Copyright Cases in 2023: A Year in Review

Copyright enthusiasts knew that 2023 would bring with it a highly anticipated decision in one of the biggest fair use cases in decades: Andy Warhol Foundation v. Lynn Goldsmith. Indeed, the Supreme Court’s opinion—whether you agree with it not—is nothing short of a lodestar in the world of copyright law that will influence fair use cases for years. But while Warhol grabbed all the headlines, there were a few other major copyright decisions that signaled how the law will be applied to key issues like deposit requirements, the protection of safety codes and standards, and the unauthorized scanning and distribution of copyrighted works. This blog will discuss those cases and their impact. But first, Warhol.

Landmark Warhol Decision Reins in Transformative Fair Use

On May 18, the Supreme Court, in a 7-2 opinion written by Justice Sonia Sotomayor, found that the purpose and character of Andy Warhol Foundation’s (AWF) use of Lynn Goldsmith’s photograph did not favor a fair use defense under the first fair use factor. For a full background on the facts and procedure of the case, see this earlier blog. The landmark decision reaffirmed a critical tenet of the fair use doctrine: that whether a use is transformative not only doesn’t control a fair use determination, but it also doesn’t control a factor one analysis. Sotomayor’s thoughtful examination of the boundaries of fair use—paired with a recognition of the importance of copyright owners’ right to prepare derivative works—rightfully reined in expansive notions of transformative use by lower courts and others who have misinterpreted the doctrine as first handed down by the Court in Campbell v. Acuff Rose Music almost 30 years ago.

While some commentors claim the decision is narrow because it addresses a specific situation—use of images for licensing to magazines—the opinion’s (and concurrence’s) affirmation of the limited weight of transformativeness and significance of the derivative works right is anything but narrow. The fact that the Court did not, as a matter of procedure, opine on other uses that were not at issue in the case doesn’t mean its analysis is inapplicable to other uses. For example, it’s not hard to see how the Court’s treatment of transformative use could impact artificial intelligence developers’ fair use claims related to their unauthorized copying and ingestion of copyrighted works for training purposes. And while many generative AI infringement cases are still in their early stages, AI developers who rely heavily on transformative use arguments to support such unauthorized copying and ingestion may be in for a Warhol-based reality check. 

Ultimately, Sotomayor’s opinion swings the fair use pendulum back to its proper position, confirming the intended context and limited application of transformative use within factor one. This reaffirmation of the proper weight that should be afforded to transformative use shouldn’t come as a surprise, as other courts have recently begun to recognize that expansive notions transformative use are a “high-water mark.” Warhol assures us that the high water is now receding and will hopefully settle at the level that the Supreme Court intended.

Internet Archive’s Manufactured “Lending” Theory Rejected

In March, the District Court for the Southern District of New York granted a motion for summary judgment filed by a group of book publishers in their case against the Internet Archive (IA) for copyright infringement related to the scanning of tens of thousands of literary works and distribution of digital copies to the public for free. The case was brought back in 2020, when four book publishers challenged the Internet Archive’s contrived theory of controlled digital lending (“CDL”) that it argued allowed it to scan and distribute digital copies of books to the public without a license.

The court’s order denounced Internet Archive’s CDL theory as clear copyright infringement and unequivocally rejected Internet Archive’s fair use defense. Considering the first fair use factor, the court explained that “[t]here is nothing transformative about IA’s copying and unauthorized lending of the Works in Suit” because it did not alter the purpose and character of the books “with new expression, meaning or message.” In the court’s view, digitally reproducing and distributing the books plainly violated the publishers’ exclusive rights.

The court also found that the three remaining factors clearly favored the publishers. Regarding the nature of the works, the court explained that creative works such as the fiction books involved in the case are at “the core of copyright’s protective purposes,” and even the accompanying nonfiction books have creative value in the “subjective descriptions and portraits … whose power lies in the author’s individualized expression.” Addressing factor three, the court found that Internet Archive copied and disseminated the entirety of the books at issue. Finally, considering the fourth factor, the court explained that the publishers were deprived of benefiting from a “thriving ebook licensing market for libraries” as a result of Internet Archive’s rote, unlicensed copying and lending of their works.

The Internet Archive recently filed an opening brief in its appeal of the decision, but it’s hard to see how it could convince a court to embrace such a thoroughly rejected justification for infringement. However, it’s not surprising that the Internet Archive is eager to challenge the adverse decision, given that it is facing a similar lawsuit related to the unauthorized digitization and distribution of sound recordings owned by Universal Music Group and other record labels.

