Rotbart v. J.R. O'Dwyer Co., Inc.

34 U.S.P.Q.2d 1085

Dean ROTBART and TJFR Publishing Co., Inc., Plaintiffs,
J.R. O'DWYER CO., INC. and Jack O'Dwyer, Defendants.

No. 94 Civ. 2091 (JSM).

United States District Court, S.D. New York.

Feb. 7, 1995.

Victor A. Kovner, Lankenau Kovner & Kurtz, New York City.


MARTIN, District Judge:

In this action, plaintiffs Dean Rotbart and TJFR Publishing Co. claim that articles published in defendant Jack O'Dwyer's publications, which covered remarks delivered by Rotbart at a conference, infringed plaintiffs' copyright in the remarks, violated Section 43(a) of the Lanham Act as unfair competition, and defamed the plaintiffs. Now before the Court is defendants' motion to dismiss. Because the parties have submitted affidavits and other exhibits, the motion is properly treated as one for summary judgment.See Fed.R.Civ.P. 12(b). For the reasons stated below, defendants' motion is granted in its entirety.

I. Introduction

Dean Rotbart is the President of TJFR Publishing Co., Inc., which publishes several newsletters about journalists and offers seminars to public relations professionals. Compl. ¶¶ 7, 8. Rotbart gives a workshop for PR executives called "Newsroom Confidential" for which all participants must sign confidentiality agreements.

Jack O'Dwyer, a journalist, is the Editor and Publisher of Jack O'Dwyer's Newsletter and O'Dwyer's PR Services Report. The Newsletter, published weekly, and the Report, published monthly, cover news, people, and issues regarding public relations matters.

On November 16, 1993, Rotbart delivered a presentation to the national conference of the Public Relations Society of America ("the Talk"). This oral presentation was based in part on a typical Newsroom Confidential workshop. Compl. ¶ 18. Unlike Newsroom Confidential, however, participants were not required to sign a confidentiality agreement, and no other restrictions were imposed on the more than two hundred participants. Compl., Ex. A, Newsletter (Nov. 24, 1993) at 7.

The Talk primarily focused on the relationship between public relations professionals and members of the media, and included some severe criticism of the business press. O'Dwyer attended the Talk, took detailed hand-written notes, and recorded the Talk on a tape recorder as a back-up note-taking device. Compl. ¶ 19.

After the Talk, O'Dwyer wrote articles and editorials in three editions of the Newsletter and one edition of the Report covering the events of the meeting. O'Dwyer quoted and paraphrased Rotbart in his coverage of the Talk, and he was harshly critical of Rotbart's ideas. Compl., Ex. A, Newsletter (Nov. 24, 1993) at 7–8; Ex. D, Newsletter (Dec. 15, 1993) at 7–8; Ex. E, Report (Jan. 1994) at 1, 2, 16–26; Ex. F., Newsletter (Jan. 19, 1994) at 7–8.

Apparently, several members of the media asked O'Dwyer for the context of some of the quotations that he had attributed to Rotbart. O'Dwyer acceded to these requests by making available to these persons a copy of the transcript of the Talk that he had prepared from the tape-recording. Compl., Ex. D, Newsletter (Dec. 15, 1993) at 7. O'Dwyer later sent out a few copies of a second version of the transcript in which he corrected some of the errors that appeared in the first copy. It is undisputed that both versions of the transcript were incomplete and contained several errors or incorrect words. Compl. ¶¶ 24A–B, 24E–F. In subsequent editions of the Newsletter and the Report, O'Dwyer reported the reactions of media professionals who had read his articles. Compl., Ex. D, Newsletter (Dec. 15, 1993) at 7 and Ex. E, Report (Jan. 1994) at 1, 16–26.

On February 18, 1994, Rotbart registered his transcription of the talk with the United States Copyright Office. Plaintiffs filed suit in this Court on March 25, 1994.

II. Discussion

A. Copyright Infringement: Fair Use

To succeed on a claim of copyright infringement, plaintiffs must prove that defendants copied Rotbart's work in an unprivileged manner. Plaintiffs claim several instances of unprivileged copyright infringement by defendants including (1) the copying of portions of the Talk in defendants' publications, (2) an unauthorized taping of the Talk, and (3) the creation and publication of a transcript of the Talk to third parties. Compl. ¶¶ 50–56. Although defendants indeed copied Rotbart's remarks in the published articles and transcript, they contend that each instance of copying is privileged under the fair use provision of the Copyright Act. The Court agrees.

