and copyright was therefore not designed to reach them.”

The court’s opinion adopts the Copyright Office’s position (responding to Thaler’s complaint that the Office improperly rejected a registration application where Thaler’s AI machine was named the author of the image in the case) that “the Constitutional purpose of copyright is to incentivize humans to create expressive works” and that “human creativity is the sine qua non at the core of copyrightability, even as that human creativity is channeled through new tools or into new media.” Both the Copyright Office and District Court explain that the history and language of the Copyright Act, Supreme Court precedent, and the Copyright Office Compendium support the position that only human authorship qualifies for copyright protection.

While AI tools have the potential to assist human creativity, much like other creative tools that have come before it, copyright protection for wholly AI-generated material is not desirable as a policy matter. Wholly generated AI material that is based on copyrighted works ingested by AI developers without compensating the creator or obtaining their permission to ingest their works has the potential to supplant the market for the ingested works. Policymakers should be discouraging such activities, not incentivizing them by granting legal protection to material manufactured wholly outside of the realm of human authorship.

Some have suggested that granting copyright protection to AI-generated works is important to incentivize the further development of generative AI systems and technology. However, the prevalent use of AI tools demonstrates that there are already adequate incentives in place. Today, there exist a large number of AI developers and systems, all who offer varieties of GAI tools that are used across a spectrum of creative fields. That number has grown exponentially over the past year and is likely to continue to increase in the coming months and years. Similarly, the number of AI users and customers has expanded significantly. It is clear that no additional incentives related to the copyrightability of output wholly generated by AI are necessary to encourage AI developers and systems to enter the marketplace and prosper.

Established Copyrightability Standards Are Capable of Addressing AI-Generated Material

What about those tough cases that fall in the middle of the spectrum? Attempting to create a bright line rule about how much AI use renders a work unprotectable is extremely difficult. Because of this, it makes little sense to create a bright line rule. Instead, protectability determinations should be made on a case-by-case basis—as has always been the case. The factors for determining copyrightability are well developed and have been articulated and applied throughout copyright law jurisprudence.  There is no reason these factors should not continue to be applicable to newer technologies, such as generative AI.

In Feist Publications v. Rural Telephone, the Supreme Court explained that a work of authorship must possess “at least some minimal degree of creativity” to sustain a copyright claim. And in Burrow-Giles Lithographic Co. v. Sarony, the Supreme Court noted that the question of copyrightability is to be determined based on “the existence of those facts of originality, of intellectual production, of thought, and conception on the part of the author.” Finally, in Thaler v. Perlmutter, the district court reiterated that copyright only protects the unique value of human creativity, noting that courts have “uniformly declined to recognize copyright in works created absent any human involvement”.

In determining whether a work generated using AI is copyrightable, these longstanding standards of copyrightability should apply no differently than they do in other contexts. Thus, revisions to the Copyright Act should not be necessary to clarify the human authorship requirement, especially in view of the recent decision of the U.S. District Court for the District of Columbia in Thaler v. Perlmutter granting the U.S. Copyright Office’s motion for summary judgment and confirming that “human authorship is an essential part of a valid copyright claim” and “a bedrock requirement of copyright.”

A Few Words About the U.S. Copyright Office’s Registration Guidance

Last year, the Copyright Office issued guidance on the registration of works that contain AI-generated elements titled Copyright Registration Guidance: Works Containing Material Generated by Artificial Intelligence. In the guidance, the Office explains that applicants have a duty to disclose the inclusion of AI-generated content in a work submitted for registration and to provide an explanation of the human author’s contributions to the work. Other notable requirements are that for AI-generated content, registrants must use the standard application, and in a situation where registration has already been granted (but AI-generated content was not disclosed), the applicant should correct the public record by submitting a supplementary registration.

Unfortunately, despite the Copyright Office’s efforts to provide clarification, somewhat unsurprisingly, the Guidance has left many unanswered questions and resulted in some confusion on how the standards set forth in the guidance will be applied in practice. For example, there are several inconsistencies between the guidance and parts of the Copyright Office Compendium on registration guidelines that must be clarified. For instance, the Compendium says that unclaimable material should be disclaimed when it represents an “appreciable portion” of the whole work, whereas the guidance says that AI-generated content that is more than de minimis should be explicitly excluded from the application. These are two different standards that must be reconciled. In a webinar explaining the Guidance, the Office attempted to define what it meant by de minimis and described how it compared to “appreciable amount,” but unfortunately this raised additional questions.

