Abstract:
This chapter examines judicial responses to the expansion of the fair use doctrine in copyright law. Recently, courts have increasingly pushed back against broad interpretations of transformative use, fearing they undermine copyright protections. The 2014 Kiennitz v. Sconnie Nation case questioned whether transformative use should override derivative rights. The Fox News v. TVEyes ruling limited fair use when it caused market harm. Similarly, Locast was shut down for exploiting a nonprofit loophole in retransmitting TV content. The 2023 Warhol v. Goldsmith case reinforced stricter standards for transformative use in appropriation art. However, the Google Books precedent, while praised, risks weakening copyright protections for literary works. Efforts by advocacy groups to expand digital access have clashed with judicial rulings prioritizing copyright holders. Ultimately, the courts are trying to balance content access with protecting creators’ rights.
Chapters in the Book:
- Part 2 - Unmaking Copyright Law
- Chapter 6 - The Hesitant Return of Reason (p.139-152)
Summary
6. The Hesitant Return of Reason
In a 2014 case (Kiennitz v. Sconnie Nation), the Court of Appeals for the Seventh Circuit challenged the broad application of the fair use doctrine, arguing it conflicted with the copyright statute. The court observed that broad application of the fair use doctrine to shield uses deemed to be transformative would threaten copyright owners. Many scholars view the derivative right as an undeserved windfall for content owners. However, this overlooks the critical role the derivative right plays in supporting the fragile economics of the entertainment and media industry. The appellate court argued that if a work is deemed transformative under fair use, it could also qualify as transformative under the derivative right, leading to legal inconsistencies.
Following this logic, this could effectively nullify the derivative right, undermining copyright protection. The Court proposed eliminating the concept of transformative use from fair use analysis. This would align with the Campbell decision, which primarily used the term “transformative” to refine traditional fair use categories like criticism and parody. In other words, the court’s stance was a wake-up call about the potential collapse of copyright protections if the fair use doctrine remained unmodified. Unrestrained fair use could undermine not just the derivative right but also claims of nonliteral infringement, including mass literal infringement (such as in the Google Books cases). The 2022 Nimmer on Copyright treatise supported the Seventh Circuit’s critique, arguing that transformative use had been overextended. Similarly, some courts have begun pushing back against broad transformative use arguments. The result is a growing tension in fair use case law. On the one hand, there are still-prevailing tendencies to favor a broad understanding of transformative use over competing policy considerations. On the other hand, there are tendencies to create a more nuanced version of the fair-use analysis.
6.1. Fox News Network v. TVEyes (2018): Restoring Balance in Fair Use Analysis
In Fox News v. TVEyes (2018), the Second Circuit rejected TVEyes’ fair use defence for providing video clips of copyrighted broadcasts. TVEyes recorded and stored television content in a searchable database, allowing users to view, download, and share short video segments. The court ruled that TVEyes’ use was only modestly transformative and caused significant market harm by undermining licensing opportunities. Citing Harper & Row, the court emphasized that market harm is the most crucial fair use factor. However, TVEyes was allowed to maintain its searchable transcript database without the video-viewing function.
6.2. Locast: The “Non-Profit” Streaming Service (2021)
In a 2021 case, a nonprofit entity, Sports Fan Coalition, operated Locast, streaming local TV, including NFL games, without broadcaster consent or retransmission fees. In its defense against a copyright infringement lawsuit brought by television broadcasters, Locast argued that its parent entity’s non-profit status qualified it for a statutory exemption under the copyright statute. This would provide a safe harbor from infringement of the public performance right in the case of transmission by non-profit organizations. In 2021, the Federal Court rejected this argument on the grounds that Locast was a commercial operation in practice. This was because its “donations” exceeded costs and funded expansion. Locast was ordered to cease operations, and the television broadcasters were awarded statutory damages under the copyright statute.
There is a sequel to the Locast case that illustrates the extent to which the U.S. copyright system has departed from its historical commitment to protect the originators of content assets. Gigi Sohn, a director of Locast and former CEO of Public Knowledge, is linked to efforts to weaken copyright protections in favor of content access. The overlapping leadership of Locast and Public Knowledge illustrates the convergence of efforts by advocacy groups and business interests to commoditize content assets in creative markets.