Fair use, codified at 17 U.S.C. § 107, is an equitable doctrine that allows reasonable use of copyrighted materials[1] without consent for certain purposes. Harper & Row, 471 U.S. at 549, 105 S.Ct. at 2224. The statutory scheme sets forth four nonexhaustive factors to be considered in determining whether a particular use is fair: (1) purpose and character of the alleged infringing use, (2) nature of the copyrighted work, (3) extent of the copying, and (4) effect of alleged infringing use upon the potential market for or value of the copyrighted work.

Fair use is a mixed question of law and fact; however, the Court may find as a matter of law that the copying qualifies as fair use if a reasonable trier of fact could reach only one conclusion. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 105 S.Ct. 2218 (1985).

An examination of the above factors demonstrates that summary judgment should be granted on plaintiffs' copyright claims in favor of defendants.

1. Purpose and Character of the Use

The preamble to Section 107 specifically mentions "criticism, comment, [and] news reporting" as among the purposes most appropriate to a finding of fair use. 17 U.S.C. § 107. Defendants used portions of the Talk for precisely these purposes; O'Dwyer used quotations to review and criticize Rotbart's work in a fair and reasonable manner. Moreover, defendants' work is not meant to, and likely cannot, supersede the use of the original work.

a. Commercial Use

The first factor "asks whether the original was copied in good faith to benefit the public or primarily for the commercial interests of the infringer." Rogers v. Koons, 960 F.2d 301, 309 (2d Cir.), cert. denied, 113 S.Ct. 365 (1992). The mere fact that a newsletter which uses copyrighted material may produce pecuniary gain for the publisher does not preclude a finding of fair use, for "[t]he commercial nature of a use is a matter of degree." Maxtone–Graham v. Burtchaell, 803 F.2d 1253, 1262 (2d Cir.1986). In fact, "[a]s long as a [work] can be classified as a work of criticism, scholarship or research ... the factor cuts in favor of the [work's] publisher." New Era Publications Int'l v. Henry Holt & Co., 873 F.2d 576, 583 (2d Cir.1989), cert. denied,493 U.S. 1094 (1990).

In the present case, the newsworthy and critical elements of defendants' articles outweigh their commercial aspects. The articles primarily were written to provide a report on the Talk and to express a certain point of view as a comment on it. Though it is undisputed that O'Dwyer quoted from the Talk in his report and analysis, these quotations were used "to write persuasively and without arousing the suspicion of the reader." Maxtone–Graham, 803 F.2d at 1260. Such a use is well within the fair use exception.

Defendants' fair use is also supported by the work's "transformative" nature, in that it "adds something new" to plaintiffs' work, has a "different character," and alters plaintiffs' work with a "new expression, meaning, or message." Campbell v. Acuff–Rose Music, Inc., 114 S.Ct. 1164, 1171 (1994). The Supreme Court has held that "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." Id.

Finally, defendants neither did nor intended to make a substantial profit by making and distributing copies of the transcript of the Talk. O'Dwyer initially made the tape recording for his own private use. Although the extent of the copying of plaintiffs' work in this instance would normally not be allowable, O'Dwyer did not publish the transcript to take advantage of its commercial value by creating a substitute for the original work. In providing a copy of the transcript upon request, defendants merely wanted to demonstrate that what O'Dwyer had reported in his articles was accurate. This limited distribution allowed readers to view the published quotations in context and permitted readers to come to their own conclusions about the legitimacy of O'Dwyer's criticism.

b. Errors in Copying

Plaintiffs allege that defendants made several mistakes by using incomplete statements or taking them out of context. As the Second Circuit stated in Maxtone–Graham, the fact that errors were made in transcription and use is a proper factor to consider in making the fair use determination, but "[o]nly where the distortions were so deliberate, and so misrepresentative of the original work that no reasonable person could find them to be the product of mere carelessness [should the Court] incline toward rejecting a fair use claim." Maxtone–Graham, 803 F.2d at 1261 (citation omitted).

It is undisputed that errors were made by defendants but those errors would not support a finding that they were deliberate distortions. Indeed plaintiffs make no claim that these errors were deliberate, but claim that defendants' use of Rotbart's work does not qualify as "criticism, comment, [or] news" under the fair use doctrine. There can be no question that the format chosen for presentation by O'Dwyer was one that an objective observer would believe to be news reporting. To have the Court go behind the objective evidence to divine the motive of a reporter would have First Amendment implications that suggest such an inquiry is inappropriate.

2. Nature of the Copyrighted Work

The second factor, the nature of plaintiffs' work, requires the Court to consider whether a work is creative or factual in nature and whether the work is published. The scope of the fair use defense is narrower for more creative works. Diamond v. Am–Law Publishing Corp., 745 F.2d 142, 148 (2d Cir.1984). Defendants' contention that the Talk was merely a factual guide to dealing with the business press is untenable. The Talk is clearly more than the product of mere diligence and the gathering of information; Rotbart's own experience and ideas were the primary sources of this original work.

