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U.S. Copyright Fair Use Index

  • 1 Fox Broadcasting Co., Inc. v. Dish Network LLC

    723 F.3d 1067 (2013)

    FOX BROADCASTING COMPANY, INC.; Twentieth Century Fox Film Corporation; Fox Television Holdings, Inc., Plaintiffs-Appellants,
    v.
    DISH NETWORK L.L.C.; Dish Network Corporation, Defendants-Appellees.

    No. 12-57048.

    United States Court of Appeals, Ninth Circuit.

    Argued and Submitted June 4, 2013.
    Filed July 24, 2013.

    [1069] Paul M. Smith (argued), Jenner & Block LLP, New York, New York; Richard L. Stone, Andrew J. Thomas, David R. Singer, and Amy M. Gallegos, Jenner & Block LLP, Los Angeles, CA, for Plaintiffs-Appellants.

    E. Joshua Rosenkranz (argued), Peter A. Bicks, Elyse D. Echtman, and Lisa T. [1070] Simpson, Orrick, Herrington & Sutcliffe LLP, New York, NY; Annette L. Hurst and William A. Molinski, Orrick, Herrington & Sutcliffe LLP, San Francisco, CA; Mark A. Lemley and Michael H. Page, Durie Tangri LLP, San Francisco, CA, for Defendants-Appellees.

    Robert A. Long, Jennifer A. Johnson, and David M. Zionts, Covington & Burling LLP, Washington, D.C., for Amici Curiae ABC Television Affiliates Association et al.

    Jeffrey A. Lamken and Robert K. Kry, MoloLamken LLP, Washington, D.C., for Amicus Curiae Cablevision Systems Corp.

    Mark J. Prak, Charles F. Marshall, Julia C. Ambrose, and Laura S. Chipman, Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, Raleigh, NC; Jane E. Mago, Jerianne Timmerman, Bart Stringham, and Benjamin F.P. Ivins, National Association of Broadcasters, Washington, D.C., for Amicus Curiae National Association of Broadcasters.

    Kelly M. Klaus and Jonathan H. Blavin, Munger, Tolles & Olson LLP, Los Angeles, CA, for Amici Curiae Paramount Pictures Corp. et al.

    Seth D. Greenstein and Robert S. Schwartz, Constantine Cannon LLP, Washington, D.C., for Amici Curiae Computer & Communications Industry Association et al.

    Mitchell L. Stoltz and Corynne McSherry, Electronic Frontier Foundation, San Francisco, CA; John Bergmayer, Public Knowledge, Washington, D.C.; Betsy Rosenblatt, Organization for Transformative Works, New York, NY, for Amici Curiae Electronic Frontier Foundation et al.

    Jason Schultz, Samuelson Law, Technology & Public Policy Clinic, University of California, Berkeley, School of Law, Berkeley, CA, for Amici Curiae law scholars and professors.

    Before: SIDNEY R. THOMAS, BARRY G. SILVERMAN, and RAYMOND C. FISHER, Circuit Judges.

    OPINION
    THOMAS, Circuit Judge:

    Dish Network offers two marsupial-inspired products: the "Hopper," which "hops" over commercials, and a companion box known as a "Joey." Fox Broadcasting Company claims these products are contractually out of bounds and constitute copyright infringement. The district court denied the broadcaster's request for a preliminary injunction. We have jurisdiction under 28 U.S.C. § 1292, and we affirm.

    I

    Plaintiffs Fox Broadcasting Company, Twentieth Century Fox Film Corp., and Fox Television Holdings, Inc. (collectively, "Fox") own the copyrights to television shows that air on the Fox television network. Its primetime lineup includes shows such as Glee, Bones, The Simpsons, and Family Guy. Fox contracts with cable and satellite television service providers to retransmit Fox's broadcast signal for the customers of these providers, known as multichannel video programming distributors. Some such distributors also offer Fox programming via video on demand. Fox separately licenses its shows to companies such as Hulu, Apple, Netflix, and Amazon, which sell Fox programs online or stream them over the Internet.

    One distributor that Fox contracts with is Dish Network, the third-largest pay television service provider in the United States. Dish retransmits Fox's broadcast signal under a 2002 contract with Dish's former parent company and current technology [1071] vendor, EchoStar Technologies. Among other things, the contract provides that Dish shall not "distribute" Fox programs on an "interactive, time-delayed, video-on-demand or similar basis," though Dish may "connect[] its Subscribers' video replay equipment." Dish also cannot "record, copy, duplicate and/or authorize the recording, copying, duplication (other than by consumers for private home use) or retransmission" of any part of Fox's signal.

    Fox and Dish have amended this contract several times, most recently in a 2010 letter agreement. Under that agreement, Dish could provide Fox Video On Demand to its subscribers, but Dish had to "disable fast forward functionality during all advertisements"; the contract stated "such fast-forward disabling is a necessary condition to distribution of the Fox broadcast content via [video on demand]." The 2010 agreement also forbids Fox and Dish from attempting to "frustrate or circumvent" the contractual rights.

    In March 2012, Dish released to its customers the Hopper, a set-top box with digital video recorder (DVR) and video on demand capabilities. The Hopper provides service to up to four televisions in a home using companion boxes (known as Joeys) wired to each television. Dish customers can also watch Hopper content on their computers and mobile devices using a product called the Sling Adapter.

    At the same time it released the Hopper, Dish introduced a feature called PrimeTime Anytime that works only on the Hopper. PrimeTime Anytime allows a subscriber to set a single timer to record any and all primetime programming on the four major broadcast networks (including Fox) every night of the week. To enable PrimeTime Anytime, a Hopper user presses the "*" button on the remote control to reach the PrimeTime Anytime setup screen. The user selects "Enable," and a new menu appears where the viewer can disable recordings of certain networks on certain days of the week and change the length of time that the shows are saved (between two and eight days). By default, PrimeTime Anytime records primetime shows on all four networks each night of the week and saves all recordings for eight days.[1]

    Dish determines the start and end time of the PrimeTime Anytime recordings each night and sometimes alters these times to record programming outside the traditional primetime window of 8 p.m. to 11 p.m. Eastern and Pacific time Monday through Saturday and 7 p.m. to 11 p.m. on Sunday (Primetime starts and ends one hour earlier in the Mountain and Central time zones.). For instance, Dish altered the times to accommodate Olympic programming on NBC in summer 2012. If at least half of a program falls within the primetime window, Dish includes the entire show in the PrimeTime Anytime recording.

    A user may start watching recorded programs immediately after PrimeTime Anytime starts recording. The user must enable PrimeTime Anytime at least 15 minutes before the primetime recording begins and can cancel a PrimeTime Anytime recording up to 15 minutes before the recording begins; after that, a user can no longer cancel that day's PrimeTime Anytime recording.

    All PrimeTime Anytime recordings are stored locally on a customer's Hopper for [1072] the preselected number of days (typically eight), at which time they are automatically deleted. Before that time, a customer cannot actually delete or save a PrimeTime Anytime recording. Rather, if the customer selects "Save" or "Save Series" from the PrimeTime Anytime menu, an icon is created in the customer's "My Recordings" folder, but the icon is simply linked to the PrimeTime Anytime recording until the time of automatic deletion, at which time a duplicate copy is created. Similarly, if a customer "deletes" a show recorded through PrimeTime Anytime, the icon for that show disappears from the user's graphical user interface, but the recording remains on the customer's hard drive until it is automatically deleted.

    Dish customers can also use the Hopper to access pay-per-view movies via video on demand, but Dish does not offer video on demand from any of the four broadcast networks, including Fox. Video on demand recordings are stored on the user's hard drive in a file directory separate from the PrimeTime Anytime and DVR recordings.

    In May 2012, Dish started offering a new feature, AutoHop, that allows users to automatically skip commercials. AutoHop is only available on shows recorded using PrimeTime Anytime, typically on the morning after the live broadcast. It is not available for all primetime programs. When a user plays back a PrimeTime Anytime recording, if AutoHop is available, a pop-up screen appears that allows the user to select the option to "automatically skip over" commercial breaks. By default, AutoHop is not selected.

    If a customer enables AutoHop, the viewer sees only the first and last few seconds of each commercial break. A red kangaroo icon appears in the corner of the screen to demonstrate that AutoHop is skipping commercials. Unlike the 30-second skip feature available on many DVRs, once a user has enabled AutoHop, the user does not press anything to skip through commercials. AutoHop does not delete commercials from the recording. Customers can see the commercials if they manually rewind or fast-forward into a commercial break.

    To create the AutoHop functionality, Dish technicians in Cheyenne, Wyoming manually view Fox's primetime programing each night and technologically mark the beginning and end of each commercial. The program content is not altered in any way. The electronically marked files are then uplinked in Wyoming and eventually transmitted to subscribers in an "announcement" file that Dish makes available to subscribers after the show has aired. Simultaneously with the uplink, three "beta Hoppers" record the Fox primetime block for transmissions in Kentucky, Pennsylvania, and Florida to test the marking announcement. These copies remain at the uplink facility and are used to make sure the commercials have been accurately marked and that no portion of the program has been cut off.

    Fox sued Dish for copyright infringement and breach of contract and sought a preliminary injunction. The district court denied the motion. Fox Broad. Co. v. Dish Network, LLC, 905 F.Supp.2d 1088 (C.D.Cal.2012). It held that Fox did not demonstrate a likelihood of success on most of its copyright infringement and contract claims. The exceptions were Fox's claims regarding the quality assurance copies. In making these copies, the court held, Dish likely breached its contract with Fox and directly infringed Fox's reproduction rights. Id. at 1102-06, 1108. Nonetheless, the court held that Fox was not entitled to an injunction because it failed to establish that it would likely suffer "irreparable harm" as a result of those copies. Id. at 1109-11.

    To obtain a preliminary injunction, Fox must demonstrate that (1) it is [1073] likely to succeed on the merits, (2) it is likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in its favor, and (4) an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008).[2]

    We review the denial of a preliminary injunction for an abuse of discretion. Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1157 (9th Cir.2007). Factual findings are reviewed for clear error, and legal conclusions are reviewed de novo. Id. We do not reverse "simply because the appellate court would have arrived at a different result if it had applied the law to the facts of the case." Sports Form, Inc. v. United Press Int'l, Inc., 686 F.2d 750, 752 (9th Cir.1982); see also United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir.2009) (en banc).

    Applying this deferential standard of review, we hold that the district court did not abuse its discretion in holding that Fox did not demonstrate a likelihood of success on its copyright infringement and breach of contract claims regarding Dish's implementation of PrimeTime Anytime and AutoHop. Furthermore, the district court did not err in holding that Fox did not demonstrate a likelihood of irreparable harm from Dish's creation of the "quality assurance" copies used to perfect the functioning of AutoHop.

    II
    A

    The district court did not abuse its discretion in holding that Fox was unlikely to succeed on its claim of direct copyright infringement regarding PrimeTime Anytime. "To establish a claim of copyright infringement by reproduction, the plaintiff must show ownership of the copyright and copying by the defendant." Kelly v. Arriba Soft Corp., 336 F.3d 811, 817 (9th Cir.2003); see also 17 U.S.C. §§ 106(1), 501(a).

    In this case, the district court determined that Fox had demonstrated ownership of the copyrights of some of the shows. The court then focused on who made the copies of Fox programs using PrimeTime Anytime: Dish or its customers. The district court noted that the Second Circuit had considered a similar question in Cartoon Network LP v. CSC Holdings, Inc. ("Cablevision"), 536 F.3d 121 (2d Cir.2008). The Second Circuit concluded that Cablevision's remote-storage DVR system did not directly infringe the plaintiffs' copyrights. Unlike a typical DVR system, in which a customer's remote sends signals to the set-top box in her home, users of Cablevision's remote-storage DVR system sent signals to Cablevision's central facility, where a copy of the program the viewer selected was created and stored on Cablevision's central servers. Id. at 125, 130. The question was "who made this copy" — the viewer or Cablevision? Id. at 130. The Second Circuit held that much like a VCR user makes the copy, so did the Cablevision customer. Id. at 131.

    In this case, the district court found that "Dish exercises a degree of discretion over the copying process beyond that which was present in Cablevision." Fox Broad., 905 F.Supp.2d at 1102. It pointed to the facts [1074] that Dish decides how long copies are available for viewing, Dish maintains the authority to modify the start and end times of the primetime block, and a user cannot stop a copy from being made once the recording has started. Id. at 1101-02. Yet the court held that "at this stage of the proceedings," it was "not satisfied" that PrimeTime Anytime had "crossed over the line that leads to direct liability." Id. at 1102. The court held that the "user, not Dish, must take the initial step of enabling" PrimeTime Anytime. Id. "The user, then, and not Dish, is `the most significant and important cause' of the copy." Id. (quoting Prosser & Keeton on Torts § 42).

    The district court did not abuse its discretion in concluding that Fox had not established a likelihood of success on this claim. Infringement of the reproduction right requires "copying by the defendant," Kelly, 336 F.3d at 817 (emphasis added), which comprises a requirement that the defendant cause the copying. See Cablevision, 536 F.3d at 130 (explaining that direct infringement claim turned on "who made" the copies). Fox argues that because Dish participates in the operation of PrimeTime Anytime on a daily basis, Dish made the copies, either alone or concurrently with its users. However, operating a system used to make copies at the user's command does not mean that the system operator, rather than the user, caused copies to be made. Here, Dish's program creates the copy only in response to the user's command. Therefore, the district court did not err in concluding that the user, not Dish, makes the copy.

    That Dish decides how long copies are available for viewing, modifies the start and end times of the primetime block, and prevents a user from stopping a recording might be relevant to a secondary or perhaps even a direct infringement claim. Cf. Cablevision, 536 F.3d at 132-33 (finding that factors evidencing Cablevision's control over copying process seemed "more relevant to the question of contributory liability" but reserving the question "whether one's contribution to the creation of an infringing copy may be so great that it warrants holding that party directly liable for the infringement, even though another party has actually made the copy"). But these facts do not establish that Dish made the copies. Therefore, the district court did not err in holding that Fox did not establish a likelihood of success on its direct infringement claim.

    B

    The district court did not abuse its discretion in concluding that Fox was unlikely to succeed on its claim of secondary copyright infringement for the PrimeTime Anytime and AutoHop programs. "Secondary liability for copyright infringement does not exist in the absence of direct infringement by a third party." A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n. 2 (9th Cir.2001). Therefore, to establish secondary liability, Fox must establish that Dish's users are infringing. There is no dispute that Fox has established a prima facie case of direct infringement by Dish customers because Fox owns the copyrights to its shows and the users make copies. Thus, the burden shifts to Dish to demonstrate that it is likely to succeed on its affirmative defense that its customers' copying was a "fair use." Perfect 10, 508 F.3d at 1158. Dish has met this burden.

    As the district court recognized, the Supreme Court's analysis in Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984), provides strong guidance in assessing whether Dish customers' copying of Fox programs is a "fair use." In Sony, the Supreme Court held that Sony was not [1075] liable for secondary infringement for manufacturing Betamax VCRs because customers used the machines primarily for time-shifting, "the practice of recording a program to view it once at a later time, and thereafter erasing it." Id. at 423, 104 S.Ct. 774. The Court held that "even the unauthorized home time-shifting of respondents' programs is legitimate fair use." Id. at 442, 104 S.Ct. 774.

    Fox and its amici argue that Dish customers use PrimeTime Anytime and AutoHop for purposes other than time-shifting — namely, commercial-skipping and library-building. These uses were briefly discussed in Sony, in which the Court recognized that some Betamax customers used the device to avoid viewing advertisements and accumulate libraries of tapes. In Sony, about 25 percent of Betamax users fast-forwarded through commercials. Id. at 452 n. 36, 104 S.Ct. 774. Additionally, a "substantial number of interviewees had accumulated libraries of tapes." Id. at 423, 104 S.Ct. 774. One user owned about 100 tapes and bought his Betamax intending to "build a library of cassettes," but this "proved too expensive." Id. at 423 n. 3, 104 S.Ct. 774. Because the Betamax was primarily used for timeshifting, the Court in Sony never expressly decided whether commercial-skipping and library-building were fair uses. Cf. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 931, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005) (explaining that "[a]lthough Sony's advertisements urged consumers to buy the VCR to `record favorite shows' or `build a library' of recorded programs, neither of these uses was necessarily infringing" (citations omitted)).

    Yet, as the district court held, commercial-skipping does not implicate Fox's copyright interest because Fox owns the copyrights to the television programs, not to the ads aired in the commercial breaks. If recording an entire copyrighted program is a fair use, the fact that viewers do not watch the ads not copyrighted by Fox cannot transform the recording into a copyright violation. Indeed, a recording made with PrimeTime Anytime still includes commercials; AutoHop simply skips those recorded commercials unless a viewer manually rewinds or fast-forwards into a commercial break. Thus, any analysis of the market harm should exclude consideration of AutoHop because ad-skipping does not implicate Fox's copyright interests.

    Analyzing PrimeTime Anytime under the fair use factors, Dish has demonstrated a likelihood of success on its customers' fair use defense. As for the first factor, the "purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes," 17 U.S.C. § 107(1), Dish customers' home viewing is noncommercial under Sony, which held that "time-shifting for private home use" was a "noncommercial, nonprofit activity," 464 U.S. at 449, 104 S.Ct. 774. Here, the district court found that PrimeTime Anytime is used for time-shifting, and that the Hopper is available only to private consumers. Fox Broad., 905 F.Supp.2d at 1098.

    Sony also governs the analysis of the second and third factors, the "nature of the copyrighted work" and "the amount and substantiality of the portion used in relation to the copyrighted work as a whole," 17 U.S.C. § 107(2), (3). Sony held that "when one considers the nature of a televised copyrighted audiovisual work, and that time-shifting merely enables a viewer to see such a work which he had been invited to witness in its entirety free of charge, the fact that the entire work is reproduced, does not have its ordinary effect of militating against a finding of fair use." 464 U.S. at 449-50, 104 S.Ct. 774 [1076] (citations omitted). The same analysis applies here, and thus the fact that Dish users copy Fox's entire copyrighted broadcasts does not have its ordinary effect of militating against a finding of fair use.

    Finally, we consider the "effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). This is the "most important element of fair use." Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 566, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). Because Dish customers' taping is "for a noncommercial purpose," the likelihood of future market harm is not presumed but "must be demonstrated." Sony, 464 U.S. at 451, 104 S.Ct. 774. Fox "need only show that if the challenged use `should become widespread, it would adversely affect the potential market for the copyrighted work.'" Harper & Row, 471 U.S. at 568, 105 S.Ct. 2218 (quoting Sony, 464 U.S. at 451, 104 S.Ct. 774 (emphasis added by Harper & Row Court)).

    Because Fox licenses its programs to distributors such as Hulu and Apple, the market harm analysis is somewhat different than in Sony, where no such secondary market existed for the copyright-holders' programs.[3] However, the record before the district court establishes that the market harm that Fox and its amici allege results from the automatic commercial-skipping, not the recording of programs through PrimeTime Anytime. Indeed, Fox often charges no additional license fees for providers to offer Fox's licensed video on demand, so long as providers disable fast-forwarding. This indicates that the ease of skipping commercials, rather than the on-demand availability of Fox programs, causes any market harm. And as we have discussed, the commercial-skipping does not implicate any copyright interest.

    In arguing otherwise, Fox points to the district court's market harm analysis in a different section of its opinion. However, that analysis is not relevant to determining whether PrimeTime Anytime causes market harm because that portion of the opinion addresses a different question: whether the "quality assurance" copies used to test AutoHop would harm the market for Fox to license copies of its shows. Because the quality assurance copies were used to perfect AutoHop, the district court assessed whether AutoHop caused market harm and found that Dish "harms Fox's opportunity to negotiate a value for [authorized] copies and also inhibits Fox's ability to enter into similar licensing agreements with others in the future by making the copies less valuable." Fox Broad., 905 F.Supp.2d at 1105. However, the court's analysis of the market harm caused by the quality assurance copies does not affect the assessment of whether Dish customers' copying of programs potentially causes market harm because the district court correctly found that AutoHop, standing alone, does not infringe.

    Therefore, the district court did not abuse its discretion in concluding that Fox was unlikely to succeed on its secondary infringement claim.

    C

    The question of whether Dish has breached its contract with Fox is much closer. However, applying our very deferential standard of review, we conclude that the district court did not abuse its discretion in denying a preliminary injunction based on the alleged contract breaches.

    [1077] Fox first argues that Dish breached the portion of the 2002 contract that states:

    EchoStar [now Dish] shall not, for pay or otherwise, record, copy, duplicate and/or authorize the recording, copying, duplication (other than by consumers for private home use) or retransmission of any portion of any Station's Analog Signal without prior written permission of the Station, except as is specifically permitted by this Agreement.

    Fox's argument as to why Dish allegedly breached this clause is the same as its argument that Dish directly infringed its copyrights. It does not argue that the contract's use of "record, copy, duplicate" has a different meaning than the Copyright Act's definition of "reproduce." Given that Dish did not directly infringe Fox's copyrights, the district court properly concluded that Fox is unlikely to succeed on its claim that Dish breached this clause.

    Second, Fox argues that Dish breached the following provision in the 2002 contract:

    EchoStar acknowledges and agrees that it shall have no right to distribute all or any portion of the programming contained in any Analog Signal on an interactive, time-delayed, video-on-demand or similar basis; provided that Fox acknowledges that the foregoing shall not restrict EchoStar's practice of connecting its Subscribers' video replay equipment....

    The district court construed the contract term "distribute" to be analogous to the same word in the Copyright Act, 17 U.S.C. § 106(3). It held that distribution under the Copyright Act required a copyrighted work to "chang[e] hands," Fox Broad., 905 F.Supp.2d at 1106, and Dish engaged in no distribution because the PrimeTime Anytime copies "are made by users, remain in private homes, and do not change hands," id. at 1107. Therefore, it held, Fox was unlikely to prevail on its claim that Dish breached this contract provision.[4]

    On appeal, Fox challenges this construction of "distribute," essentially arguing that the prohibition against "distribut[ing]" Fox programming constitutes an agreement that Dish would not make Fox programming available to its subscribers. Fox's interpretation is plausible, but so is the district court's. While the district court would not be justified in holding that the meaning of the term "distribute" was unambiguous or that, as a matter of law, any ambiguous terms in the contract should be interpreted by looking to the Copyright Act, we do not read the district court's opinion as resting its decision on such grounds. In the proceedings below, the parties did not argue about the meaning of "distribute." Absent any argument or extrinsic evidence on this term, the district court did not err by looking to the Copyright Act to interpret "distribute." We express no view on whether, after a fully developed record and arguments, the district court's construction of "distribute" will prove to be the correct one.

    We are, however, dubious of Dish's position that PrimeTime Anytime is not "similar" to "interactive, time-delayed, [or] video-on-demand" programming, the distribution of which is expressly prohibited by the 2002 contract. Dish has convinced us that PrimeTime Anytime is not identical to video-on-demand but is at a loss to explain why it is not similar, and at oral argument, when pressed, Dish could not provide even a single example of what would be considered similar under the [1078] contract if not this. The contract is written broadly, and Fox has a good argument that PrimeTime Anytime is "similar," even though not exactly the same, as time-delayed or video-on-demand programming.

    Third, Fox argues that Dish breached a provision of a 2010 letter agreement that modified the 2002 contract. The letter agreement permitted Dish to offer Fox's licensed video on demand (VOD) service so long as Dish disabled fast-forwarding during commercials:

    DISH will disable fast forward functionality during all advertisements; FBC and DISH may include a pre-roll announcement prior to each show regarding the fast-forward disabling. DISH and FBC will discuss in good faith the timing of DISH's implementation of such fast-forward disabling and messaging to consumers; provided that DISH acknowledges and agrees that such fast-forward disabling is a necessary condition to distribution of the Fox broadcast content via VOD. (Emphasis added.)

    The district court held that if PrimeTime Anytime is video on demand, then Dish clearly breached the contract. The court found this dispute "especially challenging because [PrimeTime Anytime] is, in some ways, a hybrid of DVR and VOD likely not contemplated by either party when the 2010 Agreement was drafted." Fox Broad., 905 F.Supp.2d at 1109. But the district court concluded that PrimeTime Anytime was "more akin" to DVR than to video on demand. Id.

    Because the district court based its interpretation on extrinsic evidence, we review its holding for clear error. Miller v. Safeco Title Ins. Co., 758 F.2d 364, 367 (9th Cir.1985). The district court's finding that PrimeTime Anytime was more akin to a DVR than to video on demand was not clearly erroneous. Because, unlike the relevant clause of the 2002 contract, this provision of the 2010 letter agreement does not preclude Dish from enabling fast-forwarding on services that are "similar" to video on demand, the district court did not abuse its discretion in concluding that Fox was unlikely to succeed on its breach of contract claim.

    The fact that a Dish attorney referred to PrimeTime Anytime as a "video-on-demand service" in a trademark application supports Fox's claim that the parties would have understood PrimeTime Anytime to be akin to video on demand. Providing further support are Dish promotional materials that repeatedly referred to PrimeTime Anytime providing "On Demand access" or an "on demand library." However, Dish introduced evidence that programming distributors such as itself and DirecTV have used the phrase "on demand" to refer to DVR recordings, which are clearly not video on demand. And the district court relied in part on the fact that a viewer must enable PrimeTime Anytime before a show airs to view it later, which is an important feature distinguishing DVR from video on demand. Fox Broad., 905 F.Supp.2d at 1109. Therefore, in light of the record before it, the district court did not clearly err in concluding that PrimeTime Anytime was more like DVR than video on demand.

    Finally, Fox argues that Dish breached the portion of the 2010 letter agreement that provides that neither party may "take any action whatsoever intended to frustrate or circumvent, or attempt to frustrate or circumvent, the protections granted to the other Party pursuant to any provision in this Letter Agreement." Contrary to Fox's argument, the record does not indicate that Dish launched PrimeTime Anytime because it was unwilling to comply with the requirements to offer Fox's licensed video on demand service, rather than because Dish lacked the technological [1079] capability to do so. On this record, Fox has not demonstrated it is likely to succeed on this claim.

    Therefore, the district court did not abuse its discretion in concluding that Fox did not demonstrate a likelihood of success on its breach of contract claims.

    III

    The district court held that Dish likely directly infringed Fox's copyrights and breached the no-copying clause of the 2002 contract by making "quality assurance" copies to test the functioning of the AutoHop program. However, it ultimately concluded that Fox did not demonstrate a likelihood of irreparable harm absent an injunction. Assuming, without deciding, that the district court correctly decided that Fox was likely to succeed on the merits of this claim, we agree with the district court that Fox did not demonstrate a likelihood of irreparable harm resulting from these copies.

    These copies were made as part of Dish's process of implementing the AutoHop program. As we have noted, Dish creates marking announcements to signal to AutoHop when to skip commercials. It then tests the accuracy of the marking announcements using copies recorded through PrimeTime Anytime. These copies remain at a Dish facility and are used for "quality assurance" purposes only. A technician working for Dish then plays back each recording, enables AutoHop, and fast-forwards through each show segment just until the point of each commercial break to ensure AutoHop is working properly. If the marking announcements are correct, AutoHop is made available to Dish customers at 3 a.m. Eastern time on the morning following the live broadcast.

    In refusing to enjoin Dish from creating these copies, the district court correctly concluded that the harms Fox identified — including "loss of control over its copyrighted works and loss of advertising revenue" — did not "flow from" the quality assurance copies themselves, but from the entire AutoHop program. Fox Broad., 905 F.Supp.2d at 1110-11. While a plaintiff need not "show that the action sought to be enjoined is the exclusive cause of the injury," M.R. v. Dreyfus, 697 F.3d 706, 728 (9th Cir.2012), the district court did not err in concluding that the quality assurance copies were not a cause of Fox's alleged harm. That Dish used the copies in the process of implementing AutoHop does not suggest that those copies were integral to AutoHop's functioning. Rather, the record demonstrates that the AutoHop announcement files are created using an entirely separate process and the quality assurance copies are used only to test whether this process is working.[5]

    Furthermore, the district court did not err in holding that monetary damages could compensate Fox for its losses from the copies. See, e.g., L.A. Mem'l Coliseum Comm'n v. Nat'l Football League, 634 F.2d 1197, 1202 (9th Cir.1980) ("[M]onetary injury is not normally considered irreparable."). To be sure, Fox does not license copies of its programs for distributors to create ad-skipping software. However, the lack of a licensing agreement that directly corresponds to Dish's copying of Fox programs does not mean it would be difficult to calculate damages. Fox's existing licensing agreements could, at the very least, constitute a starting point or an aid in calculating damages.

    [1080] IV

    Given our "limited and deferential" review of preliminary injunction appeals, Sw. Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir.2003) (en banc) (per curiam), and without determining the ultimate merits of the case, Am. Trucking Ass'ns, Inc. v. City of L.A., 559 F.3d 1046, 1052 (9th Cir.2009), we conclude that the district court did not abuse its discretion in declining to grant Fox a preliminary injunction.[6]

    AFFIRMED.

    [1] Prior to July 2012, a viewer who enabled PrimeTime Anytime could not deselect any networks or days of the week, and could not save recordings for fewer than eight days. The district court "examine[d] the propriety of the Hopper features in their current form, as Dish has stated that it has no plans to return to its pre-July 20, 2012 practices." Fox Broad. Co. v. Dish Network, LLC, 905 F.Supp.2d 1088, 1094 n. 6 (C.D.Cal.2012).

    [2] Alternatively, a plaintiff may obtain an injunction if it demonstrates (1) serious questions going to the merits, (2) a balance of hardships that tips sharply towards the plaintiff, (3) a likelihood of irreparable injury, and (4) the injunction is in the public interest. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir.2011). Because Fox does not argue that the balance of hardships tips sharply in its favor, we do not consider its claims under this standard.

    [3] Instead, the Sony plaintiffs argued in part that the Betamax would reduce the audience for live television and movies, a fear the district court described as lacking "factual basis." 464 U.S. at 453, 104 S.Ct. 774.

    [4] Fox also argued below that Dish violated its right "to distribute copies ... of the copyrighted work to the public" under 17 U.S.C. § 106(3). The district court held that Fox was unlikely to succeed on this claim. Fox Broad., 905 F.Supp.2d at 1106. Fox has not challenged this ruling on appeal.

    [5] Indeed, Dish has temporarily stopped making the quality assurance copies pending the outcome of this appeal.

    [6] The parties' motions for judicial notice are DENIED.

  • 2 North Jersey Media Group, Inc. v. Pirro

    NORTH JERSEY MEDIA GROUP INC., Plaintiff,
    v.
    JEANINE PIRRO and FOX NEWS NETWORK, LLC, Defendants.

    No. 13 Civ. 7153 (ER).

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

    February 10, 2015.

    AMENDED OPINION AND ORDER
    EDGARDO RAMOS, District Judge.

    Plaintiff North Jersey Media Group Inc. ("Plaintiff" or "NJMG") brings this action against Jeanine Pirro and Fox News Network, LLC ("Fox News") (collectively, "Defendants") under the Copyright Act, 17 U.S.C. § 101, alleging that Defendants infringed on Plaintiff's copyright in its now iconic photograph of three firefighters raising the American flag at the ruins of the World Trade Center site on September 11, 2001 (the "Work"). Fox News posted a photograph that juxtaposed the Work with the classic World War II photograph of four U.S. Marines raising the American flag on Iwo Jima[1] (the "Combined Image") on a Facebook page associated with Fox News' television program Justice with Judge Jeanine. Defendants contend that their posting of the Combined Image was protected "fair use" under the Copyright Act. See 17 U.S.C. § 107. Pending before the Court is Defendants' motion for summary judgment pursuant to Fed. R. Civ. P. 56. (Doc. 31) For the reasons set forth below, Defendants' motion for summary judgment is DENIED.

    I. Factual Background

    The following facts are undisputed except where otherwise noted.

    a. The Work

    Plaintiff is the publisher of New Jersey-based newspapers The Record (Bergen County) and Herald News. Pl.'s 56.1 Counter-Stmt. ¶ 1.[2] Thomas E. Franklin is a photojournalist who works for NJMG. Defs.' 56.1 Stmt. ¶ 3. On September 11, 2001, Franklin was assigned to cover the attacks on the World Trade Center. Pl.'s 56.1 Counter-Stmt. ¶ 4. Among the many photographs Franklin took that day was a photograph of three firefighters raising an American flag near the ruins of the World Trade Center. Id. ¶ 5. The Work was first published on page A32 of the September 12, 2001 edition of The Record. Pl.'s 56.1 Stmt. ¶ 7.

    Franklin disclaims that in the immediacy of the moment he recognized the symbolic importance the Work would ultimately achieve. For example, on September 20, 2001, Plaintiff stated on one of its websites that Franklin did not "kn[o]w initially that [his] . . . instincts would grow into a national symbol of patriotism." Defs.' 56.1 Stmt. ¶ 9. Similarly, a year later, in a September 11, 2002 article posted on Plaintiff's website, northjersey.com, Franklin stated:

    [The] photo just happened, in a brief moment. I recognized it, shot it the best I could, and moved on, continuing to shoot the devastation. I did note the similarity to Joe Rosenthal's World War II photograph of the Iwo Jima flagraising and was certainly aware of the symbolism of what these firefighters were doing, but in no way did I have time to analyze it. The events of the day were far more important, and in my mind, always will be.

    Pl.'s 56.1 Counter-Stmt. ¶ 10. The parties do not dispute, however, that Plaintiff knew—at the latest—shortly after the time of original publication that the Work had historical importance. Defs.' 56.1 Counter-Stmt. ¶¶ 10, 15. Franklin has received numerous awards for the Work. Pl.'s 56.1 Stmt. ¶ 13.

    Less than one month after the photograph was taken, on October 5, 2001, Jennifer Borg, NJMG's Vice President, General Counsel and Corporate Secretary, registered the Work with the U.S. Copyright Office. Id. ¶ 16. This was the first time Plaintiff had ever registered a copyright in an individual photograph with the Copyright Office. Id.

    b. Fox News' Use of the Combined Image

    Defendant Pirro hosts Justice with Judge Jeanine (the "Program"), a news and commentary program that airs on the Fox News Channel. Pl.'s 56.1 Counter-Stmt. ¶ 12. Fox News also manages a Facebook page that is associated with the Program (the "Pirro Facebook Page"). Id. ¶ 13. Fox News created the Pirro Facebook Page at least in part to promote the Program. See Defs.' 56.1 Counter-Stmt. ¶ 2.

    According to Defendants, Georeen Tanner, a Fox News production assistant assigned to the Program, is also principally responsible for managing and posting content to the Pirro Facebook Page. Defs.' 56.1 Stmt. ¶ 13. As of September 11, 2014, Tanner had been working at Fox News as a production assistant for the Program for approximately three years. See Declaration of Georeen Tanner ("Tanner Decl.") ¶ 4. She joined the Program upon graduating from Rutgers where she majored in journalism and media studies. Id. ¶ 2. While she has received no training in copyright law either in college or during her tenure at Fox News, she acknowledged in her deposition that she understood a copyright to be "[s]omething that is owned by someone else." Tanner Tr. 71:10. Tanner further testified that she had sought legal advice from Fox News' legal department regarding the fair use of photographs and videos on the Program a few times a month. Id. 72:22-23, 70:20-24. However, she had never consulted the legal department in connection with the posting of images to the Pirro Facebook Page. Id. 74:17, 69:17-23.

    Tanner found the Combined Image on September 11, 2013, when she Googled "9/11" in order to find an image to post on the Pirro Facebook Page to commemorate the events of September 11, 2001. Defs.' 56.1 Stmt. ¶¶ 19, 20; see Tanner Decl. ¶ 10.[3] Defendants claim that Tanner had not previously seen the Combined Image, but that she immediately recognized the juxtaposition of the Work and Raising the Flag on Iwo Jima. Defs.' 56.1 Stmt. ¶ 23. According to Defendants, Tanner chose to use the Combined Image precisely because of the parallel drawn between the first responders and the Marines. Id. ¶ 24. Tanner posted the Combined Image to the Pirro Facebook Page that day. Pl.'s 56.1 Counter-Stmt. ¶ 28. The decision to post the Combined Image was hers, and she did not seek the advice of the legal department or anyone else associated with the Program before doing so. Id.

    Tanner did not alter the Combined Image other than to add the phrase "#neverforget."[4] Defs.' 56.1 Stmt. ¶ 33. Tanner stated in her declaration that she posted the Combined Image to convey Fox News' participation in the global conversation taking place on social media that day. Id. ¶ 37. According to Defendants, hundreds of people commented on Fox News' posting of the Combined Image on Facebook. Id. ¶ 36.

    The Combined Image does not include the entirety of the Work. Pl.'s 56.1 Counter-Stmt. ¶ 31. Portions of the top and the right-hand side of the Work do not appear in the Combined Image. Id. As a result, the firefighters occupy a larger portion of the Combined Image than they do in the Work. Id. The Combined Image also differs from the Work in that the resolution is lower and the scale is smaller. Defs.' 56.1 Stmt. ¶ 29; Pl.'s 56.1 Counter-Stmt. ¶ 29.

    According to Defendants, the Combined Image found on Google did not contain any restrictions on copying. Defs.' 56.1 Stmt. ¶ 25.[5] Defendants contend that Tanner did not seek permission from anyone to use the Combined Image because she did not believe—and still does not believe—that she needed permission to use the image for the purpose of making a commentary in remembrance of the events of September 11, 2001. Id. ¶ 35.

    The events of September 11, 2001 were not discussed on the editions of the Program that aired on the Saturdays immediately preceding and following the posting,[6] nor did the posting contain any information about the contents of the upcoming edition of the Program. Pl.'s 56.1 Counter-Stmt. ¶ 38. While Defendants claim that the posting did not contain any information as to when the next episode of the Program would be televised, Defs.' 56.1 Stmt. ¶ 38, Plaintiff asserts that a banner appearing across the top of the Pirro Facebook Page did, in fact, provide such information to users. Pl.'s 56.1 Counter-Stmt. ¶ 38.[7]

    On September 13, 2013, after learning that an attorney had contacted Defendant Pirro to request that Fox News remove the Combined Image from the Pirro Facebook Page, Defendants deleted the posting. Defs.' 56.1 Stmt. ¶ 39.

    c. Licensing and Other Uses of the Work

    Almost immediately after publication of the Work, Plaintiff was "inundated" with requests to license the photograph. Pl.'s 56.1 Stmt. ¶ 17. To date, NJMG has raised more than $1 million in licensing revenue from the Work. Id. ¶ 20. This licensing reached its peak in the period 2002 to 2004, but has continued over time. Id. NJMG has licensed the Work for a fee to several media outlets, including television and print media. See Declaration of Dori Ann Hanswirth ("Hanswirth Decl."), Ex. O. Plaintiff's gross revenue for editorial licensing from January 1, 2013 through June 3, 2014 was $10,221.71, whereas its gross revenue for commercial licensing during the same period was $4,698.91. Defs.' 56.1 Counter-Stmt. ¶ 19; see Hanswirth Decl., Ex. S.

    Plaintiff has also licensed the Work for use to a number of entities at no cost. Pl.'s 56.1 Counter-Stmt. ¶ 47. Since Fox News' posting of the Combined Image on September 11, 2013, Plaintiff has licensed the Work through Getty and the Associated Press at least 14 times. Id. ¶ 41. While Plaintiff occasionally sent cease and desist letters in connection with infringing uses of the Work,[8] see id. ¶ 43; Declaration of Jennifer A. Borg In Opposition to Defendants' Motion for Summary Judgment ¶¶ 11-12, NJMG did not file any lawsuits concerning the alleged infringement of its copyright in the Work until December 6, 2012. Pl.'s 56.1 Counter-Stmt. ¶ 45.[9]

    There is no dispute that Plaintiff may have granted a license to Fox News for the use of the Combined Image if Fox News had made such a request before Tanner posted the image to the Pirro Facebook Page. Pl.'s 56.1 Stmt. ¶ 23.

    II. Procedural Background

    Plaintiff commenced this action on October 9, 2013, by filing a Complaint against Defendant Pirro. Doc. 1. On February 20, 2014, Plaintiff filed the Amended Complaint, adding Fox News as a defendant. Doc. 12. A pre-motion conference was held on May 30, 2014, and the instant motion was filed on June 30, 2014. See Doc. 31.

    III. Summary Judgment Standard

    Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact." Fed. R. Civ. P. 56(a). "An issue of fact is `genuine' if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Senno v. Elmsford Union Free Sch. Dist., 812 F. Supp. 2d 454, 467 (S.D.N.Y. 2011) (citing SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009)). A fact is "material" if it might affect the outcome of the litigation under the governing law. Id. The party moving for summary judgment is first responsible for demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets its burden, "the nonmoving party must come forward with admissible evidence sufficient to raise a genuine issue of fact for trial in order to avoid summary judgment." Saenger v. Montefiore Med. Ctr., 706 F. Supp. 2d 494, 504 (S.D.N.Y. 2010) (internal quotation marks omitted) (quoting Jaramillo v. Weyerhaeuser Co., 536 F.3d 140, 145 (2d Cir. 2008)).

    In deciding a motion for summary judgment, the Court must "`construe the facts in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant.'" Brod v. Omya, Inc., 653 F.3d 156, 164 (2d Cir. 2011) (quoting Williams v. R.H. Donnelley, Corp., 368 F.3d 123, 126 (2d Cir. 2004)). However, in opposing a motion for summary judgment, the non-moving party may not rely on unsupported assertions, conjecture or surmise. Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). The non-moving party must do more than show that there is "some metaphysical doubt as to the material facts." McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006) (internal quotation marks omitted) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). To defeat a motion for summary judgment, "the non-moving party must set forth significant, probative evidence on which a reasonable fact-finder could decide in its favor." Senno, 812 F. Supp. 2d at 467-68 (citing Anderson v. Liberty Lobby, 477 U.S. 242, 256-57 (1986)).

    IV. Discussion

    Plaintiff has brought this action under the Copyright Act of 1976, 17 U.S.C. § 101 et seq. The purpose of the copyright law is "[t]o promote the Progress of Science and useful Arts. . . ." U.S. Const., Art. I, § 8, cl. 8. "[T]he copyright is not an inevitable, divine, or natural right that confers on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public." Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1107 (1990) ("Leval"); see Cariou v. Prince, 714 F.3d 694, 705 (2d Cir. 2013), cert. denied, 134 S. Ct. 618 (2013). The Copyright Act furthers this purpose by granting authors a limited monopoly over the dissemination of their original works of authorship. Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 95 (2d Cir. 2014). In particular, the Copyright Act confers upon authors certain enumerated exclusive rights over their works during the term of the copyright, including the rights to reproduce the copyrighted work and to distribute those copies to the public. Id. (citing 17 U.S.C. § 106(1), (3)).

    At the same time, there are important limits to an author's rights to control original and derivative works. Id. at 95. "One such limit is the doctrine of `fair use,' which allows the public to draw upon copyrighted materials without the permission of the copyright holder in certain circumstances." Id. The fair use doctrine mediates between the "property rights [copyright law] establishes in creative works, which must be protected up to a point, and the ability of authors, artists, and the rest of us to express them—or ourselves by reference to the works of others, which must be protected up to a point." Blanch v. Koons, 467 F.3d 244, 250 (2d Cir. 2006).

    The fair use doctrine was codified in the Copyright Act of 1976, which lists four nonexclusive factors that must be considered in determining fair use:

    (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.

    17 U.S.C. § 107. Although Defendants bear the burden of proving that their use was fair, they need not establish that each of the factors set forth in Section 107 weighs in their favor. Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P., 756 F.3d 73, 81 (2d Cir. 2014) (quoting NXIVM Corp. v. Ross Inst., 364 F.3d 471, 476-77 (2d Cir. 2004), cert. denied, 543 U.S. 1000 (2004)). Instead, the factors "are to be explored, and the results weighed together, in light of the purposes of copyright." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578 (1994).[10] Moreover, as will be seen below, certain considerations will be relevant with respect to more than one factor.

    Although fair use is a mixed question of law and fact, courts in the Second Circuit have "on a number of occasions" resolved fair use determinations at the summary judgment stage where there are no genuine issues of material fact. Castle Rock Entm't, Inc. v. Carol Publ'g Grp., 150 F.3d 132, 137 (2d Cir. 1998).

    a. Factor One: The Purpose and Character of the Use

    The first factor, which addresses the manner in which the copied work is used, is the "heart of the fair use inquiry." Blanch, 467 F.3d at 251. As the Supreme Court instructed in Campbell, the central purpose of the inquiry is to see whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message. 510 U.S. at 579 (quoting Folsom v. Marsh, 9 F.Cas., 342, 348 (no. 4,901) (C.C.D. Mass. 1841)). In other words, the investigation "asks . . . whether and to what extent the new work is `transformative.'" Id. (quoting Leval at 1111). "A use is transformative if it does something more than repackage or republish the original copyrighted work." HathiTrust, 755 F.3d at 96.

    "Although transformative use is not `absolutely necessary' to a finding of fair use, `the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works.'" Authors Guild, Inc. v. Google Inc., 954 F. Supp. 2d 282, 290-91 (S.D.N.Y. 2013) (quoting Campbell, 510 U.S. at 579). Indeed, if "`the secondary use adds value to the original—if [copyrightable expression in the original work] is used as raw material, transformed in the creation of new information, new aesthetics, new insights and understandings—this is the very type of activity that the fair use doctrine intends to protect for the enrichment of society.'" Castle Rock, 150 F.3d at 142 (quoting Leval at 1111). "Added value or utility is not the test: a transformative work is one that serves a new and different function from the original work and is not a substitute for it." HathiTrust, 755 F.3d at 96. And as the Court stated in Campell, "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." 510 U.S. at 579.

    1) Transformative Use

    Defendants argue that the first factor favors a finding of fair use because the connection drawn between the events of September 11, 2001 and Iwo Jima can be "comfortably categorized as `comment.'" Defs. Mem. L. 14. According to Defendants, Tanner's use of the phrase "#neverforget" connoted remembrance of, and signaled Fox News' participation in an ongoing, global discussion concerning, the events of September 11, 2001. Id. Defendants further claim that they used a derivative of the Work for a distinct purpose: whereas Franklin's purpose in creating the Work was to report the news of the day, Fox News' use was designed to express solemn remembrance for September 11, 2001 and link the heroic acts of that day and World War II. Id. at 17. Plaintiff, on the other hand, claims that Fox News did not create any new content, use existing content for a materially different purpose, or disseminate existing content to a new audience that might not have seen it otherwise. Pl. Opp. Mem. L. 13. NJMG further contends that Fox News used the Combined Image not for commentary, but rather for a commercial purpose: to advertise and promote the Program. Pl.'s 56.1 Counter-Stmt. ¶ 24.

    To be sure, Defendants did not simply copy the Work wholesale. The image used by Defendants was different from the Work in five distinct ways. Fox News used a (1) cropped, (2) lower-resolution version of the Work, (3) which was juxtaposed with Raising the Flag on Iwo Jima and (4) in a smaller scale than the Work, and (5) added the phrase "#neverforget."

    Despite Defendants' claims regarding their use of the Work, however, the Court cannot conclude as a matter of law that the Combined Image transformed the Work sufficiently to merit protection as fair use. As Plaintiff asserts—accurately in the Court's view—the alterations to the Work are "barely discernable" unless the viewer is specifically prompted to look for them. Pl. Opp. Mem. L. 13-14. The Work is the clearly predominant feature of the Combined Image. Thus, a casual observer may believe that he is simply viewing the Work with only the hashtag added. Second Circuit authority suggests that more is required to "transform" an image. In Cariou, for example, the Second Circuit considered appropriation artist Richard Prince's alterations of copyrighted photographs that professional photographer Patrick Cariou took during the course of a period spent living among Rastafarians in Jamaica. 714 F.3d at 698. At issue in Cariou were thirty works of art Prince created through the appropriation of partial or whole images from Cariou's book Yes Rasta. Id. at 699. The portions of the Yes Rasta photographs used, and the amount of the artwork that they constituted, varied significantly from piece to piece. Id. at 699-700. Prince also changed other features of Cariou's work, including the scale and medium. Whereas Yes Rasta is a book of photographs measuring approximately 9.5" × 12", Prince's works, in addition to the images appropriated from the book, comprise inkjet printing and acrylic paint, as well as pasted-on elements, and are several times that size. Id. at 700.

    The Second Circuit found twenty-five of the thirty Prince works to be transformative as a matter of law. Id. at 706. In those pieces, Prince's composition, presentation, scale, color palette, and media were "fundamentally different and new" compared to the Cariou photographs. Id. The court noted that those portions of Cariou's photographs as to which it found fair use were heavily obscured and altered to the point that the original works were "barely recognizable." Id. at 710. Accordingly, the Second Circuit was able to conclude by looking at the Prince artworks and the Cariou photographs side-by-side that those twenty-five works had a different character, gave Cariou's photographs a new expression, and employed new aesthetics with creative and communicative results distinct from Cariou's. Id. at 707-08.

    However, the court could not conclude that the remaining five works were sufficiently transformative as a matter of law despite noting that there were key differences in those works compared to the Cariou photographs. Id. at 710, 711.[11] In Graduation, for example, Prince tinted a black-and-white photograph blue, painted a diamond-like shape over the subject's eyes and mouth, pasted enlarged hands and an electric guitar onto the canvas, and placed the image onto a large canvas. Id. at 700, 711. Despite these significant alterations, the Second Circuit was unable to conclude that the use of the Cariou photograph in Graduation was fair use as a matter of law. That conclusion, while not determinative, is instructive here because the Work is barely altered and is immediately recognizable as the iconic 9/11 photograph. Certainly, the level of alteration here would appear to be much less even than the five works as to which the Second Circuit remanded in Cariou.

    Similarly, in Blanch, the Second Circuit affirmed the district court's ruling on summary judgment that artist Jeff Koons' appropriation of fashion photographer Andrea Blanch's photograph Silk Sandals by Gucci was fair use. 467 F.3d at 246. Silk Sandals by Gucci appeared in the August 2000 issue of Allure magazine. Id. at 247-48. It depicts a woman's lower legs and feet, shod in Gucci sandals, resting on a man's lap in an airplane cabin. Id. at 248. At issue in Blanch was Koons' painting Niagara, which depicts four pairs of women's feet and lower legs dangling prominently over images of desserts and pastries with a grassy field and Niagara Falls in the background. Id. at 247. Similar to the artistic process employed by Prince, Koons took from the photograph only the image of the woman's legs and feet, cropping the background of the airplane cabin and the man's lap, before adding the resulting image into Niagara. Id. at 248. And unlike in this case, the parties did not dispute that Koons' purposes in using the photograph were "sharply different" from Blanch's goals in creating it. Id. at 252.

    The Second Circuit concluded that Koons' use of the Blanch photograph was transformative because of the new expression, meaning, and message captured in Niagara. Id. at 253. The court observed:

    The [fair use] test almost perfectly describes Koons's adaptation of "Silk Sandals": the use of a fashion photograph created for publication in a glossy American "lifestyles" magazine—with changes of its colors, the background against which it is portrayed, the medium, the size of the objects pictured, the objects' details and, crucially, their entirely different purpose and meaning—as part of a massive painting commissioned for exhibition in a German art-gallery space.

    Id.

    Defendants' use of the Combined Image presents a much closer call. The Combined Image used by Fox News surely altered the content and message of the Work, but only minimally. Certainly, the alterations do not begin to approach the alterations found to be transformative as a matter of law in Cariou and Blanch. It therefore cannot be said that Fox News presented an "entirely different aesthetic" from the Franklin photograph. Cf. Monge v. Maya Magazines, Inc., 688 F.3d 1164, 1173, 1176 (9th Cir. 2012) (concluding that gossip magazine's publication of copyrighted photographs of celebrity plaintiffs' wedding as an exposé "sprinkled with written commentary" was "at best minimally transformative"; the court noted that the gossip magazine could not "simply take fair use refuge under the umbrella of news reporting").

    Wholly apart from the image itself, there is also an issue as to whether the commentary Fox News wished to convey created anything new at all, much less anything transformative. On the particular facts of this case—as it involves the secondary use of a secondary use[12]—it can be argued that no part of the Combined Image constitutes an original idea on the part of Defendants; some other person first thought to combine the two photographs, and the phrase "#neverforget" was a ubiquitous presence on social media that day. Thus Fox News' commentary, if such it was, merely amounted to exclaiming "Me too." Analyzed from that perspective, the posting does not begin to constitute the creation of "new information, new aesthetics, new insights and understandings" required for finding a transformative purpose. Castle Rock, 150 F.3d at 142 (quoting Leval at 1111) (internal quotation marks omitted). Fox News' use was not therefore the type of activity that the fair use doctrine intended to protect "`for the enrichment of society.'" Id. (quoting Leval at 1111); cf. Monge, 688 F.3d at 1176 (noting that even if an infringer's purpose was distinct from that of the plaintiff's, such purpose, by itself, does not necessarily create new aesthetics or a new work that alters the original work with new expression, meaning, or message).[13]

    2) Commercial Use[14]

    As part of the first factor, the Court must also consider whether, and to what extent, Defendants' use was for a commercial purpose. This consideration arises when a secondary user makes unauthorized use of copyrighted material to gain a profit through copying the original work. Arrow Prods., LTD. v. Weinstein Co., ___ F. Supp. 2d ___, No. 13 Civ. 5488, 2014 WL 4211350, at *8 (S.D.N.Y. Aug. 25, 2014). However, the mere fact that Fox News operates a for-profit news service, and that the Pirro Facebook Page is intended to capture revenues for the network, is insufficient for a finding in Plaintiff's favor. The Second Circuit has consistently recognized that "[a]lmost all newspapers, books and magazines are published by commercial enterprises that seek a profit," Consumers Union of U.S., Inc. v. Gen. Signal Corp., 724 F.2d 1044, 1049 (2d Cir. 1983), and has "discounted this consideration where `the link between [the defendant's commercial gain and its copying is . . . attenuated' such that it would be misleading to characterize the use as `commercial exploitation.'" Swatch, 756 F.3d at 83 (quoting Am. Geophysical Union, 60 F.3d at 922); see also Cariou, 714 F.3d at 708 (instructing that the first factor "must be applied with caution because, as the Supreme Court has recognized, Congress `could not have intended' a rule that commercial uses are presumptively unfair" (quoting Campbell, 510 U.S. at 584)).

    Rather, the relative importance of this factor is determined on a sliding scale: the more transformative the work, the less important the commercial purpose. Because, as discussed in the previous section, neither the image nor the message conveyed by the Combined Image was substantially transformative, "the question whether the new use is commercial thus acquires an importance it [would] not [otherwise] have. . . ." Davis v. The Gap, Inc., 246 F.3d 152, 175 (2d Cir. 2001); cf. United States v. Am. Soc'y of Composers, Authors & Publishers, 599 F. Supp. 2d 415, 429 (S.D.N.Y. 2009) ("[A]pplicant's use of previews is not transformative, and, thus, the significance of its commercial use is not reduced, but instead takes on greater importance.").

    Defendants contend that their use of the Work was not "commercial," in particular because there is no evidence that Fox News captured any revenues as a direct consequence of its use. Defs. Mem. L. 19.[15] Plaintiff argues that Fox News' use of the Work constituted advertising and was therefore commercial. Pl. Opp. Mem. L. 8. In support of this contention, NJMG references the banner posted across the top of the Pirro Facebook Page, as well as the fact that the page invited users to respond to the Program's in-show polls, alerted them about upcoming guests, and attached videos from episodes of the Program. Id.

    While Tanner asserts that she posted the Combined Image to convey Fox News' participation in a global conversation about 9/11, she plainly stated in her deposition that the purpose of her role with respect to the Pirro Facebook Page is to engage the page's followers, and that Fox News operates the page, inter alia, to promote the Program. There exists, then, at least a question of material fact as to whether Fox News posted the Combined Image for the purely expressive purpose of commenting on the events of September 11, 2001, or whether it did so for the commercial purpose of promoting the Program. See Pl. Opp. Mem. L. 11.[16] Given the relative importance of this factor on the facts of this case, the Court is unable to conclude that it weighs in favor of either party as a matter of law.[17]

    b. Factor Two: The Nature of the Work

    The second statutory factor "calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Campbell, 510 U.S. at 586. Courts have generally adopted two types of distinctions in their analysis of the second factor: (1) whether the work is expressive or creative, such as a work of fiction, or more factual with a greater leeway being allowed to a claim of fair use where the work is factual or informational, and (2) whether the work is published or unpublished, with the scope for fair use involving unpublished works being considerably narrower. Blanch, 467 F.3d at 257 (quoting 2 Howard B. Abrams, The Law of Copyright, § 15:52 (2006)); see also Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 540 (1985) ("The unpublished nature of a work is a key, though not necessarily determinative, factor tending to negate a defense of fair use."). In the end, however, this factor is rarely found to be determinative. Arrow Prods., 2014 WL 4211350, at *9 (citing Davis, 246 F.3d at 175).

    Defendants argue that both prongs favor a determination of fair use. First they argue that the Work is factual in nature and not the product of a wholly creative process. Defs. Mem. L. 21. Instead, Defendants claim that Plaintiff's copyright interest in the Work is limited to Franklin's creative decisions in taking the photograph: "Plaintiff cannot claim ownership in the firefighters' actions, the expressions on their faces, their ashen uniforms, or the American flag." Id. Defendants further contend that the previous publication of the Work favors a finding of fair use. Id. at 21-22.

    According to Plaintiff, the nature of the Work weighs against fair use because it is a "stunning [example] of photojournalism, taken under life threatening conditions, during one of the most significant events in recent American history." Pl. Opp. Mem. L. 19. Plaintiff claims the Work involved many creative decisions, including the orientation of the photograph and the selection of a specific lens to best capture the steel wreckage at the World Trade Center site. Id. In Plaintiff's view, the Work is "not merely the depiction of an unforgettable historical event, but also the product of considerable creativity." Id.

    The Court finds that the second factor favors a finding of fair use. There can be no dispute that the Work is a non-fictional rendering of an event of utmost historical importance, which Franklin created during the course of his duties as a news photographer. Franklin did not create the scene or stage his subjects—to the contrary, he plainly acknowledged that the photograph "just happened." While there can be no dispute that Franklin exhibited great artistry in carrying out his task—for which he has been rightfully recognized and rewarded—there can also be no dispute that the Work is a quintessential example of photojournalism. Also weighing in Defendants' favor is the fact that the Work has been published since September 12, 2001.

    Courts analyzing similar photographic works created for news gathering or other nonartistic purposes have found this factor to weigh in favor of fair use. In Katz v. Chevaldina, No. 12 Civ. 22211, 2014 WL 2815496, at *1 (S.D. Fla. June 17, 2014), adopted by, 2014 WL 4385690 (S.D. Fla. Sept. 5, 2014), the court considered the defendant's publication of a critical blog post which incorporated a copyrighted photograph of the plaintiff. The court concluded that the second factor weighed in the defendant's favor because the photograph captured the plaintiff in a public setting and was simply used to identify him, and there was "no evidence that the photographer influenced, at all, the Plaintiff's activity, pose, expression or clothing." Id. at *8 (emphasis added). The court went on to note that it could not be said that the photograph conveyed the photographer's ideas or emotions. Id.; see also Fitzgerald v. CBS Broad., Inc., 491 F. Supp. 2d 177, 188 (D. Mass. 2007) (finding that the second factor weighed in favor of fair use because the plaintiff did not employ a creative process in photographing alleged mobster after arrest). Accordingly, because the Work is factual and has been published, this factor favors a finding of fair use. As mentioned above, however, this factor is rarely determinative.

    c. Factor Three: The Amount and Substantiality of the Portion Used

    The third factor bearing on fair use is "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). The question is whether the quantity and value of the materials used are reasonable in relation to the purpose of the copying. Campbell, 510 U.S. at 586 (quoting Folsom, 9 F. Cas. at 348); see also HathiTrust, 755 F.3d at 98 (stating that the third factor asks whether the copying used more of the copyrighted work than necessary and whether the copying was excessive). "In general, `the more of a copyrighted work that is taken, the less likely the use is to be fair.'" Swatch, 756 F.3d at 89 (quoting Infinity Broad. Corp. v. Kirkwood, 150 F.3d 104, 109 (2d Cir. 1998)). As the Second Circuit has noted, however, there are no absolute rules as to how much of a copyrighted work may be copied and still be considered a fair use. HathiTrust, 755 F.3d at 98 (quoting Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1263 (2d Cir. 1986)). "[T]he extent of permissible copying varies with the purpose and character of the use." Campbell, 510 U.S. at 586-87. Indeed, for some purposes, it may be necessary to copy the entire copyrighted work, and the third factor would not weigh against a finding of fair use in such circumstances. HathiTrust, 755 F.3d at 98; see, e.g., Bill Graham Archives, 448 F.3d at 613. "The crux of the inquiry is whether `no more was taken than necessary.'" HathiTrust, 755 F.3d at 98 (quoting Campbell, 510 U.S. at 589). Moreover, this factor "weighs less when considering a photograph—where all or most of the work often must be used in order to preserve any meaning at all—than a work such as a text or musical composition, where bits and pieces can be excerpted without losing all value." Fitzgerald, 491 F. Supp. 2d at 188; see also Katz, 2014 WL 2815496, at *8.

    The Court concludes that this factor is neutral. Given the express purpose of commemorating the events of 9/11, it is not clear that Fox News' use of any less of the Work would have ensured its audience's recognition of the iconic photograph. Cf. Fitzgerald, 491 F. Supp. 2d at 188 (deciding that this factor was "balanced between fair use and infringement" based on the slight cropping of the photograph and the preservation of most of the "heart" of the work); Katz, 2014 WL 2815496, at *8 (finding that the third factor was neutral even though the defendant copied the entire copyrighted work because the work in question was a photograph); Kelly v. Arriba Soft Corp., 336 F.3d 811, 821 (9th Cir. 2002) (deciding that the third factor did not favor either party because images used for a search engine database are necessarily copied in their entirety for the purpose of recognition); see also Dhillon v. Does 1-10, No. 13 Civ. 1465 (SI), 2014 WL 722592, at *5 (N.D. Cal. Feb. 25, 2014) (finding that the third factor was neutral where blog posted entire copyrighted headshot of state assembly candidate because "it would not have been feasible in these circumstances for the defendant to have copied less than the entire photo"). Therefore, the Court cannot conclude that the third factor favors either party.[18]

    d. Factor Four: The Effect of the Use Upon the Market for or Value of the Original

    The fourth factor is "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). In Harper & Row, the Supreme Court described this factor as "undoubtedly the single most important element of fair use." 471 U.S. at 566. This factor "requires courts to consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also `whether unrestricted and widespread conduct of the sort engaged in by the defendant . . . would result in a substantially adverse impact on the potential market' for the original." Campbell, 510 U.S. at 590 (quoting 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 13.05[A][4] (1993)). The Second Circuit has "made clear that `[the court's] concern is not whether the secondary use suppresses or even destroys the market for the original work or its potential derivatives, but whether the secondary use usurps the market of the original work.'" Cariou, 714 F.3d at 708 (quoting Blanch, 467 F.3d at 258)). "The market for potential derivative uses includes only those that creators of original works would in general develop or license others to develop." Campbell, 510 U.S. at 592. The Second Circuit has concluded that an alleged infringer has usurped the market for copyrighted works, including the derivative market, where the infringer's target audience and the nature of the infringing content is the same as the original. Cariou, 714 F.3d at 709; see, e.g., Castle Rock, 150 F.3d at 145 (finding that a Seinfeld trivia book usurped the show's market because it substituted for a derivative market that a television program copyright owner would in general develop or license others to develop). In conducting this analysis, courts are "mindful that `[t]he more transformative the secondary use, the less likelihood that the secondary use substitutes for the original,' even though `the fair use, being transformative, might well harm, or even destroy, the market for the original.'" Cariou, 714 F.3d at 709 (quoting id. at 145).

    Furthermore, "[i]t 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." Am. Geophysical Union, 60 F.3d at 929 (internal citations omitted). As the Second Circuit has noted, however, "were a court automatically to conclude in every case that potential licensing revenues were impermissibly impaired simply because the secondary user did not pay a fee for the right to engage in the use, the fourth fair use factor would always favor the copyright holder." Id. at 930 n.17; see also Bill Graham Archives, 448 F.3d at 614.

    Defendants contend that the fourth factor favors a finding of fair use because Plaintiff has not produced evidence that it lost any licensing revenue as a result of the use, or that Fox News ever attempted to oust Plaintiff from its licensing market, let alone that it has usurped such a market. Defs. Mem. L. 23-24.[19] NJMG counters that the unauthorized use here damaged the licensing market for the Work, and that widespread copying of the same sort would greatly diminish Plaintiff's copyright. Pl. Opp. Mem. L. 23.

    The Court finds that this factor weighs against fair use. As discussed above, the Combined Image is not substantially transformative. It does not present an "entirely different aesthetic" but instead relies upon the Work's original subjects and setting to retain the Work's historical meaning. And it is this historical meaning that has allowed the Work to remain popular to this day, as evidenced by the fact that NJMG has raised more than $1 million in licensing revenue from the Work to date. Indeed, there is no dispute that NJMG, which was "inundated" with licensing requests at the time of the Work's original publication, still maintains an active licensing program for the photograph, including by licensing the Work to media entities for editorial use, precisely the type of use Defendants urge they intended here. Fox News' interest in the Combined Image therefore poses a very real danger that other such media organizations will forego paying licensing fees for the Work and instead opt to use the Combined Image at no cost. Accordingly, given the predominance of the Work in the Combined Image, the posting on the Pirro Facebook Page poses a much greater danger to NJMG than simply the loss of licensing revenues from this one-time use.

    The district court's analysis in Fitzgerald is instructive. There the court found that the fourth factor "must go" in the plaintiff photographer's favor because CBS Broadcasting, Inc.'s ("CBS") use of photographs of an alleged mobster following his arrest was "paradigmatic of the only market the photographs could reasonably have: licensing to media outfits." 491 F. Supp. 2d at 189. The court noted that while there was no significant demand for "8 × 10 glossies" of a mobster, the market for media licenses for the photographs clearly existed. Id. Indeed, various media organizations used the photographs more than 20 times, resulting in over $60,000 in fees and settlements for the same kind of use as that employed by CBS. Id. While the Combined Image is, in the Court's view, marginally more transformative than the cropped image used in Fitzgerald, the continued demand for the Work for editorial use suggests that the purported use for commentary here was likewise paradigmatic of a primary market for the photograph.[20]

    The fourth factor therefore weighs against a finding of fair use.

    e. Overall Assessment

    Weighing the results together, in light of the purposes of copyright, the Court cannot conclude as a matter of law that Defendants' use of the Work was fair. Material questions of fact exist concerning the purpose of the Combined Image's use, precluding a determination of the

    [1] This photograph, taken by Joe Rosenthal, is entitled Raising the Flag on Iwo Jima.

    [2] Citations to "Pl.'s 56.1 Counter-Stmt." refer to Plaintiff's Counter-Statement of Material Facts pursuant to Local Civil Rule 56.1, Doc. 56. Citations to "Defs.' 56.1 Stmt." refer to Defendants' Statement of Material Facts pursuant to Local Civil Rule 56.1, Doc. 34. Citations to "Pl.'s 56.1 Stmt." refer to Plaintiff's Statement of Material Facts pursuant to Local Civil Rule 56.1, Doc. 56. Citations to "Defs.' 56.1 Counter-Stmt." Refer to Defendants' Statement of Material Facts in Response to Plaintiff's Statement pursuant to Local Civil Rule 56.1, Doc. 65.

    [3] Plaintiff disputes Tanner's purported intentions based on Tanner's deposition testimony that (i) she is paid by Fox News to update the Pirro Facebook Page in order to engage the page's followers, and (ii) one of the purposes of the Pirro Facebook Page is to promote the Program. Pl.'s 56.1 Counter-Stmt. ¶¶ 19-20; see Tanner Tr. 54:8-10, 55:15-21.

    [4] On September 11, 2013, "#neverforget" was a popular hashtag that Tanner saw many times on social media. Pl.'s 56.1 Counter-Stmt. ¶ 34.

    [5] Plaintiff disputes Defendants' claim that the Combined Image did not contain any restrictions on copying based on the fact that the legend "concordville.org" appeared at the bottom right-hand corner of the image found by Tanner. Pl.'s 56.1 Counter-Stmt. ¶ 26. This legend refers to the website of the Concordville Fire & Protective Association, a volunteer firefighting organization in Concordville, Pennsylvania. Id. ¶ 27.

    [6] Facebook users who have "liked" the Pirro Facebook Page automatically receive content posted to the page on their personal "News Feeds," which are constantly updating lists of stories from people and Facebook pages that the users follow. Pl.'s 56.1 Counter-Stmt. ¶ 14. Facebook users can read, like, comment on, or share such postings through their own News Feeds, without connecting to the Pirro Facebook Page itself. Id. ¶ 16. Defendants claim that the primary way Facebook users view content posted to the Pirro Facebook Page is by receiving the content on their News Feeds. Defs.' 56.1 Stmt. ¶ 15.

    [7] According to Plaintiff, the banner advertises that the Program airs on Saturdays at 9 p.m. See Declaration of William Dunnegan In Opposition to Defendants' Motion for Summary Judgment, Ex. G. Defendants do not appear to contest this, but explain that Facebook users who saw Tanner's posting on their News Feeds (i.e., without visiting the Pirro Facebook Page) would not have seen this banner. See Defs. Reply Mem. L. 7.

    [8] Relatedly, there is no evidence that Plaintiff ever contacted the Concordville Fire & Protection Association in connection with the Combined Image. Defs. Mem. L. 25; see Pl.'s 56.1 Counter-Stmt. ¶ 46.

    [9] The parties dispute the extent to which Plaintiff has sought to enforce its copyright over the years. According to Defendants, Plaintiff is aware of at least 11 other uses of the Work on September 11, 2013 that it considered to be infringing. Defs.' 56.1 Stmt. ¶ 42. Plaintiff did not contact seven of the businesses responsible for such uses, however. Pl.'s 56.1 Counter-Stmt. ¶ 42. Defendants also claim that Plaintiff did not issue any cease and desist letters concerning alleged infringements of its copyright in the Work between March 14, 2003 and February 7, 2012. Defs.' 56.1 Stmt. ¶ 43. As discussed above, however, Plaintiff contests this claim.

    [10] As the Supreme Court stated in Campbell, the fair use inquiry may be guided by the examples set forth in the preamble to Section 107, such as whether the purpose of the use was for "criticism, comment, news reporting, teaching . . ., scholarship, or research." 510 U.S. at 578-79; see 17 U.S.C. § 107.

    [11] The Second Circuit vacated and remanded with regard to the five remaining artworks, instructing the district court to make its own fair use determination in the first instance. Cariou, 714 F.3d at 712. The parties entered into a stipulation of voluntary dismissal before the district court ruled on the issue.

    [12] The parties did not address the issue from this perspective and the Court has not found a case addressing similar facts.

    [13] Even if it were the case, as Defendants claim, that Tanner did not seek permission to use the Combined Image because she did not believe she needed permission for the purpose of making a commentary, her belief is entitled to little weight. See Defs.' 56.1 Stmt. ¶ 35. In the first instance, Tanner has no training in copyright law. Secondly, whether Defendants appropriated the Work in good faith is irrelevant to the analysis. Cf. Monge, 688 F.3d at 1170 ("Despite its claim that it purchased the photos in good faith, `the innocent intent of the defendant constitutes no defense to liability'" (quoting 4 M. Nimmer & D. Nimmer, Nimmer on Copyright § 13.08[B][1] (2001)).

    [14] Defendants contend that they used the Work to make a comment about September 11, 2001, and that the inquiry under the first factor therefore "should be at an end." Defs. Mem. L. 14 (quoting Wright v. Warner Books, Inc., 953 F.2d 731, 736 (2d Cir. 1991)). However, even assuming the post was designed as commentary, the Court would still analyze the commercial nature of the use. See, e.g., NXIVM, 364 F.3d at 477-79 (discussing the commercial purpose of the use despite the court's conclusion that the defendants' use was transformative as criticism); see also Twin Peaks Prods., Inc. v. Publ'ns Int'l, Ltd., 996 F.2d 1366, 1374 (2d Cir. 1993) (analyzing the commercial nature of the use despite finding that the defendants' use was "surely a work of `comment'").

    [15] See Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 922 (2d Cir. 1994) (stating that the commercial/nonprofit dichotomy concerns the unfairness that arises when a secondary user makes unauthorized use of copyrighted material to capture significant revenues as a direct consequence of copying the original work).

    [16] The Court notes, moreover, that the two purposes are not mutually exclusive. By "commenting" that we should not forget the terrible events of 9/11 and honor the nation's response to them, Fox News was also consciously associating itself with a view indisputably regarded favorably by most if not all of its target audience. Such uncontroversial commentary arguably generates goodwill for, and therefore serves to promote, the Program.

    [17] Defendants' reliance on Bill Graham Archives is misplaced. There, the court affirmed the district court's grant of summary judgment for defendant publishers of Grateful Dead: The Illustrated Trip, a 480-page coffee table book that provides a history of the Grateful Dead through the use of a timeline and over 2000 images. The plaintiff claimed to own the copyright to seven such images, which the defendants reproduced without permission. Id. at 607.

    The Second Circuit found that the first factor weighed in the defendants' favor, inter alia, because their purpose in using the copyrighted images—as historical artifacts to document the Grateful Dead concert events featured in the book's timeline—was plainly different from the plaintiff's dual purposes of artistic expression and promotion: the images were originally used as concert posters to generate public interest in the band's upcoming events. Id. at 609. This case is different because it presents an issue of fact as to Fox News' purpose in using the work.

    [18] As discussed above, the inquiry under the third factor is dependent on the purported purpose of the copyrighted work's use, which presents an issue of fact here. The Court notes, however, that irrespective of whether the purpose of Fox News' use was the commemoration of 9/11 or the promotion of the Program, it still could not conclude as a matter of law that the third factor favored either party.

    [19] Defendants also claim that Plaintiff is aware of, but has done little to stop, widespread unlicensed uses of the Work, and that NJMG's "newfound and porous (or selective) enforcement" of its copyright in the Work implies that "stray internet uses" of the photograph are not substitutes for, and have not usurped the market for, the Work. Defs. Mem. L. 24, 25.

    [20] Finally, Defendants' argument that the fourth factor favors fair use because Plaintiff has not presented evidence that it lost even a single dollar of licensing revenue is unavailing. As the Second Circuit stated in Bill Graham Archives, the court's role with respect to the fourth factor is to "look at the impact on potential licensing revenues for `traditional, reasonable, or likely to be developed markets.'" 448 F.3d at 614 (emphasis added) (quoting Am. Geophysical Union, 60 F.3d at 930); see also Ringgold v. Black Entm't Television, Inc., 126 F.3d 70, 81 (2d Cir. 1997) (noting that the plaintiff was not required to show a decline in the number of licensing requests for the work in question, but instead that there was a traditional, reasonable, or likely to be developed market for licensing the work). And in Castle Rock, the Second Circuit found that the fourth factor favored Seinfeld's production company where there was no evidence that the publication of the allegedly infringing trivia book diminished the show's profitability. 150 F.3d at 136. The court noted that although the plaintiff evidenced little if any interest in exploiting the market for derivative works based on Seinfeld, the copyright law must respect that creative and economic choice. Id. at 145-46.

  • 3 Cambridge University Press v. Patton

    769 F.3d 1232 (2014)

    CAMBRIDGE UNIVERSITY PRESS, OXFORD UNIVERSITY PRESS, INC., SAGE PUBLICATIONS, INC., Plaintiffs-Appellants,
    v.
    CARL V. PATTON, et al., Defendants,
    J. L. ALBERT, in his official capacity as Georgia State University Associate Provost for Information System and Technology, MARK P. BECKER, in his official capacity as President of Georgia State University, KENNETH R. BERNARD, JR., in his official capacity as member of the Board of Regents of the University System of Georgia., ROBERT F. HATCHER, in his official capacity as Vice Chair of the Board of Regents of the University System of Georgia, W. MANSFIELD JENNINGS, JR., in his official capacity as member of the Board of Regents of the University System of Georgia, JAMES R. JOLLY, in his official capacity as member of the Board of Regents of the University System of Georgia, et al., Defendants-Appellees.

    Nos. 12-14676, 12-15147.

    United States Court of Appeals, Eleventh Circuit.

    October 17, 2014.

    Before TJOFLAT and MARCUS, Circuit Judges, and VINSON,[1] District Judge.

    TJOFLAT, Circuit Judge.

    Three publishing houses, Cambridge University Press, Oxford University Press, and Sage Publications, Inc. (collectively, "Plaintiffs") allege that members of the Board of Regents of the University System of Georgia and officials at Georgia State University ("GSU") (collectively, "Defendants") infringed Plaintiffs' copyrights by maintaining a policy which allows GSU professors to make digital copies of excerpts of Plaintiffs' books available to students without paying Plaintiffs. Plaintiffs alleged seventy-four individual instances of infringement, which took place during three academic terms in 2009. The District Court issued an order finding that Plaintiffs failed to establish a prima facie case of infringement in twenty-six instances, that the fair use defense applied in forty-three instances, and that Defendants had infringed Plaintiffs' copyrights in the remaining five instances.

    Finding that GSU's policy caused the five instances of infringement, the District Court granted declaratory and injunctive relief to Plaintiffs. Nevertheless, the District Court found that Defendants were the prevailing party and awarded them costs and attorneys' fees. Because we find that the District Court's fair use analysis was in part erroneous, we reverse the District Court's judgment; vacate the injunction, declaratory relief, and award of costs and fees; and remand for further proceedings consistent with this opinion.

    I.
    A.

    Like many recent issues in copyright law, this is a case in which technological advances have created a new, more efficient means of delivery for copyrighted works, causing copyright owners and consumers to struggle to define the appropriate boundaries of copyright protection in the new digital marketplace. These boundaries must be drawn carefully in order to assure that copyright law serves its intended purpose, which is to promote the creation of new works for the public good by providing authors and other creators with an economic incentive to create. See Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S. Ct. 2040, 2044, 45 L. Ed. 2d 84 (1975). If copyright's utilitarian goal is to be met, we must be careful not to place overbroad restrictions on the use of copyrighted works, because to do so would prevent would-be authors from effectively building on the ideas of others. Some unpaid use of copyrighted materials must be allowed in order to prevent copyright from functioning as a straightjacket that stifles the very creative activity it seeks to foster. If we allow too much unpaid copying, however, we risk extinguishing the economic incentive to create that copyright is intended to provide.

    The fair use doctrine provides a means by which a court may ascertain the appropriate balance in a given case if the market actors cannot do so on their own. Fair use is a defense that can excuse what would otherwise be an infringing use of copyrighted material. See 17 U.S.C. § 107 ("[T]he fair use of a copyrighted work . . . is not an infringement of copyright."). To prevail on a claim of fair use, a defendant must convince the court that allowing his or her unpaid use of copyrighted material would be equitable and consonant with the purposes of copyright. In order to make this determination, the court must carefully evaluate the facts of the case at hand in light of four considerations, which are codified in the Copyright Act of 1976: (1) the purpose of the allegedly infringing use, (2) the nature of the original work, (3) the size and significance of the portion of the original work that was copied, and (4) the effect of the allegedly infringing use on the potential market for or value of the original. Id. These factors establish the contours within which a court may investigate whether, in a given case, a finding of fair use would serve the objectives of copyright. Here, we are called upon to determine whether the unpaid copying of scholarly works by a university for use by students—facilitated by the development of systems for digital delivery over the Internet—should be excused under the doctrine of fair use.

    Plaintiffs are three publishing houses that specialize in academic works. Plaintiff Cambridge University Press ("Cambridge") is the not-for-profit publishing house of the University of Cambridge in England, having an American branch headquartered in New York City. Plaintiff Oxford University Press, Inc. ("Oxford") is a not-for-profit United States corporation associated with Oxford University in England and headquartered in New York City. Plaintiff Sage Publications, Inc. ("Sage") is a for-profit Delaware corporation, headquartered in Sherman Oaks, California.

    Plaintiffs do not publish the large, general textbooks commonly used in entry-level university courses. Rather, Plaintiffs publish advanced scholarly works, which might be used in upper-level undergraduate and graduate courses. Cambridge and Oxford publish scholarly books and journals on niche subject areas. Their works involved in this case include research-based monographs, which are "small, single author books which give in-depth analysis of a narrow topic," Cambridge Univ. Press v. Becker, 863 F. Supp. 2d 1190, 1212 (N.D. Ga. 2012) (footnote omitted), instructional books, trade books, and other works on academic topics. Sage primarily publishes books on the social sciences. All three Plaintiffs publish, in addition to works by a single author, "edited books" which feature the contributions of multiple authors. Id.

    Plaintiffs market their books to professors who teach at universities and colleges. Cambridge and Oxford regularly send complimentary copies of their publications to professors. Sage provides trial copies upon request. Plaintiffs intend that professors use Plaintiffs' publications in their work and assign them as required reading so that students will purchase them.

    Rather than assigning whole books, some professors assign or suggest excerpts from Plaintiffs' books as part of the curriculum for their courses. Professors might do this by putting the work on reserve at the university library so that students can visit the library to read an assigned excerpt. Or, professors might prepare a bound, photocopied, paper "coursepack" containing excerpts from several works for a particular course. Often, a third-party copy shop assembles these coursepacks, performing the copying and binding, obtaining the necessary licenses from publishers, and charging students a fee for the finished coursepack. In recent years, however, universities—following the trend with regard to distribution of many forms of media the world over—have increasingly abandoned paper coursepacks in favor of digital distribution of excerpts over the Internet.[2]

    GSU is a public university in Atlanta, Georgia. It is part of the University System of Georgia, and is overseen by the Board of Regents of the University System of Georgia. GSU maintains two on-campus systems known as "ERes" and "uLearn" for digital distribution of course materials to students.

    ERes (short for "E-Reserves") is an "electronic reserve system" hosted on servers maintained by GSU, and managed by GSU's library staff. Since 2004, GSU has used ERes to allow GSU students to access course materials—including course syllabi, class notes, sample exams, and excerpts from books and journals— on the Internet via a web browser. In order to place an excerpt from a book or journal on ERes, a professor must either provide a personal copy of the work to the GSU library staff or indicate that the GSU library owns a copy. A member of the library staff then scans the excerpt to convert it to a digital format and posts the scanned copy to ERes. GSU students are given access to an ERes website specific to the courses in which they are enrolled. On each course-specific ERes website, students find their reading assignments listed by title. The scanned excerpts are accessible via hyperlink. When a student clicks a link for a particular assignment, the student receives a digital copy of a scanned excerpt that the student may view, print, save to his or her computer, and potentially keep indefinitely. ERes course websites are password-protected in order to limit access to the students in the particular course. Once a course ends, students no longer have access to the ERes website for that course.

    uLearn is a "course management system" hosted on servers maintained by the Board of Regents. Like ERes, uLearn provides course-specific webpages through which professors may make course material available, including digital copies of excerpts from books, which students in the course may view, print, or save. The most significant difference between the ERes and uLearn systems is that uLearn allows professors to upload digital copies of reading material directly to their course websites while ERes forces professors to rely on GSU library personnel to upload reading material for them.

    ERes and uLearn have been popular at GSU.[3] For example, during the Spring 2009 term, paper coursepacks were offered for only about fifteen courses, while instructors in hundreds of courses made readings available on ERes. Thus, the excerpts from larger works that make up some portion of course readings at GSU, and which were once distributed to students via a paper coursepack purchased at the university bookstore, are now largely distributed to students via digital download on the Internet, which the students pay for only indirectly via tuition and fees.