Use of the de minimis standard to separate material that should be disclaimed from material that should not be is not only confusing but also an inappropriate standard. The term “more than de minimis” is used in other contexts in the law where it does not involve a standard of separable copyrightability. For instance, in the context of joint authorship, a more than de minimis contribution may suffice to constitute joint authorship while not rising to the level of independent copyright protection, and, in the context of an infringement analysis, whether a portion of a work used without authorization is “more than de minimis” may have different implications. Because the de minimis standard varies in different contexts, the Office should not use the term as the standard for determining when it is necessary to disclaim material in a registration application. It would make sense for the Office’s guidance to simply confirm the existing standard articulated in section 621.2 of the Compendium, which explains that “[u]nclaimable material should be disclaimed only if it represents an appreciable portion of the work as a whole.”

The guidance also includes the requirement that registrants must use the standard application when registering a work with AI-generated content, which, among other things, prohibits the use of group registrations and the benefits that flow from them, making it more challenging and economically infeasible for certain creators to register their works with the Office.

Lastly, there is significant concern amongst many in the copyright community about retroactive application of the Copyright Office’s guidance. For creators and organizations with a vast portfolio of registrations, the threat of invalidation or cancellation is a major concern, especially when the guidance on where to draw the line regarding what to disclaim is unclear. Many copyright owners are worried that the new guidance will be misused by overly aggressive litigators to challenge the validity of every copyright registration if they believe AI was used even slightly and was not disclosed, which in turn might make litigation even more expensive than it currently is.

We are encouraged by the fact that the Copyright Office recently indicated in a letter to Congress outlining its next steps addressing issues raised by AI that it will soon publish an update to the Compendium of U.S. Copyright Office Practices. According to the letter, the update will include further guidance and examples relating to the registration of works incorporating AI-generated material and will be subject to a notice-and-public comment process.

Like many issues related to AI, these copyrightability issues will require a certain amount of thoughtfulness and patience while we all get a better understanding of the technology and how that technology applies to current law.

---

If you aren’t already a member of the Copyright Alliance, you can join today by completing our Individual Creator Members membership form! Members gain access to monthly newsletters, educational webinars, and so much more — all for free! To stay up to date on all things AI and copyright law related, sign up for the Copyright Alliance’s AI Copyright Alert.

It’s never been more challenging to be an independent music performer or songwriter.

Before the pandemic, the number of full-time songwriters in one of our music cities, Nashville, had already fallen by 80 percent. But, for performers and songwriters, the pandemic was cataclysmic. According to the RAND Corporation, “[t]he vast majority of artists have likely lost some or all of their income, not to mention losing the institutions on which they depend to earn their living. And there is no clear path back to pre-pandemic levels of employment.” The same study found that 27.4 percent of performing artists were unemployed.

The loss of the ability to collaborate, record, tour, and sell merchandise laid bare the already shaky safety net musicians depend on. With many or most left to rely solely on income from streaming, the longstanding outcry about low payments by the music streaming services has taken on even greater importance.

And, adding insult to injury, in the midst of this devastation, the biggest streaming service, Spotify, which accounts for 35% of the music streaming market, embarked on an effort to extract a discount from independent artists and labels on their already paltry streaming payments. This “offer,” called “Discovery Mode,” offers independent artists and labels the promise of preferred placement on Spotify’s playlists in exchange for what we understand will be a massive pay cut of as much as 30%. The Artists Rights Alliance and many other artist groups are concerned that this amounts to 21st Century digital payola.

House Judiciary Ranking Member Representative Jerry Nadler (D-NY) and House Subcommittee on Courts, Intellectual Property, and the Internet Ranking Member Representative Hank Johnson (D-GA) launched an investigation, stating in a letter to Spotify: “This may set in motion a ‘race to the bottom’ in which artists and labels feel compelled to accept lower royalties as a necessary way to break through an extremely crowded and competitive music environment.”

Many of these problems are only possible because of the unique structure of the music streaming marketplace, which lacks the pro-artist/creator features of other streaming markets, such as the intense competition seen in the streaming video marketplace where services compete to land new films, shows, video games, or other creative works on a highly paid exclusive basis. In the music streaming marketplace musicians and independent labels have no real choice but to put their music on the world’s biggest music streaming services on whatever terms are offered to them. As individual musicians or labels, they lack the power to bargain for better pay and against unfair terms and requirements or “Discovery Mode”-type hidden pay cuts. It’s out of balance.