The scope of fair use is also narrower if a given work is unpublished. The factors surrounding Rotbart's Talk indicate that the Talk had been de facto published. Unlike other, previous presentations by Rotbart, the Talk was delivered without requirements of confidentiality to more than two hundred people in a public forum. And although the Talk was given at the national PRSA conference, it was open to the general public upon payment of a registration fee. O'Dwyer Aff. ¶ 10, Ex. 3. In addition, Rotbart was aware that at least two reporters were in the audience. Rotbart Aff. ¶ 54. The Supreme Court has noted that these factors weigh in favor of fair use:

In a given case, factors such as implied consent through de facto publication or performance or dissemination of a work may tip the balance of equities in favor of prepublication use.

Harper & Row, 471 U.S. at 564, 105 S.Ct. at 2232. Thus, the fact that Rotbart had "published" his work, in the sense that he made it available to the public in these several ways, makes his work subject to fair use by defendant. See Harper & Row, 471 U.S. at 563, 105 S.Ct. at 2232.

3. Amount and Substantiality of Work Used

The third factor calls for an examination of "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." Harper & Row, 471 U.S at 564, 105 S.Ct. at 2233. This factor requires a consideration of both quantitative as well as qualitative substantiality. Maxtone–Graham, 803 F.2d at 1263. "[W]hat is relevant is the amount and substantiality of the copyrighted expression that has been used, not the factual content of the material in the copyrighted works." Salinger v. Random House, Inc., 811 F.2d 90, 97 (2d Cir.1987). Moreover, "[i]t is not fair use when more of the original is copied than necessary." Rogers, 960 F.2d at 311.

With respect to the quantitative measure, it is to be considered "in relation to the copyrighted work, not to the allegedly infringing work." New Era Publications Int'l v. Carol Publishing Group, 904 F.2d 152, 158 (2d Cir.1990). The Talk was over 14,000 words; defendant published a total of 793 words, which is less than six percent of the Talk. Moreover, no single article quoted more than 602 words, although it appears that some of the quoted portions were published in more than one article. Kovner Aff. ¶ 7, Ex. F.

Plaintiffs contend that the quotations selected by Rotbart for publication constitute "the heart" of the Talk and that his use is therefore a qualitatively substantive taking. Even if we accept plaintiffs' contention that the quotations selected were "the heart" of the Talk, that is not the end of the inquiry. In an analogous context, the use of copyrighted material for parody, the Supreme Court inCampbell rejected the reasoning of the court below that "taking the heart of the original and making it the heart of a new work was to purloin a substantial portion of the essence of the original." 114 S.Ct. at 1175 (citing Acuff–Rose Music, Inc. v. Campbell, 972 F.2d 1429, 1438 (2d Cir.1992), rev'd,114 S.Ct. 1164 (1994)). Rather than focus on whether the copied material was "the heart" of the original work, the Supreme Court reasoned:

how much [copying] is reasonable will depend, say, on the extent to which the song's overriding purpose and character is to parody the original or, in contrast, the likelihood that the parody may serve as a market substitute for the original.

Id. at 1176.

Like any good reporter, O'Dwyer naturally chose to report on those items that he believed most significant and interesting to his readers. But it is extremely doubtful that anyone who would be interested enough in the subject matter of plaintiffs' seminars to pay to attend them would accept O'Dwyer's news report "as the market substitute for the original."

4. Effect of the Use on Market Value of the Original

The Supreme Court has noted that the effect of the use on the market value of the original "is the 'most important, and indeed, central fair use factor.' " Stewart v. Abend, 495 U.S. 207, 238, 110 S.Ct. 1750, 1769 (1990) (quoting 3 Nimmer on Copyright § 13.05[A] ). The fair use defense may be allowed where defendants' work does not diminish potential sales of plaintiffs' work or fulfill the demand for the original work. The Second Circuit has held that "[t]he less adverse effect that an alleged infringing use has on the copyright owner's expectation of gain, the less public benefit need be shown to justify the use." MCA, Inc. v. Wilson, 677 F.2d 180, 183 (2d Cir.1981) (citations omitted); see Rogers, 960 F.2d at 311–12.