    There exists a well-established system for the licensing of excerpts of copyrighted works. Copyright Clearance Center ("CCC") is a not-for-profit corporation with headquarters in Danvers, Massachusetts. CCC licenses excerpts from copyrighted works for a fee, acting on behalf of publishers who choose to make their works available through CCC. These licenses are called "permissions." All three Plaintiffs offer excerpt-specific permissions to photocopy or digitally reproduce portions of their works, which may be obtained directly from Plaintiffs or through CCC. Permissions are not, however, available for licensed copying of excerpts from all of Plaintiffs' works.[4]

    CCC offers a variety of permissions services to various categories of users, including corporate, educational, and institutional users. One such service, the Academic Permissions Service ("APS"), licenses educational users to make print copies on a per-use basis. CCC also offers an electronic course content service ("ECCS") for licensing of digital excerpts by educational users on a per-use basis, which—in 2008, the year for which evidence on the question was presented— offered only a small percentage of the works that were available through APS. ECCS is designed for electronic reserve systems such as ERes and uLearn. Software is available that would allow GSU library personnel to place an order with CCC for a permission to provide students with a digital copy of an excerpt via ERes. CCC also offers an Academic Repertory License Service ("ARLS") which affords subscribers access to excerpts from a set group of about nine million titles, approximately 17 percent of which are available in digital format. Sage participates in ARLS and did so in 2009, Oxford participated in 2009 with regard to journals but not books, and Cambridge does not participate. GSU did not and does not subscribe to this program.

    When the GSU bookstore assembles and sells a paper coursepack containing excerpts from copyrighted works, GSU pays permissions fees for use of the excerpts.[5] The central issue in this case is under what circumstances GSU must pay permissions fees to post a digital copy of an excerpt of Plaintiffs' works to ERes or uLearn.

    B.

    On April 15, 2008, Plaintiffs filed their original complaint in the United States District Court for the Northern District of Georgia. Plaintiffs alleged that hundreds of GSU professors have made thousands of copyrighted works— including works owned or controlled by Plaintiffs—available on GSU's electronic reserve systems without obtaining permissions from copyright holders, and that GSU's administration facilitated, encouraged, and induced this practice. Plaintiffs sued Defendants in their official capacities as GSU officials, claiming (1) direct copyright infringement[6] caused by the officials "scanning, copying, displaying, and distributing Plaintiffs' copyrighted material;" (2) contributory copyright infringement[7] caused by the officials "facilitating, encouraging, and inducing librarians and professors to scan, copy, display, and distribute Plaintiffs' copyrighted material" and "students to view, download, copy and further distribute [Plaintiffs'] copyrighted material;" and (3) vicarious copyright infringement[8] caused by the officials inducing GSU employees and students to copy Plaintiffs' copyrighted material, profiting from this practice, and failing to stop it despite having the right and ability to do so. Doc. 1, at 25-28. Plaintiffs sought declaratory and injunctive relief. Plaintiffs supported their allegations with numerous examples of GSU professors posting excerpts of Plaintiffs' works on GSU's electronic reserve systems. Defendants filed an Answer, denying Plaintiffs' allegations of infringement; claiming sovereign immunity and Eleventh Amendment immunity based on Defendants' status as state officials; and asserting a defense of fair use because "any alleged use of copyrighted materials was for the purpose of teaching, scholarship or research and for nonprofit educational purposes." Doc. 14, at 2.

    On December 15, 2008, Plaintiffs filed their First Amended Complaint. The First Amended Complaint added several members of the Board of Regents as Defendants, alleging that they were ultimately responsible for the alleged acts of infringement at GSU because of their supervisory authority over the University System of Georgia. Defendants' Answer to the First Amended Complaint again denied infringement, asserted fair use, and claimed sovereign immunity and Eleventh Amendment immunity for all Defendants.

    In late December 2008, the University System of Georgia convened a Select Committee on Copyright to review GSU's then-existing copyright policy, which was called the "Regents' Guide to Understanding Copyright & Educational Fair Use."[9] On February 17, 2009, the Select Committee announced a new copyright policy for GSU (the "2009 Policy"), which went into effect the same day. Under the 2009 Policy, a revised version of which remains in effect today, GSU professors who wish to post an excerpt of a copyrighted work on ERes or uLearn for distribution to their students must first determine whether they believe that doing so would be fair use. In order to make this determination, professors must fill out a "Fair Use Checklist" for each excerpt.[10]

    The Checklist allows GSU professors to perform a version of the analysis a court might perform should the professor claim fair use in a subsequent copyright infringement suit. As described above, see supra part I.A, the fair use analysis involves a consideration of whether allowing the unpaid use in a given case would be equitable and serve the objectives of copyright in light of four statutory factors, see 17 U.S.C. § 107. For each factor, the Checklist provides several criteria that purportedly weigh either for or against a finding of fair use, each with a corresponding checkbox.[11] The Checklist instructs professors to check each criterion that applies, and then add up the checks to determine whether the factor weighs in favor of or against a finding of fair use. After making this tally, the Checklist explains that "[w]here the factors favoring fair use outnumber those against it, reliance on fair use is justified. Where fewer than half the factors favor fair use, instructors should seek permission from the rights holder." Doc. 235-2, at 7. Thus, under the 2009 Policy, a GSU professor may post an excerpt of a copyrighted work on ERes or uLearn without obtaining a permission from the copyright holder if the professor first decides that doing so would be protected by the doctrine of fair use, according to the criteria set forth in the Checklist.

    After completing an initial round of discovery, both parties moved for summary judgment on February 26, 2010. Plaintiffs alleged that the 2009 Policy had failed to curb the alleged infringement of their copyrighted works, and argued that they were entitled to summary judgment on all claims. Plaintiffs argued that they were entitled to an injunction based on the alleged infringements listed in their First Amended Complaint, which had occurred prior to enactment of the 2009 Policy, and added allegations regarding new instances of infringement, which also occurred prior to enactment of the 2009 Policy. Plaintiffs also argued that injunctive relief was appropriate as to Defendants under Ex parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L. Ed. 714 (1908), which permits prospective relief against state officers in their official capacities.

    Defendants argued that they were entitled to summary judgment on all claims. Defendants also contended that Plaintiffs were only entitled to prospective declaratory and injunctive relief as to ongoing and continuous conduct, and so the District Court should only consider alleged infringements that occurred since GSU enacted the 2009 Policy. Thus, Defendants contended, any claims based on GSU's superseded pre-2009 policy were moot. Defendants also claimed that GSU's adoption of the 2009 Policy had substantially reduced the amount of Plaintiffs' works used by GSU professors.

    On August 11, 2010, and August 12, 2010, the District Court ordered Plaintiffs to produce a list of all claimed infringements of their works that had occurred at GSU during the period following enactment of the 2009 Policy, which included the 2009 "Maymester" (a three-week term), the 2009 summer semester, and the 2009 fall semester. The District Court also required that Plaintiffs provide certain information about the alleged infringements, including the name of the course in which the excerpt of the work was used, the instructor's name, a title and description of the copied work, the name of the owner of the work's copyright, the number of pages and chapters in the work, the number of pages and chapters copied, the retail price to purchase the entire work, and the potential cost to license each excerpt at issue. On August 20, 2010, Plaintiffs filed a list showing 126 claimed infringements.

    On September 30, 2010, the District Court denied Plaintiffs' motion for summary judgment. The District Court granted in part and denied in part Defendants' motion for summary judgment, granting summary judgment to Defendants on the claims of direct and vicarious infringement, and denying summary judgment to Defendants on the claim of contributory infringement.

    In its summary judgment order, the District Court construed the First Amended Complaint as claiming that the 2009 Policy as applied to Plaintiffs' works "has led to continuing abuse of the fair use privilege." Doc. 235, at 5. Accordingly, the District Court agreed that only alleged acts of infringement that took place after GSU enacted the 2009 Policy were relevant to Plaintiffs' claims, and held that it would only consider those acts. However, the District Court declined to consider at that time the list of alleged post-2009 Policy infringements that Plaintiffs had provided because the parties had not yet conducted discovery as to these allegations.

    The District Court granted summary judgment for Defendants on the direct infringement claim because it found that GSU as an entity is not itself capable of copying or making fair use determinations, and that Defendants cannot be held liable under a respondeat superior theory because "respondeat superior applies in the copyright context as a basis for finding vicarious liability, not direct liability." Id. at 19. With regard to the vicarious infringement claim, the District Court held that summary judgment for Defendants was appropriate because it found that there was no evidence to support the conclusion that GSU had profited from the allegedly infringing use of Plaintiffs' works by GSU personnel, or that GSU's shift to digital distribution of excerpts via its electronic reserve system served as a "direct draw for students or that Defendants have a direct financial interest in copyright infringement." Id. at 21. With regard to the contributory infringement claim, the District Court denied both Plaintiffs' and Defendants' motions for summary judgment, finding that the record was silent as to whether the 2009 Policy "encourage[s] improper application of the fair use defense." Id. at 30.

    The District Court further held:

    Going forward, in order to show that Defendants are responsible for the copyright infringements alleged in this case, Plaintiffs must show that the 2009 Copyright Policy resulted in ongoing and continuous misuse of the fair use defense. To do so, Plaintiffs must put forth evidence of a sufficient number of instances of infringement of Plaintiffs' copyrights to show such ongoing and continuous misuse. Defendants will have the burden of showing that each specified instance of 2009 Copyright Policy infringement was a fair use.

    Both sides will be limited to the list of claimed infringements produced in response to the Court's August 11, 2010 and August 12, 2010 orders.

    Id. at 30.

    On October 20, 2010, Plaintiffs filed a motion for partial reconsideration of the District Court's grant of summary judgment for Defendants. Plaintiffs argued, in relevant part, that the District Court erred in dismissing the direct infringement claim because courts routinely hold employers responsible for acts of copyright infringement committed by their employees through the doctrine of respondeat superior without recourse to secondary infringement doctrines. The District Court granted Plaintiffs' motion, reviving Plaintiffs' claim of direct infringement, striking Plaintiffs' label of the claim as "direct infringement," and construing the claim as an "indirect infringement" claim.[12]

    On November 4, 2010, Defendants moved to dismiss Plaintiffs' First Amended Complaint for lack of subject matter jurisdiction. Defendants argued that Plaintiffs' claims were barred by the Eleventh Amendment, and that Plaintiffs could not make use of the Ex parte Young exception to Eleventh Amendment immunity because Defendants were not personally violating—or threatening to violate—copyright law. Defendants contended that their supervisory role over GSU's policies and personnel did not create a sufficient causal nexus to the infringing activity, and thus Ex parte Young did not apply. The District Court denied Defendants' motion to dismiss, holding that it would not presently address Defendants' argument that Ex parte Young did not apply because "Plaintiffs' First Amended Complaint currently alleges that Defendants' own copying, scanning, displaying, and distributing of Plaintiffs' materials violated Plaintiffs' copyrights." Doc. 267, at 12.

    On November 5, 2010, the District Court ordered discovery regarding GSU's use of Plaintiffs' copyrighted material during the 2009 Maymester, the 2009 summer term, and the 2009 fall term. In response, on March 15, 2011, the parties filed a joint document detailing ninety-nine alleged acts of infringement that occurred during that period. This filing included the name of each allegedly infringed work, the circumstances of the alleged infringement, and Defendants' objections to each claimed infringement. For all ninety-nine, Defendants claimed fair use. In some instances, Defendants also argued that Plaintiffs had not provided evidence of a copyright registration for the work in question. Defendants also objected to the method by which Plaintiffs had calculated the ratio between the number of pages in an excerpt and the total number of pages in the work. Plaintiffs had made these calculations based on the total number of pages in the textual body of the work, excluding parts such as tables of contents, indexes, and prefaces. Defendants argued that these non-body parts of a work should be included in the total page count of a work.

    On May 11, 2011, in response to the District Court's Consolidated Pretrial Order dated May 2, 2011, Plaintiffs filed a proposed order for injunctive relief. Plaintiffs' proposed injunction would essentially limit GSU to copying that fell within the parameters set forth in the Agreement on Guidelines for Classroom Copying in Not-For-Profit Educational Institutions with Respect to Books and Periodicals (the "Classroom Guidelines").[13] See Doc. 300-1, at 3-4.

    A bench trial began on May 17, 2011. At the close of Plaintiffs' case, the District Court granted Defendants' motion for judgment on the contributory infringement claim, leaving only the claim that the 2009 Policy directly caused copyright infringement.

    On June 1, 2011, Plaintiffs voluntarily filed a revised list of seventy-five claimed infringements, relating to sixty-four separate works. This list dropped twenty-five of the claimed infringements from the joint list filed on March 15, 2011, and added one new claim. The District Court accepted Plaintiffs' revised list, including the added claim, because it found that the added claim featured the same copied material as a previously identified claim, and that both sides had an adequate opportunity to address it at trial. Cambridge Univ. Press, 863 F. Supp. 2d at 1204-05 n.7. However, the District Court construed two claims of infringement involving the same copied material in two different semesters as one claim, because the evidence showed that the material was posted only once for the same multi-semester course, and that the material was accessed during only one semester. Id. at 1289 n.89. Thus, in reaching its decision, the District Court considered a total of seventy-four individual claims of infringement.

    On May 11, 2012, the District Court issued an order holding that Defendants had infringed Plaintiffs' copyright in five of the seventy-four instances at issue. Id. at 1363. First, the District Court held that Plaintiffs were entitled to the benefit of the Ex parte Young exception to Eleventh Amendment immunity because the GSU Defendants were responsible for the creation and implementation of the 2009 policy, and the Board of Regents at least tacitly approved it. Id. at 1209.

    After holding that it could appropriately enter injunctive relief pursuant to Ex parte Young, the District Court described how it would proceed. First, because "there is no precedent on all fours for how the factors should be applied where excerpts of copyrighted works are copied by a nonprofit college or university for a nonprofit educational purpose," the District Court would determine how the fair use factors should be applied in this case, and whether any other factors merit consideration. Id. at 1210. Then, in order to assess the efficacy of GSU's copyright policy in complying with the requirements of the law, the District Court would assess each of the seventy-four claimed instances of infringement individually and "compare the outcome of this process to the outcomes that were achieved under the [fair use] checklists prescribed under the 2009 Copyright Policy." Id. at 1211.

    First, the District Court made several findings of fact. Id. at 1211-21. In addition to findings—described above—regarding GSU's copyright policy, Plaintiffs' operations, and CCC's services for licensing of excerpts of copyrighted works, the District Court made detailed findings regarding the market for excerpts of Plaintiffs' works, based largely on the parties' stipulations.

    With regard to CCC's APS and ECCS programs, the District Court noted that publishers determine the fee for licensing excerpts of their materials, which for academic users is currently between ten and twenty-five cents per page. Id. at 1215. Cambridge stipulated that it charges eleven cents per page for APS and fifteen cents per page for ECCS, Sage stipulated that it charges fourteen cents per page (unspecified whether for permissions via APS, ECCS, or both), and Oxford stipulated that it charges twelve cents per page (unspecified whether for APS, ECCS, or both). Id. CCC charges a $3.50 service charge per order, and keeps 15 percent of the permission fee. Id. All three Plaintiffs have in-house permissions departments, but 90 percent of Oxford's permissions income and 95 percent of Cambridge's comes from CCC. Id. Although it did not note a percentage, the District Court found that "many though not all of Sage's works at issue in this case generated permissions revenue from CCC during the period from July 1, 2004 to December 1, 2010." Id. at 1214.

    The District Court found that "Plaintiffs earn considerable annual rights and permissions income through CCC. CCC made rights and permissions payments to Cambridge, Oxford, and Sage totaling $4,722,686.24 in FY 2009 and $5,165,445.10 in FY 2010," amounting to an average of $1,574,228.74 per-Plaintiff in FY 2009. Id. at 1216 (footnote omitted). However, these totals involve payments through services which have "no demonstrated relevance to this case." Id.

    Considering only payments for permissions under the academic permissions services—the APS, ECCS, and Academic Annual Copyright License[14] programs— in FY 2009 Cambridge earned $404,494.90, Oxford earned $480,622.47, and Sage earned $352,759.84. Id. APS income, which "is dominated by payments for printed coursepacks," accounted for the majority of these totals. Id. Thus, in FY 2009, through ECCS—CCC's academic permissions service for individual licensing of digital copies of excerpts—Cambridge earned $81,671.35, Oxford earned $70,485.81, and Sage earned $85,660.91. Id. The figures for FY 2010 are similar. Id.

    The District Court calculated the percentage of Plaintiffs' total revenues that these figures represent and determined that

    on average, APS and ECCS permissions represent .0024 (one-quarter of one percent) of net revenue in FY 2009 for each of the Plaintiffs. If the calculation is limited to ECCS income [for licensing of digital excerpts] (an average of $79,272 per Plaintiff), the percentage would be .00046 (five one-hundredths of one percent) of average net revenues. Even if all of the types of permissions payments reflected in Plaintiffs' referenced exhibits are included, this income would represent an average of .0093 (nine-tenths of one percent) of net revenues per Plaintiff for FY 2009.

    Id.

    The District Court noted that Plaintiffs offered no testimony or evidence demonstrating that they lost book sales on account of Defendants' actions, and accordingly found that no book sales were lost. Id. at 1217. The District Court also found that if GSU students had been required to pay permissions fees for the use of excerpts of Plaintiffs' works in 2009, "there would have been some small overall increase in the cost of education." Id.

    The District Court turned to its conclusions of law, first laying out the requirements for establishing a prima facie case of copyright infringement. To establish a prima facie case, Plaintiffs must establish that (1) they own valid copyrights in the allegedly infringed works and (2) that Defendants copied protected elements of the allegedly infringed works. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 1296, 113 L. Ed. 2d 358 (1991). Plaintiffs must also establish that the copyright for the allegedly infringed work has been registered in the U.S. Copyright Office. 17 U.S.C. § 411(a).

    The District Court found that there were valid copyright registrations in all but one of the instances of alleged infringement. Cambridge Univ. Press, 863 F. Supp. 2d at 1221. The District Court also found that Plaintiffs had established the element of copying protected material in all instances of alleged infringement. Id. With regard to the ownership prong, the District Court found that Plaintiffs are generally assignees of copyrights originally owned by authors, or hold exclusive licenses to publish the works in question pursuant to contracts with authors. Id. at 1222. Sage is deemed to be the author of some of its edited books by virtue of work-for-hire contracts. Id. However, the District Court found that several instances of alleged infringement involved works for which the Plaintiff-publisher offered no evidence of a contract with the contributing author. Id. The District Court held that, because such evidence is necessary in this case to establish ownership of the copyright to the works in question, in those instances lack of such evidence would be fatal to Plaintiffs' prima facie case of infringement. Id. at 1223.

    Then, the District Court set forth the parameters of its fair use analysis. The District Court held that the first fair use factor, "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes," 17 U.S.C. § 107(1), "strongly favor[ed] Defendants" in all instances because "[t]his case involves making copies of excerpts of copyrighted works for teaching students and for scholarship . . . [and so] [t]he use is for strictly nonprofit educational purposes," Cambridge Univ. Press, 863 F. Supp. 2d at 1224-25.

    The District Court held that the second fair use factor, "the nature of the copyrighted work," 17 U.S.C. § 107(2), favored Defendants in all instances because it found—after undertaking an individualized review of all of the works at issue for which it found that Plaintiffs had made a prima facie case of infringement—that "the books involved in this case are properly classified as informational in nature, within the spectrum of factual materials and hence favoring fair use." Cambridge Univ. Press, 863 F. Supp. 2d at 1226.

    The District Court held that the third fair use factor, "the amount and substantiality of the portion used in relation to the copyrighted work as a whole," 17 U.S.C. § 107(3), "favor[ed] either Plaintiffs or Defendants, depending on the amount taken from each book," Cambridge Univ. Press, 863 F. Supp. 2d at 1235.

    After hearing testimony from several GSU professors as to the reasoning behind their choice of a particular excerpt and how use of that excerpt furthered the professor's goals for a particular class, the District Court found that all of the selections furthered the legitimate educational purposes of the courses in which they were used. Id. The District Court also found that some professors' educational purposes were furthered by using whole chapters of books, because chapters typically contain a complete treatment of a topic. Id. at 1234

    The District Court then determined that "[t]he right approach is to select a percentage of pages which reasonably limits copying and to couple that with a reasonable limit on the number of chapters which may be copied." Id. at 1235. Accordingly, the District Court held that

    [w]here a book is not divided into chapters or contains fewer than ten chapters, unpaid copying of no more than 10 percent of the pages in the book is permissible under factor three. . . . Where a book contains ten or more chapters, the unpaid copying of up to but no more than one chapter (or its equivalent) will be permissible under fair use factor three. . . . The chapter or other excerpt must fill a demonstrated, legitimate purpose in the course curriculum and must be narrowly tailored to accomplish that purpose. Where the foregoing limitations are met factor three will favor fair use, i.e., will favor Defendants. Otherwise factor three will favor Plaintiffs.

    Id. at 1243.

    The District Court held that its factor three analysis would not be bound by the standards provided in the Classroom Guidelines. Id. at 1227-29. The District Court also chose to consider non-body material—such as dedications and introductions—as part of the work for purposes of calculating the work's total page count, noting that such material constitutes copyrightable expression, and rejected Plaintiffs' argument—raised late in the proceedings, that Defendants' took 100 percent of a work when copying a whole chapter from a book of chapters by individual authors on individual subjects—on grounds of untimeliness and unfair surprise. Id. at 1230-31.

    With regard to the fourth fair use factor, "the effect of the use upon the potential market for or value of the copyrighted work," 17 U.S.C. § 107(4), the District Court found that "Defendants' use of small excerpts did not affect Plaintiffs' actual or potential sales of books" because they do not substitute for the books, Cambridge Univ. Press, 863 F. Supp. 2d at 1236. However, the District Court found that Defendants' use of excerpts may be at the cost of Plaintiffs' licensing revenues, and so may affect the market for licensing of excerpts. Id. at 1237. Thus, the District Court concluded that, in reviewing the individual instances of alleged infringement, it would analyze fair use factor four as follows:

    [W]here permissions are readily available from CCC or the publisher for a copy of a small excerpt of a copyrighted book, at a reasonable price, and in a convenient format (in this case, permissions for digital excerpts), and permissions are not paid, factor four weighs heavily in Plaintiffs' favor. Factor four weighs in Defendants' favor when such permissions are not readily available.

    Id. at 1243.

    However, "[b]ecause Plaintiffs advocate that CCC has created an effective means through which Defendants could have obtained licensed copies of the excerpts in question here, the [District] Court place[d] the burden on Plaintiffs to show that CCC provided, in 2009, reasonably efficient access to the particular excerpts involved in this case." Id. at 1237. Thus, in cases where no evidence showed whether digital permissions were readily available for excerpts of a particular work, the District Court found that the fourth fair use factor favored Defendants.

    The District Court took into account two additional considerations. First, the District Court noted that, based on testimony that "royalties are not an important incentive for academic writers," and on a presumption that that academic authors publish primarily to enhance their professional reputation and contribute to academic knowledge, "[t]here is no reason to believe that allowing unpaid, nonprofit academic use of small excerpts in controlled circumstances would diminish creation of academic works." Id. at 1240. Second, the District Court found that "it is consistent with the principles of copyright to apply the fair use doctrine in a way that promotes the dissemination of knowledge, and not simply its creation." Id. at 1241. The District Court noted that the evidence demonstrates that academic permissions income does not represent a significant portion of Plaintiffs' overall revenue. Id. Thus, the District Court found that a slight diminution of Plaintiffs' permissions income caused by the District Court's findings of fair use would not appreciably harm Plaintiffs' ability to publish scholarly works. Id. at 1243. On the other hand, the District Court found, "[m]aking small free excerpts available to students would further the spread of knowledge." Id. at 1242.

    The District Court proceeded to undertake an individualized analysis of the seventy-four individual instances of alleged infringement, subject to the foregoing analysis. Id. at 1243-1363. The District Court held that Plaintiffs had established a prima facie case of copyright infringement in forty-eight instances. Id. at 1254-59; 1263; 1265-67; 1270-77; 1281; 1283-1296; 1299-1300; 1303-1310; 1316; 1322-24; 1329-30; 1333; 1339-51; 1355-62. For the other twenty-six instances, the District Court held that Plaintiffs had failed to establish a prima facie case either because Plaintiffs failed to demonstrate ownership of or (in one case) a valid registration of a copyright in the work in question, or because any infringement was de minimis in cases where the evidence showed that students either never accessed the excerpt or were required to buy the full book from which the excerpt in question had been copied. Id. at 1245-53; 1262; 1265; 1269; 1280; 1283; 1299; 1302; 1312-15; 1319-21; 1326-27; 1332; 1335-37; 1354.

    In weighing the fair use factors to assess each of the forty-eight instances of alleged infringement for which the District Court found that Plaintiffs had established a prima facie case, the District Court held that fair use applied whenever at least three of the four factors favored Defendants. Id. at 1255-58; 1264; 1266; 1271-76; 1282; 1284-97; 1300-01; 1304-11; 1317; 1323-25; 1329-31; 1334; 1339-52; 1356; 1361. Because the District Court found that factors one and two favored Defendants in all cases, the District Court essentially held that fair use applied each time a professor posted an excerpt that fell within the 10 percent-or-one-chapter limit on allowable copying the District Court had set (such that factor three favored Defendants) and each time there was no evidence that digital permissions were available for excerpts of the work in question (such that factor four favored Defendants).

    With regard to factor three, in thirty-five of the forty-eight claims of infringement, the District Court found that the copying was "decidedly small" because it fell within the 10 percent-or-one-chapter limit, and so factor three favored Defendants. Id. at 1254-58; 1266; 1270-72; 1276; 1281; 1283-88; 1291; 1295-97; 1300-01; 1304-08; 1317; 1325; 1329-30; 1334; 1339-45; 1348-50; 1356; 1361. In the other thirteen cases, the copying exceeded the 10 percent-or-one-chapter limit, and so the District Court held that factor three favored Plaintiffs. Id. at 1259; 1263; 1268; 1274; 1277; 1290; 1294; 1310; 1323; 1346; 1352; 1358; 1362.

    With regard to factor four, in seventeen of the forty-eight cases, the District Court found that the parties had presented no evidence regarding licensing availability, but because the District Court placed the burden on this issue on Plaintiffs, the District Court found that factor four favored Defendants. Id. at 1290-97; 1300-01; 1311; 1317; 1323-25; 1329-31; 1340-42; 1347; 1352. In the other thirty-one cases, the District Court found that Plaintiffs had made digital licensing available for excerpts of the work in question, and so, because there was a "ready market for licensed digital excerpts of [the] work in 2009," factor four strongly favored Plaintiffs. Id. at 1255-60; 1263; 1266-68; 1271-78; 1281; 1284-88; 1304-09; 1334; 1339; 1344-45; 1348-50; 1356-62.

    When the District Court's weighing of the factors resulted in a tie—factors one and two favored Defendants and factors three and four favored Plaintiffs—the District Court revisited its analysis of the factors, reviewing and reweighing the importance of the factors for the specific work in question. Id. at 1260; 1263-64; 1268-69; 1274; 1278; 1358-59; 1363. The District Court performed this reweighing for seven claims of infringement. Id. In two instances, the District Court held that fair use applied because Plaintiffs' revenues from digital permissions were sufficiently small as a proportion of total revenues to render factor four of less importance. Id. at 1263-64; 1274. The District Court held that fair use did not apply in the remaining five instances. Id. at 1260; 1268-69; 1278; 1358-59; 1363.

    Thus, of the forty-eight instances of alleged infringement for which the District Court found that Plaintiffs had established a prima facie case, the District Court held that Defendants had infringed Plaintiffs' copyrights in five instances, id. at 1260; 1269; 1278; 1358-59; 1363, and that the fair use defense applied in forty-three, id. at 1255-58; 1264; 1266; 1271-76; 1282; 1284-97; 1300-01; 1304-11; 1317; 1323-25; 1329-31; 1334; 1339-52; 1356; 1361. The District Court concluded that the 2009 Policy had caused the five instances of infringement. Id. at 1363. In reaching this conclusion, the District Court noted that the 2009 Policy did not limit copying to excerpts which were "decidedly small," did not prohibit the copying of multiple chapters from the same book, and did not provide sufficient guidance in determining the effect the use of an excerpt may have on the market for or value of the copyrighted work. Id.

    In light of its findings, the District Court directed Plaintiffs to propose appropriate injunctive and declaratory relief. Id. at 1364. On May 31, 2012, Plaintiffs filed a second proposed injunction. This injunction would allow copying without permission in a manner that appears to be modelled on the fair use parameters set forth in District Court's judgment, as described above. The proposed injunction would also require a reasonable investigation as to license availability, recordkeeping as to unlicensed copying and the related license availability investigations, periodic reports and certifications of compliance by Defendants to the District Court for a three-year period, and periodic granting of access to GSU's electronic reserve systems to Plaintiffs' representative over a three-year period.

    In their Opposition to Plaintiffs' Request for Injunctive Relief, filed on June 15, 2012, Defendants stated that GSU had revised its 2009 Policy in accordance with the District Court's May 11, 2012, order, and submitted into evidence revised versions of the 2009 Policy and Fair Use Checklist which purportedly "incorporate[d] the provisions of the Court's Order that were not already present in the 2009 Copyright Policy." Doc. 432, at 15; Doc. 432-1; Doc. 432-2.

    On August 10, 2012, the District Court issued an order entering declaratory and injunctive relief. The District Court enjoined Defendants "to maintain copyright policies for Georgia State University which are not inconsistent with the Court's Order of May 11, 2012 and this Order." Doc. 441, at 11. By way of declaratory relief, the District Court clarified the holding of its May 11, 2012, order in three detailed sections, titled as follows:

    A. The requirement that excerpts be "decidedly small" to tip factor three in Defendants' favor applies to the aggregate of all excerpts from a book which are assigned during the term of the course.

    B. The holdings of this case do not address fair use of books intended solely for instruction of students enrolled in a class.

    C. Fair use protection is conditioned on strict reliance with measures calculated to protect copyrighted excerpts from unwarranted distribution.

    Id. at 2-9.

    Finally, because "Defendants prevailed on all but five of the [ninety-nine] copyright claims which were at issue when the trial began," the District Court declared Defendants the prevailing party, and determined that it would exercise its discretion to award attorneys' fees and costs to Defendants. Id. at 12-13. The District Court noted that:

    When the trial began, Plaintiffs chose to pursue 99 claims out of 126. They then dropped 25 claims (and added one) during the trial. As to the remaining 75 claims, no prima facie case was proven in 26 instances. Digital permissions were unavailable in 33 instances. Neither digital nor hard copy permissions were available in 18 cases. . . . Plaintiffs' failure to narrow their individual infringement claims significantly increased the cost of defending the suit.

    Id. at 14. On September 10, 2012, Plaintiffs appealed the District Court's August 10 order entering declaratory and injunctive relief, seeking review of that order and all prior orders entered.

    Finally, on September 30, 2012, the District Court issued an order awarding to Defendants attorneys' fees in the amount of $2,861,348.71 and costs in the amount of $85,746.39; and entered final judgment on its finding of infringement, its order granting declaratory and injunctive relief, and the award of fees and costs to Defendants. On October 2, 2012, Plaintiffs appealed the District Court's September 30 order and final judgment, as well as all prior orders. On October 23, 2012, the District Court stayed execution of the portion of its judgment awarding Defendants attorneys' fees and costs pending appeal.

    We consolidated Plaintiffs' appeals. On appeal, Plaintiffs do not contest the District Court's ruling that Plaintiffs failed to make out a prima facie case of infringement in twenty-six instances of copying. However, Plaintiffs argue that the District Court's application of the fair use factors was legally flawed, and that the District Court consequently erred in finding that the fair use defense applied in forty-three of the forty-eight remaining instances of alleged infringement.[15]

    Furthermore, Plaintiffs argue, because the District Court erred in identifying only five instances of infringement during the period it examined in 2009, and failed to apprehend that the 2009 Policy facilitates widespread, ongoing infringement, the injunction the District Court ordered is "unduly narrow." Appellants' Br. at 83. Thus, Plaintiffs contend, we must vacate the injunction "and remand with instructions to enter an appropriately comprehensive injuncti[on]" along the lines of the injunctive relief Plaintiffs proposed below.[16] Id.

    Plaintiffs also argue that the District Court erred in awarding attorneys' fees and costs to Defendants. Plaintiffs argue the District Court should have considered the claims of infringement as a whole instead of conducting a work-by-work analysis. Plaintiffs contend that the District Court's "erroneous treatment of the individual claims [of infringement] . . . produced a misleading tally of unsuccessful and successful claims which obscured the fact that the court held GSU's [2009] [P]olicy unlawful for allowing excessive copying." Id. at 84. The relevant measure of success is not, Plaintiffs contend, which party prevailed on the most individual claims, but rather whether or not the 2009 Policy caused copyright infringement. Because the District Court held that the 2009 Policy did cause copyright infringement, Plaintiffs claim that the District Court erred in designating Defendants as the prevailing party for the purpose of awarding fees and costs. Even if the District Court did not err in designating Defendants as the prevailing party, Plaintiffs further argue, the District Court abused its discretion in awarding fees and costs to Defendants because it made the award despite finding that Plaintiffs acted in "good faith in bringing . . . suit" and that there was "no controlling authority governing fair use in a nonprofit educational setting." See Doc. 441, at 14. Thus, Plaintiffs contend, we must reverse the District Court's ruling as to Defendants' entitlement to attorneys' fees and costs. Finally, Plaintiffs argue that even if we allow the award of fees and costs to stand, we must reduce the award by $142,038.54, an amount awarded for fees paid to Defendants' expert, Dr. Kenneth Crews, because, Plaintiffs' argue, expert witness fees are not recoverable.

    Defendants argue that the District Court did not err in its fair use analysis. Thus, Defendants contend, in light of their successful defense in all but five of the alleged instances of infringement, the District Court's injunction was proper. Defendants also argue that Plaintiffs' more restrictive proposed injunction is unnecessary because GSU already revised its copyright policy in order to comply with the District Court's order. Accordingly, Defendants contend, we must affirm the District Court's order finding five instances of infringement and its entry of injunctive and declaratory relief.

    Defendants argue that the District Court properly undertook a work-by-work analysis of the individual claims of infringement and did not err in concluding that Defendants were the prevailing party because disposition of the individual instances of infringement represents the central issue in the case, upon which Plaintiffs did not prevail, having proved only five instances of infringement out of the ninety-nine Plaintiffs alleged at the beginning of trial. Because Plaintiffs refused to limit the scope of their claims, which significantly increased Defendants' costs, Defendants argue that the District Court did not abuse its discretion in awarding fees and costs to Defendants. Defendants also argue that the District Court did not err in awarding expert witness fees to Defendants, because such fees are routinely awarded as incidental expenses incurred as part of attorneys' work on litigation. Accordingly, Defendants contend, we must affirm the District Court's award of attorneys' fees and costs.

    Finally, Defendants argue—apparently in the alternative to Defendants' argument that the District Court's entry of injunctive and declaratory relief should be affirmed—that, because Plaintiffs cannot establish that the 2009 Policy violates any federal law, and because Defendants' generalized responsibility for GSU policy is not sufficient to establish the necessary connection to GSU professors' infringing actions, Defendants are immune from suit pursuant to the Eleventh Amendment and the Ex parte Young exception does not apply. Plaintiffs counter that because Defendants did not raise this argument on cross-appeal we should not consider it.

    II.

    "After a bench trial, we review [a] district court's conclusions of law de novo and [a] district court's factual findings for clear error." Proudfoot Consulting Co. v. Gordon, 576 F.3d 1223, 1230 (11th Cir. 2009). Fair use involves both questions of law and questions of fact. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560, 105 S. Ct. 2218, 2230, 85 L. Ed. 2d 588 (1985).

    We review a district court's decision to award injunctive relief for abuse of discretion. Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1096 (11th Cir. 2004); see also Pac. & S. Co. v. Duncan, 744 F.2d 1490, 1499 (11th Cir. 1984) (reviewing for abuse of discretion the district court's decision not to permanently enjoin a seller of videotapes containing material that the court had held infringed copyrights).

    We review de novo a district court's determination as to whether a party is the "prevailing party" and hence eligible for an award of fees under the Copyright Act, 17 U.S.C. § 505. Dionne v. Floormasters Enters., Inc., 667 F.3d 1199, 1203 (11th Cir. 2012). We review a district court's ultimate decision to award attorneys' fees or costs for abuse of discretion. Id.

    III.
    A.

    As an initial matter, we must dispose of Defendants' contention that they are immune from suit pursuant to the Eleventh Amendment. Because this argument is outside the scope of Plaintiffs' brief and was not raised by Defendants on cross-appeal, we find that the argument is not properly raised. As we have previously explained, "a party who has not appealed may not bring an argument in opposition to a judgment or attack the judgment in any respect, or hitch a ride on his adversary's notice of appeal to enlarge his rights under the judgment or diminish those of the opposing party." Lawhorn v. Allen, 519 F.3d 1272, 1286 n.20 (11th Cir. 2008) (citations omitted) (quotation marks omitted). An argument that the District Court's ruling must be vacated because suit is barred by Eleventh Amendment immunity is not excepted from this rule. Majette v. O'Connor, 811 F.2d 1416, 1419 n.3 (11th Cir. 1987). Accordingly, we decline to address Defendants' Eleventh Amendment argument.[17]

    B.

    The Copyright Clause of the U.S. Constitution provides that Congress shall have the power "[t]o promote the Progress of Science[18] . . . by securing for limited Times to Authors . . . the exclusive Right to their respective Writings . . . ." U.S. Const., Art. I, § 8, cl. 8. As the Supreme Court has explained, "the economic philosophy behind the clause empowering Congress to grant copyrights is the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare [by promoting the creation and dissemination of ideas] through the talents of authors. . . ." Mazer v. Stein, 347 U.S. 201, 219, 74 S. Ct. 460, 98 L. Ed. 630 (1954).

    Promoting the creation and dissemination of ideas has been the goal driving Anglo-American copyright law since the enactment of the first English copyright statute to explicitly vest copyright in a work's creator, the Statute of Anne of 1710, which declared that it was "[a]n Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors . . . during the Times therein mentioned." 8 Ann., c. 19 (1710); see also Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105 (1990) (describing the Statute of Anne and its influence on early U.S. copyright law and the fair use doctrine). Thus, in our tradition, "copyright is not an inevitable, divine, or natural right that confers on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public." Cariou v. Prince, 714 F.3d 694, 705 (2d Cir. 2013) (quoting Leval, supra, at 1107); see also Aiken, 422 U.S. at 156, 95 S. Ct. at 2044 ("The immediate effect of our copyright law is to secure a fair return for an `author's' creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the general public good.").

    The Copyright Act furthers this purpose by granting authors a bundle of "exclusive rights," 17 U.S.C. § 106, "in original works of authorship fixed in any tangible medium of expression," id. § 102, for a limited time, id. §§ 302-305. While an author holds a copyright in his or her work, the author may control, for example, reproduction of the work or distribution of the work to the public. Id. § 106(1), (3).

    In part because copyright is not grounded in authors' natural rights but rather meant to provide maximal public benefit, the Copyright Act's grant to authors of a monopoly over the use of their works is limited in several important ways beyond its finite duration.[19] Golan v. Holder, ___ U.S. ___, 132 S. Ct. 873, 890-91, L. Ed. 2d 835 (2012). For example, "[c]opyright cannot protect an idea, only the expression of that idea." Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257, 1263 (11th Cir. 2001); 17 U.S.C. § 102(b) ("In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work."). Thus, "copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work." Feist, 499 U.S. at 349-50, 111 S. Ct. at 1290.

    The fair use doctrine also critically limits the scope of the monopoly granted to authors under the Copyright Act in order to promote the public benefit copyright is intended to achieve. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575, 114 S. Ct. 1164, 1169, 127 L. Ed. 2d 500 (1994) ("From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright's very purpose, `[t]o promote the Progress of Science. . . .'" (quoting U.S. Const., Art. I, § 8, cl. 8.)). In other words, fair use provides necessary "breathing space within the confines of copyright." Id. at 579, 114 S. Ct. at 1171. By allowing for the limited use of copyrighted works without the permission of the copyright holder by members of the public in certain circumstances, fair use "permits [and requires] courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster." Id. at 577, 114 S. Ct. at 1170 (alteration in original) (quoting Stewart v. Abend, 495 U.S. 207, 236, 110 S. Ct. 1750, 1767, 109 L. Ed. 2d 184 (1990)).

    In a sense, the grant to an author of copyright in a work is predicated upon a reciprocal grant to the public by the work's author of an implied license for fair use of the work. See Harper & Row, 471 U.S. at 549, 105 S. Ct. at 2225 ("[T]he author's consent to a reasonable use of his copyrighted works ha[d] always been implied by the courts as a necessary incident of the constitutional policy of promoting the progress of science . . . since a prohibition of such use would inhibit subsequent writers from attempting to improve upon prior works and thus . . . frustrate the very ends sought to be attained." (quoting H. Ball, Law of Copyright and Literary Property 260 (1944))). Thus, in order to promote the creation of new works, our laws contemplate that some secondary users—those implied licensees making fair use of copyrighted works—will be allowed to make use of original authors' works. At the same time, a secondary user who takes overmuch in the name of fair use operates outside the bounds of his or her implied-by-law license.

    How much unpaid use should be allowed is the bailiwick of the fair use doctrine. To further the purpose of copyright, we must provide for some fair use taking of copyrighted material. This may be viewed as a transaction cost, incidental to the business of authorship. But if we set this transaction cost too high by allowing too much taking, we run the risk of eliminating the economic incentive for the creation of original works that is at the core of copyright and—by driving creators out of the market—killing the proverbial goose that laid the golden egg.

    Thus, the proper scope of the fair use doctrine in a given case boils down to an evidentiary question. As a conceptual matter, in making fair use determinations, we must conjure up a hypothetical, perfect market for the work in question, consisting of the whole universe of those who might buy it, in which everyone involved has perfect knowledge of the value of the work to its author and to potential buyers, and excluding for the moment any potential fair uses of the work. Then, keeping in mind the purposes animating copyright law—the fostering of learning and the creation of new works—we must determine how much of that value the implied licensee-fair users can capture before the value of the remaining market is so diminished that it no longer makes economic sense for the author—or a subsequent holder of the copyright—to propagate the work in the first place.

    In most instances, licensors (authors and copyright holders) and licensees (both paying licensees, and implied-by-law fair use licensees) will independently perform some version of this analysis in order to reach a mutually equitable arrangement. Ideally, a copyright holder will sell his or her works to buyers who pay the price that the market will bear and will routinely tolerate secondary uses which do not adversely impact that market. However, in the event of a disagreement, the copyright holder can file an infringement suit and the secondary user may invoke the fair use defense. In so doing the parties essentially turn to a court to make a determination for them as to the appropriate boundaries of the secondary user's implied license.

    The fair use doctrine, as codified by Congress,[20] furnishes judges with a laboratory within which to work to answer this question. The fair use statute provides that:

    Notwithstanding the provisions of 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, 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—

    (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.

    17 U.S.C. § 107.

    In drafting § 107, Congress "resisted pressures from special interest groups to create presumptive categories of fair use, but structured the provision as an affirmative defense requiring a case-by-case analysis."[21] Harper & Row, 471 U.S. at 561, 105 S. Ct. at 2231 (citing H.R. Rep. No. 83, 90th Cong., 1st Sess., 37 (1967)). Accordingly, the fair use inquiry is a flexible one. The four statutory factors provide courts with tools to determine—through a weighing of the four factors in light of the facts of a given case—whether a finding of fair use is warranted in that particular instance.

    Thus, the examples enumerated in the preamble of § 107— "criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research"—are meant to "give some idea of the sort of activities the courts might regard as fair use under the circumstances. This listing was not intended to be exhaustive, or to single out any particular use as presumptively a `fair' use." Harper & Row, 471 U.S. at 561, 105 S. Ct. at 2231 (citations omitted) (quotation marks omitted); see also Peter Letterese & Assocs., Inc. v. World Inst. of Scientology Enters. Int'l, 533 F.3d 1287, 1308 (11th Cir. 2008) (The "[f]air use doctrine is an `equitable rule of reason'; neither the examples of possible fair uses nor the four statutory factors are to be considered exclusive." (quoting Abend, 495 U.S. at 236-37, 110 S. Ct. at 1768)). Furthermore, because fair use is an affirmative defense, its proponent bears the burden of proof in demonstrating that it applies. See Campbell, 510 U.S. at 590, 114 S. Ct. at 1177; Harper & Row, 471 U.S. at 561, 105 S. Ct. at 2231.

    C.

    Before we turn to the District Court's analysis of each of the four fair use factors, we must first address the District Court's overarching fair use methodology. Plaintiffs make two broad arguments that the District Court's methodology was flawed, only one of which is persuasive.

    Plaintiffs contend that the District Court erred by performing a work-by-work analysis which focused on whether the use of each individual work was fair use rather than on the broader context of ongoing practices at GSU. We disagree. Fair use must be determined on a case-by-case basis, by applying the four factors to each work at issue. See Campbell, 510 U.S. at 577, 114 S. Ct. at 1170. Were we to accept Plaintiffs' argument, the District Court would have no principled method of determining whether a nebulous cloud of infringements purportedly caused by GSU's "ongoing practices" should be excused by the defense of fair use. Thus, we find that the District Court's work-by-work approach—in which the District Court considered whether the fair use defense excused a representative sample of instances of alleged infringement in order to determine the need for injunctive relief—was the proper one.

    Plaintiffs also argue that the District Court erred in giving each of the four factors equal weight, essentially taking a mechanical "add up the factors" approach, finding fair use if three factors weighed in favor of fair use and one against and vice versa, and only performing further analysis in case of a "tie." We agree that the District Court's arithmetic approach was improper.

    Congress, in the Copyright Act, spoke neither to the relative weight courts should attach to each of the four factors nor to precisely how the factors ought to be balanced. However, the Supreme Court has explained that "the four statutory factors [may not] be treated in isolation, one from another. All are to be explored, and the results weighed together, in light of the purposes of copyright." Id. at 578, 114 S. Ct. at 1170-71. In keeping with this approach, a given factor may be more or less important in determining whether a particular use should be considered fair under the specific circumstances of the case. See id. at 586, 114 S. Ct. at 1175 (noting that the second factor is generally not important in determining whether a finding of fair use is justified in the case of a parody). As such, the four factors "do not mechanistically resolve fair use issues." Harper & Row, 471 U.S. at 588, 105 S. Ct. at 2245 (Brennan, J., dissenting). "Because [fair use] is not a mechanical determination, a party need not `shut-out' her opponent on the four factor tally to prevail." Wright v. Warner Books, Inc., 953 F.2d 731, 740 (2d Cir. 1991). Accordingly, we find that the District Court erred in giving each of the four factors equal weight, and in treating the four factors as a simple mathematical formula. As we will explain, because of the circumstances of this case, some of the factors weigh more heavily on the fair use determination than others.

    D.

    We now turn to the District Court's analysis of each individual fair use factor. Although we have found that the District Court's method for weighing the four factors against one another was erroneous, this does not mean that the District Court's reasoning under each of the four factors is also necessarily flawed. Rather, we must determine the correct analysis under each factor and then ascertain whether the District Court properly applied that analysis.

    Plaintiffs argue that the District Court erred in its application of each of the four fair use factors. Plaintiffs' argument centers on a comparison of the circumstances of the instant case to those of the so-called "coursepack cases," in which courts rejected a defense of fair use for commercial copyshops that assembled paper coursepacks containing unlicensed excerpts of copyrighted works for use in university courses.

    In Basic Books, Inc. v. Kinko's Graphics Corp., publishing houses sued Kinko's, a commercial copyshop, alleging that Kinko's infringed the publishers' copyrights when it copied excerpts from the publishers' books, without permission and without payment of a license fee, and sold the copies for profit in bound, paper coursepacks to students for use in college courses. 758 F. Supp. 1522, 1526 (S.D.N.Y. 1991). The District Court rejected Kinko's claim that its use of the excerpts was fair use, and granted injunctive relief to the publishers. Id.

    Similarly, in Princeton University Press v. Michigan Document Services, Inc., the Sixth Circuit upheld the District Court's ruling that Michigan Document Services, a commercial copyshop, was not entitled to a fair use defense when it reproduced substantial portions of copyrighted academic works and sold the copies in bound, paper coursepacks to students for use in courses at the University of Michigan, without obtaining permission from the copyright holder. 99 F.3d 1381, 1383 (6th Cir. 1996) (en banc). The Sixth Circuit held that injunctive relief was therefore warranted. Id. at 1392.

    In essence, Plaintiffs argue that the coursepack cases should have guided the District Court's analysis in this case, because GSU cannot alter the fair use calculus simply by choosing to distribute course readings in an electronic rather than paper format. In making this argument, Plaintiffs invoke the "media neutrality" principle, which "mandates that the `transfer of a work between media does not alter the character of that work for copyright purposes.'" See Greenberg v. Nat'l Geographic Soc., 533 F.3d 1244, 1257 (11th Cir. 2008) (en banc) (quoting N.Y. Times Co., Inc. v. Tasini, 533 U.S. 483, 502, 121 S. Ct. 2381, 2392, 150 L. Ed. 2d 500 (2001)).

    Plaintiffs' reliance on the media neutrality doctrine is misplaced. Congress established that doctrine to ensure that works created with new technologies, perhaps not in existence at the time of the Copyright Act of 1976, would qualify for copyright protection. See id. (citing 17 U.S.C.§ 102(a) ("Copyright protection subsists . . . in original works of authorship fixed in any tangible medium of expression, now known or later developed . . . ." (emphasis added))); see also H.R. Rep. No. 94-1476, at 52 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5665 ("This broad language is intended to avoid the artificial and largely unjustifiable distinctions . . . under which statutory copyrightability in certain cases has been made to depend upon the form or medium in which the work is fixed."). The media neutrality doctrine concerns copyrightability and does not dictate the result in a fair use inquiry. Congress would not have intended this doctrine to effectively displace the flexible work-by-work fair use analysis in favor of a one dimensional analysis as to whether the case involves a transfer of a work between media.

    Likewise, because the fair use analysis is highly fact-specific and must be performed on a work-by-work basis, see Cariou, 714 F.3d at 694, the coursepack cases provide guidance but do not dictate the results here, which must be based upon a careful consideration of the circumstances of the individual instances of alleged infringement involved in this case.

    1.

    The first fair use factor is "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107(1). The inquiry under the first factor has several facets, including (1) the extent to which the use is a "transformative" rather than merely superseding use of the original work and (2) whether the use is for a nonprofit educational purpose, as opposed to a commercial purpose. Peter Letterese & Assocs., 533 F.3d at 1309. "Before illumining these facets, however, we observe that the Supreme Court has cautioned against the use of the facets to create `hard evidentiary presumption[s]' or `categories of presumptively fair use.'" Id. (alteration in original) (citing Campbell, 510 U.S. at 584, 114 S. Ct. at 1174 ("[T]he mere fact that a use is educational and not for profit does not insulate it from a finding of infringement, any more than the commercial character of a use bars a finding of fairness.")).

    Our initial inquiry under the first factor asks whether Defendants' use is transformative, i.e., "whether the new work merely supersede[s] the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message . . . ." Campbell, 510 U.S. at 579, 114 S. Ct. at 1171 (alteration in original) (citations omitted) (quotation marks omitted). For example, a parody transforms a work by appropriating elements of the work for purposes of comment or criticism, and thus "reflects transformative value because it `can provide social benefit, by shedding light on an earlier work, and, in the process, creating a new one.'" Suntrust Bank, 268 F.3d at 1271 (quoting Campbell, 510 U.S. at 579, 114 S. Ct. at 1171). A nontransformative use, on the other hand, is one which serves the same "overall function" as the original work. Peter Letterese & Assocs., 533 F.3d at 1311 (quotation marks omitted).

    Even verbatim copying "may be transformative so long as the copy serves a different function than the original work." Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007) (finding a search engine's copying of website images in order to create an Internet search index transformative because the original works "serve[d] an entertainment, aesthetic, or informative function, [whereas the] search engine transforms the image into a pointer directing a user to a source of information"); A.V. v. iParadigms, LLC, 562 F.3d 630, 640 (4th Cir. 2009) (finding use of student papers in an online plagiarism detection database transformative because the database used the papers not for their original purpose as schoolwork, but rather to automatically detect plagiarism in the works of other student authors); Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 609 (2d Cir. 2006) (finding use by publishers of concert posters reproduced in full, although in reduced size, in a biography of a musical group transformative because the use was for historical and educational purposes, rather than advertising and informational purposes).

    Allowing would-be fair users latitude for transformative uses furthers "the goal of copyright, to promote science and the arts." See Campbell, 510 U.S. at 579, 114 S. Ct. at 1171. This is because transformative works possess a comparatively large share of the novelty copyright seeks to foster. At the same time, transformative uses are less likely, generally speaking, to negatively impact the original creator's bottom line, because they do not "`merely supersede the objects of the original creation'" and therefore are less likely to "`supplant' the market for the copyrighted work [by] `fulfilling demand for the original.'" See Peter Letterese & Assocs., 533 F.3d at 1310 (alteration omitted) (quoting Campbell, 510 U.S. at 579, 588, 114 S. Ct. at 1171, 1176).

    Here, Defendants' use of excerpts of Plaintiffs' works is not transformative. The excerpts of Plaintiffs' works posted on GSU's electronic reserve system are verbatim copies of portions of the original books which have merely been converted into a digital format. Although a professor may arrange these excerpts into a particular order or combination for use in a college course, this does not imbue the excerpts themselves with any more than a de minimis amount of new meaning. See Princeton University Press, 99 F.3d at 1389 ("[I]f you make verbatim copies of 95 pages of a 316-page book, you have not transformed the 95 pages very much—even if you juxtapose them to excerpts from other works.").

    Nor do Defendants use the excerpts for anything other than the same intrinsic purpose—or at least one of the purposes—served by Plaintiffs' works: reading material for students in university courses.[22] Although an electronic reserve system may facilitate easy access to excerpts of Plaintiffs' works, it does nothing to transform those works. But see Authors Guild, Inc. v. HathiTrust, 755 F.3d 87, 97 (2d Cir. 2014) (holding that universities' systematic digitization of copyrighted books was transformative because the digital copies were used to create a searchable database which supplied users with lists of page numbers and not with copies of the original works, and so the copies served a different purpose than the original works). Rather, Defendants' use of excerpts of Plaintiffs' works "supersede[s] the objects of the original creation." See Campbell, 510 U.S. at 579, 114 S. Ct. at 1171 (alteration in original) (quotation marks omitted). Were this element by itself dispositive, we would be compelled to find that the first factor weighs against a finding of fair use.

    However, we must also consider under the first factor whether Defendants' use is for a nonprofit educational purpose, as opposed to a commercial purpose. "[T]he commercial or non-transformative uses of a work are to be regarded as `separate factor[s] that tend[ ] to weigh against a finding of fair use,' and `the force of that tendency will vary with the context.'" Peter Letterese & Assocs., 533 F.3d at 1309 (alteration in original) (quoting Campbell, 510 U.S. at 585, 114 S. Ct. at 1174). Indeed, the Supreme Court has recognized in dicta that nonprofit educational use may weigh in favor of a finding of fair use under the first factor, even when nontransformative. Campbell, 510 U.S. at 579 n.11, 114 S. Ct. at 1171 n.11 ("The obvious statutory exception to this focus on transformative uses is the straight reproduction of multiple copies for classroom distribution.").

    Because "copyright has always been used to promote learning," Suntrust Bank, 268 F.3d at 1261, allowing some leeway for educational fair use furthers the purpose of copyright by providing students and teachers with a means to lawfully access works in order to further their learning in circumstances where it would be unreasonable to require permission. But, as always, care must be taken not to allow too much educational use, lest we undermine the goals of copyright by enervating the incentive for authors to create the works upon which students and teachers depend.

    In the coursepack cases, Princeton University Press, 99 F.3d at 1389, and Basic Books, 758 F. Supp. at 1531-32, the first factor weighed against a finding of fair use when the nontransformative, educational use in question was performed by a for-profit copyshop, and was therefore commercial. In a more recent case, a district court refused to allow a commercial copyshop to sidestep the outcome of the coursepack cases by requiring its student customers to perform the photocopying themselves (for a fee) when assembling paper coursepacks from master copies held by the copyshop. Blackwell Publ'g, Inc. v. Excel Research Grp., LLC, 661 F. Supp. 2d 786, 794 (E.D. Mich. 2009). In all three instances, the court refused to allow the defendants, who were engaged in commercial operations, to stand in the shoes of students and professors in claiming that their making of multiple copies of scholarly works was for nonprofit educational purposes.

    However, in both of the coursepack cases, the court expressly declined to conclude that the copying would fall outside the boundaries of fair use if conducted by professors, students, or academic institutions. See Princeton University Press, 99 F.3d at 1389 ("As to the proposition that it would be fair use for the students or professors to make their own copies, the issue is by no means free from doubt. We need not decide this question, however, for the fact is that the copying complained of here was performed on a profit-making basis by a commercial enterprise."); Basic Books, 758 F. Supp. at 1536 n.13 ("Expressly, the decision of this court does not consider copying performed by students, libraries, nor on-campus copyshops, whether conducted for-profit or not."). In Blackwell Publishing, the District Court noted that, conversely, "the fact that students do the copying does not ipso facto mean that a commercial use cannot be found." 661. F. Supp. 2d at 793.

    Furthermore, where we previously held that the first factor weighed against a finding of fair use in a case involving use that was nontransformative but educational, the use in question was commercial. Peter Letterese & Assocs., 533 F.3d at 1309-12 (finding that the first factor weighed against a finding of fair use in a case involving the verbatim use of copyrighted material in an instructional coursepack for use by the Church of Scientology, where defendants charged a fee or obtained a promissory note in exchange for the coursepacks and hence the use was for commercial purposes).

    Thus, the question becomes whether Defendants' use of Plaintiffs' works is truly a nonprofit educational use under § 107(1), and if so, whether this places sufficient weight on the first factor scales to justify a finding that this factor favors fair use despite the nontransformativeness of Defendants' use.

    GSU is a nonprofit educational institution. While this is relevant, our inquiry does not end there: we must consider not only the nature of the user, but the use itself. See Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 921-22 (2d Cir. 1994) ("[A] court's focus should be on the use of the copyrighted material and not simply on the user, [although] it is overly simplistic to suggest that the `purpose and character of the use' can be fully discerned without considering the nature and objectives of the user.").

    Defendants' use of Plaintiffs' works in the teaching of university courses is clearly for educational purposes. Nevertheless, it is not entirely clear that use by a nonprofit entity for educational purposes is always a "nonprofit" use as contemplated by § 107(1). The Supreme Court has explained that "[t]he 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 exploitation of the copyrighted material without paying the customary price." Harper & Row, 471 U.S. at 562, 105 S. Ct. at 2231. Plaintiffs point to several cases in which courts have found that educational use of copyrighted works by a nonprofit entity (or an individual associated with such an entity) was commercial even though the secondary user was not selling the items in question, in which "profit" took the form of an indirect economic benefit or a nonmonetary, professional benefit. See, e.g., Soc'y of Holy Transfiguration Monastery, Inc. v. Gregory, 689 F.3d 29, 61 (1st Cir. 2012), cert. denied, 133 S. Ct. 1315, 185 L. Ed. 2d 195 (2013) (finding that the first factor weighed against fair use where an archbishop used copyrighted translations of a religious text on his website; although the use was educational, the archbishop profited from the use, in part, in the form of enhanced professional reputation); Worldwide Church of God v. Philadelphia Church of God, Inc., 227 F.3d 1110, 1118 (9th Cir. 2000) (finding the first factor weighed against fair use where a religious organization distributed copies of a copyrighted book for use in its religious observance; the use was nontransformative, and although the use was educational, the organization profited indirectly by using the work to attract new members who would tithe ten percent of their income); Weissmann v. Freeman, 868 F.2d 1313, 1324 (2d Cir. 1989) (finding that the first factor weighed against fair use where a professor claimed an assistant's paper as his own work and copied it for use in his class, under the professor's name, because the professor profited from the use by enhancing his professional reputation and gaining a valuable authorship credit).

    Under this line of reasoning, Defendants' educational use of Plaintiffs' works is a for-profit use despite GSU's status as a nonprofit educational institution, and despite the fact that GSU does not directly sell access to Plaintiffs' works on Eres and uLearn. Defendants "exploited" Plaintiffs' copyrighted material for use in university courses without "paying the customary price"—a licensing fee. Defendants profited from the use of excerpts of Plaintiffs' works—however indirectly—because GSU collects money from students in the form of tuition and fees (which students pay in part for access to ERes and uLearn) and reduces its costs by avoiding fees it might have otherwise paid for the excerpts.

    However, this reasoning is somewhat circular, and hence of limited usefulness to our fair use inquiry. Of course, any unlicensed use of copyrighted material profits the user in the sense that the user does not pay a potential licenseing fee, allowing the user to keep his or her money. If this analysis were persuasive, no use could qualify as "nonprofit" under the first factor. Moreover, if the use is a fair use, then the copyright owner is not entitled to charge for the use, and there is no "customary price" to be paid in the first place.[23]

    Accordingly, evaluating the indirect profit GSU gained by refusing to pay to license Plaintiffs' works provides little useful guidance under the first factor. Simply put, the greater the amount of a work taken by the secondary user (or the more valuable the portion taken), the more the user "profits" by not paying for the use. Thus, the concern we have identified with profit in this sense is better dealt with under the third factor, which directs us to consider the amount of the original work that the secondary user appropriated, and the substantiality of the portion used. See 17 U.S.C. § 107(3).

    Defendants' use of Plaintiffs' works does not provide GSU with a noneconomic but measurable professional benefit, such as an enhanced reputation. Contra Soc'y of Holy Transfiguration Monastery, 689 F.3d at 61. Although GSU students are likely pleased with the convenience of ERes and uLearn, there is no evidence that the presence of excerpts of Plaintiffs' works on these electronic reserve systems enhances GSU's reputation in any meaningful sense.[24] There is no evidence that GSU gains any other measurable, indirect benefit by distributing Plaintiffs' works to students, such as a valuable authorship credit either. Contra Weissmann, 868 F.2d at 1324.

    Ultimately, we agree with the Second Circuit's assessment that

    [t]he commercial/nonprofit dichotomy concerns the unfairness that arises when a secondary user makes unauthorized use of copyrighted material to capture significant revenues as a direct consequence of copying the original work.

    Consistent with these principles, courts will not sustain a claimed defense of fair use when the secondary use can fairly be characterized as a form of "commercial exploitation," i.e., when the copier directly and exclusively acquires conspicuous financial rewards from its use of the copyrighted material. Conversely, courts are more willing to find a secondary use fair when it produces a value that benefits the broader public interest. The greater the private economic rewards reaped by the secondary user (to the exclusion of broader public benefits), the more likely the first factor will favor the copyright holder and the less likely the use will be considered fair.

    Texaco, 60 F.3d at 922 (2d Cir. 1994) (l citations omitted).[25]

    Although GSU certainly benefits from its use of Plaintiffs' works by being able to provide the works conveniently to students, and profits in the sense that it avoids paying licensing fees, Defendants' use is not fairly characterized as "commercial exploitation." Even if Defendants' use profits GSU in some sense, we are not convinced that this type of benefit is indicative of "commercial" use. There is no evidence that Defendants capture significant revenues as a direct consequence of copying Plaintiffs' works. At the same time, the use provides a broader public benefit—furthering the education of students at a public university.

    Thus, we find that Defendants' use of Plaintiffs' works is of the nonprofit educational nature that Congress intended the fair use defense to allow under certain circumstances. Furthermore, we find this sufficiently weighty that the first factor favors a finding of fair use despite the nontransformative nature of the use.

    The text of the fair use statute highlights the importance Congress placed on educational use. The preamble to the statute provides that fair uses may include "teaching (including multiple copies for classroom use), scholarship, or research" and the first factor singles out "nonprofit educational purposes." 17 U.S.C. § 107. The legislative history of § 107 further demonstrates that Congress singled out educational purposes for special consideration. In the years leading up to passage of the Copyright Act of 1976 (which introduced § 107), Congress devoted considerable attention to working out the proper scope of the fair use defense as applied to copying for educational and classroom purposes, going so far as to include in a final report the Classroom Guidelines developed by representatives of educator, author, and publisher groups at the urging of Congress. See H.R. Rep. No. 2237, at 59-66 (1966); S. Rep. No. 93-983, at 116-19 (1974); S. Rep. No. 94-473, at 63-65 (1975); H.R. Rep. No. 94-1476, at 66-70 (1976).

    Notably, early drafts of § 107 did not include the parenthetical "including multiple copies for classroom use" or the specific direction to consider "whether [the] use is of a commercial nature or is for nonprofit educational purposes." See S. 3008, H.R. 11947, H.R. 12354, 88th Cong. (1st Sess. 1964); S. 1006, H.R. 4347, H.R. 5680, H.R. 6831, H.R. 6835, 89th Cong. (1st Sess. 1965); S. 597, H.R. 2512, H.R. 5650, 90th Cong. (1st Sess. 1967). This language was not inserted until one month before the passage of the Copyright Act of 1976. See S. 22, 94th Cong. (2d Sess. 1976).

    In sum, Congress devoted extensive effort to ensure that fair use would allow for educational copying under the proper circumstances and was sufficiently determined to achieve this goal that it amended the text of the statute at the eleventh hour in order to expressly state it. Furthermore, as described above, allowing latitude for educational fair use promotes the goals of copyright. Thus, we are persuaded that, despite the recent focus on transformativeness under the first factor, use for teaching purposes by a nonprofit, educational institution such as Defendants' favors a finding of fair use under the first factor, despite the nontransformative nature of the use.

    Accordingly, we find that the District Court did not err in holding that the first factor favors a finding of fair use. Nevertheless, because Defendants' use of Plaintiffs' works is nontransformative, the threat of market substitution is significant. We note that insofar as the first factor is concerned with uses that supplant demand for the original, this factor is "closely related" to "[t]he fourth fair use factor, the effect on the potential market for the work." See Pac. & S. Co., 744 F.2d at 1496. We will thus revisit this concern when we analyze the fourth factor. See infra part III.D.4.

    2.

    The second fair use factor, "the nature of the copyrighted work," 17 U.S.C. § 107(2), "calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied," Campbell, 510 U.S. at 586, 114 S. Ct. at 1175. The inquiry under the second factor generally focuses on two criteria. First, because works that are highly creative are closer to the core of copyright—that is, such works contain the most originality and inventiveness—the law affords such works maximal protection, and hence it is less likely that use of such works will be fair use.[26] Id. In contrast, "[t]he law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy," and so it is more likely that the use of a factual or informational work will be fair use. Harper & Row, 471 U.S. at 563, 105 S. Ct. at 2232; see also Stewart v. Abend, 495 U.S. 207, 237, 110 S. Ct. 1750, 1769, 109 L. Ed. 2d 184 (1990). Second, because an "author's right to control the first public appearance of his expression weighs against such use of the work before its release," use of an unpublished work is less likely to be fair use. Harper & Row, 471 U.S. at 564, 105 S. Ct. at 2232. Because all of Plaintiffs' works in question here are published, we will focus on the creative/factual distinction.

    A paradigmatic example of a creative work, the use of which will disfavor fair use under the second factor, is "[a] motion picture based on a fictional short story." Abend, 495 U.S. at 238, 110 S. Ct. at 1769. On the factual end of the spectrum, secondary use of a "bare factual compilation[]" favors fair use under the second factor. Campbell, 510 U.S. at 586, 114 S. Ct. at 1175 (citing Feist, 499 U.S. at 348-51, 111 S. Ct. at 1289-91). However, "[e]ven within the field of fact[ual] works, there are gradations as to the relative proportion of fact and fancy. One may move from sparsely embellished maps and directories to elegantly written biography." Harper & Row, 471 U.S. at 563, 105 S. Ct. at 2232 (quoting Robert A. Gorman, Fact or Fancy? The Implications for Copyright, 29 J. Copyright Soc'y 560, 561 (1982)).

    The coursepack cases—which involved copying of academic works similar to those involved here—reached opposite conclusions as to the effect of the second factor.[27] Compare Princeton Univ. Press, 99 F.3d at 1389 ("[T]he excerpts copied for the coursepacks contained creative material, or `expression;' it was certainly not telephone book listings that the defendants were reproducing. This factor . . . cuts against a finding of fair use."), with Basic Books, 758 F. Supp. at 1533 ("The books infringed in suit were factual in nature. This factor weighs in favor of defendant.").

    Nevertheless, relevant precedent indicates the proper approach. In Harper & Row, a publisher holding exclusive rights to President Ford's unpublished memoirs sued The Nation magazine after The Nation published portions of the memoirs. 471 U.S. at 543, 105 S. Ct. at 2221-22. Although it focused on the unpublished nature of the memoir, the Court held that the second factor disfavored fair use in part because "The Nation did not stop at isolated phrases and instead excerpted subjective descriptions and portraits of public figures whose power lies in the author's individualized expression. Such use, focusing on the most expressive elements of the work, exceeds that necessary to disseminate the facts." Id. at 563-64, 105 S. Ct. at 2232.

    In Peter Letterese & Associates, the holder of the copyright on a book about sales techniques sued several entities associated with the Church of Scientology after the entities used portions of the book in materials prepared for Church training courses. 533 F.3d at 1294-96. We held that the second factor was neutral—i.e., did not weigh for or against fair use—in part because, although the book

    [fell] roughly under the rubric of a factual work[,] . . . [it] contain[ed] a significant "proportion of fact and fancy," and not merely in the subjective selection and arrangement of sales techniques; [the author] utilize[d] original expression that surpasses the bare facts necessary to communicate the underlying technique. Although the techniques are presented by way of personal anecdote, it is hard to believe that such anecdotes feature actual persons and actual retellings of past events and conversations, as opposed to composite characters and experiences served with a healthy dose of fiction.

    Id. at 1312-13.

    Similarly, in Marcus v. Rowley, the Ninth Circuit considered a case involving the unauthorized copying of portions of the plaintiff's instructional booklet on the subject of cake decoration. 695 F.2d 1171, 1172 (9th Cir. 1983). The court held that

    plaintiff's booklet involved both informational and creative aspects. Some pages in her booklet undoubtedly contained information available in other cake decorating books or in recipe books. Other parts of her booklet contained creative hints she derived from her own experiences or ideas; certainly the manner in which plaintiff assembled her book represented a creative expression. Thus, on balance, it does not appear that analysis of this factor is of any real assistance in reaching a conclusion as to applicability of fair use.

    Id. at 1176.

    Here, the District Court held that "[b]ecause all of the excerpts are informational and educational in nature and none are fictional, fair use factor two weighs in favor of Defendants." Cambridge Univ. Press, 863 F. Supp. 2d at 1242. We disagree.

    The District Court found that "[s]ome of the books [at issue] are not merely descriptive; they contain material of an evaluative nature, giving the authors' perspectives and opinions." Id. at 1226. Such material might involve "subjective descriptions [that rely on] the author's individualized expression," Harper & Row, 471 U.S. at 563, 105 S. Ct. at 2232, may "surpass[] the bare facts necessary to communicate the underlying" information, Peter Letterese & Assocs., 533 F.3d at 1312, or may be "derived from [the author's] own experiences," Rowley, 695 F.2d at 1176. Although there appears to be no evidence that any of the non-fiction works in question here are "served with a healthy dose of fiction," neither are all of the works mere "factual compilation[s]."[28] Peter Letterese & Assocs., 533 F.3d at 1312-13.

    Defendants argue that GSU professors chose the excerpts of Plaintiffs' works for their factual content, not for any expressive content the works may contain, noting that several professors testified that if the use of a particular excerpt was not a fair use, they would have found another source. Of course, other professors testified that they chose particular excerpts because of the author's interpretative originality and significance. Regardless of whether GSU faculty chose the excerpts for their expressive or factual content, the excerpts were copied wholesale—facts, ideas, and original expression alike. Which aspect the secondary user was interested in is irrelevant to the disposition of the second factor.

    Accordingly, we find that the District Court erred in holding that the second factor favored fair use in every instance. Where the excerpts of Plaintiffs' works contained evaluative, analytical, or subjectively descriptive material that surpasses the bare facts necessary to communicate information, or derives from the author's experiences or opinions, the District Court should have held that the second factor was neutral, or even weighed against fair use in cases of excerpts that were dominated by such material. That being said, the second fair use factor is of relatively little importance in this case.[29]

    3.

    The third fair use factor is "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107 (3). "[T]his third factor examines whether defendants have `helped themselves overmuch' of the copyrighted work in light of the purpose and character of the use." Peter Letterese & Assocs., 533 F.3d at 1314 (quoting Campbell, 510 U.S. at 587, 114 S. Ct. at 1175). Thus, this factor is intertwined with the first factor.

    "[T]his factor is [also] intertwined with the fourth factor and partly functions as a heuristic to determine the impact on the market for the original." Id. (footnote omitted). As we have explained,

    A book reviewer who copies snippets of a book is likely to increase the demand for the book, but "were a book reviewer to quote the entire book in his review, or so much of the book as to make the review a substitute for the book itself, he would be cutting into the publisher's market, and the defense of fair use would fail."

    Id. (quoting Ty, Inc. v. Publ'ns Int'l Ltd., 292 F.3d 512, 517 (7th Cir. 2002). Thus, "[t]he inquiry is whether the amount taken is reasonable in light of the purpose of the use and the likelihood of market substitution." Id. at 1314 n.30 (citing Campbell, 510 U.S. at 588, 114 S. Ct. at 1176).

    In making this determination, we must consider "not only . . . the quantity of the materials used, but . . . their quality and importance, too." Campbell, 510 U.S. at 587, 114 S. Ct. at 1175; see also Harper & Row, 471 U.S. at 565, 105 S. Ct. at 2233 (holding that the third factor disfavored fair use because the defendant copied a qualitatively substantial portion of the original work—"the most interesting and moving parts of the entire manuscript" or "the heart of the book"—even though the defendants copied only approximately 300 words out of the 200,000 words in the plaintiffs' work) (quotation marks omitted).

    Here, the District Court found that the third factor favored fair use in instances where Defendants copied no more than 10 percent of a work, or one chapter in case of a book with ten or more chapters. Cambridge Univ. Press, 863 F. Supp. 2d at 1243. The District Court's blanket 10 percent-or-one-chapter benchmark was improper. The fair use analysis must be performed on a case-by-case/work-by-work basis. Campbell, 510 U.S. at 577, 114 S. Ct. at 1170; see supra discussion accompanying note 20. We must avoid "hard evidentiary presumption[s] . . . and `eschew[] a rigid, bright-line approach to fair use.'" Campbell, 510 U.S. at 584-85, 114 S. Ct. at 1174 (quoting Sony, 464 U.S. at 449 n. 31, 104 S. Ct. at 792 n. 31). By holding that the third factor favored fair use whenever the amount of copying fell within a 10 percent-or-one-chapter baseline, the District Court abdicated its duty to analyze the third factor for each instance of alleged infringement individually.

    Defendants argue that the District Court's 10 percent-or-one-chapter baseline served as a starting point only. However, this "starting point" in fact served as a substantive safe harbor in the third factor analysis, an approach which is incompatible with the prescribed work-by-work analysis. Even if we consider the baseline as a starting point only, application of the same non-statutory starting point to each instance of infringement is not a feature of a proper work-by-work analysis under the third fair use factor.

    Defendants also argue that the District Court's 10 percent-or-one-chapter approach is supported by the record. Defendants' explain that a CCC white paper, Using Electronic Reserves: Guidelines and Best Practices for Copyright Compliance (2011), identifies "best practices" for electronic reserves, stating that electronic reserve materials should be limited to "small excerpts" and that "[m]ost experts advise using a single article or . . . chapter of a copyrighted work . . . ." See Defendants' Trial Ex. 906, at 2. However, even if we accept that the 10 percent-or-one-chapter approach represents a general industry "best practice" for electronic reserves, this is not relevant to an individualized fair use analysis.

    Plaintiffs offer four additional critiques of the District Court's analysis under the third factor. First, Plaintiffs argue that the District Court erred in focusing its inquiry on whether the amount copied suited GSU's pedagogical purposes. This analysis, Plaintiffs contend, reflects a misplaced reliance on Campbell, in which the Supreme Court held that it was proper to allow a parodist—a transformative user—to use "at least enough" of the original work "to make the object of its critical wit recognizable." 510 U.S. at 588, 114 S. Ct. at 1176; see also Suntrust Bank, 268 F.3d at 1271. Such an analysis, Plaintiffs conclude, has no application in a case of nontransformative copying like this one.

    Plaintiffs mischaracterize the holding of Campbell. Although Campbell involved a parody, the Supreme Court's statement in that case that the inquiry under the third factor is whether "the quantity and value of the materials used . . . are reasonable in relation to the purpose of the copying" was not limited to the context of transformative uses. See 510 U.S. at 586, 114 S. Ct. at 1175 (citations omitted) (quotation marks omitted). Indeed, the Supreme Court acknowledged in Campbell that it had recognized that "the extent of permissible copying varies with the purpose and character of the use" in prior cases which did not involve transformative uses. Id. at 586-87, 114 S. Ct. at 1175 (citing Sony, 464 U.S. at 449-50, 104 S. Ct. at 792-93 (holding that reproduction of an entire work "does not have its ordinary effect of militating against a finding of fair use" as to home videotaping of television programs); Harper & Row, 471 U.S. at 564, 105 S. Ct. at 2232 ("[E]ven substantial quotations might qualify as fair use in a review of a published work or a news account of a speech" but not in a scoop of a soon-to-be-published memoir)). We have also previously held that this principle applies in the context of nontransformative uses. Peter Letterese & Assocs., 533 F.3d at 1314-15. Thus, we find that the District Court properly took into account whether the amount copied suited GSU's pedagogical purposes.

    Second, Plaintiffs argue that the District Court erred in measuring the amount taken based on the length of the entire book even where the copied material was an independently authored chapter in an edited volume. Rather, Plaintiffs contend, the relevant "work" in the case of an edited volume is the chapter copied, not the entire book; to conclude otherwise would create the anomalous result that a work bound with other works in an edited volume would enjoy less copyright protection than if the same work were published in a journal. See Texaco, 60 F.3d at 926 (treating individual articles in a journal as discrete works of authorship for purposes of third factor analysis).

    As noted earlier, the District Court declined to consider this argument because Plaintiffs raised it late in the proceedings. The decision whether to hear an argument raised late in litigation is squarely within the discretion of the District Court. See Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962). In the parties' March 15, 2011, joint exhibit—the document, which was admitted into evidence, detailing the alleged instances of infringement which were to be the subject of the bench trial—Plaintiffs identified whole books as the subject of the infringement claims and calculated the percentages taken as the amount copied from the total number of pages in those books. In their pre-trial proposed Findings of Fact and Conclusions of Law, filed on May 17, 2011, Plaintiffs again calculated the percentages in this manner. Although the argument that individual chapters should constitute the whole work in edited volumes for the purposes of factor three "came up for the first time briefly during the trial, . . . [i]t was not until Plaintiffs filed their post-trial Proposed Findings of Fact and Conclusions of Law that Plaintiffs' . . . theory was fleshed out." Cambridge Univ. Press, 863 F. Supp. 2d at 1231.

    Plaintiffs argue that Defendants had an opportunity to respond to the argument in their response to Plaintiffs' post-trial Proposed Findings of Fact and Conclusions of Law, and that the District Court identified no prejudice to Defendants. However, the bench trial was conducted based on the pre-trial filings, in which Plaintiffs' calculated the percentages in relation to whole works. We find that the District Court did not abuse its discretion in rejecting Plaintiffs' argument regarding chapters of edited compilations "on grounds of untimeliness and unfair surprise to the Defendants." Id.

    Third, Plaintiffs argue that the copying permitted by the District Court exceeds the amounts outlined in the Classroom Guidelines.[30] We note that the Classroom Guidelines, although part of the legislative history of the Copyright Act, do not carry force of law. In any case, to treat the Classroom Guidelines as indicative of what is allowable would be to create the type of "hard evidentiary presumption" that the Supreme Court has cautioned against, because fair use must operate as a "`sensitive balancing of interests.'" Campbell, 510 U.S. at 584, 114 S. Ct. at 1174 (quoting Sony, 464 U.S. at 455, n. 40, 104 S. Ct. at 795, n. 40). As discussed, the fair use analysis must be performed on a work-by-work basis, and so we must not give undue weight to the amounts of copying set forth in the Classroom Guidelines.

    Furthermore, although Plaintiffs characterize the amounts set forth in the Classroom Guidelines as "limits," the Classroom Guidelines were intended to suggest a minimum, not maximum, amount of allowable educational copying that might be fair use, and were not intended to limit fair use in any way:

    The purpose of the [Classroom] [G]uidelines is to state the minimum and not the maximum standards of educational fair use . . . .

    Moreover, the following statement of guidelines is not intended to limit the types of copying permitted under the standards of fair use under judicial decision and which are stated in Section 107 of the Copyright Revision Bill.

    H.R. Rep. No. 94-1476, at 68 (1976), reprinted in U.S.C.C.A.N. 5659, 5681. Thus, while the Classroom Guidelines may be seen to represent Congress' tentative view of the permissible amount of educational copying in 1976, we are not persuaded by the Plaintiffs' argument that the Classroom Guidelines should control the analysis under factor three in this case.

    Finally, Plaintiffs argue that the District Court allowed excessive taking as a percentage of the entire book compared to the amounts held to be "over the line" in the coursepack cases. The District Court erred, Plaintiffs contend, in finding that because GSU's use was nonprofit and educational, "fair use factor one strongly favors Defendants and tends to push the amount of permissible copying toward a greater amount than" the amounts held to disfavor fair use in the coursepack cases. Cambridge Univ. Press, 863 F. Supp. 2d at 1232. In Basic Books, the court found the fact that certain excerpts represented 5 to 14 percent of the whole work to weigh against the defendant, and the fact that other excerpts represented 16 to 28 percent of the whole work to "weigh heavily against [the] defendant." 758 F. Supp. at 1527-28. In Princeton University Press, the court found that takings ranging from 5 to 30 percent of the works in question weighed against fair use. 99 F.3d at 1391. Plaintiffs point out that the portions of Plaintiffs' works that the District Court held to favor fair use under the third factor are comparable to those held to disfavor fair use in the coursepack cases.

    We first note that the coursepack cases are not binding authority on this Court. Furthermore, because the four factors must be "weighed together" and not "treated in isolation," Campbell, 510 U.S. at 578, 114 S. Ct. at 1171, it is appropriate for the District Court to take the educational purpose of the use into consideration when analyzing how much copying is permissible under the third factor. This must be done on a work-by-work basis in a case such as this. While this type of analysis necessarily precludes hard-and-fast evidentiary presumptions, the wholesale reproduction of an entire work will not generally be considered fair unless the use is highly transformative.[31]

    Accordingly, we find that the District Court properly considered whether the individual instances of alleged infringement were excessive in relation to Defendants' pedagogical purpose, properly measured the amounts taken in all cases based on the length of the entire book, and properly declined to tie its analysis under the third factor to the Classroom Guidelines or to the coursepack cases. However, we find that the District Court erred in applying a 10 percent-or-one-chapter safe harbor in it analysis of the individual instances of alleged infringement. The District Court should have analyzed each instance of alleged copying individually, considering the quantity and the quality of the material taken—including whether the material taken constituted the heart of the work— and whether that taking was excessive in light of the educational purpose of the use and the threat of market substitution.

    4.