Here, too, Congress is taking notice, with proposals like the Protect Working Musicians Act (PWMA) to allow independent performers and labels to negotiate collectively with music streaming services. Re-introduced on September 19, by Representative Deborah Ross (D-NC), a Member of the House Subcommittee on Courts, Intellectual Property, and the Internet, the PWMA demonstrates that Congress wants a level playing field for individual creators and small/independent labels, including by giving them the ability to stand together in negotiations if necessary to ensure fair treatment.

It’s no idle threat. In recent years our elected leaders have proven they are willing to act to defend the rights of small music creators in the digital environment. The Music Modernization Act of 2018 codified much needed updates to the music licensing landscape to better facilitate licensing of music by digital services. What’s more, in December 2020, Congress enacted the CASE Act, which created the Copyright Claims Board—a low-cost copyright small claims court that empowers individual artists and labels to protect their rights and gives them access to tools that in the past have only been available to larger-scale creators. Clearly, policymakers are concerned about the plight of independent music performers, songwriters, and composers and are willing to take decisive action where appropriate.

Whatever the solution to this power imbalance—whether it is PWMA or something else—shining a spotlight on the exploitation of independent labels and artists is an important step, as the Copyright Alliance believes that music is a cornerstone of our culture. As such, we need to support and value the people who make it.

---

If you aren’t already a member of the Copyright Alliance, you can join today by completing our Individual Creator Members membership form! Members gain access to monthly newsletters, educational webinars, and so much more — all for free!

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.

---

If you aren’t already a member of the Copyright Alliance, you can join today by completing our Individual Creator Members membership form! Members gain access to monthly newsletters, educational webinars, and so much more — all for free!

Last week’s Supreme Court decision in Andy Warhol Foundation (AWF) v. Goldsmith sent a thunderbolt throughout the copyright community unlike anything we have seen in decades. When the Court issued its decision on May 18, most of us copyright geeks stopped whatever we were doing to focus our attentions on the decision and to grasp its meaning and impact. It’s now a week later, and after reading the various blogs, Twitter posts, and articles addressing the decision, and discussing it with and listening to a host of copyright experts and creators opine about the case, we have a better understanding of the case’s impact.

There is no doubt that the AWF v. Goldsmith decision will have a monumental impact on how courts interpret fair use in the future. However, it is important to understand that the decision does not actually change copyright law or our understanding of the fair use doctrine. What the decision does is level-set fair use jurisprudence to where the Supreme Court always intended it to be after its landmark fair use case, Campbell v Acuff-Rose Music.

For many years, lower courts have expanded the transformative use doctrine in the first fair use factor to make it the most influential element of the fair use test. A finding of transformative use by a court almost always had a virulent effect that infected the rest of the three factors and often resulted in an incorrect finding of fair use. This decision is so impactful because, as discussed more below, it reins in the domineering transformative use analysis by returning it to its intended scope and application. It is said that fair use is like a pendulum. If that is the case, then this decision swings the pendulum back to the middle, where the Court had intended to be at the outset in Campbell.

This case is also impactful because it is rare for SCOTUS to take on a fair use case. Although it did decide the fair use case of Google v. Oracle two years ago, it also made clear several times that the decision in that case was limited to computer software, did not apply to other types of copyrighted works, and did nothing to “overturn or modify” fair use analyses. The Court did not similarly limit its decision in AWF v. Goldsmith. Prior to Google v. Oracle, the last time the Court decided a fair use case was over a quarter century ago. If the Court does not address fair use for another 25 years or so, the impact of this case will be self-evident.

Some people have inaccurately described the decision as being “narrow.” The fact that the case is focused on a particular work, a particular use, and a 22-word clause in a specific section of the copyright law does not mean that the decision itself or its impact is narrow. That description largely stems from a misinterpretation of a statement made by the Court in which the court said the issue was narrow. However, while the decision made clear (on page 2) that the question presented by AWF was a “narrow issue,” that does not mean the Court’s analysis is narrow or limited. Specifically, the case was limited procedurally in three ways:

• although there were numerous silk screens made by Warhol, Goldsmith only pursued one—the so-called Orange Prince—and did not pursue AWF for any of the other silk screens.

• “[t]he district court concluded that it ‘need not address’ the merits of Ms. Goldsmith’s infringement claim because the Foundation could prevail at summary judgment on its affirmative defense of fair use.” (page 5 of concurrence) The appellate court followed suit. As a result, whether Warhol’s Orange Prince actually infringed Goldsmith’s photograph of Prince was not before the Supreme Court.

