Google’s Fair Use Defense Fails Under Factor 4 Scrutiny

Note: This post is part of a series. Part 1 can be found here and Part 2 can be found here.

The fourth fair use factor is critical to determining whether an otherwise infringing use is permissible, and the Supreme Court’s evaluation of this factor in Google v. Oracle is certain to influence its ultimate finding. Factor 4 considers the effect of the alleged infringing use upon the potential market for or value of the copyrighted work. What is sometimes overlooked is that this factor examines not only the market that the copyrighted work is actively participating in, but also any potential market for the work and any of its derivatives. This is a critical element of factor 4 determinations that amici explain weighs heavily against Google’s fair use defense. Below are excerpts from the briefs addressing factor 4.

Concerning Fair Use Factor 4: Effect of the Use upon the Potential Market for or Value of the Copyrighted Work

• Solicitor General’s Brief:
  • “Petitioner asserts that Android and Java “did not compete” because Java “was designed for servers and desktop computers” and “is not suitable for the modern smartphone market.” But the record contained “overwhelming'” evidence that petitioner’s copying harmed the market for the Java platform. That included undisputed evidence that respondent’s customer Amazon had used the existence of the Android platform as leverage “to negotiate a steep discount” for continuing to license respondent’s Java platform for use in Kindle tablets. Undisputed evidence also showed that mobile phones used the Java platform and that respondent licensed its work to smartphone manufacturers. Petitioner’s argument also cannot be reconciled with the fourth factor’s role in protecting an author’s broad right to authorize derivative works, such as a version of the Java Standard Library tailored to “modern smart- phones.”” (citations omitted).
• Copyright Alliance’s Brief:
  • “The fourth factor requires a reviewing court to look beyond the market that the original work currently occupies, and to consider the effect of the alleged infringer’s use on “potential market[s]” for the copyrighted material, as well as the “harm to the market for derivative works.” Moreover, a copyright owner need not move into all markets at once (or at all) to avoid a finding that a third- party’s use is fair. To the contrary, creators have the “exclusive right” to decide “when, whether and in what form to release the” copyrighted work into new markets, whether on their own or through licensing agreements.”‘
• RIAA et al. Brief:
  • “Finally, with respect to the fourth factor, the Federal Circuit correctly considered “not only harm to the actual or potential market for the copyrighted work, but also harm to the market for potential derivative uses,” and found that “the effect of the use upon the potential market for or value of the copyrighted work” weighed against a finding of fair use. Id. at 1207-10 (citations & quotations omitted). Significantly, the Federal Circuit noted that Oracle both (i) had actually been in the same market as Google’s target market (smartphones) for years; and (ii) “was attempting to license its work for mobile devices, including smartphones.” Id. at 1209.”
• Journalism Professors’ Brief:
  • “The copyright holder has the exclusive right to determine “when, whether and in what form to release’ the copyrighted work into new markets.” Monge v. Maya Magazines, Inc., 688 F.3d 1164, 1182 (9th Cir. 2012), quoting Harper & Row, 471 U.S. at 553. even a copyright owner who had disavowed any intention to publish his work during his lifetime was entitled to copyright protection because “the relevant consideration was the potential market'” and “he has the right to change his mind.””
• Association of American Publishers’ Brief:
  • “Under the fourth statutory factor, the Federal Circuit correctly found that the unauthorized use of the Java Code in android caused both actual and potential market harm to oracle, therefore the fourth factor weighed “heavily” in oracle’s favor. Cognizable market harm under the fourth factor includes not only actual or potential harm to the market for the copyright owner’s work itself, but also actual or potential harm to “potential derivative uses” including “those that creators of original works would in general develop or license others to develop,” as this Court held in Campbell. It was also relevant to the Federal Circuit that a copyright owner has the exclusive right to determine “when, whether and in what form to release” the work into new markets, whether directly or through licensing agreements.”
• Creators Rights Organizations’ Brief:
  • “Without properly considering potential, likely to be developed markets, including markets for derivative uses, courts essentially restrict the ways by which copyright owners may later exploit their exclusive rights. This is antithetical to the purpose of copyright law, which grants creators the exclusive right to their writings for a limited time.”
• News Media Alliance’s Brief:
  • “Courts have long recognized that loss of potential licensing revenue is a cognizable Factor 4 harm. As the Second Circuit explained: “It is indisputable that, as a general matter, a copyright holder is entitled to demand a royalty for licensing others to use its copyrighted work, and that the impact on potential licensing revenues is a proper subject for consideration in assessing the fourth factor[.]””