    The fourth fair use factor is "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). "We must consider two inquiries: (1) `the extent of the market harm caused by the particular actions of the alleged infringer,' and (2) `whether unrestricted and widespread conduct of the sort engaged in by the defendant[] would result in a substantially adverse impact on the potential market.'" Peter Letterese & Assocs., 533 F.3d at 1315 (alteration in original) (quoting Campbell, 510 U.S. at 590, 114 S. Ct. at 1177 (quotation marks omitted)). The adverse impact we are "primarily concerned [with] is that of market substitution." Id.; see also Harper & Row, 471 U.S. at 568, 105 S. Ct. at 2235 (explaining that the fourth factor is concerned with "use that supplants any part of the normal market for a copyrighted work" (quoting S. Rep. No. 94-473, at 65 (1975)). Furthermore, "[m]arket harm is a matter of degree, and the importance of [the fourth] factor will vary, not only with the amount of harm, but also with the relative strength of the showing on the other factors." Campbell, 510 U.S. at 590 n.21, 114 S. Ct. at 1177 n.21. Because Defendants' use is nontransformative and fulfills the educational purposes that Plaintiffs, at least in part, market their works for, the threat of market substitution here is great and thus the fourth factor looms large in the overall fair use analysis.[32]

    The central question under the fourth factor is not whether Defendants' use of Plaintiffs' works caused Plaintiffs to lose some potential revenue. Rather, it is whether Defendants' use—taking into account the damage that might occur if "everybody did it"—would cause substantial economic harm such that allowing it would frustrate the purposes of copyright by materially impairing Defendants' incentive to publish the work. See Harper & Row, 471 U.S. at 566-67, 105 S. Ct. at 2234 ("Fair use, when properly applied, is limited to copying by others which does not materially impair the marketability of the work which is copied." (emphasis added) (quotation marks omitted)).

    We agree with the District Court that the small excerpts Defendants used do not substitute for the full books from which they were drawn. "Plaintiffs offered no trial testimony or evidence showing that they lost any book sales in or after 2009 on account of any actions by anyone at Georgia State." Cambridge Univ. Press, 863 F. Supp. 2d at 1217. Thus, the District Court did not err in finding that "Defendants' use of small excerpts did not affect Plaintiffs' actual or potential sales of books." Id. at 1236.

    However, CCC's various programs for academic permissions—and Plaintiffs' own permissions programs—constitute a workable market through which universities like GSU may purchase licenses to use excerpts of Plaintiffs' works. Plaintiffs contend that, by failing to purchase digital permissions to use excerpts of Plaintiffs' works on ERes and uLearn, Defendants caused substantial harm to the market for licenses, and that widespread adoption of this practice would cause substantial harm to the potential market. Plaintiffs also argue that, even if a license for a digital excerpt of a work was unavailable, this should not weigh in favor of fair use because the copyright owner is not obliged to accommodate prospective users.

    Defendants argue that, because permissions income for academic books represents a miniscule percentage of Plaintiffs' overall revenue, Defendants' practices have not caused substantial harm to the market for Plaintiffs works, and would not do so even if widely adopted. Defendants further argue that unavailability of licensing opportunities for particular works should weigh in favor of fair use.

    We note that it is not determinative that programs exist through which universities may license excerpts of Plaintiffs' works. In other words, the fact that Plaintiffs have made paying easier does not automatically dictate a right to payment. "[A] copyright holder can always assert some degree of adverse [effect] on its potential licensing revenues as a consequence of the secondary use at issue simply because the copyright holder has not been paid a fee to permit that particular use." Texaco, 60 F.3d at 929 n.17 (citations omitted). The goal of copyright is to stimulate the creation of new works, not to furnish copyright holders with control over all markets. Accordingly, the ability to license does not demand a finding against fair use.

    Nevertheless, "it is sensible that a particular unauthorized use should be considered `more fair' when there is no ready market or means to pay for the use, while such an unauthorized use should be considered `less fair' when there is a ready market or means to pay for the use. The vice of circular reasoning arises only if the availability of payment is conclusive against fair use." Id. at 931. Put simply, absent evidence to the contrary, if a copyright holder has not made a license available to use a particular work in a particular manner, the inference is that the author or publisher did not think that there would be enough such use to bother making a license available. In such a case, there is little damage to the publisher's market when someone makes use of the work in that way without obtaining a license, and hence the fourth factor should generally weigh in favor of fair use. This is true of Plaintiffs' works for which no license for a digital excerpt was available.[33]

    Plaintiffs argue that even though a use is less fair when licensing is readily available, it does not follow that a use becomes more fair if, for a legitimate reason, the copyright holder has not offered to license the work. Plaintiffs cite several cases which have found that the fourth factor weighs against fair use even though the copyright holder was not actively marketing the work in question because the secondary use negatively impacted the potential market for the work. See Balsley v. LFP, Inc., 691 F.3d 747, 761 (6th Cir. 2012), cert. denied, 133 S. Ct. 944, 184 L. Ed. 2d 727 (2013) (finding that a magazine publisher had failed to rebut a presumption of market harm in a commercial context where the publisher published a photo in which plaintiffs had acquired copyright in order to prevent its dissemination, because plaintiffs' "current desire or ability to avail themselves of the market" was irrelevant to the question of potential market harm); Worldwide Church of God, 227 F.3d at 1119 (finding market harm even though the copyright holder had ceased distributing the copyrighted work ten years prior to the act of alleged infringement and had no concrete plans to publish a new version); Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 145-46 (2d Cir. 1998) (finding that the fourth factor weighed against a defendant who published a book containing trivia questions about the plaintiff's copyrighted television program where the plaintiff "ha[d] evidenced little if any interest in exploiting [the] market for derivative works based on" the program, noting that "copyright law must respect that creative and economic choice"). We note that our own precedent also supports this theory in some circumstances. See Pac. & S. Co., 744 F.2d at 1496 (finding harm to the potential market for plaintiff's news broadcasts where a defendant videotaped the broadcasts and sold tapes to the subjects of the news reports because "[c]opyrights protect owners who immediately market a work no more stringently than owners who delay before entering the market" and so "[t]he fact that [the plaintiff] does not actively market copies of the news programs does not matter, for Section 107 looks to the `potential market' in analyzing the effects of an alleged infringement").

    However, this reasoning need not dictate the result in this case, which concerns not the market for Plaintiffs' original works themselves or for derivative works based upon those works, but rather a market for licenses to use Plaintiffs' works in a particular way. As previously explained, licensing poses a particular threat that the fair use analysis will become circular, and Plaintiffs may not head off a defense of fair use by complaining that every potential licensing opportunity represents a potential market for purposes of the fourth fair use factor.

    An analogy is helpful. A publisher acts like a securities underwriter. A publisher determines the value of a work, which is set by the anticipated demand for the work. Thus, the greater the demand for the work—the greater the market— the more the publisher will pay the author of the work up front, and the more the publisher will endeavor to make the work widely available. If a publisher makes licenses available for some uses but not for others, this indicates that the publisher has likely made a reasoned decision not to enter the licensing market for those uses, which implies that the value of that market is minimal.

    With regard to the works for which digital permissions were unavailable, Plaintiffs choose to enter those works into some markets—print copies of the whole work, or perhaps licenses for paper copies of excerpts—but not the digital permission market. This tells us that Plaintiffs likely anticipated that there would be little to no demand for digital excerpts of the excluded works and thus saw the value of that market as de minimis or zero. If the market for digital excerpts were in fact de minimis or zero, then neither Defendants' particular use nor a widespread use of similar kind would be likely to cause significant market harm. Of course, if publishers choose to participate in the market the calculation will change.

    In its individual analysis under the fourth factor of each of the forty-eight works for which it found Plaintiffs had made a prima facie case of infringement, the District Court performed a sufficiently nuanced review of the evidence regarding license availability. Where the evidence showed that there was a ready market for digital excerpts of a work in 2009, the time of the purported infringements, the District Court found that there was small—due to the amount of money involved—but actual damage to the value of Plaintiffs' copyright.[34] The District Court also properly took into account that widespread use of similar unlicensed excerpts could cause substantial harm to the potential market. Thus, where there was a license for digital excerpts available, the District Court generally held that the fourth factor weighed against a finding of fair use. In close cases, the District Court went further and examined the amount of permissions income a work had generated in order to determine how much this particular revenue source contributed to the value of the copyright in the work, noting that where there is no significant demand for excerpts, the likelihood of repetitive unpaid use is diminished. Where there was no evidence in the record to show that a license for digital excerpts was available—as was the case for seventeen works published by Oxford and Cambridge—the District Court held that the fourth factor weighted in favor of fair use. We find that the District Court's analysis under the fourth factor was correct, and that the District Court properly took license availability into account in determining whether the fourth factor weighted for or against fair use.

    Plaintiffs argue that the District Court erred by placing the burden on Plaintiffs to show that digital licenses for the particular works in question were reasonably available through CCC in 2009. Cognizant that fair use is an affirmative defense, the District Court kept the overall burden on Defendants to show that "no substantial damage was caused to the potential market for or the value of Plaintiffs' works" in order to prevail on the question of whether the fourth factor should favor fair use. Cambridge Univ. Press, 863 F. Supp. 2d at 1237. However, the District Court found that because Plaintiffs were "advocates of the theory that the availability of licenses shifts the factor four fair use analysis in their favor . . . it is appropriate for them to be called upon to show that CCC provided in 2009 reasonably efficient, reasonably priced, convenient access to the particular excerpts which are in question in this case." Id. Plaintiffs argue that this amounted to relieving the Defendants of their burden of proof on the fourth factor.

    We disagree. Fair use is an affirmative defense, and the evidentiary burden on all four of its factors rests on the alleged infringer. See Campbell, 510 U.S. at 590, 114 S. Ct. at 1177. However, Plaintiffs—as publishers—can reasonably be expected to have the evidence as to availability of licenses for their own works. It is therefore reasonable to place on Plaintiffs the burden of going forward with the evidence on this question.

    In effect, this creates a presumption that no market for digital permissions exists for a particular work.[35] Cf. Verbraeken v. Westinghouse Elec. Corp., 881 F.2d 1041, 1045 (11th Cir. 1989) (explaining that, in a case brought pursuant to the Age Discrimination in Employment Act, "the plaintiff bears the ultimate burden of proving that age was a determinative factor in the employer's decision to terminate his employment," but that after the plaintiff establishes a prima facie case of discrimination, this creates a presumption that age was a determinative factor and the defendant then has the burden to go forward with evidence of "a legitimate, non-discriminatory rationale for the discharge," after which the plaintiff must prove that the employer's purported reason was merely a pretext). This is reasonable, because if a license was available during the relevant time period, Plaintiffs can rebut the presumption of no market by going forward with evidence of license availability. If there is evidence of a potential, future market, Plaintiffs can rebut the presumption by going forward with that. Then, Defendants— retaining the overall burden of persuasion on the fourth factor—must demonstrate that their use does not materially impair the existing or potential market in order to prevail.

    Although the District Court did not articulate its approach to the evidentiary burden on license availability in exactly this manner, the District Court did essentially what we have described. The District Court required Plaintiffs to put on evidence as to the availability of digital permissions in 2009, and Plaintiffs provided such evidence for some of the works in question but not for others. For those seventeen works for which Plaintiffs presented no evidence that digital permissions were available, the District Court—noting that, because access was limited to particular classes, it was unlikely that Defendants' use would result in exposure of the works to the general public and so there was little risk of widespread market substitution for excerpts of the works—held that there was no harm to the actual or potential market. For those works for which Plaintiffs demonstrated that digital permissions were available, the District Court considered the evidence demonstrating that the actual harm to the value of Plaintiffs' copyright was minor (because the fees Defendants would have paid for a small number of licenses for the works in question amounted to a relatively small amount), but reasonably concluded that widespread conduct of the sort engaged in by Defendants would cause substantial harm.[36] Thus, although the District Court required Plaintiffs to go forward with evidence of license availability, the District Court properly kept the ultimate burden of persuasion on Defendants on the question of market harm under the fourth factor. Accordingly, the District Court did not engage in improper burden shifting.[37]

    Finally, Plaintiffs argue that the District Court erred in finding that digital licenses for many of the works in question were unavailable in 2009. Plaintiffs point to the joint exhibit enumerating the allegations of infringement which were to be the basis of the trial, filed on March 15, 2011. Plaintiffs note that this document identified what it would have cost in 2009 to license each of the works at issue through CCC. Defendants, however, argue that the joint exhibit merely depicts what the permission fee for each work might have been using the standard per-page rates charged by CCC for each publisher. The District Court accepted this argument, noting that "[t]he fact that a license to copy an excerpt of an individual work would have cost a particular amount is not a substitute for evidence that the license was actually available." Cambridge Univ. Press, 863 F. Supp. 2d at 1238.

    Given the evidence in the record, it was reasonable for the District Court to find that a lack of direct evidence of availability indicated that licenses were unavailable. Cambridge's representative testified that Cambridge does not allow excerpts of certain categories of books to be licensed through CCC, including reference and language books (as several of the works at issue here are). Representatives of Oxford, Cambridge, and CCC testified, but did not explain whether digital licenses for excerpts were available in 2009 for the books at issue in this case.[38] The District Court also noted that the record shows that Cambridge and Oxford have been reluctant to make digital excerpts available. Thus, the District Court's findings of fact regarding license availability are not clearly erroneous.

    The District Court engaged in a careful investigation of the evidence in the record, properly considered the availability of digital permissions in 2009, and appropriately placed the burden of going forward with the evidence on this issue on Plaintiffs. Accordingly, we find that the District Court did not err in its application of the fourth factor. However, because Defendants' copying was nontransformative and the threat of market substitution was therefore serious, the District Court erred by not affording the fourth factor additional weight in its overall fair use calculus.

    5.

    The District Court enumerated two additional, purportedly non-statutory considerations which it held favored fair use: (1) that "[l]imited unpaid copying of excerpts will not deter academic authors from creating new academic works," and (2) that "[t]he slight limitation of permissions income caused by the fair use authorized by this Order will not appreciably diminish Plaintiffs' ability to publish scholarly works and will promote the spread of knowledge." Id. at 1240. Although it is within the District Court's discretion to go beyond the considerations set forth in the four factors, see Harper & Row, 471 U.S. at 549, 105 S. Ct. at 2225 (explaining that the four statutory fair use factors are nonexclusive), the District Court's supplemental considerations are not actually supplemental, and as such should have instead been considered within the existing statutory framework.

    The District Court's first additional consideration was more properly considered under the first fair use factor—"the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107(1). Nonprofit educational uses are more likely to be fair because they promote the ultimate aims of copyright—the creation and dissemination of knowledge. Both of these aims must be kept in mind when evaluating a claim of fair use. Thus, whether the limited unpaid copying of excerpts will deter academic authors from creating is relevant. Nevertheless, it is the publishers—not academic authors—that are the holders of the copyrights at issue here. Publishers—not authors—are claiming infringement. Thus, when determining whether Defendants' unpaid copying should be excused under the doctrine of fair use in this case, we are primarily concerned with the effect of Defendants' copying on Plaintiffs' incentive to publish, not on academic authors' incentive to write.

    The District Court's second additional consideration may be divided into two findings. First, the District Court found that a slight diminution of Plaintiffs' permissions income caused by Defendants' fair use would not appreciably harm Plaintiffs' ability to publish scholarly works. However, this consideration is adequately dealt with under the fourth factor, which, as we have explained, asks whether the market harm caused by Defendants' unpaid copying will materially impair Plaintiffs' incentive to publish.

    Second, the District Court found that that "it is consistent with the principles of copyright to apply the fair use doctrine in a way that promotes the dissemination of knowledge, and not simply its creation," and treated this as a basis to allow the slight diminution of Plaintiffs' permissions income caused by Defendants' unpaid copying. Cambridge Univ. Press, 863 F. Supp. 2d at 1241. We agree with the proposition that applying fair use in a manner which promotes the dissemination of knowledge is consistent with the goals of copyright. See Golan v. Holder, ___ U.S. ___, 132 S. Ct. 873, 888, 181 L. Ed. 2d 835 (2012) (explaining that the Progress of Science, which Congress is empowered to promote pursuant to the Copyright Clause, "refers broadly to the creation and spread of knowledge and learning" (emphasis added) (quotation marks omitted)). However, all unpaid copying could be said to promote the spread of knowledge, so this principal is not particularly helpful in "separating the fair use sheep from the infringing goats." See Campbell, 510 U.S. at 586, 114 S. Ct. at 1175. To the extent that it is relevant here, this consideration is more neatly dealt with under the first factor, which teaches that educational uses—which certainly promote the dissemination of knowledge—are more likely to be fair. See § 107(1).

    Accordingly, we hold that the District Court erred by separating the following considerations from its analysis of the first and fourth factors:(1) whether limited unpaid copying of excerpts will deter authors from creating new academic works, and (2) whether the slight limitation of permissions income caused by Defendants' use would promote the spread of knowledge and would not appreciably diminish Plaintiffs' ability to publish scholarly works

    E.

    In sum, we hold that the District Court did not err in performing a work-by-work analysis of individual instances of alleged infringement in order to determine the need for injunctive relief. However, the District Court did err by giving each of the four fair use factors equal weight, and by treating the four factors mechanistically. The District Court should have undertaken a holistic analysis which carefully balanced the four factors in the manner we have explained.

    The District Court did not err in holding that the first factor—the purpose and character of the use—favors fair use. Although Defendants' use was nontransformative, it was also for nonprofit educational purposes, which are favored under the fair use statute. However, the District Court did err in holding that the second fair use factor—the nature of the copyrighted work—favors fair use in every case. Though this factor is of comparatively little weight in this case particularly because the works at issue are neither fictional nor unpublished, where the excerpts in question contained evaluative, analytical, or subjectively descriptive material that surpasses the bare facts, or derives from the author's own experiences or opinions, the District Court should have held that the second factor was neutral or even weighed against fair use where such material dominated.

    With regard to the third factor—the amount used in relation to the copyrighted work as a whole—the District Court erred in setting a 10 percent-or-one-chapter benchmark. The District Court should have performed this analysis on a work-by-work basis, taking into account whether the amount taken— qualitatively and quantitatively—was reasonable in light of the pedagogical purpose of the use and the threat of market substitution. However, the District Court appropriately measured the amount copied based on the length of the entire book in all cases, declined to give much weight to the Classroom Guidelines, and found that the Defendants' educational purpose may increase the amount of permissible copying.

    With regard to the fourth factor—the effect of Defendants' use on the market for the original—the District Court did not err. However, because Defendants' unpaid copying was nontransformative and they used Plaintiffs' works for one of the purposes for which they are marketed, the threat of market substitution is severe. Therefore, the District Court should have afforded the fourth fair use factor more significant weight in its overall fair use analysis. Finally, the District Court erred by separating two considerations from its analysis of the first and fourth fair use factors, as described above supra part III.D.5.

    Because the District Court's grant of injunctive relief to Plaintiffs was predicated on its finding of infringement, which was in turn based on the District Court's legally flawed methodology in balancing the four fair use factors and erroneous application of factors two and three, we find that the District Court abused its discretion in granting the injunction and the related declaratory relief. Similarly, because the District Court's designation of Defendants as the prevailing party and consequent award of fees and costs were predicated on its erroneous fair use analysis, we find that the District Court erred in designating Defendants as the prevailing party and awarding fees and costs to Defendants.

    IV.

    Accordingly, we REVERSE the judgment of the District Court. We VACATE the injunction, declaratory relief, and award of fees and costs to Defendants, and REMAND for further proceedings consistent with this opinion.

    SO ORDERED.

    VINSON, District Judge, concurring specially.

    It seems to me that the District Court's error was broader and more serious than the majority's analysis concludes, and I write separately to highlight some of those differences.[39]

    This case reveals the critical need to see the "big picture" when attempting to determine what constitutes fair use of copyrighted work. It also highlights how the temptation to apply traditional statutory interpretation principles to a common law concept can lead to serious error.

    While copyright is a creature of statute, the doctrine of fair use has always been governed by judicially-created common law principles. See 4 Nimmer on Copyright § 13.05 (2014) ("Nimmer") (stating that fair use was, and remains, a "judge-made rule of reason"). The Copyright Act of 1909 (and earlier versions) did not even mention fair use, notwithstanding that it had been around since "the infancy of copyright protection[.]" Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575-76, 114 S. Ct. 1164, 1169-70, 127 L. Ed. 2d 500 (1994) (discussing early cases). When Congress enacted a new copyright statute in 1976, it recognized the existence of fair use (for the first time) in Section 107 of the Act, which provided that "fair use . . . is not an infringement of copyright" and summarized the four non-exhaustive factors that courts should consider in analyzing claims of fair use: (1) the purpose of the use, (2) the nature of the work, (3) the size and significance of the copied portion, and (4) the effect of the use on the value or potential market for that work. 17 U.S.C. § 107(1)-(4). As the Supreme Court of the United States has observed, however:

    Congress meant § 107 "to restate the present judicial doctrine of fair use, not to change, narrow, or enlarge it in any way" and intended that courts continue the common-law tradition of fair use adjudication.

    Campbell, supra, 510 U.S. at 577 (citations omitted). Thus, it is important to keep in mind that fair use analysis does not require conventional statutory interpretation or the mechanical application of a checklist; it is, instead, rooted in the "270-year-old tradition of judge-made law and in judicial common sense — the mortar of the common law." Pierre N. Leval, Nimmer Lecture: Fair Use Rescued, 44 UCLA L. Rev. 1449, 1454 (1997) ("Nimmer Lecture").

    While Section 107 was well intended, judges have had difficulty applying statutory recognition to common-law adjudication, and this case presents a good example of that situation. Courts frequently focus on the word-bites of the statute instead of the fair use doctrine itself. As Judge Leval has bluntly described, there was "chaotic confusion that resulted from the statutory recognition" in 1976, and, as courts "looked for answers in the wrong place, fair use jurisprudence became a comedy of miscommunication . . . . The doctrine was thus broken into a haphazard assortment of nonfunctional fragments, its core elements forgotten." See Nimmer Lecture, supra, 44 UCLA L. Rev. at 1450; Nimmer, supra, at § 13.05 (noting fair use has been called "`the most troublesome [area] in the whole law of copyright'" and is said to be "`so flexible as virtually to defy definition'") (citations omitted). Nonetheless, despite the confusion that statutory incorporation of the doctrine has brought about, one thing should be reasonably clear from the name of the doctrine: a proper fair use analysis should focus primarily on the use of the work, not on the user. So, in analyzing fair use in a given case, the court should step back a little, just as you would at an art museum, and view the work and its use in its entirety. Viewed in this way, and after applying traditional common law principles to the use at issue here, this is a rather simple case. Checking the four statutory factors to ensure that they have been considered merely affirms the conclusion that what GSU is doing is not fair use.[40]

    This case does not involve an individual using a single copyrighted work, nor does it involve a single course, a single professor, or even a one-time use of "multiple copies for classroom distribution." See Campbell, supra, 510 U.S. at 579 n.11. Nor, in my opinion, should it be confined to the seventy-four specific instances of infringement that were the focus during trial. Rather, this case arises out of a university-wide practice to substitute "paper coursepacks" (the functional equivalent of textbooks) that contained licensed copyrighted works with "digital coursepacks" that contained unlicensed copyrighted works. This was done for the vast majority of courses offered at GSU and, as will be seen, it was done primarily to save money.[41] As Plaintiffs have pointed out:

    What makes GSU's disregard for copyright law in relation to the creation and dissemination of digital coursepacks [most] remarkable is its stark contrast to GSU's legally compliant conduct when it supplies the same readings in physical form. It is stipulated that when GSU faculty make precisely the same uses of excerpted copyrighted books to create paper coursepacks for students, GSU has paid permissions fees to [Plaintiffs] and the other publishers of those works.

    (emphasis added). Thus, Defendants have the burden to show by a preponderance of the evidence why this aggregated use in electronic form is fair use — when the exact same use in paper form is not. In my view, they have not even come close to doing so. Plaintiffs' brief then goes on to cite two important cases in this area:

    Two key decisions from the 1990's, Princeton Univ. Press v. Mich. Document Servs., Inc., 99 F.3d 1381 (6th Cir. 1996) (en banc), and Basic Books, Inc. v. Kinko's Graphics Corp., 758 F. Supp. 1522 (S.D.N.Y. 1991) (the "Coursepack Cases"), established that the nontransformative, verbatim copying inherent in the preparation of coursepacks, with the resulting prospect of significant market harm to the authors and publishers of the materials, did not constitute fair use. Significantly, GSU stipulated [in the District Court] that it has for years abided by these requirements for paper coursepacks, routinely seeking permission from copyright holders and paying the requisite fees when printing and selling paper coursepacks.

    (emphasis added). The twice-emphasized stipulation referenced above — which is arguably the most meaningful fact in this case — specifically provided that: "GSU pays permissions fees when copyrighted content is used in hardcopy coursepacks." Thus, James Palmour (whose job at GSU was to arrange coursepacks and evaluate the materials included therein "to determine if copyright laws are violated or not") testified that, when he prepared paper coursepacks, "if anything was copyrighted I obtained the copyright permission and paid the royalties to the publishers . . . ." Palmour Dep. at 16, 24-25, 30. He did this whenever the work had already been published in a book or journal because, in that situation, "I assume that it needs copyright permission" before it could be put in a paper coursepack. Id. at 30-31, 34. Notably, however, that same assumption was not made (and the permissions fees were not paid) when GSU moved to digital coursepacks, which (as Palmour explained) was done because they were "easier", "cheaper" and "convenient." Id. at 129, 134-35.[42] In short, GSU went from paper coursepacks (for which they had "obtained the copyright permission and paid the royalties to the publishers") to digital coursepacks (for which they did not), and they did this not because there was any real difference in the actual use but, rather, in large part to save money.[43]

    In light of the undisputed fact that GSU paid the permissions fees whenever copyrighted works were included in paper coursepacks, but did not pay those fees when "they put the same material on EReserves", resolution of this case (which involves admitted extensive verbatim copying in undisputed non-transformative format, resulting in complete market substitution) seems clear. See Greenberg v. National Geographic Society, 533 F.3d 1244, 1257 (11th Cir. 2008) (en banc) (stating that the transfer of a work "from print to digital form . . . does not create a different balance of copyright protection . . . because copyright protection is media neutral") (citing New York Times Co. v. Tasini, 533 U.S. 483, 121 S. Ct. 2381, 150 L. Ed. 2d 500 (2001)). Inasmuch as both sides in this case stipulated at trial (and Palmour's testimony further made clear) that royalty payments were made when copyrighted works were provided to students in paper form, providing the same or similar materials in an electronic form should not change the calculus in any meaningful or significant way. The "use" of a copyright protected work that had previously required the payment of a permissions fee does not all of a sudden become "fair use" just because the work is distributed via a hyperlink instead of a printing press.[44]

    To the extent the majority concludes that reliance on the media neutrality doctrine is "misplaced", and that the Coursepack Cases are not controlling since they involved commercial copyshops, see Maj. Op. at 56-59, 65-66, I respectfully disagree. The media neutrality doctrine should not be limited to copyrightability, but, rather, should apply equally in a fair use analysis. There is no transformative technology transition here. The digital format is merely another way of displaying the same paginated materials as in a paper format and for the same underlying use. Electronic reproduction is faster, cheaper, and almost unlimited in its scope and duration, but there is no discernable difference in its use, purpose, and effect. And while the Coursepack Cases are, of course, not binding on us, I find their legal and factual rationale persuasive and would reverse for largely the same reasons set out in those decisions.[45]

    The majority allows that the Coursepack Cases may "provide guidance" in conducting the fair use analysis, but it concludes that the cases do not dictate the outcome here since every case must be decided on its own facts and by individual application of the fair use factors. I do not disagree that each individual case must be decided on its own facts, as I have already set out. However, in undertaking its analysis in this case, I believe the majority has misapplied several of those factors — or at least certain parts thereof. I will now proceed to highlight where I part company with the majority's analysis of the fair use factors (and to briefly add to some portions of the analysis with which I agree).

    It appears that the majority finds that the first factor (i.e., the purpose of the use) favors a finding of fair use based primarily on the fact that GSU is a not-for-profit university using the copyrighted material for educational purposes. Neither churches, charities, nor colleges get a free ride in copyright, however. The test is ultimately the same for them as it is for everyone else: is the use "fair" under the specific circumstances? While I agree that educational use is an important factor to consider, and there is much to recommend in the majority's thoughtful analysis and detailed consideration of this issue, see Maj. Op. at 59-74 — which stands in stark contrast to the District Court's perfunctory (two page) analysis[46] — I simply cannot agree that the first factor weighs in favor of fair use just because the works are being used for educational purposes at a non-profit university.[47]

    In Campbell, the Supreme Court expressly stated that the "central purpose" of the investigation under the first factor is to determine "whether the new work merely supersedes the objects of the original creation" or, instead, whether it adds "something new" with an additional purpose or different character. See 510 U.S. at 578-79 (citations, quotation marks, and alterations omitted); see also Nimmer, supra, § 13.05[A][1][b]. The Supreme Court went on to state in this context that "the mere fact that a use is educational and not for profit does not insulate it from a finding of infringement." Campbell, supra, 510 U.S. at 584. Thus, rather than the focus being on the distinction between commercial and non-profit — or educational and non-educational — the real "backbone" of the first factor is the "crucial" distinction between transformative use (which tends to support fair use) and non-transformative use that supersedes the original work (which cuts against it). See Nimmer Lecture, supra, 44 UCLA L. Rev. at 1460-61; Nimmer, supra, § 13.05[A][1][b]. The use of the works in this case, as the majority opinion notes and the Defendants have not really contested, was obviously non-transformative. In switching from paper to digital coursepacks, the professors at GSU superseded the original works, and displaced and substituted the "textbooks" which contained the copyrighted works for which Plaintiffs had previously been paid. In my view, this use compels the conclusion that the first factor weighs heavily against fair use (despite that the user is a non-profit university).

    As for the second factor (i.e., the nature of the work), the District Court held that it weighs in favor of Defendants "because all of the excerpts are informational and educational in nature and none are fictional[.]" See Cambridge Univ. Press v. Becker, 863 F. Supp. 2d 1190, 1242 (N.D. Ga. 2012). This conclusion was error, as the majority opinion holds. Admittedly, the "nature of the work" encompasses a huge spectrum of considerations, often bridging the field of copyrighted works. Characterizing the nature of poetic works, visual art, or musical compositions and performances is quite different from that of written textual materials. For some works, the contested use also may affect the "nature" of the work. A proper analysis of the second factor should not focus on whether a work is fiction or non-fiction; rather, in my opinion, the focus should be on the originality and creativity of the work and its value to the public (or, as here, to the academic community).[48] Here, the works were all original, and it cannot be denied that they had value. To be sure, their value is demonstrated by the fact that they were each selected and utilized for classroom purposes by professors to illustrate the pedagogical point for which they were chosen. I thus agree with the majority that the District Court erroneously held that factor two weighs in favor of fair use for informational or educational works of non-fiction "in every instance." Such works can be, and frequently are, original and valuable works that contain evaluative, analytical, or subjectively descriptive material. I also agree with the majority that factor two is either neutral here or weighs against fair use.[49]

    In considering the third factor (i.e., the size and significance of the portion that was copied), the majority concludes that "[t]he District Court's blanket 10 percent-or-one-chapter benchmark was improper." Maj. Op. at 83. I agree for all the reasons that the majority has identified.[50] To the extent the majority then goes on to reject Plaintiffs' claim that the Classroom Guidelines should further inform the analysis under the third factor, I disagree. The guidelines — which expressly deal with fair use of copyrighted material in the classroom context and place limits on not-for-profit educational copying — are a compromised and negotiated arms-length agreement that Congress had asked for, and was fully aware of and took into account, at the time that Section 107 was enacted. They provide, inter alia, strict word count limits on allowable copying, such as the lesser of an excerpt from a prose work of not more than 1,000 words or 10 percent of the work. While the majority opinion is correct that the guidelines do not create a "hard evidentiary presumption" or "carry force of law", they are still important to this analysis as the Coursepack Cases (and other cases) have recognized, and I believe they deserve more weight and consideration than the majority has allowed. See Princeton Univ. Press, supra, 99 F.3d at 1390 (noting that there are "strong reasons" to consider the Classroom Guidelines as they "evoke a general idea . . . of the type of educational copying Congress had in mind"). With respect to factor three, they provide a standard of presumed reasonableness. If they are properly considered and applied to the facts of this case, I agree with the Plaintiffs that they would confirm that the Defendants "helped themselves overmuch." See Campbell, supra, 510 U.S. at 587.[51]

    And lastly, with respect to the fourth factor (i.e., the effect of the use on the value or potential market for that work), there are two inquiries: (1) the extent of the market harm caused by the conduct of the alleged infringer, and (2) whether such conduct — if unrestricted and widespread — would result in a substantially adverse impact on the potential market for the original. See Campbell, supra, 510 U.S. at 590. "In particular, the adverse effect with which fair use is primarily concerned is that of market substitution." Peter Letterese & Assocs., Inc. v. World Institute of Scientology Enters., Int'l, 533 F.3d 1287, 1315 (11th Cir. 2008). The threat of market substitution in this case, as the majority opinion rightly notes, is severe. However, after noting that digital licenses were not available for some of the copyrighted works at issue, the majority opinion concludes "the District Court held that the fourth factor weighted in favor of fair use. We find that the District Court's analysis under the fourth factor was correct . . . ." See Maj. Op. at 100.

    I disagree and am instead persuaded by the Plaintiffs' arguments, which highlight multiple legal and factual errors in the District Court's analysis of the fourth factor. In short, establishing market harm does not require a showing of lost profits, nor is it dependent on the availability of a digital license.[52] Rather, what counts is whether "some meaningful likelihood of future harm exists." Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 451, 104 S. Ct. 774, 793, 78 L. Ed. 2d 574 (1984). The Sixth Circuit undertook a proper market-harm analysis in one of the Coursepack Cases when it assessed the potential impact on publishers if unauthorized reproduction of scholarly works for paper coursepacks was replicated nationwide:

    If copyshops across the nation were to start doing what the defendants have been doing here, this revenue stream would shrivel and the potential value of the copyrighted works of scholarship published by the plaintiffs would be diminished accordingly.

    Princeton Univ. Press, supra, 99 F.3d at 1387. One could substitute "universities" for "copyshops" in the above quoted passage (which, as I indicated earlier, would be appropriate since the underlying use is the same in both cases) and would have to reach the same conclusion.

    Therefore, I would go further than does the majority and conclude that both the District Court's methodology and its analysis were flawed. The Defendants' use fails under any objective common law "big picture" adjudication of fair use and also fails on a work-by-work analysis under three of the four factors (while the remaining factor is either neutral or weighs against Defendants). It has been said that fair use is best and most precisely explained by the following paraphrase of the Golden Rule: "`Take not from others to such an extent and in such a manner that you would be resentful if they so took from you.'" See Nimmer, supra, at § 13.05[A] (citation omitted). If GSU or the individual defendants held copyrights for which other universities had always sought — and paid for — permission to copy and provide to students on paper, I am confident they would be "resentful" if those universities (in an effort to save money) just stopped paying the permissions fees and instead provided the same or similar materials by digital means. GSU's use of Plaintiffs' copyright protected works without compensation was, in a word, unfair.

    I thus concur with the decision to reverse and remand this case.

    [1] Honorable C. Roger Vinson, United States District Judge for the Northern District of Florida, sitting by designation.

    [2] As the Association of Research Libraries recognizes, "[t]oday, students and teachers alike strongly prefer electronic equivalents (e-reserves for text, streaming for audio and video) to the old-media approaches to course support." Brief of American Library Association, et al., as Amicus Curiae Supporting Defendants/Appellees at 8 (quoting Association of Research Libraries, Code of Best Practices in Fair Use for Academic and Research Libraries 13 (2012), http://www.arl.org/storage/documents/publications/code-of-best-practices-fair-use.pdf).

    [3] Electronic reserve systems are popular not just at GSU, but nationwide. Many other university libraries offer electronic reserve systems to students and faculty that are similar to ERes and uLearn. See Brief of the Association of Southeastern Research Libraries as Amicus Curiae Supporting Defendants/Appellees at 3.

    [4] In 2011, according to the Director of Digital Publishing Global for Cambridge, Frank Smith, "CCC [was] able to license excerpts from 60% of Cambridge's works." Cambridge Univ. Press v. Becker, 863 F. Supp. 2d 1190, 1213 (N.D. Ga. 2012). Mr. Smith did not testify as to how many of Cambridge's works were available via CCC for licensed copying in 2009, the year during which the instances of copying that the District Court examined took place. In 2011, according to Oxford's Acting President, Nike Pfund, "CCC . . . license[d] the copying of excerpts from over 90% of Oxford's titles." Id. Mr. Pfund did not testify as to how many of Oxford's works were available via CCC for licensed copying in 2009. However, the District Court found that "[t]here is documentary evidence showing that some but by no means all of these works were available for permissions in 2009." Id. at 1214. In 2011, according to the Director of Licensing at Sage, Carol Richman, "CCC . . . handle[d] permissions for all of Sage's works." Id. Ms. Richman did not testify as to how many of Sage's works were available via CCC for licensed copying in 2009. However, the District Court found that "documentary evidence shows that many though not all of Sage's works at issue in this case generated permissions revenue from CCC during the period from July 1, 2004 to December 1, 2010." Id.

    [5] GSU stipulated that "[a]t GSU, coursepacks are printed and bound together and sold as units through the GSU bookstore. . . . GSU pays permission fees when copyrighted content is used in hardcopy coursepacks." Doc. 276, at 8. Presumably this means that if no license for an excerpt of a particular work is available for use in a paper coursepack, GSU would simply not use that work. However, there is no evidence in the record that makes this explicit. Additionally, that GSU previously decided to pay for permissions to use paper excerpts does not necessarily weigh heavily on whether its current use of digital excerpts constitutes fair use. A number of factors might influence GSU's decision whether to pay for permissions, or instead, claim fair use. As we make clear below in our analysis of the fourth fair use factor, the same logic also applies to Plaintiffs' decision whether to make digital permissions available. See infra note 32.

    [6] In an action for direct infringement, the owner of a copyright may bring a claim against anyone who violates one of the "exclusive rights" protected by the Copyright Act. 17 U.S.C. § 501(a). The exclusive rights protected by the Copyright Act are as follows, subject to certain limitations set forth in other sections:

    (1) to reproduce the copyrighted work in copies or phonorecords;

    (2) to prepare derivative works based upon the copyrighted work;

    (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending;

    (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly;

    (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

    (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

    Id. § 106.

    [7] A claim of contributory copyright infringement arises against one who intentionally induces or encourages the direct infringement of another. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930, 125 S. Ct. 2764, 2776, 162 L. Ed. 2d 781 (2005). Although the Copyright Act does not expressly provide for any liability for infringement committed by another, "the[] doctrines of secondary liability emerged from common law principles and are well established in the law." Id. (citations omitted).

    [8] A claim of vicarious copyright infringement arises against one who "profit[s] from [another's] direct infringement while declining to exercise a right to stop or limit it." Id.

    [9] GSU's now-supplanted Regents' Guide to Understanding Copyright & Educational Fair Use dates from 1997. According to a GSU professor who testified at trial, under the Regents' Guide GSU professors were routinely allowed to post digital copies of excerpts consisting of up to 20 percent of a work without obtaining a license from the copyright holder. Doc. 403, at 88:9-15.

    [10] GSU's 2009 Policy was modeled on the copyright policy of Columbia University, which employs a similar approach, including use of a four-factor fair use checklist. Appellees' Br. at 9. The 2009 Policy is also similar to a policy jointly drafted in 2006 by Cornell University and the Association of American Publishers (the "AAP") for the use of materials in Cornell's electronic review system, after publishers represented by the AAP threatened to sue Cornell for copyright infringement. Brief of American Library Association, et al., as Amicus Curiae Supporting Defendants/Appellees at 3. Many other universities incorporate a fair use checklist as part of their copyright policy to assist instructors with making fair use determinations, including Duke University, Florida State University, University of Tennessee-Knoxville, and Louisiana State University. Brief of the Association of Southeastern Research Libraries as Amicus Curiae Supporting Defendants/Appellees at 9.

    [11] For example, the Fair Use Checklist provides that the "[n]onprofit [e]ducational" use of an excerpt favors a finding of fair use, whereas "[c]ommercial activity" weighs against a finding of fair use. Doc. 235-2, at 7. Use of a "[f]actual or nonfiction work" favors a finding of fair use, whereas use of a "[h]ighly creative work (art, music, novels, films, plays, poetry, fiction)" weighs against a finding of fair use. Id. at 8. Use of a "[s]mall portion" of a work favors a finding of fair use, whereas use of a "[l]arge portion or entire work" weighs against a finding of fair use. Id. A use that has "[n]o significant effect on [the] market or potential market for [the] copyrighted work" favors a finding of fair use, whereas a use that "[s]ignficantly impairs [the] market or potential market for [the] copyrighted work or [a] derivative" weighs against a finding of fair use. Id.

    [12] As the District Court's Ex parte Young analysis in the following paragraph illustrates, however, despite the District Court's preference for the word "indirect"—Plaintiffs' direct infringement claim survived Defendants' Motion to Dismiss.

    [13] The Classroom Guidelines are the result of independent meetings that took place prior to passage of the Copyright Act of 1976 between "representatives of the Ad Hoc Committee of Educational Institutions and Organizations on Copyright Law Revision, and of the Authors League of America, Inc., and the Association of American Publishers, Inc.," groups representing, respectively, educators, authors, and publishers. See H.R. Rep. No. 94-1476 at 67 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5680-81. These meetings took place at the urging of the Chairman and other members of the House Judiciary Subcommittee, "in an effort to achieve a meeting of the minds as to permissible educational uses of copyrighted material." Id., reprinted in 1976 U.S.C.C.A.N. 5659, 5680.

    In a letter dated March 8, 1976, the three groups delivered to Congress an "Agreement on Guidelines for Classroom Copying in Not-For-Profit Educational Institutions with Respect to Books and Periodicals," which came be known as the Classroom Guidelines. Id., reprinted in 1976 U.S.C.C.A.N. 5659, 5681. The Classroom Guidelines, which are reproduced in the legislative history of the 1976 Act, begin by stating that their "purpose . . . is to state the minimum and not the maximum standards of educational fair use under Section 107." Id. at 68, reprinted in 1976 U.S.C.C.A.N. 5659, 5681.

    Under the terms of the Classroom Guidelines, teachers may make individual copies of excerpts of certain works for use in teaching, research, and class preparation, and may make multiple copies of works for classroom use so long as the copying meets the conditions of "brevity," "spontaneity," and "cumulative effect." Id., reprinted in 1976 U.S.C.C.A.N. 5659, 5682. "Brevity" places strict word count limits on allowable copying, such as "an excerpt from any prose work of not more than 1,000 words or 10 percent of the work." Id. "Spontaneity" provides that "[t]he inspiration and decision to use the work and the moment of its use for maximum teaching effectiveness are so close in time that it would be unreasonable to expect a timely reply to a request for permission." Id. at 69, reprinted in 1976 U.S.C.C.A.N. 5659, 5682. "Cumulative effect" places caps on the total amount of copying permissible under the Classroom Guidelines. Id., reprinted in 1976 U.S.C.C.A.N. 5659, 5683. The Classroom Guidelines also contain other provisions, including prohibitions on charging students for copied materials beyond the cost of copying, copying that substitutes for the purchase of books and other publications, copying the same material in multiple terms, and copying that "substitute[s] for anthologies, compilations or collective works." Id. at 69-70, reprinted in 1976 U.S.C.C.A.N. 5659, 5683.

    "The [Classroom] [G]uidelines were designed to give teachers direction as to the extent of permissible copying and to eliminate some of the doubt which had previously existed in this area of the copyright laws. . . . [T]hey are not controlling on the court." Marcus v. Rowley, 695 F.2d 1171, 1178 (9th Cir. 1983).

    Whatever persuasive value the Classroom Guidelines may possess, we must keep in mind that they (1) were drafted by partisan groups, (2) "state the minimum and not the maximum standards of educational fair use under Section 107", and (3) adopt the type of "hard evidentiary presumption[s]" with regard which types of use may be fair that the Supreme Court has since repeatedly warned against. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 584, 114 S. Ct. 1164, 1174, 127 L. Ed. 2d 500 (1994). Indeed, the sentences immediately preceding the mechanistic "brevity," "spontaneity," and "cumulative effect" provisions illustrate the tentative nature of the groups' recommendations:

    The parties agree that the conditions determining the extent of permissible copying for educational purposes may change in the future; that certain types of copying permitted under these guidelines may not be permissible in the future; and conversely that in the future other types of copying not permitted under these guidelines may be permissible under revised guidelines. Moreover, the following statement of guidelines is not intended to limit the types of copying permitted under the standards of fair use under judicial decision and which are stated in Section 107 of the Copyright Revision Bill. There may be instances in which copying which does not fall within the guidelines stated below may nonetheless be permitted under the criteria of fair use.

    H.R. Rep. No. 94-1476 at 67 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5681.

    [14] The District Court assumed that the Academic Annual Copyright License referred to CCC's Academic Repertory License Service, a subscription service which allows access to excerpts from a set group of works.

    [15] Plaintiffs argue that the District Court's fair use analysis was legally deficient, but do not clarify whether they challenge the holding concerning only the forty-three claims for which the District Court found no infringement, or whether they instead challenge all forty-eight claims for which the District Court undertook a fair use analysis. Because we review the legal sufficiency of the overall manner in which the District Court undertook its fair use analysis, we will not limit our review to the forty-three claims for which the District Court found no infringement, but will consider all forty-eight.

    [16] Plaintiffs cite their first proposed injunction, filed May 11, 2011, modelled after the Classroom Guidelines. Appellants' Br. at 83 (citing Doc. 300-1.).

    [17] We note that "`the Eleventh Amendment defense sufficiently partakes of the nature of a jurisdictional bar' that it may be raised by the State for the first time on appeal," Patsy v. Bd. of Regents of State of Fla., 457 U.S. 496, 515 n.19, 102 S. Ct. 2557, 2567 n.19, 73 L. Ed. 2d 172 (1982) (quoting Edelman v. Jordan, 415 U.S. 651, 678, 94 S. Ct. 1347, 1363, 39 L. Ed. 2d 662 (1974)). However, Eleventh Amendment immunity is not jurisdictional in the sense that we must consider it sua sponte, or must consider an argument that it applies that was not properly presented. See id. (observing that "the State may, under certain circumstances, waive th[e] [Eleventh Amendment] defense").

    [18] While it may seem counterintuitive to students of contemporary copyright, in eighteenth-century usage "science" meant "the field of human knowledge," and "the useful arts" meant "technology and kindred knowhow." Thus, "science" refers to copyright while "useful arts" refers to patent. David L. Lange & Jefferson Powell, No Law: Intellectual Property in the Image of an Absolute First Amendment 36 (2009).

    [19] The Supreme Court tells us that the idea/expression dichotomy and the fair use doctrine, coupled together, present the most important limitation on copyright law. Eldred v. Ashcroft, 537 U.S. 186, 219-20, 123 S. Ct. 769, 788-89, 154 L. Ed. 2d 683 (2003) ("[C]opyright law contains built-in First Amendment accommodations. First, it distinguishes between ideas and expression and makes only the latter eligible for copyright protection. . . . As we said in Harper & Row, this idea/expression dichotomy strikes a definitional balance between the First Amendment and the Copyright Act by permitting free communication of facts while still protecting an author's expression. Due to this distinction, every idea, theory, and fact in a copyrighted work becomes instantly available for public exploitation at the moment of publication. Second, the fair use defense allows the public to use not only facts and ideas contained in a copyrighted work, but also expression itself in certain circumstances." (citations omitted) (quotation marks omitted)). The Court reaffirmed this position most recently in Golan v. Holder, ___ U.S. ___, 132. S. Ct. 873, 890-91, L. Ed. 2d 835 (2012) ("Given the speech-protective purposes and safeguards embraced by copyright law, we concluded in Eldred that there was no call for the heightened [First Amendment] review petitioners sought in that case. We reach the same conclusion here [because the challenged law] leaves undisturbed the idea/expression distinction and the fair use defense." (emphasis added) (footnotes omitted) (citations omitted) (quotation marks omitted)).

    [20] Fair use was originally a common law doctrine which Congress codified in the Copyright Act of 1976. See 17 U.S.C. § 107.

    [21] We understand "case-by-case" and "work-by-work" to be synonymous in cases where a copyright proprietor alleges numerous instances of copyright infringement and a secondary user claims that his or her use was fair. Courts must apply the fair use factors to each work at issue. Otherwise, courts would have no principled method of determining whether a nebulous cloud of alleged infringements purportedly caused by a secondary user should be excused by the defense of fair use. See supra pages 54-55.

    The Second Circuit's approach in Cariou v. Prince, 714 F.3d 694 (2d Cir. 2013) illustrates this point nicely. Cariou involved a relatively unknown photographer, Patrick Cariou; Richard Prince, a world famous appropriation artist; and the Gogosian Gallery in New York. Cariou spent six years taking photographic portraits of Rastafarians and landscape portraits of Jamaica. Cariou v. Prince, 784 F. Supp. 2d 337, 344 (S.D.N.Y. 2011). He then compiled these images into a book entitled Yes, Rasta. Id. Prince made a collage entitled Canal Zone out of 35 images from Cariou's Yes, Rasta collection, and ultimately completed a series of 30 Canal Zone paintings based on that collage. Id. at 343-45. Cariou sued Prince for copyright infringement. Id. at 353. Prince claimed each of his works constituted fair use. Id. The District Court evaluated each work individually and granted Cariou's motion for summary judgment. Id. at 355. The Second Circuit, however, held that 25 of Prince's Canal Zone paintings made fair use of Cariou's photographs and remanded the remaining five alleged instances of infringement to the District Court to consider each work more closely. Cariou, 714 F.3d at 708.

    [22] Amici point out that excerpts in an electronic reserve system—like the ones at GSU— could be used for a different function than the original. For example, a scholarly monograph may be meant for use in research rather than teaching, and so use of that monograph in the classroom is arguably transformative. See Brief of American Library Association, et al., as Amici Curiae Supporting Defendants/Appellees at 14. Or, a professor "might assign an excerpt on the history of the civil rights movement by an author from Alabama and a similar excerpt by an author from New York not for the original purpose of conveying `facts' about these events but rather for the different purpose of discussing possible writer bias in the differing accounts of the events." See Brief of the Association of Southeastern Research Libraries as Amicus Curiae Supporting Defendants/Appellees at 20.

    We need not rule on whether such uses could ever be transformative, because the question is not before us. The District Court found that the works at issue in this case are targeted for use, at least in part, in the university classroom. Cambridge Univ. Press, 863 F. Supp. 2d at 1211 n. 15. Because this finding is not clearly erroneous, we will not disturb it. Thus, Defendants' use of excerpts of Plaintiffs' works in university courses is for the same purpose—or one of the purposes, insofar as some of Plaintiffs' works may also be meant for other purposes—as Plaintiffs' original works, and we need not consider the alternative scenarios amici suggest. Furthermore, we note that even if an individual work may be more in the vein of a research piece, the overall purpose of the works in question is nevertheless educational.

    [23] This concern regarding the circularity of the analysis under the first factor as to "whether the user stands to profit from exploitation of the copyrighted material without paying the customary price" originates in an article written by the noted fair use scholar Judge Pierre Leval. See Pierre N. Leval, Nimmer Lecture: Fair Use Rescued, 44 UCLA L. Rev. 1449, 1460 (1997) (quoting Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562, 105 S. Ct. 2218, 2231, 85 L. Ed. 2d 588 (1985)).

    [24] Electronic reserve systems are not unique to GSU. As noted, "countless university libraries across the country" have such systems. Brief of the Association of Southeastern Research Libraries as Amicus Curiae Supporting Defendants/Appellees at 2. As such, the presence of such a system at GSU would hardly serve as a special draw to students or enhance GSU's reputation such as it might were it a unique advantage offered only at GSU.

    [25] Although we agree with the thrust of the Second Circuit's characterization of the commercial/nonprofit dichotomy, we note that its assertion that "courts will not sustain a claimed defense of fair use" for a secondary use that amounts to "commercial exploitation," Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 922 (2d Cir. 1994) (emphasis added), would be better stated without resort to categorical language; i.e., courts will be less likely to sustain the fair use defense for secondary uses that represent commercial exploitation. To categorically exclude "commercial exploitation" from the purview of the fair use defense is contrary to the Supreme Court's direction that courts not adopt "hard evidentiary presumption[s]" with regard which types of use may be fair use. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 584, 114 S. Ct. 1164, 1174, 127 L. Ed. 2d 500 (1994).

    [26] As noted, copyright protects expression, and not the underlying ideas a work contains. See, e.g., Suntrust Bank v. Houghton Mifflin Co., 268 F.3d 1257, 1263 (11th Cir. 2001). However, "the mere fact that the copied portions are themselves copyrightable cannot incline [the second] factor against fair use." 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.05[A][2][a] (2014). "[A] work will always be found `original' for copyrightability purposes before the fair use analysis is applied. The second statutory fair use factor . . . refers to the `nature' of the work beyond this initial inquiry." Compaq Computer Corp. v. Ergonome Inc., 387 F.3d 403, 410 (5th Cir. 2004) (holding that the second factor favored fair use because the work in question was factual despite the district court's finding "at summary judgment that portions of [the work] were sufficiently original to warrant a copyrightability finding"), cert. denied, 544 U.S. 962, 125 S. Ct. 1742, 161 L. Ed. 2d 604 (2005).

    [27] As the District Court noted, the court in Princeton University Press appears to have been influenced by the defendants' concession that the coursepacks contained creative material, and the parties there may have "confused an element of the prima facie case"—the threshold level of originality—with the second factor analysis. Cambridge Univ. Press, 863 F. Supp. 2d at 1227.

    [28] For example, the District Court found that one of Plaintiffs' works in question, The Organ as a Mirror of its Time: North European Reflections 1610-2000, "is a non-fiction work that discuss[es] various organs in Northern Europe over the past four centuries. The focus is on what organs reveal about the time in which they were built." Cambridge Univ. Press, 863 F. Supp. 2d at 1301. A GSU professor caused pages 78-91 of the book, representing one chapter entitled "The Organ in Seventeenth-Century Cosmology," to be placed on ERes. Id. at 1300. The District Court held that "[t]he chapters are factual in nature." Id. at 1301. However, if the chapter in question reflects the focus of the book, "what organs reveal about the time in which they were built," id., then this type of creative analysis certainly goes beyond a mere compilation of facts regarding organs and represents the author's individualized, subjective expression.

    [29] The second factor is of comparatively little weight in this case, particularly because the works at issue are neither fictional nor unpublished. As to unpublished works, the Supreme Court discussed the circumstances under which authors have the right to decide when to reveal their work to the public in Harper & Row. As stated above, none of the works at issue in this case were unpublished; therefore we need not consider that matter further.

    As to the fictional nature of a work however, the ground between the "paradigmatic example of a creative work" and the "bare factual compilation" is treacherous. This is so because courts who tread upon it must parse the pernicious idea/expression dichotomy to determine just how expressive a work is. Though, as mentioned supra note 25, the second statutory fair use factor refers to the nature of the work beyond the initial copyrightability inquiry, copyrightability cases illustrate the difficulty one encounters when attempting to separate idea from expression.

    For example, Judge Learned hand once wrote in a copyright case involving a movie that was allegedly based on a play: "Upon any work . . . a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out. . . . [T]here is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his ideas, to which, apart from their expression, his property is never extended. Nobody has ever been able to fix that boundary, and nobody ever can." Nichols v. Universal Pictures, Corp., 45 F.2d 119, 121 (2d Cir. 1930) (emphasis added); see also Bleistein v. Donaldson Lithographic Co., 188 U.S. 239, 251 (1903) (Holmes, J.) ("It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations, outside the narrowest and most obvious of limits."); Mannion v. Coors Brewing Co., 377 F. Supp. 2d. 444, 459 (S.D.N.Y. 2005) (noting "little is gained from attempting to distinguish an unprotectable idea from its protectable expression in a photograph or [any] other work of visual art"); Rebecca Tushnet, Worth a Thousand Words: The Image of Copyright, 125 Harv. L. Rev. 683, 702 (2012) ("The very excessive, worth-a-thousand-words quality of pictures may make them too unstable for courts accustomed to looking for meaning in words. With texts, by contrast, courts often feel more in control: courts have many standardized tools to interpret text, not least of all the rules of statutory and contractual construction. Those rules might be, in fact, indeterminate and manipulable, but they feel predictable and rational. For example, Judge Learned Hand's classic explanation of copyright's idea/expression dichotomy [in Nichols] acknowledged that the distinction between the two is inherently arbitrary, but he was nonetheless perfectly comfortable applying it to written texts such as plays and screenplays.").

    [30] For example, the Classroom Guidelines' "brevity" requirement allows copying of "an excerpt from any prose work of not more than 1,000 words or 10 percent of the work." See supra note 12. Plaintiffs point out that the District Court consistently found Defendants' copying far in excess of 1,000 words to be fair use.

    [31] There are ample precedents that explain that excessive verbatim copying weighs against fair use under factor three. See, e.g., Marcus v. Rowley, 695 F.2d 1171, 1176 (9th Cir. 1983) ("[W]holesale copying of copyrighted material precludes application of the fair use doctrine."); Walt Disney Prods. v. Air Pirates, 581 F.2d 751 (9th Cir. 1978) ("Excessive copying precludes fair use . . . ."); Rosemont Enters., Inc. v. Random House, Inc., 366 F.2d 303, 310 (2d Cir. 1966) ("The fair use privilege is based on the concept of reasonableness and extensive verbatim copying or paraphrasing of material set down by another cannot satisfy that standard."); Wihtol v. Crow, 309 F.2d 77, 780 (8th Cir. 1962) ("[I]t is not conceivable to us that the copying of all, or substantially all, of a copyrighted song can be a `fair use' merely because the infringer had no intent to infringe."). Judge Chin, however, in Authors Guild, Inc. v. Google, Inc., 954 F. Supp. 2d 282, 292 (S.D.N.Y. 2014) explained the broad contours of the third fair use factor well when he wrote: "[On the one hand] Google scans the full text of books—the entire books—and it copies verbatim expression. On the other hand, courts have held that copying the entirety of a work may still be fair use. See, e.g., Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 449-50, 104 S. Ct. 774, 78 L. Ed. 2d 574 (1984); Bill Graham Archives, 448 F.3d at 613 ("[C]opying the entirety of a work is sometimes necessary to make a fair use of the image[.]")."

    [32] At one point, the Supreme Court described the fourth factor as "the single most important element of fair use," Harper & Row, 471 U.S. at 566, 105 S. Ct. at 2233. However, in Campbell, the Supreme Court stated that the fair use analysis "is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis. . . . Nor may the four statutory factors be treated in isolation, one from another. All are to be explored, and the results weighed together, in light of the purposes of copyright." 510 U.S. 569, 577-78, 114 S. Ct. 1164, 1170-71, 127 L. Ed. 2d 500 (1994). This language appears to be inconsistent with any single factor being deemed the single most important. In its discussion of the fourth factor in Campbell, the Supreme Court conspicuously did not single it out as having any greater significance than the others. 510 U.S. at 590-94, 114 S. Ct. at 1177-79. Many courts and commentators, following Campbell, have determined that the fourth factor should not be given primacy. E.g., Texaco, 60 F.3d at 926; William F. Patry, Patry on Fair Use 450-56 (2011).

    Nevertheless, because Defendants' use of Plaintiffs' works is nontransformative and hence the threat of market substitution is severe, it is appropriate in this instance to afford relatively great weight to the fourth factor in the overall fair use analysis.

    [33] Of course, it need not always be true that a publisher's decision not to make a work available for digital permissions conclusively establishes that the publisher envisioned little or no demand, and that the value of the permissions market is zero. After all, a number of other factors might influence a publisher's distribution decision: the publisher may not yet have figured out how to sell work in a different medium, or it might want to restrict circulation in one medium to promote another.

    [34] Plaintiffs argue that the District Court improperly focused on the availability of digital licenses in 2009. Such availability, Plaintiffs point out, is irrelevant because Plaintiffs seek only prospective injunctive relief, and the status of licensing in 2009 has no bearing on the question of whether GSU's copyright policy going forward should require an investigation of whether a license is available.

    However, the fair use analysis must be performed on a work-by-work basis. Campbell, 510 U.S. at 577, 114 S. Ct. at 1170. As such, the District Court had to examine specific instances of infringement in order to determine whether prospective relief was warranted, and what shape that relief should take. In deciding those individual cases, the availability of licensing at the time of an alleged infringement—not at some undefined time in the future—is the relevant evidence.

    Plaintiffs also complain that they were not notified at trial that they were required to show license availability for 2009 in particular. However, Plaintiffs were aware that the trial was to be conducted on the basis of the individual instances of purported infringement taking place in 2009 that were enumerated in the March 15, 2011, joint document. Thus, Plaintiffs were—or should have been—aware that the relevant evidentiary question was whether a market existed at the time of the purported infringements.

    [35] We note that placing the burden of going forward with the evidence regarding license availability on Plaintiffs does not create a proscribed "hard evidentiary presumption" regarding categories of use that are fair use against. See Campbell, 510 U.S. at 584, 114 S. Ct. at 1174. Placing this burden on Plaintiffs creates no presumption about whether a given instance of copying will be fair use. This approach merely recognizes that this is a case wherein one party has all the evidence on a particular issue, and so it is equitable to require that party to go forward with the evidence.

    [36] Plaintiffs did not put on evidence demonstrating that large numbers of universities other than GSU were making unpaid use in electronic reserves of the works that are the subject of this case. Nevertheless, the District Court did not need such evidence in order to properly find that widespread conduct of the type engaged in by GSU would cause substantial harm to the market for Plaintiffs' works because the Copyright Act directs us to consider the effect on the potential market. See § 107(4).

    We note that Plaintiffs could have framed their case differently by putting on evidence of copying at other universities in order to show the negative impact a finding of fair use would have on the existing market for the works in question. Because this is not the case before us, however, we need not speculate as to its outcome

    [37] Defendants argue that the District Court should have gone further and shifted the ultimate burden of persuasion on market harm to Plaintiffs. Defendants argue that support for this position may be found in Sony, in which the Supreme Court placed the burden on the holders of copyrights on television programs to demonstrate that noncommercial recording by home users of Sony's videotape recorders likely caused nonmiminal harm to the market for their works. 464 U.S. at 451, 104 S. Ct. at 793. Defendants contend that Sony created a rule that the overall burden of proof on the fourth factor is reversed in cases of noncommercial use, and argue that other courts have interpreted Sony in this manner. See Princeton Univ. Press, 99 F.3d at 1385-86 ("The burden of proof as to market effect rests with the copyright holder if the challenged use is of a `noncommercial' nature. The alleged infringer has the burden, on the other hand, if the challenged use is `commercial' in nature.").

    We are not convinced that Sony stands for such a proposition. The portion of Sony Defendants cite discusses a presumption that commercial uses are not fair use and noncommercial uses are fair use. See Sony, 464 U.S. at 449-51, 104 S. Ct. at 792-93. The Supreme Court has since clarified that such presumptions have no place in the fair use analysis. See Campbell, 510 U.S. at 584, 114 S. Ct. at 1174. Campbell's treatment of Sony suggests that Sony's discussion of presumptions and burdens is better viewed as a discourse on the common sense inferences that may be drawn regarding the threat of market substitution in cases of nontransformative use (although at the time of Sony the Court had not yet adopted that term).

    Furthermore, in Campbell, the Supreme Court stated unequivocally that "[s]ince fair use is an affirmative defense, its proponent would have difficulty carrying the burden of demonstrating fair use without favorable evidence about relevant markets." 510 U.S. at 590, 114 S. Ct. at 1177 (footnotes omitted). Defendants contend that the Campbell court was dealing with commercial use and did not disapprove Sony's shifting of the burden in noncommercial cases. However, we find that the Court's unqualified statement that fair use is an affirmative defense in its discussion of the fourth factor indicates that the Court did not intend for the overall burden of proof to be reversed.

    [38] The seventeen works for which Plaintiffs failed to provide evidence of digital license availability were published by Oxford and Cambridge. Thus, evidence concerning Sage is nor relevant to the question of whether the District Court erred in finding that no license was available for those works.

    [39] As will be seen, my disagreement with the majority opinion is limited to its fair use analysis. Since I agree with the majority with respect to vacating the injunction, declaratory relief, and attorney fee award, I will not separately address those subjects here.

    [40] The statutory factors are not exhaustive, and there is an unlimited universe of possible things to consider, which automatically makes it improper to apply the factors — as the District Court did — in a straight arithmetic manner. See Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L. Rev. 1105, 1110 (1990) ("The factors do not represent a score card that promises victory to the winner of the majority.").

    [41] The majority notes that, during the Spring 2009 term, paper coursepacks were offered for about fifteen courses, compared to hundreds of courses that utilized the digital coursepacks. Plaintiffs contend on appeal that the District Court erred by performing a work-by-work analysis which focused on each individual work rather than analyzing fair use in the context of this broad ongoing practice at GSU. The majority opinion rejects this argument, concluding that "[c]ourts must apply the fair use factors to each work at issue. Otherwise, courts would have no principled method of determining whether a nebulous cloud of alleged infringements purportedly caused by a secondary user should be excused by the defense of fair use." See Maj. Op. at 52-55 & n.20. If we were writing on a blank slate in the normal case, I would agree that the court should focus on the details. But, we are not writing on a blank slate in a normal case. This is a unique (but much easier) case as it is undisputed that GSU had always paid permissions fees to use the copyrighted works in paper form, but it refused to do so when it used the same or similar copyrighted work in digital form. The fact that GSU previously paid the permissions fees is strong, if not conclusive, evidence that the underlying use at issue was not "fair use;" indeed, it is practically an admission that it was not. Thus, in my view, there is no "nebulous cloud" surrounding what happened here that would otherwise require a work-by-work analysis. Rather, it seems clear that the challenged use (replacing paper coursepacks comprised of licensed copyrighted works with digital versions comprised of unlicensed works) is an aggregated one that should be viewed in the "big picture." I believe the District Court's work-by-work methodology — on the facts of this specific case — was an unnecessary undertaking and serious error which led that court astray.

    [42] The only cost associated with the digital coursepacks was apparently incurred when the materials were printed out. As Palmour testified:

    Q. And so if the professor opts to use a coursepack, a printed coursepack, they have to pay permission fees under your system?

    A. Yes.

    Q. And if they put the same material on EReserves, it's just the printing cost, is that right?

    A. Yes.

    Palmour Dep. at 135 (emphasis added).

    [43] To illustrate, Palmour testified about an instructor who had recently wanted to use four chapters from a psychology textbook for her paper coursepack. When she found out how much the publisher intended to charge (25 cents per page), the instructor just reduced the amount that she wanted to copy to get it under 20% of the whole book (per the Regents' Guide as described by the majority) and then put it on EReserves, thereby avoiding paying any copyright fee.

    [44] I recognize that digital permissions (or licenses) were not offered for all of Plaintiffs' works. Nevertheless, the mere fact that a license may have been available in paper form but not in digital form — perhaps for market reasons — should not mean that users only have to pay for the first but have carte blanche under fair use for the second. The underlying use is the same in both cases. So, if a license was only available for a work in paper form, GSU could presumably pay for it (as it always had), or participate in the Academic Repertory License Service (which it did not), and "make the desired number of photocopies or scan and place the electronic excerpt online." Cf. Cambridge Univ. Press v. Becker, 863 F. Supp. 2d 1190, 1212-15 (N.D. Ga. 2012) (describing how permission services offered by the Copyright Clearance Center (CCC) function in the context of licensing works for use by universities and other educational institutions).

    [45] Although the Coursepack Cases involved copying by commercial print shops for a non-profit university and not, as here, copying by a non-profit university, as I have already indicated, and as the majority also notes, see Maj. Op. at 67, fair use analysis should focus primarily on the use, not on the user. The use at issue in this case and in the Coursepack Cases (specifically, non-transformative, extensive, and verbatim copying of copyrighted protected works for the inclusion in university "coursepacks" — a commercial substitution) and the effect on the market for those protected works is exactly the same.

    [46] As one of the amici notes: "To say that the court's `analysis' of the first fair use factor was cursory is an understatement. The court looked no further than the nonprofit status of GSU and the fact that teaching was involved to find that `the first fair use factor favors Defendants.'. . . A determination that copies of protected works are being made by a nonprofit entity for use in education should be the beginning, not the end, of the discussion." Brief of Marybeth Peters, Ralph Oman and Jon Baumgarten as Amici Curiae in Support of the Appellants Recommending Reversal at 8.

    [47] The Supreme Court said almost thirty years ago that "[t]he crux of the profit/non-profit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying the customary price." See Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562, 105 S. Ct. 2218, 2231, 85 L. Ed. 2d 588 (1985). Defendants obviously "stand to profit" from exploiting the copyrighted works at issue here, if nothing else by virtue of the fact that GSU is no longer paying the fees that it previously deemed appropriate. As a result, GSU students no longer have to pay for classroom materials and books in digital form that they (through tuition and/or other fees) used to pay for in paper form. See note 5 supra. Buying and selling books or other textual material is clearly a commercial endeavor (even in a university setting), and the substitution of digital texts for paper texts does not change that commercial aspect. In any event, even if GSU did not "stand to profit" from the use at issue, as will be seen, the Supreme Court has emphasized that the most pertinent inquiry under the first factor is not profit vs. non-profit (or educational vs. non-educational), but, rather, transformative vs. non-transformative.

    [48] To say, as the District Court impliedly did, that a work of fiction is deserving of more copyright protection than a work of non-fiction, without regard for the originality and value of the works involved, would suggest (for example) that a pulp fiction novel should be entitled to more protection than Darwin's The Origin of Species, which would, of course, be absurd.

    [49] Both the District Court and the majority have noted that the Coursepack Cases reached opposite conclusions on factor two. In Princeton University Press, the Sixth Circuit held (albeit apparently based on stipulation and with little discussion) that the second factor weighed against fair use as the factual, non-fictional, and scholarly works in that case "contained creative material or `expression'" and were "certainly not telephone book listings . . . ." 99 F.3d at 1389. In Basic Books, by contrast, the District Court stated as a "general rule of thumb" that non-fictional works were deserving of less protection than fictional works for purposes of the second factor. 758 F. Supp. at 1532-33. I agree with the conclusion reached by the Sixth Circuit.

    [50] But, I also believe, unlike the majority, that the District Court erred in its treatment of edited compilations and its calculations and methodology in measuring the amount taken by the Defendants.

    [51] Plaintiffs argue in their brief, and I could not agree more, that:

    In dismissing the Guidelines as irrelevant, the district court noted that they are `so restrictive that no book chapters in this case . . . would qualify for fair use." But unless the object of the fair-use exercise is to validate GSU's ongoing practices (which it is not), rather than to require that those practices comply with the quantitative (and other) limits Congress had in mind when it adopted section 107, the district court's reasoning cannot stand.

    [52] The market for certain of the works at issue may be quite small (and thus the copyright holders may have made a decision to not market the work in a digital form), but the material can be reproduced digitally, see note 6 supra, and the copyright still must be respected and protected.

  • 4 Authors Guild, Inc. v. HathiTrust

    755 F.3d 87 (2014)

    AUTHORS GUILD, INC., AUSTRALIAN SOCIETY OF AUTHORS LIMITED, UNION DES ECRIVAINES ET DES ECRIVAINS QUEBECOIS, ANGELO LOUKAKIS, ROXANA ROBINSON, ANDRE ROY, JAMES SHAPIRO, DANIELE SIMPSON, T.J. STILES, FAY WELDON, AUTHORS LEAGUE FUND, INC., AUTHORS' LICENSING AND COLLECTING SOCIETY, SVERIGES FORFATTARFORBUND, NORSK FAGLITTERAER FORFATTER-OG OVERSETTERFORENING, WRITERS' UNION OF CANADA, PAT CUMMINGS, ERIK GRUNDSTROM, HELGE RONNING, JACK R. SALAMANCA, Plaintiffs-Appellants,
    v.
    HATHITRUST, CORNELL UNIVERSITY, MARY SUE COLEMAN, President, University of Michigan, JANET NAPOLITANO, President, University of California, RAYMOND W. CROSS, President, University of Wisconsin System, MICHAEL MCROBBIE, President, Indiana University, Defendants-Appellees,[1]
    NATIONAL FEDERATION OF 1 THE BLIND, GEORGINA KLEEGE, BLAIR SEIDLITZ, COURTNEY WHEELER, ELLEN HOLLOMAN, Intervenor Defendants-Appellees.[2]

    No. 12-4547-cv.

    United States Court of Appeals, Second Circuit.

    Argued: October 30, 2013.
    Decided: June 10, 2014.

    EDWARD H. ROSENTHAL (Jeremy S. Goldman, Anna Kadyshevich, on the brief), Frankfurt Kurnit Klein & Selz, P.C., New York, NY, for Plaintiffs-Appellants.

    JOSEPH PETERSEN (Robert Potter, Joseph Beck, Andrew Pequignot, Allison Scott Roach, on the brief), Kilpatrick Townsend & Stockton LLP, New York, NY, for Defendants-Appellees.

    DANIEL F. GOLDSTEIN (Jessica P. Weber, on the brief), Brown Goldstein & Levy, LLP, Baltimore, MD; Robert J. Bernstein, New York, NY, on the brief; Peter Jaszi, Chevy Chase, MD, on the brief, for Intervenor Defendants-Appellees.

    Jennifer M. Urban, Pamela Samuelson, David Hansen, Samuelson Law, Technology & Public Policy Clinic, University of California, Berkeley, School of Law, Berkeley, CA, for Amici Curiae 133 Academic Authors.

    Blake E. Reid, Brian Wolfman, Institute for Public Representation, Georgetown University Law Center, Washington, DC, for Amicus Curiae American Association of People with Disabilities.

    Jonathan Band, Jonathan Band PLLC, Washington, DC, for Amicus Curiae American Library Association.

    David Leichtman, Hillel I. Parness, Shane D. St. Hill, Robins, Kaplan, Miller & Ciresi L.L.P., New York, NY, for Amicus Curiae American Society of Journalists and Authors, Inc.

    Brian G. Joseph, Karyn K. Ablin, Wiley Rein LLP; Ada Meloy, General Counsel, American Council on Education, Washington, DC, for Amici Curiae American Council on Education, Association of American Universities, et al.

    Elizabeth A. McNamara, Alison B. Schary, Colin J. Peng-Sue, Davis Wright Tremaine LLP, New York, NY, for Amicus Curiae the Associated Press.

    Mary E. Rasenberger, Nancy E. Wolff, Eleanor M. Lackman, Nicholas J. Tardif, Cowan DeBaets, Abrahams & Sheppard LLP, New York, NY, for Amicus Curiae Association of American Publishers.

    Jo Anne Simon, Mary J. Goodwin, Amy F. Robertson, Jo Anne Simon, P.C., Brooklyn, NY, for Amici Curiae Association on Higher Education and Disability, Marilyn J. Bartlett, et al.

    Brandon Butler, Washington, DC, for Amici Curiae Beneficent Technolology, Inc., and Learning Ally, Inc.

    Susan M. Kornfield, Bodman PLC, Ann Arbor, MI, for Amici Curiae Board of Trustees of the University of Illinois, Board of Trustees of Michigan State University, et al.

    Jason Schultz, Berkeley, CA; Matthew Sag, Chicago, IL, for Amici Curiae Digital Humanities and Law Scholars.

    Michael Waterstone, Los Angeles, CA; Robert Dinerstein, Washington, DC; Christopher H. Knauf, Knauf Associates, Santa Monica, CA; Michael Stein, Cambridge, MA, for Amici Curiae Disability Law Professors.

    Roderick M. Thompson, Stephanie P. Skaff, Deepak Gupta, Rochelle L. Woods, Farella Braun + Martel LLP, San Francisco, CA; Corynne McSherry, Daniel Nazer, Electronic Frontier Foundation, San Francisco, CA; John Bergmayer, Public Knowledge, Washington, DC; David Sohn, Center for Democracy & Technology, Washington, DC, for Amicus Curiae Electronic Frontier Foundation.

    Stephen M. Schaetzel, Meunier Carlin & Curfman, LLC, Atlanta, GA, for Amicus Curiae Emory Vaccine Center.

    Frederick A. Brodie, Pillsbury Winthrop Shaw Pittman LLP, New York, NY, for Amicus Curiae the Leland Stanford Junior University.

    Eric J. Grannis, The Law Offices of Eric J. Grannis, New York, NY, for Amici Curiae Medical Historians.

    Steven B. Fabrizio, Kenneth L. Doroshow, Steven R. Englund, Jenner & Block LLP, Washington, DC, for Amicus Curiae Motion Picture Association of America, Inc.

    Before: WALKER, CABRANES, and PARKER, Circuit Judges.

    BARRINGTON D. PARKER, Circuit Judge.

    Beginning in 2004, several research universities including the University of Michigan, the University of California at Berkeley, Cornell University, and the University of Indiana agreed to allow Google to electronically scan the books in their collections. In October 2008, thirteen universities announced plans to create a repository for the digital copies and founded an organization called HathiTrust to set up and operate the HathiTrust Digital Library (or "HDL"). Colleges, universities, and other nonprofit institutions became members of HathiTrust and made the books in their collections available for inclusion in the HDL. HathiTrust currently has 80 member institutions and the HDL contains digital copies of more than ten million works, published over many centuries, written in a multitude of languages, covering almost every subject imaginable. This appeal requires us to decide whether the HDL's use of copyrighted material is protected against a claim of copyright infringement under the doctrine of fair use. See 18 U.S.C. § 107.

    BACKGROUND
    A. The HathiTrust Digital Library

    HathiTrust permits three uses of the copyrighted works in the HDL repository. First, HathiTrust allows the general public to search for particular terms across all digital copies in the repository. Unless the copyright holder authorizes broader use, the search results show only the page numbers on which the search term is found within the work and the number of times the term appears on each page. The HDL does not display to the user any text from the underlying copyrighted work (either in "snippet" form or otherwise). Consequently, the user is not able to view either the page on which the term appears or any other portion of the book.

    Below is an example of the results a user might see after running an HDL full-text search:

    [Image Omitted]

    J.A. 681 ¶ 80 (Wilkin Decl.).

    Second, the HDL allows member libraries to provide patrons with certified print disabilities access to the full text of copyrighted works. A "print disability" is any disability that prevents a person from effectively reading printed material. Blindness is one example, but print disabilities also include those that prevent a person from physically holding a book or turning pages. To use this service, a patron must obtain certification of his disability from a qualified expert. Through the HDL, a print-disabled user can obtain access to the contents of works in the digital library using adaptive technologies such as software that converts the text into spoken words, or that magnifies the text. Currently, the University of Michigan's library is the only HDL member that permits such access, although other member libraries intend to provide it in the future.

    Third, by preserving the copyrighted books in digital form, the HDL permits members to create a replacement copy of the work, if the member already owned an original copy, the member's original copy is lost, destroyed, or stolen, and a replacement copy is unobtainable at a "fair" price elsewhere.

    The HDL stores digital copies of the works in four different locations. One copy is stored on its primary server in Michigan, one on its secondary server in Indiana, and two on separate backup tapes at the University of Michigan.[3] Each copy contains the full text of the work, in a machine readable format, as well as the images of each page in the work as they appear in the print version.

    B. The Orphan Works Project

    Separate and apart from the HDL, in May 2011, the University of Michigan developed a project known as the Orphan Works Project (or "OWP"). An "orphan work" is an out-of-print work that is still in copyright, but whose copyright holder cannot be readily identified or located. See U.S. Copyright Office, Notice of Inquiry, Orphan Works and Mass Digitization, 77 Fed. Reg. 64555 (Oct. 22, 2012).

    The University of Michigan conceived of the OWP in two stages: First, the project would attempt to identify out-of-print works, try to find their copyright holders, and, if no copyright holder could be found, publish a list of orphan works candidates to enable the copyright holders to come forward or be otherwise located. If no copyright holder came forward, the work was to be designated as an orphan work. Second, those works identified as orphan works would be made accessible in digital format to the OWP's library patrons (with simultaneous viewers limited to the number of hard copies owned by the library).

    The University evidently became concerned that its screening process was not adequately distinguishing between orphan works (which were to be included in the OWP) and in-print works (which were not). As a result, before the OWP was brought online, but after the complaint was filed in this case, the University indefinitely suspended the project. No copyrighted work has been distributed or displayed through the project and it remains suspended as of this writing.

    C. Proceedings in the District Court

    This case began when twenty authors and authors' associations (collectively, the "Authors") sued HathiTrust, one of its member universities, and the presidents of four other member universities (collectively, the "Libraries") for copyright infringement seeking declaratory and injunctive relief. The National Federation of the Blind and three print-disabled students (the "Intervenors") were permitted to intervene to defend their ability to continue using the HDL.

    The Libraries initially moved for partial judgment on the pleadings on the ground that the authors' associations lacked standing to assert claims on behalf of their members and that the claims related to the OWP were not ripe. See Fed. R. Civ. P. 12(c). The Libraries then moved for summary judgment on the remaining claims on the ground that their uses of copyrighted material were protected by the doctrine of fair use, see 17 U.S.C. § 107, and also by the Chafee Amendment, see id. § 121. The Intervenors moved for summary judgment on substantially the same grounds as the Libraries and, finally, the Authors cross-moved for summary judgment.

    D. The District Court's Opinion

    The district court granted the Libraries' and Intervenors' motions for summary judgment on the infringement claims on the basis that the three uses permitted by the HDL were fair uses. In this assessment, the district court gave considerable weight to what it found to be the "transformative" nature of the three uses and to what it described as the HDL's "invaluable" contribution to the advancement of knowledge, Authors Guild, Inc. v. HathiTrust, 902 F. Supp. 2d 445, 460-64 (S.D.N.Y. 2012). The district court explained:

    Although I recognize that the facts here may on some levels be without precedent, I am convinced that they fall safely within the protection of fair use such that there is no genuine issue of material fact. I cannot imagine a definition of fair use that would not encompass the transformative uses made by [the HDL] and would require that I terminate this invaluable contribution to the progress of science and cultivation of the arts that at the same time effectuates the ideals espoused by the [Americans With Disabilities Act of 1990, Pub. L. No. 101-336, 104 Stat. 327 (codified as amended at 42 U.S.C. §§ 12101, et seq.)].

    Id. at 464.

    Next, the district court addressed the Libraries' Chafee Amendment defense. Under the Amendment, "authorized entities" are permitted to reproduce or distribute copies of a previously published, nondramatic literary work in specialized formats exclusively for use by the blind or other persons with disabilities. See 17 U.S.C. § 121; HathiTrust, 902 F. Supp. 2d at 465. Under § 121, an "`authorized entity' means a nonprofit organization or a governmental agency that has a primary mission to provide specialized services relating to training, education, or adaptive reading or information access needs of blind or other persons with disabilities." 17 U.S.C. § 121(d)(1).

    The district court stated that the ADA requires that libraries of educational institutions, such as the Libraries in this case, "have a primary mission to reproduce and distribute their collections to print-disabled individuals," which, according to Judge Baer, made "each library a potential `authorized entity' under the Chafee Amendment." HathiTrust, 902 F. Supp. 2d at 465. As a result, the district court concluded that "[t]he provision of access to previously published non-dramatic literary works within the HDL fits squarely within the Chafee Amendment, although Defendants may certainly rely on fair use . . . to justify copies made outside of these categories or in the event that they are not authorized entities." Id.

    The district court held that certain associational plaintiffs lacked standing under the Copyright Act and dismissed them from the suit. Id. at 450-55. The district court also held that the OWP claims were unripe for judicial review in the absence of crucial information about what the program would look like and whom it would affect should it be implemented, and because the Authors would suffer no hardship by deferring litigation until such time as the Libraries released the details of a new OWP and a revised list of orphan work candidates. Id. at 455-56. The court entered judgment against the Authors, and this appeal followed.

    DISCUSSION

    We review de novo under well-established standards the district court's decisions granting summary judgment and judgment on the pleadings. See Maraschiello v. City of Buffalo Police Dep't, 709 F.3d 87, 92 (2d Cir. 2013) (summary judgment); LaFaro v. N.Y. Cardiothoracic Grp., PLLC, 570 F. 3d 471, 475 (2d Cir. 2009) (judgment on the pleadings).

    As a threshold matter, we consider whether the authors' associations have standing to assert infringement claims on behalf of their members.