Plaintiffs argue that "given the direct competition between Plaintiffs and Defendants, any use by Defendants of information which places Plaintiffs in a disparaging light ... is both Plaintiffs' loss and Defendants' gain." Pl.Mem. at 21. However, "a court need not take into account an adverse impact on the potential market for plaintiff's work by reason of a disparaging or otherwise unfavorable reference in defendant's work to plaintiff's work.... The fourth factor looks to adverse impact only by reason of usurpation of the demand for plaintiff's work through defendant's copying of protectible expression from such work." 3 Nimmer on Copyright § 13.05[A][4] (1994); see Wojnarowicz v. American Family Ass'n, 745 F.Supp. 130, 145 (S.D.N.Y.1990) (no copyright violation where "even a ruinous review" decreases demand for copyrighted work).

At oral argument on the motion, plaintiffs' counsel made much of their contention that defendants' articles were part of a campaign to damage Rotbart's reputation and business. Plaintiffs' counsel has lost sight of the purpose of the fair use exception. Once O'Dwyer's use is determined to be fair use, his purpose in doing so is irrelevant. Fair use is an inquiry requiring an assessment of the totality of the specific facts presented. In this case, the undisputed facts weigh heavily in favor of defendants, and the motion for summary judgment with respect to copyright is granted.

B. Section 43(a) of the Lanham Act: Unfair Competition

Plaintiffs allege that defendants' articles and conversations were false and misleading, constituting unfair competition. Compl. ¶¶ 57–59. Because the Lanham Act clearly requires that defendants' statements have been made in "commercial advertising or promotion," this claim cannot be maintained. 15 U.S.C. § 1125(a)(1)(B) (1988).

Section 43(a) of the Lanham Act "is limited to false advertising as that term is generally understood." Gordon & Breach Science Publishers v. AIP, 859 F.Supp. 1521, 1533 (S.D.N.Y.1994) (citing Alfred Dunhill Ltd. v. Interstate Cigar Co., 499 F.2d 232, 237 (2d Cir.1974)). Therefore, "only commercial speech that a competitor employs for the express purpose of influencing consumers to buy the competitor's goods or services is actionable under section 43(a)." EventMedia Int'l, Inc. v. Time, Inc., 1992 WL 321629, *3, 1992 U.S.Dist. LEXIS 16385, *8 (S.D.N.Y. Oct. 24, 1992).

In this case, O'Dwyer's articles were not advertisements but rather newsletter comments; while they were harshly critical of Rotbart's ideas, they did not promote O'Dwyer services at the expense of Rotbart's. See Gordon & Breach, 859 F.Supp. at 1533.

C. Defamation

Plaintiffs claim that O'Dwyer's news coverage of the Talk and conversations with sources while gathering information for his publications contained false statements or implications about plaintiffs which libeled and slandered them, and were actionable under the tort of injurious falsehood. Compl. ¶¶ 60–63, 68–71, 64–67, 72–75, 76–79. The Court declines supplemental jurisdiction over these remaining state tort claims, pursuant to 28 U.S.C. § 1367 (c)(3).

"A district court may exercise supplemental jurisdiction over pendent state claims when it has jurisdiction over associated federal claims that 'form part of the same case or controversy.' " Sriram v. Preferred Income Fund III Ltd., 22 F.3d 498, 501 (2d Cir.1994) (quoting 28 U.S.C. § 1367). Once this threshold is met, "the exercise of supplemental jurisdiction is left to the discretion of the district court." Purgess v. Sharrock, 33 F.3d 134, 138 (2d Cir.1994).

Section 1367 provides, in pertinent part, that "[t]he district courts may decline to exercise supplemental jurisdiction over a claim ... if ... the district court has dismissed all claims over which it has original jurisdiction." In this regard, the Second Circuit has directed that " 'if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well.' " Castellano v. Board of Trustees, 937 F.2d 752, 759 (2d Cir.1991) (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1138, 1139 (1966)). In fact, " 'in the usual case in which all federal-law claims are eliminated before trial, the balance of factors ... will point toward declining to exercise jurisdiction over the remaining state-law claims,' " and refusal to do so may even be an abuse of discretion. Morse v. University of Vermont, 973 F.2d 122, 127 (2d Cir.1992) (citation omitted).

Because this Court has dismissed plaintiffs' federal claims against defendants, it chooses to decline to assert jurisdiction over plaintiffs' state law claims.

IV. Conclusion

For the reasons stated above, defendants' motion for summary judgment on all of plaintiffs' federal claims is granted. Defendants' motion to dismiss plaintiffs' state defamation claims is granted.


[1] For the purposes of this motion, it is assumed that the subject of this controversy, the Talk, is protected by the Copyright Act. Although defendants initially suggested that plaintiffs' work is not covered by the Copyright Act in their Memorandum of Law, they subsequently conceded, for the purposes of this motion, that the speech is protected.