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May 25, 2023

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

by Keith Kupferschmid

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.

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