    Three of these authors' associations—Authors Guild, Inc., Australian Society of Authors Limited, and Writers' Union of Canada—claim to have standing, solely as a matter of U.S. law, to seek an injunction for copyright infringement on their members' behalf. But, as we have previously explained, § 501 of "the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf." ABKCO Music, Inc. v. Harrisongs Music, Ltd., 944 F.2d 971, 980 (2d Cir. 1991); see also Itar-Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 92 (2d Cir. 1998) ("United States law permits suit only by owners of `an exclusive right under a copyright' . . . ." (quoting 17 U.S.C. § 501(b))). Accordingly, we agree with the district court that these associations lack standing to bring suit on behalf of their members, and they were properly dismissed from the suit.

    The remaining four authors' associations—Union des Écrivaines et des Écrivains Québécois, Authors' Licensing and Collecting Society, Sveriges Författarförbund, and Norsk faglitterær forfattero og oversetterforening—assert that foreign law confers upon them certain exclusive rights to enforce the copyrights of their foreign members (an assertion that the Libraries do not contest on this appeal). These four associations do have standing to bring suit on behalf of their members. See Itar-Tass, 153 F.3d at 93-94 (recognizing that an association authorized by foreign law to administer its foreign members' copyrights has standing to seek injunctive relief on behalf of those members in U.S. court).

    I. Fair Use[4]
    A

    As the Supreme Court has explained, the overriding purpose of copyright is "`[t]o promote the Progress of Science and useful Arts. . . .'" Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 574 (1994) (quoting U.S. CONST. art. I, § 8, cl. 8); see also Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975). This goal has animated copyright law in Anglo-American history, beginning with the first copyright statute, the Statute of Anne of 1709, which declared itself to be "[a]n Act for the Encouragement of Learning, by Vesting the Copies of Printed Books in the Authors . . . during the Times therein mentioned." Act for the Encouragement of Learning, 8 Anne, ch. 19. In short, our law recognizes that copyright is "not an inevitable, divine, or natural right that confers on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public." Pierre N. Leval, Toward a Fair Use Standard, 103 HARV. L. REV. 1105, 1107 (1990).

    The Copyright Act furthers this core purpose by granting authors a limited monopoly over (and thus the opportunity to profit from) the dissemination of their original works of authorship. See 17 U.S.C. §§ 102, 106, 302-305. The Copyright Act confers upon authors certain enumerated exclusive rights over their works during the term of the copyright, including the rights to reproduce the copyrighted work and to distribute those copies to the public. Id. § 106(1), (3). The Act also gives authors the exclusive right to prepare certain new works—called "derivative works"—that are based upon the copyrighted work. Id. § 106(2). Paradigmatic examples of derivative works include the translation of a novel into another language, the adaptation of a novel into a movie or a play, or the recasting of a novel as an e-book or an audiobook. See id. § 101. As a general rule, for works created after January 1, 1978, copyright protection lasts for the life of the author plus an additional 70 years. Id. § 302.

    At the same time, there are important limits to an author's rights to control original and derivative works. One such limit is the doctrine of "fair use," which allows the public to draw upon copyrighted materials without the permission of the copyright holder in certain circumstances. See id. § 107 ("[T]he fair use of a copyrighted work . . . is not an infringement of copyright."). "From the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright's very purpose, `[t]o promote the Progress of Science and useful Arts. . . .'" Campbell, 510 U.S. at 574.

    Under the fair-use doctrine, a book reviewer may, for example, quote from an original work in order to illustrate a point and substantiate criticisms, see Folsom v. Marsh, 9 F. Cas. 342, 344 (C.C.D. Mass. 1841) (No. 4901), and a biographer may quote from unpublished journals and letters for similar purposes, see Wright v. Warner Books, Inc., 953 F.2d 731 (2d Cir. 1991). An artist may employ copyrighted photographs in a new work that uses a fundamentally different artistic approach, aesthetic, and character from the original. See Cariou v. Prince, 714 F.3d 694, 706 (2d Cir. 2013). An internet search engine can display low-resolution versions of copyrighted images in order to direct the user to the website where the original could be found. See Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007); Kelly v. Arriba Soft Corp., 336 F.3d 811, 818-22 (9th Cir. 2002). A newspaper can publish a copyrighted photograph (taken for a modeling portfolio) in order to inform and entertain the newspaper's readership about a news story. See Nunez v. Caribbean Int'l News Corp., 235 F.3d 18, 25 (1st Cir. 2000). A viewer can create a recording of a broadcast television show in order to view it at a later time. See Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 447-450 (1984). And a competitor may create copies of copyrighted software for the purpose of analyzing that software and discovering how it functions (a process called "reverse engineering"). See Sony Comp. Entertainment, Inc. v. Connectix Corp., 203 F.3d 596, 599-601 (9th Cir. 2000).

    The doctrine is generally subject to an important proviso: A fair use must not excessively damage the market for the original by providing the public with a substitute for that original work. Thus, a book review may fairly quote a copyrighted book "for the purposes of fair and reasonable criticism," Folsom, 9 F. Cas. at 344, but the review may not quote extensively from the "heart" of a forthcoming memoir in a manner that usurps the right of first publication and serves as a substitute for purchasing the memoir, Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539 (1985).

    In 1976, as part of a wholesale revision of the Copyright Act, Congress codified the judicially created fair-use doctrine at 17 U.S.C. § 107. See Copyright Act of 1976, Pub. L. No. 94-553, § 107, 90 Stat. 2541, 2546 (1976) (codified as amended at 17 U.S.C. § 107). Section 107 requires a court to consider four nonexclusive factors which are to be weighed together to assess whether a particular use is fair:

    (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.

    17 U.S.C. § 107.

    An important focus of the first factor is whether the use is "transformative." A use is transformative if it does something more than repackage or republish the original copyrighted work. The inquiry is whether the work "adds something new, with a further purpose or different character, altering the first with new expression, meaning or message. . . ." Campbell, 510 U.S. at 579 (citing Leval, 103 HARV. L. REV. at 1111). "[T]he more transformative the new work, the less will be the significance of other factors . . . that may weigh against a finding of fair use." Id. Contrary to what the district court implied, a use does not become transformative by making an "invaluable contribution to the progress of science and cultivation of the arts." HathiTrust, 902 F. Supp. 2d at 464. Added value or utility is not the test: a transformative work is one that serves a new and different function from the original work and is not a substitute for it.

    The second factor considers whether the copyrighted work is "of the creative or instructive type that the copyright laws value and seek to foster." Leval, 103 HARV. L. REV. at 1117; see also Folsom, 9 F. Cas. at 348 ("[W]e must often . . . look to the nature and objects of the selections made . . . ."). For example, the law of fair use "recognizes a greater need to disseminate factual works than works of fiction or fantasy." Harper & Row, 471 U.S. at 563.

    The third factor asks whether the secondary use employs more of the copyrighted work than is necessary, and whether the copying was excessive in relation to any valid purposes asserted under the first factor. Campbell, 510 U.S. at 586-87. In weighing this factor, we assess the quantity and value of the materials used and whether the amount copied is reasonable in relation to the purported justifications for the use under the first factor. Leval, 103 HARV. L. REV. at 1123.

    Finally, the fourth factor requires us to assess the impact of the use on the traditional market for the copyrighted work. This is the "single most important element of fair use." Harper & Row, 471 U.S. at 566. To defeat a claim of fair use, the copyright holder must point to market harm that results because the secondary use serves as a substitute for the original work. See Campbell, 510 U.S. at 591 ("cognizable market harm" is limited to "market substitution"); see also NXIVM Corp. v. Ross Inst., 364 F.3d 471, 481-82 (2d Cir. 2004).

    B

    As discussed above, the Libraries permit three uses of the digital copies deposited in the HDL. We now consider whether these uses are "fair" within the meaning of our copyright law.

    1. Full-Text Search

    It is not disputed that, in order to perform a full-text search of books, the Libraries must first create digital copies of the entire books. Importantly, as we have seen, the HDL does not allow users to view any portion of the books they are searching. Consequently, in providing this service, the HDL does not add into circulation any new, human-readable copies of any books. Instead, the HDL simply permits users to "word search"—that is, to locate where specific words or phrases appear in the digitized books. Applying the relevant factors, we conclude that this use is a fair use.

    i.

    Turning to the first factor, we conclude that the creation of a full-text searchable database is a quintessentially transformative use. As the example on page 7, supra, demonstrates, the result of a word search is different in purpose, character, expression, meaning, and message from the page (and the book) from which it is drawn. Indeed, we can discern little or no resemblance between the original text and the results of the HDL full-text search.

    There is no evidence that the Authors write with the purpose of enabling text searches of their books. Consequently, the full-text search function does not "supersede[] the objects [or purposes] of the original creation," Campbell, 510 U.S. at 579 (internal quotation marks omitted). The HDL does not "merely repackage[] or republish[] the original[s]," Leval, 103 HARV. L. REV. at 1111, or merely recast "an original work into a new mode of presentation," Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 143 (2d Cir. 1998). Instead, by enabling full-text search, the HDL adds to the original something new with a different purpose and a different character.

    Full-text search adds a great deal more to the copyrighted works at issue than did the transformative uses we approved in several other cases. For example, in Cariou v. Prince, we found that certain photograph collages were transformative, even though the collages were cast in the same medium as the copyrighted photographs. 714 F.3d at 706. Similarly, in Bill Graham Archives v. Dorling Kindersley Ltd., we held that it was a transformative use to include in a biography copyrighted concert photos, even though the photos were unaltered (except for being reduced in size). 448 F.3d 605, 609-11 (2d Cir. 2006); see also Blanch v. Koons, 467 F.3d 244, 252-53 (2d Cir. 2006) (transformative use of copyrighted photographs in collage painting); Leibovitz v. Paramount Pictures Corp., 137 F.3d 109, 114 (2d Cir. 1998) (transformative use of copyrighted photograph in advertisement).

    Cases from other Circuits reinforce this conclusion. In Perfect 10, Inc., the Ninth Circuit held that the use of copyrighted thumbnail images in internet search results was transformative because the thumbnail copies served a different function from the original copyrighted images. 508 F.3d at 1165; accord Arriba Soft Corp., 336 F.3d at 819. And in A.V. ex rel. Vanderhye v. iParadigms, LLC, a company created electronic copies of unaltered student papers for use in connection with a computer program that detects plagiarism. Even though the electronic copies made no "substantive alteration to" the copyrighted student essays, the Fourth Circuit held that plagiarism detection constituted a transformative use of the copyrighted works. 562 F.3d 630, 639-40.

    ii.

    The second fair-use factor—the nature of the copyrighted work—is not dispositive. The HDL permits the full-text search of every type of work imaginable. Consequently, there is no dispute that the works at issue are of the type that the copyright laws value and seek to protect. However, "this factor `may be of limited usefulness where,' as here, `the creative work . . . is being used for a transformative purpose." Cariou, 714 F.3d at 710 (quoting Bill Graham Archives, 448 F.3d at 612). Accordingly, our fair-use analysis hinges on the other three factors.

    iii.

    The third factor asks whether the copying used more of the copyrighted work than necessary and whether the copying was excessive. As we have noted, "[t]here are no absolute rules as to how much of a copyrighted work may be copied and still be considered a fair use." Maxtone-Graham v. Burtchaell, 803 F.2d 1253, 1263 (2d Cir. 1986). "[T]he extent of permissible copying varies with the purpose and character of the use." Campbell, 510 U.S. at 586-87. The crux of the inquiry is whether "no more was taken than necessary." Id. at 589. For some purposes, it may be necessary to copy the entire copyrighted work, in which case Factor Three does not weigh against a finding of fair use. See Bill Graham Archives, 448 F.3d at 613 (entire image copied); Arriba Soft, 336 F.3d at 821 ("If Arriba only copied part of the image, it would be more difficult to identify it, thereby reducing the usefulness of the visual search engine.").

    In order to enable the full-text search function, the Libraries, as we have seen, created digital copies of all the books in their collections.[5] Because it was reasonably necessary for the HDL to make use of the entirety of the works in order to enable the full-text search function, we do not believe the copying was excessive.

    The Authors also contend that the copying is excessive because the HDL creates and maintains copies of the works at four different locations Appellants' Br. 27-28. But the record demonstrates that these copies are also reasonably necessary in order to facilitate the HDL's legitimate uses. In particular, the HDL's services are offered to patrons through two servers, one at the University of Michigan (the primary server) and an identical one at the University of Indiana (the "mirror" server). Both servers contain copies of the digital works at issue. According to the HDL executive director, the "existence of a[n] [identical] mirror site allows for balancing the load of user web traffic to avoid overburdening a single site, and each site acts as a back-up of the HDL collection in the event that one site were to cease operation (for example, due to failure caused by a disaster, or even as a result of routine maintenance)." J.A. 682-83 ¶ 88-89 (Wilkin Decl.). To further guard against the risk of data loss, the HDL stores copies of the works on two encrypted backup tapes, which are disconnected from the internet and are placed in separate secure locations on the University of Michigan campus. Id. at 683 ¶ 90. The HDL creates these backup tapes so that the data could be restored in "the event of a disaster causing large-scale data loss" to the primary and mirror servers. Id.

    We have no reason to think that these copies are excessive or unreasonable in relation to the purposes identified by the Libraries and permitted by the law of copyright. In sum, even viewing the evidence in the light most favorable to the Authors, the record demonstrates that these copies are reasonably necessary to facilitate the services HDL provides to the public and to mitigate the risk of disaster or data loss. Accordingly, we conclude that this factor favors the Libraries.

    iv.

    The fourth factor requires us to consider "the effect of the use upon the potential market for or value of the copyrighted work," 17 U.S.C. § 107(4), and, in particular, whether the secondary use "usurps the market of the original work," NXIVM Corp., 364 F.3d at 482.

    The Libraries contend that the full-text-search use poses no harm to any existing or potential traditional market and point to the fact that, in discovery, the Authors admitted that they were unable to identify "any specific, quantifiable past harm, or any documents relating to any such past harm," resulting from any of the Libraries' uses of their works (including full-text search). Defs.-Appellees' Br. 38 (citing Pls.' Resps. to Interrogs.). The district court agreed with this contention, as do we.

    At the outset, it is important to recall that the Factor Four analysis is concerned with only one type of economic injury to a copyright holder: the harm that results because the secondary use serves as a substitute for the original work. See Campbell, 510 U.S. at 591 ("cognizable market harm" is limited to "market substitution"). In other words, under Factor Four, any economic "harm" caused by transformative uses does not count because such uses, by definition, do not serve as substitutes for the original work. See Bill Graham Archives, 448 F.3d at 614.

    To illustrate why this is so, consider how copyright law treats book reviews. Book reviews often contain quotations of copyrighted material to illustrate the reviewer's points and substantiate his criticisms; this is a paradigmatic fair use. And a negative book review can cause a degree of economic injury to the author by dissuading readers from purchasing copies of her book, even when the review does not serve as a substitute for the original. But, obviously, in that case, the author has no cause for complaint under Factor Four: The only market harms that count are the ones that are caused because the secondary use serves as a substitute for the original, not when the secondary use is transformative (as in quotations in a book review). See Campbell, 510 U.S. at 591-92 ("[W]hen a lethal parody, like a scathing theater review, kills demand for the original, it does not produce a harm cognizable under the Copyright Act.").

    The Authors assert two reasons why the full-text-search function harms their traditional markets. The first is a "lost sale" theory which posits that a market for licensing books for digital search could possibly develop in the future, and the HDL impairs the emergence of such a market because it allows patrons to search books without any need for a license. Thus, according to the Authors, every copy employed by the HDL in generating full-text searches represents a lost opportunity to license the book for search. Appellants' Br. 43.

    This theory of market harm does not work under Factor Four, because the full-text search function does not serve as a substitute for the books that are being searched. See Campbell, 510 U.S. at 591-92; Bill Graham Archives, 448 F.3d at 614. Thus, it is irrelevant that the Libraries might be willing to purchase licenses in order to engage in this transformative use (if the use were deemed unfair). Lost licensing revenue counts under Factor Four only when the use serves as a substitute for the original and the full-text-search use does not.

    Next, the Authors assert that the HDL creates the risk of a security breach which might impose irreparable damage on the Authors and their works. In particular, the Authors speculate that, if hackers were able to obtain unauthorized access to the books stored at the HDL, the full text of these tens of millions of books might be distributed worldwide without restriction, "decimat[ing]" the traditional market for those works. Appellants' Br. 40.

    The record before us documents the extensive security measures the Libraries have undertaken to safeguard against the risk of a data breach. Some of those measures were described by the HDL executive director as follows:

    First, [HDL] maintains . . . rigorous physical security controls. HDL servers, storage, and networking equipment at Michigan and Indiana University are mounted in locked racks, and only six individuals at Michigan and three at Indiana University have keys. The data centers housing HDL servers, storage, and networking equipment at each site location are monitored by video surveillance, and entry requires use of both a keycard and a biometric sensor.

    Second, network access to the HDL corpus is highly restricted, even for the staff of the data centers housing HDL equipment at Michigan and Indiana University. For example, two levels of network firewalls are in place at each site, and Indiana University data

    center staff do not have network access to the HDL corpus, only access to the physical equipment. For the backup tapes, network access is limited to the administrators of the backup system, and these individuals are not provided the encryption key that would be required to access the encrypted files on the backup tapes.

    Web access to the HDL corpus is also highly restricted. Access by users of the HDL service is governed by primarily by [sic] the HDL rights database, which classifies each work by presumed copyright status, and also by a user's authentication to the system (e.g., as an individual certified to have a print disability by Michigan's Office of Services for Students with Disabilities).. . .

    Even where we do permit a work to be read online, such as a work in the public domain, we make efforts to ensure that inappropriate levels of access do not take place. For example, a mass download prevention system called "choke" is used to measure the rate of activity (such as the rate a user is reading pages) by each individual user. If a user's rate of activity exceeds certain thresholds, the system assumes that the user is mechanized (e.g., a web robot) and blocks that user's access for a set period of time.

    J.A. 683-85 ¶¶ 94-96, 98 (Wilkins Decl.).

    This showing of the security measures taken by the Libraries is essentially unrebutted. Consequently, we see no basis in the record on which to conclude that a security breach is likely to occur, much less one that would result in the public release of the specific copyrighted works belonging to any of the plaintiffs in this case. Cf. Clapper v. Amnesty Int'l USA, ___ U.S. ___, ___, 133 S. Ct. 1138, 1143, 1149 (2013) (risk of future harm must be "certainly impending," rather than merely "conjectural" or "hypothetical," to constitute a cognizable injury-in-fact); Sony Corp., 464 U.S. at 453-54 (concluding that time-shifting using a Betamax is fair use because the copyright owners' "prediction that live television or movie audiences will decrease" was merely "speculative"). Factor Four thus favors a finding of fair use.

    Without foreclosing a future claim based on circumstances not now predictable, and based on a different record, we hold that the balance of relevant factors in this case favors the Libraries. In sum, we conclude that the doctrine of fair use allows the Libraries to digitize copyrighted works for the purpose of permitting full-text searches.

    2. Access to the Print-Disabled

    The HDL also provides print-disabled patrons with versions of all of the works contained in its digital archive in formats accessible to them. In order to obtain access to the works, a patron must submit documentation from a qualified expert verifying that the disability prevents him or her from reading printed materials, and the patron must be affiliated with an HDL member that has opted-into the program. Currently, the University of Michigan is the only HDL member institution that has opted-in. We conclude that this use is also protected by the doctrine of fair use.

    i.

    In applying the Factor One analysis, the district court concluded that "[t]he use of digital copies to facilitate access for print-disabled persons is [a] transformative" use. HathiTrust, 902 F. Supp. 2d at 461. This is a misapprehension; providing expanded access to the print disabled is not "transformative."

    As discussed above, a transformative use adds something new to the copyrighted work and does not merely supersede the purposes of the original creation. See Campbell, 510 U.S. at 579. The Authors state that they "write books to be read (or listened to)." Appellants' Br. 34-35. By making copyrighted works available in formats accessible to the disabled, the HDL enables a larger audience to read those works, but the underlying purpose of the HDL's use is the same as the author's original purpose.

    Indeed, when the HDL recasts copyrighted works into new formats to be read by the disabled, it appears, at first glance, to be creating derivative works over which the author ordinarily maintains control. See 17 U.S.C. § 106(2). As previously noted, paradigmatic examples of derivative works include translations of the original into a different language, or adaptations of the original into different forms or media. See id. § 101 (defining "derivative work"). The Authors contend that by converting their works into a different, accessible format, the HDL is simply creating a derivative work.

    It is true that, oftentimes, the print-disabled audience has no means of obtaining access to the copyrighted works included in the HDL. But, similarly, the non-English-speaking audience cannot gain access to untranslated books written in English and an unauthorized translation is not transformative simply because it enables a new audience to read a work.

    This observation does not end the analysis. "While a transformative use generally is more likely to qualify as fair use, `transformative use is not absolutely necessary for a finding of fair use.'" Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P., ___ F.3d ___, ___, 2014 WL 2219162, at *7 (2d Cir. 2014) (quoting Campbell, 510 U.S. at 579). We conclude that providing access to the print-disabled is still a valid purpose under Factor One even though it is not transformative. We reach that conclusion for several reasons.

    First, the Supreme Court has already said so. As Justice Stevens wrote for the Court: "Making a copy of a copyrighted work for the convenience of a blind person is expressly identified by the House Committee Report as an example of fair use, with no suggestion that anything more than a purpose to entertain or to inform need motivate the copying." Sony Corp. of Am., 464 U.S. at 455 n.40.

    Our conclusion is reinforced by the legislative history on which he relied. The House Committee Report that accompanied codification of the fair use doctrine in the Copyright Act of 1976 expressly stated that making copies accessible "for the use of blind persons" posed a "special instance illustrating the application of the fair use doctrine . . . ." H.R. REP. NO. 94-1476, at 73 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5686. The Committee noted that "special [blind-accessible formats] . . . are not usually made by the publishers for commercial distribution." Id. In light of its understanding of the market (or lack thereof) for books accessible to the blind, the Committee explained that "the making of a single copy or phonorecord by an individual as a free service for a blind persons [sic] would properly be considered a fair use under section 107." Id. We believe this guidance supports a finding of fair use in the unique circumstances presented by print-disabled readers.

    Since the passage of the 1976 Copyright Act, Congress has reaffirmed its commitment to ameliorating the hardships faced by the blind and the print disabled. In the Americans with Disabilities Act, Congress declared that our "Nation's proper goals regarding individuals with disabilities are to assure equality of opportunity, full participation, independent living, and economic self-sufficiency for such individuals." 42 U.S.C. § 12101(7). Similarly, the Chafee Amendment illustrates Congress's intent that copyright law make appropriate accommodations for the blind and print disabled. See 17 U.S.C. § 121.

    ii.

    Through the HDL, the disabled can obtain access to copyrighted works of all kinds, and there is no dispute that those works are of the sort that merit protection under the Copyright Act. As a result, Factor Two weighs against fair use. This does not preclude a finding of fair use, however, given our analysis of the other factors. Cf. Davis v. Gap, Inc., 246 F.3d 152, 175 (2d Cir. 2001) ("The second statutory factor, the nature of the copyrighted work . . ., is rarely found to be determinative.").

    iii.

    Regarding Factor Three, as previously noted, the HDL retains copies as digital image files and as text-only files, which are then stored in four separate locations. The Authors contend that this amount of copying is excessive because the Libraries have not demonstrated their need to retain the digital image files in addition to the text files.

    We are unconvinced. The text files are required for text searching and to create text-to-speech capabilities for the blind and disabled. But the image files will provide an additional and often more useful method by which many disabled patrons, especially students and scholars, can obtain access to these works. These image files contain information, such as pictures, charts, diagrams, and the layout of the text on the printed page that cannot be converted to text or speech. None of this is captured by the HDL's text-only copies. Many legally blind patrons are capable of viewing these images if they are sufficiently magnified or if the color contrasts are increased. And other disabled patrons, whose physical impairments prevent them from turning pages or from holding books, may also be able to use assistive devices to view all of the content contained in the image files for a book. For those individuals, gaining access to the HDL's image files—in addition to the text-only files—is necessary to perceive the books fully. Consequently, it is reasonable for the Libraries to retain both the text and image copies.[6]

    iv.

    The fourth factor also weighs in favor of a finding of fair use. It is undisputed that the present-day market for books accessible to the handicapped is so insignificant that "it is common practice in the publishing industry for authors to forgo royalties that are generated through the sale of books manufactured in specialized formats for the blind. . . ." Appellants' Br. 34. "[T]he number of accessible books currently available to the blind for borrowing is a mere few hundred thousand titles, a minute percentage of the world's books. In contrast, the HDL contains more than ten million accessible volumes." J.A. 173 ¶ 10 (Maurer Decl.). When considering the 1976 Act, Congress was well aware of this problem. The House Committee Report observed that publishers did not "usually ma[ke]" their books available in specialized formats for the blind. H.R. REP. NO. 94-1476, at 73, 1976 U.S.C.C.A.N. at 5686. That observation remains true today.

    Weighing the factors together, we conclude that the doctrine of fair use allows the Libraries to provide full digital access to copyrighted works to their print-disabled patrons.[7]

    3. Preservation

    By storing digital copies of the books, the HDL preserves them for generations to come, and ensures that they will still exist when their copyright terms lapse. Under certain circumstances, the HDL also proposes to make one additional use of the digitized works while they remain under copyright: The HDL will permit member libraries to create a replacement copy of a book, to be read and consumed by patrons, if (1) the member already owned an original copy, (2) the member's original copy is lost, destroyed, or stolen, and (3) a replacement copy is unobtainable at a fair price. The Authors claim that this use infringes their copyrights.

    Even though the parties assume that this issue is appropriate for our determination, we are not convinced that this is so. The record before the district court does not reflect whether the plaintiffs own copyrights in any works that would be effectively irreplaceable at a fair price by the Libraries and, thus, would be potentially subject to being copied by the Libraries in case of the loss or destruction of an original. The Authors are not entitled to make this argument on behalf of others, because § 501 of "the Copyright Act does not permit copyright holders to choose third parties to bring suits on their behalf." ABKCO Music, 944 F.2d at 980; see also our discussion of standing, supra pp. 12-13.

    Because the record before us does not reflect the existence of a non-speculative risk that the HDL might create replacement copies of the plaintiffs' copyrighted work, we do not believe plaintiffs have standing to bring this claim, and this concern does not present a live controversy for adjudication. See Clapper, ___ U.S. at ___, 133 S. Ct. at 1147; Jennifer Matthew Nursing & Rehab. Ctr. v. U.S. Dep't of Health & Human Servs., 607 F.3d 951, 955 (2d Cir. 2010) (noting that we have an "independent obligation" to evaluate subject matter jurisdiction, including whether there is "a live controversy"). Accordingly, we vacate the district court's judgment insofar as it adjudicated this issue without first considering whether plaintiffs have standing to challenge the preservation use of the HDL, and we remand for the district court to so determine.

    II. Ripeness of Claims Relating to the Orphan Works Project

    The district court also held that the infringement claims asserted in connection with the OWP were not ripe for adjudication because the project has been abandoned and the record contained no information about whether the program will be revived and, if so, what it would look like or whom it would affect. HathiTrust, 902 F. Supp. 2d at 455-56. We agree.

    In considering whether a claim is ripe, we consider (1) "the fitness of the issues for judicial decision" and (2) "the hardship to the parties of withholding court consideration." Murphy v. New Milford Zoning Comm'n, 402 F.3d 342, 347 (2d Cir. 2005) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967)).

    The fitness analysis is concerned with whether the issues sought to be adjudicated are contingent on unknowable future events. N.Y. Civil Liberties Union v. Grandeau, 528 F. 3d 122, 132 (2d Cir. 2008). The Authors assert that their OWP claim is fit for judicial decision because it "will not change based upon the particular procedures that [the University of Michigan] ultimately employs to identify orphan works." Appellants' Br. 13. According to the Authors, the legality of the OWP does not depend upon the specific means the Libraries ultimately employ to identify orphan candidates or the time the Libraries wait before making works available. Rather, the Authors believe that any iteration of the OWP that results in the publication of complete copyrighted works is an infringement of copyright.

    We are not persuaded that these concerns create a ripe dispute. Even assuming, arguendo, that "[a]ny iteration of the OWP under which copyrighted works are made available for public view and download" would infringe someone's copyright, id., it does not follow that the OWP will inevitably infringe the copyrights held by the remaining plaintiffs in this case.[8] It is conceivable that, should the University of Michigan ever revive the OWP, the procedures it ultimately implements to identify orphan works would successfully identify and exclude works to which a plaintiff in this suit holds a copyright. Consequently, we cannot say that any of the plaintiffs face a "certainly impending" harm under our ripeness analysis, Clapper, ___ U.S. at ___, 133 S. Ct. at 1147; see also Grandeau, 528 F.3d at 130 n.8.

    Nor do we perceive any hardship if decision is withheld. See Grandeau, 528 F.3d at 134. The Authors argue that they would suffer hardship because "there is nothing to stop the Libraries from reinstituting the OWP and then, if owners of the listed works come forward, suspending it again." Appellants' Br. 16.

    We disagree. As indicated above, it is far from clear that the University of Michigan or HathiTrust will reinstitute the OWP in a manner that would infringe the copyrights of any proper plaintiffs. If that occurs, the Authors may always return to court. Suffice it to say that "[t]he mere possibility of future injury, unless it is the cause of some present detriment, does not constitute hardship." Grandeau, 528 F.3d at 134 (internal quotation marks omitted). For these reasons, we conclude that the OWP claims are not ripe for adjudication.

    CONCLUSION

    The judgment of the district court is AFFIRMED, in part, insofar as the district court concluded that certain plaintiffs-appellants lack associational standing; that the doctrine of "fair use" allows defendants-appellees to create a full-text searchable database of copyrighted works and to provide those works in formats accessible to those with disabilities; and that claims predicated upon the Orphan Works Project are not ripe for adjudication. We VACATE the judgment, in part, insofar as it rests on the district court's holding related to the claim of infringement predicated upon defendants-appellees' preservation of copyrighted works, and we REMAND for further proceedings consistent with this opinion.

    [1] Pursuant to Federal Rule of Appellate Procedure 43(c)(2), we automatically substitute the current president of the University of California, Janet Napolitano, and the current president of the University of Wisconsin System, Raymond W. Cross, in place of their predecessors-in-office.

    [2] The Clerk of Court is directed to amend the caption as set forth above.

    [3] Separate from the HDL, one copy is also kept by Google. Google's use of its copy is the subject of a separate lawsuit currently pending in this Court. See Authors Guild, Inc. v. Google, Inc., 721 F.3d 132 (2d Cir. 2013), on remand, 954 F. Supp. 2d 282 (S.D.N.Y. 2013), appeal docketed, No. 13-4829 (2d Cir. Dec. 23, 2013).

    [4] Plaintiffs argue that the fair use defense is inapplicable to the activities at issue here, because the Copyright Act includes another section, 108, which governs "Reproduction [of copyrighted works] by Libraries . . ." 17 U.S.C. § 108. However, section 108 also includes a "savings clause," which states, "Nothing in this section in any way affects the right of fair use as provided by section 107. . . ." § 108(f)(4). Thus, we do not construe § 108 as foreclosing our analysis of the Libraries' activities under fair use, and we proceed with that analysis.

    [5] The HDL also creates digital copies of the images of each page of the books. As the Libraries acknowledge, the HDL does not need to retain these copies to enable the full-text search use. We discuss the fair-use justification for these copies in the context of the disability-access use, see infra pp. 29-30.

    [6] The Authors also complain that the HDL creates and maintains four separate copies of the copyrighted works at issue. Appellants' Br. 27-28. For reasons discussed in the full-text search section, this does not preclude a finding of fair use. See supra pp. 20-22.

    [7] In light of our holding, we need not consider whether the disability-access use is protected under the Chafee Amendment, 17 U.S.C. § 121.

    [8] We note that, in addition to our conclusion about ripeness, the same reasoning leads us to conclude that the remaining plaintiffs lack standing to bring this claim, see our discussion of standing, supra pp. 12-13.

  • 5 Rosen v. eBay, Inc.

    Barry ROSEN, Plaintiff,
    v.
    eBAY, INC., et al., Defendants.

    No. CV 13–6801 MWF (Ex).

    United States District Court, C.D. California.

    Signed Jan. 16, 2015.

    Peter R. Dion–Kindem, The Dion Kindem Law Firm, Woodland Hills, CA, for Plaintiff.

    Christopher J. Cox, Bambo Obaro, Weil Gotshal and Manges LLP, Redwood Shores, CA, James T. Catlow, Catlow and Doherty, Los Angeles, CA, Olivia J. Greer, R. Bruce Rich, Randi W. Singer, Reed L. Collins, Weil Gotshal and Manges LLP, New York, NY, for Defendants.

    ORDER RE MOTIONS FOR SUMMARY JUDGMENT [64; 73]
    MICHAEL W. FITZGERALD, District Judge.

    Before the Court are cross motions for summary judgment filed by Plaintiff Barry Rosen and Defendant eBay, Inc. ("eBay"). Rosen filed his Motion for Partial Summary Judgment re Liability for Copyright Infringement (the "Rosen Motion") on September 5, 2014. (Docket No. 64). eBay filed its Motion for Summary Judgment (the "eBay Motion") on the same day. (Docket No. 73).

    The Court held a hearing on the two Motions on November 8, 2014 and read and considered the briefing on the matters provided by the parties. For the reasons stated below, the Court GRANTS eBay's Motion and DENIES Rosen's Motion.

    I. BACKGROUND

    Rosen initiated this suit by filing a Complaint against eBay on September 16, 2013. (Docket No. 1). Rosen ultimately filed a Second Amended Complaint ("SAC"), which is the operative complaint, on December 16, 2013. (Docket No. 15). Rosen purports to be a professional photographer. (SAC ¶ 7). eBay runs an online marketplace the primary function of which is to allow third parties to buy and sell items listed on eBay's website.

    Rosen asserts a variety of direct and indirect copyright claims against eBay. The claims all arise from photographs over which Rosen claims copyright protection and copies of which have appeared in various forms for sale on eBay's online marketplace.

    The basic question presented is the extent to which owners of copyright may allege copyright claims against eBay for images of their copyrighted works used on eBay's website in connection with the sale by eBay's users of goods consisting of, or containing in part, their copyrighted works. The two issues this question raises are: first the extent to which the safe harbor protections of the Digital Millennium Copyright Act ("DMCA"), codified at 17 U.S.C. § 512, cover eBay; and second whether making copies of copyrighted works for the purpose of selling the copyrighted item under the first sale doctrine constitutes fair use.

    The issues are best addressed by considering the two types of copied works separately. The first category of material consists of 17 8x10 inch photographs of various celebrities and models (the "8x10 Prints") that have been offered for sale by third parties through eBay's online marketplace. The second category comprises 40 listings of physical copies of magazine back issues containing photographs from a set of 22, over which Rosen also claims copyright protection (the "Magazine Photographs").

    This action relates both to the sale of these physical copies on eBay and to the pictures taken and used by the sellers on eBay. Through eBay's activities in hosting and managing the listings and the associated images, Rosen claims eBay has directly violated his copyrights by copying and distributing infringing items after receiving notice that they are copyrighted material and vicariously infringed Rosen's copyrights by profiting from users' infringing activity. Moreover, eBay has contributorily infringed Rosen's copyrights by "failing expeditiously to remove access to the infringing images."(Rosen Mot. at 10).

    Rosen also claims that through eBay's licensing relationship with Terapeak, Inc., eBay has directly infringed his copyrights by licensing copies of Rosen's work and distributing his images. (Rosen Mot. at 6, 11).

    Rosen claims that the 8x10 Prints are all unauthorized copies, but concedes that the Magazine Photographs were printed in magazines under licenses given by him. However, he contends that the presence of images of both the 8x10 Prints and the Magazine Photographs in eBay's listings and on its servers constitute unauthorized copying and distribution of his work and that eBay's users' activities make eBay vicariously and contributorily liable for copyright infringement.

    II. THE CROSS MOTIONS FOR SUMMARY JUDGMENT

    eBay and Rosen have filed cross-motions for summary judgment. Rosen's Motion requests summary judgment for liability for copyright infringement. eBay's Opposition Rosen's Motion and its own Motion raise essentially identical issues; namely, the sufficiency of evidence supporting Rosen's claims, and the DMCA and fair use defenses asserts to Rosen's claims. Indeed, the parties frequently cross-referenced arguments raised in briefing across the two motions.

    As explained below, the Court denies Rosen's Motion as to all of his claims because of a simple factual dispute as to the basis for his maintaining a copyright action in the absence of federal registration of his work that may be easily resolved. See Section III.B, infra.The Court's determination as to eBay's safe harbor and fair use defenses means that eBay is entitled to summary judgment and further support the Court's denying Rosen's Motion.

    III. DISCUSSION

    In deciding this Motion under Rule 56, the Court applies Anderson, Celotex, and their Ninth Circuit progeny. Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202, (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); In re Oracle Corp. Securities Litig., 627 F.3d 376, 387 (9th Cir.2010) ("Where the non-moving party bears the burden of proof at trial, the moving party need only prove that there is an absence of evidence to support the non-moving party's case."). The non-moving party may not simply rely on allegations in its pleadings but must identify specific facts raising a genuine dispute that will be material at trial. Fed.R.Civ.P. 56(c).

    eBay, in its Opposition and its own Motion, asserts four broad reasons as to why it is not guilty of direct, vicarious, or contributory copyright infringement: First, eBay argues that Rosen has failed to document registration of his photographs, a requirement to assert copyright claims. (eBay Opp. at 9). Second, eBay argues that it is shielded from liability by the internet service provider safe harbor provisions of the DMCA as to eBay's infringement claims for the 8x10 Prints. (eBay Mot. at 10, eBay Opp. at 9–16). Third, eBay argues its hosting of pictures of the Magazine Photographs cannot lead to copyright liability because the images constitute fair use by its users and by itself to the extent it has direct liability. (eBay Opp. at 22–24). Fourth, eBay argues Rosen fails to establish the necessary elements to show eBay's direct, contributory, and vicarious infringement. (eBay Opp. at 16–21, 24–25).

    A. Evidentiary Objections

    In addition to the substantial briefing and exhibits presented to the Court on these motions, the parties both filed objections to the evidence presented in support of the motions.

    The two most significant objections relate to the Declaration of David Sterling (the "Sterling Declaration" (Docket No. 64–2)), which was submitted by Rosen along with his Motion, and the Declaration of Kara Ricupero (the "Ricupero Declaration" (Docket No. 122)) and accompanying exhibits submitted by eBay in its Reply.

    1. Objections to Sterling Declaration

    eBay objects to the Sterling Declaration because it purports to be based on expert knowledge as to the operation of eBay's website and systems. Rosen did not disclose Sterling to eBay until he submitted his declaration. eBay further alleges that Sterling lacks adequate knowledge to provide expert opinions and complains that his conclusions are based on conjecture rather than a reliable method. Indeed, it appears that Sterling's primary basis for his opinion was navigating the websites of eBay, Terapeak and Worthpoint.

    Rosen's attempt to use the Sterling Declaration is in violation of Rosen's expert disclosure obligations under the Federal Rules of Civil Procedure. Further, Sterling's declaration does not establish him as an expert under Federal Rule of Evidence 702 as to the opinions he offers. Sterling's interaction with the websites in question and his qualifications do not show that his testimony, as an expert, would assist the jury in understanding the evidence. However, Sterling is competent to provide testimony as to what he was able to find online to the extent it does not constitute expert testimony.

    As explained below, and identified in eBay's objections, much of the substance of Sterling's declaration is either based on mere conjecture or an inaccurate reading of the plain language of the license eBay has with Terapeak (the "Terapeak License"). The Court therefore SUSTAINS eBay's objections as to Sterling's purported expert testimony, but OVERRULES the objections to the extent they attempt to prevent the Court from considering the content of the websites that Sterling personally observed.

    2. Objections to Ricupero Declaration and Exhibits

    Rosen in turn objects to eBay's submission of the Ricupero Declaration along with otherwise undisclosed documents in his Reply. Ricupero attached to her declaration a number of archived versions of various eBay policies. Rosen claims that eBay provided the documents only the night before its final briefing on the motions was due and Ricupero was, like Sterling, not disclosed to Rosen at any point, nor were the documents produced. Rosen also argues that Ricupero could not have personal knowledge of the documents as she was hired by eBay after they were allegedly published.

    eBay contends that the Ricupero Declaration was purely an additional presentation of evidence in direct response to an argument made by Rosen in his Opposition to its Motion asserting its DMCA defense. eBay also argues that the Ricupero Declaration serves merely to authenticate the documents. Ricupero submits the declaration solely as custodian of records, for which she is qualified as someone familiar with the methods by which eBay stores its documents. Further, eBay argues it was forced to provide the additional documents because of Rosen's contentions that the Rule 30(b)(6) testimony and Declaration of Cara Baldwin was insufficient to establish that it has adequately published its repeat infringer policy and information regarding its designated agent. Finally, eBay contends that the documents were not responsive to any of Rosen's requests and it was Rosen's stonewalling and refusal to discuss his 803 document requests that was the cause of the failure of the parties to settle their discovery disputes within the deadline set by the Court.

    eBay contends that in light of Rosen's raising the problems with the sufficiency of eBay's DMCA defense, and despite adequate sworn testimony in support, it is entitled to present the new documents.

    The Court generally agrees with eBay that Rosen's concerns with the Ricupero Declaration are misguided. However, the Court is reluctant to consider evidence when presented for the first time in the last round of briefing on a matter. Ordinarily the Court would allow Rosen a sur-reply to address the arguments and evidence raised by eBay in its Reply. However, as indicated below, the Court does not believe that this is necessary in light of the sufficiency of the declarations presented by eBay to which there are no valid objections. Because the Court's ruling would be the same regardless of the Ricupero Declaration, Rosen's objections are OVERRULED as moot.

    3. Rosen's Objections to eBay's Other Declarations

    Rosen also makes numerous objections to the other declarations submitted by eBay in support of its papers on these motions. Rosen's objections are primarily for lack of relevance, lack of personal knowledge, and "inadmissible conclusion and opinion." The objections, however, appear to be largely unsubstantiated and have little basis. The Court OVERRULES Rosen's objections as to relevance. To the extent the content of the declarations have a bearing on the disposition of the motions, such portions are relevant and will be considered by the Court.

    Rosen also appears to object to eBay's employees' personal knowledge of eBay's operations and practice in the areas within which they work. However, Rosen provides no justification as to why these employees do not have personal knowledge of the subject of their declarations in light of the explanations of their responsibilities and experience. Rosen also makes a number of seemingly nonsensical objections that facts are "inadmissible conclusion and opinion," including such statements that witnesses "make the following declaration on personal knowledge." The Court OVERRULES these objections.

    Rosen also objects on the basis of hearsay. However, to the extent the declarations seek to show the existence of policies or emails, they are not being presented for the truth of their contents and therefore are not hearsay. The hearsay objections are likewise OVERRULED.

    Further, Rosen objects that eBay has been guilty of a number of discovery failures, including failure to produce certain documents that are relevant to eBay's current assertion of various defenses. However, it is too late for Rosen to make such objections. If Rosen believed he was entitled to more documents he should have brought a timely motion to compel. Similarly, Rosen's concerns with Cara Baldwin's preparation as eBay's Rule 30(b)(6) representative should have been addressed before the close of discovery. The objections based on purported discovery failures are OVERRULED.

    Finally, Rosen objects to the declarations of a variety of people because they were not deposed, or because their testimony overlaps with the subject matter of the Rule 30(b)(6) designees. Rosen's complaints about the Declarations of Larry Taylor and Randy Strickler are unfounded because they were disclosed by eBay and it was Rosen's choice not to depose them. Rosen is also wrong that Cara Baldwin is the only person who can provide testimony on the topics on which she was deposed as eBay's Rule 30(b)(6) witness. See LG Elecs. v. Whirlpool Corp., No. 08–C–242, 2010 WL 3714992, at *1 (N.D.Ill. Sept.14, 2010) (holding that testimony on Rule 30(b)(6) topics was not limited to the testimony of the designated Rule 30(b)(6) witness). Objections based on these grounds are OVERRULED.

    As to much of this evidence, the Court would have ruled the same way whether the evidence was admissible or not. Likewise, any remaining objections are OVERRULED as moot for the same reason.

    B. Existence of Copyright Registration

    Rosen has provided a variety of registration certificates. (Rosen Decl. Ex. 1). Rosen has also provided copies of the "relevant Photographs related to each of the registrations" as asserted in his Declaration. (Rosen Decl. ¶ 3). eBay argues that Rosen's presentation of the certificates and his claim that the photographs are those covered by the certificates are not sufficient to establish that the claimed photographs are indeed federally registered. Therefore, eBay asserts Rosen is not entitled to summary judgment.

    As the district court explained in Corbis Corp. v. Amazon.com, Inc., 351 F.Supp.2d 1090, 1115 (W.D.Wash.2004) (hereinafter "Corbis"), "[w]ithout the deposit, there remains a legitimate question of fact regarding whether the ... Photo is protected by [the] Registration" certificates presented. Therefore, there exists a genuine issue of material fact as to the registration of the 8 x10 Prints and Magazine Photographs.

    Because federal registration of copyright is required to maintain a suit for copyright infringement, a factual dispute as to the registration of Rosen's asserted copyright precludes summary judgment as to his copyright claims. This lack, however, could have been easily remedied by either party obtaining the deposit copies from the Copyright Office to establish Rosen's registration of the works.

    Accordingly, as a technical matter, Rosen's Motion is DENIED without prejudice.Nonetheless, the Court will address the arguments made in both Motions on the assumption that Rosen has registered the disputed works.

    C. eBay's Alleged Infringement

    Rosen alleges two basic forms of direct infringement of his copyright. First, Rosen argues that in creating the listings eBay creates a copy of the copyrighted image and stores it on its servers. These images are then distributed to the public in a number of ways. They are accessible after the listing has been taken down, they are distributed to Terapeak subject to eBay's license with it, they are also subsequently available on the website www.worthpoint.com, and they are distributed by eBay to its content delivery network ("CDN") providers. Second, Rosen argues that eBay directly infringed Rosen's work when it reposted listings of certain Magazine Photographs after taking them down in response to Rosen's Notice of Copyright Infringement ("NOCI").

    eBay argues that it does not engage in any direct infringement because its processes are automated. For the same reason, eBay argues that it enjoys the safe harbor protections for internet service providers established by the DMCA. Further, eBay argues that the Magazine Photographs fall within the fair use doctrine.

    Direct infringement of any of the section 106 copyright rights requires volitional conduct, and "[the] requirement of 'volitional conduct' ... focuse [s] the inquiry on whether the defendant directly caused the infringement to take place." Perfect 10, Inc. v. Giganews, Inc., No. 11–cv–7098 AHM, 2013 WL 2109963, at *5–7 (C.D.Cal. Mar.8, 2013) (hereinafter Giganews ); see also Fox Broad. Co. v. Dish Network LLC, 747 F.3d 1060, 1067 (9th Cir.2014) ( "Infringement of the reproduction right requires copying by the defendant, which comprises a requirement that the defendant cause the copying.") (internal quotation marks and citations omitted).

    Therefore, as explained by the Ninth Circuit in Fox, a third party's infringing use of a defendant's automated systems does not render the defendant directly liable. 747 F.3d at 1067 (holding that where a system makes copies at a user's command, the operator of that system is not liable for direct infringement); see also Giganews, 2013 WL 2109963, at *7 (finding no direct infringement where defendants "simply programmed their servers to automatically copy, distribute, and display content, including infringing content, uploaded by ... users").

    Therefore the Court rejects Rosen's claims that eBay directly infringes the 8 x10 Prints as a result of its users putting them on eBay's servers and making them publicly available.

    The Terapeak and Worthpoint Images: Rosen further argues that through its license with Terapeak, eBay distributes copies of his copyrighted works and therefore directly infringes his rights. eBay objects to Rosen's characterizations on two counts, as well as to the evidence Rosen presents in support.

    eBay acknowledges that Terapeak has a license with eBay that allows it to access various data from eBay's sales. However, the Terapeak License does not include providing pictures to Terapeak. (Kimden Decl. Ex. 5 at 10–11). Rosen relies on the Sterling Declaration to support his claims that eBay allows Terapeak to access its data files, including images, and that eBay distributes such data files.

    As noted above, eBay objects to Sterling's Declaration. Notwithstanding the Sterling Declaration, the Terapeak License makes clear that images are not part of the data eBay provides to Terapeak. "Data" is defined by the License agreement as "certain raw data files collected by eBay relating to closed eBay Listings that ... contain the data fields set forth in Exhibit A." (Terapeak License at 1). The data listed in Exhibit A that eBay provides to Terapeak does not include image files. (Terapeak License at 10–11).

    Further, Rosen provides no evidence that there is any relationship between Worthpoint and eBay beyond the supposition in the Sterling Declaration. Even then, were there to be some connection between eBay and Worthpoint through Terapeak, since the evidence indicates eBay does not provide Terapeak with images, the presence of eBay images on Worthpoint is irrelevant without evidence that eBay distributed these images to Worthpoint.

    In the absence of admissible evidence that eBay distributes its pictures to Terapeak, Rosen fails to establish that eBay directly infringes its copyright through its license and interaction with Terapeak.

    D. DMCA Safe Harbor

    eBay argues that it is not liable in any form for any of the infringing content because it is protected by the § 512 safe harbor provisions in the DMCA. 17 U.S.C. § 512(c); (eBay Opp. at 12).Section 512(c) establishes a safe harbor from copyright liability for a service provider's "storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." eBay argues that the images are put up "at the direction of its users" and it has fully complied with the notice and take-down provisions of the DMCA, and so, as an internet service provider, enjoys the safe harbor protections of 17 U.S.C. § 512(c). (eBay Opp. at 12).

    Safe harbor protection is dependent on a service provider meeting certain criteria, most notably implementing an adequate notice and take-down process by which copyright owners can get infringing materials removed from a site. eBay argues that its Verified Rights Owner ("VeRO") program is designed to, and does, meet the statutory requirements of § 512(c). Rosen contests that eBay has failed to established that it qualifies for the safe harbor protections of § 512(c).

    As a preliminary matter, a service provider can only receive safe harbor protection if it:

    (A) has adopted and reasonably implemented, and informs subscribers and account holders of the service provider's system or network of a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers; and

    (B) accommodates and does not interfere with standard technical measures [by which copyright holders may identify and protect copyright materials].

    17 U.S.C. § 512(i); see Perfect 10, Inc. v. CCBill, LLC 488 F.3d 1102, 1109 (9th Cir.2007) (hereinafter CCBill ) (holding that "to be eligible for any of the four safe harbors ... a service provider must first meet the threshold conditions set out in § 512(i)").

    The Court must therefore determine whether eBay has (1) adopted and (2) reasonably implemented a policy for the termination of repeat infringers, and (3) that it has informed subscribers and account holders of the repeat infringer termination policy. Rosen asserts that eBay fails to establish that it has reasonably implemented an appropriate repeat offender policy (Rosen Opp. at 4–8), or that it has adequately informed its subscribers of the policy. (Rosen Opp. at 10).

    1. Adoption and Reasonable Implementation of a Repeat Infringer Policy

    Implementation is "reasonable" if, "under 'appropriate circumstances,' the service provider terminates users who repeatedly or blatantly infringe copyright." CCBill, 488 F.3d at 1109.

    Rosen does not contest that eBay promptly removed the listings of the 8 x10 Prints after he informed eBay they were posted in violation of his copyright. Instead, Rosen argues that while eBay "claims that [it] has 'suspended from its site tens of thousands of users who repeatedly list infringing items or otherwise violate eBay policies' " it has not provided documentation of such suspensions or terminations of repeat infringers. eBay has submitted declarations indicating that in its attempts to comply with the requirements of the DMCA, it implemented a policy for the termination of repeat infringers by October 2000 and has since suspended repeat offenders. (eBay Opp. at 2, n. 1; Baldwin Decl. ¶¶ 18, 24–25; Taylor Decl. ¶ 30).

    Rosen also argues that eBay fails to satisfy the requirement because "eBay has not adequately informed its users of the terms of its policy" when they do not "know specifically what eBay's policy is." (Rosen Opp. at 8). However, the case law is clear that § 512(i) does not require that a service provider reveal its decision-making criteria to its users. Corbis, 351 F.Supp.2d at 1102. The implementation of the policy "need only put users on notice that they face exclusion from the service if they repeatedly violate copyright laws."Id. Further, the implementation of a policy need not be perfect to render it sufficient to qualify a service provider for protection under § 512(c).Id. at 1103. The eBay declarations prove, in the absence of contrary evidence from Rosen, that eBay's policy meets these criteria.

    Rosen's allegations as to the deficiency of eBay's policy amounts only to a complaint that eBay has not provided full documentation of all terminations and suggestions that eBay does not prove that "there were not other repeat infringers who eBay failed to terminate."(Rosen Opp. at 99 (emphasis in original)). In the absence of admissible evidence that eBay's policy is not in fact reasonably implemented, Rosen offers only conjecture for the possibility that eBay may have failed to suspend some repeat infringers and does not establish a genuine dispute of a material fact.

    Rosen is correct that this Court may not ignore evidence of eBay's treatment of third party NOCIs. CCBill, 488 F.3d at 1113. However, the Court need only consider such evidence if Rosen had presented it to the Court in an admissible form. The evidence eBay has presented is sufficient to establish that its policy is reasonably implemented.

    Rosen directs the Court to Rosen v. Global Net Access, LLC, No. CV 10–2721–DMG, 2014 WL 2803752 (C.D.Cal. June 20, 2014), where the district court held that defendant GNAX's failure to provide evidence of take downs amounted to a failure to establish a reasonably implemented policy. However, in Global Net Access, the court determined that GNAX did not timely produce any evidence of take downs, and that its "failure to produce even a single record of DMCA notification leads this Court to the adverse inference that no 'working notification system' exists."Id. at *4. The evidence presented by eBay does not lead this Court to such an inference. Indeed, where it had taken GNAX two months to take down Rosen's work, eBay responded within a day of Rosen's requests.

    Further, other courts have affirmed the adequacy of eBay's notice and take-down policy. To the extent the district court and Second Circuit decisions in Tiffany (NJ) Inc. v. eBay, Inc., are relevant (they apply trademark and not copyright law), they show other courts' recognition of eBay's robust implementation of its notice and take-down procedures. 576 F.Supp.2d 463 (S.D.N.Y.2008), aff'd in part, rev'd in part,600 F.3d 93 (2d Cir.2010).

    In light of the Court's rulings on Rosen's evidentiary objections, it will not address Rosen's argument that eBay should be estopped from asserting this defense because of eBay's alleged failures during discovery. (Rosen Opp. at 6).

    eBay has provided sworn testimony as to its policy and implementation thereof, evidence of its efficacy as it relates to Rosen's NOCI, and Rosen has provided only conjecture in response. Even when viewed favorably to Rosen, the evidence does not establish a genuine dispute of material fact.

    2. Publication of eBay's Repeat Infringer Policy

    Rosen also argues that eBay has not established that it adequately published its repeat infringer policy. Specifically Rosen argues that eBay has not established that the policy it presents to the Court now was either the one that was in existence during late 2013, or that it was on eBay's website.

    Neither of these accusations stands up to scrutiny:

    First, Baldwin testified that the eBay User Agreement as presented to the Court in connection with these Motions was "materially the same" as the one in operation at the relevant time. (Baldwin Decl. ¶ 3; Ex. A). The declarations presented by eBay also establish that eBay has on its webpage a number of policies that inform users of its intellectual policy policies, including that repeat offenses may result in suspensions. (eBay Reply at 9; Baldwin Decl. ¶¶ 3–4, 18–19). These include eBay's "Suspended Accounts" page, (Ex. G); eBay's User Agreement, (Ex. A); and a "Why did eBay remove my listing" page (Ex. H).

    Second, the law does not require that eBay provide its users with a detailed version of its policy, including all of the criteria it uses to determine whether an account will be suspended. As the district court in Corbis made clear, the DMCA "does not suggest what criteria should be considered by a service provider, much less require the service provider to reveal its decision-making criteria to the user."351 F.Supp.2d at 1102. All a service provider need do to qualify under § 512(i) is "put users on notice that they face exclusion from the service if they repeatedly violate copyright laws." Id. Nothing presented by Rosen creates a genuinely disputed issue of material fact as to eBay's compliance with this requirement.

    3. Compliance with § 512(c)

    To qualify for the safe harbor protections, eBay must still meet the three conditions for liability protection set forth in § 512(c) (1)(A)-(C)and the agent designation requirement of § 512(c)(2). First, eBay must show that it does not have actual or apparent knowledge that material on its network is infringing. See 17 U.S.C. § 512(c)(1)(A)(i) & (ii). Where eBay does have actual or apparent knowledge, it must show that it acted "expeditiously to remove, or disable access to, the [infringing] material."17 U.S.C. § 512(c)(1)(A)(iii). Second, eBay must show that it does not receive a financial benefit directly attributable to any infringing activity that it maintains the right and ability to control. Third, eBay must show that it has expeditiously removed or disabled access to allegedly infringing material for which it has received appropriate notice under § 512(c) (3). Fourth, eBay must have "designated an agent to receive notifications of claimed infringement" as required by 17 U.S.C. § 512(c)(2).

    eBay asserts that it has met all the elements necessary to invoke liability protection under § 512(c). Rosen argues that eBay fails to comply with the requirements of § 512(c) for three reasons: (1) eBay has not proven that it adequately published the contact information of its DMCA compliance officer (Rosen Opp. at 11); (2) eBay cannot prove that it expeditiously removed the infringing items once notified of their existence (Rosen Opp. at 12); and (3) eBay has not established that it did not receive a financial benefit directly attributable to the infringing activity.

    a. Designation of DMCA Compliance Officer

    Rosen argues that eBay has failed to prove that it made available accurate information as to its designated DMCA officer; the documents provided by eBay are dated through 2014, and therefore do not necessarily cover the period relevant to this case. eBay argues that § 512(c)(2) does not require the identification of a specific individual. See Hendrickson v. eBay, Inc., 165 F.Supp.2d 1082, 1092 n. 13 (C.D.Cal.2001) (holding that eBay satisfied the designation of a DMCA Compliance Officer by requesting that notices be submitted to its VeRO program and providing a hyperlink to its notice of infringement form, facsimile number and address, and did not need to identify an individual).

    Section 512(c)(2) requires that the service provider, through its service to "mak[e] available ... including on its website in a location available to the public ... substantially""the name, address, phone number, and electronic mail address of the agent."From August to December 2013, eBay designated Amber Leavitt as its copyright agent for the purposes of the DMCA. (Baldwin Decl. ¶ 27). In numerous places on its website eBay provided facsimile, telephone, email and mail contact information to parties interested in submitting infringement notices. Leavitt's contact information and name were also provided to the United States Copyright Office. The pages do not, however, mention Ms. Leavitt specifically by name. The Court determines that the information provided by eBay was sufficient for eBay to have "substantially" provided the necessary information to the public.

    Indeed, Rosen's claims as to the sufficiency of the notice are belied by the success he had in getting the 9x10 Prints and Magazine Photographs taken down in response to his NOCIs sent to eBay.

    Rosen does not establish a genuine dispute as to a material fact on this issue.

    b. eBay's Failure to Expeditiously Remove Infringing Items

    Rosen also argues that eBay does not qualify for the safe harbor because it did not expeditiously remove images it knew to be infringing. (Rosen Reply at 8; Rosen Opp. at 12). eBay acknowledges that it reposted some of the Magazine Photographs, but argues that it did so after initially removing them and later determining that they were covered by fair use. (eBay Reply at 5). This argument is dealt with below in Section E. Rosen also argues that eBay failed to comply with this requirement because, despite taking down the listings, it still kept copies of the images on its servers, and copies of the images remained available to the public through Google searches and via Terapeak's website. (Rosen Reply at 8–9).

    eBay argues that by taking down the listings of which Rosen complained it "remove[d], or disable[d] access to the material" "in every practical and realistic sense."(eBay Opp. at 11).

    Section 512(c) (1)(C) requires that a service provider "remove, or disable access to, the material."(Emphasis added). As noted by the Ninth Circuit in UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1019 (9th Cir.2013), § 512(c)"recognizes that one is unlikely to infringe a copyright by merely storing material that no one could access."That eBay retained copies of the pictures is therefore irrelevant to the inquiry if it disabled access to the works sufficient to meet the requirements of § 512(c)(1)(C).

    Rosen asserts that he was able to access the images held by eBay after it had removed the listings. (Rosen Opp. at 12). eBay argues that it has legitimate reasons for keeping copies of the images for some period after taking down the listings—including to allow reposting in response to a counter-DMCA notice—and that once a listing is taken down, eBay has disabled all "meaningful public" access to the image as required by the statute. (eBay Opp. at 13–14).

    eBay also contests the significance of Rosen's claims that he has been able to access images after the listing has been taken down. First, eBay argues that Rosen himself conceded that he may have accessed the images cached on his own machine and that Rosen has provided no evidence of any third party accessing them directly from eBay's servers rather than through a search engine. (Rosen Dep. 187:17–189:20, 247:3248:8). Second, eBay suggests that the images may have been collected by various search engines and cached when the listings were live and it is now just a matter of time before they drop from those third parties' caches. Third, eBay argues that even if Rosen was able to access the image directly, to do so he had to use the unique URL of the image taken from the listing while it was still live. That URL provides access to the stored version of the image on eBay's servers, but is not obtainable short of copying it while the listing is live.

    In UMG Recordings, while analyzing Congress's intent as to the meaning of "by reason of storage," the Ninth Circuit stated that "the language of the statute recognizes that one is unlikely to infringe a copyright by merely storing material that no one could access, and so includes activities that go beyond storage."718 F.3d at 1019. The Ninth Circuit was addressing whether § 512(c) applied to service providers beyond web hosts and so was not addressing the question of the extent to which a service provider must disable access to qualify for safe harbor protection. However, the statement does provide some guidance, as does Congress's decision to include "disabling access" in addition to "remove." The Ninth Circuit's construction of the statute suggests that first, mere storage is unlikely to lead to copyright infringement, and second, there may be legitimate reasons for storage of potentially infringing material for which there is no access.

    The next question is the extent to which access must be disabled. At one extreme, it would not be consistent with the presence of the "disabling access" alternative if a service provider who had otherwise disabled access were to be hacked and therefore be subject to copyright liability for failure to disable access to the material. On the other hand the service provider must disable access in a meaningful way. Rosen contends that his ability to copy the direct image URL for later recall from eBay's servers means access is not disabled. However, this copying is clearly not a normal or expected use of eBay's systems, and it is unclear that anyone not specifically compelled to exploit this workaround-as Rosen is-would ever use it.

    In light of the somewhat extraordinary lengths Rosen had to go to obtain copies of his images, which may or may not have actually been accessed from eBay's servers, eBay adequately disabled access to his images when it took down the listings, even when the record is viewed in the light most favorable to Rosen.

    c. eBay's Financial Benefit from Infringing Conduct

    A service provider will be excluded from the § 512(c) safe harbor if it (1) has the "right and ability to control" the infringing activity, and (2) receives "a financial benefit directly attributable to the infringing activity."17 U.S.C. § 512(c)(1) (B). Both elements must be established for safe harbor coverage to be denied. Corbis, 351 F.Supp.2d at 1109; 3 Nimmer on Copyright, § 12, 12B.04.

    Rosen asserts that eBay has the right and ability to control the infringing activity because it has software that reviews every posting, has tools to prevent and remove posts, and requires its users to provide photographs, which includes requirements as to size and resolution. Rosen also points to the determinations of the district court and Second Circuit in Tiffany (NJ) Inc. v. eBay, Inc., that eBay had the ability to control infringing activity, and argues that eBay is collaterally estopped from making arguments that it lacks control. 576 F.Supp.2d 463, 600 F.3d 93.

    However, Tiffany was a case asserting eBay's contributory liability for trademark infringement. It is therefore not appropriate to apply collateral estoppel in limiting eBay's arguments as to its right and ability to control under the DMCA based on a case applying a different standard under a different area of law.

    In order to establish that eBay has the "right and ability to control," Rosen must establish that eBay "exert[s] substantial influence on the activities of users. Substantial influence may include ... high levels of control over activities of users ... or purposeful conduct." UMG Recordings, 718 F.3d at 1030 (citations omitted).

    eBay's mere ability to block or remove access to its website is not sufficient to establish that it has the "right and ability to control infringing activity."The standard for "right and ability to control" under § 512 requires something more than common law vicarious liability. Id. at 1029 (rejecting vicarious liability standard to evaluate "right and ability to control" infringing activity under § 512(c)).

    As the Ninth Circuit explained in UMG Recordings, interpreting the control requirement such that the mere ability to remove content is sufficient would mean the prerequisite to § 512(c) protection under § 512(c)(1)(A)(iii) and (C) would at the same time be a disqualifier under § 512(c)(1)(B) where the "financial benefit" condition is met. In line with this ruling, the district court in Corbis held that Amazon's mere ability to identify vendors selling infringing goods and terminate their shops did "not mean [Amazon] exercised the type of right and ability to control that would disqualify [Amazon] from § 512(c) safe harbor." 351 F.Supp.2d at 1110. To do so, after all would place service providers in a catch–22 as efforts to establish effective notice and take-down procedures would disqualify a service provider from the safe harbor under the financial benefit requirement.

    More than just eBay's ability to remove listings is needed. Indeed, another district court has explained:

    eBay's voluntary practice of engaging in limited monitoring of its website for 'apparent' infringements under the VeRO program cannot, in and of itself, lead the Court to conclude that eBay has the right and ability to control infringing activity within the meaning of the DMCA. The legislative history shows that Congress did not intend for companies such as eBay to be penalized when they engage in voluntary efforts to combat piracy over the Internet.

    Hendrickson, 165 F.Supp.2d at 1094.

    Rosen asserts that eBay's requirement that users post a picture, and its requirements as to the picture's size and quality, means that eBay exerts control over what is posted on its website. (Rosen Opp. Br. at 13; Rosen Reply at 10; Rosen Decl. ¶ 17). This requirement imposed by eBay, however, does not meet the standard for establishing "high levels of control over activities of users." UMG Recordings, 718 F.3d at 1030. eBay does not direct users what to list, does not come into contact with the items being posted, and beyond the basic content requirements, including the photograph requirement, has no control over what its users list until the listing is complete. eBay only requires that users post a photograph to maintain the integrity of its marketplace, and provides technical requirements for that photograph. The rest of the process takes place through eBay's automated systems. Such is not enough control to disqualify eBay from the safe harbor. See e.g. Io Group, Inc. v. Veoh Networks, Inc., 586 F.Supp.2d 1132, 1153 (N.D.Cal.2008)(holding that video service provider lacked the right and ability to control infringing activity on its system where there was "no suggestion that [it] aims to encourage copyright infringement on its system [and] no evidence that [it] can control what content users choose to upload before it is uploaded").

    The Court's determination that eBay does not have a right and ability to control the content posted by users is sufficient for eBay to meet the requirement of § 512(c)(1)(B). The Court therefore need not address whether eBay also does not receive a direct financial benefit from the infringing activity.

    4. eBay is Protected by the DMCA Safe Harbor

    In light of the forgoing analysis, the Court determines that eBay qualifies for the protections of the DMCA safe harbor under 17 U.S.C. § 512(c). Accordingly, the Court rejects Rosen's claims of vicarious and contributory infringement of the 8x10 Prints.

    E. Fair Use of Magazine Photographs

    In response to Rosen's accusations regarding the Magazine Photographs, eBay argues that taking a picture of a physical copyrighted object for the purpose of legitimately selling that object under the first sale doctrine is fair use.

    eBay argues that it cannot be held liable for direct infringement arising from its re-posting of the Magazine Photographs. eBay argues that the direct infringement claims arise only as a result of eBay's attempts to balance its responsibility to respond to Rosen's NOCIs and the fair use rights of its users. The Court is sympathetic with eBay's argument that its attempt to pay heed to the procedures proscribed by Congress to balance innovation online and the protection of copyright holders' rights should not subject it to greater liability than if it merely left the images online. However, eBay cannot deny the basic fact that it volitionally placed the images online. In any event, the issue is not determinative, because, as explained below, such use of the images is fair use.

    The doctrine of fair use is a common law doctrine of judicial creation that has been codified by Congress in § 107 of the Copyright Act. Section 107 states:

    In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

    (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;

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

    17 U.S.C. § 107.

    When Congress incorporated the doctrine of fair use into the Copyright Act, it intended to restate the judicial doctrine but "not to change, narrow, or enlarge it in any way." H.R.Rep. No. 94–1476, at 66 (1976) (hereinafter "House Report"); S.Rep. No. 94–473, at 62(1975) (hereinafter "Senate Report"). Supreme Court precedents and the legislative history also make clear that fair use analysis is not appropriately conducted through the use of bright line rules, but must be dealt with on a case by case basis. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (holding that publication of verbatim quotes from the "heart" of unpublished memoirs, which was intended to supplant copyright holders' commercially valuable right of first publication was not fair use); Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417, 448 & n. 31, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (holding that sale of home video recording equipment was not contributory infringement where there were substantial non-infringing uses of the equipment); House Report at 65–66; Senate Report at 62. Further, the four statutory factors should not be treated in isolation. "All [the factors] are to be explored, and the results weighed together, in light of the purposes of copyright." Campbell v. Acuff–Rose Music, Inc. 510 U.S. 569, 578, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994) (holding that commercial character of song parody did not create presumption against fair use"). The Court must "balance these factors in light of the objectives of copyright law, rather than view them as definitive or determinative tests." Kelly v. Arriba Soft Corp., 336 F.3d 811, 818 (9th Cir.2002). Congress also specifically warned against "freez[ing] the doctrine in the statute, especially during a period of rapid technological change."House Report at 66.

    1. Purpose and Character of Use

    The first factor in a fair use inquiry is "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107(1); Campbell, 510 U.S. at 578. This factor has been given various descriptions such as, in the words of Justice Story, whether the new work merely "supersede[s] the objects" of the original creation, or whether the new work is "transformative." Campbell, 510 U.S. at 579 (quoting Pierre Leval, Toward a Fair Use Standard, 103 Harv. L.Rev. 1105, 1110–11 (1990)). While transformation is not necessary for a finding of fair use, the goal of copyright protection is "generally furthered by the creation of transformative works." Campbell, 510 U.S. at 579.

    The Ninth Circuit has adopted a two-step analysis as to the purpose and character of a copyrighted work's use. See Kelly 336 F.3d 818–19. First, whether the use of the work is commercial in nature. Second, whether such use is transformative. Kelly, 336 F.3d at 818 ("The second part of the inquiry as to this factor involves the transformative nature of the use").

    There is no doubt that eBay operates its website for commercial purposes. Further, there is no doubt that eBay and its users' alleged display and distribution of copies of Rosen's work is also for a commercial purpose. However, the Supreme Court has made clear that commercial use of copyrighted material is not determinative of this factor. Campbell, 510 U.S. at 579; Kelly, 336 F.3d at 818. The Ninth Circuit has explained that commercial use provides only slight weight against finding fair use where the use is not "highly exploitative" and intended to "save the expense of purchasing authorized copies." Kelly, 336 F.3d at 818 (use of low resolution copies in a commercial search engine was incidental and less exploitative in nature than more traditional types of commercial use); A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1015 (9th Cir.2001) ("[C]ommercial use is demonstrated by a showing that repeated and exploitative unauthorized copies of copyrighted works were made to save the expense of purchasing authorized copies.").

    The Ninth Circuit has provided guidance on this balance in cases relating to the copying of copyrighted images by internet search engines. In both Kelly v. Arriba Soft Corp., 336 F.3d 811, 818 (9th Cir.2002), and Perfect 10 v. Amazon.com, 508 F.3d 1146, 1165 (9th Cir.2007) (hereinafter "Amazon.com"), the Ninth Circuit determined that, notwithstanding the commercial nature of an internet search engine, the creation of complete copies of protected works by Arriba and Google (as defendant in Amazon.com) was transformative because of the use to which the copies were put.

    Similar to the Ninth Circuit's determination in Kelly, eBay's use of the copyrighted works is not exploitative in the traditional sense. eBay does not seek to profit from Rosen's copyright by avoiding the need to pay for authorized copies. In a manner more similar to Google and Arriba's use of thumbnails in its search engines, eBay's use of the imagines is to provide information to legitimate purchasers under the first sale doctrine, not for the artistic purpose of Rosen's original images.

    In Kelly, the Ninth Circuit looked to two other appellate decisions addressing what constitutes transformative use under the fair use doctrine to guide its determination of the issue on Arriba's creation and display of thumbnail versions of an artist's photographs. Specifically, the Ninth Circuit looked to Núñez v. Caribbean Int'l News Corp., 235 F.3d 18 (1st Cir.2000) and Worldwide Church of God v. Philadelphia Church of God, Inc., 227 F.3d 1110 (9th Cir.2000).

    In Núñez, the First Circuit determined that when a newspaper published copyrighted pictures originally intended for a modeling portfolio, it transformed the work. The court determined that the purpose and meaning of the pictures were transformed to news, creating new meaning or purpose for the work. Núñez, 235 F.3d at 23 (quoting Campbell, 510 U.S. at 579). Despite the commercial nature of the newspaper, the First Circuit determined that the transformative nature of the use suggested that the factor was neutral or weighed in favor of a finding of fair use. By comparison, in Worldwide Church, the Ninth Circuit ruled that the infringing work was not transformative because the copy of the religious book in question, when used by another church, was being used for the same purpose as the original. 227 F.3d at 1117. This ruling was despite the copy being used for a non-commercial purpose.

    The Kelly court ruled that Arriba's copying and distribution of the thumbnails to be more like that in Núñez than in Worldwide Church because the change in the purpose of the images rendered the new images transformative. Kelly, 336 F.3d at 818–20. The Ninth Circuit explained that Arriba's "thumbnails do not stifle artistic creativity because they are not used for illustrative or artistic purposes and therefore do not supplant the need for the originals. In addition, they benefit the public by enhancing information-gathering techniques on the internet." Id. at 820.

    The Ninth Circuit rejected Kelly's arguments that Arriba's thumbnails could not be transformative because they reproduced the exact image in its entirety. The Court reasoned, however, that the purpose of the reproductions was completely different from the purpose of the originals, and so they were transformative. The court further determined that Arriba's copying and distribution was fair use. Id. at 822.

    Similarly, following Kelly the Ninth Circuit in Amazon.com held that Google's use of indexed thumbnails of images owned by Perfect 10 was "highly transformative" because the search engine "puts images in a different context so that they are transformed into a new creation."508 F.3d at 1165 (quotations omitted). Indeed, despite the possibility that Google's thumbnail images could displace certain sales by Perfect 10, in the absence of evidence that this displacement had happened, the Ninth Circuit ruled that Google's transformative use of the images meant that the first factor "weigh [ed] heavily in favor of Google." Id. at 1167.

    The same is true here. Rosen's original photographs were created for an aesthetic and artistic purpose. The Magazine Photographs in question were created for the purpose of providing information as to the condition and content of the magazines in which Rosen's photographs appeared. Further, unlike in either Kelly or Amazon.com, the pictures are not exact duplications of Rosen's works, but rather duplications of Rosen's works as already altered by the editors of the magazines in which they are found. Rosen has already consented to have his works copied, altered and widely distributed as deemed fit by the editors of the magazines in question, and he has presumably been compensated accordingly.

    This determination is further buttressed by the Ninth Circuit's decision in Sony Computer Entm't Am., Inc. v. Bleem, LLC, 214 F.3d 1022, 1027 (9th Cir.2000), in which Sony challenged the use of screenshots taken by Bleem to advertise its computer software. Bleem's software competed directly with Sony's game console. The Ninth Circuit determined that despite the commercial nature of Bleem's copying, its use for comparative advertising "redounds greatly to the purchasing public's benefit with very little corresponding loss to the integrity of Sony's copyrighted material."Id. at 1027.

    Indeed, unlike in Sony, eBay is not using Rosen's work to compete with Rosen. The public also benefits greatly from being able to evaluate the magazines offered for sale legitimately under the first sale doctrine. Although perhaps the public benefits of comparative advertising are not specifically present in this case, there is nonetheless an important public benefit in allowing a thriving second-hand market for copyrighted material, and especially visual copyrighted material.

    While the commercial nature of a copy or infringing display is still an important factor, the Ninth Circuit in Amazon.com faulted the district court for not balancing the displaced commercial use of the thumbnails and the transformative nature of the work. 508 F.3d at 1168.

    At the hearing, eBay argued that the images of the magazines were of a similar size to the thumbnails in Amazon.com and should be treated accordingly. Despite eBay's representation, the images at issue are considerably larger than standard thumbnails. Nonetheless, the copies displayed on eBay's site are offered for a very different purpose to that of the original Magazine Photographs and so are transformative. Further, the images in question are pictures of magazines in which Rosen's photographs are to be found; the images had already been transformed somewhat from Rosen's original photographs.

    For his part, Rosen argued at the hearing that in Amazon.com the Ninth Circuit had remanded on the question of Google's liability for linking to full size images and this ruling precluded a finding in eBay's favor on summary judgment. However, Rosen mischaracterizes the Amazon.com court's ruling. The Ninth Circuit corrected the district court on the test it used for contributory infringement, and specifically on the requisite showing of knowledge on Google's part. Amazon.com, 508 F.3d at 1172–73. Neither the Ninth Circuit nor the district court addressed fair use when addressing Google's use of links to framed pictures, because such linking was not direct infringement.

    This factor, therefore, weighs in favor of eBay.

    2. Nature of the Copyrighted Work

    The second factor is the nature of the copyrighted work. "Works that are creative in nature are closer to the core of intended copyright protection than are more fact-based works." Kelly, 336 F.3d at 820. Rosen's photographs are creative in nature and fall within "the core of intended copyright protection." Id. However, "[t]he fact that a work is unpublished is a critical element of its 'nature.' " Harper & Row,471 U.S. at 564 (quoting 3 Nimmer on Copyright, § 13.05[A] ); Kelly 336 F.3d at 820. The right of first publication is a "one-time right" that is exhausted by publication in any medium. Amazon.com, 508 F.3d at 1167 (holding that prior publication online removed enhanced protection for first publication right and so the second factor weighed only slightly in favor of copyright holder); Batjac Prods. Inc. v. GoodTimes Home Video Corp., 160 F.3d 1223, 1235 (9th Cir.1998) (noting in the context of the common law right of first publication, that such a right "does not entail multiple first public rights in every available medium"). Because the work falls within the core of intended copyright protection, but Rosen has previously authorized publication of this work, the factor therefore weighs only slightly against a finding of fair use.

    3. Amount and Substantiality of Work Used

    Under the third factor, the Court evaluates the amount of the work used. Rosen argues that because the images copy the entirety of his works, this factor should weigh heavily against a finding of fair use. However, the Supreme Court in Campbell explained that the third factor inquires as to whether the "amount and substantiality of the portion used in relation to the copyrighted work as a whole ... [is] reasonable in relation to the purpose of the copying. Here attention turns to the persuasiveness of a parodist's justification for the particular copying done, and the enquiry will harken back to the first of the statutory factors, for, as in prior cases, we recognize that the extent of permissible copying varies with the purpose and character of the use."Campbell, 510 U.S. at 586–87.

    The Ninth Circuit also held in Kelly and Amazon.com that copying of full versions of the protected works did not preclude a finding of fair use. In Kelly, the court explained that "[i]f the secondary user only copies as much as is necessary for his or her intended use, then this factor will not weigh against him or her." Kelly, 336 F.3d at 820–21. The Kelly court concluded that while Arriba copied the entire work, "it was reasonable to do so in light of Arriba's use of the images." Id. at 821. Similarly, in Amazon.com, the Ninth Circuit explained that "[t]he fact that Google incorporates the entire Perfect 10 image into the search engine results does not diminish the transformative nature of Google's use." 508 F.3d at 1165.

    The purpose of the Magazine Photographs was to provide a potential buyer a full view of the magazine she was considering purchasing. The images contain full copies of Rosen's works only as a result of showing the magazine which contains the images. Given the Ninth Circuit's holdings in Amazon.com and Kelly that full copying of protected works for the purpose of search engine indexing resulted in the factor being neutral, the Court determines that the factor in the present instance is either neutral or weighs slightly in favor of eBay. Indeed, the purpose of the image requires that the entire work be reproduced.

    Rosen argues that copying of the works is not necessary where a description of the magazine and images would suffice. However, Rosen does not consider that the images presented are primarily of the magazines and only derivatively of his copyrighted works. To provide the most benefit to the public in offering these magazines for sale, full pictures of the magazines, as required by eBay's terms of service, is entirely reasonable. Indeed, even taken one step closer to Rosen's direct claim, the flaws in Rosen's argument are obvious. An online marketplace for copyrighted visual works being sold legitimately under the first sale doctrine would struggle immensely were the seller or broker not able to display the image itself. That the image is only derivatively a copy of Rosen's work further supports the Court's determination that the extent of copying is reasonable.

    4. Effect of Use on the Market

    The fourth factor is the "effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). Rosen argues only that because eBay's use of the image was commercial, he is entitled to a presumption that the unauthorized use of his images has "adversely affected the potential market or value of the copyrighted work."(Rosen Opp. at 21–22 (quoting Sony, 464 U.S. at 451)).

    However, as the Ninth Circuit explained in Amazon.com, the "presumption does not arise when a work is transformative because 'market substitution is at least less certain, and market harm may not be so readily inferred.' " 508 F.3d at 1168 (quoting Campbell, 510 U.S. at 591). As explained above, the use of the images by eBay and its users are transformative and are not commercially exploitative, and they do not substitute for paying for legitimate copies. The effect on the market is therefore minimal. This factor therefore weighs in favor of finding fair use.

    5. The Magazine Photographs Constitute Fair Use

    In light of the foregoing analysis the Court determines that the posting of the Magazine Photographs, as used to represent physical magazines for resale, constitutes fair use. Indeed, looking holistically at the purpose of copyright protection and the use to which the photographs are being put, the Court determines that they clearly promote the purposes of copyright by not displacing the need for the original work. The images are used for a fundamentally different purpose and promote the development of a robust legal secondary market.

    Ultimately, Rosen's arguments that a finding of fair use would "eradicate" the first sale doctrine are unpersuasive. The Court does not hold, as Rosen suggests, that the owner of a copyrighted work may, under the fair use doctrine, make copies and "publicly display works in any manner desired." (Rosen Opp. at 24). Rather, the Court concludes only that copies made of a magazine containing depictions of a copyrighted work, for the purpose of selling that magazine under the first sale doctrine, do not violate the Copyright Act under the fair use doctrine as codified in 17 U.S.C. § 107.

    At the hearing, Rosen further challenged a finding of fair use by arguing that Congress has already spoken definitively on the limits of the display, distribution and copying rights of a first sale owner. However, the fair use doctrine applies to all forms of use of copyrighted works. There is nothing in the Copyright Act that limits its application to only certain types of direct infringement. SeeHouse Report at 80 (recognizing the need to consider the "the potentialities of the new communications media" and explaining the Committee's view that "unless [the display] constitutes a fair use under section 107... transmission [as described in section 109 addressing display rights of copies of copyrighted works] would be an infringement"). While the Court considers the purpose and content of legislation, the Court finds no support for the proposition that fair use does not apply where Congress has provided more detail in its legislation.

    Rosen's proposed ruling would drastically limit the ability of any person to resell any visual copyrighted work except to those in the physical presence of the work. The Court views its modest application of the fair use doctrine as consistent with its purpose to promote rather than inhibit the goals of copyright.

    Accordingly, the Court rejects Rosen's claims of direct, vicarious, and contributory infringement of the Magazine Photographs.

    F. eBay's Automated Copying and Distribution of Images over Content Delivery Networks is Fair Use

    In his final submission on these Motions, Rosen argued for the first time that eBay had conceded that it distributed images to its CDN providers such as Akamai. (Rosen Reply at 12; Decl. of Randy Strickler, ¶¶ 3–6). The Court determines that this distribution is an inevitable and necessary part of using the internet, and ultimately a trivial activity that falls within the protections of the fair use doctrine.