• although there are four fair use factors, AWF did not challenge the Court of Appeals determinations that the three other factors all favored Goldsmith. The question AWF presented to the Court in its petition for certiorari was limited to purpose and character, and as a result, the only issue before the court was the interpretation of the first fair use factor. The Court did not—nor did it need to—opine on the three other factors.

Moreover, by their nature, fair use cases are always limited to the specific facts that are before the court. This case is no different in this regard. The fact that this case was limited to a specific set of facts is of relatively limited importance because it is the legal reasoning and analysis by the Court that will have a significant lasting influence on fair use jurisprudence moving forward. It is this reasoning and analysis that lower courts will rely on in the future when they apply fair use to a specific case before them.

As the Court points out several times, if the facts are tweaked, the outcome might change. Although the outcome might change, the reasoning and analysis by the Court does not—and that is the significant point here. The fact that the Court’s decision was focused on the Orange Prince and only the first fair use factor, and not on the other silk screens or infringement, has little bearing on the ultimate impact of the decision.

With this context in mind, below is a list of the 10 most important takeaways about the case (page numbers are included to indicate where quotes or the Court’s reasoning can be found within the opinion).

1. Transformative use is not controlling of the four fair use factors.

There are unambiguous references throughout the decision that make it clear the Court intends to rein in transformative use from being dispositive and controlling of the four fair use factors. For example:

• Throughout the decision, and in particular on page 37, the Court makes clear that all the fair use factors must be considered in their own right, a concept that is clearly supported on page four of the concurrence, where Justice Gorsuch discusses fair use being a sequential chain of questions about the secondary use and there “is no double counting.”

• On page 16 of the decision, the Court notes the first factor is just one factor in a larger analysis (emphasis added).

• On page 24 (footnote 12), there is lengthy discussion of the relationship between factors one and four. In explaining how they differ the Court makes clear that the analysis of the first factor should not trespass into the factor four analysis.

• On page 25 (footnote 13), the Court makes clear that “the commercial character of a secondary use should be weighed against the extent to which the use is transformative or otherwise justified.” It also reiterates in the sentence before that, that the “commercial nature” is just “one element of the first factor” and that “it does not dispose of that factor, much less the fair use inquiry.” (A point also made earlier on page 18.) If commerciality isn’t dispositive of the first factor or fair use generally and transformativeness and commerciality must be balanced against one another, then it follows that transformativeness likewise cannot dispose of the first factor or the fair use inquiry.

The significance of this cannot be understated. As noted above, for years the transformative use test has dominated the fair use inquiry in lower courts. There is no doubt that the Court’s decision clearly puts an end to that approach.

2. The right to create derivative works must be respected.

One of the primary issues in this case was the relationship between the copyright owner’s right to create derivative works, which is one of the exclusive rights of the copyright owner enumerated in the Copyright Act, and the judge-made concept of “transformative use” under the first fair use factor. Leading up to this decision, many in the copyright community were concerned that the dramatic expansion of transformative use by the lower courts had encroached upon the scope of the derivative work right. If the Supreme Court were to validate that expansion, that would effectively beget the death knell for the derivative work right. Thankfully, the Court did the opposite—reining in transformative use and explicitly warning of the danger of negating, as well as the need for safeguarding, the derivative work right.

Specifically, the Court cautioned that “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.” (emphasis added, pages 16 and 28) The Court then explained that “[t]o 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.” (page 16) Further, the Court then illustrates how it applied this “test” in the Campbell decision. As the Court points out, even though 2 Live Crew transformed Roy Orbison’s song by adding new lyrics, new musical elements, a new message, and a different aesthetic, that “was not enough for the first factor to weigh in favor of fair use.” If it was, that would encroach upon the derivative work right. The Court noted that in Campbell it was necessary for the use to qualify as a parodical use for the first factor to weigh in favor of fair use. (page 17)

3. The critical test is whether the purpose of the use of the secondary work is “sufficiently distinct” from the purpose of the use of the original work.

The critical test for determining the impact of the first factor is whether the new work supersedes the objects of the original work or instead adds something new, with a further purpose or different character. The court stressed that the first factor is primarily concerned about “substitution.” (page 15) If a secondary work might serve as a substitute for, or supplant, the underlying work, the first factor will not favor fair use. Although this is clearly stated in Campbell, the Court in AWF explains in great detail how this test applies.

