Fair use

Introduction
The most significant and, perhaps, murky of the limitations on a copyright owner's exclusive rights is the doctrine of fair use. Fair use is an affirmative defense to an action for copyright infringement. It is potentially available with respect to all manners of unauthorized use of all types of works in all media. When it exists, the user is not required to seek permission from the copyright owner or to pay a license fee for the use.

The doctrine of fair use is rooted in some 200 years of judicial decisions. The most common example of fair use is when a user incorporates some portion of a pre-existing work into a new work of authorship. For example, quotation from a book or play by a reviewer, or the incidental capturing of copyrighted music in a segment of a television news broadcast is fair use.

In the Campbell case, the Supreme Court expressly accepted the proposition that such "transformative" uses are more favored in fair use analyses than uses that amount to little more than verbatim copying. As one moves away from such transformative uses into the area of uses that &mdash; for practical purposes &mdash; compete with the copyright owner's exploitation of the work, the analysis becomes more difficult (as the number of litigated cases grows).

Section 107 of the 1976 Copyright Act provides:


 * Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section [sic], for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include &mdash;


 * (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;


 * (2) the nature of the copyrighted work;


 * (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and


 * (4) the effect of the use upon the potential market for or value of the copyrighted work.


 * The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

The language may usefully be divided into two parts: the first sentence, which is largely tautological ("fair use . . . is not an infringement of copyright"), and the analysis required by the second sentence. The recitation of assorted uses in the middle of the first sentence has been held neither to prevent a fair use analysis from being applied to other "unlisted" uses nor to create a presumption that the listed uses are fair. It does, however, provide some guidance on the types of activities which might be considered fair use.

The core of Section 107 is the second sentence, in which Congress elaborates a test similar to that articulated by Justice Story more than 150 years ago. It is clear that courts must evaluate all four factors in determining whether a particular use is fair, but may also take into account unenumerated "extra" factors, when appropriate.

The Purpose and Character of the Use
Although the fourth factor has repeatedly been held to be the most important of the four factors, the first factor often plays a major role in determining the result when a defendant asserts a fair use defense.

The first factor contrasts "commercial" uses with "nonprofit educational" uses. There is, of course, a continuum between these two opposites, with most uses falling neatly into neither the favored nor disfavored pigeonhole.

In Sony Corp. of America v. Universal City Studios, Inc., the Court announced a "presumption" that helps explain courts' near universal rejection of fair use claims in commercial contexts. It declared that all commercial uses were to be presumed unfair, thus placing a substantial burden on a defendant asserting that a particular commercial use is fair. The Campbell case made clear that the Sony presumption was of greatest applicability in the context of verbatim copying, thus giving greater leeway to commercial but transformative uses.

The Nature of the Copyrighted Work
This second factor tends to play a less significant role than the first in fair use litigation. Courts have held that this factor weighs in the copyright owner's favor when works of fiction and unpublished works are copied, and in the defendant's favor when factual works and published works are copied.

The Amount and Substantiality of the Portion Used
This is probably the least important factor, given that the taking of even a small amount &mdash; if it is considered the "heart" of the work &mdash; can lead to a finding of infringement. Indeed, the most frequently cited copyright treatise devotes only four sentences to its discussion:


 * The third factor listed in § 107 is "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." This raises an issue discussed in a preceding section [concerning the quantum of copying that constitutes infringement], and may be regarded as relating to the question of substantial similarity rather than whether the use is "fair." This includes a determination of not just quantitative, but also qualitative substantiality. In any event, whatever the use, generally it may not constitute a fair use if the entire work is reproduced.

The Economic Effect of the Use
Courts have repeatedly identified this as the most significant of the four factors. It is important to recall that it weighs against a defendant not only when a current market exists for a particular use, but also when a potential market could be exploited by the copyright owner. Harm in either market will, in most instances, render a use unfair.

The Supreme Court's decisions demonstrate the significant weight given this factor:

• In Sony, the absence of any market for home taping licenses, combined with the testimony of some copyright owners that they were indifferent to home copying, led the Court to conclude that there was no cognizable harm.

• In Harper & Row, the Court accepted the argument that the defendant's "scooping" of "Time" magazine's right to make the first serial publication of President Ford's memoirs, which caused cancellation of the magazine's contract with Harper & Row, caused harm to the copyright owner.

• In Stewart v. Abend, performances of a movie palpably harmed the economic interests of the owner of the copyright in the underlying short story.

• In Campbell, the Court &mdash; because the parody was "transformative" &mdash; rejected the court of appeals' determination that the commercial purpose of the parody required the parodist to overcome Sony's presumption of market harm.

Courts in two cases concerning the unauthorized "uploading" and "downloading" of copyrighted materials to and from bulletin board services have held that such uses were not fair uses. In Playboy v. Frena, the court characterized the issue as whether "unrestricted and widespread conduct of the sort engaged in by the defendant bulletin board system operator (whether in fact engaged in by the defendant or others) would result in a substantially adverse impact on the potential market for or value of [Playboy's copyrighted photographs]," and determined that it would. This, in turn, led the court to conclude that there was market harm and, thus, infringement.

In Sega v. MAPHIA, the court found that Sega established a prima facie case of direct and contributory infringement in the operation of the defendant's bulletin board system (where Sega's copyrighted videogame programs were uploaded and downloaded). In issuing a preliminary injunction, the court found that each of the four factors weighed against a finding of fair use, but found that the fourth factor, in particular, weighed "heavily" against such a finding:


 * Based on Defendants' own statement that 45,000 bulletin boards like MAPHIA operate in this country, it is obvious that should the unauthorized copying of Sega's video games by Defendants and others become widespread, there would be a substantial and immeasurable adverse effect on the market for Sega's copyrighted video game programs. Id. at 688.