    In order to ensure adequate and efficient service, service providers across the internet use CDNs to actually distribute their content. This practice ensures that a service provider does not rely on a single server of its own to maintain full operation of its service and means that the burden is spread and networks operate smoothly. In essence, rather than keeping everything in one place, an outsourced network of multiple servers is used to ensure smooth operation of the internet generally and a service provider's services in particular.

    The widespread use of CDNs means that most content is passed from a service provider to one or more third parties before reaching an end user. It is this copying and distribution of copyrighted material for which Rosen claims eBay is liable. However, such usage is minimal and is a crucial part of maintaining not only internet commerce, but the efficient operation of the internet generally. It also causes only minor and wholly incidental copying and distribution of images. The Ninth Circuit held that Google's use of cached copies of pages was fair use because it was an automatic process carried out to improve a user's internet experience, and not to exploit the copyrighted works. Amazon.com, 508 F.3d at 1169–77. As in Amazom.com, eBay's use of CDNs is designed to "enhance [a user's] use, not to supersede the copyright holders' exploitation of their works." Id. at 1169. eBay's use of CDNs is highly analogous and is fair use.

    Rosen further argued at the hearing that eBay is a sufficiently large company to afford its own wholly owned distribution networks. This argument is also unpersuasive. There is no reason to believe that a different rule should apply depending on the resources and size of the entity accused of copyright infringement. The Court has no statutory authority to fashion that rule and no guidelines exist as to which entities should be so burdened. Further, nothing in the argument changes the fact that such distribution is merely eBay's use of basic internet architecture and has trivial copyright-related effects on Rosen's images.

    IV. CONCLUSION

    For the reasons stated above, the Court GRANTS eBay's Motion for Summary Judgment Court and DENIES Rosen's Motion for Summary Judgment.

    This Order shall constitute notice of entry of judgment pursuant to Federal Rule of Civil Procedure 58. Pursuant to Local Rule 58–6, the Court ORDERS the Clerk to treat this Order, and its entry on the docket, as an entry of judgment.

  • 6 Swatch Group Management Services Ltd. v. Bloomberg LP

    742 F.3d 17 (2014)

    The SWATCH GROUP MANAGEMENT SERVICES LTD., Plaintiff-Counter-Defendant-Appellant-Cross-Appellee,
    v.
    BLOOMBERG L.P., Defendant-Counter-Claimant-Appellee-Cross-Appellant.

    Docket Nos. 12-2412-cv, 12-2645-cv.

    United States Court of Appeals, Second Circuit.

    Argued: October 21, 2013.
    Decided: January 27, 2014.

    [21] Joshua Paul (Jess M. Collen, Kristen Mogavero, on the brief), Collen IP, Ossining, NY, for Plaintiff-Counter-Defendant-Appellant-Cross-Appellee.

    John M. DiMatteo (Thomas H. Golden, Amina Jafri, on the brief), Willkie Farr & Gallagher LLP, New York, NY, for Defendant-Counter-Claimant-Appellee-Cross-Appellant.

    Before: KATZMANN, Chief Judge, KEARSE, and WESLEY, Circuit Judges.

    KATZMANN, Chief Judge:

    This case concerns the scope of copyright protection afforded to a sound recording of a conference call convened by The Swatch Group Ltd. ("Swatch Group") a foreign public company, to discuss the company's recently released earnings report with invited investment analysts. In particular, we must determine whether Defendant-Appellee Bloomberg L.P. ("Bloomberg") a financial news and data reporting service that obtained a copy of that sound recording without authorization and disseminated it to paying subscribers, may avoid liability for copyright infringement based on the affirmative defense of "fair use." 17 U.S.C. § 107. We also must determine whether we have jurisdiction to hear Bloomberg's cross-appeal on the issue of whether the sound recording of the conference call is copyrightable in the first instance.

    Plaintiff-Appellant The Swatch Group Management Services Ltd. ("Swatch"), a subsidiary of Swatch Group, appeals from a judgment of the United States District Court for the Southern District of New York (Hellerstein, J.), which sua sponte granted summary judgment to Bloomberg on Swatch's claim of copyright infringement on the ground of fair use. On appeal, Swatch argues that the district court's ruling was premature because Swatch had not yet had the opportunity to take discovery on three issues: (1) whether Bloomberg obtained and disseminated the sound recording for the purpose of "news reporting" or for some other business purpose; (2) Bloomberg's state of mind when it obtained and disseminated the recording; and (3) whether Bloomberg subscribers actually listen to sound recordings of earnings calls, or instead glean information about such calls by reading written transcripts or articles. Swatch also contends that the district court erroneously concluded that Swatch had published the sound recording before Bloomberg disseminated it. More broadly, Swatch argues that the district court erred in how it evaluated and balanced the various considerations relevant to fair use. For the reasons set forth below, we agree with the district court and hold that, upon consideration of the relevant factors and resolving all factual disputes in favor of Swatch, Bloomberg has engaged in fair use.

    In addition, Bloomberg cross-appeals from the same judgment of the district court, urging us to hold that Swatch's sound recording is not protected by the copyright laws in the first place. Swatch has moved to dismiss the cross-appeal on the grounds that Bloomberg lacks appellate standing and we lack appellate jurisdiction. That motion is granted. Because the judgment designated in Bloomberg's notice of appeal was entered in Bloomberg's favor, Bloomberg is not "aggrieved by the judicial action from which it appeals," [22] Great Am. Audio Corp. v. Metacom, Inc., 938 F.2d 16, 19 (2d Cir.1991), and therefore lacks standing. Similarly, although the district court later dismissed as moot Bloomberg's counterclaim for a declaration that Swatch's copyright is invalid, Bloomberg never filed an additional notice of appeal identifying that subsequent order as the subject of an appeal, and thus we have no jurisdiction to review it.

    Accordingly, we affirm the judgment of the district court, and we dismiss the cross-appeal.

    BACKGROUND
    I. Factual Background

    The following facts are drawn from the record before the district court and are undisputed unless otherwise noted.

    On February 8, 2011, Swatch Group released its 2010 earnings report, a seven-page compilation of financial figures and textual narrative about the company's financial performance during the prior year. Because Swatch Group is incorporated in Switzerland and its shares are publicly traded on the Swiss stock exchange, Swatch Group is governed by Swiss securities law and the listing rules of the Swiss exchange. In accordance with those rules, Swatch Group filed its earnings report with the exchange before trading opened for the day, and simultaneously posted the report in four languages (English, German, French, and Italian) on the Investor Relations section of its website.

    After it released this information to the public, Swatch Group held a conference call with an invited group of financial analysts, as is its custom. Swiss law permits public companies to hold this kind of earnings call with a limited group of analysts, provided that the company does not disclose non-public, significantly price-sensitive facts during the call. Here, Swatch Group did not reveal any significantly price-sensitive facts during the call that had not already been revealed in its previously released report. In advance of the call, Swatch Group sent invitations to all 333 financial analysts who were registered with Swatch Group's Investor Relations Department. Swatch Group held the call at 2 p.m. local Swiss time, several hours after it had released the earnings report, in order to allow European, American, and Asian analysts to participate. In the end, approximately 132 analysts joined the call. For Swatch Group's part, its Chief Executive Officer, Chief Financial Officer, and three other senior executives participated in the call from the company's offices in Switzerland.

    At Swatch Group's request, an audio conferencing vendor recorded the entire earnings call as it was in progress. At the beginning of the call, an operator affiliated with the vendor welcomed the analysts to the call and told them, "This call must not be recorded for publication or broadcast." J.A. 22. Swatch Group's executives then provided commentary about the company's financial performance and answered questions posed by fifteen of the analysts. The entire call lasted 132 minutes; Swatch Group executives spoke for approximately 106 of those minutes.

    Neither Bloomberg nor any other press organization was invited to the earnings call. Nevertheless, within several minutes after the call ended, Bloomberg obtained a sound recording and written transcript of the call and made them both available online, without alteration or editorial commentary, to subscribers to its online financial research service known as Bloomberg Professional. According to Bloomberg's promotional materials, Bloomberg Professional provides "[a] massive data stream" with "rich content" that is "unparalleled in [23] scope and depth" and is "delivered to your desktop in real time," as well as "access to all the news, analytics, communications, charts, liquidity, functionalities and execution services that you need to put knowledge into action." Id. 640.

    On February 10, 2011, after Swatch Group learned that the recording and transcript had been made available on Bloomberg terminals, Swatch Group sent Bloomberg a cease-and-desist letter demanding that they be removed. Bloomberg refused. On February 14, 2011, Swatch then filed its initial complaint against Bloomberg in this action claiming infringement of its copyright in the sound recording of the earnings call. In an agreement signed by representatives of Swatch Group and Swatch on February 14 and 15, 2011, Swatch Group assigned its interest in the copyright to its subsidiary Swatch.

    Two weeks later, on March 2, 2011, Swatch filed an application with the U.S. Copyright Office to register a copyright in a sound recording of the earnings call. The Copyright Office and Swatch then exchanged a series of emails over the scope of the claimed copyright. After Swatch narrowed the copyright to cover only the statements made by Swatch Group executives, and not the statements made by the operator or the questions posed by the analysts, the Copyright Office issued a registration on April 27, 2011.

    II. Procedural History

    As stated, Swatch filed its initial complaint in this action on February 14, 2011. Swatch then twice amended its complaint; the operative pleading thus is the Second Amended Complaint, filed on May 10, 2011. The Second Amended Complaint alleges that, by recording the earnings call and making the recording available to the public, Bloomberg infringed Swatch's exclusive rights "to reproduce the copyrighted work" and "to distribute copies or phonorecords of the work to the public." 17 U.S.C. § 106(1), (3). Swatch does not challenge Bloomberg's preparation or distribution of the written transcript of the earnings call.[1]

    On May 20, 2011, Bloomberg moved under Rule 12(b)(6) to dismiss the Second Amended Complaint for failure to state a claim, arguing inter alia that the earnings call was not copyrightable in the first place and that Bloomberg's copying and dissemination of the call was fair use. The district court denied that motion in an order entered on August 30, 2011. Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P. ("Swatch I"), 808 F.Supp.2d 634 (S.D.N.Y. 2011). The district court found that the recording was copyrightable, id. at 638-39, and declined to address the "fact-intensive" questions implicated by Bloomberg's fair use defense on a motion to dismiss, id. at 641.

    At an in-court conference held two weeks later on September 16, 2011, however, the district court informed the parties of its belief that it could resolve the case through a motion for judgment on the pleadings, and directed Swatch to file such a motion. Swatch moved as directed on October 21, 2011, and Bloomberg opposed. The district court held oral argument on December 12, 2011, at which it denied Swatch's motion and explained that, in the court's view, "defendant's use qualifies as fair use." J.A. 581. Later that day, the district court issued a summary order stating that it had "preliminarily granted judgment [24] to Defendant on the basis that if Defendant's alleged actions constitute infringement, they are protected as fair use." Id. 584. The order directed Swatch to submit "a brief regarding the existence of any triable issues of material fact with respect to Defendant's fair use affirmative defense." Id. Swatch did so, pointing out that it had taken no discovery in the action.

    In an opinion and order entered on May 17, 2012, the district court sua sponte granted summary judgment to Bloomberg, finding that Bloomberg's copying and dissemination of the recording qualify as fair use. Swatch Grp. Mgmt. Servs. Ltd. v. Bloomberg L.P. ("Swatch II"), 861 F.Supp.2d 336 (S.D.N.Y.2012). On May 18, 2012, the clerk of the district court entered judgment "in favor of defendant." J.A. 7.

    On June 14, 2012, Swatch filed a timely notice of appeal from that judgment. On June 28, 2012, Bloomberg filed a notice of cross-appeal from the same judgment, and on July 24, 2012, Swatch moved to dismiss the cross-appeal. On August 27, 2012, after the parties had filed a stipulation of dismissal without prejudice to reinstatement under Local Rule 42.1, the district court issued an order dismissing as moot all of Bloomberg's counterclaims, including the counterclaim for a declaration that Swatch's copyright is invalid. On November 13, 2012, upon receipt of a letter from Swatch, the Clerk reinstated the appeal. Finally, on January 14, 2013, the motions panel of this Court referred Swatch's motion to dismiss the cross-appeal to the merits panel.

    DISCUSSION

    We review a district court's grant of summary judgment de novo, resolving all ambiguities and drawing all reasonable inferences against the moving party. See Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc., 697 F.3d 59, 63-64 (2d Cir.2012). Summary judgment is appropriate only where the record shows "that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Under Federal Rule of Civil Procedure 56(f), district courts have discretion to grant summary judgment sua sponte "[a]fter giving notice and a reasonable time to respond" and "after identifying for the parties material facts that may not be genuinely in dispute." Fed.R.Civ.P. 56(f), (f)(3); see also Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("[D]istrict courts are widely acknowledged to possess the power to enter summary judgments sua sponte, so long as the losing party was on notice that [it] had to come forward with all of [its] evidence."). Before granting summary judgment sua sponte, however, a district court "must assure itself that following the procedures set out in Rule 56[ (a)-(e) ] would not alter the outcome." Ramsey v. Coughlin, 94 F.3d 71, 74 (2d Cir.1996). In other words, "[d]iscovery must either have been completed, or it must be clear that further discovery would be of no benefit," such that "the record ... reflect[s] the losing party's inability to enhance the evidence supporting its position and the winning party's entitlement to judgment." Id.[2]

    [25] I. Fair Use

    The Copyright Act of 1976 grants copyright holders a bundle of exclusive rights, including the rights to "reproduce, perform publicly, display publicly, prepare derivative works of, and distribute copies of" the copyrighted work. Arista Records LLC v. Doe 3, 604 F.3d 110, 117 (2d Cir. 2010) (citing 17 U.S.C. § 106). Because copyright law recognizes the need for "breathing space," Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994), however, a defendant who otherwise would have violated one or more of these exclusive rights may avoid liability if he can establish that he made "fair use" of the copyrighted material. Though of common-law origin, the doctrine of fair use is now codified at 17 U.S.C. § 107, which provides that "the fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright."

    To evaluate whether a particular use qualifies as "fair use," we must engage in "an open-ended and context-sensitive inquiry." Blanch v. Koons, 467 F.3d 244, 251 (2d Cir.2006). The Copyright Act directs that, in determining whether a particular use is fair, "the factors to be considered shall include":

    (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

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

    17 U.S.C. § 107. Though mandatory, these four factors are non-exclusive. Moreover, "[a]lthough defendants bear the burden of proving that their use was fair, they need not establish that each of the factors set forth in § 107 weighs in their favor." NXIVM Corp. v. Ross Inst., 364 F.3d 471, 476-77 (2d Cir.2004) (internal citation omitted). Rather, "[a]ll [factors] are to be explored, and the results weighed together, in light of the purposes of copyright." Campbell, 510 U.S. at 578, 114 S.Ct. 1164. "The ultimate test of fair use is whether the copyright law's goal of promoting the Progress of Science and useful Arts would be better served by allowing the use than by preventing it." Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 608 (2d Cir.2006) (quoting Castle Rock Entm't Inc. v. Carol Publi'g Grp., 150 F.3d 132, 141 (2d Cir. 1998)) (ellipsis omitted).

    The determination of fair use is a mixed question of fact and law. Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). While we have reversed district courts that too hastily resolved factual questions relevant to fair use on summary judgment, see, e.g., Ringgold v. Black Entm'nt Television, Inc., 126 F.3d 70, 81 (2d Cir.1997), "this [C]ourt has on a number of occasions resolved fair use determinations at the summary judgment stage where there are no genuine issues of material fact." Blanch, 467 F.3d at 250 (quoting Castle Rock Entm't, 150 F.3d at 137) (ellipsis omitted).

    A. Purpose and Character of Use

    We turn first to "the purpose and character of the use." 17 U.S.C. § 107(1). This statutory factor encompasses within it a number of distinct considerations, including "whether [the] use is of a commercial nature or is for nonprofit educational purposes," [26] id.; whether the use is "transformative" or "merely supersedes the objects of the original creation," Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (quotation marks and brackets omitted); whether the defendant acted in good faith, see NXIVM, 364 F.3d at 478; and whether the defendant engaged in "news reporting" or another activity illustratively listed in § 107 as indicative of fair use, see Harper & Row, 471 U.S. at 561, 105 S.Ct. 2218. Below, the district court found that this factor as a whole favored fair use because "[B]loomberg's work as a prominent gatherer and publisher of business and financial information serves an important public interest, for the public is served by the full, timely and accurate dissemination of business and financial news." Swatch II, 861 F.Supp.2d at 340.

    Swatch argues that this conclusion was error for several reasons. First, Swatch contends that the district court improperly accepted Bloomberg's unsubstantiated claim that it had engaged in "news reporting." Swatch notes that Bloomberg itself has characterized its Bloomberg Professional service as delivering both financial "news" and "data," and argues that the district court erred in denying Swatch the chance to develop facts in discovery to show that the sound recording at issue here is the latter and not the former. Similarly, Swatch argues that the district court improperly denied Swatch the chance to develop facts relevant to Bloomberg's state of mind. Swatch acknowledges that the district court "credited [Swatch]'s allegations that [Bloomberg] was not authorized to access the Earnings Call and that [Bloomberg]'s publication of the Infringing Work violated [Swatch Group's] directive," Swatch II, 861 F.Supp.2d at 343, but argues that Swatch should have been able to take discovery into whether Bloomberg knew at the time that obtaining and publishing the recording violated Swatch Group's directive. Swatch also argues that it should have been permitted to take discovery into whether Bloomberg Professional subscribers actually choose to access information about earnings calls by listening to recordings, or instead by reading written transcripts or articles. More broadly, Swatch argues that the district court gave insufficient weight to the fact that Bloomberg's use was commercial and did not transform the underlying recording.

    We find these arguments unpersuasive and hold that the first statutory factor favors fair use here. To begin with, whether one describes Bloomberg's activities as "news reporting," "data delivery," or any other turn of phrase, there can be no doubt that Bloomberg's purpose in obtaining and disseminating the recording at issue was to make important financial information about Swatch Group available to American investors and analysts. That kind of information is of critical importance to American securities markets. Indeed, as Bloomberg points out, the Securities and Exchange Commission ("SEC") has mandated that when American companies disclose this kind of material nonpublic information, they must make it available to the public immediately. See Regulation FD, 17 C.F.R. § 243.100. At a minimum, a use of copyrighted material that serves this public purpose is very closely analogous to "news reporting," which is indicative of fair use. See Harper & Row, 471 U.S. at 561, 105 S.Ct. 2218 ("News reporting is one of the examples enumerated in § 107 to `give some idea of the sort of activities the courts might regard as fair use under the circumstances.'") (quoting S.Rep. No. 94-473, at 61 (1975)). We agree with the district court, moreover, that this important public purpose underlying Bloomberg's use overcomes the countervailing [27] weight we would otherwise give to Bloomberg's clandestine methods and the commercial, nontransformative nature of its use.[3]

    Seizing on Bloomberg's citation to Regulation FD, Swatch protests that in crafting that regulation, the SEC expressly exempted "foreign private issuer[s]" like Swatch Group that are "incorporated or organized under the laws of [a] foreign country." 17 C.F.R. §§ 243.101(b), 230.405. In fact, as initially proposed, Regulation FD would have applied to such issuers, see Selective Disclosure and Insider Trading, 64 Fed.Reg. 72,590, 72,597 (Dec. 28, 1999), but the SEC ultimately "determined to exempt foreign private issuers... as it has in the past exempted them from certain U.S. reporting requirements such as Forms 10-Q and 8-K," Selective Disclosure and Insider Trading, 65 Fed.Reg. 51,716, 51,724 (Aug. 24, 2000). Swatch thus argues that giving weight to a public interest in the dissemination of important financial information in this case would in effect erase foreign issuers' exemption from Regulation FD and set up organizations like Bloomberg as private enforcers of U.S. public disclosure rules.

    This argument, however, misapprehends the limited relevance of Regulation FD to this case. The regulation merely provides additional support for a proposition that would be clear in any event: American investors and analysts have an interest in obtaining important financial information about companies whose securities are traded in American markets. The fact that the SEC has chosen not to require foreign issuers to follow certain disclosure rules imposed on domestic issuers in no way implies that information about foreign issuers is irrelevant to American markets. Indeed, Swatch Group recognized as much by scheduling its earnings call at a time when American analysts would be able to attend. Accordingly, contrary to Swatch's suggestion, nothing in our decision today subjects Swatch Group or any other foreign issuer to the requirements of Regulation FD. Nor do we hold that a foreign issuer's failure to follow Regulation FD prevents it from enforcing its copyrights in the United States. We merely hold that where a financial research service obtains and disseminates important financial information about a foreign company in order to make that information available to American investors and analysts, that purpose supports a finding of fair use.

    Swatch stands on firmer ground when it stresses the commercial nature of Bloomberg's use. Section 107 expressly directs courts to consider whether the use "is of a commercial nature or is for nonprofit educational purposes," 17 U.S.C. § 107(1), and we have held that "[t]he greater the private economic rewards reaped by the secondary user (to the exclusion of broader public benefits), the more likely the first factor will favor the copyright holder and the less likely the use will be considered fair." Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 922 (2d Cir. 1994). It is undisputed here that Bloomberg is a commercial enterprise and that Bloomberg Professional is a subscription service available to paying users. At the same time, we have recognized that "[a]lmost all newspapers, books and magazines are published by commercial enterprises that seek [28] a profit," Consumers Union of U.S., Inc. v. Gen. Signal Corp., 724 F.2d 1044, 1049 (2d Cir.1983), and have discounted this consideration where "the link between [the defendant]'s commercial gain and its copying is ... attenuated" such that it would be misleading to characterize the use as "commercial exploitation." Am. Geophysical Union, 60 F.3d at 922. Here, Swatch does not contest that Bloomberg Professional is a multifaceted research service, of which disseminating sound recordings of earnings calls is but one small part. Moreover, it would strain credulity to suggest that providing access to Swatch Group's earnings call more than trivially affected the value of that service. So while we will not ignore the commercial nature of Bloomberg's use, we assign it somewhat reduced weight.

    Bloomberg's lack of good faith likewise merits relatively little weight in this case. "[W]hile the good or bad faith of a defendant generally should be considered, it generally contributes little to fair use analysis." NXIVM, 364 F.3d at 479 n. 2 (citing Campbell, 510 U.S. at 585 n. 18, 114 S.Ct. 1164). Bloomberg does not dispute that it obtained the recording of the earnings call in violation of Swatch Group's express directive that the call "must not be recorded for publication or broadcast," J.A. 22, and, resolving all factual disputes in Swatch's favor, we must assume Bloomberg was fully aware that its use was contrary to Swatch Group's instructions. But Bloomberg's overriding purpose here was not to "scoop[]" Swatch or "supplant the copyright holder's commercially valuable right of first publication," Harper & Row, 471 U.S. at 562, 105 S.Ct. 2218, but rather simply to deliver newsworthy financial information to American investors and analysts. That kind of activity, whose protection lies at the core of the First Amendment, would be crippled if the news media and similar organizations were limited to authorized sources of information. See generally New York Times Co. v. United States, 403 U.S. 713, 91 S.Ct. 2140, 29 L.Ed.2d 822 (1971).

    Fair use must also take account of the transformativeness of the use — that is, the degree to which "the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (internal citations, quotation marks and alterations omitted). While a transformative use generally is more likely to qualify as fair use, "transformative use is not absolutely necessary for a finding of fair use," id., and indeed, some core examples of fair use can involve no transformation whatsoever. See 17 U.S.C. § 107 (listing "multiple copies for classroom use" among illustrative examples of fair use).

    In the context of news reporting and analogous activities, moreover, the need to convey information to the public accurately may in some instances make it desirable and consonant with copyright law for a defendant to faithfully reproduce an original work rather than transform it. In such cases, courts often find transformation by emphasizing the altered purpose or context of the work, as evidenced by surrounding commentary or criticism. See, e.g., Bill Graham Archives, 448 F.3d at 609-610; Nunez v. Caribbean Int'l News Corp., 235 F.3d 18, 22-23 (1st Cir.2000). Here, Bloomberg provided no additional commentary or analysis of Swatch Group's earnings call. But by disseminating not just a written transcript or article but an actual sound recording, Bloomberg was able to convey with precision not only what Swatch Group's executives said, but also how they said it. This latter type of information [29] may be just as valuable to investors and analysts as the former, since a speaker's demeanor, tone, and cadence can often elucidate his or her true beliefs far beyond what a stale transcript or summary can show. As courts have long recognized in the context of witness testimony, "`a cold transcript contains only the dead body of the evidence, without its spirit,'" and "cannot reveal ... `[t]he speaker's hesitation, his doubts, his variations of language, his confidence or precipitancy, his calmness or consideration.'" Zhou Yun Zhang v. INS, 386 F.3d 66, 73-74 (2d Cir.2004) (quoting Regina v. Bertrand, L.R. [1867] 1 L.R.P.C. 520, 535), overruled on other grounds by Shi Liang Lin v. U.S. Dep't of Justice, 494 F.3d 296, 305 (2d Cir.2007).

    To be sure, "[t]he promise of copyright would be an empty one if it could be avoided merely by dubbing the infringement a fair use `news report.'" Harper & Row, 471 U.S. at 557, 105 S.Ct. 2218. But here, in light of the independent informational value inherent in a faithful recording of the earnings call, the fact that Bloomberg did not transform Swatch's work through additional commentary or analysis does not preclude a finding that the "purpose and character" of Bloomberg's use favors fair use.

    Our decisions in Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 166 F.3d 65 (2d Cir.1999), Wainwright Securities, Inc. v. Wall Street Transcript Corp., 558 F.2d 91 (2d Cir.1977), and Financial Information, Inc. v. Moody's Investors Service, Inc. ("FII"), 751 F.2d 501 (2d Cir.1984), on which Swatch relies, are not to the contrary. In those cases, we rejected fair use arguments pressed by defendants who purported to be serving the public by providing access to important financial information. In Nihon and Wainwright, we stressed that the defendants had not supplemented or otherwise transformed the plaintiffs' works, but had instead simply translated Japanese business articles into English, Nihon, 166 F.3d at 69, or recounted the critical conclusions and predictions from research reports about major industrial and financial corporations, Wainwright, 558 F.2d at 93 & n. 1. In FII, we rejected a fair use defense by a ratings agency that had copied information about municipal bond redemptions compiled by a competing financial publisher. FII, 751 F.2d at 502-03. Criticizing the district court's conclusion that the defendant's use served a "public function," we stated that to so hold "would, it seems to us, state a rule that whenever there is a market for information, the paid delivery of goods to that market rises to a public function." Id. at 509. We rejected such a rule, finding that it would "distort" proper fair use analysis. Id.

    In all three of these cases, however, the defendants appropriated works in which the copyright owner had transformed raw financial information by compiling it from multiple sources or by mixing it with their own commentary and analysis. Here, by contrast, the statements captured in the sound recording, including the particular modes of expression used by Swatch Group's executives, were themselves pieces of financial information. In other words, while our previous cases concerned the appropriation of secondary sources that had compiled or commented on financial news, this case concerns the use of a primary source that itself was financial news. We find this distinction significant. As the Supreme Court has observed, "[t]he news element — the information respecting current events contained in the literary production — is not the creation of the writer, but is a report of matters that ordinarily are publici juris; it is the history of the day." Harper & Row, 471 U.S. at 556, 105 S.Ct. 2218 (quoting Int'l News Serv. v. [30] Assoc. Press, 248 U.S. 215, 234, 39 S.Ct. 68, 63 L.Ed. 211 (1918)).

    The discovery Swatch seeks would not alter our analysis. With respect to the request for discovery into whether Bloomberg delivered "news" or "data" to its subscribers, such a distinction raises a semantic rather than factual dispute. It is undisputed that Bloomberg gave subscribers access to the full, unaltered sound recording of Swatch Group's earnings call as part of its paid financial research service. That is sufficient for present purposes. There is likewise no need for further discovery into Bloomberg's good or bad faith, for we, like the district court, have resolved that subfactor in Swatch's favor. We also see no need to resolve how many of Bloomberg's subscribers chose to listen to the sound recording in question rather than read a written transcript or article. As we have explained, because the sound recording conveys information that a transcript or article cannot, the recording has independent value, regardless of how many Bloomberg subscribers chose to avail themselves of that independent value in this instance.

    This first factor accordingly favors fair use.

    B. Nature of the Copyrighted Work

    The second statutory fair use factor concerns "the nature of the copyrighted work." 17 U.S.C. § 107(2). This factor accounts for the fact that "some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Campbell, 510 U.S. at 586, 114 S.Ct. 1164. As relevant here, this factor requires us to consider the extent of Swatch's copyright in the recording — the "thickness" or "thinness" of Swatch's exclusive rights — as well as whether or not the recording had been published at the time of Bloomberg's use. See id. (citing cases). The district court determined that this factor favored fair use because Swatch's copyright was "at best ... `thin'" and because "the first publication of Swatch Group's expression occurred prior to [Bloomberg]'s publication of the Infringing Work." Swatch II, 861 F.Supp.2d at 341.

    Swatch argues that the district court erred in concluding that the recording had been published. Swatch points out that the Copyright Act contemplates two methods of publishing an audio recording: "the distribution of ... phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending," or "offering to distribute ... phonorecords to a group of persons for purposes of further distribution, public performance, or public display." 17 U.S.C. § 101 (defining "publication"). "Phonorecords," in turn, are defined as "material objects in which sounds ... are fixed ... and from which the sounds can be perceived, reproduced, or otherwise communicated." Id. Applying these definitions, Swatch contends that the sound recording of the earnings call has never been published. Simply put, Swatch has never, before or after Bloomberg's use, "distribut[ed]" a CD or other "material object" embodying the spoken commentary on the earnings call "to the public," nor has it ever "offer[ed] to distribute" a phonorecord of the call to any "group of persons for purposes of further distribution, public performance, or public display."

    Swatch is unquestionably correct that the earnings call is unpublished under the definition of "publication" set forth in § 101. But that technical definition does not control our analysis of this aspect of the second fair use factor. While we will consider the statutory definition, we also [31] will not blind ourselves to the fact that Swatch Group invited over three hundred investment analysts from around the globe to the earnings call, out of which over a hundred actually attended. Thus, even though the sound recording remains statutorily unpublished, it is clear that Swatch was not deprived of the ability to "control the first public appearance of [its] expression," including "when, where, and in what form" it appeared. Harper & Row, 471 U.S. at 564, 105 S.Ct. 2218.

    Swatch insists that because the definitions in § 101 by their terms apply for all purposes under the Copyright Act "[e]xcept as otherwise provided in this title," 17 U.S.C. § 101, the statutory definition of "publication" must control. Not so. While in general, "[s]tatutory definitions control the meaning of statutory words," Burgess v. United States, 553 U.S. 124, 129, 128 S.Ct. 1572, 170 L.Ed.2d 478 (2008) (quoting Lawson v. Suwannee Fruit & S.S. Co., 336 U.S. 198, 201, 69 S.Ct. 503, 93 L.Ed. 611 (1949)), in this case, no variant of the word "publish" appears in the text of the second fair use factor in § 107. Whether or not a work was published thus enters into our analysis of this factor as a judicial gloss on "the nature of the copyrighted work." That gloss, of course, is firmly grounded in fair use's common law origins and the legislative history of the 1976 Copyright Act. See Harper & Row, 471 U.S. at 552-54, 105 S.Ct. 2218.

    To the extent the text of § 107 mentions publication, it is only in a closing proviso cautioning that "[t]he 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." Congress added this proviso to § 107 in 1992, see Pub.L. No. 102-492, 106 Stat. 3145 (1992), to clarify, in response to certain decisions of this Court, that there is no "per se rule barring any fair use of unpublished works." H.R.Rep. No. 102-836, at 4, 9 (1992) (discussing New Era Publications International, ApS v. Henry Holt & Co., Inc., 873 F.2d 576 (2d Cir. 1989), and Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir.1987)). While this proviso indicates by clear implication that inquiry into a work's publication status is relevant to fair use, it in no way limits our consideration of that issue to the statutory definition of "publication" in § 101. To the contrary, the proviso directs that if we find a work to be "unpublished," however that term is understood, our analysis of the four statutory factors, including "the nature of the copyrighted work," cannot end there.

    Limiting our consideration of a work's publication status to the statutory definition, moreover, would obscure the different purposes served by the statutory definition and the judicial gloss on "the nature of the copyrighted work" in the context of fair use. The statutory concept of "publication" serves numerous purposes, such as triggering the requirement to deposit a copy with the Library of Congress, see 17 U.S.C. § 407, measuring the copyright term for certain categories of works, see id. § 302(c)-(e), setting the circumstances under which works by foreign authors are protected, see id. § 104(b), and determining the legal effect of registration, see id. §§ 410(c), 412. See also 1 Nimmer on Copyright § 4.01 (explaining the significance of publication). Publication as a judicial gloss on "the nature of the copyrighted work," by contrast, aims to take account of "the author's right to control the first public appearance of his expression," Harper & Row, 471 U.S. at 564, 105 S.Ct. 2218, which in turn forms part of our "open-ended and context-sensitive inquiry" into whether allowing the use in question would serve the goals of copyright, Blanch, 467 F.3d at 251.

    [32] This is not the first time that we have found that the second statutory factor favors fair use even though the work in question was technically unpublished under the statutory definition, see Diamond v. Am-Law Pub. Corp., 745 F.2d 142, 144, 148 (2d Cir. 1984), and courts in fact commonly look past the statutory definition when considering this issue, see, e.g., Rotbart v. J.R. O'Dwyer Co., Inc., No. 94 Civ.2091(JSM), 1995 WL 46625, at *4 (S.D.N.Y. Feb. 7, 1995) (finding that an unfixed, undisseminated talk, delivered publicly, had been "de facto published" for purposes of fair use); see also 4 Nimmer on Copyright § 13.05[A][2][b][ii] ("If the author does not seek confidentiality, fair use is not necessarily precluded even as to an unpublished work.").[4] We accordingly agree with the district court that although the sound recording is statutorily unpublished, because Swatch Group publicly disseminated the spoken performance embodied in the recording before Bloomberg's use, the publication status of the work favors fair use.

    Swatch does not challenge the district court's determination that Swatch's copyright in the earnings call is "at best... `thin,'" Swatch II, 861 F.Supp.2d at 341, nor could it. It is well established that "the scope of fair use is greater with respect to factual than non-factual works." New Era Publ'ns, 904 F.2d at 157. Moreover,

    [e]ven within the field of fact works, there are gradations as to the relative proportion of fact and fancy. One may move from sparsely embellished maps and directories to elegantly written biography. The extent to which one must permit expressive language to be copied, in order to assure dissemination of the underlying facts, will thus vary from case to case.

    Harper & Row, 471 U.S. at 563, 105 S.Ct. 2218 (quoting Robert A. Gorman, Fact or Fancy? The Implications for Copyright, 29 J. Copyright Soc'y 560, 561 (1982)).

    There can be no doubt as to the manifestly factual character of the earnings call in this case. The entire copyrighted portion of the call consists of Swatch Group executives explaining the company's financial performance and outlook to a group of investment analysts. And while we assume without deciding in this appeal that the call contained sufficient original expression — in the form of the executives' tone, cadence, accents, and particular choice of words — to be copyrightable, the purpose of the call was not in any sense to showcase those forms of expression. Rather, the call's sole purpose was to convey financial information about the company to investors and analysts.[5]

    [33] The through-and-through factual nature of the earnings call places it at the very edge of copyright's protective purposes. In light of that fact, as well as Swatch Group's prior dissemination of its executives' copyrighted expression, we find that the second statutory factor strongly favors fair use.

    C. Amount and Substantiality of the Portion Used

    We turn now to "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). This factor asks whether "the quantity and value of the materials used are reasonable in relation to the purpose of the copying." Campbell, 510 U.S. at 586, 114 S.Ct. 1164 (internal citations and quotation marks omitted). In general, "the more of a copyrighted work that is taken, the less likely the use is to be fair." Infinity Broad. Corp. v. Kirkwood, 150 F.3d 104, 109 (2d Cir.1998). It is undisputed here that Bloomberg used the entire work. The district court acknowledged that "this generally weighs against fair use," but found that the public interest in the information contained in the recording "is better served by the dissemination of that information in its entirety, including the incidents of oral speech that do not translate onto the page but color the purely factual content." Swatch II, 861 F.Supp.2d at 342.

    Swatch argues that the district court improperly resolved this factor in Bloomberg's favor because, as it also argued with respect to the first fair use factor, there are genuine disputes of material fact regarding whether Bloomberg subscribers glean information about earnings calls by listening to audio recordings or instead by reading a written transcript or article.

    We are unpersuaded. As an initial matter, we do not understand the district court to have affirmatively weighed the third statutory fair use factor in Bloomberg's favor. Such a holding would have been novel, as "[n]either our court nor any of our sister circuits has ever ruled that the copying of an entire work favors fair use." Bill Graham Archives, 448 F.3d at 613. Rather, we believe that the district court found this factor neutral, refusing to weigh it in Swatch's favor despite Bloomberg's use of the entire recording because of the public interest in the information embodied in the recording. That holding is entirely consistent with our case law. As we have recognized, a number of courts "have concluded that such copying does not necessarily weigh against fair use because copying the entirety of a work is sometimes necessary to make a fair use." Id. (citing cases); see also Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 449-55, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (finding copying of an entire work to be fair use).

    For the reasons already explained in our discussion of the first fair use factor, we agree with the district court that Bloomberg's use of the entire recording was reasonable in light of its purpose of disseminating important financial information to American investors and analysts. The recording has independent informational value over and above the value of a written transcript or article, regardless of how many Bloomberg subscribers took advantage of that value in this instance. Like the district court, we accordingly weigh this factor in neither party's favor.

    D. Effect upon the Market for or Value of the Original

    The final fair use factor considers "the effect of the use upon the potential [34] market for or value of the copyrighted work." 17 U.S.C. § 107(4). This factor "requires courts to consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also whether unrestricted and widespread conduct of the sort engaged in by the defendant would result in a substantially adverse impact on the potential market for the original." Campbell, 510 U.S. at 590, 114 S.Ct. 1164 (quotation marks and alterations omitted). We have described this factor as "requir[ing] a balancing of `the benefit the public will derive if the use is permitted and the personal gain the copyright owner will receive if the use is denied.'" Bill Graham Archives, 448 F.3d at 613 (quoting MCA, Inc. v. Wilson, 677 F.2d 180, 183 (2d Cir.1981)).

    The district court weighed this factor in favor of fair use, noting that "the relevant market effect is that which stems from [Bloomberg]'s use of the original expression of Swatch Group's senior officers, not that which stems from [Bloomberg]'s work as a whole." Swatch II, 861 F.Supp.2d at 342. The district court found "[n]othing in the record [that] suggests any possible market effect stemming from [Bloomberg]'s use of such a limited portion of the recording." Id. The district court further found that any conceivable effect was outweighed by the public benefit of providing the information contained in the call to American investors and analysts. Id.

    Swatch argues that this analysis was erroneous because the district court again assumed that affording American investors and analysts access to the recording, as opposed to a written transcript or article, served the public interest. As we have already explained, we see nothing mistaken in that finding.

    Swatch also contends that it was improperly denied the opportunity to take discovery into the existence of a market for audio recordings of earnings calls conducted by foreign companies that, like Swatch Group, are exempt from Regulation FD. Swatch admitted in its answer to Bloomberg's counterclaims that it "did not seek to profit from the publication of the February 8, 2011 Earnings Call in audio or written format." J.A. 294. Any discovery thus would concern a potential market, as yet untapped by Swatch, for recordings of exempt earnings calls.

    While the loss of a potential yet untapped market can be cognizable under the fourth fair use factor, the potential market here is defined so narrowly that it begins to partake of circular reasoning. As Professor Nimmer has observed, "it is a given in every fair use case that plaintiff suffers a loss of a potential market if that potential is defined as the theoretical market for licensing the very use at bar." 4 Nimmer on Copyright § 13.05[A][4]. To guard against this "vice of circular reasoning," our case law limits our consideration to a use's "impact on potential licensing revenues for traditional, reasonable, or likely to be developed markets." Am. Geophysical Union, 60 F.3d at 930-31. The hypothesized market for audio recordings of earnings calls convened by foreign companies that are exempt from Regulation FD cannot meet this standard.

    Moreover, to the extent that a financial news or research organization might be willing to pay to obtain such recordings, we must bear in mind that while "[t]he immediate effect of our copyright law is to secure a fair return for an `author's' creative labor," the "ultimate aim is, by this incentive, to stimulate creativity for the general public good." Fogerty v. Fantasy, Inc., 510 U.S. 517, 526-27, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994) (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 45 L.Ed.2d 84 (1975)). Here, the possibility [35] of receiving licensing royalties played no role in stimulating the creation of the earnings call. Indeed, Swatch affirmatively argues that it does not know whether there is a potential market for this kind of recording, and cannot know without obtaining discovery from Bloomberg. The context of the earnings call, moreover, makes perfectly plain that its purpose was to enable Swatch Group executives to disseminate financial information about the company in a way that they believed would be advantageous. It is that calculation of advantageousness, and not the possibility of receiving royalties, that induces Swatch Group and other similarly situated companies to hold earnings calls.

    Put differently, the "value" of the copyrighted expression for Swatch Group in this case lay not in its capacity to generate licensing royalties, but rather in its capacity to convey important information about the company to interested investment analysts. By making the recording available to analysts who did not or could not participate in the call initially, Bloomberg simply widened the audience of the call, which is consistent with Swatch Group's initial purpose. Cf. Sony, 464 U.S. at 421, 104 S.Ct. 774 (noting that the fair use known as "timeshifting" — recording a television program in order to view it in its entirety at a later time — "enlarges the television viewing audience" and therefore would not impair the value of the copyright to the plaintiffs). At most, Bloomberg's use had the effect of depriving Swatch Group of the ability to know and control precisely who heard the call. But whatever cognizable interest Swatch Group has in maintaining that ability, it is far outweighed by the public interest in the dissemination of important financial information. As we recently observed in a related context, "a [f]irm's ability to make news — by issuing a [report] that is likely to affect the market price of a security — does not give rise to a right for it to control who breaks that news and how." Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 907 (2d Cir.2011).

    We accordingly agree with the district court that, balancing the public benefits of the use against the potential private royalties lost, the fourth statutory factor weighs in favor of fair use.

    E. Balance of Factors

    Balancing the four statutory factors together, we conclude that "the copyright law's goal of promoting the Progress of Science and useful Arts would be better served by allowing [B]loomberg's use than by preventing it." Bill Graham Archives, 448 F.3d at 608 (quoting Castle Rock, 150 F.3d at 141). Although Bloomberg obtained the recording without authorization and put it to commercial use without transforming it, Bloomberg's use served the important public purpose, also reflected in Regulation FD, of ensuring the wide dissemination of important financial information. Moreover, although the recording remains technically unpublished under § 101, Swatch Group controlled the first dissemination of its executives' expression to the public. In addition, Swatch's copyright is exceedingly thin, as the recording is thoroughly factual in nature. Indeed, the whole purpose of the conference call was to convey financial information about Swatch Group to analysts and investors around the world. And while Bloomberg used the recording in its entirety, doing so was reasonably necessary in light of Bloomberg's purpose. Finally, we are confident that this type of use will neither significantly impair the value of earnings calls to foreign companies that convene and record them, nor appreciably alter the incentives for the creation of original expression. In sum, Bloomberg's use is fair use.

    [36] II. Bloomberg's Cross-Appeal

    Having resolved Swatch's main appeal on the ground of fair use without reaching the issue of copyrightability, we must address Swatch's motion to dismiss Bloomberg's cross-appeal. That motion is granted, for two reasons.

    First, it is axiomatic that "[i]n order to have standing to appeal, a party must be aggrieved by the judicial action from which it appeals." Great Am. Audio Corp., 938 F.2d at 19. Here, the May 18, 2012 judgment identified in Bloomberg's notice of appeal as the subject of the cross-appeal provides simply: "[f]or the reasons stated in the Court's Opinion and Order dated May 17, 2012, judgment is hereby entered in favor of [Bloomberg]." Special App. 13. The May 17, 2012 Opinion and Order, in turn, had explained that "since [Bloomberg]'s use qualifies as fair use, [Bloomberg] has not infringed, and [Swatch]'s Second Amended Complaint should be dismissed." Swatch II, 861 F.Supp.2d at 343.

    Bloomberg argues that it is aggrieved by the May 18, 2012 judgment because it seeks a decision not only as to whether its use was fair use, but also as to whether Swatch's recording was validly copyrightable in the first place. To the extent Bloomberg contends that Swatch's complaint should be dismissed on the ground of copyright invalidity in addition to or instead of the ground of fair use, Bloomberg "is not urging that we alter the judgment in any way, but rather that we alter the reasons underlying it." Allstate Ins. Co. v. A.A. McNamara & Sons, Inc., 1 F.3d 133, 137 (2d Cir.1993). While Bloomberg "is entitled to urge that we affirm the district court's decision on any basis submitted to that court and supported by the record" id. (quoting Great Am. Audio Corp., 938 F.2d at 19), it is not aggrieved by the district court's dismissal of Swatch's complaint on the ground of fair use, and therefore "is not entitled to cross-appeal," id.

    Second, to the extent that Bloomberg challenges the district court's dismissal of its counterclaim seeking a declaration that Swatch's copyright is invalid, that ruling of the district court is not properly before us. Federal Rule of Appellate Procedure 3(c)(1)(B) provides that a notice of appeal "must ... designate the judgment, order, or part thereof being appealed." This requirement is "jurisdictional in nature." Gonzalez v. Thaler, ___ U.S. ___, 132 S.Ct. 641, 652, 181 L.Ed.2d 619 (2012) (quoting Smith v. Barry, 502 U.S. 244, 248, 112 S.Ct. 678, 116 L.Ed.2d 678 (1992)). Bloomberg's notice of cross-appeal, filed on June 28, 2012, designates only the district court's May 18, 2012 judgment, which did not resolve Bloomberg's counterclaim. As the May 17, 2012 Opinion and Order incorporated into the judgment makes plain, the district court simply dismissed Swatch's complaint on the ground of fair use, "assum[ing], without deciding, ... that [Swatch]'s copyright is valid." Swatch II, 861 F.Supp.2d at 338. It was not until August 27, 2012, that the district court issued an order dismissing Bloomberg's counterclaims as moot. Bloomberg never filed any additional or supplemental notice of appeal designating that subsequent order as the subject of a cross-appeal. While "we construe notices of appeal liberally, taking the parties' intentions into account," Shrader v. CSX Transp., Inc., 70 F.3d 255, 256 (2d Cir. 1995), we cannot reasonably read Bloomberg's notice of cross-appeal to contemplate review of an order that did not issue until nearly two months afterwards. While Bloomberg may be aggrieved by the dismissal of its declaratory counterclaim, which arguably would have enlarged Bloomberg's rights, we have no jurisdiction [37] to review it in the absence of a proper cross-appeal. See Int'l Ore & Fertilizer Corp. v. SGS Control Servs., Inc., 38 F.3d 1279, 1286 (2d Cir. 1994).

    Bloomberg's cross-appeal accordingly is dismissed for lack of standing and lack of jurisdiction.

    CONCLUSION

    For the foregoing reasons, Bloomberg's cross-appeal is DISMISSED, and the district court's judgment is AFFIRMED.

    [1] Swatch has disclaimed any such challenge in light of 17 U.S.C. § 114(b), under which a copyright owner's right to prepare derivative works based on a sound recording "is limited to the right to prepare a derivative work in which the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality."

    [2] Although Ramsey was decided before Rule 56 was amended in 2010 to provide express procedures governing the grant of summary judgment independent of a motion, its statements regarding the care a district court must take before sua sponte granting summary judgment remain good law. See Fed.R.Civ.P. 56, advisory comm. notes (2010 Amendments) ("Subdivision (f) brings into Rule 56 text a number of related procedures that have grown up in practice.").

    [3] We have held that where "the allegedly infringing work fits the description of uses described in § 107," there is "a strong presumption that factor one favors the defendant." NXIVM, 364 F.3d at 477 (quoting Wright v. Warner Books, Inc., 953 F.2d 731, 736 (2d Cir. 1991)). Resolving all factual disputes in Swatch's favor, we assume here that Bloomberg's use falls outside of the core notion of "news reporting" Congress envisioned when it enacted § 107. We therefore will not apply the presumption.

    [4] Indeed, in discussing the relevance of publication to fair use in Harper & Row, the Supreme Court indicated that "even substantial quotations might qualify as fair use in a review of a published work or a news account of a speech that had been delivered to the public or disseminated to the press." 471 U.S. at 564, 105 S.Ct. 2218. Like the conference call at issue here, a publicly delivered speech would not, by the mere fact of its public delivery, be "publi[shed]" under § 101.

    [5] Even the portions of the call Swatch quotes as demonstrating the originality of the executives' statements are overwhelmingly factual in nature. Swatch points to the following passage, for example:

    So we're not looking desperately for someone else, but I can tell you that there are many companies out there who would like to benefit from the products, the[] know how, the management capabilities of Swatch Group.

    And you should ask the other companies out there, even big players, if they would not think that — being part of The Swatch Group, they will do much better. Look at the results and margins and what they are doing, look at the regional trends, I think you would find many of them.

    Appellant's Br. 9 (quoting J.A. 153 at 37:25-38:43).

  • 7 Kienitz v. Sconnie Nation LLC

    766 F.3d 756 (2014)

    Michael KIENITZ, Plaintiff-Appellant,
    v.
    SCONNIE NATION LLC and Underground Printing-Wisconsin, L.L.C., Defendants-Appellees.

    No. 13-3004.

    United States Court of Appeals, Seventh Circuit.

    Argued January 24, 2014.
    Decided September 15, 2014.

    [757] Jennifer L. Gregor, James D. Peterson, for Plaintiff-Appellant.

    Eric J. Hatchell, Jeffrey A. Simmons, Naikang Tsao, for Defendants-Appellees.

    Before BAUER, EASTERBROOK, and WILLIAMS, Circuit Judges.

    EASTERBROOK, Circuit Judge.

    While a student at the University of Wisconsin in 1969, Paul Soglin attended the first Mifflin Street Block Party, whose theme (according to Soglin) was "taking a sharp stick and poking it in the eye of authority." Now in his seventh term as Mayor of Madison, Wisconsin, Soglin does not appreciate being on the pointy end. He wants to shut down the annual event. For the 2012 Block Party, Sconnie Nation made some t-shirts and tank tops displaying an image of Soglin's face and the phrase "Sorry for Partying." The 54 sales, on which Sconnie Nation cleared a small profit, led to this suit, in which photographer Michael Kienitz accuses Sconnie Nation and its vendor of copyright infringement.

    Sconnie Nation concedes starting with a photograph that Kienitz took at Soglin's inauguration in 2011. Soglin (with Kienitz's permission) had posted it on the City's website, from which Sconnie Nation downloaded a copy. The photograph was posterized, the background was removed, and Soglin's face was turned lime green and surrounded by multi-colored writing. Here are the original and the revision:

    [IMAGES OMITTED]

    [758] A magistrate judge, serving by consent under 28 U.S.C. § 636(c), granted summary judgment for the defendants, holding that Sconnie Nation had made fair use of the photo. 965 F.Supp.2d 1042 (W.D.Wis. 2013).

    Fair use is a statutory defense to infringement. The Copyright Act sets out four non-exclusive factors for a court to consider. 17 U.S.C. § 107. The district court and the parties have debated whether the t-shirts are a "transformative use" of the photo — and, if so, just how "transformative" the use must be. That's not one of the statutory factors, though the Supreme Court mentioned it in Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). The Second Circuit has run with the suggestion and concluded that "transformative use" is enough to bring a modified copy within the scope of § 107. See, e.g., Cariou v. Prince, 714 F.3d 694, 706 (2d Cir.2013). Cariou applied this to an example of "appropriation art," in which some of the supposed value comes from the very fact that the work was created by someone else.

    We're skeptical of Cariou's approach, because asking exclusively whether something is "transformative" not only replaces the list in § 107 but also could override 17 U.S.C. § 106(2), which protects derivative works. To say that a new use transforms the work is precisely to say that it is derivative and thus, one might suppose, protected under § 106(2). Cariou and its predecessors in the Second Circuit do no explain how every "transformative use" can be "fair use" without extinguishing the author's rights under § 106(2).

    We think it best to stick with the statutory list, of which the most important usually is the fourth (market effect). We have asked whether the contested use is a complement to the protected work (allowed) rather than a substitute for it (prohibited). See Ty, Inc. v. Publications International Ltd., 292 F.3d 512 (7th Cir. 2002); Chicago Board of Education v. [759] Substance, Inc., 354 F.3d 624 (7th Cir. 2003). A t-shirt or tank top is no substitute for the original photograph. Nor does Kienitz say that defendants disrupted a plan to license this work for apparel. Kienitz does not argue that defendants' products have reduced the demand for the original work or any use of it that he is contemplating.

    Here is the list in § 107:

    In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include —

    (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 copy righted work as a whole; and

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

    Other than factor (4), which we have discussed already, only (3) — the amount taken in relation to the copyrighted work as a whole — has much bite in this litigation. Defendants removed so much of the original that, as with the Cheshire Cat, only the smile remains. Defendants started with a low-resolution version posted on the City's website, so much of the original's detail never had a chance to reach the copy; the original's background is gone; its colors and shading are gone; the expression in Soglin's eyes can no longer be read; after the posterization (and reproduction by silk-screening), the effect of the lighting in the original is almost extinguished. What is left, besides a hint of Soglin's smile, is the outline of his face, which can't be copyrighted. Defendants could have achieved the same effect by starting with a snapshot taken on the street.

    The other statutory factors don't do much in this case. Consider (1), for example. Defendants sold their products in the hope of profit, and made a small one, but they chose the design as a form of political commentary. Factor (2) is unilluminating, and as we have mentioned Kienitz does not argue that defendants' acts have reduced the value of this photograph, which he licensed to Soglin at no royalty and which is posted on a public website for viewing and downloading without cost.

    Two things can be said for Kienitz. First, defendants did not need to use the copyrighted work. They wanted to mock the Mayor, not to comment on Kienitz's skills as a photographer or his artistry in producing this particular photograph. There's no good reason why defendants should be allowed to appropriate someone else's copyrighted efforts as the starting point in their lampoon, when so many non-copyrighted alternatives (including snapshots they could have taken themselves) were available. The fair-use privilege under § 107 is not designed to protect lazy appropriators. Its goal instead is to facilitate a class of uses that would not be possible if users always had to negotiate with copyright proprietors. (Many copyright owners would block all parodies, for example, and the administrative costs of finding and obtaining consent from copyright holders would frustrate many academic uses.)

    Second, this use may injure Kienitz's long-range commercial opportunities, even though it does not reduce the value he derives from this particular picture. He promises his subjects that the photos will be licensed only for dignified uses. Fewer people will hire or cooperate with Kienitz if they think that the high quality of his work will make the photos more effective [760] when used against them! But Kienitz does not present an argument along these lines, and the consideration in the preceding paragraph is not enough to offset the fact that, by the time defendants were done, almost none of the copyrighted work remained. The district court thus reached the right conclusion.

    AFFIRMED.

  • 8 Oracle America, Inc. v. Google, Inc.

    ORACLE AMERICA, INC., Plaintiff-Appellant,
    v.
    GOOGLE INC., Defendant-Cross-Appellant.

    Nos. 2013-1021, 2013-1022

    United States Court of Appeals, Federal Circuit.

    Decided: May 9, 2014.

    E. JOSHUA ROSENKRANZ, Orrick, Herrington & Sutcliffe LLP, of New York, New York, argued for plaintiff-appellant. With him on the brief were MARK S. DAVIES, ANDREW D. SILVERMAN, KELLY M. DALEY; and ANNETTE L. HURST, GABRIEL M. RAMSEY, and ELIZABETH C. MCBRIDE, of San Francisco, California. Of counsel on the brief were DORIAN E. DALEY, DEBORAH K. MILLER, MATTHEW SARBORARIA, and ANDREW C. TEMKIN, Oracle America, Inc., of Redwood Shores, California; and DALE M. CENDALI, DIANA M. TORRES, SEAN B. FERNANDES, and JOSHUA L. SIMMONS, Kirkland & Ellis LLP, of New York, New York. Of counsel were SUSAN M. DAVIES, Kirkland & Ellis LLP, of New York, New York; MICHAEL A. JACOBS, Morrison & Foerster LLP, of San Francisco, California; and KENNETH A. KUWAYTI, of Palo Alto, California.

    ROBERT A. VAN NEST, Keker & Van Nest LLP, of San Francisco, California, argued for defendant-cross-appellant. With him on the brief were CHRISTA M. ANDERSON, STEVEN A. HIRSCH, MICHAEL S. KWUN, and DANIEL E. JACKSON. Of counsel on the brief were IAN C. BALLON and HEATHER MEEKER, Greenberg Traurig, LLP, of East Palo Alto, California; RENNY HWANG, Google Inc., of Mountain View, California; and DARYL L. JOSEFFER and BRUCE W. BABER, King & Spalding LLP, of Washington, DC.

    MARCIA B. PAUL, Davis Wright Tremaine LLP, of New York, New York, for amicus curiae Ralph Oman. With her on the brief were LACY H. KOONCE, III and DEBORAH A. ADLER.

    WILLIAM A. RUDY, Lathrop & Gage LLP, of Kansas City, Missouri, for amici curiae Picture Archive Council of America, Inc., et al. With him on the brief were CAROLE E. HANDLER and BRIANNA E. DAHLBERG, of Los Angeles, California.

    GREGORY G. GARRE, Latham & Watkins, LLP, of Washington, DC, for amici curiae Microsoft Corporation, et al. With him on the brief was LORI ALVINO MCGILL. Of counsel on the brief were PAUL T. DACIER, KRISHNENDU GUPTA, EMC Corporation, of Hopkinton, Massachusetts; and DOUGLAS LUFTMAN, NETAPP, Inc., of Sunnyvale, California.

    JARED BOBROW, Weil, Gotshal & Manges LLP, of Redwood Shores, California, for amici curiae Eugene H. Spafford, Ph.D., et al. With him on the brief was AARON Y. HUANG.

    MATTHEW S. HELLMAN, Jenner & Block LLP, of Washington, DC, for amicus curiae BSA/The Software Alliance. With him on the brief was PAUL M. SMITH.

    STEVEN T. COTTREAU, Clifford Chance US LLP, of Washington, DC, for amici curiae, Scott McNealy, et al.

    MEREDITH JACOB, Program on Information Justice and Intellectual Property, American University, Washington College of Law, of Washington, DC, for amici curiae Intellectual Property Law Professors.

    JULIE P. SAMUELS, Electronic Frontier Foundation, of San Francisco, California, for amici curiae Computer Scientists. With her on the brief was MICHAEL BARCLAY. Of counsel on the brief was JASON M. SCHULTZ, NYU Technology Law and Policy Clinic, NYU School of Law, of New York, New York.

    JONATHAN BAND, Jonathan Band PLLC, of Washington, DC, filed a brief for amicus curiae Computer & Communications Industry Association. With him on the brief was MATTHEW SCHRUERS, Computer & Communications Industry Association, of Washington, DC.

    CHAD RUBACK, The Ruback Law Firm, of Dallas, Texas, filed a brief for amici curiae Rackspace US, Inc., et al.

    JENNIFER M. URBAN, Samuelson Law, Technology and Public Policy Clinic, U.C. Berkeley School of Law, of Berkeley, California for amici curiae Software Innovators, et al.

    Before O'MALLEY, PLAGER, and TARANTO, Circuit Judges.

    O'MALLEY, Circuit Judge.

    This copyright dispute involves 37 packages of computer source code. The parties have often referred to these groups of computer programs, individually or collectively, as "application programming interfaces," or API packages, but it is their content, not their name, that matters. The predecessor of Oracle America, Inc. ("Oracle") wrote these and other API packages in the Java programming language, and Oracle licenses them on various terms for others to use. Many software developers use the Java language, as well as Oracle's API packages, to write applications (commonly referred to as "apps") for desktop and laptop computers, tablets, smartphones, and other devices.

    Oracle filed suit against Google Inc. ("Google") in the United States District Court for the Northern District of California, alleging that Google's Android mobile operating system infringed Oracle's patents and copyrights. The jury found no patent infringement, and the patent claims are not at issue in this appeal. As to the copyright claims, the parties agreed that the jury would decide infringement, fair use, and whether any copying was de minimis, while the district judge would decide copyrightability and Google's equitable defenses. The jury found that Google infringed Oracle's copyrights in the 37 Java packages and a specific computer routine called "rangeCheck," but returned a noninfringement verdict as to eight decompiled security files. The jury deadlocked on Google's fair use defense.

    After the jury verdict, the district court denied Oracle's motion for judgment as a matter of law ("JMOL") regarding fair use as well as Google's motion for JMOL with respect to the rangeCheck files. Order on Motions for Judgment as a Matter of Law, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. May 10, 2012), ECF No. 1119. Oracle also moved for JMOL of infringement with respect to the eight decompiled security files. In granting that motion, the court found that: (1) Google admitted to copying the eight files; and (2) no reasonable jury could find that the copying was de minimis. Oracle Am., Inc. v. Google Inc., No. C 10-3561, 2012 U.S. Dist. LEXIS 66417 (N.D. Cal. May 11, 2012) ("Order Granting JMOL on Decompiled Files").

    Shortly thereafter, the district court issued its decision on copyrightability, finding that the replicated elements of the 37 API packages—including the declaring code and the structure, sequence, and organization—were not subject to copyright protection. Oracle Am., Inc. v. Google Inc., 872 F. Supp. 2d 974 (N.D. Cal. 2012) ("Copyrightability Decision"). Accordingly, the district court entered final judgment in favor of Google on Oracle's copyright infringement claims, except with respect to the rangeCheck code and the eight decompiled files. Final Judgment, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. June 20, 2012), ECF No. 1211. Oracle appeals from the portion of the final judgment entered against it, and Google cross-appeals from the portion of that same judgment entered in favor of Oracle as to the rangeCheck code and eight decompiled files.

    Because we conclude that the declaring code and the structure, sequence, and organization of the API packages are entitled to copyright protection, we reverse the district court's copyrightability determination with instructions to reinstate the jury's infringement finding as to the 37 Java packages. Because the jury deadlocked on fair use, we remand for further consideration of Google's fair use defense in light of this decision. With respect to Google's cross-appeal, we affirm the district court's decisions: (1) granting Oracle's motion for JMOL as to the eight decompiled Java files that Google copied into Android; and (2) denying Google's motion for JMOL with respect to the rangeCheck function. Accordingly, we affirm-in-part, reverse-in-part, and remand for further proceedings.

    BACKGROUND
    A. The Technology

    Sun Microsystems, Inc. ("Sun") developed the Java "platform" for computer programming and released it in 1996.[1] The aim was to relieve programmers from the burden of writing different versions of their computer programs for different operating systems or devices. "The Java platform, through the use of a virtual machine, enable[d] software developers to write programs that [we]re able to run on different types of computer hardware without having to rewrite them for each different type." Copyrightability Decision, 872 F. Supp. 2d at 977. With Java, a software programmer could "write once, run anywhere."

    The Java virtual machine ("JVM") plays a central role in the overall Java platform. The Java programming language itself—which includes words, symbols, and other units, together with syntax rules for using them to create instructions—is the language in which a Java programmer writes source code, the version of a program that is "in a human-readable language." Id. For the instructions to be executed, they must be converted (or compiled) into binary machine code (object code) consisting of 0s and 1s understandable by the particular computing device. In the Java system, "source code is first converted into `bytecode,' an intermediate form, before it is then converted into binary machine code by the Java virtual machine" that has been designed for that device. Id. The Java platform includes the "Java development kit (JDK), javac compiler, tools and utilities, runtime programs, class libraries (API packages), and the Java virtual machine." Id. at 977 n.2.

    Sun wrote a number of ready-to-use Java programs to perform common computer functions and organized those programs into groups it called "packages." These packages, which are the application programming interfaces at issue in this appeal, allow programmers to use the prewritten code to build certain functions into their own programs, rather than write their own code to perform those functions from scratch. They are shortcuts. Sun called the code for a specific operation (function) a "method." It defined "classes" so that each class consists of specified methods plus variables and other elements on which the methods operate. To organize the classes for users, then, it grouped classes (along with certain related "interfaces") into "packages." See id. at 982 (describing organization: "[e]ach package [i]s broken into classes and those in turn [are] broken into methods"). The parties have not disputed the district court's analogy: Oracle's collection of API packages is like a library, each package is like a bookshelf in the library, each class is like a book on the shelf, and each method is like a how-to chapter in a book. Id. at 977.

    The original Java Standard Edition Platform ("Java SE") included "eight packages of pre-written programs." Id. at 982. The district court found, and Oracle concedes to some extent, that three of those packages—java.lang, java.io, and java.util—were "core" packages, meaning that programmers using the Java language had to use them "in order to make any worthwhile use of the language." Id. By 2008, the Java platform had more than 6,000 methods making up more than 600 classes grouped into 166 API packages. There are 37 Java API packages at issue in this appeal, three of which are the core packages identified by the district court.[2] These packages contain thousands of individual elements, including classes, subclasses, methods, and interfaces.

    Every package consists of two types of source code— what the parties call (1)declaring code; and (2) implementing code. Declaring code is the expression that identifies the prewritten function and is sometimes referred to as the "declaration" or "header." As the district court explained, the "main point is that this header line of code introduces the method body and specifies very precisely the inputs, name and other functionality." Id. at 979-80. The expressions used by the programmer from the declaring code command the computer to execute the associated implementing code, which gives the computer the step-by-step instructions for carrying out the declared function.

    To use the district court's example, one of the Java API packages at issue is "java.lang." Within that package is a class called "math," and within "math" there are several methods, including one that is designed to find the larger of two numbers: "max." The declaration for the "max" method, as defined for integers, is: "public static int max(int x, int y)," where the word "public" means that the method is generally accessible, "static" means that no specific instance of the class is needed to call the method, the first "int" indicates that the method returns an integer, and "int x" and "int y" are the two numbers (inputs) being compared. Copyrightability Decision, 872 F. Supp. 2d at 980-82. A programmer calls the "max" method by typing the name of the method stated in the declaring code and providing unique inputs for the variables "x" and "y." The expressions used command the computer to execute the implementing code that carries out the operation of returning the larger number.

    Although Oracle owns the copyright on Java SE and the API packages, it offers three different licenses to those who want to make use of them. The first is the General Public License, which is free of charge and provides that the licensee can use the packages—both the declaring and implementing code—but must "contribute back" its innovations to the public. This arrangement is referred to as an "open source" license. The second option is the Specification License, which provides that the licensee can use the declaring code and organization of Oracle's API packages but must write its own implementing code. The third option is the Commercial License, which is for businesses that "want to use and customize the full Java code in their commercial products and keep their code secret." Appellant Br. 14. Oracle offers the Commercial License in exchange for royalties. To maintain Java's "write once, run anywhere" motto, the Specification and Commercial Licenses require that the licensees' programs pass certain tests to ensure compatibility with the Java platform.

    The testimony at trial also revealed that Sun was licensing a derivative version of the Java platform for use on mobile devices: the Java Micro Edition ("Java ME"). Oracle licensed Java ME for use on feature phones and smartphones. Sun/Oracle has never successfully developed its own smartphone platform using Java.

    B. Google's Accused Product: Android

    The accused product is Android, a software platform that was designed for mobile devices and competes with Java in that market. Google acquired Android, Inc. in 2005 as part of a plan to develop a smartphone platform. Later that same year, Google and Sun began discussing the possibility of Google "taking a license to use and to adapt the entire Java platform for mobile devices." Copyrightability Decision, 872 F. Supp. 2d at 978. They also discussed a "possible co-development partnership deal with Sun under which Java technology would become an open-source part of the Android platform, adapted for mobile devices." Id. The parties negotiated for months but were unable to reach an agreement. The point of contention between the parties was Google's refusal to make the implementation of its programs compatible with the Java virtual machine or interoperable with other Java programs. Because Sun/Oracle found that position to be anathema to the "write once, run anywhere" philosophy, it did not grant Google a license to use the Java API packages.

    When the parties' negotiations reached an impasse, Google decided to use the Java programming language to design its own virtual machine—the Dalvik virtual machine ("Dalvik VM")—and "to write its own implementations for the functions in the Java API that were key to mobile devices." Id. Google developed the Android platform, which grew to include 168 API packages—37 of which correspond to the Java API packages at issue in this appeal.

    With respect to the 37 packages at issue, "Google believed Java application programmers would want to find the same 37 sets of functionalities in the new Android system callable by the same names as used in Java." Id. To achieve this result, Google copied the declaring source code from the 37 Java API packages verbatim, inserting that code into parts of its Android software. In doing so, Google copied the elaborately organized taxonomy of all the names of methods, classes, interfaces, and packages— the "overall system of organized names—covering 37 packages, with over six hundred classes, with over six thousand methods." Copyrightability Decision, 872 F. Supp. 2d at 999. The parties and district court referred to this taxonomy of expressions as the "structure, sequence, and organization" or "SSO" of the 37 packages. It is undisputed, however, that Google wrote its own implementing code, except with respect to: (1) the rangeCheck function, which consisted of nine lines of code; and (2) eight decompiled security files.

    As to rangeCheck, the court found that the Sun engineer who wrote it later worked for Google and contributed two files he created containing the rangeCheck function— "Timsort.java" and "ComparableTimsort"—to the Android platform. In doing so, the nine-line rangeCheck function was copied directly into Android. As to the eight decompiled files, the district court found that they were copied and used as test files but "never found their way into Android or any handset." Id. at 983.

    Google released the Android platform in 2007, and the first Android phones went on sale the following year. Although it is undisputed that certain Android software contains copies of the 37 API packages' declaring code at issue, neither the district court nor the parties specify in which programs those copies appear. Oracle indicated at oral argument, however, that all Android phones contain copies of the accused portions of the Android software. Oral Argument at 1:35, available at http://www. cafc.uscourts.gov/oral-argument-recordings/XXXX-XXXX/all. Android smartphones "rapidly grew in popularity and now comprise a large share of the United States market." Copyrightability Decision, 872 F. Supp. 2d at 978. Google provides the Android platform free of charge to smartphone manufacturers and receives revenue when customers use particular functions on the Android phone. Although Android uses the Java programming language, it is undisputed that Android is not generally Java compatible. As Oracle explains, "Google ultimately designed Android to be incompatible with the Java platform, so that apps written for one will not work on the other." Appellant Br. 29.

    C. Trial and Post-Trial Rulings

    Beginning on April 16, 2012, the district court and the jury—on parallel tracks—viewed documents and heard testimony from twenty-four witnesses on copyrightability, infringement, fair use, and Google's other defenses. Because the parties agreed the district court would decide copyrightability, the court instructed the jury to assume that the structure, sequence, and organization of the 37 API packages was copyrightable. And, the court informed the jury that Google conceded that it copied the declaring code used in the 37 packages verbatim. The court also instructed the jury that Google conceded copying the rangeCheck function and the eight decompiled security files, but that Google maintained that its use of those lines of code was de minimis. See Final Charge to the Jury (Phase One), Oracle Am., Inc. v. Google Inc., 3:10-cv-3561 (N.D. Cal. Apr. 30, 2012), ECF No. 1018 at 14 ("With respect to the infringement issues concerning the rangeCheck and other similar files, Google agrees that the accused lines of code and comments came from the copyrighted material but contends that the amounts involved were so negligible as to be de minimis and thus should be excused.").

    On May 7, 2012, the jury returned a verdict finding that Google infringed Oracle's copyright in the 37 Java API packages and in the nine lines of rangeCheck code, but returned a noninfringement verdict as to eight decompiled security files. The jury hung on Google's fair use defense.

    The parties filed a number of post-trial motions, most of which were ultimately denied. In relevant part, the district court denied Oracle's motion for JMOL regarding fair use and Google's motion for JMOL as to the rangeCheck files. Order on Motions for Judgment as a Matter of Law, Oracle Am., Inc. v. Google Inc., No. 3:10cv-3561 (N.D. Cal. May 10, 2012), ECF No. 1119. The district court granted Oracle's motion for JMOL of infringement as to the eight decompiled files, however. In its order, the court explained that: (1) Google copied the files in their entirety; (2) the trial testimony revealed that the use of those files was "significant"; and (3) no reasonable jury could find the copying de minimis. Order Granting JMOL on Decompiled Files, 2012 U.S. Dist. LEXIS 66417, at *6.

    On May 31, 2012, the district court issued the primary decision at issue in this appeal, finding that the replicated elements of the Java API packages—including the declarations and their structure, sequence, and organization—were not copyrightable. As to the declaring code, the court concluded that "there is only one way to write" it, and thus the "merger doctrine bars anyone from claiming exclusive copyright ownership of that expression." Copyrightability Decision, 872 F. Supp. 2d at 998. The court further found that the declaring code was not protectable because "names and short phrases cannot be copyrighted." Id. As such, the court determined that "there can be no copyright violation in using the identical declarations." Id.

    As to the overall structure, sequence, and organization of the Java API packages, the court recognized that "nothing in the rules of the Java language . . . required that Google replicate the same groupings even if Google was free to replicate the same functionality." Id. at 999. Therefore, the court determined that "Oracle's best argument. . . is that while no single name is copyrightable, Java's overall system of organized names—covering 37 packages, with over six hundred classes, with over six thousand methods—is a `taxonomy' and, therefore, copyrightable." Id.

    Although it acknowledged that the overall structure of Oracle's API packages is creative, original, and "resembles a taxonomy," the district court found that it "is nevertheless a command structure, a system or method of operation—a long hierarchy of over six thousand commands to carry out pre-assigned functions"—that is not entitled to copyright protection under Section 102(b) of the Copyright Act. Id. at 999-1000. In reaching this conclusion, the court emphasized that, "[o]f the 166 Java packages, 129 were not violated in any way." Id. at 1001. And, of the 37 Java API packages at issue, "97 percent of the Android lines were new from Google and the remaining three percent were freely replicable under the merger and names doctrines." Id. On these grounds, the court dismissed Oracle's copyright claims, concluding that "the particular elements replicated by Google were free for all to use under the Copyright Act." Id.

    On June 20, 2012, the district court entered final judgment in favor of Google and against Oracle on its claim for copyright infringement, except with respect to the rangeCheck function and the eight decompiled files. As to rangeCheck and the decompiled files, the court entered judgment for Oracle and against Google in the amount of zero dollars, per the parties' stipulation. Final Judgment, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. June 20, 2012), ECF No. 1211. Oracle timely appealed from the portion of the district court's final judgment entered against it and Google timely crossappealed with respect to rangeCheck and the eight decompiled files. Because this action included patent claims, we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

    DISCUSSION
    I. ORACLE'S APPEAL

    It is undisputed that the Java programming language is open and free for anyone to use. Except to the limited extent noted below regarding three of the API packages, it is also undisputed that Google could have written its own API packages using the Java language. Google chose not to do that. Instead, it is undisputed that Google copied 7,000 lines of declaring code and generally replicated the overall structure, sequence, and organization of Oracle's 37 Java API packages. The central question before us is whether these elements of the Java platform are entitled to copyright protection. The district court concluded that they are not, and Oracle challenges that determination on appeal. Oracle also argues that the district court should have dismissed Google's fair use defense as a matter of law.

    According to Google, however, the district court correctly determined that: (1) there was only one way to write the Java method declarations and remain "interoperable" with Java; and (2) the organization and structure of the 37 Java API packages is a "command structure" excluded from copyright protection under Section 102(b). Google also argues that, if we reverse the district court's copyrightability determination, we should direct the district court to retry its fair use defense.

    "When the questions on appeal involve law and precedent on subjects not exclusively assigned to the Federal Circuit, the court applies the law which would be applied by the regional circuit." Atari Games Corp. v. Nintendo of Am., Inc., 897 F.2d 1572, 1575 (Fed. Cir. 1990). Copyright issues are not exclusively assigned to the Federal Circuit. See 28 U.S.C. § 1295. The parties agree that Ninth Circuit law applies and that, in the Ninth Circuit, whether particular expression is protected by copyright law is "subject to de novo review." Ets-Hokin v. Skyy Spirits, Inc., 225 F.3d 1068, 1073 (9th Cir. 2000).[3]

    We are mindful that the application of copyright law in the computer context is often a difficult task. See Lotus Dev. Corp. v. Borland Int'l, Inc., 49 F.3d 807, 820 (1st Cir. 1995) (Boudin, J., concurring) ("Applying copyright law to computer programs is like assembling a jigsaw puzzle whose pieces do not quite fit."). On this record, however, we find that the district court failed to distinguish between the threshold question of what is copyrightable— which presents a low bar—and the scope of conduct that constitutes infringing activity. The court also erred by importing fair use principles, including interoperability concerns, into its copyrightability analysis.

    For the reasons that follow, we conclude that the declaring code and the structure, sequence, and organization of the 37 Java API packages are entitled to copyright protection. Because there is an insufficient record as to the relevant fair use factors, we remand for further proceedings on Google's fair use defense.

    A. Copyrightability

    The Copyright Act provides protection to "original works of authorship fixed in any tangible medium of expression," including "literary works." 17 U.S.C. § 102(a). It is undisputed that computer programs— defined in the Copyright Act as "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result," 17 U.S.C. § 101—can be subject to copyright protection as "literary works." See Atari Games Corp. v. Nintendo of Am., Inc., 975 F.2d 832, 838 (Fed. Cir. 1992) ("As literary works, copyright protection extends to computer programs."). Indeed, the legislative history explains that "literary works" includes "computer programs to the extent that they incorporate authorship in the programmer's expression of original ideas, as distinguished from the ideas themselves." H.R. Rep. No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S.C.C.A.N. 5659, 5667.

    By statute, a work must be "original" to qualify for copyright protection. 17 U.S.C. § 102(a). This "originality requirement is not particularly stringent," however. Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 358 (1991). "Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity." Id. at 345.

    Copyright protection extends only to the expression of an idea—not to the underlying idea itself. Mazer v. Stein, 347 U.S. 201, 217 (1954) ("Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to the expression of the idea—not the idea itself."). This distinction—commonly referred to as the "idea/expression dichotomy"—is codified in Section 102(b) of the Copyright Act, which provides:

    In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.

    17 U.S.C. § 102(b); see Golan v. Holder, 132 S. Ct. 873, 890 (2012) ("The idea/expression dichotomy is codified at 17 U.S.C. § 102(b).").

    The idea/expression dichotomy traces back to the Supreme Court's decision in Baker v. Selden, 101 U.S. 99, 101 (1879). In Baker, the plaintiff Selden wrote and obtained copyrights on a series of books setting out a new system of bookkeeping. Id. at 100. The books included an introductory essay explaining the system and blank forms with ruled lines and headings designed for use with that system. Id. Baker published account books employing a system with similar forms, and Selden filed suit alleging copyright infringement. According to Selden, the "ruled lines and headings, given to illustrate the system, are a part of the book" and "no one can make or use similar ruled lines and headings, or ruled lines and headings made and arranged on substantially the same system, without violating the copyright." Id. at 101.

    The Supreme Court framed the issue on appeal in Baker as "whether the exclusive property in a system of book-keeping can be claimed, under the law of copyright, by means of a book in which that system is explained." Id. In reversing the circuit court's decision, the Court concluded that the "copyright of a book on book-keeping cannot secure the exclusive right to make, sell, and use account-books prepared upon the plan set forth in such book." Id. at 104. Likewise, the "copyright of a work on mathematical science cannot give to the author an exclusive right to the methods of operation which he propounds." Id. at 103. The Court found that, although the copyright protects the way Selden "explained and described a peculiar system of book-keeping," it does not prevent others from using the system described therein. Id. at 104. The Court further indicated that, if it is necessary to use the forms Selden included in his books to make use of the accounting system, that use would not amount to copyright infringement. See id. (noting that the public has the right to use the account-books and that, "in using the art, the ruled lines and headings of accounts must necessarily be used as incident to it").

    Courts routinely cite Baker as the source of several principles incorporated into Section 102(b) that relate to this appeal, including that: (1) copyright protection extends only to expression, not to ideas, systems, or processes; and (2) "those elements of a computer program that are necessarily incidental to its function are . . . unprotectable." See Computer Assocs. Int'l v. Altai, 982 F.2d 693, 704-05 (2d Cir. 1992) ("Altai") (discussing Baker, 101 U.S. at 103-04).

    It is well established that copyright protection can extend to both literal and non-literal elements of a computer program. See Altai, 982 F.2d at 702. The literal elements of a computer program are the source code and object code. See Johnson Controls, Inc. v. Phoenix Control Sys., Inc., 886 F.2d 1173, 1175 (9th Cir. 1989). Courts have defined source code as "the spelled-out program commands that humans can read." Lexmark Int'l, Inc. v. Static Control Components, Inc., 387 F.3d 522, 533 (6th Cir. 2004). Object code refers to "the binary language comprised of zeros and ones through which the computer directly receives its instructions." Altai, 982 F.2d at 698. Both source and object code "are consistently held protected by a copyright on the program." Johnson Controls, 886 F.2d at 1175; see also Altai, 982 F.2d at 702 ("It is now well settled that the literal elements of computer programs, i.e., their source and object codes, are the subject of copyright protection."). Google nowhere disputes that premise. See, e.g., Oral Argument at 57:38.

    The non-literal components of a computer program include, among other things, the program's sequence, structure, and organization, as well as the program's user interface. Johnson Controls, 886 F.2d at 1175. As discussed below, whether the non-literal elements of a program "are protected depends on whether, on the particular facts of each case, the component in question qualifies as an expression of an idea, or an idea itself." Id.

    In this case, Oracle claims copyright protection with respect to both: (1) literal elements of its API packages— the 7,000 lines of declaring source code; and (2) non-literal elements—the structure, sequence, and organization of each of the 37 Java API packages.

    The distinction between literal and non-literal aspects of a computer program is separate from the distinction between literal and non-literal copying. See Altai, 982 F.2d at 701-02. "Literal" copying is verbatim copying of original expression. "Non-literal" copying is "paraphrased or loosely paraphrased rather than word for word." Lotus Dev. Corp. v. Borland Int'l, 49 F.3d 807, 814 (1st Cir. 1995). Here, Google concedes that it copied the declaring code verbatim. Oracle explains that the lines of declaring code "embody the structure of each [API] package, just as the chapter titles and topic sentences represent the structure of a novel." Appellant Br. 45. As Oracle explains, when Google copied the declaring code in these packages "it also copied the `sequence and organization' of the packages (i.e., the three-dimensional structure with all the chutes and ladders)" employed by Sun/Oracle in the packages. Appellant Br. 27. Oracle also argues that the nonliteral elements of the API packages—the structure, sequence, and organization that led naturally to the implementing code Google created—are entitled to protection. Oracle does not assert "literal" copying of the entire SSO, but, rather, that Google literally copied the declaring code and then paraphrased the remainder of the SSO by writing its own implementing code. It therefore asserts non-literal copying with respect to the entirety of the SSO.

    At this stage, it is undisputed that the declaring code and the structure and organization of the Java API packages are original. The testimony at trial revealed that designing the Java API packages was a creative process and that the Sun/Oracle developers had a vast range of options for the structure and organization. In its copyrightability decision, the district court specifically found that the API packages are both creative and original, and Google concedes on appeal that the originality requirements are met. See Copyrightability Decision, 872 F. Supp. 2d at 976 ("The overall name tree, of course, has creative elements. . . ."); Id. at 999 ("Yes, it is creative. Yes, it is original."); Appellee Br. 5 ("Google does not dispute" the district court's finding that "the Java API clears the low originality threshold."). The court found, however, that neither the declaring code nor the SSO was entitled to copyright protection under the Copyright Act.