To determine whether a secondary work might serve as a substitute for, or supplant, the work, the purpose of the use must be considered. If the purpose of the use of the original work is “to achieve a purpose that is the same as, or highly similar to, that of the original work,” it is more likely to substitute for, or supplant, the work, and therefore less likely to be a fair use. (pages 15 and 20). Conversely, if the purpose of the secondary use is “sufficiently distinct” from the purpose of the use of the original work, it is less likely to substitute for, or supplant, the work, and therefore more likely to favor fair use under the first factor. (pages 12 and 38)

4. Purpose and character of the use must be weighed against the commercial nature of, and justification for, the use.

In addition to considering the purpose and character of the use, the Court explains in great detail, that both the commercial nature of, and justification for, the use must also be taken into account and weighed against the purpose of the use. Consequently, merely having a distinct purpose may not be enough to result in the first factor favoring fair use. In my view, at the bottom of page two, the concurrence states the entire first factor test more clearly than the majority, explaining that ultimately determining the purpose and character of the use comes down to a two-step inquiry: (i) determine how the secondary user is using the copyrighted work; and (iii) why the secondary user is using the work.

With regard to the commercial nature of the use, the Court emphasized that the commercial nature of the use is not to be ignored or given short shrift. As the Court states, “the fact that a use is commercial as opposed to nonprofit is an additional ‘element of the first factor.’” And although the commercial nature is not dispositive, it is relevant to the inquiry. The Court explained that this meant that when a use is more transformative, the commercial nature (and other factors that may weigh against a finding of fair use) will be less significant. (page 18) Conversely, when the use is less transformative, commercialism and other factors that weigh against a finding of fair use play a larger role in the analysis. In this respect, purpose and character are a “matter of degree,” which the Court noted numerous times throughout the opinion.

Some have criticized this reference to commercialism as a new consideration. That criticism is wrong. The commercial nature of the use has always been a part of the first factor considerations. In fact, the statutory language of the first factor explicitly states that the commercial nature of the use must be considered. While commercialism has always been part of the first factor analysis, over the years, the commercial nature of the use has been given less importance. The Court’s decision instructs lower courts to restore commercialism back into the analysis.

With regard to justifications for using the work, the Court explained that a use may be justified because “copying is reasonably necessary to achieve the user’s new purpose.” (page 19) To illustrate a type of sufficient justification, the Court cited the parody in Campbell as an example of the user needing to mimic the original in order to make its point. The Court stated that “[a]n independent justification like [the parody in Campbell] is particularly relevant to assessing fair use where an original work and copying use share the same or highly similar purposes, or where wide dissemination of a secondary work would otherwise run the risk of substitution for the original or licensed derivatives of it.” The Court further explained that when the uses are substantially similar the justification must be particularly compelling. (page 35)

The Court also listed several justifications that should be deemed insufficient. These inadequate justifications included:

• The secondary uses can improve on the work (see footnote 21, “I can make it better”);

• Copying is helpful (see page 35); and

• The secondary user wants to reach different buyers, in different markets, consuming different products (footnote 22)

5. The six purposes listed in the preamble serve as a guide.

In its decision, the Court emphasizes that the purpose of the secondary use must be sufficiently distinct from the purpose of the original work. It also provides some direction to lower courts as to how they could determine what level of distinctiveness might be sufficient enough for the purpose to weigh in favor of fair use. The fair use preamble identifies six different purposes—criticism, comment, news reporting, teaching, scholarship, or research—as prototypical fair uses because, as the court stated on page 15, they “serv[e] a manifestly different purpose” from the original work. The Court (including the concurrence) instructs lower courts that, while this list is intended to be merely illustrative, they should use the list to guide their analysis. Once again, the Court notes that not every case will clearly fit into one of these six purposes, and other uses will be a “matter of degree.”

To illustrate how this works in practice, the Court explained how the first factor analysis was applied in Campbell. (page 17) It noted that even though 2 Live Crew transformed Roy Orbison’s song by adding new lyrics, new musical elements, a new message and a different aesthetic, that “that did not end the Court’s analysis of the first fair use factor.” “The Court found it necessary to determine whether 2 Live Crew’s transformation of Orbison’s song rose to the level of parody, a distinct purpose of commenting on the original or criticizing it.” (emphasis added) This seems to demonstrate that courts should not stray too far from the six purposes outlined in the preamble, at least when the use is of a commercial nature. (pages 17 and 18)

There are five more takeaways yet to come. Be sure to stay tuned for part two of this blog, which will be published on Friday, May 26.

---

If you aren’t already a member of the Copyright Alliance, you can join today by completing our Individual Creator Members membership form! Members gain access to monthly newsletters, educational webinars, and so much more — all for free!