Protection of Safety Standards and Codes Suffers Setback

In September, the U.S. Court of Appeals for the District of Columbia issued an opinion in American Society for Testing Materials (ASTM) v., holding that the noncommercial distribution of privately-authored safety codes and standards that are incorporated by reference into law qualifies as fair use. The case was initially brought in 2013 by ASTM and other Standards Development Organizations (SDOs) against, an organization that digitized and posted to the internet many of the SDOs works without authorization. In 2017, the District Court for the District of Columbia found that’s activities did not qualify as fair use and ordered the posted materials to be taken down from its website. However, over the next five years, the case was appealed, reversed and remanded, and eventually the Court of Appeals for the District of Columbia affirmed a decision that’s reproduction and dissemination of most of the works at issue qualified as fair use.

Unfortunately, the court misapplied the fair use factors and the decision disregards the harm to existing and potential markets for the works of SDOs. In an amicus brief filed in support of ASTM, we explain that allowing to copy and distribute the copyrighted works of SDOs—which they invest much time and resources into developing—would effectively manufacture a carve-out from the protections guaranteed by copyright law. While we support making federal, state, and local laws accessible to the public, our brief points out that SDOs already make these codes available, and the fact that they are incorporated into laws does not strip them of copyright protection.

Ultimately, only Congress is empowered to decide whether and under what circumstances exceptions to copyright law can be expanded. The type of privately-authored standards at issue in the case have been around for over a hundred years, and never has Congress said that they shouldn’t enjoy the full protections of the Copyright Act. In fact, in 2023 a bill was introduced by a bipartisan group of Senators that would ensure safety standards do not lose copyright protection when they are incorporated into law by name, as long as they are accessible for free on a publicly available website. The Copyright Alliance supports the Pro Codes Act and looks forward to its reintroduction in 2024.

Deposit Requirement Found to be Unconstitutional

In August, the D.C. Circuit Court of Appeals reversed a 2021 district court decision that held the Copyright Act’s section 407’s deposit requirement was not an unconstitutional taking, but rather a voluntary exchange in return for the benefit of federal copyright protection. The case stemmed from a 2018 dispute between a small book publisher, Valancourt, and the U.S. Copyright Office, which demanded that Valancourt deposit 341 works that it published through its print-on-demand service under section 407’s mandatory deposit rule. Valancourt sued the Copyright Office soon after, seeking to enjoin the federal government from demanding deposit copies and alleging the mandatory deposit provisions are an unconstitutional taking of property without just compensation in violation of the Fifth Amendment and an unconstitutional burden on free speech in violation of the First Amendment.

The Court of Appeals’ August decision in favor of Valancourt only addressed the Copyright Office’s demand for physical copies of works in the context of the Fifth Amendment, finding that section 407, as applied by the Copyright Office, constituted an unconstitutional taking. Reviewing the role and evolution of the mandatory deposit requirement in U.S. copyright law, the court found that the current mandatory deposit requirement was not tethered to any benefit in exchange for the submission of physical deposits, because copyright protections automatically vest at fixation.

One unresolved question is whether copyright owners van voluntarily disavow or abandon their copyrights in order to avoid the deposit requirement. The court declined to resolve the issue but explained that existing authority and Office guidelines did not make clear that such a theory could be applied for parties to avoid the mandatory deposit requirement. The court also declined to address Valancourt’s First Amendment claims because it concluded that Valancourt would prevail anyway on the Fifth Amendment claim.

In late 2023, the Court of Appeals rejected the Copyright Office’s petition for an en banc rehearing of the case. While it seems the case is over for now, the decision will surely impact the development of future Copyright Office deposit policies and the Library of Congress’s collection of physical versions of copyrighted works.

Looking Ahead

2024 will undoubtedly be another important year for copyright litigation, as the many lawsuits brought by creators and copyright owners against AI developers will progress and lead to potentially game-changing decisions. Outside of AI, the cases against Internet Archive may finally put to rest the manufactured “controlled digital lending” theory that has already been recognized as having no legitimate foundation in the law. The Supreme Court will also take on the discovery rule in Warner Chappell Music v. Nealy, which may resolve a circuit split over what constitutes a timely copyright claim. And, of course, the impact of Warhol will begin to take shape, as courts apply the Supreme Court’s landmark confirmation of the limited nature of transformative fair use. 

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