    Although the parties agree that Oracle's API packages meet the originality requirement under Section 102(a), they disagree as to the proper interpretation and application of Section 102(b). For its part, Google suggests that there is a two-step copyrightability analysis, wherein Section 102(a) grants copyright protection to original works, while Section 102(b) takes it away if the work has a functional component. To the contrary, however, Congress emphasized that Section 102(b) "in no way enlarges or contracts the scope of copyright protection" and that its "purpose is to restate . . . that the basic dichotomy between expression and idea remains unchanged." Feist, 499 U.S. at 356 (quoting H.R. Rep. No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S.C.C.A.N. 5659, 5670). "Section 102(b) does not extinguish the protection accorded a particular expression of an idea merely because that expression is embodied in a method of operation." Mitel, Inc. v. Iqtel, Inc., 124 F.3d 1366, 1372 (10th Cir. 1997). Section 102(a) and 102(b) are to be considered collectively so that certain expressions are subject to greater scrutiny. Id. In assessing copyrightability, the district court is required to ferret out apparent expressive aspects of a work and then separate protectable expression from "unprotectable ideas, facts, processes, and methods of operation." See Atari, 975 F.2d at 839.

    Of course, as with many things, in defining this task, the devil is in the details. Circuit courts have struggled with, and disagree over, the tests to be employed when attempting to draw the line between what is protectable expression and what is not. Compare Whelan Assocs., Inc. v. Jaslow Dental Lab., Inc., 797 F.2d 1222, 1236 (3d Cir. 1986) (everything not necessary to the purpose or function of a work is expression), with Lotus, 49 F.3d at 815 (methods of operation are means by which a user operates something and any words used to effectuate that operation are unprotected expression). When assessing whether the non-literal elements of a computer program constitute protectable expression, the Ninth Circuit has endorsed an "abstraction-filtration-comparison" test formulated by the Second Circuit and expressly adopted by several other circuits. Sega Enters. Ltd. v. Accolade, Inc., 977 F.2d 1510, 1525 (9th Cir. 1992) ("In our view, in light of the essentially utilitarian nature of computer programs, the Second Circuit's approach is an appropriate one."). This test rejects the notion that anything that performs a function is necessarily uncopyrightable. See Mitel, 124 F.3d at 1372 (rejecting the Lotus court's formulation, and concluding that, "although an element of a work may be characterized as a method of operation, that element may nevertheless contain expression that is eligible for copyright protection."). And it also rejects as flawed the Whelan assumption that, once any separable idea can be identified in a computer program everything else must be protectable expression, on grounds that more than one idea may be embodied in any particular program. Altai, 982 F.2d at 705-06.

    Thus, this test eschews bright line approaches and requires a more nuanced assessment of the particular program at issue in order to determine what expression is protectable and infringed. As the Second Circuit explains, this test has three steps. In the abstraction step, the court "first break[s] down the allegedly infringed program into its constituent structural parts." Id. at 706. In the filtration step, the court "sift[s] out all non-protectable material," including ideas and "expression that is necessarily incidental to those ideas." Id. In the final step, the court compares the remaining creative expression with the allegedly infringing program.[4]

    In the second step, the court is first to assess whether the expression is original to the programmer or author. Atari, 975 F.2d at 839. The court must then determine whether the particular inclusion of any level of abstraction is dictated by considerations of efficiency, required by factors already external to the program itself, or taken from the public domain—all of which would render the expression unprotectable. Id. These conclusions are to be informed by traditional copyright principles of originality, merger, and scenes a faire. See Mitel, 124 F.3d at 1372 ("Although this core of expression is eligible for copyright protection, it is subject to the rigors of filtration analysis which excludes from protection expression that is in the public domain, otherwise unoriginal, or subject to the doctrines of merger and scenes a faire.").

    In all circuits, it is clear that the first step is part of the copyrightability analysis and that the third is an infringement question. It is at the second step of this analysis where the circuits are in less accord. Some treat all aspects of this second step as part of the copyrightability analysis, while others divide questions of originality from the other inquiries, treating the former as a question of copyrightability and the latter as part of the infringement inquiry. Compare Lexmark, 387 F.3d at 537-38 (finding that the district court erred in assessing principles of merger and scenes a faire in the infringement analysis, rather than as a component of copyrightability), with Kregos, 937 F.2d at 705 (noting that the Second Circuit has considered the merger doctrine "in determining whether actionable infringement has occurred, rather than whether a copyright is valid"); see also Lexmark, 387 F.3d at 557 (Feikens, J., dissenting-in-part) (noting the circuit split and concluding that, where a court is assessing merger of an expression with a method of operation, "I would find the merger doctrine can operate only as a defense to infringement in that context, and as such has no bearing on the question of copyrightability."). We need not assess the wisdom of these respective views because there is no doubt on which side of this circuit split the Ninth Circuit falls.

    In the Ninth Circuit, while questions regarding originality are considered questions of copyrightability, concepts of merger and scenes a faire are affirmative defenses to claims of infringement. Ets-Hokin, 225 F.3d at 1082; Satava v. Lowry, 323 F.3d 805, 810 n.3 (9th Cir. 2003) ("The Ninth Circuit treats scenes a faire as a defense to infringement rather than as a barrier to copyrightability."). The Ninth Circuit has acknowledged that "there is some disagreement among courts as to whether these two doctrines figure into the issue of copyrightability or are more properly defenses to infringement." Ets-Hokin, 225 F.3d at 1082 (citations omitted). It, nonetheless, has made clear that, in that circuit, these concepts are to be treated as defenses to infringement. Id. (citing Kregos, 937 F.2d at 705 (holding that the merger doctrine relates to infringement, not copyrightability); Reed-Union Corp. v. Turtle Wax, Inc., 77 F.3d 909, 914 (7th Cir. 1996) (explaining why the doctrine of scenes a faire is separate from the validity of a copyright)).

    With these principles in mind, we turn to the trial court's analysis and judgment and to Oracle's objections thereto. While the trial court mentioned the abstractionfiltration-comparison test when describing the development of relevant law, it did not purport to actually apply that test. Instead, it moved directly to application of familiar principles of copyright law when assessing the copyrightability of the declaring code and interpreted Section 102(b) to preclude copyrightability for any functional element "essential for interoperability" "regardless of its form." Copyrightability Decision, 872 F. Supp. 2d at 997.

    Oracle asserts that all of the trial court's conclusions regarding copyrightability are erroneous. Oracle argues that its Java API packages are entitled to protection under the Copyright Act because they are expressive and could have been written and organized in any number of ways to achieve the same functions. Specifically, Oracle argues that the district court erred when it: (1) concluded that each line of declaring code is uncopyrightable because the idea and expression have merged; (2) found the declaring code uncopyrightable because it employs short phrases; (3) found all aspects of the SSO devoid of protection as a "method of operation" under 17 U.S.C. § 102(b); and (4) invoked Google's "interoperability" concerns in the copyrightability analysis. For the reasons explained below, we agree with Oracle on each point.

    1. Declaring Source Code

    First, Oracle argues that the district court erred in concluding that each line of declaring source code is completely unprotected under the merger and short phrases doctrines. Google responds that Oracle waived its right to assert copyrightability based on the 7,000 lines of declaring code by failing "to object to instructions and a verdict form that effectively eliminated that theory from the case." Appellee Br. 67. Even if not waived, moreover, Google argues that, because there is only one way to write the names and declarations, the merger doctrine bars copyright protection.

    We find that Oracle did not waive arguments based on Google's literal copying of the declaring code. Prior to trial, both parties informed the court that Oracle's copyright infringement claims included the declarations of the API elements in the Android class library source code. See Oracle's Statement of Issues Regarding Copyright, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. Apr. 12, 2012), ECF No. 899-1, at 3 (Oracle accuses the "declarations of the API elements in the Android class library source code and object code that implements the 37 API packages" of copyright infringement.); see also Google's Proposed Statement of Issues Regarding Copyright, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. Apr. 12, 2012), ECF No. 901, at 2 (Oracle accuses the "declarations of the API elements in Android class library source code and object code that implements the 37 API packages.").

    While Google is correct that the jury instructions and verdict form focused on the structure and organization of the packages, we agree with Oracle that there was no need for the jury to address copying of the declaring code because Google conceded that it copied it verbatim. Indeed, the district court specifically instructed the jury that "Google agrees that it uses the same names and declarations" in Android. Final Charge to the Jury at 10.

    That the district court addressed the declaring code in its post-jury verdict copyrightability decision further confirms that the verbatim copying of declaring code remained in the case. The court explained that the "identical lines" that Google copied into Android "are those lines that specify the names, parameters and functionality of the methods and classes, lines called `declarations' or `headers.'" Copyrightability Decision, 872 F. Supp. 2d at 979. The court specifically found that the declaring code was not entitled to copyright protection under the merger and short phrases doctrines. We address each in turn.

    a. Merger

    The merger doctrine functions as an exception to the idea/expression dichotomy. It provides that, when there are a limited number of ways to express an idea, the idea is said to "merge" with its expression, and the expression becomes unprotected. Altai, 982 F.2d at 707-08. As noted, the Ninth Circuit treats this concept as an affirmative defense to infringement. Ets-Hokin, 225 F.3d at 1082. Accordingly, it appears that the district court's merger analysis is irrelevant to the question of whether Oracle's API packages are copyrightable in the first instance. Regardless of when the analysis occurs, we conclude that merger does not apply on the record before us.

    Under the merger doctrine, a court will not protect a copyrighted work from infringement if the idea contained therein can be expressed in only one way. Satava v. Lowry, 323 F.3d 805, 812 n.5 (9th Cir. 2003). For computer programs, "this means that when specific [parts of the code], even though previously copyrighted, are the only and essential means of accomplishing a given task, their later use by another will not amount to infringement." Altai, 982 F.2d at 708 (citation omitted). We have recognized, however, applying Ninth Circuit law, that the "unique arrangement of computer program expression . . . does not merge with the process so long as alternate expressions are available." Atari, 975 F.2d at 840.

    In Atari, for example, Nintendo designed a program— the 10NES—to prevent its video game system from accepting unauthorized game cartridges. 975 F.2d at 836. Nintendo "chose arbitrary programming instructions and arranged them in a unique sequence to create a purely arbitrary data stream" which "serves as the key to unlock the NES." Id. at 840. Because Nintendo produced expert testimony "showing a multitude of different ways to generate a data stream which unlocks the NES console," we concluded that Nintendo's specific choice of code did not merge with the process. Id.

    Here, the district court found that, "no matter how creative or imaginative a Java method specification may be, the entire world is entitled to use the same method specification (inputs, outputs, parameters) so long as the line-by-line implementations are different." Copyrightability Decision, 872 F. Supp. 2d at 998. In its analysis, the court identified the method declaration as the idea and found that the implementation is the expression. Id. ("The method specification is the idea. The method implementation is the expression. No one may monopolize the idea.") (emphases in original). The court explained that, under the rules of Java, a programmer must use the identical "declaration or method header lines" to "declare a method specifying the same functionality." Id. at 976. Because the district court found that there was only one way to write the declaring code for each of the Java packages, it concluded that "the merger doctrine bars anyone from claiming exclusive copyright ownership" of it. Id. at 998. Accordingly, the court held there could be "no copyright violation in using the identical declarations." Id.

    Google agrees with the district court that the implementing code is the expression entitled to protection—not the declaring code. Indeed, at oral argument, counsel for Google explained that, "it is not our position that none of Java is copyrightable. Obviously, Google spent two and a half years . . . to write from scratch all of the implementing code." Oral Argument at 33:16.[5] Because it is undisputed that Google wrote its own implementing code, the copyrightability of the precise language of that code is not at issue on appeal. Instead, our focus is on the declaring code and structure of the API packages.

    On appeal, Oracle argues that the district court: (1) misapplied the merger doctrine; and (2) failed to focus its analysis on the options available to the original author. We agree with Oracle on both points. First, we agree that merger cannot bar copyright protection for any lines of declaring source code unless Sun/Oracle had only one way, or a limited number of ways, to write them. See Satava, 323 F.3d at 812 n.5 ("Under the merger doctrine, courts will not protect a copyrighted work from infringement if the idea underlying the copyrighted work can be expressed in only one way, lest there be a monopoly on the underlying idea."). The evidence showed that Oracle had "unlimited options as to the selection and arrangement of the 7000 lines Google copied." Appellant Br. 50. Using the district court's "java.lang.Math.max" example, Oracle explains that the developers could have called it any number of things, including "Math.maximum" or "Arith.larger." This was not a situation where Oracle was selecting among preordained names and phrases to create its packages.[6] As the district court recognized, moreover, "the Android method and class names could have been different from the names of their counterparts in Java and still have worked." Copyrightability Decision, 872 F. Supp. 2d at 976. Because "alternative expressions [we]re available," there is no merger. See Atari, 975 F.2d at 840.

    We further find that the district court erred in focusing its merger analysis on the options available to Google at the time of copying. It is well-established that copyrightability and the scope of protectable activity are to be evaluated at the time of creation, not at the time of infringement. See Apple Computer, Inc. v. Formula Int'l, Inc., 725 F.2d 521, 524 (9th Cir. 1984) (quoting National Commission on New Technological Uses of Copyrighted Works, Final Report at 21 (1979) ("CONTU Report") (recognizing that the Copyright Act was designed "to protect all works of authorship from the moment of their fixation in any tangible medium of expression")). The focus is, therefore, on the options that were available to Sun/Oracle at the time it created the API packages. Of course, once Sun/Oracle created "java.lang.Math.max," programmers who want to use that particular package have to call it by that name. But, as the court acknowledged, nothing prevented Google from writing its own declaring code, along with its own implementing code, to achieve the same result. In such circumstances, the chosen expression simply does not merge with the idea being expressed.[7]

    It seems possible that the merger doctrine, when properly analyzed, would exclude the three packages identified by the district court as core packages from the scope of actionable infringing conduct. This would be so if the Java authors, at the time these packages were created, had only a limited number of ways to express the methods and classes therein if they wanted to write in the Java language. In that instance, the idea may well be merged with the expression in these three packages.[8] Google did not present its merger argument in this way below and does not do so here, however. Indeed, Google does not try to differentiate among the packages for purposes of its copyrightability analysis and does not appeal the infringement verdict as to the packages. For these reasons, we reject the trial court's merger analysis.

    b. Short Phrases

    The district court also found that Oracle's declaring code consists of uncopyrightable short phrases. Specifically, the court concluded that, "while the Android method and class names could have been different from the names of their counterparts in Java and still have worked, copyright protection never extends to names or short phrases as a matter of law." Copyrightability Decision, 872 F. Supp. 2d at 976.

    The district court is correct that "[w]ords and short phrases such as names, titles, and slogans" are not subject to copyright protection. 37 C.F.R. § 202.1(a). The court failed to recognize, however, that the relevant question for copyrightability purposes is not whether the work at issue contains short phrases—as literary works often do—but, rather, whether those phrases are creative. See Soc'y of Holy Transfiguration Monastery, Inc. v. Gregory, 689 F.3d 29, 52 (1st Cir. 2012) (noting that "not all short phrases will automatically be deemed uncopyrightable"); see also 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 2.01[B] (2013) ("[E]ven a short phrase may command copyright protection if it exhibits sufficient creativity."). And, by dissecting the individual lines of declaring code at issue into short phrases, the district court further failed to recognize that an original combination of elements can be copyrightable. See Softel, Inc. v. Dragon Med. & Scientific Commc'ns, 118 F.3d 955, 964 (2d Cir. 1997) (noting that, in Feist, "the Court made quite clear that a compilation of nonprotectible elements can enjoy copyright protection even though its constituent elements do not").

    By analogy, the opening of Charles Dickens' A Tale of Two Cities is nothing but a string of short phrases. Yet no one could contend that this portion of Dickens' work is unworthy of copyright protection because it can be broken into those shorter constituent components. The question is not whether a short phrase or series of short phrases can be extracted from the work, but whether the manner in which they are used or strung together exhibits creativity.

    Although the district court apparently focused on individual lines of code, Oracle is not seeking copyright protection for a specific short phrase or word. Instead, the portion of declaring code at issue is 7,000 lines, and Google's own "Java guru" conceded that there can be "creativity and artistry even in a single method declaration." Joint Appendix ("J.A.") 20,970. Because Oracle "exercised creativity in the selection and arrangement" of the method declarations when it created the API packages and wrote the relevant declaring code, they contain protectable expression that is entitled to copyright protection. See Atari, 975 F.2d at 840; see also 17 U.S.C. §§ 101, 103 (recognizing copyright protection for "compilations" which are defined as work that is "selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship"). Accordingly, we conclude that the district court erred in applying the short phrases doctrine to find the declaring code not copyrightable.

    c. Scenes a Faire

    The scenes a faire doctrine, which is related to the merger doctrine, operates to bar certain otherwise creative expression from copyright protection. Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1444 (9th Cir. 1994). It provides that "expressive elements of a work of authorship are not entitled to protection against infringement if they are standard, stock, or common to a topic, or if they necessarily follow from a common theme or setting." Mitel, 124 F.3d at 1374. Under this doctrine, "when certain commonplace expressions are indispensable and naturally associated with the treatment of a given idea, those expressions are treated like ideas and therefore [are] not protected by copyright." Swirsky v. Carey, 376 F.3d 841, 850 (9th Cir. 2004). In the computer context, "the scene a faire doctrine denies protection to program elements that are dictated by external factors such as `the mechanical specifications of the computer on which a particular program is intended to run' or `widely accepted programming practices within the computer industry.'" Softel, 118 F.3d at 963 (citation omitted).

    The trial court rejected Google's reliance on the scenes a faire doctrine. It did so in a footnote, finding that Google had failed to present evidence to support the claim that either the grouping of methods within the classes or the code chosen for them "would be so expected and customary as to be permissible under the scenes a faire doctrine." Copyrightability Decision, 872 F. Supp. 2d at 999 n.9. Specifically, the trial court found that "it is impossible to say on this record that all of the classes and their contents are typical of such classes and, on this record, this order rejects Google's global argument based on scenes a faire." Id.

    On appeal, Google refers to scenes a faire concepts briefly, as do some amici, apparently contending that, because programmers have become accustomed to and comfortable using the groupings in the Java API packages, those groupings are so commonplace as to be indispensable to the expression of an acceptable programming platform. As such, the argument goes, they are so associated with the "idea" of what the packages are accomplishing that they should be treated as ideas rather than expression. See Br. of Amici Curiae Rackspace US, Inc., et al. at 19-22.

    Google cannot rely on the scenes a faire doctrine as an alternative ground upon which we might affirm the copyrightability judgment of the district court. This is so for several reasons. First, as noted, like merger, in the Ninth Circuit, the scenes a faire doctrine is a component of the infringement analysis. "[S]imilarity of expression, whether literal or non-literal, which necessarily results from the fact that the common idea is only capable of expression in more or less stereotyped form, will preclude a finding of actionable similarity." 4 Nimmer on Copyright § 13.03[B][3]. Thus, the expression is not excluded from copyright protection; it is just that certain copying is forgiven as a necessary incident of any expression of the underlying idea. See Satava, 323 F.3d at 810 n.3 ("The Ninth Circuit treats scenes a faire as a defense to infringement rather than as a barrier to copyrightability.").

    Second, Google has not objected to the trial court's conclusion that Google failed to make a sufficient factual record to support its contention that the groupings and code chosen for the 37 Java API packages were driven by external factors or premised on features that were either commonplace or essential to the idea being expressed. Google provides no record citations indicating that such a showing was made and does not contend that the trial court erred when it expressly found it was not. Indeed, Google does not even make this argument with respect to the core packages.

    Finally, Google's reliance on the doctrine below and the amici reference to it here are premised on a fundamental misunderstanding of the doctrine. Like merger, the focus of the scenes a faire doctrine is on the circumstances presented to the creator, not the copier. See Mitel, 124 F.3d at 1375 (finding error to the extent the trial court discussed "whether external factors such as market forces and efficiency considerations justified Iqtel's copying of the command codes"). The court's analytical focus must be upon the external factors that dictated Sun's selection of classes, methods, and code—not upon what Google encountered at the time it chose to copy those groupings and that code. See id. "[T]he scenes a faire doctrine identifies and excludes from protection against infringement expression whose creation `flowed naturally from considerations external to the author's creativity.'" Id. (quoting Nimmer § 13.03[F][3], at 13-131 (1997)). It is this showing the trial court found Google failed to make, and Google cites to nothing in the record which indicates otherwise.

    For these reasons, the trial court was correct to conclude that the scenes a faire doctrine does not affect the copyrightability of either the declaring code in, or the SSO of, the Java API packages at issue.

    2. The Structure, Sequence, and Organization of the API Packages

    The district court found that the SSO of the Java API packages is creative and original, but nevertheless held that it is a "system or method of operation . . . and, therefore, cannot be copyrighted" under 17 U.S.C. § 102(b). Copyrightability Decision, 872 F. Supp. 2d at 976-77. In reaching this conclusion, the district court seems to have relied upon language contained in a First Circuit decision: Lotus Development Corp. v. Borland International, Inc., 49 F.3d 807 (1st Cir. 1995), aff'd without opinion by equally divided court, 516 U.S. 233 (1996).[9]

    In Lotus, it was undisputed that the defendant copied the menu command hierarchy and interface from Lotus 1-2-3, a computer spreadsheet program "that enables users to perform accounting functions electronically on a computer." 49 F.3d at 809. The menu command hierarchy referred to a series of commands—such as "Copy," "Print," and "Quit"—which were arranged into more than 50 menus and submenus. Id. Although the defendant did not copy any Lotus source code, it copied the menu command hierarchy into its rival program. The question before the court was "whether a computer menu command hierarchy is copyrightable subject matter." Id.

    Although it accepted the district court's finding that Lotus developers made some expressive choices in selecting and arranging the command terms, the First Circuit found that the command hierarchy was not copyrightable because, among other things, it was a "method of operation" under Section 102(b). In reaching this conclusion, the court defined a "method of operation" as "the means by which a person operates something, whether it be a car, a food processor, or a computer." Id. at 815.[10] Because the Lotus menu command hierarchy provided "the means by which users control and operate Lotus 1-2-3," it was deemed unprotectable. Id. For example, if users wanted to copy material, they would use the "Copy" command and the command terms would tell the computer what to do. According to the Lotus court, the "fact that Lotus developers could have designed the Lotus menu command hierarchy differently is immaterial to the question of whether it is a `method of operation.'" Id. at 816. (noting that "our initial inquiry is not whether the Lotus menu command hierarchy incorporates any expression"). The court further indicated that, "[i]f specific words are essential to operating something, then they are part of a `method of operation' and, as such, are unprotectable." Id.

    On appeal, Oracle argues that the district court's reliance on Lotus is misplaced because it is distinguishable on its facts and is inconsistent with Ninth Circuit law. We agree. First, while the defendant in Lotus did not copy any of the underlying code, Google concedes that it copied portions of Oracle's declaring source code verbatim. Second, the Lotus court found that the commands at issue there (copy, print, etc.) were not creative, but it is undisputed here that the declaring code and the structure and organization of the API packages are both creative and original. Finally, while the court in Lotus found the commands at issue were "essential to operating" the system, it is undisputed that—other than perhaps as to the three core packages—Google did not need to copy the structure, sequence, and organization of the Java API packages to write programs in the Java language.

    More importantly, however, the Ninth Circuit has not adopted the court's "method of operation" reasoning in Lotus, and we conclude that it is inconsistent with binding precedent.[11] Specifically, we find that Lotus is inconsistent with Ninth Circuit case law recognizing that the structure, sequence, and organization of a computer program is eligible for copyright protection where it qualifies as an expression of an idea, rather than the idea itself. See Johnson Controls, 886 F.2d at 1175-76. And, while the court in Lotus held "that expression that is part of a `method of operation' cannot be copyrighted," 49 F.3d at 818, this court—applying Ninth Circuit law—reached the exact opposite conclusion, finding that copyright protects "the expression of [a] process or method," Atari, 975 F.2d at 839.

    We find, moreover, that the hard and fast rule set down in Lotus and employed by the district court here— i.e., that elements which perform a function can never be copyrightable—is at odds with the Ninth Circuit's endorsement of the abstraction-filtration-comparison analysis discussed earlier. As the Tenth Circuit concluded in expressly rejecting the Lotus "method of operation" analysis, in favor of the Second Circuit's abstraction-filtrationcomparison test, "although an element of a work may be characterized as a method of operation, that element may nevertheless contain expression that is eligible for copyright protection." Mitel, 124 F.3d at 1372. Specifically, the court found that Section 102(b) "does not extinguish the protection accorded a particular expression of an idea merely because that expression is embodied in a method of operation at a higher level of abstraction." Id.

    Other courts agree that components of a program that can be characterized as a "method of operation" may nevertheless be copyrightable. For example, the Third Circuit rejected a defendant's argument that operating system programs are "per se" uncopyrightable because an operating system is a "method of operation" for a computer. Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1250-52 (3d Cir. 1983). The court distinguished between the "method which instructs the computer to perform its operating functions" and "the instructions themselves," and found that the instructions were copyrightable. Id. at 1250-51. In its analysis, the court noted: "[t]hat the words of a program are used ultimately in the implementation of a process should in no way affect their copyrightability." Id. at 1252 (quoting CONTU Report at 21). The court focused "on whether the idea is capable of various modes of expression" and indicated that, "[i]f other programs can be written or created which perform the same function as [i]n Apple's operating system program, then that program is an expression of the idea and hence copyrightable." Id. at 1253. Notably, no other circuit has adopted the First Circuit's "method of operation" analysis.

    Courts have likewise found that classifying a work as a "system" does not preclude copyright for the particular expression of that system. See Toro Co. v. R & R Prods. Co., 787 F.2d 1208, 1212 (8th Cir. 1986) (rejecting the district court's decision that "appellant's parts numbering system is not copyrightable because it is a `system'" and indicating that Section 102(b) does not preclude protection for the "particular expression" of that system); see also Am. Dental Ass'n v. Delta Dental Plans Ass'n, 126 F.3d 977, 980 (7th Cir. 1997) ("A dictionary cannot be called a `system' just because new novels are written using words, all of which appear in the dictionary. Nor is word-processing software a `system' just because it has a command structure for producing paragraphs.").

    Here, the district court recognized that the SSO "resembles a taxonomy," but found that "it is nevertheless a command structure, a system or method of operation—a long hierarchy of over six thousand commands to carry out pre-assigned functions." Copyrightability Decision, 872 F. Supp. 2d at 999-1000.[12] In other words, the court concluded that, although the SSO is expressive, it is not copyrightable because it is also functional. The problem with the district court's approach is that computer programs are by definition functional—they are all designed to accomplish some task. Indeed, the statutory definition of "computer program" acknowledges that they function "to bring about a certain result." See 17 U.S.C. § 101 (defining a "computer program" as "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result"). If we were to accept the district court's suggestion that a computer program is uncopyrightable simply because it "carr[ies] out pre-assigned functions," no computer program is protectable. That result contradicts Congress's express intent to provide copyright protection to computer programs, as well as binding Ninth Circuit case law finding computer programs copyrightable, despite their utilitarian or functional purpose. Though the trial court did add the caveat that it "does not hold that the structure, sequence and organization of all computer programs may be stolen," Copyrightability Decision, 872 F. Supp. 2d at 1002, it is hard to see how its method of operation analysis could lead to any other conclusion.

    While it does not appear that the Ninth Circuit has addressed the precise issue, we conclude that a set of commands to instruct a computer to carry out desired operations may contain expression that is eligible for copyright protection. See Mitel, 124 F.3d at 1372. We agree with Oracle that, under Ninth Circuit law, an original work—even one that serves a function—is entitled to copyright protection as long as the author had multiple ways to express the underlying idea. Section 102(b) does not, as Google seems to suggest, automatically deny copyright protection to elements of a computer program that are functional. Instead, as noted, Section 102(b) codifies the idea/expression dichotomy and the legislative history confirms that, among other things, Section 102(b) was "intended to make clear that the expression adopted by the programmer is the copyrightable element in a computer program." H.R. Rep. No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S.C.C.A.N. 5659, 5670. Therefore, even if an element directs a computer to perform operations, the court must nevertheless determine whether it contains any separable expression entitled to protection.

    On appeal, Oracle does not—and concedes that it cannot—claim copyright in the idea of organizing functions of a computer program or in the "package-class-method" organizational structure in the abstract. Instead, Oracle claims copyright protection only in its particular way of naming and organizing each of the 37 Java API packages.[13] Oracle recognizes, for example, that it "cannot copyright the idea of programs that open an internet connection," but "it can copyright the precise strings of code used to do so, at least so long as `other language is available' to achieve the same function." Appellant Reply Br. 13-14 (citation omitted). Thus, Oracle concedes that Google and others could employ the Java language—much like anyone could employ the English language to write a paragraph without violating the copyrights of other English language writers. And, that Google may employ the "package-class-method" structure much like authors can employ the same rules of grammar chosen by other authors without fear of infringement. What Oracle contends is that, beyond that point, Google, like any author, is not permitted to employ the precise phrasing or precise structure chosen by Oracle to flesh out the substance of its packages—the details and arrangement of the prose.

    As the district court acknowledged, Google could have structured Android differently and could have chosen different ways to express and implement the functionality that it copied.[14] Specifically, the court found that "the very same functionality could have been offered in Android without duplicating the exact command structure used in Java." Copyrightability Decision, 872 F. Supp. 2d at 976. The court further explained that Google could have offered the same functions in Android by "rearranging the various methods under different groupings among the various classes and packages." Id. The evidence showed, moreover, that Google designed many of its own API packages from scratch, and, thus, could have designed its own corresponding 37 API packages if it wanted to do so.

    Given the court's findings that the SSO is original and creative, and that the declaring code could have been written and organized in any number of ways and still have achieved the same functions, we conclude that Section 102(b) does not bar the packages from copyright protection just because they also perform functions.

    3. Google's Interoperability Arguments are Irrelevant to Copyrightability

    Oracle also argues that the district court erred in invoking interoperability in its copyrightability analysis. Specifically, Oracle argues that Google's interoperability arguments are only relevant, if at all, to fair use—not to the question of whether the API packages are copyrightable. We agree.

    In characterizing the SSO of the Java API packages as a "method of operation," the district court explained that "[d]uplication of the command structure is necessary for interoperability." Copyrightability Decision, 872 F. Supp. 2d at 977. The court found that, "[i]n order for at least some of [the pre-Android Java] code to run on Android, Google was required to provide the same java.package.Class.method() command system using the same names with the same `taxonomy' and with the same functional specifications." Id. at 1000 (emphasis omitted). And, the court concluded that "Google replicated what was necessary to achieve a degree of interoperability—but no more, taking care, as said before, to provide its own implementations." Id. In reaching this conclusion, the court relied primarily on two Ninth Circuit decisions: Sega Enterprises v. Accolade, Inc., 977 F.2d 1510 (9th Cir. 1992), and Sony Computer Entertainment, Inc. v. Connectix, Corp., 203 F.3d 596 (9th Cir. 2000).

    Both Sega and Sony are fair use cases in which copyrightability was addressed only tangentially. In Sega, for example, Sega manufactured a video game console and game cartridges that contained hidden functional program elements necessary to achieve compatibility with the console. Defendant Accolade: (1) reverse-engineered Sega's video game programs to discover the requirements for compatibility; and (2) created its own games for the Sega console. Sega, 977 F.2d at 1514-15. As part of the reverse-engineering process, Accolade made intermediate copies of object code from Sega's console. Id. Although the court recognized that the intermediate copying of computer code may infringe Sega's copyright, it concluded that "disassembly of copyrighted object code is, as a matter of law, a fair use of the copyrighted work if such disassembly provides the only means of access to those elements of the code that are not protected by copyright and the copier has a legitimate reason for seeking such access." Id. at 1518. The court agreed with Accolade that its copying was necessary to examine the unprotected functional aspects of the program. Id. at 1520. And, because Accolade had a legitimate interest in making its cartridges compatible with Sega's console, the court found that Accolade's intermediate copying was fair use.

    Likewise, in Sony, the Ninth Circuit found that the defendant's reverse engineering and intermediate copying of Sony's copyrighted software program "was a fair use for the purpose of gaining access to the unprotected elements of Sony's software." Sony, 203 F.3d at 602. The court explained that Sony's software program contained unprotected functional elements and that the defendant could only access those elements through reverse engineering. Id. at 603. The defendant used that information to create a software program that let consumers play games designed for Sony's PlayStation console on their computers. Notably, the defendant's software program did not contain any of Sony's copyrighted material. Id. at 598.

    The district court characterized Sony and Sega as "close analogies" to this case. Copyrightability Decision, 872 F. Supp. 2d at 1000. According to the court, both decisions "held that interface procedures that were necessary to duplicate in order to achieve interoperability were functional aspects not copyrightable under Section 102(b)." Id. The district court's reliance on Sega and Sony in the copyrightability context is misplaced, however.

    As noted, both cases were focused on fair use, not copyrightability. In Sega, for example, the only question was whether Accolade's intermediate copying was fair use. The court never addressed the question of whether Sega's software code, which had functional elements, also contained separable creative expression entitled to protection. Likewise, although the court in Sony determined that Sony's computer program had functional elements, it never addressed whether it also had expressive elements. Sega and Sony are also factually distinguishable because the defendants in those cases made intermediate copies to understand the functional aspects of the copyrighted works and then created new products. See Sony, 203 F.3d at 606-07; Sega, 977 F.2d at 1522-23. This is not a case where Google reverse-engineered Oracle's Java packages to gain access to unprotected functional elements contained therein. As the former Register of Copyrights of the United States pointed out in his brief amicus curiae, "[h]ad Google reverse engineered the programming packages to figure out the ideas and functionality of the original, and then created its own structure and its own literal code, Oracle would have no remedy under copyright whatsoever." Br. for Amicus Curiae Ralph Oman 29. Instead, Google chose to copy both the declaring code and the overall SSO of the 37 Java API packages at issue.

    We disagree with Google's suggestion that Sony and Sega created an "interoperability exception" to copyrightability. See Appellee Br. 39 (citing Sony and Sega for the proposition that "compatibility elements are not copyrightable under section 102(b)" (emphasis omitted)). Although both cases recognized that the software programs at issue there contained unprotected functional elements, a determination that some elements are unprotected is not the same as saying that the entire work loses copyright protection. To accept Google's reading would contradict Ninth Circuit case law recognizing that both the literal and non-literal components of a software program are eligible for copyright protection. See Johnson Controls, 886 F.2d at 1175. And it would ignore the fact that the Ninth Circuit endorsed the abstractionfiltration-comparison inquiry in Sega itself.

    As previously discussed, a court must examine the software program to determine whether it contains creative expression that can be separated from the underlying function. See Sega, 977 F.2d at 1524-25. In doing so, the court filters out the elements of the program that are "ideas" as well as elements that are "dictated by considerations of efficiency, so as to be necessarily incidental to that idea; required by factors external to the program itself." Altai, 982 F.2d at 707.

    To determine "whether certain aspects of an allegedly infringed software are not protected by copyright law, the focus is on external factors that influenced the choice of the creator of the infringed product." Dun & Bradstreet Software Servs., Inc. v. Grace Consulting, Inc., 307 F.3d 197, 215 (3d Cir. 2002) (citing Altai, 982 F.2d at 714; Mitel, 124 F.3d at 1375). The Second Circuit, for example, has noted that programmers are often constrained in their design choices by "extrinsic considerations" including "the mechanical specifications of the computer on which a particular program is intended to run" and "compatibility requirements of other programs with which a program is designed to operate in conjunction." Altai, 982 F.2d at 709-10 (citing 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.01 at 13-66-71 (1991)). The Ninth Circuit has likewise recognized that: (1) computer programs "contain many logical, structural, and visual display elements that are dictated by . . . external factors such as compatibility requirements and industry demands"; and (2) "[i]n some circumstances, even the exact set of commands used by the programmer is deemed functional rather than creative for purposes of copyright." Sega, 977 F.2d at 1524 (internal citation omitted).

    Because copyrightability is focused on the choices available to the plaintiff at the time the computer program was created, the relevant compatibility inquiry asks whether the plaintiff's choices were dictated by a need to ensure that its program worked with existing third-party programs. Dun & Bradstreet, 307 F.3d at 215; see also Atari, 975 F.2d at 840 ("External factors did not dictate the design of the 10NES program."). Whether a defendant later seeks to make its program interoperable with the plaintiff's program has no bearing on whether the software the plaintiff created had any design limitations dictated by external factors. See Dun & Bradstreet, 307 F.3d at 215 (finding an expert's testimony on interoperability "wholly misplaced" because he "looked at externalities from the eyes of the plagiarist, not the eyes of the program's creator"). Stated differently, the focus is on the compatibility needs and programming choices of the party claiming copyright protection—not the choices the defendant made to achieve compatibility with the plaintiff's program. Consistent with this approach, courts have recognized that, once the plaintiff creates a copyrightable work, a defendant's desire "to achieve total compatibility. . . is a commercial and competitive objective which does not enter into the . . . issue of whether particular ideas and expressions have merged." Apple Computer, 714 F.2d at 1253.

    Given this precedent, we conclude that the district court erred in focusing its interoperability analysis on Google's desires for its Android software. See Copyrightability Decision, 872 F. Supp. 2d at 1000 ("Google replicated what was necessary to achieve a degree of interoperability" with Java.). Whether Google's software is "interoperable" in some sense with any aspect of the Java platform (although as Google concedes, certainly not with the JVM) has no bearing on the threshold question of whether Oracle's software is copyrightable. It is the interoperability and other needs of Oracle—not those of Google—that apply in the copyrightability context, and there is no evidence that when Oracle created the Java API packages at issue it did so to meet compatibility requirements of other pre-existing programs.

    Google maintains on appeal that its use of the "Java class and method names and declarations was `the only and essential means' of achieving a degree of interoperability with existing programs written in the [Java language]." Appellee Br. 49. Indeed, given the record evidence that Google designed Android so that it would not be compatible with the Java platform, or the JVM specifically, we find Google's interoperability argument confusing. While Google repeatedly cites to the district court's finding that Google had to copy the packages so that an app written in Java could run on Android, it cites to no evidence in the record that any such app exists and points to no Java apps that either pre-dated or post-dated Android that could run on the Android platform.[15] The compatibility Google sought to foster was not with Oracle's Java platform or with the JVM central to that platform. Instead, Google wanted to capitalize on the fact that software developers were already trained and experienced in using the Java API packages at issue. The district court agreed, finding that, as to the 37 Java API packages, "Google believed Java application programmers would want to find the same 37 sets of functionalities in the new Android system callable by the same names as used in Java." Copyrightability Decision, 872 F. Supp. 2d at 978. Google's interest was in accelerating its development process by "leverag[ing] Java for its existing base of developers." J.A. 2033, 2092. Although this competitive objective might be relevant to the fair use inquiry, we conclude that it is irrelevant to the copyrightability of Oracle's declaring code and organization of the API packages.

    Finally, to the extent Google suggests that it was entitled to copy the Java API packages because they had become the effective industry standard, we are unpersuaded. Google cites no authority for its suggestion that copyrighted works lose protection when they become popular, and we have found none.[16] In fact, the Ninth Circuit has rejected the argument that a work that later becomes the industry standard is uncopyrightable. See Practice Mgmt. Info. Corp. v. Am. Med. Ass'n, 121 F.3d 516, 520 n.8 (9th Cir. 1997) (noting that the district court found plaintiff's medical coding system entitled to copyright protection, and that, although the system had become the industry standard, plaintiff's copyright did not prevent competitors "from developing comparative or better coding systems and lobbying the federal government and private actors to adopt them. It simply prevents wholesale copying of an existing system."). Google was free to develop its own API packages and to "lobby" programmers to adopt them. Instead, it chose to copy Oracle's declaring code and the SSO to capitalize on the preexisting community of programmers who were accustomed to using the Java API packages. That desire has nothing to do with copyrightability. For these reasons, we find that Google's industry standard argument has no bearing on the copyrightability of Oracle's work.

    B. Fair Use

    As noted, the jury hung on Google's fair use defense, and the district court declined to order a new trial given its conclusion that the code and structure Google copied were not entitled to copyright protection. On appeal, Oracle argues that: (1) a remand to decide fair use "is pointless"; and (2) this court should find, as a matter of law, that "Google's commercial use of Oracle's work in a market where Oracle already competed was not fair use." Appellant Br. 68.

    Fair use is an affirmative defense to copyright infringement and is codified in Section 107 of the Copyright Act. Golan, 132 S. Ct. at 890 ("[T]he fair use defense, is codified at 17 U.S.C. § 107."). Section 107 permits use of copyrighted work if it is "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." 17 U.S.C. § 107. The fair use doctrine has been referred to as "`the most troublesome in the whole law of copyright.'" Monge v. Maya Magazines, Inc., 688 F.3d 1164, 1170 (9th Cir. 2012) (quoting Dellar v. Samuel Goldwyn, Inc., 104 F.2d 661, 662 (2d Cir. 1939) (per curiam)). It both permits and requires "courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994) (quoting Stewart v. Abend, 495 U.S. 207, 236 (1990)).

    "Section 107 requires a case-by-case determination whether a particular use is fair, and the statute notes four nonexclusive factors to be considered." Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549 (1985). Those factors are: (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." 17 U.S.C. § 107. The Supreme Court has explained that all of the statutory factors "are to be explored, and the results weighed together, in light of the purpose[] of copyright," which is "[t]o promote the Progress of Science and useful Arts." Campbell, 510 U.S. at 578, 575 (internal citations omitted).

    "Fair use is a mixed question of law and fact." Harper & Row, 471 U.S. at 560. Thus, while subsidiary and controverted findings of fact must be reviewed for clear error under Rule 52 of the Federal Rules of Civil Procedure, the Ninth Circuit reviews the ultimate application of those facts de novo. See Seltzer v. Green Day, Inc., 725 F.3d 1170, 1175 (9th Cir. 2013) (citing SOFA Entm't, Inc. v. Dodger Prods., Inc., 709 F.3d 1273, 1277 (9th Cir. 2013)). Where there are no material facts at issue and "the parties dispute only the ultimate conclusions to be drawn from those facts, we may draw those conclusions without usurping the function of the jury." Id. (citing Fisher v. Dees, 794 F.2d 432, 436 (9th Cir. 1986)). Indeed, the Supreme Court has specifically recognized that, "[w]here the district court has found facts sufficient to evaluate each of the statutory factors, an appellate court `need not remand for further factfinding . . . [but] may conclude as a matter of law that [the challenged use] [does] not qualify as a fair use of the copyrighted work.'" Harper & Row, 471 U.S. at 560 (citation omitted).

    Of course, the corollary to this point is true as well— where there are material facts in dispute and those facts have not yet been resolved by the trier of fact, appellate courts may not make findings of fact in the first instance. See Shawmut Bank, N.A. v. Kress Assocs., 33 F.3d 1477, 1504 (9th Cir. 1994) ("[W]e must avoid finding facts in the first instance."); see also Golden Bridge Tech., Inc. v. Nokia, Inc., 527 F.3d 1318, 1323 (Fed. Cir. 2008) ("Appellate courts review district court judgments; we do not find facts."). Here, it is undisputed that neither the jury nor the district court made findings of fact to which we can refer in assessing the question of whether Google's use of the API packages at issue was a "fair use" within the meaning of Section 107. Oracle urges resolution of the fair use question by arguing that the trial court should have decided the question as a matter of law based on the undisputed facts developed at trial, and that we can do so as well. Google, on the other hand, argues that many critical facts regarding fair use are in dispute. It asserts that the fact that the jury could not reach a resolution on the fair use defense indicates that at least some presumably reasonable jurors found its use to be fair. And, Google asserts that, even if it is true that the district court erred in discussing concepts of "interoperability" when considering copyrightability, those concepts are still relevant to its fair use defense. We turn first to a more detailed examination of fair use.

    The first factor in the fair use inquiry involves "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107(1). This factor involves two sub-issues: (1) "whether and to what extent the new work is transformative," Campbell, 510 U.S. at 579 (citation and internal quotation marks omitted); and (2) whether the use serves a commercial purpose.

    A use is "transformative" if it "adds something new, with a further purpose or different character, altering the first with new expression, meaning or message." Id. The critical question is "whether the new work merely supersede[s] the objects of the original creation . . . or instead adds something new." Id. (citations and internal quotation marks omitted). This inquiry "may be guided by the examples given in the preamble to § 107, looking to whether the use is for criticism, or comment, or news reporting, and the like." Id. at 578-79. "The Supreme Court has recognized that parodic works, like other works that comment and criticize, are by their nature often sufficiently transformative to fit clearly under the fair use exception." Mattel Inc. v. Walking Mountain Prods., 353 F.3d 792, 800 (9th Cir. 2003) (citing Campbell, 510 U.S. at 579).

    Courts have described new works as "transformative" when "the works use copy-righted material for purposes distinct from the purpose of the original material." Elvis Presley Enters., Inc. v. Passport Video, 349 F.3d 622, 629 (9th Cir. 2003) ("Here, Passport's use of many of the television clips is transformative because they are cited as historical reference points in the life of a remarkable entertainer."), overruled on other grounds by Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 995 (9th Cir. 2011) (per curiam); see also Bouchat v. Baltimore Ravens Ltd. P'ship, 619 F.3d 301, 309-10 (4th Cir. 2010) (quoting A.V. ex rel. Vanderhyge v. iParadigms, LLC, 562 F.3d 630, 638 (4th Cir. 2009) ("[A] transformative use is one that `employ[s] the quoted matter in a different manner or for a different purpose from the original.'")). "A use is considered transformative only where a defendant changes a plaintiff's copyrighted work or uses the plaintiff's copyrighted work in a different context such that the plaintiff's work is transformed into a new creation." Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007) (quoting Wall Data Inc. v. L.A. County Sheriff's Dep't, 447 F.3d 769, 778 (9th Cir. 2006), and finding that Google's use of thumbnail images in its search engine was "highly transformative").

    A work is not transformative where the user "makes no alteration to the expressive content or message of the original work." Seltzer, 725 F.3d at 1177; see also Wall Data, 447 F.3d at 778 ("The Sheriff's Department created exact copies of RUMBA's software. It then put those copies to the identical purpose as the original software. Such a use cannot be considered transformative."); Monge, 688 F.3d at 1176 (finding that a magazine's publication of photographs of a secret celebrity wedding "sprinkled with written commentary" was "at best minimally transformative" where the magazine "did not transform the photos into a new work . . . or incorporate the photos as part of a broader work"); Elvis Presley Enters., 349 F.3d at 629 (finding that use of copyrighted clips of Elvis's television appearances was not transformative where "some of the clips [we]re played without much interruption, if any . . . [and] instead serve[d] the same intrinsic entertainment value that is protected by Plaintiffs' copyrights."). Where the use "is for the same intrinsic purpose as [the copyright holder's] . . . such use seriously weakens a claimed fair use." Worldwide Church of God v. Phila. Church of God, Inc., 227 F.3d 1110, 1117 (9th Cir. 2000) (quoting Weissmann v. Freeman, 868 F.2d 1313, 1324 (2d Cir. 1989)).

    Analysis of the first factor also requires inquiry into the commercial nature of the use. Use of the copyrighted work that is commercial "tends to weigh against a finding of fair use." Harper & Row, 471 U.S. at 562 ("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 exploitation of the copyrighted material without paying the customary price."). "[T]he 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." Campbell, 510 U.S. at 579.

    The second factor—the nature of the copyrighted work—"calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Id. at 586. This factor "turns on whether the work is informational or creative." Worldwide Church of God, 227 F.3d at 1118; see also Harper & Row, 471 U.S. at 563 ("The law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy."). Creative expression "falls within the core of the copyright's protective purposes." Campbell, 510 U.S. at 586. Because computer programs have both functional and expressive components, however, where the functional components are themselves unprotected (because, e.g., they are dictated by considerations of efficiency or other external factors), those elements should be afforded "a lower degree of protection than more traditional literary works." Sega, 977 F.2d at 1526. Thus, where the nature of the work is such that purely functional elements exist in the work and it is necessary to copy the expressive elements in order to perform those functions, consideration of this second factor arguably supports a finding that the use is fair.

    The third factor asks the court to examine "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). Analysis of this factor is viewed in the context of the copyrighted work, not the infringing work. Indeed, the statutory language makes clear that "a taking may not be excused merely because it is insubstantial with respect to the infringing work." Harper & Row, 471 U.S. at 565. "As Judge Learned Hand cogently remarked, `no plagiarist can excuse the wrong by showing how much of his work he did not pirate.'" Id. (quoting Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49, 56 (2d Cir. 1936)). In contrast, "the fact that a substantial portion of the infringing work was copied verbatim is evidence of the qualitative value of the copied material, both to the originator and to the plagiarist who seeks to profit from marketing someone else's copyrighted expression." Id. The Ninth Circuit has recognized that, while "wholesale copying does not preclude fair use per se, copying an entire work militates against a finding of fair use." Worldwide Church of God, 227 F.3d at 1118 (internal citation and quotation omitted). "If the secondary user only copies as much as is necessary for his or her intended use, then this factor will not weigh against him or her." Kelly v. Arriba Soft Corp., 336 F.3d 811, 820-21 (9th Cir. 2003). Under this factor, "attention turns to the persuasiveness of a parodist's justification for the particular copying done, and the enquiry will harken back to the first of the statutory factors . . . [because] the extent of permissible copying varies with the purpose and character of the use." Campbell, 510 U.S. at 586-87.

    The fourth and final factor focuses on "the effect of the use upon the potential market for or value of the copyrighted work." Harper & Row, 471 U.S. at 566. This factor reflects the idea that fair use "is limited to copying by others which does not materially impair the marketability of the work which is copied." Id. at 566-67. The Supreme Court has said that this factor is "undoubtedly the single most important element of fair use." Id. at 566. It requires that courts "consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also whether unrestricted and widespread conduct of the sort engaged in by the defendant. . . would result in a substantially adverse impact on the potential market for the original." Campbell, 510 U.S. at 590 (citation and quotation marks omitted). "Market harm is a matter of degree, and the importance of this factor will vary, not only with the amount of harm, but also with the relative strength of the showing on the other factors." Id. at 590 n.21.

    Oracle asserts that all of these factors support its position that Google's use was not "fair use"—Google knowingly and illicitly copied a creative work to further its own commercial purposes, did so verbatim, and did so to the detriment of Oracle's market position. These undisputable facts, according to Oracle, should end the fair use inquiry. Oracle's position is not without force. On many of these points, Google does not debate Oracle's characterization of its conduct, nor could it on the record evidence.

    Google contends, however, that, although it admittedly copied portions of the API packages and did so for what were purely commercial purposes, a reasonable juror still could find that: (1) Google's use was transformative; (2) the Java API packages are entitled only to weak protection; (3) Google's use was necessary to work within a language that had become an industry standard; and (4) the market impact on Oracle was not substantial.

    On balance, we find that due respect for the limit of our appellate function requires that we remand the fair use question for a new trial. First, although it is undisputed that Google's use of the API packages is commercial, the parties disagree on whether its use is "transformative." Google argues that it is, because it wrote its own implementing code, created its own virtual machine, and incorporated the packages into a smartphone platform. For its part, Oracle maintains that Google's use is not transformative because: (1) "[t]he same code in Android . . . enables programmers to invoke the same pre-programmed functions in exactly the same way;" and (2) Google's use of the declaring code and packages does not serve a different function from Java. Appellant Reply Br. 47. While Google overstates what activities can be deemed transformative under a correct application of the law, we cannot say that there are no material facts in dispute on the question of whether Google's use is "transformative," even under a correct reading of the law. As such, we are unable to resolve this issue on appeal.

    Next, while we have concluded that it was error for the trial court to focus unduly on the functional aspects of the packages, and on Google's competitive desire to achieve commercial "interoperability" when deciding whether Oracle's API packages are entitled to copyright protection, we expressly noted that these factors may be relevant to a fair use analysis. While the trial court erred in concluding that these factors were sufficient to overcome Oracle's threshold claim of copyrightability, reasonable jurors might find that they are relevant to Google's fair use defense under the second and third factors of the inquiry. See Sega, 977 F.2d at 1524-25 (discussing the Second Circuit's approach to "break[ing] down a computer program into its component subroutines and subsubroutines and then identif[ying] the idea or core functional element of each" in the context of the second fair use factor: the nature of the copyrighted work). We find this particularly true with respect to those core packages which it seems may be necessary for anyone to copy if they are to write programs in the Java language. And, it may be that others of the packages were similarly essential components of any Java language-based program. So far, that type of filtration analysis has not occurred.

    Finally, as to market impact, the district court found that "Sun and Oracle never successfully developed its own smartphone platform using Java technology." Copyrightability Decision, 872 F. Supp. 2d at 978. But Oracle argues that, when Google copied the API packages, Oracle was licensing in the mobile and smartphone markets, and that Android's release substantially harmed those commercial opportunities as well as the potential market for a Java smartphone device. Because there are material facts in dispute on this factor as well, remand is necessary.

    Ultimately, we conclude that this is not a case in which the record contains sufficient factual findings upon which we could base a de novo assessment of Google's affirmative defense of fair use. Accordingly, we remand this question to the district court for further proceedings. On remand, the district court should revisit and revise its jury instructions on fair use consistent with this opinion so as to provide the jury with a clear and appropriate picture of the fair use defense.[17]

    II. GOOGLE'S CROSS-APPEAL

    Google cross-appeals from the portion of the district court's final judgment entered in favor of Oracle on its claim for copyright infringement as to the nine lines of rangeCheck code and the eight decompiled files. Final Judgment, Oracle Am., Inc. v. Google Inc., No. 3:10-cv-3561 (N.D. Cal. June 20, 2012), ECF No. 1211. Specifically, Google appeals from the district court's decisions: (1) granting Oracle's motion for JMOL of infringement as to the eight decompiled Java files that Google copied into Android; and (2) denying Google's motion for JMOL with respect to rangeCheck.

    When reviewing a district court's grant or denial of a motion for JMOL, we apply the procedural law of the relevant regional circuit, here the Ninth Circuit. Trading Techs. Int'l, Inc. v. eSpeed, Inc., 595 F.3d 1340, 1357 (Fed. Cir. 2010). The Ninth Circuit reviews a district court's JMOL decision de novo, applying the same standard as the district court. Mangum v. Action Collection Serv., Inc., 575 F.3d 935, 938 (9th Cir. 2009). To grant judgment as a matter of law, the court must find that "the evidence presented at trial permits only one reasonable conclusion" and that "no reasonable juror could find in the non-moving party's favor." Id. at 938-39 (citation and internal quotation marks omitted).

    Oracle explains that the eight decompiled files at issue "contain security functions governing access to network files" while rangeCheck "facilitates an important sorting function, frequently called upon during the operation of Java and Android." Oracle Response to Cross-Appeal 60-61. At trial, Google conceded that it copied the eight decompiled Java code files and the nine lines of code referred to as rangeCheck into Android. Its only defense was that the copying was de minimis. Accordingly, the district court instructed the jury that, "[w]ith respect to the infringement issues concerning the rangeCheck and other similar files, Google agrees that the accused lines of code and comments came from the copyrighted materials but contends that the amounts involved were so negligible as to be de minimis and thus should be excluded." Final Charge to the Jury (Phase One), Oracle Am., Inc. v. Google, Inc., No. 3:10-cv-3561 (N.D. Cal. Apr. 30, 2012), ECF No. 1018, at 14.

    Although the jury found that Google infringed Oracle's copyright in the nine lines of code comprising rangeCheck, it returned a noninfringement verdict as to eight decompiled security files. But because the trial testimony was that Google's use of the decompiled files was significant—and there was no testimony to the contrary—the district court concluded that "[n]o reasonable jury could find that this copying was de minimis." Order Granting JMOL on Decompiled Files, 2012 U.S. Dist. LEXIS 66417, at *6. As such, the court granted Oracle's motion for JMOL of infringement as to the decompiled security files.

    On appeal, Google maintains that its copying of rangeCheck and the decompiled security files was de minimis and thus did not infringe any of Oracle's copyrights. According to Google, the district court should have denied Oracle's motion for JMOL "because substantial evidence supported the jury's verdict that Google's use of eight decompiled test files was de minimis." Cross-Appellant Br. 76. Google further argues that the court should have granted its motion for JMOL as to rangeCheck because the "trial evidence revealed that the nine lines of rangeCheck code were both quantitatively and qualitatively insignificant in relation to the [Java] platform." Id. at 78.

    In response, Oracle argues that the Ninth Circuit does not recognize a de minimis defense to copyright infringement and that, even if it does, we should affirm the judgments of infringement on grounds that Google's copying was significant. Because we agree with Oracle on its second point, we need not address the first, except to note that there is some conflicting Ninth Circuit precedent on the question of whether there is a free-standing de minimis defense to copyright infringement or whether the substantiality of the alleged copying is best addressed as part of a fair use defense. Compare Norse v. Henry Holt & Co., 991 F.2d 563, 566 (9th Cir. 1993) (indicating that "even a small taking may sometimes be actionable" and the "question of whether a copying is substantial enough to be actionable may be best resolved through the fair use doctrine"), with Newton v. Diamond, 388 F.3d 1189, 1192-93 (9th Cir. 2003) ("For an unauthorized use of a copyrighted work to be actionable, the use must be significant enough to constitute infringement. This means that even where the fact of copying is conceded, no legal consequences will follow from that fact unless the copying is substantial.") (internal citation omitted)).[18]

    Even assuming that the Ninth Circuit recognizes a stand-alone de minimis defense to copyright infringement, however, we conclude that: (1) the jury reasonably found that Google's copying of the rangeCheck files was more than de minimis; and (2) the district court correctly concluded that the defense failed as a matter of law with respect to the decompiled security files.

    First, the unrebutted testimony at trial revealed that rangeCheck and the decompiled security files were significant to both Oracle and Google. Oracle's expert, Dr. John Mitchell, testified that Android devices call the rangeCheck function 2,600 times just in powering on the device. Although Google argues that the eight decompiled files were insignificant because they were used only to test the Android platform, Dr. Mitchell testified that "using the copied files even as test files would have been significant use" and the district court specifically found that "[t]here was no testimony to the contrary." Order Granting JMOL on Decompiled Files, 2012 U.S. Dist. LEXIS 66417, at *6. Given this testimony, a reasonable jury could not have found Google's copying de minimis.

    Google emphasizes that the nine lines of rangeCheck code "represented an infinitesimal percentage of the 2.8 million lines of code in the 166 Java packages—let alone the millions of lines of code in the entire [Java] platform." Google Cross-Appeal Br. 78-79. To the extent Google is arguing that a certain minimum number of lines of code must be copied before a court can find infringement, that argument is without merit. See Baxter v. MCA, Inc., 812 F.2d 421, 425 (9th Cir. 1987) ("[N]o bright line rule exists as to what quantum of similarity is permitted."). And, given the trial testimony that both rangeCheck and the decompiled security files are qualitatively significant and Google copied them in their entirety, Google cannot show that the district court erred in denying its motion for JMOL.

    We have considered Google's remaining arguments and find them unpersuasive. Accordingly, we affirm both of the JMOL decisions at issue in Google's cross-appeal.

    III. GOOGLE'S POLICY-BASED ARGUMENTS

    Many of Google's arguments, and those of some amici, appear premised on the belief that copyright is not the correct legal ground upon which to protect intellectual property rights to software programs; they opine that patent protection for such programs, with its insistence on non-obviousness, and shorter terms of protection, might be more applicable, and sufficient. Indeed, the district court's method of operation analysis seemed to say as much. Copyrightability Decision, 872 F. Supp. 2d at 984 (stating that this case raises the question of "whether the copyright holder is more appropriately asserting an exclusive right to a functional system, process, or method of operation that belongs in the realm of patents, not copyrights"). Google argues that "[a]fter Sega, developers could no longer hope to protect [software] interfaces by copyright . . . Sega signaled that the only reliable means for protecting the functional requirements for achieving interoperability was by patenting them." Appellee Br. 40 (quoting Pamela Samuelson, Are Patents on Interfaces Impeding Interoperability? 93 Minn. L. Rev. 1943, 1959 (2009)). And, Google relies heavily on articles written by Professor Pamela Samuelson, who has argued that "it would be best for a commission of computer program experts to draft a new form of intellectual property law for machine-readable programs." Pamela Samuelson, CONTU Revisited: The Case Against Copyright Protection for Computer Programs in Machine-Readable Form, 1984 Duke L.J. 663, 764 (1984). Professor Samuelson has more recently argued that "Altai and Sega contributed to the eventual shift away from claims of copyright in program interfaces and toward reliance on patent protection. Patent protection also became more plausible and attractive as the courts became more receptive to software patents." Samuelson, 93 Minn. L. Rev. at 1959.

    Although Google, and the authority on which it relies, seem to suggest that software is or should be entitled to protection only under patent law—not copyright law— several commentators have recently argued the exact opposite. See Technology Quarterly,Stalking Trolls, ECONOMIST, Mar. 8, 2014, http://www.economist. com/news/technology-quarterly/21598321-intellectualproperty-after-being-blamed-stymying-innovation-america-vague ("[M]any innovators have argued that the electronics and software industries would flourish if companies trying to bring new technology (software innovations included) to market did not have to worry about being sued for infringing thousands of absurd patents at every turn. A perfectly adequate means of protecting and rewarding software developers for their ingenuity has existed for over 300 years. It is called copyright."); Timothy B. Lee, Will the Supreme Court save us from software patents?, WASH. POST, Feb. 26, 2014, 1:13 PM, http://www.washingtonpost.com/blogs/the-switch/wp/ 2014/02/26/will-the-supreme-court-save-us-from-softwarepatents/ ("If you write a book or a song, you can get copyright protection for it. If you invent a new pill or a better mousetrap, you can get a patent on it. But for the last two decades, software has had the distinction of being potentially eligible for both copyright and patent protection. Critics say that's a mistake. They argue that the complex and expensive patent system is a terrible fit for the fast-moving software industry. And they argue that patent protection is unnecessary because software innovators already have copyright protection available.").

    Importantly for our purposes, the Supreme Court has made clear that "[n]either the Copyright Statute nor any other says that because a thing is patentable it may not be copyrighted." Mazer v. Stein, 347 U.S. 201, 217 (1954). Indeed, the thrust of the CONTU Report is that copyright is "the most suitable mode of legal protection for computer software." Peter S. Menell, An Analysis of the Scope of Copyright Protection for Application Programs, 41 Stan. L. Rev. 1045, 1072 (1989); see also CONTU Report at 1 (recommending that copyright law be amended "to make it explicit that computer programs, to the extent that they embody an author's original creation, are proper subject matter of copyright"). Until either the Supreme Court or Congress tells us otherwise, we are bound to respect the Ninth Circuit's decision to afford software programs protection under the copyright laws. We thus decline any invitation to declare that protection of software programs should be the domain of patent law, and only patent law.

    CONCLUSION

    For the foregoing reasons, we conclude that the declaring code and the structure, sequence, and organization of the 37 Java API packages at issue are entitled to copyright protection. We therefore reverse the district court's copyrightability determination with instructions to reinstate the jury's infringement verdict. Because the jury hung on fair use, we remand Google's fair use defense for further proceedings consistent with this decision.

    With respect to Google's cross-appeal, we affirm the district court's decisions: (1) granting Oracle's motion for JMOL as to the eight decompiled Java files that Google copied into Android; and (2) denying Google's motion for JMOL with respect to the rangeCheck function. Accordingly, we affirm-in-part, reverse-in-part, and remand for further proceedings.

    AFFIRMED-IN-PART, REVERSED-IN-PART, AND REMANDED

    [1] Oracle acquired Sun in 2010.

    [2] The 37 API packages involved in this appeal are: java.awt.font, java.beans, java.io, java.lang, java.lang.annotation, java.lang.ref, java.lang.reflect, java.net, java.nio, java.nio.channels, java.nio.channels.spi, java.nio.charset, java.nio.charset.spi, java.security, java.security.acl, java.security.cert, java.security.interfaces, java.security.spec, java.sql, java.text, java.util, java.util.jar, java.util.logging, java.util.prefs, java.util.regex, java.util.zip, javax.crypto, javax.crypto.interfaces, javax.crypto.spec, javax.net, javax.net.ssl, javax.security.auth, javax.security.auth.callback, javax.security.auth.login, javax.security.auth.x500, javax.security.cert, and javax.sql.

    [3] The Supreme Court has not addressed whether copyrightability is a pure question of law or a mixed question of law and fact, or whether, if it is a mixed question of law and fact, the factual components of that inquiry are for the court, rather than the jury. Relatedly, it has not decided the standard of review that applies on appeal. Ten years ago, before finding it unnecessary to decide whether copyrightability is a pure question of law or a mixed question of law and fact, the Seventh Circuit noted that it had "found only a handful of appellate cases addressing the issue, and they are split." Gaiman v. McFarlane, 360 F.3d 644, 648 (7th Cir. 2004). And, panels of the Ninth Circuit have defined the respective roles of the jury and the court differently where questions of originality were at issue. Compare North Coast Indus. v. Jason Maxwell, Inc., 972 F.2d 1031, 1035 (9th Cir. 1992), with Ets-Hokin, 225 F.3d at 1073. More recently, several district courts within the Ninth Circuit have treated copyrightability as a question for only the court, regardless of whether it is a pure question of law. See Stern v. Does, No. 09-1986, 2011 U.S. Dist. LEXIS 37735, *7 (C.D. Cal. Feb. 10, 2011); Jonathan Browning, Inc. v. Venetian Casino Resort LLC, No. C 07-3983, 2009 U.S. Dist. LEXIS 57525, at *2 (N.D. Cal. June 19, 2009); see also Pivot Point Int'l, Inc. v. Charlene Prods., Inc., 932 F. Supp. 220, 225 (N.D. Ill. 1996) (Easterbrook, J.) (citing to Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), and concluding that whether works are copyrightable is a question which the "jury has nothing to do with"). We need not address any of these questions, because the parties here agreed that the district court would decide copyrightability, and both largely agree that we may undertake a review of that determination de novo.

    [4] Importantly, this full analysis only applies where a copyright owner alleges infringement of the non-literal aspects of its work. Where "admitted literal copying of a discrete, easily-conceptualized portion of a work" is at issue—as with Oracle's declaring code—a court "need not perform a complete abstraction-filtration-comparison analysis" and may focus the protectability analysis on the filtration stage, with attendant reference to standard copyright principles. Mitel, 124 F.3d at 1372-73.

    [5] It is undisputed that Microsoft and Apple developed mobile operating systems from scratch, using their own array of software packages. When asked whether Google could also copy all of Microsoft or Apple's declaring code—codes that obviously differ from those at issue here—counsel for Google responded: "Yes, but only the structure, sequence, and organization. Only the command structure—what you need to access the functions. You'd have to rewrite all the millions of lines of code in Apple or in Microsoft which is what Google did in Android." Oral Argument at 36:00.

    [6] In their brief as amici curiae in support of reversal, Scott McNealy and Brian Sutphin—both former executives at Sun who were involved in the development of the Java platform—provide a detailed example of the creative choices involved in designing a Java package. Looking at the "java.text" package, they explain that it "contains 25 classes, 2 interfaces, and hundreds of methods to handle text, dates, numbers, and messages in a manner independent of natural human languages. . . ." Br. of McNealy and Sutphin 14-15. Java's creators had to determine whether to include a java.text package in the first place, how long the package would be, what elements to include, how to organize that package, and how it would relate to other packages. Id. at 16. This description of Sun's creative process is consistent with the evidence presented at trial. See Appellant Br. 12-13 (citing testimony that it took years to write some of the Java packages and that Sun/Oracle developers had to "wrestle with what functions to include in the package, which to put in other packages, and which to omit entirely").

    [7] The district court did not find merger with respect to the structure, sequence, and organization of Oracle's Java API packages. Nor could it, given the court's recognition that there were myriad ways in which the API packages could have been organized. Indeed, the court found that the SSO is original and that "nothing in the rules of the Java language . . . required that Google replicate the same groupings." Copyrightability Decision, 872 F. Supp. 2d at 999. As discussed below, however, the court nonetheless found that the SSO is an uncopyrightable "method of operation."

    [8] At oral argument, counsel for Oracle was asked whether we should view the three core packages "differently vis-à-vis the concept of a method of operation than the other packages." See Oral Argument at 7:43. He responded: "I think not your Honor. I would view them differently with respect to fair use. . . . It's not that they are more basic. It's that there are just several methods, that is, routines, within just those three packages that are necessary to `speak the Java language.' Nothing in the other thirty-four packages is necessary in order to speak in Java, so to speak." Id. Counsel conceded, however, that this issue "might go to merger. It might go to the question whether someone—since we conceded that it's okay to use the language—if it's alright to use the language that there are certain things that the original developers had to say in order to use that language, arguably, although I still think it's really a fair use analysis." Id.

    [9] The Supreme Court granted certiorari in Lotus, but, shortly after oral argument, the Court announced that it was equally divided and that Justice Stevens took no part in the consideration or decision of the case. The Court therefore left the First Circuit's decision undisturbed. See Lotus, 516 U.S. at 233-34.

    [10] The Lotus majority cited no authority for this definition of "method of operation."

    [11] As Oracle points out, the Ninth Circuit has cited Lotus only one time, on a procedural issue. See Danjaq LLC v. Sony Corp., 263 F.3d 942, 954 (9th Cir. 2001) (citing Lotus for the proposition that delay "has been held permissible, among other reasons, when it is necessitated by the exhaustion of remedies through the administrative process . . . when it is used to evaluate and prepare a complicated claim").

    [12] This analogy by the district court is meaningful because taxonomies, in varying forms, have generally been deemed copyrightable. See, e.g., Practice Mgmt. Info. Corp. v. Am. Med. Ass'n, 121 F.3d 516, 517-20 (9th Cir. 1997); Am. Dental, 126 F.3d at 978-81.

    [13] At oral argument, counsel for Oracle explained that it "would never claim that anyone who uses a package-class-method manner of classifying violates our copyright. We don't own every conceivable way of organizing, we own only our specific expression—our specific way of naming each of these 362 methods, putting them into 36 classes, and 20 subclasses." Oral Argument at 16:44.

    [14] Amici McNealy and Sutphin explain that "a quick examination of other programming environments shows that creators of other development platforms provide the same functions with wholly different creative choices." Br. of McNealy and Sutphin 17. For example, in Java, a developer setting the time zone would call the "setTime-Zone" method within the "DateFormat" class of the java.text package. Id. Apple's iOS platform, on the other hand, "devotes an entire class to set the time zone in an application—the `NSTimeZone' class" which is in the "Foundation framework." Id. at 17-18 (noting that a "framework is Apple's terminology for a structure conceptually similar to Java's `package'"). Microsoft provides similar functionality with "an entirely different structure, naming scheme, and selection." Id. at 18 ("In its Windows Phone development platform, Microsoft stores its time zone programs in the `TimeZoneInfo' class in its `Systems' namespace (Microsoft's version of a `package' or `framework')."). Again, this is consistent with the evidence presented at trial.

    [15] During oral argument, Google's counsel stated that "a program written in the Java language can run on Android if it's only using packages within the 37. So if I'm a developer and I have written a program, I've written it in Java, I can stick an Android header on it and it will run in Android because it is using the identical names of the classes, methods, and packages." Oral Argument at 31:31. Counsel did not identify any programs that use only the 37 API packages at issue, however, and did not attest that any such program would be useful. Nor did Google cite to any record evidence to support this claim.

    [16] Google argues that, in the same way a formerly distinctive trademark can become generic over time, a program element can lose copyright protection when it becomes an industry standard. But "it is to be expected that phrases and other fragments of expression in a highly successful copyrighted work will become part of the language. That does not mean they lose all protection in the manner of a trade name that has become generic." Warner Bros., Inc. v. Am. Broadcasting Cos., 720 F.2d 231, 242 (2d Cir. 1983) ("No matter how well known a copyrighted phrase becomes, its author is entitled to guard against its appropriation to promote the sale of commercial products."). Notably, even when a patented method or system becomes an acknowledged industry standard with acquiescence of the patent owner, any permissible use generally requires payment of a reasonable royalty, which Google refused to do here. See generally In re Innovatio IP Ventures, LLC, No. 11-C-9308, 2013 U.S. Dist. LEXIS 144061 (N.D. Ill. Sept. 27, 2013).

    [17] Google argues that, if we allow it to retry its fair use defense on remand, it is entitled to a retrial on infringement as well. We disagree. The question of whether Google's copying constituted infringement of a copyrighted work is "distinct and separable" from the question of whether Google can establish a fair use defense to its copying. See Gasoline Prods. Co. v. Champlin Refining Co., 283 U.S. 494, 500 (1931) ("Where the practice permits a partial new trial, it may not properly be resorted to unless it clearly appears that the issue to be retried is so distinct and separable from the others that a trial of it alone may be had without injustice."). Indeed, we have emphasized more than once in this opinion the extent to which the questions are separable, and the confusion and error caused when they are blurred. The issues are not "interwoven" and it would not create "confusion and uncertainty" to reinstate the infringement verdict and submit fair use to a different jury. Id. We note, moreover, that, because Google only mentions this point in passing, with no development of an argument in support of it, under our case law, it has not been properly raised. See SmithKline Beecham Corp. v. Apotex Corp., 439 F.3d 1312, 1320 (Fed. Cir. 2006) (when a party provides no developed argument on a point, we treat that argument as waived) (collecting cases).

    [18] At least one recent district court decision has recognized uncertainty in Ninth Circuit law on this point. See Brocade Commc'ns Sys. v. A10 Networks, Inc., No. 10cv-3428, 2013 U.S. Dist. LEXIS 8113, at *33 (N.D. Cal. Jan. 10, 2013) ("The Ninth Circuit has been unclear about whether the de minimis use doctrine serves as an affirmative defense under the Copyright Act's fair use exceptions or whether the doctrine merely highlights plaintiffs' obligation to show that `the use must be significant enough to constitute infringement.'") (citing Newton, 388 F.2d at 1193; Norse, 991 F.2d at 566).

  • 9 Richards v. Merriam-Webster, Inc.

    JAMES T. RICHARDS, Plaintiff,
    v.
    MERRIAM WEBSTER, INC., Defendant.

    Civil Action No. 13-cv-13092-IT.

    United States District Court, D. Massachusetts.

    September 26, 2014.

    MEMORANDUM & ORDER
    INDIRA TALWANI, District Judge.
    I. Introduction

    James T. Richards ("Richards") filed suit against Merriam-Webster, Inc. ("Merriam-Webster") seeking a declaratory judgment that he may copy and use a substantial portion of the Merriam-Webster's Collegiate Dictionary, Eleventh Edition (the "Dictionary") without violating Merriam-Webster's copyright. Because the court finds that all material facts in this case are undisputed and concludes that Richards' proposed use of the material in question would violate Merriam-Webster's copyright, Merriam-Webster's Motion for Summary Judgment [#33] is ALLOWED.

    II. Background

    In 2012, Richards undertook to develop a "textbook dictionary," aimed at improving the reading comprehension of its users. First Am. Compl. ¶ 23 [#17-1] [hereinafter Am. Compl.]. Richards began by converting an electronic copy[1] of the Dictionary into a set of Microsoft Word files. Id. ¶¶ 25-26. He then modified the dictionary entries by increasing the font size, underlining words for emphasis, increasing spacing between entries, redacting some etymological history, and inserting examples of how words might be used in sentences. Id. ¶¶ 28-29; see also Compl. Ex. C [#1-1]. Richards did not, however, make modifications to Merriam-Webster's definitions for each word. Compl. Exs. C-D (showing a side-by-side comparison of Richards' textbook and the Dictionary). In total, Richards copied approximately 70% (109,725) of the Dictionary's entries. Am. Compl. ¶ 28; Pl.'s Statement Disputed Material Facts Mot. Summ. J., 2 [#46] [hereinafter, Pl.'s Statement Disputed Facts].[2] The 30% of entries that Richards deleted were words that he believed to be rare or anachronistic and therefore less helpful to a textbook user. Am. Compl. ¶ 28.

    In June 2013, Richards contacted Merriam-Webster requesting permission to use "virtually all the material" in its Dictionary for his planned textbook. Id. ¶ 30. Merriam-Webster responded via email, denying Richards' request. Id. ¶ 32. On February 4, 2013, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, Richards filed his amended complaint before this court, seeking a declaration that publication of his textbook would not violate Merriam-Webster's copyright. Richards claims that (1) at least some portion of the Dictionary is comprised of definitions copied from earlier dictionary versions that have now entered the public domain, and (2) his proposed use of the Dictionary is permissible under the fair-use doctrine.

    III. Discussion

    Summary judgment is appropriate where "[t]he movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Genereux v. Raytheon Co., 754 F.3d 51, 54 (1st Cir. 2014).

    A. Merriam-Webster's Copyright

    In support of its Motion for Summary Judgment, Merriam-Webster submitted a certificate of copyright for the Dictionary, dated July 9, 2004. See Aff. Supp. Mot. Summ. J., Ex. B [#34-2]. This copyright certificate serves as prima facie evidence that Merriam-Webster holds a valid copyright over the Dictionary. See CMM Cable Rep, Inc. v. Ocean Coast Props., Inc., 97 F.3d 1504, 1513 (1st Cir. 1996) (citing 17 U.S.C. § 410(c)). Therefore, Richards bears the burden of establishing a material dispute as to the copyright's validity. See id.

    Richards does not directly dispute the validity of Merriam-Webster's copyright. Rather, he asserts that some portion of the Dictionary's definitions may have originated in an earlier dictionary version that has now entered the public domain. Pl.'s Mem. Supp. Opp'n Mot. Summ. J., 3 [#46] [hereinafter, Pl.'s Opp. Summ. J.]. Even if Richards' claim is accepted as true, however, the fact that some dictionary entries have entered the public domain would not allow the court to grant Richards' requested remedy.[3]

    To issue a declaratory judgment in this case, the court would have to find that Merriam-Webster has no claim of copyright infringement over any portion of the material Richards proposes to use. Richards does not make such a claim, nor does he allege that Merriam-Webster's copyright certificate is invalid. Accordingly, his claim that some entries may have entered the public domain is an insufficient ground for a declaratory judgment of noninfringement of the work as a whole.[4]

    B. Fair Use

    The fair-use doctrine allows for the use of copyrighted material without permission of the copyright holder in limited circumstances. See 17 U.S.C. § 107. Four factors are relevant in determining whether a reproduction constitutes fair use:

    (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.

    Id. Because fair use is an affirmative defense, the burden of proof is borne by the putative infringer — in this case, Richards. See Soc'y of the Holy Transfiguration Monastery, Inc. v. Gregory, 689 F.3d 29, 59 (1st Cir. 2012) (citing Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 590 (1994)).

    Three of the four fair-use factors strongly disfavor finding that Richards' proposed use of the Dictionary is permissible. Accordingly, the court first discusses these factors and then turns to an evaluation of the purpose and character of Richards' proposed use.

    1. Nature of the work

    The fair-use doctrine considers: "(1) whether the [work is] factual or creative, and (2) whether the [work has] previously been published." Gregory, 689 F.3d at 61 (citing Harper & Row Publishers v. Nation Enters., 471 U.S. 539, 563 (1985); Núñez v. Caribbean Int'l News Corp., 235 F.3d 18, 24 (1st Cir. 2000)).

    In assessing where a work falls on the spectrum from factual to creative, a dictionary may reasonably be understood as having a stronger informational or factual focus than a novel or poem. Cf. Núñez, 235 F.3d at 23 (explaining that even artistic endeavors like the taking of photographs may be considered largely non-creative if intended not for purposes of art, but for a commercial enterprise such as a modeling portfolio); Fitzgerald v. CBS Broad., Inc., 491 F. Supp. 2d 177, 188 (D. Mass. 2007) (holding that photographs taken for a news story were factual). Nonetheless, Merriam-Webster asserts — and Richards does not contest — that its dictionary definitions represent Merriam Webster's "unique perspective[] and opinion[] as to what words mean." Def.'s Mem. Supp. Mot. Summ. J., 15 [#35]. The definitions chosen by Merriam-Webster are the result of a creative process that reflects the choices and opinions of the Dictionary's developers. Given the creativity inherent in developing and editing these dictionary entries, this factor disfavors a finding of fair use.[5]

    2. Extent of material used

    Richards admits to copying, largely verbatim, approximately 70% of the dictionary. The breadth of Richards' copying, amounting to more than 1000 dictionary entries and the majority of the copyrighted work, strongly disfavors a finding of fair use. Harper & Row, 471 U.S. at 564-66 (finding that verbatim copying of 300 words was not fair use where those words were the "heart" of the work); Sony Corp., 464 U.S. at 450 (noting that in an ordinary case copying a substantial portion of a work "militat[es] against a finding of fair use").

    3. Market effect

    An allegedly infringing work's effect on the original work's market is the "most important" of the four fair-use factors. Harper & Row, 471 U.S. at 566. The inquiry into market effect takes into consideration "both (1) the degree of market harm caused by the alleged infringer's actions, and (2) `whether unrestricted and widespread conduct of the sort engaged in by the defendant . . . would result in a substantially adverse impact on the potential market for the original.'" Gregory, 689 F.3d at 64 (quoting Campbell, 510 U.S. at 590).

    Merriam-Webster asserts that it derives income from advertising on the webpage of its online dictionary, and that the rate of such advertisements is based on the number of visits to the page. See Def.'s Stmt. Undisputed Material Facts ¶¶ 4, 9-11 [#36]. Merriam-Webster avers that, by providing access to nearly the entirety of its copyrighted work on an alternative site, Richards would clearly impede the market share and profitability of its online dictionary. Id. ¶¶ 11-12. Richards does not dispute Merriam-Webster's claim that the marketability of its dictionary would be greatly reduced if a free textbook version was available online; he argues only that this interest is outweighed by the benefits of increased reading comprehension among the American public.

    In the absence of a dispute as to the textbook's effect on the Dictionary's marketability, this factor weighs strongly against fair use. This is particularly so because any negative market effect would be further exacerbated if copying and distributing the Dictionary became an "unrestricted and widespread" practice. Campbell, 510 U.S. at 590.

    4. Purpose and Character of Use

    In considering the purpose and character of a reproduction's use, the fair-use doctrine pays particular attention to whether the work is "transformative" and whether its intended use is for profit. Campbell, 510 U.S. at 578-79; Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 448-49 (1984) (finding that, although transformation is not a per se requirement for fair use, the more transformative a work is, the more likely the fair-use exception is to apply).

    Richards does not contest that his textbook includes a significant portion of the Dictionary, copied verbatim. See Am. Compl. ¶¶ 28-29; Compl. Ex. C-D [#1-1]. He alleges, however, that the textbook is transformative insofar as changes in font size, formatting, the insertion of examples of words used in context, and the deletion of unnecessary words has changed "a reference book[] into a textbook." Pl.'s Opp'n Summ. J. at 7. The sum result of these changes, Richards asserts, makes his textbook significantly easier to use and converts the Dictionary from its original form into a reading comprehension tool. Id. at 7-8.

    If Richards' explanation of the proposed textbook's intended use is fully credited, some level of transformation may perhaps have occurred. Richards has also disavowed any attempt to garner profits or reputational gain from the textbook's publication. He claims that the textbook will be distributed for free online as a public service. Id. at 9. Nonetheless, the final three factors of the fair-use test strongly disfavor Richard's claim. Therefore, even if the textbook could be considered transformative and Richards in fact would derive no profit from its distribution, this factor alone does not make Richards' proposed use permissible under the fairuse doctrine.

    IV. Conclusion

    Richards has failed to establish the existence of a disputed material fact as to the validity of Merriam-Webster's copyright. Moreover, Richards' action in copying approximately 70% of the Dictionary's definitions is beyond the scope of the fair-use doctrine. Accordingly, Merriam-Webster's Motion for Summary Judgment [#33] is ALLOWED.

    IT IS SO ORDERED.

    [1] Richards used Merriam-Webster's Collegiate Dictionary, Eleventh Edition, version 3.1 on CD-ROM. Pl.s' Statement Disputed Material Facts Mot. Summ. J., 4 [#46].

    [2] Merriam-Webster initially charged Richards with using approximately 30% of the Dictionary's entries. Richards disputed this claim, explaining that he had in fact used nearly 70%. The parties now agree on this estimate.

