Fair use

Introduction
The originating objective of copyright, as stated in the U.S. Constitution, was to promote the progress of science and the useful arts. Rewarding the labor of authors is viewed as furthering that objective. The Copyright Act serves this two-tier purpose by vesting in authors of protected works certain exclusive rights. The unauthorized use of copyrighted material constitutes an infringement of these rights, unless the use is excused by a statutory exception. By limiting these rights, the Copyright Act attempts to strike a fair balance between an author’s exclusive rights and the public’s interest in using copyrighted material.

The most significant and, perhaps, murky of the limitations on a copyright owner's exclusive rights (particularly online) is the doctrine of fair use. The fair use doctrine allows people in certain circumstances to use copyrighted material in ways the copyright owner has not authorized and might even forbid if asked. Fair uses are generally limited to uses for useful or beneficial purposes with minimal impact on the market for the work.

Fair use is designed to ensure that the rights of authors are balanced with the interest of the public in the free flow of information. Congress has noted that fair use is the most important limitation on the exclusive rights granted copyright owners, and the Supreme Court has characterized fair use as one of copyright law's built-in accommodations to the First Amendment.

Fair use is an affirmative defense to an action for copyright infringement. It is a privilege, not a right. It is considered an "equitable rule of reason, which permits courts to avoid rigid application of the copyright statute when, on occasion, it would” undermine the purpose of copyright. 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 Campbell v. Acuff-Rose Music, Inc., 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).

Fair Use Test &mdash; 17 U.S.C. §107
By design, the fair use doctrine is fluid and applies not according to definite rules, but rather according to a multi-factor balancing test. 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. It would be difficult to articulate a more determinate set of fair use rules, given the variety of copyrighted works, their uses, and the situations in which they can be used. Consequently, both through case law and statutory codification, fair use has historically been decided on a case-by-case basis looking at the totality of the facts at hand.

Although the fair use doctrine has developed primarily in civil cases, those cases have precedential weight in criminal cases, too.

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 has two primary facets, whether the use serves a commercial purpose, and whether the new use is transformative.

Commercial Use
Commercial use of copyrighted material cuts against a finding of fair use. In Sony Corp. of America v. Universal City Studios, Inc., the Court 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. According to the Supreme Court “the crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain, but whether the user stands to profit from the exploitation of the copyrighted material without paying the customary price.”

This standard does not require courts to make a clear-cut choice between two absolute choices – i.e., making a dispositive decision of whether a use is a “commercial” or “non-profit” per se. Rather, “the commercial nature of a use is a matter of degree, not absolute.”

This places the question of commercial use on a continuum between two extremes: (1) a use that serves a non-commercial purpose by a non-commercial entity charging no fee whatsoever, and (2) a use that serves a commercial purpose by a commercial entity deriving its revenue directly from a fee charged for the copyrighted material.

Transformative Use
In Campbell v. Acuff-Rose, the Supreme Court indicated that the Sony presumption (that a commercial use is not a fair use) is strongest in cases of "mere duplication" and weakest when a second commercial comer makes a transformative use or uses that add something new or different beyond a mere repackaging or restatement of the original:


 * "Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works."

For this reason, “the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use.” See Acuff-Rose, 510 U.S. at 579.

What constitutes a “transformative work” is not subject to exacting definition. However, as a general rule, if the new work “merely supersedes the objects of the original creation,” it is not transformative, but if it “adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message,” it is transformative. Transformative uses add new information, new aesthetics, new insights and new understandings. Such uses may include criticizing the copyrighted work, “exposing the character of the original author, proving a fact,” or representing the original work in order to defend or rebut it.

The Nature of the Copyrighted Work
This second factor tends to play a less significant role than the first in fair use litigation. "This factor calls for recognition that some works are closer to the core of intended copyright protection than others."

Fair use is more difficult to establish in the use of fictional or purely creative or fanciful works, as opposed to more factual or historical (yet still copyrightable) works, such as recollections of public figures, or depictions of newsworthy events. "The law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy."

As a result 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. However, a use can be fair even if it copies the entire work.

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. Further:
 * [T]o negate fair use one need only show that if the challenged use "should become widespread, it would adversely affect the potential market for the copyrighted work." This inquiry must take account not only of harm to the original but also of harm to the market for derivative works.

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.

The Supreme Court has emphasized the importance of this factor in cases of noncommercial use.

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.