6.3. Was Andy Warhol a Serial Infringer? (2023)
In Warhol v. Goldsmith (2023), the Supreme Court addressed whether the fair use doctrine can protect “appropriation art” practices, specifically regarding Warhol’s paintings of Prince’s photograph. Warhol created 16 color illustrations based on a photo of Prince, which Conde Nast later used without the proper license, raising infringement questions. The case mirrors Cariou v. Prince, where the Second Circuit favored the appropriation artist, emphasizing transformative use and minimal market harm. In the Warhol case, reflecting the recent judicial pushback against the most expansive understandings of the fair use doctrine, the Second Circuit ruled against the appropriation artist. The appellate court rejected the Warhol Foundation's transformative use defense, emphasizing that Warhol’s illustration likely displaced market opportunities for the original work. The Second Circuit introduced a stricter standard for transformative use, requiring more than just the mere application of a different style to the original work. Thus, the court’s decision contrasted with Cariou, signaling a return to a more balanced application of the fair use factors. The Supreme Court upheld this decision. It agreed with the Seventh Circuit’s view that without a stricter test for transformative use, it could undermine the copyright owner’s exclusive right to create derivative works.
6.4. The Great American Book Robbery (2023)
The Google Books decisions have been widely praised in the scholarly community as a creative application of the fair use doctrine to enable access to copyright-protected material. Nonetheless, the precedent set by Google Books could undermine authors’ ability to protect their works and generate revenue from literary content. The application of fair use in the Google Books litigation relied on the fact that Google only showed “snippets” to users. The related HathiTrust project showed only information concerning the number of times, and the pages on which a particular search term appears in a book. Thus, according to the argument and in light of the limited portions of text being displayed, these projects caused no significant economic harm to copyright holders. This led others to “push the envelope” of the fair use exemption by deploying business models that engage in more extensive use of copyright-protected material for commercial purposes (such as in the cases of TVEyes and Locast litigations).
For example, Library Associations have lobbied for weakened copyright protections, aiming to facilitate easier access to copyrighted works and push for broader fair use applications. To bypass judicial resistance to expanded fair use, these groups have sought state laws that impose compulsory licenses on book publishers for digital libraries. For example, in 2021, Maryland enacted a law requiring publishers to offer licenses to public libraries on “reasonable terms”. However, these state laws likely violate the federal copyright statute’s preemption clause, as the federal court struck down Maryland’s law in 2022. These efforts, along with the expansion of fair use, undermine the ability to assert legal exclusivity over literary works.
The consequences of these actions are not merely theoretical. During the COVID-19 pandemic, the Internet Archive provided unrestricted access to books, including some under copyright, which it had scanned without permission. The Archive’s practices, especially suspending the waitlist system and offering unlimited access to digital books, contradicted fair use defenses. This raised significant concerns about potential economic harm to copyright owners. According to the Internet Archive, digital lending increases access to literary content. However, this overlooks the financial challenges of producing and marketing content and the potential harms to publishers’ revenue streams. Despite being non-profit, the Internet Archive’s operations resemble for-profit business models. The Archive earned millions from its services, including through partnerships with Better World Books, which monetizes the digitized content. Although the Archive may aim to expand access to literature, its business model supports revenue extraction from digitized content without compensating the creators. Ultimately, this raises concerns about the broader impact on the sustainability of the literary market and the economic incentives for authors and publishers.
While legal academics in the two previously mentioned amicus briefs supported the position of the Archive, the Seventh Circuit disagreed vigorously. It stated that converting physical books into e-books did not qualify as transformative use but as a “paradigmatic” adaptation, violating the derivative right. The Court found that the Archive did not strictly enforce its one-to-one digital lending model, as it was unclear whether physical copies were removed from circulation once digitized. It emphasized that allowing the Archive to reproduce in-copyright books without authorization would undermine authors’ rights to profit. Thus, the court’s decision reflected a balance between expanding access to content and preserving authors’ economic rights. The decision countered the efforts of advocacy groups that favored broader fair use and digital appropriation.
6.5. Closing Thoughts
In 2013, Maria Pallante emphasized that copyright laws should prioritize authors and ensure they remain central to the equation. The judiciary has expanded the fair use doctrine, favoring broader access to content. This shift is largely driven by the desire to promote digital technologies that increase content access. However, as courts like the Supreme Court’s 2023 Warhol decision noted, this focus contradicts the intent of Congress and copyright law's balance between access and incentives. Expanding fair use and DMCA safe harbors often benefits content aggregators, overlooking content creators’ rights. This imbalance undermines the protection needed for creative professionals. A system that prioritizes access over creativity incentives risks destabilizing the creative ecosystem.