    [3] Richards asserts that Merriam-Webster's answers to his interrogatories regarding which definitions are still under copyright were "unclear." Pl.'s Statement Disputed Facts at 1. Even if Richards or Merriam-Webster had identified which words are now in the public domain, however, the result in this case would be no different, given that Richards is seeking a declaratory judgment as to the use of the work as a whole.

    [4] Because this ruling is limited to the relief sought, the court's opinion does not expressly rule on the potential for Richards to utilize an older version of the dictionary, now within the public domain, to achieve his intended goal.

    [5] This is true even though the Dictionary has previously been published. "[Prior publication] does not mean that this inquiry weighs in favor of fair use, only that [the works] do not fall into the category of private works to which the doctrine of fair use is especially unsuited." Fitzgerald, 491 F. Supp. 2d. at 187; see also Gregory, 689 F.3d at 62.

  • 10 Denison v. Larkin

    Joanne M. Denison, Plaintiff,
    v.
    Jerome Larkin, Melissa Smart, Sharon Opryszek, Leah Black, Nextpoint, Inc and the Illinois Attorney Registration and Discipline Commission, Defendants.

    No. 1:14-cv-01470.

    United States District Court, N.D. Illinois, Eastern Division.

    August 13, 2014.

    MEMORANDUM OPINION AND ORDER.
    AMY J. ST. EVE, District Judge.

    Plaintiff JoAnne M. Denison ("Plaintiff") brings this action against Defendants Jerome Larkin, Sharon Opryszek, Melissa Smart, Leah Black, and Nextpoint (collectively, "Defendants") alleging copyright infringement, vicarious copyright infringement and contributory copyright infringement in violation of 17 U.S.C §101 et seq. Defendants move to dismiss Plaintiff's Complaint in its entirety. Jerome Larkin, Sharon Opryszek, Melissa Smart, and Leah Black (collectively, the "IARDC Defendants") move to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6)[1]. Nextpoint also moves to dismiss for failure to state a claim pursuant to Rule 12(b)(6). For the following reasons, the Court grants Defendants' motions to dismiss.

    BACKGROUND[2]

    This case arises out of an Illinois Attorney Registration and Disciplinary Commission ("IARDC") disciplinary proceeding. Plaintiff, a licensed attorney in the state of Illinois, is suing the IARDC and Nextpoint for using portions of her copyrighted Blog ("Blog") as evidence against her in an attorney disciplinary proceeding. The IARDC has alleged that Plaintiff made false statements about judges and other lawyers on her Blog, which addresses the guardianship proceeding of Mary Sykes. (R. 1-4, Pl. Exhibit C ¶ 6.)[3]

    I. Mary Sykes

    Mary Sykes was a 90-year-old woman who was put into guardianship in December of 2009. (R. 1, Compl. ¶ 6.) Plaintiff investigated Ms. Sykes' case and allegedly found "a large number of irregularities" in the case. (Id.) Plaintiff believes that Ms. Sykes was a victim of courtroom corruption. (Id.)

    In late 2011, Plaintiff created the Blog to, in her words, "provide a forum for the friends and relatives of Mary Sykes, a probate victim, to speak out against corruption in the courtroom." (R.1, Compl. ¶ 6.) Plaintiff applied for and received a copyright registration for the Blog on January 26, 2013. (R 1-4, Pl. Exhibit A.) Plaintiff posted her own writings as well as the writings of others on the Blog. The writings included allegations of corruption in the Probate Court of Cook County, that Sykes was the victim of elder abuse, and that the guardians ad litem and the court had physically or mentally harmed Sykes. (R. 1-4, Pl. Exhibit C ¶ 6.) This guardianship proceeding has generated several state and federal proceedings involving Plaintiff and her associate, Kenneth Ditkowsky.[4]

    II. IARDC Action Against Plaintiff

    The Illinois Supreme Court has the power to discipline attorneys who have been admitted to practice in the state of Illinois. In re Thomas, 356 Ill. Dec. 769, 791 (Ill. 2012) (citing In re Mitan, 75 Ill. 2d 118, 123, 387 N.E. 2d 278 (1979), cert. denied, 444 U.S. 916 (1979)). The Illinois Supreme Court enacted rules governing the discipline of attorneys and created the IARDC to enforce those rules. Ill. S. Ct. Rules 751-80. The IARDC's responsibilities include conducting disciplinary proceedings affecting members of the Illinois bar. Ill. S. Ct. R. 751(a). Investigations conducted by the IARDC remain private and confidential. Ill. S. Ct. R. 766(a)(1).

    The Administrator in this case, Defendant Jerome Larkin, concluded that sufficient evidence existed to establish misconduct by Plaintiff and brought the matter to the Inquiry Board, which determines whether to file a complaint with the Hearing Board, pursuant to Ill. S. Ct. R. 753(a)(2). If the Inquiry Board decides to file a complaint based on the misconduct, the Administrator files the complaint with the Hearing Board. Ill. S. Ct. R. 753(b). Defendants Melissa Smart, Sharon Opryszek and Lea Black are IARDC attorneys who represent Mr. Larkin before the Hearing Board. The Hearing Board can recommend discipline, dismissal of the complaint or petition, or nondisciplinary disposition. Ill. S. Ct. R. 753(c)(3). Disciplinary actions include disbarment, suspension, censure, and reprimand. Ill. S. Ct. R. 770.

    Upon the filing of the recommendation of the Hearing Board, either party may appeal to the Review Board. Ill. S. Ct. R. 753(d). The Review Board presides over an appellate review of the Hearing Board's determination. Ill. S. Ct. R. 753(d)(1). The Review Board may approve, reject or modify the recommendation of the Hearing Board. Ill. S. Ct. R. 753(d)(3). Additionally, the Review Board may make additional findings or may remand for further action. Id. Either party may appeal the report and recommendation of the Review Board to the Illinois Supreme Court. Ill. S. Ct. R. 753(e).

    Defendant Black filed a disciplinary complaint on behalf of Defendant Larkin against Plaintiff alleging professional misconduct in making false statements on her Blog. (R 1-4, Pl. Exhibit C ¶ 10.) The IARDC complaint alleged that Plaintiff wrote in her Blog that the judges, guardians ad litem, and other attorneys involved in the guardianship proceedings engaged in improprieties including theft and embezzlement from the estate of the Ms. Sykes. (Id. ¶¶ 4-8.) The IARDC alleged that these claims were false and brought an action against Plaintiff for:

    a) making a statement that the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge, adjudicatory officer or public legal officer, in violation of Rule 8.2 of the Illinois Rules of Professional Conduct;

    b) conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of Rule 8.4(c) of the Illinois Rules of Professional Conduct;

    c) conduct that is prejudicial to the administration of justice, in violation of Rule 8.4(d) of the Illinois Rules of Professional Conduct;

    d) presenting, participating in presenting, or threatening to present criminal charges to obtain an advantage in a civil matter, in violation of Rule 8.4(g) of the Illinois Rules of Professional Conduct; and

    e) conduct which tends to defeat the administration of justice or to bring the courts or the legal profession into disrepute.

    (Id. ¶ 12.)

    III. Copyright Action Against IARDC and Nextpoint

    Plaintiff brought this suit alleging that the IARDC infringed on her copyright by using "15 paragraphs of text from the Mary Sykes Blog" in its disciplinary complaint which the IARDC posted on its website. (R.1, Compl. at ¶ 10.) In addition, the ARDC copied "hundreds of pages from her blog" and maintained them in her case file. (Id. ¶ 13.) Plaintiff alleges the IARDC copied over 1,000 pages of the Blog and "then incorporated [it] into even further exhibits." (Id. ¶¶ 21, 23.) Plaintiff claims the amount copied was "far in excess of what the IARDC needed for its investigation and trial." (Id. ¶ 27.) Moreover, Plaintiff alleges that she sent the IARDC a cease and desist letter and objected to its use of her copyrighted materials. (Id. ¶¶ 11,14.) The IARDC, according to Plaintiff, continued to copy and use portions of her blog for the disciplinary hearing, including for trial exhibits.

    Additionally, Plaintiff alleges that Nextpoint, which produces webpage software data, also infringed on her copyright by allowing the IARDC to use Nextpoint's software to capture her Blog. (Id. ¶ 24.) Plaintiff claims that the copies exceeded the amount necessary for the IARDC proceeding. (Id. ¶ 34.) In Count I, Plaintiff alleges that the Defendants committed direct copyright infringement. (Id. ¶ 26.) In Counts II and III, Plaintiff alleges that Defendant Larkin committed contributory copyright infringement and vicarious copyright infringement. (Id. ¶¶ 29; 37.)

    Plaintiff seeks (1) statutory damages for willful infringement against each and all Defendants as jointly and severally liable; (2) a preliminary and permanent injunction against copying portions of Plaintiff's Blog; (3) an order that Defendants deliver up for destruction by the United States Marshal all exhibit pages not used at trial and that Defendants pay the cost of such destruction; (4) an order directing the IARDC to remove the 15 paragraphs of her Blog used to publish the January 8, 2013 complaint on the IARDC's website and to mark the omitted portions "copyrighted material omitted;" and (5) her reasonable attorney's fees, costs, and other relief under United States copyright law. (Id. p. 16.)

    LEGAL STANDARD

    "A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief may be granted." Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed. 2d 929 (2007) (citation omitted). Under the federal notice pleading standards, a plaintiffs "factual allegations must be enough to raise a right to relief above the speculative level." Id. Put differently, a complaint must contain sufficient factual content "to allow the court `to draw a reasonable inference that the defendant is liable for the misconduct alleged.'" Charleston v. Board of Trs. of Univ. of Ill. at Chicago, 741 F.3d 769, 772 (7th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed. 2d 868 (2009)). "In reviewing the sufficiency of a complaint under the plausibility standard, [courts] accept the well-pleaded facts in the complaint as true." Alam v. Miller Brewing Co., 709 F.3d 662, 665-66 (7th Cir. 2013). In ruling on a Rule 12(b)(6) motion, district courts may also consider documents attached to the pleadings without converting the motion into a motion for summary judgment, as long as the documents are referred to in the complaint and central to the claims. See Geinosky v. City of Chicago, 675 F.3d 743, 745 n. 1 (7th Cir. 2012). Additionally, although a plaintiff need not plead facts in the complaint to defeat potential affirmative defenses, where "the allegations of the complaint itself set forth everything necessary to satisfy [an] affirmative defense," the plaintiff pleads himself out of court. See Brooks v. Ross, 578 F.3d 574, 579 (7th Cir. 2009).

    ANALYSIS

    The IARDC Defendants seek dismissal of the alleged vicarious, contributory and direct copyright infringement claims pursuant to Rule 12(b)(6) for failure to state a claim. Nextpoint also seeks dismissal of the direct copyright infringement claim pursuant to Rule 12(b)(6) for failure to state a claim.

    I. Direct Copyright Infringement

    The owner of a copyright has the exclusive right to reproduce the copyrighted work. 17 U.S.C §106(1). Copyright infringement occurs when anyone violates the exclusive rights of a copyright owner. 17 U.S.C §501(a). "A plaintiff alleging copyright infringement must establish two elements: `(1) ownership of a valid copyright, and (2) copying of the constituent elements of the work that are original." Janky v. Lake Cnty. Convention And Visitors Bureau, 576 F.3d 356, 361 (7th Cir. 2009) (citing Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 113 L. Ed. 2d 358 (1991)).

    Here, Plaintiff alleges that she owns a copyright for the Blog and that the IARDC made copies of this Blog. (R.1, Compl. ¶¶ 10-11; 24.) Copying copyrighted material is prima facie evidence of copyright infringement. 17 U.S.C. §501. If the copying is for a fair use of the material, however, it does not constitute infringement. 17 U.S.C §107. Fair use is an affirmative defense to a copyright infringement claim. See Brownmark Films, LLC v. Comedy Ptrs., 682 F.3d 687, 689 (7th Cir. 2012).

    The Copyright Act sets forth four, non-exclusive factors that a court must consider in determining whether a particular use of a copyrighted work is a fair use: "(1) the purpose and character of the use ...; (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." 17 U.S.C. § 107 (2006). These factors are "illustrative and not limitative" and "provide only general guidance." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577, 114 S. Ct. 1164, 127 L. Ed. 2d 500 (1994). The Supreme Court has held that whether a particular form of copying is a fair use is an open-ended and context-specific inquiry. Id. ("The task is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis.").

    A. Purpose and Character of the Use

    The first fair use factor for the Court to consider is the "purpose and character of the use, including whether such use is of a commercial nature."[5] 17 U.S.C §107(1). The main inquiry is whether the new work supersedes the objects of the original or adds something new. Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 562, 105 S. Ct. 2218, 2231, 85 L. Ed. 2d 588 (1985). See also Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687, 693 (7th Cir. 2012) ("Central to determining the purpose and character of a work is whether the new work merely supersedes the original work, or instead adds something new with a further purpose or of a different character.")

    The purpose and character of the IARDC's use is unrelated to the purpose of the Blog, which Plaintiff created to serve as a forum for people to "speak out against corruption in the courtroom." (R.1, Compl. ¶ 6.) As Plaintiff alleges, the IARDC used portions of the Blog as evidence in its disciplinary proceeding against Plaintiff, the author of the Blog. The House Committee on the Judiciary explicitly listed "reproduction of a work in legislative or judicial proceedings or reports" as an example of a fair use. H.R. Rep. No. 94-1476, 65 (1976). In addition, the Seventh Circuit has noted that reproducing copyrighted works for litigation is an example of the fair use doctrine. Ty, Inc. v. Publications Intern. Ltd., 292 F.3d 512 (7th Cir. 2002). In Ty, Inc., a copyright infringement action, the Seventh Circuit commented on the characterization of certain books at issue: "An even clearer case is a two-page spread in For the Love of Beanie Babies entitled "Kitty Corner," which we reproduce (without Ty's permission!— a good example of the fair-use doctrine in action) at the end of this opinion." Id. at 519. Other courts have also held that the use of copyrighted material in litigation constitutes a fair use. See, e.g., Bond v. Blum, 317 F.3d 385, 396 (4th Cir. 2003) (holding that the defendant's use of the plaintiff's entire copyrighted work in a child custody proceeding "does not undermine the protections granted by the [Copyright] Act but only serves the important societal interest in having evidence before the factfinder"); Jartech, Inc. v. Clancy, 666 F.2d 403 (9th Cir. 1982) (holding that the city councils use of copyrighted material in the legal proceedings was not "the same intrinsic use to which the copyright holders expected protection from unauthorized use."); Stern v. Does, 978 F. Supp. 2d 1031, 1044-49 (C.D. Cal. 2011) (Reproduction of copyrighted material for use in litigation or potential litigation is generally fair use, even if the material is copied in whole.); Healthcare Advocates, Inc. v. Harding, Earley, Follmer & Frailey, 497 F.Supp. 2d 627, 638 (E.D. Pa. 2007) (holding that law firm's copying of an entire set of copyrighted web pages was justified where the web pages were relevant evidence in litigation).

    Copying portions of the Blog for evidence does not supersede the Blog's purpose as a forum to discuss purported courtroom corruption. Moreover, it is uncontested that Defendants used the reproduction of these copyrighted materials in a judicial proceeding. Therefore, the purpose and character of the Defendants' use of the Blog, as alleged, weighs heavily in favor of a finding of fair use.

    B. Nature of the Copyrighted Work

    The second fair use factor for the Court to consider is the nature of the copyrighted work. 17 U.S.C. §107(2). This factor "draws on Justice Story's expression, the `value of the materials used.'" Campbell 510 U.S. at 586 (citing Folsom v. Marsh, 9 F. Cas. 342 (C.C.D. Mass. 1841)). The purpose of copyright law is "to Promote the Progress of Science and useful Arts." U.S. Const. art. I, § 8, cl. 8. Fictional and creative works are closer to the heart of copyright law than factual works. See Stewart v. Abend, 495 U.S. 207, 237-238, 110 S. Ct. 1750, 109 L. ED. 2d 184 (1990) (contrasting fictional short story with factual works); Harper & Row, 471 U.S. at 563-564 (contrasting soon-to-be-published memoir with published speech); Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S 417, 455, n. 40, 104 S. Ct. 774 (1984) (contrasting motion pictures with news broadcasts). It is easier to establish a defense of fair use when the work is farther from the heart of copyright law. See Campbell 510 U.S. at 586 ("This factor calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied"); Stewart, 495 U.S. at 237 ("In general, fair use is more likely to be found in factual works than in fictional works").

    Plaintiff asserts that the Blog was a "place to discuss legal issues and strategies, explain laws and compliance with laws." (R.1, Compl. ¶ 9.) As alleged, the Blog is closer to a factual work or published speech than it is to a short story or unpublished memoir. See, e.g., Stewart, 495 U.S. at 237-238 (contrasting fictional short story with factual works); Harper & Row, 471 U.S. at 563-564 (contrasting soon-to-be-published memoir with published speech). The factual nature of the Blog weighs in favor of a finding of fair use.

    C. The Amount and Substantiality of the Portion Used

    The third factor for the Court to consider is the amount and substantiality of the portion used. 17 U.S.C. § 107(3). This factor considers whether the amount used is reasonable in relation to the purpose of the copying. Campbell, 510 U.S. at 586. Reasonableness depends on how much the copy serves as a market substitute for the original. Campbell, 510 U.S. at 588 ("Once enough has been taken to assure identification, how much more is reasonable will depend, say, on. ... the likelihood that the [copy] may serve as a market substitute for the original"). Copying the entire work does not, however, guarantee a claim of copyright infringement. Sony, 464 U.S. at 449-50 ("the fact that the entire work is reproduced ... does not have its ordinary effect of militating against a finding of fair use") (citation omitted).

    Here, Plaintiff alleges that Defendants copied the entire Blog. As she alleges, however, the Defendants copied the Blog in connection with the disciplinary proceeding against her. As the Court has already discussed, this is allowed given the uncontested underlying litigation purpose of the materials. (supra pp. 8-9.) Further, as alleged, the IARDC only used fifteen paragraphs as part of the public portion of that proceeding. (R.1, Compl. ¶ 10.) Fifteen paragraphs is not a market substitute for a Blog that contains over "1,000 pages." (R.1, Compl. ¶ 23.); See Campbell, 510 U.S. at 586, 114 S. Ct. at 1175 (reasonableness depend on the likelihood that the copy may serve as a market substitute for the original). The amount of the Blog copied by the IARDC and the significantly smaller amount used by the IARDC was reasonable in relation to its purpose. Copying the entire Blog serves the important "societal interest in having evidence before the factfinder." Bond, 317 F.3d at 396. As such, this factor weighs in favor of a finding of fair use.

    D. The Effect upon the Potential Market

    The fourth fair use factor is "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. §107(4). This factor "requires courts to consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also `whether unrestricted and widespread conduct of the sort engaged in by the defendant ... would result in a substantially adverse impact on the potential market' for the original." Campbell, 510 U.S. at 590 (citing 3 M. Nimmer & D. Nimmer, Nimmer on Copyright § 13.05[A] [4], p. 13-102.61 (1993)). This factor "requires a court to consider the effect of the use on the potential market for the copyrighted work." Sony, 464 U.S. at 497.

    As laid out in Campbell, the Court considers (1) the extent that the copying resulted in market harm and (2) whether unrestricted and widespread conduct of the sort engaged in by Defendants would result in a substantially adverse impact on the potential market for the original. Plaintiff fails to allege that the IARDC's use of the Blog as evidence had any impact on any alleged market for the Blog. Plaintiff never sold or offered to sell the Blog. (R.1, Compl. ¶ 7.) Indeed, Plaintiff alleges that the Blog "is currently very popular and has experienced at least 44,000 hits to date since its creation." (Id. at 5.) Further, Plaintiff has not identified any market for or revenue generated from the Blog. The use of the Blog as evidence in a state disciplinary proceeding does not create any adverse impact on any perceived market for the Blog. As with the other factors, this factor weighs in favor of Defendants' fair use.

    This Court, taking all fair use factors into consideration, finds that the copying of the Blog by the IARDC and Nextpoint, as alleged in the complaint, was a fair use of the copyrighted material consistent with 17 U.S.C §107. Since Plaintiff's complaint leaves no possible outcome but a finding of fair use, there is no valid claim for copyright infringement. Therefore, the Court dismisses Count I, alleging copyright infringement, for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6).

    II. Vicarious and Contributory Copyright Infringement

    In order to have a valid claim for contributory or vicarious copyright infringement, Plaintiff must allege a valid direct copyright infringement claim. See Monotype Imaging, Inc. v. Bitstream, Inc., 376 F. Supp. 2d 877, 883 (N.D. Ill. 2005) ("To support a claim for contributory copyright infringement, a plaintiff must demonstrate (1) direct infringement by a primary infringer"); Monotype Imaging, Inc. v. Bitstream, Inc., 03 C 4349, 2005 WL 936882 (N.D. Ill. Apr. 21, 2005) ("In order to support a claim of vicarious infringement, a plaintiff must demonstrate: (1) direct infringement by a primary infringer").

    The Court dismisses Plaintiff's claims for contributory copyright infringement (Count II) and vicarious copyright infringement (Count III) for failure to state a claim pursuant to Rule 12(b)(6) because Defendants copied the Blog for fair use and thus no direct infringement exists.

    CONCLUSION

    For these reasons, the Court dismisses with prejudice Plaintiff's complaint and her claims of direct, vicarious, and contributory copyright infringement against Defendants Jerome Larkin, Sharon Opryszek, Melissa Smart, Leah Black, the IARDC, and Nextpoint.

    [1] The IARDC Defendants also raised the Younger doctrine as a basis for dismissal. Because the Court is dismissing Plaintiff's claims for failure to state a claim pursuant to Rule 12(b)(6), it does not address Defendants' argument for abstention pursuant to the Younger doctrine.

    [2] The Court accepts Plaintiff's factual allegations as true for purposes of Rule 12(b)(6).

    [3] Plaintiff submitted a redacted version of the IARDC complaint against her. The Court may take note of the IARDC proceeding against Plaintiff in this motion to dismiss because the IARDC complaint is a public record. Ill. S. Ct. R. 766(a) (attorney disciplinary proceedings are public). See Ennenga v. Starns, 677 F.3d 766, 773-74 (7th Cir. 2012) ("Taking judicial notice of matters of public record need not convert a motion to dismiss into a motion for summary judgment"). Defendants filed the un-redacted IARDC complaint as R. 24-1, Defendant's Exhibit 1.

    [4] Ditkowsky, 2012PR00014 available at http://www.iardc.org/ardcroll.asp (Review Board Dec. 5, 2013) (recommendation to the Illinois Supreme Court that Mr. Ditkowsky be suspended four years for making statements the lawyer knows to be false or with reckless disregard for its truth in regards to the Sykes matter); Ditkowsky, M.R. 26516 available at http://www.iardc.org/ardcroll.asp (Ill. Order March 15, 2014) (Illinois Supreme Court Order suspending Mr. Ditkowsky for matters related to the Sykes case); Ditkowsky and Denison v. Stern, et al., No. 14-cv-375, 2014 WL 1607587 (N.D. Ill. Apr. 21, 2014) (Mr. Ditkowsky and Ms. Denison sued Defendant Larkin and others for allegedly violating their First, Fifth and Fourteenth Amendment rights and for intrusion upon seclusion after the IARDC began a proceeding against them for making false statements. Both counts were dismissed for failure to state a claim).

    [5] The use of copyrighted material for commercialprofit weighs against a finding of fair use.See Harper & Row, 471 U.S. at 539 ("The fact that a publication was commercial as opposed to nonprofit is a separate factor that tends to weigh against a finding of fair use."). Plaintiff asserts that the IARDC proceeding is commercial in nature because, "upon information and belief," the IARDC sells its decisions to companies such as Lexis Nexis and Westlaw for paid or unpaid benefits. (R. 1, Compl. ¶ 18.) This statement is unfounded. The purpose of the IARDC is to "promote and protect the integrity of the legal profession, at the direction of the Supreme Court, through attorney registration, education, investigation, prosecution and remedial action." IARDC Homepage (July 28, 2014), http://www.iardc.org/. Commercial profit is not part of protecting the integrity of the legal profession.

  • 11 Arrow Productions, LTD. v. The Weinstein Company LLC

    Arrow Productions, LTD., Plaintiff,
    v.
    The Weinstein Company LLC, et al., Defendants.

    No. 13 Civ. 5488.

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

    August 25, 2014.

    OPINION
    THOMAS P. GRIESA, District Judge.

    This is a motion for judgment on the pleadings made by defendants the Weinstein Company, LLC, et al., against plaintiff Arrow Productions. Plaintiff, an entertainment company that produces and distributes films, owns the copyrights to the well-known pornographic film Deep Throat as well as the trademarks "Deep Throat" and "Linda Lovelace." Plaintiff alleges that in filming the movie Lovelace, a biographical account of Linda Lovelace, the star of Deep Throat, defendants infringed upon plaintiff's copyright protected material (17 U.S.C. § 107) and violated plaintiff's trademark rights (15 U.S.C. §§ 1114, 1125(a), 1125(c)).

    The court enters judgment for defendants and dismisses plaintiff's complaint in its entirety.

    Pleadings

    The following facts and allegations are drawn from the pleadings, and the works incorporated by those pleadings—namely, the films Deep Throat and Lovelace.

    The Controversy

    Deep Throat is a famous pornographic film replete with explicit sexual scenes and sophomoric humor. It was released in 1972 and stars Linda Lovelace[1]. The film is about a woman—Linda Lovelace—who cannot achieve an orgasm and undertakes a search for sexual fulfillment. Along the way, Lovelace meets Dr. Young who diagnoses her unusual problem and tells her that she can only achieve sexual satisfaction by performing oral sex (or, more specifically, the act which is the title of the film) because her clitoris is in her throat. In the end, Lovelace is finally able to achieve sexual fulfillment.

    Lovelace is a biographical film that was released in —. It provides a two-pronged look at the tragic life of Linda Lovelace. First, the film documents Lovelace's marriage to her husband Chuck Traynor, her decision to enter the pornography business, and her development into a cultural icon. Then, the film provides a behind-the-scenes depiction of Lovelace's life that focuses on the physical and emotional abuse that Traynor inflicted upon her, and the manner in which he coerced her into participating in Deep Throat and its subsequent marketing. The film aims to demonstrate how it came to be that Lovelace—once the most famous star of the pornography business—became an outspoken critic of pornography later in her life. Lovelace does not contain any pornographic scenes or nudity.

    Copyright Claim (Count One)

    Plaintiff alleges that in their film Lovelace, defendants have copied the following three scenes from Deep Throat: (1) the opening scene in Deep Throat, where Lovelace is filmed driving down the road in her Cadillac, (2) the first pornographic scene in Deep Throat, where Lovelace walks in on a man performing oral sex on her housemate, and (3) the most famous scene in Deep Throat, where Dr. Young diagnoses Lovelace's condition and tells her that she can achieve sexual satisfaction by performing oral sex and suggests that she start with him. In its complaint, plaintiff alleges that in these three scenes, defendants "have reproduced dialogue word for word, positioned the actors identically or nearly identically, recreated camera angles and lighting, and reproduced costumes and settings." Compl. ¶ 57.

    The court has reviewed both Deep Throat and Lovelace and below, summarizes the three contested scenes as depicted in each film.

    (1) Scene of Lovelace Driving

    Deep Throat: The film opens with Lovelace driving down the road in a blue Cadillac. While the opening credits are rolling, there are shots of Lovelace from inside and outside of her car. Lovelace is driving from a promenade along the water back to her home. During the scene, there is music playing—a version of "Ode to Joy" on the organ—and there is no dialogue. The scene ends when Lovelace arrives back at her home.

    Lovelace: The directors of Lovelace have provided a behind-the-scenes depiction of the filming of this scene. This scene occurs roughly thirty minutes into Lovelace. At this point in the film, Lovelace has agreed to take part in the filming of Deep Throat and the parties begin by filming this opening scene.

    The scene starts with Lovelace driving a red Cadillac in a motel parking lot. The film-crew—the director, videographer, and sound director—is in the car with her. Lovelace begins to drive and then slams on the brakes. Lovelace is clearly nervous. The director tells her to "drive normally," to which Lovelace responds, "I don't know how I normally drive. I just drive, you know?" The director tells her, "Yeah. That's exactly right. Just drive and pretend we're not here. Okay?" Lovelace collects herself and then proceeds to drive without a problem. She drives along the road by the water. The director tells her that she is "doing beautiful, baby." The scene then ends.

    (2) First Pornographic Scene

    Deep Throat: This is the second scene in the film. Upon arriving back home, Lovelace walks into the kitchen where she finds her housemate, Helen. There is a man performing oral sex on Helen in plain sight, as Helen sits on the kitchen table. Helen had recently been grocery shopping and there are groceries on the kitchen table. Lovelace, apparently unfazed, says to Helen, "that's a pretty sight. I hope that I'm not interrupting anything." Helen tells Lovelace that she's not interrupting and that the groceries also belong to her. Lovelace then begins to put away the groceries. Helen asks Lovelace for a cigarette and turns to the man, delivering the punchline of the scene, "mind if I smoke while you're eating?" Lovelace exits the kitchen and a pornographic scene ensues between Helen and the man in the kitchen.

    Lovelace: This scene is recreated about halfway through Lovelace. Here, defendants have not provided a behind-the-scenes account of the scene. Rather, the scene is shown during a recreated red-carpet screening of Deep Throat to a star-studded audience. Lovelace is seated in a private area with Hugh Hefner, the owner of Playboy Magazine, watching the film and discussing her future. Defendants cut between shots of the recreated scene and Lovelace speaking with Hefner.

    In the recreated scene, Lovelace once again engages in a conversation with her housemate Helen, while a man is performing oral sex on Helen. In this filming, Helen is seated on a bar and there are no groceries. Lovelace is complaining to Helen about her inability to achieve an orgasm. Lovelace says that "there's got to be more to sex than a lot of little tingles. There's got to be bells ringing, dams bursting, or bombs going off." Helen then delivers the punchline of the scene, "you want to get off or wreck a city." Upon hearing this line, the audience at the screening erupts in laughter and defendants then cut back to the conversation between Lovelace and Hefner. Hefner tells Lovelace that she could be a real movie star.

    Later in the film, during the behind-the-scenes depiction of the Lovelace story that focuses on her suffering during the filming and marketing of Deep Throat, defendants return to this scene. Here, defendants include the detail that during the screening, Hefner asks Lovelace to perform oral sex on him. It appears as though he is offering her a quid pro quo—if she performs oral sex on him, he will help her with her career.

    (3) Scene with Dr. Young

    Deep Throat: In this scene, Lovelace meets with Dr. Young to discuss her inability to achieve an orgasm. Dr. Young is an eccentric and quirky man and there is no evidence that he is an actual doctor apart from his title. His office is in his home and he is assisted by a young nurse, who also doubles as his sexual companion. During the beginning of the consultation, Dr. Young is blowing bubbles with a children's toy. Lovelace tells Dr. Young that there must be more to sex than "little tingles" and that she wants "to hear bells, bombs, and dams bursting." Dr. Young, after returning the bubble toy to the nurse, begins the consultation by examining Lovelace's vagina. He calls to the nurse for "sterilization" and the nurse returns with a dish of water into which he dips his fingertips. Dr. Young begins to examine Lovelace's vagina with a telescope. He then uses his fingers and determines that Lovelace does not have a clitoris.

    Dr. Young then examines Lovelace's throat and finds that her clitoris is actually in her throat. Upon hearing this diagnosis, Lovelace begins to cry. Dr. Young consoles Lovelace and then encourages her to try engaging in the form of oral sex, for which the film has its name, on him. He says to her, invoking the famous catch-phrase from the Alka-Seltzer commercial of the time, "try it. You'll like it." A pornographic scene ensues and Lovelace is finally able to achieve an orgasm.

    Lovelace: Once again, defendants have provided a behind-the-scenes account of the filming of this famous scene. Here, the scene is split into two parts—the first half of the scene, or the diagnosis by Dr. Young, is filmed on one day, and the second half of the scene, or the pornographic part of the scene, is filmed on the following day.

    During the filming of the diagnosis, defendants set up the scene in such a way that Lovelace, Dr. Young, as well as all of the directors and producers of Deep Throat are included. The scene begins with a producer holding a "clapperboard" and the director shouting "action." Lovelace tells Dr. Young, who is blowing bubbles during the consultation, that she enjoys having sex, but that there has to be more to sex than just "little tingles." Lovelace then tells Dr. Young that she wants to hear "bells ringing, dams bursting, bombs going off." Dr. Young decides to examine Lovelace's throat—he does not conduct a full physical examination—and determines that her clitoris is in her throat. Upon hearing this diagnosis, Lovelace begins to cry. Dr. Young then consoles her. The director yells "cut" and the filming ends for the day.

    The director and the producers are very pleased with the filming, however, they then point to an aggravated Traynor (Lovelace's husband) sitting next to Lovelace. Traynor is talking to Lovelace, but defendants do not include the details of the conversation. It is clear that he is intimidating her. The directors and producers immediately recognize that having Traynor present for the next day's pornographic scene would be very problematic. Later that day, the producers tell Traynor that they need him to go to Miami tomorrow to pick up more film. This request is simply an excuse to ensure that Traynor is not present during Lovelace's most important pornographic scenes. Traynor reluctantly agrees to travel to Miami.

    During the signature pornographic scene, once again, both characters as well as all of the directors and producers are filmed. There is no nudity in the scene. The scene begins by Dr. Young telling Loveleace, "try it. You'll like it." Lovelace then starts to engage in oral sex. All of the producers and directors are watching and one of the producers jokes to the others, "we're all gonna win Oscars." Dr. Young, in this filming, ejaculates prematurely. The producers are caught by surprise and begin to make fun of him. It is clear that this is just the first take of the filming of this scene. Lovelace turns to the producers and sheepishly asks, "I'm really sorry, did I do something wrong?" The producers and director reply, "no . . . no . . . no." The scene then ends and cuts to the cast and crew celebrating the completion of the filming.

    Trademark Claims (Counts Two, Three, and Four)

    Plaintiff has also brought the following three trademark claims against defendants: (1) trademark infringement under 15 U.S.C. § 1114, (2) false designation of origin under 15 U.S.C. § 1125(a), and (3) trademark dilution under 15 U.S.C. § 1125(c). "Linda Lovelace" and "Deep Throat" are registered trademarks belonging to plaintiff. In its complaint, plaintiff alleges that defendants have violated 15 U.S.C. §§ 1114, 1125(a), 1125(c) through naming the film "Lovelace" and through referring to "Deep Throat" in Lovelace and in the marketing for Lovelace.

    Procedural History

    Plaintiff filed suit on August 6, 2013. On August 7, 2013, plaintiff moved this court for a temporary restraining order to enjoin the distribution of Lovelace, which was to be released on August 9, 2013. The court denied plaintiff's application for a temporary restraining order.

    Discussion

    A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is analyzed under the same standard applicable to a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). See Sheppard v. Beerman, 18 F.3d 147,150 (2d Cir. 1994). Accordingly, judgment on the pleadings is only appropriate if, drawing all reasonable inferences in favor of the non-moving party, it is apparent from the pleadings that no set of facts can be proven that would entitle the plaintiff to relief. See Id.

    Copyright Claim

    The court first considers defendants claim that they did not infringe upon plaintiff's copyright protected material in violation of 17 U.S.C. § 107, because defendants' recreation of the three scenes in Deep Throat constitutes fair use. The court finds that defendants have engaged in the fair use of the copyright protected material.

    The fair use doctrine "permits and requires courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity that the law is designed to foster." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994). The Copyright Act provides that the use or limited reproduction of a copyrighted work "for purposes such as criticism, comment, news reporting, teaching . . . scholarship, or research, is not an infringement of copyright." 17 U.S.C. § 107. In determining whether the use made of a work in any particular case is fair use, courts consider the following four factors enumerated in the Copyright Act:

    (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 proportion 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.

    17 U.S.C. § 107(1)-(4).

    The Second Circuit has found that these statutory factors are not requirements and that the party requesting a judgment of fair use need not demonstrate that every factor weighs in its favor. Cariou v. Prince, 714 F.3d 694, 705 (2d Cir. 2013). Instead, the fair use determination is an open-ended and context sensitive inquiry. Id. "The ultimate test of fair use is whether the copyright law's goal of promoting the Progress of Science and useful Arts would be better served by allowing the use than by preventing it." Id. If the use of the copyright material is fair, then the defendant need not seek or receive permission from the plaintiff to use the material. FireSabre Consulting LLC v. Sheehy, No. 11-cv-4719 (CS), 2013 WL 5420977, at *7 (S.D.N.Y. Sept. 2013).

    The determination of fair use is a mixed question of law and fact. Harper & Row Publishers v. Nation Enterprises, 471 U.S. 539, 560 (1985). Plaintiff argues that this court should not make a fair use determination at this stage in the litigation, because there are factual questions that must be addressed through discovery. The court disagrees. The court is not aware of any authority in this Circuit that prevents it from undertaking a fair use inquiry in a motion for judgment on the pleadings. The Second Circuit has explained that the "fact-driven nature of the fair use determination suggests that a district court should be cautious in granting [dismissal in advance of trial] in this area." See Wright v. Warner Books, Inc., 953 F.2d 731, 735 (2d Cir. 1991). The court appreciates that would there be factual questions in the case, then a fair use determination would be inappropriate. However, there is a complete factual record before the court and discovery would not provide any additional relevant information in this inquiry. All that is necessary for the court to make a determination as to fair use are the two films at issue—Deep Throat and Lovelace. Accordingly, below, the court undertakes a fair use analysis.

    Purpose and Character of the Use

    The first statutory factor—the purpose and character of the use—is the heart of the fair use inquiry. See On Davis v. The Gap, Inc., 246 F.3d 152, 174 (2d Cir. 2001). "There is a strong presumption in the Second Circuit that this factor favors the defendant if the allegedly infringing work fits within the Section 107 preamble uses: criticism, comment, or research." Bill Graham Archives, LLC. v. Dorling Kindersley Ltd., 386 F.Supp.2d 324, 328 (S.D.N.Y. 2005). The court in Bill Graham went on to explain that "[b]iographies in general and critical biographies in particular, fit comfortably within these statutory categories of uses illustrative of uses that can be fair." Id. (quoting New Era Publishing v. Carol Publishing Group, 904 F.2d 152, 156 (2d Cir. 1990)). Here, there is no doubt that Lovelace, which is a critical biographical work, is entitled to a presumption of fair use.

    The more important question under the first factor and in the fair use analysis more generally, is whether the allegedly infringing work is transformative—whether it "adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." Cariou, 714, F.2d at 705 (quoting Campbell, 510 U.S. at 579). Ultimately, transformative works "lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, and 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." Campbell, 510 U.S. at 579.

    Here, the court finds that defendants' use, or recreation, of the three scenes from Deep Throat constitutes transformative use, adding a new, critical perspective on the life of Linda Lovelace and the production of Deep Throat. Deep Throat is a pornographic film containing seventeen scenes of explicit sexual content. Conversely, Lovelace is a critical biographical film that documents the tragic story of Linda Lovelace and provides a behind-the-scenes perspective on the filming of Deep Throat. It does not contain any nudity. Defendants have recreated the three challenged scenes in order to focus on a defining part of Lovelace's life, her starring role in Deep Throat.

    In two of the three challenged scenes—the driving scene as well as the scene of Lovelace and Dr. Young—, defendants have provided a behind-thescenes perspective in order to demonstrate Lovelace's apprehension and unfamiliarity during the filming of Deep Throat. These two recreated scenes are markedly different from the originals—they include actors playing the parts of the director, producers, sound directors, and videographers as well as entirely new dialogue surrounding the filming of the shots. But, most importantly, in these recreated scenes, the producers of Lovelace have endeavored to portray Lovelace as an unsuspecting amateur, anxious about her role in the film, and ultimately, susceptible to the influence of her domineering and manipulative husband, Chuck Traynor.

    The driving scene in Lovelace is entirely different than the driving scene in Deep Throat. In Deep Throat, the driving scene does not meaningfully advance the plot of the film; rather, it is a vehicle for displaying the opening credits. There is no dialogue in the scene. Conversely, in Lovelace, the driving scene is an important scene. It takes places roughly thirty minutes into the film. At this point, Lovelace has agreed to take part in the filming of Deep Throat and this is the first scene. There is ample dialogue in the scene that captures Lovelace's anxiety about the filming. She is clearly nervous and more specifically, she is uneasy about driving while being filmed. Ultimately, after a few false starts, the director is able to reassure her and the filming begins. But, the defendants have established an important theme—Lovelace is undoubtedly a novice who is unsure about her role in the film, and in need of encouragement and support in order to go forward with the filming.

    Similarly, defendants have also transformed the infamous pornographic scene between Dr. Young and Lovelace into a behind-the-scenes account of its young, inexperienced, and susceptible star.[2] In Deep Throat, this is the most famous scene in the movie. It progresses from a faux-medical consultation to a sexual encounter between Dr. Young and his patient, Lovelace. However, in Lovelace, defendants have recreated this scene to focus on Lovelace's inexperience and her relationship with Traynor rather than on the sexual encounter between Lovelace and Dr. Young. Defendants have removed the sexually explicit part of Dr. Young's physical examination as well as the famous pornographic scene.

    Instead, in Lovelace, defendants have split this classic scene into two parts—a behind-the-scenes depiction of the physical examination and then, the subsequent sexual scene. Lovelace's relative inexperience is evident throughout the filming. For instance, after Dr. Young ejaculates prematurely, she turns to the directors and in a moment of unintended comedy says, "I'm really sorry. Did I do something wrong?" Of course, she has not done anything wrong.

    But, perhaps most importantly, through dividing the scene in two, defendants are able to highlight the fraught relationship between Lovelace and Traynor. After the parties have finished filming the consultation scene and with the ultimate climatic scene scheduled for the next day, defendants include a shot of Traynor sitting next to Lovelace. Defendants do not include any dialogue between the parties but it is clear that Traynor is lording over Lovelace and intimidating her. The producers and director immediately recognize that this is a problem. They decide that Traynor needs to be sent away for the climactic scene between Lovelace and Dr. Young. Thus, through splitting the scene in two, defendants are able to continue establishing what will turn out to be the most important plotline in the film—Traynor's control, abuse, and manipulation of Lovelace.

    In the third recreated scene—the first pornographic shot in Deep Throat—defendants have, once again, filmed a recreated scene in an entirely different context. Defendants have not provided a behind-the-scenes account of the filming of this scene; instead, they have chosen to display the recreated scene during a star-studded premiere of Deep Throat. The recreated scene appears on the movie screen before the audience. The recreated scene contains material differences from the original—both the dialogue and the set are completely different.

    But more importantly, the recreated scene in Lovelace serves an entirely different purpose from the original pornographic scene in Deep Throat. Defendants have removed all the nudity from the scene and instead, recreated the scene in order to juxtapose the public's overwhelmingly positive response to the film with Lovelace's simultaneous suffering. In order to achieve this goal, defendants depict the screening in two separate parts of the film—first, during the story of the filming and marketing of Lovelace, which captures the public's positive response to the film, and then, during the behind-the-scenes account, which captures Lovelace's suffering.

    During the first depiction of this scene, Lovelace is taken to her seat by Hugh Hefner and along the way, meets celebrities such as Sammy Davis Junior. Lovelace is seated alone in the balcony with Hugh Hefner and together, they watch the film and discuss Lovelace's future. During the screening, the audience roars with laughter after Helen—Lovelace's friend—responds to Lovelace telling her that that when she has sex, she wants to hear "bells ringing, dams bursting, and bombs going off," by delivering the punchline of the scene, "do you want to get off or wreck a city?" Defendants cut between shots of the recreated scene, the audience laughing, and Lovelace speaking with Hefner.

    Then, during the second telling of the Lovelace story, defendants return to this scene and include the detail that while sitting together alone in the balcony, Hefner attempts to coerce Lovelace into performing oral sex on him. It appears that he is offering Lovelace a quid pro quo—that he will help her career if she will engage with him sexually. Ultimately, it is this juxtaposition of the public's overwhelmingly positive reception to the film Deep Throat with Lovelace's concomitant, silent suffering during the filming and subsequent marketing of the film that is a central theme in Lovelace and that is captured in this two-part scene.

    Finally, the first fair use factor—the purpose and character of the use— also requires that the court consider whether the allegedly infringing work has a commercial or nonprofit educational purpose. See Cariou, 714 F.3d at 708. This factor arises when a secondary user makes unauthorized use of copyrighted material to gain a profit through copying the original work. See Id. However, courts are to apply this factor with caution because "as the Supreme Court has recognized, Congress `could not have intended' a rule that commercial uses are presumptively unfair." Id. (quoting Campbell 510, U.S. at 584). "Instead, 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. Thus, while there is no doubt that defendants created Lovelace for commercial purposes, the court does not place very much significance on this part of the first fair-use factor given the transformative nature of the work.

    In all, the court finds that the first factor weighs in favor of a finding fair use.

    2. Nature of the Copyrighted Work

    The second factor—the nature of the copyrighted work—calls for the "recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Campbell, 510 U.S. at 586. In this analysis, courts consider "whether the work is expressive or creative, with a greater leeway being allowed to a claim of fair use where the work is factual or informational." Cariou, 714 F.3d at 709.

    Here, the court finds that the creative and expressive nature of Deep Throat places the film within the core of copyright protection and thus, that the second fair use factor favors plaintiff. However, similar to the commercial nature of defendant's film, this factor "may be of less (or even of no) importance when assessed in the context of certain transformative uses." Bill Graham Archives, LLC., 386 F.Supp.2d at 330 (quoting Castle Rock Entertainment Inc., v. Carol Publishing Group, Inc., 150 F.3d 132, 144 (2d Cir. 1998); see also, Cariou, 714 F.3d at 710 In the end, this factor is rarely found to be determinative. Davis v. The Gap, Inc., 246 F.2d 152, 175 (2d Cir. 2001).

    3. Amount and Substantiality of the Use

    The third statutory fair use factor "asks whether `the amount and substantiality of the portion used in relation to the copyrighted work as a whole' are reasonable in relation to the purpose of the copying." Campbell, 510 U.S. at 586 (quoting 17 U.S.C. § 107(3)). There is both a qualitative and quantitative dimension to this analysis. Bill Graham Archives, LLC., 386 F.Supp.2d at 330. This factor "favors copyright holders where the portion used by the alleged infringer is a significant percentage of the copyrighted work, or where the portion used is essentially the heart to the copyrighted work." NXIVM Corporation v. Ross Institute, 364 F.3d 471, 480 (2d Cir. 2004). Ultimately, the central question in this analysis is whether defendant took no more than necessary given the creative purpose of the copying. FireSabre Consulting LLC, 2013 WL 5420977, at *10.

    Here, defendants copied, or recreated, three scenes from the original film Deep Throat in order to provide a behind-the-scenes depiction of the filming (the driving scene and the Dr. Young scene) as well as to demonstrate the public's positive reaction to the film (the first pornographic scene). In all, the three recreated scenes, which mostly contain original dialogue, last for roughly four minutes—comparatively, the running time for Deep Throat is sixty-one minutes. Defendants chose three scenes to recreate and each scene, as discussed above, serves a distinct and important purpose in telling the story of Linda Lovelace. The court finds that defendants did not copy any more than necessary to achieve its creative purposes.

    Along these lines, the court finds that defendants have not copied the core of plaintiff's film Deep Throat. The heart, or core, of Deep Throat is that it is a pornographic film that in particular, focuses on one type of pornographic act. Conversely, Lovelace has an entirely different purpose—it is a critical, biographical film. Thus, given that the two films have entirely different purposes, it is impossible that defendants' could have copied the core of Deep Throat.

    Accordingly, the court finds that the third factor weighs in favor of a finding of fair use.

    4. Effect of the Use on the Market for or Value of the Work

    The final fair use factor considers "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4). Copyright law is concerned with protecting the ability of a copyright holder to exploit the market for his work as well as the markets that the copyright holder could reasonably be expected to enter. Bill Graham Archives, LLC., 386 F.Supp.2d at 331. Thus, courts must also consider the harm to the market for derivative works, which are defined as those markets that the creators of the original work would in general develop or license others to develop. Castle Rock Entertainment, Inc. v. Carol Publishing Group, Inc., 150 F.3d 132, 145 (2d Cir. 1998). In this analysis, "[a] market harm for licensing revenues will only be recognized if the market is traditional, reasonable, or likely to be developed and is not a protected transformative use." Bill Graham Archives, LLC., 386 F.Supp.2d at 333. The Second Circuit has explained that "by developing or licensing a market for parody, news reporting, education, or other transformative uses of its own creative work, a copyright owner plainly cannot prevent others from entering those fair use markets." Castle Rock Enterprises v. Carol Publishing Group, 150 F.3d 132, 146 n.11 (2d Cir. 1998).

    Here, Lovelace could not supplant demand for Deep Throat, because the two films have entirely different subjects—one is a pornography and the other is a critical biography. Instead, the issue in this fourth factor analysis is whether Lovelace has harmed the market for derivative works of Deep Throat. In its complaint, plaintiff alleges that it had licensed the use of Deep Throat to the directors of the film Inferno, a film that like Lovelace, was to be about the life of Linda Lovelace. Plaintiff alleges that once the entertainment press began to report on the production of Deep Throat, funding for the film Inferno came to an end. Ultimately, Inferno was never produced and plaintiff attributes defendants' alleged copyright infringement for this lost licensing revenue.

    However, the court finds that plaintiff's claim must fail because defendants' film Lovelace clearly constitutes a transformative use of the copyright protected film Deep Throat. Accordingly, plaintiff cannot prevent defendants from entering this fair use market. See Bill Graham Archives, LLC., 386 F.Supp.2d at 333; Castle Rock Enterprises, 150 F.3d at 146 n.11.

    Aggregate Assessment

    In light of the factors discussed above, the court concludes that defendants' recreation of the three scenes from Deep Throat constitutes fair use. Thus, defendants have not infringed upon plaintiff's copyright protected material.

    Trademark Claims

    Plaintiff has also brought the following three trademark claims against defendants: (1) trademark infringement under 15 U.S.C. § 1114, (2) false designation of origin under 15 U.S.C. § 1125(a), and (3) trademark dilution under 15 U.S.C. § 1125(a). The court finds that these three claims fail as a matter of law.

    Trademark Infringement and False Designation of Origin

    The standard for establishing a trademark infringement claim under 15 U.S.C. § 1114 is the same as the standard for establishing a false designation of origin claim under 15 U.S.C. § 1125(a). Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Company, 799 F.2d 867, 871 (2d Cir. 1986); Twentieth Century Fox Film Corporation v. Marvel Enterprises, Inc., 220 F. Supp.2d 289, 287 (S.D.N.Y. 2002). In either a claim for trademark infringement or false designation of origin, a plaintiff can establish a prima facie case by showing that defendant's use of plaintiff's trademark is likely to confuse consumers as to the source of defendant's product. Lois Sportswear, U.S.A., Inc., 799 F.2d at 871. Accordingly, the court will consider these two trademark claims together.

    In its complaint, plaintiff alleges that defendants have infringed upon plaintiff's marks "Linda Lovelace" and "Deep Throat" in violation of 15 U.S.C. § 1114 by "advertising and distributing Lovelace, a movie whose title infringes upon plaintiff's Linda Lovelace mark, and advertising and promoting Lovelace by repeated mention of plaintiff's `Deep Throat' movies and mark." Compl. ¶ 83. Additionally, plaintiff alleges that in violation of 15 U.S.C. § 1125(a), defendants' "use of `Lovelace' and `Deep Throat' are false designations of origin which are likely to cause confusion, to cause mistake and to deceive as to the affiliation, connection or association with plaintiff as to the origin, sponsorship, or approval of Lovelace by plaintiff." Id. ¶ 91.

    Here, defendants' conduct, as alleged, does not constitute trademark infringement, or false designation of origin, because in its complaint, plaintiff fails to plausibly allege that consumers are likely to be confused by defendants' conduct. Pearson Education Inc. v. Allen Air Conditioning Co., et al., No. 08cv-6152 (KBF), 2013 WL 5870235, at *2 (S.D.N.Y. Oct. 2013). "A pleading that offers labels and conclusions or a formulation recitation of the elements of a cause of action will not do." Pension Benefits Guarantee Corporation ex rel. St. Vincent Catholic Medical Centers Retirement Plan v. Morgan Stanley Investment Management Inc., 712 F.3d 705, 717 (2d Cir. 2013). In its complaint, plaintiff has only set forth conclusory allegations of confusion; it is has not set forth any reason as to why consumers would believe that plaintiff was involved in the production of defendants' film Lovelace.

    Trademark Dilution

    Federal law allows the owner of a "famous mark" to enjoin a person form using "a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by transnishment of the famous mark." 15 U.S.C. § 1125(c)(1). "Dilution by blurring" is an "association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark." Id. § 1125(c)(2). The Second Circuit has listed the following as classic examples of trademark dilution by blurring, "Dupont shoes, Buick aspirin tablets, Schlitz varnish, Kodak pianos, Bulova gowns. . . ." Starbucks Corporation v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 105 (2d Cir. 2009). "Dilution by blurring refers to the whittling away of the established trademark's selling power and value through its unauthorized use by others." Tiffany (NJ) INC. v. eBay Inc., 600 F.3d 93, 111 (2d Cir. 2010).

    In contrast to dilution by blurring, "dilution by tarnishment" is an "association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark." 15 U.S.C. § 1125(c)(2)(C). "This generally arises when the plaintiff's trademark is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner's product." Tiffany (NJ) INC., 600 F.3d at 111 (quoting Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir.1994)).

    Here, in support of its trademark dilution claim, plaintiff has set forth allegations of both dilution by blurring and dilution by tarnishment. More specifically, plaintiff has alleged that "defendants acts are in violation of 15 U.S.C. § 1125(c) in that they are likely to cause dilution by blurring the distinctiveness of plaintiff's famous marks Linda Lovelace and Deep Throat, all to the irreparable injury to and damage of plaintiff." Compl. ¶ 101 (emphasis added). Similarly, plaintiff has alleged that "defendants' acts are also in violation of 15 U.S.C. § 1125(c) in that they are likely to cause dilution by tarnishment by harming the reputation of Plaintiff's famous marks Linda Lovelace and Deep Throat, all to the irreparable injury to and damage of Plaintiff." Id. ¶ 102 (emphasis added).

    The court finds that both of plaintiff's trademark dilution claims must fail as a matter of law. As mentioned above, "a pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do." Pension Benefits Guarantee Corporation ex rel. St. Vincent Catholic Medical Centers Retirement Plan, 712 F.3d at 717 (2d Cir. 2013). Once again, plaintiff has only set forth bare-bones, conclusory allegations in support of these claims that merely recite the elements of the cause of action. With respect to dilution by blurring, plaintiff has not provided any basis for its allegation that Lovelace impairs the distinctiveness of its marks "Linda Lovelace" and "Deep Throat". Along these lines, plaintiffs have also not provided any basis for its claim that Lovelace has tarnished the reputation of its marks "Linda Lovelace" and Deep Throat".

    Attorneys' Fees

    Defendants move for an award of costs and attorneys' fees under 17 U.S.C § 505 of the Copyright Act. A court may award costs to any party (other than the United States), and attorneys' fees to a prevailing party in a copyright action. 17 U.S.C § 505. In determining whether to award attorney's fees, courts are to consider several non-exclusive factors including frivolousness, motivation, objective unreasonableness, and the need to advance considerations of compensation and deterrence. See Muller v. Twentieth Century Fox Film Corp., No. 08-Civ-02550 (DC), 2011 WL 3678712, at *1 (S.D.N.Y. Aug. 2011) (referencing Fogerty v. Fantasy, 510 U.S. 517, 534 (1994)). Defendants contend that given that plaintiffs copyright claims are meritless and designed to stifle any public criticism of the film Deep Throat, the court should award attorneys' fees.

    While the court finds that plaintiffs copyright claims fail as a matter of law, the court does not find that they are so unreasonable as to warrant the award of attorneys' fees.

    Conclusion

    The court enters judgment for defendants and dismisses plaintiffs complaint in its entirety. The court declines to award attorneys' fees to defendants. This opinion resolves item #9 on the docket.

    SO ORDERED.

    [1] Linda Lovelace's legal name is Linda Boreman. However, throughout her life she went by the name Linda Lovelace. Accordingly, in this opinion, the court will refer to her as Linda Lovelace.

    [2] Admittedly, defendants have copied parts of the dialogue from Deep Throat. For example, defendants have copied the following lines of dialogue: (1) Lovelace telling Dr. Young that she wants to "hear bells ringing, dams bursting, bombs going off," and (2) after recommending that Lovelace engage in a certain type of oral sex, Dr. Young provides the following encouragement, "try it. You'll like it." However, as the court in Bill Graham Archives explained "it is both reasonable and customary for biographers to refer to and utilize earlier works dealing with the subject of the work and occasionally to quote directly from such works." 386 F.Supp.2d at 328 (emphasis added).

  • 12 Fox News Network, LLC v. TVEyes, Inc.

    FOX NEWS NETWORK, LLC, Plaintiff,
    v.
    TVEYES, INC. Defendant.

    No. 13 Civ. 5315 (AKH).

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

    September 9, 2014.

    ORDER AND OPINION DENYING IN PART AND GRANTING IN PART CROSS MOTIONS FOR SUMMARY JUDGMENT
    ALVIN K. HELLERSTEIN, District Judge.

    TVEyes, Inc. ("TVEyes") monitors and records all content broadcast by more than 1,400 television and radio stations twenty-four hours per day, seven days per week, and transforms the content into a searchable database for its subscribers. Subscribers, by use of search terms, can then determine when, where, and how those search terms have been used, and obtain transcripts and video clips of the portions of the television show that used the search term. TVEyes serves a world that is as much interested in what the television commentators say, as in the news they report.

    Fox News Network, LLC ("Fox News") filed this lawsuit to enjoin TVEyes from copying and distributing clips of Fox News programs, and for damages, and bases its lawsuit on the Copyright Act, 17 U.S.C. § 101 et seq., and the New York law of unfair competition and misappropriation. TVEyes asserts the affirmative defense of fair use. 17 U.S.C. § 107. Both parties have moved for summary judgment.

    For the reasons stated in this opinion, I find that TVEyes' use of Fox News' content is fair use, with exceptions noted in the discussion raising certain questions of fact. Fox News' request for an injunction is denied.[1]

    I. Factual Background
    A. TVEyes

    TVEyes is a media-monitoring service that enables its subscribers to track when keywords or phrases of interest are uttered on the television or radio. To do this, TVEyes records the content of more than 1,400 television and radio stations, twenty-four hours a day, seven days a week. Using closed captions and speech-to-text technology, TVEyes records the entire content of television and radio broadcasts and creates a searchable database of that content. The database, with services running from it, is the cornerstone of the service TVEyes provides to its subscribers.

    The database allows its subscribers, who include the United States Army, the White House, numerous members of the United States Congress, and local and state police departments, to track the news coverage of particular events. For example, police departments use TVEyes to track television coverage of public safety messages across different stations and locations, and to adjust outreach efforts accordingly. Without a service like TVEyes, the only way for the police department to know how every station is constantly reporting the situation would be to have an individual watch every station that broadcast news for twenty-four hours a day taking notes on each station's simultaneous coverage.

    An Internet search of a recent amber alert for a missing child, for example, would not yield the same results as would a TVEyes search result, because using the internet search results would provide only the segments of content that the television networks made available to the Internet. TVEyes' search results, in contrast, will index, organize, and present what was said on each of the 1,400 stations about the amber alert reliably and authoritatively. Without TVEyes, the police department could not monitor the coverage of the event in order to ensure that the news coverage is factually correct and that the public is correctly informed.

    Upon logging into its TVEyes account, the subscriber is taken to the Watch List Page. This page monitors all of the subscriber's desired keywords and terms, and organizes search results by day, tabulating the total number of times the keyword was mentioned by all 1,400 television and radio stations each day over a 32 day period. While on the Watch List Page, a user can also run a "Google News" search, comparing the mentions of the keyword or term on the internet with the mentions of the keyword or term on the TVEyes database. A subscriber can also create a custom time range to tabulate the number of times a term has been used in a certain time period, and the relative frequency of such use compared to other terms. Subscribers can set up email alerts for specific keywords or terms, and receive responses one to five minutes after the keyword or term is mentioned on any of the 1,400 television and radio stations TVEyes monitors. TVEyes' responses to subscribers provides a thumbnail image of the show, a snippet of transcript, and a short video clip beginning 14 seconds before the word was used.

    When a subscriber on the Watch List Page clicks on the hyperlink showing the number of times the term was mentioned on a particular day, the subscriber is brought to the Results List Page. The Results List Page displays each mention of the keyword or term in reverse chronological order. Each individual result includes a portion of transcript highlighting the keyword and a thumbnail image of the particular show that used the term. When the user clicks the thumbnail image of the show, the video clip begins to play automatically alongside the transcript on the Transcript Page, beginning 14 seconds before the keyword is mentioned.

    The Transcript Page shows users the following information: the title of the program; the precise date and time of the clip; a transcript of the video; the name and location of the channel; market viewership of the clip according to the Nielsen Ratings data; the publicity value of the clip according to data from the television research company, SQAD; and a web address to the website for the channel that features the program or for the program itself if such a web address exists.

    TVEyes also provides website pages that organize and present the relevant data graphically and pictorially. The Media Stats page organizes data associated with the watch term, providing a graphic showing the number of times the term has been mentioned over a given time period. The Marketshare page displays a "heatmap" graphic that shows the geographic locations where the term is most used, and the frequency of the mentions. The Broadcast Network page generates a pie chart depicting the breakdown of broadcast stations on which the watch term was used. TVEyes also features a Power Search tool that allows users to run ad-hoc keyword search queries; clicking the thumbnail image will bring the user to the clip's corresponding transcript page. Subscribers also can organize searches according to dates and times, by broadcast. The "Date and Time Search" feature enables subscribers to play a video clip starting at a specific time and date on a specific television station, rather than entering a search term.

    Subscribers can save, archive, edit, and download to their personal computers an unlimited number of clips generated by their searches. The clips, however, are limited to ten minutes, and a majority of the clips are shorter than two minutes. TVEyes enables subscribers to email the clip from its website to anyone, whether or not a TVEyes subscriber. If the user has downloaded the particular clip, the user can share the clip, or a link to it, on any and all social media platforms and by email. When a recipient clicks on the hyperlink, the viewer is directed to TVEyes' website, not to the content owner's website, and can watch the video content in high-definition. Unless saved or downloaded, the clip's availability is limited to the 32-day term that the clip will remain on the website from the time the clip first appeared on television. Thus TVEyes facilitates publicity activities by subscribers publicizing the content that TVEyes has captured from the broadcasts of television and radio stations, both copyrighted and non-copyrighted contents.

    TVEyes is available only to businesses and not to the general public. As of October 2013 TVEyes had over 2,200 subscribers including the White House, 100 current members of Congress, the Department of Defense, the United States House Committee on the Budget, the Associated Press, MSNBC, Reuters, the United States Army and Marines, the American Red Cross, AARP, Bloomberg, Cantor Fitzgerald, Goldman Sachs, ABC Television Group, CBS Television Network, the Association of Trial Lawyers, and many others.[2]

    All TVEyes subscribers are required to sign a contractual limitation in a User Agreement, limiting use of downloaded clips to internal purposes. Whenever a subscriber seeks to download clips, TVEyes' website gives notice that such material may be used only for internal review, analysis, or research. Any reproduction, publication, rebroadcasting, public showing or public display is forbidden. TVEyes' email communications with subscribers contain similar warnings. When TVEyes users ask how to obtain rights to publicly post or disseminate clips, TVEyes refers such inquiries to the broadcaster. TVEyes recently added a feature that will block a user from trying to play more than 25 minutes of sequential content from a single station.

    TVEyes is a for-profit company with revenue of more than $8 million in 2013. Subscribers pay a monthly fee of $500, much more than the cost of watching cable television. TVEyes advertises in its marketing materials that its users can "watch live TV, 24/7;" "monitor Breaking News;" and "download unlimited clips" of television programming in high definition. It also highlights that subscribers can play unlimited clips from television broadcasts, "email unlimited clips to unlimited recipients" and "post an unlimited number of clips" to social media and enjoy "unlimited storage [of clips] on TVEyes servers," and therefore is better "than the traditional clipping services." TVEyes also advertises that subscribers can edit unlimited radio and television clips and download edited clips to their hard drive or to a compact disk. The TVEyes User Manual states that its Media Snapshot feature "allows you to watch live-streams of everything we are recording. This is great for Crisis Communications, monitoring Breaking News, as well as for Press Conferences." Fox News draws specific attention to such live-streaming of its programs by TVEyes in its claim of copyright infringement.

    B. FoxNews

    Fox News is an international television news organization headquartered in New York. Fox News owns and operates two television news channels: Fox News Channel ("FNC") and Fox Business Network ("FBN"). FNC delivers breaking news in a twenty-four hour news cycle on all matters of interest, including political and business news, and has been the most watched news channel in the United States for the last eleven years. FBN is a financial news channel that provides real-time information and reports on financial and business news. FBN is distributed to over 70 million cable subscribers across the United States. Both FNC and FBN air news and information twenty-four hours a day, seven days a week. Their primary competitors are the cable television channels, MSNBC and CNN.

    FNC and FBN are in the business of reporting news worldwide, and incur significant expenditures to cover developing news stories of the day, every day. Their programs reflect creative endeavors, and considerable time, effort, and expense in delivering news and political commentary to the public. The news ticker passing horizontally at the bottom of the television screen provides real-time updates of breaking news while regular programming airs.

    Fox News also has a growing online and digital presence on the Internet (as do its competitors, MSNBC and CNN). Fox News makes live streams of PNC and FBN programming available on the internet through its TVEverywhere service, to viewers having a cable or satellite subscription. Fox News also makes certain segments of its shows available to the general public on its websites, FoxNews.com and FoxBusiness.com. Fox News makes about 16% of its television broadcast content available online, and is concerned that a broader dissemination beyond that will result in a weakening of its viewer-base or create a substitute for viewing Fox News on television cable and satellite. Fox News provides clips of segments of its programs within an hour of airing, and with updates as needed. The video clips do not show the exact content or images that were aired on television — the news ticker on the bottom of the screen is absent in the online clips, for example. Furthermore, the online clips sometimes feature "corrected" versions of news stories, amending and correcting incorrect and outdated descriptions in the original television version.

    Visitors to Fox News' websites are shown a pre-reel advertisement, before watching news clips, a feature that generates revenue for Fox News. Visitors to Fox News' websites can also copy and paste URLs of specific clips to share on social media platforms. Fox News also allows website visitors to search the video clip content on its website, and provide keywords for that purpose. Fox News restricts the use of the video clips provided on the websites, requiring that they are to be used for "personal use only and [the content] may not be used for commercial purposes." Visitors to Fox News' websites are not permitted to download any of the video clips.

    Fox News licenses third party websites, including Yahoo!, Hulu, and YouTube, to store and show video clips of segments of its program on their websites, thereby generating another stream of income by the license fees Fox News charges. Fox News licensees must covenant that they will not show the clips in a way that is derogatory or critical of Fox News. In the past three years, Fox News has made approximately $1 million in revenue from licensing content to these third party websites.

    Fox News also distributes video clips through its exclusive clip-licensing agent, ITN Source, Ltd. ("ITN Source"). ITN Source distributes and licenses video clips of Fox News' content to companies and governmental organizations for use in a variety of ways, including to post on a website or social media platform or to create a digital archive. ITN Source maintains a library of over 80,000 Fox News video clips which its customers can search using keywords. Overall, Fox News has made approximately $2 million in licensing fees through ITN Source. ITN Source's partner, Executive Interviews, Ltd. ("Executive Interviews") also distributes Fox News' content by marketing copies of video clips to guests who have appeared on Fox News' channels. Executive Interviews' clients include multinational corporations, small boutique and regional companies, nonprofit organizations, and government entities.

    The vast majority of Fox News' revenues is derived from fees paid to Fox News by cable companies that broadcast Fox News' content. Unlike broadcast television which is aired free of charge, FNC and FBN, as cable television stations, charge fees to cable providers like, for example, Time Warner Cable, and they, in turn, charge fees for use of cable to their subscribers. Time Warner Cable and other cable and satellite providers pay Fox News persubscriber carriage fees — the more subscribers, the bigger the carriage fee. Fees and advertising revenues from commercial advertisers and sponsors vary directly with the Nielsen Ratings of the total number of viewers, and similar ratings of traffic on Fox News websites.

    Fox News filed this lawsuit because of concern that TVEyes will divert viewers of its news and commentary programs and visits to its websites. Fox News sues TVEyes for violations of the Copyright Act, 17 U.S.C. § 101 et seq., and under state law for misappropriation. Fox News also alleges that TVEyes' use of Fox News' video content to create video clips that TVEyes' subscribers can play, save, edit, archive, download, and share constitute copyright infringement. Specifically, Fox News alleges that TVEyes copied and infringed 19 hour-long programs aired on FNC and FBN between October 16, 2012 and July 3, 2013 aired on FNC and FBN.[3] Fox News owns copyright registrations for the nineteen hour-long shows. TVEyes asserts that its use of Fox News' content is a "fair use" protected by the Copyright Act. See, 17 U.S.C. § 107. The parties have cross-moved for summary judgment.

    II. Discussion
    A. Standard of Review

    A motion for summary judgment shall be granted where the pleadings and supporting materials show that "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The court must "resolve all ambiguities, and credit all factual inferences that could rationally be drawn, in favor of the party opposing summary judgment." Roe v. City of Waterbury, 542 F.3d 31, 35 (2d Cir. 2008). The assertion of the fair use affirmative defense raises a mixed question of law and fact that can be resolved at summary judgment ifthere are no genuine material facts in dispute. Bill Graham Archives v. Darling Kindersley Ltd., 448 F.3d 605, 608 (2d Cir. 2006).

    B. Copyright Infringement

    The Copyright Act, 17 U.S.C. § 101 et seq., grants authors "a limited monopoly over (and thus the opportunity to profit from) the dissemination of their original works of authorship." Authors Guild, Inc. v. Hathi Trust, 755 F.3d 87 (2d Cir. 2014). The Copyright Act also gives authors the exclusive right not only to reproduce these works but also to create "derivative works."[4] Id. To show copyright infringement, an author must show ownership of a valid copyright and unauthorized copying of the author's copyrighted work. Tufenkian lmp./Exp. Ventures, Inc. v. Einstein Moomjy, Inc., 338 F.3d 127, 131 (2d Cir. 2003). Fox News has shown, and TVEyes concedes, that Fox News owns valid copyrights in the nineteen television programs that form the subject of this lawsuit.[5] TVEyes admits also that it copies, verbatim, each of Fox News' registered works. These concessions constitute copyright infringement unless TVEyes shows that its use is fair use. UMG Recordings, Inc. v. MP3. Com, Inc., 92 F. Supp. 2d 349, 350 (S.D.N.Y. 2000). Fox News does not argue that TVEyes' use of Fox News' broadcasts for the purpose of creating an analytical database is a fair use; Fox News takes issue with the features of TVEyes' database that provide TVEyes subscribers with video clips of Fox News' content.

    C. Fair Use

    As the Supreme Court explained, from "the infancy of copyright protection, some opportunity for fair use of copyrighted materials has been thought necessary to fulfill copyright's very purpose, `[t]o promote the Progress of Science and useful Arts . . .' U.S. Const., Art. I, 8, cl. 8." Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 575 (1994). The Fair Use doctrine limits the author's monopoly over her work allowing the public to make use of the copyrighted work without the author's permission in certain situations. 17 U.S.C. § 107. The preamble to the fair use section in the Copyright Act provides in pertinent part that:

    the fair use of a copyrighted work ... for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright ...

    When the copied work is being used for one of the purposes identified in the preamble, there is a strong presumption in favor of fair use for the defendant. NXIVM Corp. v. Ross Institute, 364 F.3d 471, 477 (2d Cir. 2004). These examples of fair use are illustrative. Campbell, 510 U.S at 577-78.

    A court considering whether or not a challenged and potentially infringing use of a copyrighted work is fair use must consider the following nonexclusive statutory factors:

    (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.

    17 U.S.C. § 107. The four factors should not "be treated in isolation, one from another. All are to be explored, and the results weighed together, in light of the purposes of copyright." Campbell, 510 U.S. at 578. "The ultimate test of fair use is whether the copyright law's goal of promoting the Progress of Science and useful Arts would be better served by allowing the use than by preventing it." Bill Graham Archives v. Darling Kindersley Limited, 448 F.3d 605, 608 (2d Cir. 2006) (internal quotations and citations omitted). This evaluation is an "open-ended and context-sensitive inquiry," Blanch v. Koons, 467 F.3d 244, 251 (2d Cir. 2006) that calls for "case-by-case analysis." Campbell, 510 U.S. at 577. A proponent of the fair use doctrine need not establish that each factor weighs in its favor to prevail. NXIVM Corp. v. Ross Inst., 364 F.3d 471, 476-77 (2d Cir. 2004). Because fair use is an affirmative defense, the proponent carries the burden of proof on issues in dispute. American Geophysical Union v. Texaco, Inc., 60 F.3d 913, 918 (2d Cir. 1994).

    i. The First Factor

    The first factor directs courts to consider "the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes." 17 U.S.C. § 107(1). The "central purpose of this investigation" requires evaluating whether the new work "merely supersedes the objects of the original creation" or "instead adds something new, with a further purpose or different character, altering the first with new expression, meaning or message; it asks, in other words, whether and to what extent the new work is transformative." Campbell, 510 U.S. at 578-79 (internal citations and quotations omitted). Transformation "lies at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright" and therefore "the more transformative the new work, the less will be the significance of other facts, like commercialism, that may weigh against a finding of fair use." Id.

    Transformation almost always occurs when the new work "does something more than repackage or republish the original copyrighted work." Authors Guild, Inc. v. HathiTrust, 755 F.3d 87 (2d Cir. 2014) ("A transformative work is one that serves a new and different function from the original work and is not a substitute for it."). A use "can be transformative in function or purpose without altering or actually adding to the original work." Swatch Group Mgmt. Servs. v. Bloomberg LP, 2014 WL 2219162 (2d Cir. May 30, 2014). Appreciating that this first factor largely turns on whether or not TVEyes is deemed transformative, both parties claim to have a controlling line of precedent in their favor.

    TVEyes relies on a line of cases holding that electronic libraries of books, created for the purpose of allowing users to pinpoint which books use certain keywords or terms, is transformative and therefore constitutes fair use. In Authors Guild, Inc. v. Hathi Trust, 755 F.3d 87 (2d Cir. 2014), the Second Circuit considered a copyright challenge to the Hathi Trust Digital Library ("HDL"), an electronic repository of scanned books. HDL contains over 10 million works. The general public can search HDL for any particular term. The search results will show the page numbers on which the search term appears in each book in the HDL, and the number of times the term appears. The HDL does not display snippets of the text nor can the individual view the actual page on which the term appears.[6] The Second Circuit found that HDL was protected from copyright infringement because its "creation of a full-text searchable database is a quintessentially transformative use [and] the result of a word search is different in purpose, character, expression, meaning, and message from the page (and the book) from which it is drawn" and therefore qualified as fair use. Id. at 97.

    In Authors Guild, Inc. v. Google, Inc., 954 F. Supp. 2d 282 (S.D.N.Y. 2013), Google defended its practice of scanning more than 20 million books without permission from the copyright holders as fair use. Google's digital library created an index of all the words in each scanned book. Users can search for a particular word or phrase to see in which of the 20 million books that word appears. Additionally, because the books in Google Books are digitized, a user can search a particular book to see how many times that word or phrase appears in that book. Google provides a "snippet view" of the page in which the search word appears, dividing the page into eight different snippets. The results for a particular keyword only show three snippets on each page, making it difficult for a user to read the entire page without generating multiple searches for each page, and repeating such multiple searches for each page in a book. Furthermore, a user motivated to run enough different searches to cumulatively view all eight snippets on every page, still could not read the entire book since one out of every ten pages of the digitized book is blocked out and will not be shown no matter what kind of serial searches are run by a user.

    The Authors Guild sued Google for copyright infringement. Google asserted a fair use defense, claiming that its creation of an online digital library was transformative. The district court agreed, ruling that Google Books' copying created a "highly transformative" database of the words in books:

    Google books digitizes books and transforms expressive text into a comprehensive word index that helps readers, scholars, researchers, and others find books .... The use of book text to facilitate search through the display of snippets is transformative .... Similarly, Google Books is also transformative in the sense that it has transformed the book text into data for purposes of substantive research, including data mining and text mining in new areas, thereby opening up new fields of research. Words in books are being used in a way they have not been used before. Google Books has created something new in the use of book text — the frequency of words and trends in their usage provide substantive information.

    Id. at 291. The district court considered it important that the research database had become an important tool for librarians and cite-checkers, and thus served a different purpose and function than did the book itself. Google Books was thus not a replacement of the hard copies of books, but added value by creating new information. Id. The district court considered that it was unlikely that someone would expend the time and effort to "input countless searches to try and get enough snippets to comprise an entire book," and that a user probably would need a hard copy of the book to generate the search terms necessary to read the entire book. See, also, Perfect JO, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) (internet search engine's display of thumbnail versions of plaintiffs photographs constituted fair use because they were put "to a use fundamentally different than the use intended by Perfect 1 O"); Kelly v. Arriba Soft Corporation, 336 F.3d 811 (9th Cir. 2002) (same).

    Fox News objects to TVEyes copying its content and disseminating it to TVEyes' subscribers. Fox News argues that excerpts, circulations, and summaries of copyrighted content are not transformative and not a fair use. See Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 166 F.3d 65 (2d Cir. 1999) (ruling that abstracts and rough translations of Japanese copyrighted content was not transformative).

    In Infinity Broadcast Corp. v. Kirkwood, 150 F.3d 104 (2d Cir. 1998), defendant created a dial-up service that allowed its subscribers to call a telephone number to listen to live radio broadcasts. By telephoning the number, subscribers could listen to the radio broadcast through the phone. The Second Circuit held that defendant's telephone service was not fair use. Because the derivative broadcast merely repackaged or republished the original, there was a "total absence of transformativeness in [defendant's] act of retransmission" which prevented a fair use finding. Id. at 109.

    In Associated Press v. Meltwater U.S. Holdings, Inc., 931 F. Supp. 2d 537 (S.D.N.Y. 2013), the defendants created a news monitoring service for news articles that appeared on the internet. The service featured a searchable database that allowed users to see the number of times, and where, keywords were used. The defendant used an automated computer program that crawled the Internet for news, and extracted and downloaded all content responsive to search terms, customized by users. The extracted content was then placed in a queue for indexing. Users could search the database for keywords or terms and find out how many times, when, and where they were used. The court ruled that this use was not transformative because it "uses its computer programs to automatically capture and republish designated segments of text from news articles, without adding any commentary or insight in its New Reports." Id. at 552. The district court acknowledged that the "purpose of search engines is to allow users to sift through the deluge of data available through the Internet and to direct them to the original source. That would appear to be a transformative purpose." Id. at 556.

    However, the district court noted that Meltwater chose "not to offer evidence that Meltwater News customers actually use[d] its service to improve their access to the underlying news stories that are excerpted in its news feed," and without such proof, Meltwater failed to prove its fair use defense. Id. at 554. Meltwater failed to show that its service was actually used by subscribers for research or to transform the original news story into a factum or datum that told a broader story about the overall news reporting industry. See, also, Authors Guild, Inc. v. Hathi Trust, 755 F.3d 87, 97 (holding that a word search of books which "does not add into circulation any new, human-readable copies of any books," but just creates a word search, constitutes fair use); Los Angeles News Service v. Reuters, 149 F.3d 987 (9th Cir. 1998) (holding that copying plaintiffs video recording of the Rodney King riots and selling it to other news stations for the very same purpose was not fair use); Los Angeles News Service v. Tullo, 973 F.2d 791 (9th Cir. 1992) (holding that copying plaintiffs video recordings of news events and selling them to news outlets for same purpose was not fair use). In the cases cited by Fox News, save for Meltwater, defendants were copying the plaintiffs work and then selling it for the very same purpose as plaintiff. That is quintessential copyright infringement and thus these cases do not shed much light on the more nuanced issue before me today, and especially not on the question of transformation.

    TVEyes distinguishes itself from those cases by the different character of its database. Print is fixed in form, and regularly available from publishing sources and archives. A service that provides clipping of news articles and columns provides essentially the same service as could be provided by the content provider itself. TVEyes, however, is not a clipping service for print. TVEyes' search results show the combination of visual images and text in a medium that raises the commentator to have the qualities of news itself. The focus of certain programs and talk shows on President Obama's recent golf vacation, for example, was as much the news as the beheading of an American reporter. The actual images and sounds depicted on television are as important as the news information itself — the tone of voice, arch of an eyebrow, or upturn of a lip can color the entire story, powerfully modifying the content. The service provided by TVEyes, indexing and collecting visual and audio images, allows subscribers to categorize, not only content in the response to key search words, but also "information [that] may be just as valuable to [subscribers] as the [content], since a speaker's demeanor, tone, and cadence can often elucidate his or her true beliefs far beyond what a stale transcript or summary can show." The Swatch Group Management Ltd. v. Bloomberg L.P., 2014 WL 2219162, at *8 (2d Cir. 2014). Unlike the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative. By indexing and excerpting all content appearing in television, every hour of the day and every day of the week, month, and year, TVEyes provides a service that no content provider provides. Subscribers to TVEyes gain access, not only to the news that is presented, but to the presentations themselves, as colored, processed, and criticized by commentators, and as abridged, modified, and enlarged by news broadcasts.

    There also is a second relevant distinction that makes the district judge's opinion in Meltwater less helpful to deciding the disposition here. Meltwater aggregated content already available to the individual user who was willing to perform enough searches and cull enough results on the Internet. The service provided simply "crawled" the Internet, gathering extant content. TVEyes, however, creates a database of otherwise unavailable content. TVEyes is the only service that creates a database of everything that television channels broadcast, twenty-four hours a day, seven days a week. The Internet does not and cannot house the entirety of this content because Fox News, for example, does not provide all of its content online. Thus, without TVEyes, this information cannot otherwise be gathered and searched. That, in and of itself, makes TVEyes' purpose transformative and different in kind from Meltwater's, which simply amalgamated extant content that a dedicated researcher could piece together with enough time, effort, and Internet searches. These differences further reduce the persuasive value of the district court opinion in Meltwater.

    Fox News argues that the clips that TVEyes provides are of the very content that is protected by its copyright. The clips, however, are integral to TVEyes' service of monitoring and reporting on all the news and opinions presented by all television and radio stations. Without these excerpted video clips, TVEyes' users could not receive the full spectrum of information identified by an index, for the excerpt discloses, not only what was said, but also how it was said, with subtext body language, tone of voice, and facial expression — all crucial aspects of the presentation of, and commentary on, the news.

    Fox News argues that a TVEyes' subscriber could watch sequential ten minute clips of content end to end, and thus watch and hear all of Fox News' programs in their entirety just two to five minutes after they air. Fox News makes an unrealistic point, for cost and trouble would make such copying impractical and timely. In any event, the case before me must be decided on its own merits. "The task is not to be simplified with bright-line rules, for the statute, like the doctrine it recognizes, calls for case-by-case analysis." Campbell, 510 U.S. at 577.

    I find that TVEyes' search engine together with its display of result clips is transformative, and "serves a new and different function from the original work and is not a substitute for it." Hathi Trust, 2014 WL 2576342, at *6. In making this finding, I am guided by the Second Circuit's determination that databases that convert copyrighted works into a research tool to further learning are transformative. TVEyes' message, "`this is what they said' — is a very different message from [Fox News'] — `this is what you should [know or] believe.'" Swatch, 2014 WL 2219162, at *8. TVEyes' evidence, that its subscribers use the service for research, criticism, and comment, is undisputed and shows fair use as explicitly identified in the preamble of the statute. 17 U.S.C. § 107.

    The issue of fair use is affected by the issue of profits. Clearly, TVEyes is a for profit company, and enjoys revenue and income from the service it provides. However, the consideration of profits is just one factor, among many others. "[T]he 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." Campbell, 510 U.S. at 579; Swatch, 756 F.3d at 90-91. If "commerciality carried presumptive force against a finding of fairness, the presumption would swallow nearly all of the illustrative uses listed in the preamble paragraph of§ 107, including news reporting, comment, criticism, teaching, scholarship, and research, since these activities are generally conducted for profit in this country." Campbell, 510, U.S. at 584. Thus I find that the first factor weighs in favor of TVEyes' fair use defense.

    ii. The Second Factor

    The second statutory factor in the fair use analysis requires consideration of "the nature of the copyrighted work." 17 U.S.C. § 107(2). This factor considers the "value of the materials used," and calls for "the recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Campbell, 510 U.S. at 568. The nature of Fox News' programming and its copyrightable content is not disputed. The news itself is not subject to copyright protection, but the creative expression and artistic license necessarily exercised in deciding how to portray, film, direct, stage, sequence, and communicate this information is subject to copyright protection. Nevertheless, there is "greater leeway" for a determination of fair use when the work is factual or largely informational. Cariou v. Prince, 714 F.3d 694, 709-10 (2d Cir. 2013). In these cases, the scope for fair use is greater. Swatch, 2014 WL 2219162, at *13. Additionally, where the creative aspect of the work is transformed, as is the case here, the second factor has limited value. Authors Guild, Inc. v. Hathi Trust, 755 F.3d 87 (2d Cir. 2014). I find that the second factor, the nature of the copyrighted work, does not weigh for or against a finding of fair use.

    iii. The Third Factor

    The third factor requires that I consider "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). Here, there is no question that TVEyes copies all of Fox News' content — that is the essence of TVEyes' business model. The third factor does not, however, counsel a simple, crude quantitative comparison. It asks rather "whether the secondary use employs more of the copyrighted work than is necessary, and whether the copying was excessive in relation to any valid purpose asserted under the first factor." Authors Guild, Inc. v. Hathi Trust, 755 F.3d 87 (2d Cir. 2014). Thus, where copying the entire work is necessary to accomplish the transformative function or purpose, as is the case, here, this factor, like the second factor, bows to the importance and priority of the first factor's finding of transformative use. "[T]he crux of the inquiry is whether no more was taken than necessary. For some purposes, it may be necessary to copy the entire copyrighted work, in which case Factor Three does not weigh against a finding of fair use." Id.

    Here TVEyes copies all of Fox News' television content (and other stations' contents) in its entirety, a service no one, including Fox News itself provides. The value of TVEyes' database depends on its all-inclusive nature, copying everything that television and radio stations broadcast. One cannot say that TVEyes copies more than is necessary to its transformative purpose for, if TVEyes were to copy less, the reliability of its all-inclusive service would be compromised. I find that the third factor, the extent of the copying, weighs neither in favor or against a fair use finding, since "the extent of permissible copying varies with the purpose and character of the use," Campbell, 510 U.S. at 586-87, and TVEyes' service requires complete copying twenty-four hours a day, seven days a week.

    iv. The Fourth Factor

    The fourth factor considers "the effect of the use upon the potential market for or value of the copyrighted work." 17 U.S.C. § 107(4).

    It requires courts to consider not only the extent of market harm caused by the particular actions of the alleged infringer, but also whether unrestricted and widespread conduct of the sort engaged in by the defendant ... would result in a substantially adverse impact on the potential market ... The enquiry must take account not only of harm to the original but also harm to the market for derivative works.

    Campbell, 510 U.S. at 590 (internal citations and quotations omitted). Crucially, this factor "is concerned with only one type of economic injury to a copyright holder: the harm that results because the secondary use serves as a substitute for the original work." Hathi Trust, 2014 WL 2576342, at *9. Thus any economic harm caused by transformative uses does not factor into this analysis, "because such uses, by definition do not serve as substitutes for the original work." Id This factor also requires a "balancing of the benefit the public will derive if the use is permitted and the personal gain the copyright owner will receive if the use is denied." Bill Graham, 448 F.3d at 610 (internal quotations omitted).

    a. Economic Injury

    The Fair Use doctrine does not permit users to

    excessively damage the market for the original by providing the public with a substitute for the original work. Thus, a book review may fairly quote a copyrighted book for the purposes of fair and reasonable criticism, but the review may not quote extensively from the heart of a forthcoming memoir in a manner that usurps the right of first publication and serves as a substitute for purchasing the memoir.

    Authors Guild, Inc. v. Hathi Trust, 755 F.3d 87, 95-96 (2d Cir. 2013) (internal citations and quotations omitted). "Market harm is a matter of degree, and the importance of this factor will vary, not only with the amount of harm, but also with the relative strength of the showing on other factors." Campbell, 510 U.S. at 590 n.21.

    Fox News bases its suit on 19 individual, hour-long programs that it aired between October 16, 2012 and July 3, 2013. Fox News argues that TVEyes' service decreases the per-subscriber carriage fees that advertisers and cable and satellite providers are willing to pay Fox News. Fox News alleges that people will watch copies of content on TVEyes, and not FNC and FBN, thereby depressing Fox News' viewership ratings. Fox News' allegations assume that TVEyes' users actually use TVEyes as a substitute for Fox News' channels. Fox News' assumption is speculation, not fact. Indeed, the facts are contrary to Fox News' speculation.

    First, none of the shows on which Fox News' suit is based remain available to TVEyes subscribers; TVEyes erases content every 32 days. Second, in the 32 days that these programs were available to TVEyes' subscribers, only 560 clips were played, with an average length of play of 53.4 seconds and the full range of play being 11.5 seconds to 362 seconds. Of the 560 clips played, 85.5% of the clips that were played were played for less than one minute; 76% were played for less than 30 seconds; and 51 % were played for less than 10 seconds. One program was not excerpted at all. The long term TVEyes statistics are consistent with the specific statistics of the 19 programs. From 2003 to 2014, only 5 .6% of all TVEyes users have ever seen any Fox News content on TVEyes. Between March 31, 2003 and December 31, 2013, in only three instances did a TVEyes subscriber access 30 minutes or more of any sequential content on FNC, and no TVEyes subscriber ever accessed any sequential content on FBN. Not one of the works in suit was ever accessed to watch clips sequentially. The record does not support Fox News' allegations. Fox News fails in its proof that TVEyes caused, or is likely to cause, any adverse effect to Fox News' revenues or income from advertisers or cable or satellite providers.

    In a typical month, fewer than 1 % ofTVEyes' users play a video clip that resulted from a keyword search of its watch terms. TVEyes subscribers play video clips, on average, for 41 seconds, while the median play duration is 12 seconds. 95% of all video clips played on TVEyes are three minutes or shorter; 91 % are two minutes or shorter; and 82% are a minute or shorter. Fewer than .08% of clips are ever played for the maximum clip time often minutes. Most clips respond to a search using keywords, fewer than 5.5% of all plays originate from a Date and Time Search. There is no basis for Fox News' alleged concern that TVEyes' subscribers are likely to watch ten minute clips sequentially in order to use TVEyes as a substitute for viewing Fox News' programming on television.

    No reasonable juror could find that people are using of TVEyes as a substitute for watching Fox News broadcasts on television. There is no history of any such use, and there is no realistic danger of any potential harm to the overall market of television watching from an "unrestricted and widespread conduct of the sort engaged in by defendant." Campbell, 510 U.S. at 590 (internal citations and quotations omitted). Fox News has not shown that TVEyes poses a risk to it of reduced returns on advertising rates or revenues because of alleged diversions of television viewers.

    Fox News also argues that TVEyes impairs the derivative market for video clips of copyrighted content with syndication partners like YouTube, and with Fox News' exclusive licensing agent, ITN Source and Executive Interviews. Why, Fox News asks, should TVEyes subscribers purchase clips from Fox News' licensing agents if they can be procured as part of their TVEyes subscription? However, Fox News is unable to provide the identity of the customers Executive Interviews allegedly lost. Fox News' entire revenue from this derivative source, between July 1, 2012 and June 30, 2013, is $212,145.00 from syndication partners and $246,875.00 from the licensing of clips, a very small fraction of its overall revenue. In light of this very small possible impact, any, "cognizable market harm" that can occur is likely to be out-weighed by the public benefit arising from TVEyes' services. See Campbell, 510 U.S. at 590, n.21.

    b. Public Benefit

    The fourth factor requires a balance between the "benefit the public will derive if the use is permitted, and the personal gain the copyright owner will receive if the use is denied." Bill Graham, 448 F.3d at 610 (internal quotations omitted). TVEyes argues that its service provides an immense benefit to the public interest because it assembles from scratch a library of television broadcast content that otherwise would not exist and renders it easily and efficiently text-searchable. Without TVEyes, there is no other way to sift through more than 27,000 hours of programming broadcast on television daily, most of which is not available online or anywhere else, to track and discover information.

    TVEyes subscribers use this service to comment on and criticize broadcast news channels. Government bodies use it to monitor the accuracy of facts reported by the media so they can make timely corrections when necessary. Political campaigns use it to monitor political advertising and appearances of candidates in election years. Financial firms use it to track and archive public statements made by their employees for regulatory compliance. The White House uses TVEyes to evaluate news stories and give feedback to the press corps. The United States Army uses TVEyes to track media coverage of military operations in remote locations, to ensure national security and the safety of American troops. Journalists use TVEyes to research, report on, compare, and criticize broadcast news coverage. Elected officials use TVEyes to confirm the accuracy of information reported on the news and seek timely corrections of misinformation. Clearly, TVEyes provides substantial benefit to the public.

    I therefore conclude that this factor does not weigh against a finding of fair use, especially when the de minimis nature of any possible competition is considered in comparison to the substantial public service TVEyes provides. Subject to possible exceptions from the downloading and sharing of clips via social media, as discussed below, I find that the small possible market harm to Fox News is substantially outweighed by the important public benefit provided by TVEyes.

    iv. The Balance of the Factors

    Ultimately, "the various non-exclusive statutory factors are to be weighed together, along with any other relevant considerations, in light of the purposes of the copyright laws." Google Books, 954 F. Supp. 2d at 293. TVEyes' service copies television broadcasts but for an entirely different purpose and function. TVEyes is not "trying to scoop" Fox News' broadcasts or to "supplant the copyright holder's commercially valuable right of first publication" Swatch, 2014 WL 2219162, at *7. TVEyes captures and indexes broadcasts that otherwise would be largely unavailable once they aired.

    Users access the clips and snippets for an altogether different purpose — to evaluate and criticize broadcast journalism, to track and correct misinformation, to evaluate commercial advertising, to evaluate national security risks, and to track compliance with financial market regulations. As TVEyes points out, "monitoring television is simply not the same as watching it." As the Second Circuit explained in Swatch Group Mgmt. Servs. Ltd. v. Bloomberg LP,

    In the context of news reporting and analogous activities, moreover, the need to convey information to the public accurately may in some instances make it desirable and consonant with copyright law for a defendant to faithfully reproduce an original work without alteration. Courts often find such uses transformative by emphasizing the altered purpose or context of the work, as evidenced by surrounding commentary or criticism.

    2014 WL 2219162, at *8. TVEyes' service provides social and public benefit and thus serves an important public interest.

    I therefore find that TVEyes' copying of Fox News' broadcast content for indexing and clipping services to its subscribers constitutes fair use. However, I do not decide the issue of fair use for the full extent of TVEyes' service, TVEyes provides features that allow subscribers to save, archive, download, email, and share clips of Fox News' television programs. The parties have not presented sufficient evidence showing that these features either are integral to the transformative purpose of indexing and providing clips and snippets of transcript to subscribers, or threatening to Fox News' derivative businesses.

    Similarly, neither party is entitled to summary judgment on the issue of whether the date and time search function, allowing its subscribers to search for television clips by date and time instead of by keyword or term, is integral to the transformative purpose ofTVEyes and its defense of fair use. While the evidence shows that this feature does not pose any threat of market harm to Fox News, the record fails to show that it is crucial or integral to TVEyes' transformative purpose. The factual record should be developed further before I can decide this issue.

    D. Hot News Misappropriation Claim

    Fox News also pleads a hot news misappropriation claim, alleging that TVEyes stole "hot news" from Fox News in violation of state tort law. In International News Service v. Associated Press, 248 U.S. 215 (1918), the case that created the concept of hot news misappropriation, plaintiff and defendant were in exactly the same business of gathering news worldwide and distributing it to its members, various news reporting outlets. The Associated Press ("AP") sued the International News Service ("INS") because the INS had engaged in a practice of "scooping" AP news stories. They did this by lifting AP news stories from AP bulletins and repackaging them as INS news stories and selling them to news outlets before the AP could. The Supreme Court ruled that this kind of "reaping what one has not sown" was tortious where the parties were "in the keenest of competition between themselves in the distribution of the news throughout the United States." Id. at 231.

    To prevail on a hot news misappropriation claim, Fox News must show that: (1) it generates or collects information at some expense; (2) the value of information is highly time sensitive; (3) defendant's use of information constitutes free-riding on plaintiffs costly efforts to generate or collect it; (4) defendant's use of information is in direct competition with a product or service offered by plaintiff; and (5) the ability of other parties to free-ride on efforts of plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened. The National Basketball Ass'n v. Motorola, Inc. 105 F.3d 841, 852 (2d Cir. 1997).

    Before addressing the merits of this claim, however, I must determine whether or not this state law claim is preempted by the federal Copyright Act. "All legal or equitable rights that are equivalent to any of the exclusive rights" of the Copyright Act "are governed exclusively by" the Copyright Act. 17 U.S.C. § 301(a). State law hot news misappropriation claims are preempted by the Copyright Act if the "claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle of exclusive rights already protected by the Copyright Act; and the work in question is of the type of works protected by the Copyright Act." Barclays Capital, Inc. v. TheFlyontheWall.com, Inc., 650 F.3d 876, 892 (2d Cir. 2011). Where both of these conditions are met, as is clearly the case here, the court then applies the "extra element test" to determine whether the claim should survive because of some extra element in the tort bringing it outside the realm of copyright.

    This test asks whether "an extra element [is] required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action," such that the claim is qualitatively different from a copyright claim. National Basketball Association, 105 F.3d at 850. Here, Fox News argues that the "extra element" is the fact that TVEyes stole its "hot news" and thereby "free-rides" on Fox News' hard work and labor in the same way the INS free-rode on the AP's labor. In making this argument, Fox News ignores the actual definition of free-riding provided by the Supreme Court in INS. For the purposes of this tort and its preemption test, the term "free-riding" means "taking material that has been acquired by complainant as the result of organization and the expenditure of labor, skill, and money, and which is salable by complainant for money, and ... appropriating it and selling it as the [defendant's] own ..." Barclays Capital, Inc. v. The flyonthewall.com, Inc., 650 F.3d 876, 895, (2d Cir. 2011), quoting International News Service v. Associated Press, 248 U.S. 215, 239 (1918). The Supreme Court defined free-riding as passing off someone else's work as one's own. Here, TVEyes is not passing off Fox News' content as its own.

    In Barclays Capital, the Second Circuit ruled that the hot news misappropriation claim was preempted by the Copyright Act, and that the "extra element" test premised on "freeriding" was not shown. In that case, the plaintiff researched and analyzed the financial markets in order to generate daily reports that provided recommendations to clients about firms in which to invest, and stock in which to trade. The defendants obtained information about firm recommendations and posted them on its website before firms made them available to the general public and before exchanges for trading in those shares opened for the day. The Second Circuit held that the hot news misappropriation claim was preempted by the Copyright Act, and that defendants were not "free-riding," but were "collating and disseminating factual information — the facts that Firms and others in the securities business would have made recommendations with respect to the value of and the wisdom of purchasing or selling securities — and attributing the information to its source." Barclays Capital, Inc., 650 F.3d at 902.

    Fox News' hot news misappropriation claim is preempted by the Copyright Act for the very same reasons. As in Barclays, "[i]t is not the identity of Fly and its reputation as a financial analyst that carries the authority and weight sufficient to affect the market. It is Fly's accurate attribution of the Recommendation to the creator that gives this news its value." Id. Similarly, TVEyes is not a valuable service because its subscribers credit it as a reliable news outlet, it is valuable because it reports what the news outlets and commentators are saying and therefore does not "scoop" or free-ride on the news services. Thus, the hot news misappropriation claim is preempted by the Copyright Act because if fails the extra element test.

    E. Misappropriation

    Lastly, Fox News brings a state law misappropriation claim based on the equitable doctrine that recognizes that "a person shall not be allowed to enrich himself unjustly at the expense of another." Georgia Malone and Company, Inc. v. Rieder, 19 N.Y.3d 511, 516 (2012). Such a claim must be "grounded in either deception or appropriation of the exclusive property of the plaintiff." HL Hayden Co. of New York, Inc. v. Siemens Medical Systems, Inc., 879 F.2d 1005, 1025 (2d Cir. 1989). Here again, I must first determine if this claim is preempted by the Copyright Act. It is, and for straightforward reasons that echo the analysis above. Fox News goes to great length to argue that TVEyes acted in bad faith and that TVEyes' "bad faith" constitutes the extra element to take Fox News' claim outside the Copyright Act. Under this analysis, however, elements of a tort that address the mens rea or intent of the tortfeasor cannot constitute an "extra element" for purposes of evading preemption. An

    action will not be saved from preemption by elements such as awareness or intent, which alter the action's scope but not its nature ... Following this `extra element' test, we have held that unfair competition and misappropriation claims grounded solely in the copying of a plaintiffs protected expression are preempted by section 301.

    Computer Association Intern v. Altai, Inc. 982 F.2d at 717 (2d Cir. 1992) (internal citations and quotations omitted).

    Thus, the misappropriation claim also is preempted by the Copyright Act. "The broad misappropriation doctrine relied upon ... is therefore equivalent to the exclusive rights in copyright law ... Indeed because the copyright act itself provides a remedy for wrongful copying, such unfairness may be seen as supporting a finding that the Act preempts the tort." Barclays Capital, Inc., 650 F.3d at 895. See also Walker v. Time Life Films, Inc., 784 F.2d 44, 53 (2d Cir. 1986) ("Walker's cause of action for unfair competition is preempted by the federal copyright laws to the extent it seeks protection against copyright of Walker's book" dismissing common law unfair competition claim as arising out of defendant's alleged copyright); Levine v. Landy, 832 F. Supp. 2d 176, 191 (N.D.N.Y.2011) (plaintiffs claim is "essentially a copyright infringement claim with the added allegation that after unlawfully copying, distributing, and/or publishing the photographs, defendants stamped their own name or copyright on the works, rather than plaintiffs" and was thus preempted). This claim is also preempted by the Copyright Act and therefore must fail no matter what kind of evidence Fox News could or has produced to support it.

    Conclusion

    I hold that TVEyes' database and provision of television clips and snippets of transcript are transformative and thus constitute fair use, protecting it from claims of copyright infringement. The record must be further developed, however, before I can determine whether or not the features that allow searches by date and time, and that allow clips to be archived, downloaded, emailed, and shared via social media are integral services and protected by a fair use defense.

    Counsel shall meet with me for a status conference to discuss the proceedings necessary to determine the remaining issues on October 3, 2014 at 10:00 a.m. Counsel shall meet prior to the conference, and submit their respective views in a joint letter submitted by October 1, 2014 at noon.

    The Clerk shall mark the motion (Doc. No. 32) terminated.

    SO ORDERED.

    [1] The parties have asked for confidentiality with respect to considerable materials in the briefs. To the extent that such information is found in this opinion, confidentiality is terminated. The interest of the public in the full basis of the fair use defense outweighs any interest in confidentiality. See the Hartford Courant Co. v. Pellegrino, 380 F.3d 83 (2d Cir. 2004).

    [2] One of the subscribers is Stroock & Stroock & Lavan, LLP, a law firm of which I was a partner before being appointed a U.S. District Judge in 1998.

    [3] The 19 programs at issue in this suit are two episodes of On the Record with Greta Van Sustren; three episodes of Special Report with Bret Baier; three episodes of The Five; four episodes of The O'Reilly Factor; two episodes of The Fox Report with Shepard Smith; four episodes of Hannity; and one episode of Special Report Investigates: Death & Deceit in Benghazi.

    [4] A derivative work is defined as one "based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a `derivative work.'" 17 U.S.C. § 101.

    [5] Fox News owns copyrights only over the creative expression in its television programs. Factual reports are not copyrightable because facts cannot be original to an author. Compilations and descriptions of facts, however, are copyrightable because the presentation "can display originality." Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 166 F.3d 65, 70 (2d Cir. 1999).

    [6] Hathi Trust allows its member libraries to provide its patrons that have a certified print disability (meaning, among other things that they cannot physically hold a book) with access to the full contents of the book in the digital library.

  • 13 Neri v. Monroe

    QUINCY M. NERI and RODNEY RIGSBY, Plaintiffs, OPINION and
    v.
    MELINDA MONROE, STEVE LARSON, ARCHITECTURAL BUILDING ARTS, INC., LESLIE SAGER, ERIC FERGUSON and RURAL MUTUAL INSURANCE COMPANY, Defendants.

    No. 11-cv-429-slc.

    United States District Court, W.D. Wisconsin.

    February 26, 2014.

    ORDER
    STEPHEN L. CROCKER, Magistrate Judge.

    This action for copyright infringement is before the court for a second summary judgment proceeding after remand by the Court of Appeals for the Seventh Circuit. Initially, this court found that plaintiffs Quincy Neri and Rodney Rigsby's claims of copyright infringement based on their "Artwork of Q" submission could not proceed because they lacked a valid registration in the copyright, and that any claims based on a later registration titled "Processes of Mendota Reflection" could not proceed because plaintiffs had not mentioned it until after the summary judgment briefs had been filed. See Opinion and Order, Sept. 21, 2012, dkt. 152. In an opinion issued on August 12, 2013, the Seventh Circuit disagreed with this court's analysis of the validity of plaintiffs' "Artwork of Q" registration and remanded the case for reconsideration, suggesting that it might be more prudent on remand to consider defendants' asserted defenses to infringement instead of revisiting the registration question. Neri v. Monroe, et al., 726 F.3d 989, 993 (7th Cir. 2013).

    Taking their cue, defendants have withdrawn their objections to the validity of both of plaintiffs' asserted copyrights and now ask this court to rule on the other grounds raised in their summary judgment submissions, including the defenses of fair use, consent from a joint author, implied license and lack of damages. Plaintiffs have agreed to proceed in this fashion. Accordingly, all of the summary judgment motions, dkts. 68, 75, 80, 85 and 88, are before the court.

    Having reconsidered the parties' summary judgment submissions, I conclude once again that plaintiffs' action must be dismissed. As set out in more detail below, I agree with defendants that taking and displaying pictures of Neri's sculpture was permissible under the fair use doctrine and that in any event, plaintiffs cannot recover either statutory or actual damages. In light of these conclusions, I have not addressed the other defenses raised by defendants.

    As a preliminary observation, I note that plaintiffs have riddled their submissions with proposed facts that the court cannot accept because they suffer from one or more of these shortcomings: they are immaterial; not supported by the evidence cited; speculative; improper legal conclusions; and contrary to Neri's earlier, sworn deposition testimony. As a result although plaintiffs purport to "dispute" many of defendants' proposed findings of fact, many of these claimed disputes are not genuine. I highlighted plaintiffs' most prominent factual gaffes in the recitation of the facts below; in those situations where I have not explained why I found as undisputed other facts that plaintiffs claim are disputed, it is for one or more of the reasons itemized above. The bottom line is that, after the court has culled out plaintiffs' unfounded legal conclusions, rank speculation and unsupported assertions, the few material facts that remain fall far short of establishing their claim of copyright infringement.

    For the purposes of deciding the instant motions, I find the following facts to be material and undisputed:

    FACTS
    I. The Parties

    Plaintiff Quincy Neri is a glass blowing artist who has worked with another local artist, Fritz Schomburg.[1] Plaintiff Rodney Rigsby is Neri's business consultant and co-owner of the two copyrights at issue in this suit.

    Defendant Melinda Monroe is president and co-owner of defendant Architectural Building Arts (ABA), along with defendant Steven Larson. ABA is a general contractor design/build firm focused on residential and commercial interior remodeling. Defendant Leslie Sager is an interior designer who was employed by ABA during the condominium remodel that is at issue in this lawsuit; she now is an adjunct faculty member of the University of Wisconsin-Madison Design Studies program. Defendant Eric Ferguson is a professional photographer in Madison, Wisconsin.

    II. The Hughes Condo Remodel and Creation of "Mendota Reflection"

    In April 2008, ABA was hired by Linda Hughes to remodel her condominium in Madison, Wisconsin. As part of the renovation of the entire residence, Hughes wanted ABA to remove a large mural from the dome of the entryway into her condominium and replace it with more modern artwork. ABA agreed to remove the mural, which required disassembling the dome rebuilding the ceiling.[2]

    Hughes hired an interior designer, Amy Radspinner, to assist with the remodeling and to handle decorating. Radspinner contacted Neri, with whom she had worked in the past, and told her about the plans for the entryway. Neri, in turn, contacted her friend, fellow glass-blower and artist Schomburg. Neri and Schomburg worked together to create a composition comprised of about 60 individual blown glass pieces that eventually were installed onto the remodeled ceiling of the entryway.[3] Although Neri calls this glass sculpture "Mendota Reflection," neither she nor Schomburg referred to it by this title to any of the defendants until June 2011.[4]

    ABA hired a professional engineer to help design the ceiling. As part of this process, ABA met on several occasions with Schomburg, accompanied at times by Neri, regarding the design and construction of the ceiling. The purpose of these meetings was to ensure that the new ceiling would support the weight of the glass pieces and would compliment the artwork aesthetically. ABA decided that the best option was to convert the dome ceiling to a half-barrel vault ceiling. Although Neri made suggestions about various materials that could be used to support the weight of the glass artwork, she did not create any schematics or mock-ups of the ceiling or otherwise "design," engineer or construct it.[5] ABA's design team, which included defendant Sager, also worked with Schomburg to determine the best lighting to complement the artwork, ultimately deciding to install lighting into a custom-designed alcove running along both sides of the ceiling.

    Once the entryway ceiling was rebuilt, Schomburg, with Neri's help, mounted their glass pieces to the ceiling.[6] The pieces were mounted into the ceiling through holes and then secured by Schomburg to the back side of the ceiling structure. The lighting was directed onto the various pieces, casting spiral shadows onto the ceiling and walls. Both Neri and Schomburg consider the spiral shadows to be an integral feature of the artwork. Neri testified that she could not reproduce the artwork without reproducing an exact copy of the ceiling.

    Consistent with industry practice, before beginning work at the condominium, Monroe obtained Hughes's permission to take "before," "during," and "after" photographs of the entire remodeling project to document ABA's work, to advertise ABA's services and to apply for industry awards on ABA's behalf. ABA hired defendant Ferguson to take a series of photographs of the interior of Hughes's condominium, including the entryway, hallways, bedrooms, bathrooms, living room, kitchen, atrium and entertainment center areas, in order to depict ABA's work. The photographs taken by Ferguson after construction was complete include two photographs of the entryway and ceiling, shown below:

    [IMAGES OMITTED] 

    C. The Photographs of the Sculpture

    As is apparent, the two "after" photographs of the entryway include glass pieces mounted onto the new ceiling. Neither photograph depicts all of the glass pieces, although some pieces appear in both. Ferguson's goal in taking these photographs was to showcase the design work and changes that ABA implemented in the entryway. In addition to the glass pieces and the barrel-vault ceiling to which they are mounted, the photographs also depict the hall, including a waterfall designed by ABA, the furniture, other art and decorative accessories. Hughes was aware of Ferguson taking photographs of her condominium and did not object to him taking or using the photographs.

    When photographing the condominium, Ferguson employed his skills as a professional photographer to showcase ABA's remodeling work in the most aesthetically pleasing manner. Ferguson made significant artistic choices for each photograph in terms of lighting, angles, lens choice and camera choice, among other subjective, artistic judgments. ABA paid Ferguson $1,200 to photograph Hughes's condominium and to grant ABA "unlimited rights of usage" of these photographs. Other than this grant of usage rights, Ferguson retains full copyright of all of the photographs he took of Hughes's condominium.

    Ferguson has never used the two photographs of in which the entryway artwork can be seen in any sort of advertisement or promotion or on his own website, and he has not sold them. Other than defendant Sager, no person or entity has ever contacted Ferguson to inquire about the photographs he took at Hughes's residence or the glass pieces that appear incidentally in some of the photographs. Apart from the $1,200 he was paid by ABA to take the photographs, Ferguson has made no money from any of the photographs.

    In late 2009 and early 2010, defendant ABA posted some of these photographs, including the two photographs depicting the entryway, in a newsletter and on its website, www.designbuildmadison.com. ABA also submitted the photographs as part of its application for "Contractor of the Year" awards sponsored by the National Association of the Remodeling Industry. NARI gives these awards each year to NARI members who have demonstrated outstanding work through their remodeling projects. "Contractor of the Year" awards are not art awards.

    ABA received two NARI Contractor of the Year awards for its interior design and its construction work at the Hughes' condominium, including its reconstruction of the entryway's ceiling and its fireplace redesign. ABA received another local and a regional NARI award for its remodeling work in the condominium's bathroom.

    ABA did not claim to have made or to own the glass pieces that appear in the photographs of the entryway, and it did not sell any of Ferguson's photographs containing images of the sculpture. ABA is not in the business of selling artwork or photographs of artwork. Indeed, ABA did not benefit financially in any way as a result of the partial images of the artwork that appeared in Ferguson's photographs.[7]

    With Ferguson's permission, in December 2009 or January 2010 defendant Sager posted one of Ferguson's photographs of the entryway ceiling on her own website, along with two "before" pictures showing the dome that had been removed. Sager inserted the following text to accompany the photo:

    A LITTLE BIT OF GLASS

    A large dome with a painting of the four seasons of Wisconsin by Richard Hass [sic] did not appeal to the new residents of this condominium. They were able to donate the painting and dome to the Madison Children's museum for a tax deduction. With the help of Amy Radspinner, I converted the dome into a smaller barrel vault with an integrated cover to conceal the LED spot lights. Local Glass blower Fritz Schomburg, designed a series of large aquatic glass pieces to hang from the vault in keeping with the lake view.

    Sager's purpose in posting the photograph was to show her contribution to the renovation at the Hughes homes, namely, her work on the barrel vault ceiling and the lighting.

    In March 2010, during a field trip to the Hughes residence with students from a class she was teaching at the University of Wisconsin, Sager took this photograph of her students looking at the vault ceiling where the artwork was installed:

    [IMAGES OMITTED] 

    Sager's photograph captures only a portion of the 60 glass pieces. Sager posted this photograph on the University of Wisconsin's Design Studies website for the purpose of showing students engaged in an enrichment experience and not for any specific reason related to the glass artwork.

    D. Neri Discovers the Photographs and Registers a Copyright in the Sculpture

    On April 14, 2011, Neri visited ABA's website and saw the two entryway photographs taken by Ferguson that depict some of the art glass pieces mounted on the entryway ceiling of Hughes' condominium. The next day, Neri discovered the photographs posted by Sager on her websites. Before then, Neri had not attempted to copyright, market or create derivative works from the sculpture. In fact, Neri did not even associate herself with the work publicly apart from putting some photographs of it in her portfolio book. For example, Neri did not post any pictures of the sculpture on her personal website. According to Neri, it was not until she discovered that the artwork had "won" NARI awards that she began to think of it as anything but "just another project." Neri Dep., Apr. 19, 2012, dkt. 65, at 75:2-10.[8]

    One reaction might have been for Neri to be pleased to have received free advertising of her artwork; to the contrary, Neri was most displeased as evidenced by her reaction: Neri promptly registered a copyright for a work she called "The Artwork of Q," a collection that purported to include, among other things, "Mendota Reflection." (This copyright was assigned registration no. VAu X-XXX-XXX.) Neri then filed this pro se suit on June 15, 2011, alleging that the defendants had "copied" Mendota Reflection by taking pictures of it and displaying it on their websites without her permission. Shortly thereafter, ABA and Sager removed the allegedly infringing photographs from their websites and ceased all use of it.

    On or about February 14, 2012, plaintiff registered a copyright for a sculpture titled "Processes of Mendota Reflection." (This copyright was assigned registration no. VAu X-XXX-XXX.) Submitted with this application are photographs purporting to be pictures of the installation of the sculpture in the condominium's entryway.

    As noted previously, although defendants argued initially that the "Artwork of Q" was not a valid registration and that it was too late in this case for Neri to amend her complaint to assert a violation of her copyright in "The Processes of Mendota Reflection," they have now withdrawn those objections, they concede the validity of the copyrights and they ask this court to rule on the merits of their defenses.

    OPINION
    I. Fair Use

    Acknowledging that certain forms of copying are necessary to creative or academic endeavors such as education, journalism, humor and criticism, courts long have recognized that certain forms of copying a copyrighted work are permissible. To determine whether a particular form of copying is a fair use of the copyrighted work, courts consider a number of factors, four of which are codified in The Copyright Act of 1976, 17 U.S.C. § 107:

    [T]he fair use of a copyrighted work . . . 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—

    (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.

    As is plain from the statutory language, and as the Supreme Court has recognized, whether a particular form of copying is a fair use is an open-ended and context-specific inquiry. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577-78 (1994). Ultimately, the test of fair use is "whether the copyright law's goal of promoting the Progress of Science and useful Arts . . . would be better served by allowing the use than by preventing it." Castle Rock Entertainment, Inc. v. Carol Pub. Group, Inc., 150 F.3d 132, 141 (2nd Cir. 1998) (internal quotations and citations omitted).

    Because fair use is affirmative defense to a claim of copyright infringement, it is defendants' burden to prove it. Chicago Bd. of Educ. v. Substance, Inc., 354 F.3d 624, 629 (7th Cir. 2003). I address each of the four statutory factors in turn:

    (1) Purpose and Character of Use

    The first factor is the "heart of the fair use inquiry" and requires consideration of how the copied work was used. Cariou v. Prince, 714 F.3d 694, 705 (2nd Cir. 2013) (citing Blanch v. Koons, 467 F.3d 244, 251 (2nd Cir. 2006)). "Central to determining the purpose and character of a work is whether the new work merely supersedes the original work, or instead adds something new with a further purpose or of a different character." Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687, 693 (7th Cir. 2012). As the Supreme Court has noted, a work is "transformative" if it "alters the original work with new expression, meaning, or message." Campbell, 510 U.S. at 579, 114 S.Ct. 1164. "A use is considered transformative only where a defendant changes a plaintiff's copyrighted work or uses the plaintiff's copyrighted work in a different context such that the plaintiff's work is transformed into a new creation." Wall Data Inc. v. Los Angeles Cty. Sheriff's Dept., 447 F.3d 769, 778 (9th Cir. 2006). "[T]he 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." Campbell, 510 U.S. at 579.

    Here, Ferguson's photos are highly transformative of Neri's work. Neri's sculpture is art for art's sake. It is a three-dimensional, impressionistic composition of multiple colored pieces of translucent glass designed intentionally to cast spiral-shaped shadows on the vaulted ceiling, providing an aquatic quality to the entire space. Its purpose, presumably, is to beautify the Hughes condominium and to provide visual and aesthetic pleasure to those who view it as they walk under it through the entryway.

    Ferguson's photographs, on the other hand, are two-dimensional, realistic photographs of an interior space. They have a commercial asthetic. Their purpose is not to beautify but to document (albeit to document the pleasing aesthetics and transformative power of the project as a whole) and to inform the public about the remodeling work performed by ABA on Hughes's condominium, in order to showcase the firm's design and construction work. Ferguson did not set out to photograph the sculpture itself or even to create an "artistic" photograph that capitalizes on the sculpture, but rather to show as accurately and realistically as possible what the condominium's entryway-the entire entryway-looked like after it was redesigned and rebuilt. Ferguson's intended and actual photographic subject was the room, not the ceiling sculpture.

    By capturing partial images of the sculpture in conjunction with commercial photography of the room, Ferguson did not merely "supersede[ ] the objects of the original creation[s]," but instead used the works for "a further purpose," giving them a new "meaning, or message." Campbell, 510 U.S. at 579. Even accepting that Ferguson's images and defendants' use of them were for commercial purposes, the medium, composition, scale, character, expression and intended use of Ferguson's photographs are completely different from those of the sculpture itself. Given the highly transformative nature of the photographs, this factor weighs heavily in favor of defendants. Cariou, 714 F.3d at 706-07 (paintings incorporating copyrighted photographs of Rastafarians and the Jamaican landscape were transformative because paintings had different character, manifested entirely different aesthetic and gave photographs new expression: plaintiff's photographs were serene and deliberately composed, while defendant's art works were crude, jarring, hectic and provocative); Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007) (Google's use of thumbnail images of plaintiff's copyrighted photographs was transformative because it provided an entirely new use for the original work; although photographs may have been created originally to serve entertainment, aesthetic or informative function, search engine "transforms the image into a pointer directing a user to a source of information," making it an electronic reference tool); Campbell, 510 U.S. at 594-96 (holding that 2 Live Crew's parody of "Oh, Pretty Woman" using the words "hairy woman" or "bald headed woman" was a transformative work, and thus constituted a fair use); Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 796-98, 800-06 (9th Cir. 2003) (concluding that photos parodying Barbie by depicting "nude Barbie dolls juxtaposed with vintage kitchen appliances" was a fair use).

    (2) Nature of The Copyrighted Work

    In general, "the more creative the work, the more protection it should be accorded from copying; correlatively, the more informational or functional the plaintiff's work, the broader should be the scope of the fair use defense." 4 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.05[A][2][a], p. 13-186 (Matthew Bender, 2013 Ed.). Defendants acknowledge that Mendota Reflection is creative in nature. They argue, however, that in evaluating this factor, the court should take into account the fact that the sculpture is mounted onto another work, namely, the new barrel-vaulted ceiling, and that it was impossible to take pictures of the completed ceiling without also capturing images of the artwork mounted thereon. Although defendants raise a valid point, I find it more proper to consider this point under the third fair use factor. The second factor favors plaintiffs.

    (3) Amount and Substantiality of Work Used

    The third factor requires a court to examine the amount and substantiality of what was used in relation to the copyrighted work as a whole. Harper & Row, 471 U.S. at 564. It is both a qualitative and quantitative analysis. Campbell, 510 U.S. at 586; Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 613 (2nd Cir. 2006). There is no per se rule against copying a work as a whole if it is necessary to the purpose and character of the use. Chicago Bd. of Educ., 354 F.3d at 629. The focus is not on how much of the work was taken but to what extent the protected elements were copied from the original. See Salinger v. Random House, Inc., 811 F.2d 90, 97 (2nd Cir. 1987). "[T]he fair use copier must copy no more than is reasonably necessary . . . to enable him to purse an aim that the law recognizes as proper[.]" Chicago Bd. of Educ. v. Substance, Inc., 354 F.3d 624, 629 (7th Cir. 2003).

    Here, defendants' aim, carried out through Ferguson, was to publish photographs of their own remodeling and architectural work, an aim that was surely proper. Neither of Ferguson's pictures depicts all 60 glass pieces of the sculpture directly or entirely. Instead, each photograph captures only some of the pieces, along with other equally important features of the redone hallway, including the waterfall, furniture and decorative accessories. Ferguson had no choice but to capture those images in order to photograph ABA's work: the glass pieces were mounted directly to the barrel-vault ceiling that ABA had engineered and constructed and that Ferguson was hired to photograph. As the court of appeals observed, any "copying" of Neri's work was incidental: "It was not possible to show what (ABA) had accomplished without displaying the sculpture along with the furniture and other aspects of the foyer." Neri, 726 F.3d at 993.

    Plaintiffs argue that ABA should have had Ferguson take photographs of the hallway and ceiling before the glass pieces were installed. Ferguson could have done this, but this does not mean that plaintiffs prevail on point three. Plaintiffs' argument ignores the fact that ABA redesigned and rebuilt the ceiling and the lighting specifically to accommodate and illuminate the sculpture.[9] Therefore, ABA was entitled to take photos of the ceiling depicting how the ceiling served the purpose for which ABA had designed and built it. Further, the photographs were meant to showcase-and did showcase-the entire entryway: not just the barrel-vault ceiling, but also the custom built waterfall and other decorative elements that had transformed the room. Also, ABA wanted the photographs to use in its portfolio, to show potential clients and to apply for industry awards. Clearly, a photograph depicting the entire "finished product," including the permanent installation of the art glass, was a commercially reasonable use.

    Finally, as noted above, any "copying" of the sculpture by Ferguson would have occurred only in the most ephemeral sense: no one interested in viewing or purchasing a glass sculpture like "Mendota Reflection" would be satisfied by mounting a copy of one of Ferguson's photographs to his or her ceiling. Even Neri acknowledges that Ferguson's photos do not accurately depict the color of the glass or the shadows cast as a result of the specially-designed lighting installed in the ceiling, asserting that "the colors [of the glass] are de-saturated and the contrast levels are altered" to so great a degree in the photographs that it "affected the trade dress of Ms. Neri's color scheme." Response to Sager's PPFOF, dkt. 118, no. 13. Given Neri's own admission that the photographs are qualitatively different from the sculpture itself and the fact that the glass pieces shown are incidental to the true subject of the photograph (the entryway) I find that this factor weighs in defendants' favor.

    (4) Effect of Defendants' Use on the Market

    The Supreme Court has stated that this factor is "the single most important element of fair use." Harper & Row, 471 U.S. at 566. "Fair use, when properly applied, is limited to copying by others which does not materially impair the marketability of the work which is copied." Id. at 566-67, quoting 1 Nimmer, § 1.10[D] at 1-87; see also Stewart v. Abend, 495 U.S. 207, 238 (1990). The question is whether the new work will be a market substitute for the copyrighted material. Campbell, 510 U.S. at 591. A court must consider "not only the extent of the market harm caused by the particular actions of the alleged infringer, but also `whether unrestricted and widespread conduct of the sort engaged in by the defendant . . . would result in a substantially adverse impact on the potential market'" for the original. Id. at 590 (quoting 3 Nimmer § 13.05[A][4], at 13-102.61). "The less adverse impact on the owner, the less public benefit need be shown to sustain non-commercial fair use." Rogers v. Koons, 960 F.2d 301, 311-12 (2nd Cir. 1992).

    In Ty, Inc. v. Publications International Ltd., 292 F.3d 512, 518 (7th Cir. 2002), the court explained the essence of this factor by illustrating the distinction between transformative and superseding copies (or to use the dichotomy preferred by the court, "complementary" versus "substitutional" copying). If the new work substitutes for and is likely to reduce the demand for the copyrighted original, then it is not a fair use. Id. (explaining that a book review or parody compliments and does not reduce demand for original work, whereas burlesque is merely a humorous substitute catering to humor-loving segment of the original's market).

    In this case, there is no evidence that the two photographs had any detrimental effect on the market for Mendota Reflection or on any other original works by Neri. As defendants point out, there is no market for the sculpture itself because it is installed in a private residence: it cannot be publicly displayed. Further, as already noted, it is difficult to imagine that a person interested in buying a work similar to the sculpture would deem a commercial photograph depicting only portions of the work to be an adequate substitute. Indeed, even plaintiffs do not suggest that a viewer would have deemed a photograph of the Hughes vestibule to be a substitute for the sculpture itself. Accord Nunez v. Caribbean Intern. News Corp., 235 F.3d 18, 25 (1st Cir. 2000) (finding that poor reproduction of plaintiff's modeling photo on newspaper's front page would not reduce demand for other photos in modeling portfolio, and in fact, might increase it, noting that "a newspaper front page is simply an inadequate substitute for an 8" × 10" glossy.")

    As for the possibility that Neri might attempt to sell her own photographs of the work or offer derivative works, Neri has offered no evidence that she has done so. Indeed, until February 28, 2011, when she came across ABA's website, she had not done anything to even associate herself with Mendota Reflection, much less to attempt to profit from it beyond the initial fee for the piece that she split with Schomburg. There is no evidence that any market for "Mendota Reflection" or derivative works exists; a fortiori, defendants' activities could not have affected a non-existent market. This factor weighs in defendant's favor.

    (5) Conclusion

    In sum, I find that the balance of the four fair use factors weights strongly in defendants' favor. Although the sculpture is undeniably creative in nature, Ferguson's incidental photos of portions of it (and the other defendants' use of them) were for an entirely different, legitimate purpose, bore a completely different aesthetic and had no effect on the market for the work.

    Since this is true of Ferguson's photographs, then it follows that Sager's candid photograph of her students viewing the Hughes' ceiling during a field trip also must be a fair use. Like Ferguson's photograph, Sager's photograph captures some of the glass pieces, it had no effect on the market for the sculpture, and it was posted on the UW Design Studies website for educational purposes.

    On a common-sense level, it is difficult to find that the use is "unfair," where plaintiffs have not been deprived of any value in the sculpture and in fact, could only have benefitted by the publication of the photographs. Clearly, this is a case where the goals of copyright law are better served by permitting the use rather than denying it. Accordingly, defendants are entitled to summary judgment on plaintiffs' claim that they infringed their copyright in the Mendota Reflection sculpture, whether covered by copyright registration number VAu X-XXX-XXX or registration number VAu XXXXXXXXX.

    This court be the end of the court's analysis, but I will also address the issue of damages, since it also is a relatively clear basis for granting summary judgment to defendants:

    II. Damages

    A plaintiff in a copyright infringement action must elect either statutory damages or actual damages. 17 U.S.C. § 504(c)(1); Rhein Bldg. Co. v. Gehrt, 21 F. Supp. 2d 896, 908 (E.D. Wis. 1998). Even if the court were to assume, arguendo, that plaintiffs could establish infringement, the plaintiffs do not meet the criteria for statutory damages and they have no proof of actual damages.[10]

    A. Statutory Damages

    17 U.S.C. § 412 provides:

    In any action under this title . . . no award of statutory damages or of attorney's fees, as provided by sections 504 and 505, shall be made for[11]

    (1) any infringement of copyright in an unpublished work commenced before the effective date of its registration; or

    (2) any infringement of copyright commenced after first publication of the work and before the effective date of its registration, unless such registration is made within three months after the first publication of the work.

    This prohibition includes punitive damages. Evans Newton Inc. v. Chicago Sys. Software, 793 F.2d 889, 896 (7th Cir. 1986) ("17 U.S.C. § 412 prohibits the award of statutory damages (which would include punitive damages) or attorneys' fees unless the plaintiff registers its copyright prior to the infringement").

    As defendants point out, there is no evidence in this case that the artwork at issue ever was "published." The Copyright Act defines "publication" as follows:

    the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication.

    Here, the sculpture was installed-and remains installed-in a private residence. It is not on public display. Further, Neri did not "distribute copies" of the sculpture.

    Plaintiffs argue that ABA's use of the photographs to apply for NARI awards constitutes "publication," but they are incorrect. For purposes of statutory damages and attorney fees under the Copyright Act, "publication" refers to the copyright owner's actions, not those of the alleged infringer. Stated another way, "an act that commences infringement does not publish an otherwise unpublished work." Zito v. Steeplechase Films, Inc., 267 F. Supp. 2d 1022, 1026 (N.D. Cal. 2003). See also 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 4.04 at 4-22 to 4-23 (2002) ("Congress could not have intended that the various legal consequences of publication under the current Act would be triggered by an unauthorized act of an infringer or other stranger to the copyright.").

    Because the sculpture was never "published," under 17 U.S.C. § 412(1), statutory damages are not available for infringement that "commenced before the effective date of its registration." It is undisputed that plaintiffs did not obtain a copyright on "The Artwork of Q" until May 4, 2011 and on "Processes of Mendota Reflection" until February 14, 2012. It is also undisputed that defendants posted the photographs on their websites in 2009 or early 2010. Accordingly, because it is undisputed that defendants' alleged infringement commenced before the earliest effective date of Neri's registrations, statutory damages and attorney fees cannot be awarded under § 412(1).

    This is true even though there may have been a brief period of infringement after Neri's copyright registration issued and before defendants removed the photographs from their respective websites. Relying on principles of statutory interpretation and Congress's intent to promote the early registration of copyrights, courts have held that "infringement `commences' for the purposes of § 412 when the first act in a series of acts constituting continuing infringement occurs." Johnson v. Jones, 149 F.3d 494, 506 (6th Cir. 1998) (citing cases); accord Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 700-01 (9th Cir. 2008) (same); Whelan Assocs., Inc. v. Jaslow Dental Lab., Inc., 609 F.Supp. 1325, 1331 (E.D. Pa.1985) ("Interpreting `commencement of infringement' as the time when the first act of infringement in a series of on-going discrete infringements occurs . . . would best promote the early registration of a copyright."). Thus, "[a] plaintiff may not recover an award of statutory damages and attorney's fees for infringements that commenced after registration if the same defendant commenced an infringement of the same work prior to registration." Mason v. Montgomery Data, Inc., 967 F. 2d 135, 144 (5th Cir. 1992). Here, the alleged infringement began long before Neri attempted to register a copyright for the sculpture. Accordingly, plaintiffs are not entitled to an award of statutory damages even if they could prove infringement.

    B. Actual Damages

    Under Section 504(b) of the Copyright Act, a plaintiff can recover "the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages." Although actual damages and lost profits under 17 U.S.C. § 504(b) can be demonstrated in several ways, "all require that the copyright owner show either that it suffered a loss or that the infringer gained some benefit." Northwest Airlines, Inc. v. American Airlines, Inc., 870 F. Supp. 1504, 1512-13 (D. Minn. 1994). See also Eales v. Environmental Lifestyles, Inc., 958 F.2d 876 (9th Cir. 1992) (lost market value of work); Deltak, Inc. v. Advanced Systems, Inc., 767 F.2d 357 (7th Cir. 1985) (value of use to infringer even if no profits resulted); Taylor v. Meirick, 712 F.2d 1112 (7th Cir. 1983) (value of infringer's profits); Melville B. Nimmer & David Nimmer, Nimmer On Copyright § 14.02. Any benefit or loss shown must have been attributable to use of the copyrighted image. Iconbazaar, L.L.C. v. Am. Online, Inc., 378 F. Supp. 2d 592, 594 (M.D.N.C. 2005). Although a plaintiff need not prove exactly the amount of damages from the infringement, the fact or existence of such damages must be shown with more than mere speculation. Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003); Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772 F.2d 505, 513 (9th Cir. 1985).

    Even when the evidence is viewed in plaintiffs' favor, they have not proved or demonstrated any loss on their part nor any gain on the part of defendants from the alleged infringement. Plaintiffs admit they have no evidence that any defendant received any profit or other financial benefit attributable to use of photographs that contained the incidental images of Mendota Reflection, or that any defendant diverted from plaintiffs any customer who wanted to purchase Mendota Reflection or a photograph of it. Plaintiffs have no evidence showing: that Neri was denied any referrals or monetary benefit associated with the sculpture; that any person has asked them to reproduce the sculpture; or that they have made any money from licenses or derivative works off the sculpture.

    Plaintiffs' primary argument in support of actual damages is that they were deprived of the knowledge that ABA had won a NARI award for its work on Hughes's condominium. Plaintiffs contend that this deprived them of an opportunity to market the sculpture. But as noted previously, the NARI award was not given for art and there is no evidence that the glasswork had anything to do with ABA's receipt of that award. In any case, there is no evidence that plaintiffs were precluded or continue to be precluded from marketing "Mendota Reflections" as a result of the sculpture's incidental appearance in a photograph posted on a website. Indeed, even if plaintiffs somehow could market the sculpture-which is not theirs to sell-or derivative works of some sort, there is no evidence that they have made any real attempt to do so.

    Plaintiffs contend that they could have commanded a $5000 licensing fee for the rights to photograph the sculpture. This is unsupported conjecture. "The question is not what the owner would have charged, but rather what is the fair market value." On Davis v. The Gap, Inc., 246 F.3d 152,166 (2nd Cir. 2001). Plaintiffs have never sold a license for anything related to this sculpture; Neri has never sold a license to utilize any rights to any of her artwork; and plaintiffs have adduced no evidence of any benchmark licenses, that is, what licensors have paid for use of similar work. Compare On Davis, 246 F.3d at 166 (plaintiff testified he previously had received $50 royalty for use of photograph which included his sunglasses); Baker v. Urban Outfitters, Inc., 254 F.Supp.2d 346, 359 (S.D.N.Y.2003) (plaintiff produced evidence of previous license fees of $15 to $88 paid for publication of his photographs); Country Road Music, Inc. v. MP3.com, Inc., 279 F.Supp.2d 325, 331-32 (S.D.N.Y. 2003) (noting that license fees paid to other artists could be used to measure the plaintiff's license fee). The only evidence in the record regarding licenses indicates that there is no market for such a license. Ferguson testified that he did not consider the incidental appearance of the glass pieces in the photographs to be of any value, and for that reason he would not have considered paying a licensing fee for the benefit of such use. Similarly, Monroe testified that, based on her knowledge and experience in the design/build remodeling industry, she is not aware of a single instance of licensing of a piece of art in a residence. On this record, plaintiffs' claim for licensing fees is wishful thinking.

    In sum, damages "must be proved, and not just dreamed." MindGames, Inc. v. W. Publ'g Co., Inc., 218 F.3d 652, 658 (7th Cir. 2000). Plaintiffs have not provided any actual evidence that there are any actual damages or infringer's profits that they could recover under 17 U.S.C. § 504(b).

    ORDER

    It is ORDERED that:

    (1) The motions for summary judgment filed by defendants Architectural Building Arts, Inc., Melinda Monroe, Steven Larson, Leslie Sager and Eric Ferguson, dkts. 75, 80, 85, are GRANTED.

    (2) Plaintiffs Quincy Neri and Rodney Rigsby's motion for summary judgment, dkt. 88, is DENIED.

    (3) Intervenor defendant Rural Mutual Insurance Company's motion for summary judgment on its indemnification of defendant Eric Ferguson, dkt. 68, is DENIED as moot.

    (4) Plaintiffs' motion for a hearing, dkt. 239, is DENIED as moot.

    (5) The clerk of court is directed to enter judgment for defendants Architectural Building Arts, Monroe, Larson, Sager and Ferguson and to close the case.

    [1] Schomburg originally was named as a defendant in this case but has settled with plaintiffs.

    [2] As defendants point out, plaintiffs seem to be operating under the mistaken assumption that they are entitled to recover from ABA money that Hughes paid ABA to remodel her condominium. This is a copyright infringement action. Neri had no contract with ABA-she has so conceded—and she does not claim that ABA owes her money for the work she actually performed. The only recovery available to plaintiffs in this lawsuit are either statutory or actual damages resulting from the alleged infringing activities, all of which occurred after the remodeling project was complete. Therefore, Neri's estimates of what Hughes paid ABA to rebuild the ceiling, along with her apparent belief that she is entitled to some sort of compensation for allegedly pointing out to Hughes the value of the Richard Haas Mural, are irrelevant.

    [3] Defendants dispute Neri's contention that it was she rather than Schomburg who was hired by Radspinner to design and install the glass sculpture for Hughes's entryway. Although I agree with defendants that Neri's evidentiary citations do not support these assertions, see Defs.' Response to PPFOF, dkt. 105, nos. 12, 14, 15, precisely who was hired by whom to do what is not material to the court's findings that (1) defendants' activities are protected by the fair use doctrine and (2) in any case, plaintiffs cannot recover damages. Accordingly, it is unnecessary to untangle this factual dispute.

    [4] In the initial summary judgment proceeding, defendants argued that Schomburg and not Neri was the "true" author entitled to copyright the sculpture. Although this court found it unnecessary to address this question, the Court of Appeals rejected it as an alternative ground for summary judgment. Neri, 726 F.3d at 992 ("To the extent that Schomburg added features in the course of blowing the glass, he has a separate claim of intellectual property in a derivative work, but this does not detract from Neri's rights.").

    [5] Although Neri asserts repeatedly in her submissions that she "designed" the ceiling, I agree with defendants that the evidence she cites does not reasonably support this assertion. See Defs.' Joint Response to Pltff's PPFOF, dkt. 123, no.7. At her deposition, Neri testified that she and Schomburg "came up with the idea of what would be the best materials to hang the glass pieces from," and that she suggested steel, then fiberglass, then drywall. Dep. of Quincy Neri, dkt. 65, at 170. However, Neri was not sure whom she talked to from ABA or who ultimately decided what material to use; she did not create any architectural drawings, schematics, or mock-ups of the ceiling; she does not have a degree in structural engineering; and she had no contract to build the ceiling. On the basis of this evidence, no reasonable jury could find that Neri played any role in the actual design or construction of the ceiling except to suggest a list of materials from which it could be constructed.

    [6] The parties dispute whether Neri was solely responsible for how the pieces were arranged in relation to the ceiling and each other, or whether the final composition was the result of an on-site collaborative process involving Neri, Schomburg, Radspinner, Hughes and possibly others, but this dispute is not material.

    [7] Neri disputes this, but her dispute is based purely on her speculation. She has presented no evidence-there is no evidence-of actual revenues, sales, commissions, license fees or other financial benefit derived by ABA or any other defendant as a result of the photographs.

    [8] Neri's insistence that the sculpture "won" an award for which she received no credit is one of her persistent themes in this lawsuit, but it lacks any evidentiary support. As I previously found, NARI awards are not art awards. NARI awarded ABA for its construction and design work on the condominium, not for the sculpture.

    [9] Defendants also make a persuasive argument that the ceiling design was so integral to the artwork that ABA is a joint author of the work, but it is unnecessary to reach that question because the fair use issue is dispositive.

    [10] "The existence of damages suffered is not an essential element of a claim for copyright infringement." On Davis v. The Gap, Inc., 246 F.3d 152, 158 (2d Cir.2001) (citing Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991)). However, plaintiffs seek only monetary relief. Amended Complaint, dkt. 9, at 12.

    [11] The full text of this paragraph sets out three exceptions, none of which apply here.

  • 14 Diversey v. Schmidly

    738 F.3d 1196 (2013)

    Andrew DIVERSEY, Plaintiff-Appellant,
    v.
    David SCHMIDLY; Richard Holder; Charles Fleddermann; James Koch; Raymond Sanchez; Martha Bedard; Jack Fortner, all individually and in their official capacities, Defendants-Appellees.

    No. 13-2058.

    United States Court of Appeals, Tenth Circuit.

    December 23, 2013.

    [1198] Submitted on the briefs: Andrew Diversey, Plaintiff-Appellant, Pro Se.

    Kimberly N. Bell, Associate University Counsel, The University of New Mexico, Albuquerque, NM, for Defendants-Appellees.

    Before MATHESON, Circuit Judge, PORFILIO, and O'BRIEN, Senior Circuit Judges.

    O'BRIEN, Senior Circuit Judge.

    Andrew Diversey sued several administrators and members of the Board of Regents of the University of New Mexico (UNM) for infringing his copyright to an unpublished dissertation. The district court dismissed Diversey's complaint as untimely under Fed. R. Civ. P. 12(b)(6). Our review requires us to determine when claims of copyright infringement accrue, and, in particular, whether accrual is delayed until a continuing course of infringement ceases. Barring the application of an appropriate tolling principle, a copyright infringement claim must be brought within three years of the date on which the plaintiff becomes aware of an act of infringement or becomes chargeable with knowledge of it. Applying this rule, we affirm in part and reverse in part.

    BACKGROUND AND PROCEDURAL HISTORY

    Since we accept all well pleaded facts as true, our factual recitation comes primarily from Diversey's amended complaint. He was a doctor-of-philosophy (Ph.D.) student studying linguistics at the University of New Mexico. His complaint paints a picture of intractable difficulties with the members of his dissertation committee. The members did not provide him with mentorship or feedback on his dissertation drafts, even after he complained to departmental and university administrators, including Charles Fleddermann, UNM's Dean of Graduate Studies. Diversey claims the dissertation committee failed to review the final draft of the dissertation, and says, "[t]he dissertation must ... be fully reviewed and evaluated in its final form by the committee members and director before being officially approved and submitted; otherwise it is illegitimate and thus of no academic value." (R. Vol. I at 68.)

    As Diversey continued to attempt to convince UNM officials to correct the deficiencies in the dissertation process, he provided a copy of the draft dissertation to UNM Dissertation Coordinator Doug Weintraub, who volunteered to proofread it. Before Weintraub could do so, Fleddermann allegedly confiscated the draft. [1199] On February 7, 2008, UNM Deputy Provost Richard Holder wrote Diversey to advise him the dissertation had been deposited in the Zimmerman Library at UNM. The draft dissertation was also sent to ProQuest, UNM's dissertation publisher. On February 20, 2008, a ProQuest representative confirmed receipt of the draft dissertation. On Diversey's protest, ProQuest returned the manuscript to UNM.

    Diversey escalated his complaints: he contacted UNM's President, its Dean of Student Affairs, and several members and officers of UNM's Board of Regents to no avail. Then, on June 16, 2009, Diversey discovered two copies of his dissertation: one in UNM's Zimmerman Library and another in the collection of the Zimmerman Library's Center for Southwest Research. These copies were available to the general public. Diversey wrote each of the appellees, including the Dean of University Libraries, citing his copyright and requesting the return of all copies of his dissertation. On October 5, 2009, UNM's counsel sent Diversey a letter refusing Diversey's request.[1]

    On June 15, 2012, Diversey filed a complaint for copyright infringement. In dismissing the case, the magistrate judge[2] concluded the copyright infringement claims accrued in February 2008 when Diversey was notified of the dissertation's deposit in the Zimmerman Library and became aware it had been sent to Pro-Quest. Thus, he concluded, the three-year limitation period elapsed by February 2011, and Diversey's June 2012 complaint was not timely. He also rejected Diversey's argument that UNM's ongoing distribution of his work in its libraries was a continuing infringement for which the cause of action did not accrue until the infringement ceased.

    DISCUSSION

    Our review of a Fed.R.Civ.P. 12(b)(6) dismissal is de novo. Coll v. First Am. Title Ins. Co., 642 F.3d 876, 886 (10th Cir.2011). We accept the well-pled factual allegations in the complaint as true, "resolve all reasonable inferences in the plaintiff's favor," Morse v. Regents of the Univ. of Colo., 154 F.3d 1124, 1126-27 (10th Cir.1998), and "ask whether it is plausible that the plaintiff is entitled to relief." Bixler v. Foster, 596 F.3d 751, 756 (10th Cir.2010) (quotations omitted) (applying the "plausibility" pleading standard articulated in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). We also liberally construe Diversey's pro se pleadings. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991). Thus, if we "can reasonably read the pleadings to state a valid claim on which the plaintiff could prevail, [we] should do so despite the plaintiff's failure to cite proper legal authority, his confusion of various legal theories, his poor syntax and sentence construction, or his unfamiliarity with pleading requirements." Id.

    We first examine and apply the law relating to the limitation period applicable to Diversey's claims. Then, we examine the two alternative rationales the appellees assert in defense of the dismissal.[3]

    [1200] A. Limitation Period for Copyright Infringement Claims

    A claim for copyright infringement must be brought "within three years after the claim accrued." 17 U.S.C. § 507(b). Under the majority view, a claim "for copyright infringement accrues when one has knowledge of a violation or is chargeable with such knowledge." Roley v. New World Pictures, Ltd., 19 F.3d 479, 481 (9th Cir.1994); see Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199, 202 (4th Cir.1997). The statute is evenhanded; "`[i]t does not provide for a waiver of infringing acts within the limitation period if earlier infringements were discovered and not sued upon, nor does it provide for any reach back if an act of infringement occurs within the statutory period.'" Roley, 19 F.3d at 481 (quoting Hoey v. Dexel Sys. Corp., 716 F.Supp. 222, 223 (E.D.Va.1989)); accord Bridgeport Music, Inc. v. Diamond Time, Ltd., 371 F.3d 883, 889 (6th Cir.2004); Hotaling, 118 F.3d at 202; Makedwde Pub. Co. v. Johnson, 37 F.3d 180, 182 (5th Cir.1994); Stone v. Williams, 970 F.2d 1043, 1049-50 (2d Cir.1992).[4] In other words, the majority view rejects the notion that a plaintiff can recover for acts of infringement occurring more than three years before the filing of a complaint merely because some related act of infringement occurs within the limitation period.

    Diversey relies in part on the minority interpretation of § 507(b)'s limitation period, which applies a "continuing wrong" exception. The most prominent of the cases advancing this minority interpretation is the Seventh Circuit's decision in Taylor v. Meirick, 712 F.2d 1112 (7th Cir. 1983). There, the court rescued a plaintiff's contributory infringement claims from the statute of limitations; under ordinary tort principles, it reasoned, the limitation period "does not begin to run on a continuing wrong till the wrong is over and done with." Id. at 1118; see also United States v. Shabazz, 724 F.2d 1536, 1540 (11th Cir.1984) (applying the then-three-year limitation period for criminal prosecutions of copyright infringements in a comparable fashion);[5] Baxter v. Curtis Indus., 201 F.Supp. 100, 101 (N.D.Ohio 1962). Even though some of the plaintiff's claims against the defendant's own copyright infringements may have been barred under § 507(b), the Taylor court concluded the defendant was still contributorily liable for the infringing sales of retailers to whom the defendant wholesaled his infringing copies, as long as those sales occurred before the limitation period elapsed. See Taylor, 712 F.2d at 1118-19.

    The minority view is not compelling. First, the statute itself says nothing to support a special limitation rule for "continuing wrongs." See 17 U.S.C. § 507(b); [1201] Roley, 19 F.3d at 481 ("Section 507(b) is clear on its face."). Second, although the minority view seems intended to ensure copyright infringers do not escape liability when their infringing acts are obfuscated by the stream of commerce, the majority accrual rule and tolling principles adequately protect copyright owners' rights in such situations. The limitation period never begins to run until the plaintiff knows or has reason to know of the infringement. Roley, 19 F.3d at 481. Moreover, when an infringer's actions are calculated to deceive the plaintiff, the accrual may be tolled even further. See Taylor, 712 F.2d at 1118 (observing a copyright infringement plaintiff is entitled to tolling when the defendant's actions are "calculated to obstruct any inquiry [plaintiff] might have made"). Indeed, this tolling principle alone would have been sufficient to allow the Taylor plaintiff relief from the statute of limitations. Id. at 1119 ("[E]ither of the tolling principles discussed earlier would allow [plaintiff] to collect damages for acts of infringement more than three years in the past, at least if he acted promptly once he discovered them...."). Accordingly, we reject as unnecessary the "continuing wrong" doctrine in the copyright infringement context and adopt the majority view.

    B. Copying and Distribution Claims

    Diversey contends the district court erred in concluding his claims were barred under the three-year limitation period. In particular, he argues the judge erred by "failing to recognize separate ... accrual dates for each distinct infringement." (Appellant Br. at 16.) We agree and conclude Diversey's claim for infringement of his distribution right is not time-barred.

    Diversey argues "there are actually several distinct copyright infringements giving rise to several independent claims for relief, each of which has its own corresponding... accrual date." (Appellant Br. at 17.) According to his amended complaint, there were two alleged infringements. First, his exclusive right to make copies was infringed when the draft dissertation was reproduced for deposit in UNM's Zimmerman Library and its Center for Southwest Research. See 17 U.S.C. § 106(1) (giving the copyright owner the exclusive right "to reproduce the copyrighted work in copies"). Second, his exclusive right to distribute his work was allegedly infringed when the University listed his work in its library catalog for public lending. See 17 U.S.C. § 106(3) (giving the copyright owner the exclusive right "to distribute copies ... of the copyrighted work to the public by sale ... or by rental, lease, or lending").

    As to the copies made for deposit in the libraries, the judge's analysis was correct. Holder's February 7, 2008, letter apprised Diversey of the deposit of his dissertation in Zimmerman Library, which also houses the collection of the Center for Southwest Research. This notice appears to have been effective, as it prompted Diversey to contact ProQuest, UNM's dissertation publisher, to inquire as to whether it, too, had received a copy of the draft dissertation.[6] When ProQuest confirmed it had received a copy on February 20, 2008, Diversey knew at least one unauthorized copy had been made. Thus, his claim for unauthorized copying under § 106(1) accrued no later than February 20, 2008. His June 15, 2012, complaint was not timely.

    [1202] However, Diversey's claim of unauthorized distribution under § 106(3) must be separately considered. See Bridgeport Music, Inc. v. Rhyme Syndicate Music, 376 F.3d 615, 621 (6th Cir. 2004) ("[E]ach act of infringement is a distinct harm."); see also Roley, 19 F.3d at 481 (observing that a copyright infringement claim "may be brought for all acts that accrued within the three years preceding the filing of the suit."). As Diversey points out, § 106(3) explicitly protects the copyright owner's exclusive right to distribute copies by lending. See Hotaling, 118 F.3d at 203 ("When a public library adds a work to its collection, lists the work in its index or catalog system, and makes the work available to the borrowing or browsing public, it has completed all the steps necessary for distribution to the public."); 2 Melville Nimmer & David Nimmer, Nimmer on Copyright § 8.11[B][4][d] at 8-154.10 (2013) ("No consummated act of actual distribution need be demonstrated... to implicate the copyright owner's distribution right.").[7] We see no reason Diversey should have known about the UNM libraries' distribution of his work before June 16, 2009, when he discovered his draft dissertation's entry in the UNM libraries' catalog information system. According to the amended complaint, he diligently checked this information system "[a]t regular weekly (and often even daily) intervals." (R. Vol. I at 84.) As his prior searches failed to discover any reference to his dissertation, they confirmed the work was not "distributed," in the parlance of § 106(3), until June 16, 2009. Further, given Diversey's continued efforts to work with UNM officials to both prevent his dissertation from being distributed and to rectify the lack of attention given to it by the faculty, he had a legitimate reason to believe UNM might indeed change course and elect not to distribute the dissertation in its libraries.

    In the appellees' view, Diversey had actual notice of the alleged infringement of his distribution right when he was informed his dissertation "`had been deposited in Zimmerman Library' on February 7, 2008." (Appellee Br. 8.) This assertion elides the distinction between the deposit in the library and the library's subsequent distribution of the work. Given Diversey's objections and the routine processing time necessary for the libraries to add the dissertation to their collections, the deposit of the dissertation in the library was not tantamount to the distribution of the work. [1203] The essence of distribution in the library lending context is the work's availability "to the borrowing or browsing public." See Hotaling, 118 F.3d at 203. Until the work was available in the catalog system, Diversey had no reason to believe it was available to the borrowing or browsing public.

    Diversey's claim of infringement of his right to distribution accrued on June 16, 2009, and his June 15, 2012, complaint was timely as to this claim. The judge's contrary conclusion was an error.[8]

    C. Fair Use

    As an alternative basis for affirmance, the appellees contend their use was permissible under the statutory provisions for fair use. See 17 U.S.C. § 107. Under the facts as alleged in the amended complaint, the fair-use analysis favors Diversey.

    The Copyright Act of 1976 recognizes the common-law defense of fair use. 17 U.S.C. § 107; Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 549, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985). The fair-use defense insulates from liability certain violations of a copyright owner's exclusive rights "for purposes such as criticism, comment, news reporting, teaching..., scholarship, or research." 17 U.S.C. § 107. It establishes the four primary (but non-exclusive) factors to determine whether a particular use is fair:

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

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

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

    Id. As amended, § 107 tells us the unpublished nature of a work does "not itself bar a finding of fair use if such finding is made upon consideration of all the above factors." Id.

    Here, only the first factor—purpose and character of use—weighs strongly in the appellees' favor. The use at issue is the distribution of the dissertation via the UNM libraries. This is a non-commercial, educational purpose at the heart of the protection for fair use. The libraries themselves, while they apparently serve the public, are academic libraries existing primarily for scholarly and research purposes.

    The second factor—the nature of the copyrighted work—weighs strongly in Diversey's favor. As he notes, "[u]nder ordinary circumstances, the author's right to control the first public appearance of his undisseminated expression will outweigh a claim of fair use." (Appellant Br. at 28 (quoting Harper & Row, 471 U.S. at 555, 105 S.Ct. 2218).); see Harper & Row, 471 U.S. at 553, 105 S.Ct. 2218 (noting the copyright owner's heightened interest in the right of first publication relative to the other exclusive rights provided under 17 U.S.C. § 106). Indeed, at common law, the defense of fair use could never be applied to alleged infringements of unpublished works. Harper & Row, 471 U.S. at 550-51, 105 S.Ct. 2218; Salinger v. Random House, Inc., 811 F.2d 90, 95 (2d Cir. 1987). Although this restriction has subsequently softened, see Salinger, 811 F.2d at 95, the unpublished nature of Diversey's dissertation weighs heavily against the appellees under the second fair-use factor. [1204] See 17 U.S.C. § 107(2); Salinger, 811 F.2d at 96-97.

    The third factor—the amount and substantiality of the portion used in relation to the whole—also weighs strongly in Diversey's favor because the UNM libraries are distributing the entire dissertation.

    The fourth factor—the effect of the use on the potential market for or value of the copyrighted work—is somewhat harder to assess. Diversey does not allege his work was intended for the commercial market. Rather, the value of the work is in the opportunities it affords him to properly complete his doctoral program, compete for academic jobs, and advance the scholarship in his discipline. At this stage, we accept as true his assertion that he cannot effectively complete the dissertation review and defense process at another institution while UNM still lists his work in its libraries' catalogs. This has completely deprived him of the value of the dissertation. This factor weighs in his favor.

    Because, at this stage, the fair-use factors tilt heavily against the appellees, their use cannot be considered fair under 17 U.S.C. § 107.

    D. Involvement of Each of the Appellees

    As another alternative basis for affirmance, the appellees contend Diversey's amended complaint fails to allege any of them personally "undertook any act to cause the dissertation to be cataloged." (Appellee Br. 13.) We leave this issue for the district court to resolve on remand.

    Ordinarily, there are two elements to a claim for liability for copyright infringement. A plaintiff must show (1) he owns a valid copyright to the allegedly infringed work, and (2) the defendant violated one of his exclusive rights as copyright owner. Country Kids `N City Slicks, Inc. v. Sheen, 77 F.3d 1280, 1284 & n. 2 (10th Cir.1996); see 17 U.S.C. §§ 106, 501(a). However, a defendant can also be secondarily liable for another's copyright infringement under principles of vicarious and contributory liability. See Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 261-65 (9th Cir.1996). Vicarious liability attaches when the defendant "has the right and ability to supervise the infringing activity" and "has a direct financial interest in such activities." Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.1971). A defendant may be vicariously liable even when he or she is not aware of the infringing activity. Fonovisa, 76 F.3d at 262. By contrast, contributory liability attaches when the defendant causes or materially contributes to another's infringing activities and knows of the infringement. Id. at 264. One way of establishing contributory liability is by showing a defendant "authorized the infringing use." Softel, Inc. v. Dragon Med. & Scientific Comms., Inc., 118 F.3d 955, 971 (2d Cir.1997) (quoting Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 437, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984)).

    Here, there appears to be no dispute as to the validity of Diversey's copyright. And, in light of the above discussion, Diversey's exclusive right to control the distribution of his dissertation was infringed. The appellees ask us to determine whether the amended complaint adequately alleges sufficient involvement to expose each of them to liability. In the appellees' view, the complaint fails to allege any of them personally listed the dissertation in the libraries' catalog system or asked anyone else to do so.

    On the contrary, this is exactly what the complaint alleges with respect to Fleddermann. It alleges he confiscated the draft dissertation from Weintraub's office and provided it to the UNM libraries for inclusion in their collections. As this resulted in the libraries' distribution of the [1205] dissertation, Diversey has stated a plausible claim of contributory copyright infringement claim against Fleddermann.

    We are, however, reluctant to extend our analysis beyond Fleddermann.[9] The judge did not address the arguments with respect to any of the other appellees in his memorandum opinion. Because Diversey's claims include allegations of secondary liability, a fact-intensive analysis will be necessary to determine whether he has stated a plausible claim against each appellee. We decline to decide this issue in the first instance. See Lowe v. Town of Fairland, Okla., 143 F.3d 1378, 1381 (10th Cir. 1998) ("As a general rule an appellate court does not consider an issue not passed upon below.").

    CONCLUSION

    With respect to Diversey's claims of infringement of his exclusive right to copy his dissertation, we AFFIRM the judgment of the district court. With respect to his claim of infringement of his exclusive right of distribution, we REVERSE and REMAND for further proceedings consistent with this opinion.

    [1] According to the letter, UNM officials believed they had "certain non-exclusive rights in the dissertation, e.g., an implied license to keep copies of the dissertation at the University Libraries and to catalog the work." (R. Vol. I at 85.)

    [2] The parties consented to have their case heard and decided by a magistrate judge. See 28 U.S.C. § 636(c); Fed.R.Civ.P. 73(a). Under this procedure, Diversey properly appealed directly to this court. See 28 U.S.C. § 636(c)(3); Fed.R.Civ.P. 73(c).

    [3] The transcript of the district court's motion on the appellee's motion to dismiss reflects some discussion as to whether the doctrine of qualified immunity protects the appellees from liability for their actions. During this discussion, neither party discussed the explicit immunity-stripping provisions of 17 U.S.C. §§ 501(a) and 511(a). See also Nat'l Ass'n of Bds. of Pharmacy v. Bd. of Regents of the Univ. Sys. of Ga., 633 F.3d 1297, 1313-15 (11th Cir.2011) (discussing immunity issues in copyright infringement cases). Because the appellees have not urged affirmance on this alternative ground and because the issue presents possibly thorny questions, we do not address it. The initial furrow in the plowing of such rocky ground is best turned by the district court.

    [4] The district courts within this circuit have generally taken this view. See Rocking Chair Enters. v. Macerich SCG Ltd., 407 F.Supp.2d 1263, 1266-67 (W.D.Okla.2005); Fisher v. United Feature Syndicate, Inc., 37 F.Supp.2d 1213, 1217 (D.Colo.1999); In re Indep. Servs. Orgs. Antitrust Litig., 964 F.Supp.1469, 1478 (D.Kan.1997).

    [5] But see Makedwde, 37 F.3d at 181 n. 2 ("We do not understand the Shabazz opinion to rely on a continuing tort type theory.").

    [6] According to the amended complaint, the copy sent to ProQuest was the authorized copy Diversey handed over to Weintraub. Thus, it appears only the copies placed in Zimmerman Library were unauthorized.

    [7] The appellees argue merely listing the work in the libraries' catalog information system does not violate Diversey's distribution right. They say Diversey must (but has failed to) allege the libraries actually distributed an unauthorized copy to a member of the public. They cite Atlantic Recording Corp. v. Howell, 554 F.Supp.2d 976 (D.Ariz.2008) to suggest "`§ 106(3) is not violated unless the defendant has actually distributed an unauthorized copy of the work to a member of the public.'" (Appellee's Br. 14 (quoting Howell, 554 F.Supp.2d at 983).)

    Howell does reflect some dissensus, particularly among district courts, about the applicability of Hotaling's holding to cases of Internet file-sharing. We need not delve into the file-sharing issue today. Hotaling, like this case, involves a public library making "the work available to the borrowing or browsing public." Hotaling, 118 F.3d at 203. A patron could "visit the library and use the work." See id. This is the essence of a violation of the copyright owner's exclusive right to distribute his work via lending. See 17 U.S.C. § 106(3); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 552, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) (noting § 106(3) gives the copyright owner "the right to control the first public distribution ... of his work" (quotation omitted)); Peter S. Menell, In Search of Copyright's Lost Ark: Interpreting the Right to Distribute in the Internet Age, 59 J. Copyright Soc'y U.S.A. 1, 52-66 (2011) (analyzing the legislative history regarding the distribution right and concluding the requirement of actual distribution of an unauthorized copy is unwarranted).

    [8] Our resolution of this issue in Diversey's favor makes the resolution of his arguments about the judge having made "false inferences and factual misrepresentations" unnecessary. (Appellant Br. at 34.)

    [9] Diversey named as defendants three members and officers of UNM's Board of Regents (James Koch, Raymond Sanchez, and Jack Fortner) with whom he communicated during his efforts to resolve his concerns. He also named three administrators he contacted: Martha Bedard, UNM's Dean of University Libraries, David Schmidly, UNM's former president, and former Deputy Provost Richard Holder. In addition to his other contacts with the appellees, Diversey sent each of the appellees a letter demanding they cease UNM's infringement of his copyright.

  • 15 Cariou v. Prince

    714 F.3d 694 (2013)
    Patrick CARIOU, Plaintiff-Appellee,
    v.
    Richard PRINCE, Defendant-Appellant,
    Gagosian Gallery, Inc., Lawrence Gagosian, Defendants-Cross-Defendants-Appellants.
    Docket No. 11-1197-cv.

    United States Court of Appeals, Second Circuit.

    Argued: May 21, 2012.
    Decided: April 25, 2013.

    [697] Joshua I. Schiller (Jonathan D. Schiller, George F. Carpinello, on the brief), Boies, Schiller & Flexner LLP, New York, NY, for Defendant-Appellant Richard Prince.

    Hollis Anne Gonerka Bart, Chaya Weinberg-Brodt, Dara G. Hammerman, Azmina N. Jasani, Withers Bergman LLP, New York, NY, for Defendants-Appellants Gagosian Gallery, Inc. and Lawrence Gagosian.

    Daniel J. Brooks (Seth E. Spitzer, Eric A. Boden, on the brief), Schnader Harrison Segal & Lewis LLP, New York, NY, for Plaintiff-Appellee Patrick Cariou.

    Anthony T. Falzone, Julie A. Ahrens, Daniel K. Nazer, Stanford Law School Center for Internet and Society, Stanford, CA; Virginia Rutledge, New York, NY; Zachary J. Alinder, John A. Polito, Bingham McCutchen LLP, San Francisco, CA, [698] for Amicus The Andy Warhol Foundation for the Visual Arts.

    Joseph C. Gratz, Durie Tangri, LLP, San Francisco, CA; Oliver Metzger, Google Inc., Mountain View, CA, for Amicus Google Inc.

    Clifford M. Sloan, Bradley A. Klein, Skadden, Arps, Slate, Meagher & Flom LLP, Washington, DC, for Amici The Association of Art Museum Directors, The Art Institute of Chicago, The Indianapolis Museum of Art, The Metropolitan Museum of Art, The Museum of Modern Art, Museum Associates d.b.a. Los Angeles County Museum of Art, The New Museum, The Solomon R. Guggenheim Foundation, The Walker Art Center, and The Whitney Museum of American Art.

    Michael Williams, Dale M. Cendali, Claudia Ray, Kirkland & Ellis LLP, Washington, DC, for Amici American Society of Media Photographers, Inc., and Picture Archive Council of America.

    Before: B.D. PARKER, HALL, and WALLACE,[1] Circuit Judges.

    B.D. PARKER, J., delivered the opinion of the Court, in which HALL, J., joined. WALLACE, J., filed an opinion concurring in part and dissenting in part.

    BARRINGTON D. PARKER, Circuit Judge:

    In 2000, Patrick Cariou published Yes Rasta, a book of classical portraits and landscape photographs that he took over the course of six years spent living among Rastafarians in Jamaica. Richard Prince altered and incorporated several of Cariou's Yes Rasta photographs into a series of paintings and collages, called Canal Zone, that he exhibited in 2007 and 2008, first at the Eden Rock hotel in Saint Barthélemy ("St. Barth's") and later at New York's Gagosian Gallery.[2] In addition, Gagosian published and sold an exhibition catalog that contained reproductions of Prince's paintings and images from Prince's workshop.

    Cariou sued Prince and Gagosian, alleging that Prince's Canal Zone works and exhibition catalog infringed on Cariou's copyrights in the incorporated Yes Rasta photographs. The defendants raised a fair use defense. After the parties cross-moved for summary judgment, the United States District Court for the Southern District of New York (Batts, J.) granted Cariou's motion, denied the defendants', and entered a permanent injunction. It compelled the defendants to deliver to Cariou all infringing works that had not yet been sold, for him to destroy, sell, or otherwise dispose of.

    Prince and Gagosian principally contend on appeal that Prince's work is transformative and constitutes fair use of Cariou's copyrighted photographs, and that the district court imposed an incorrect legal standard when it concluded that, in order to qualify for a fair use defense, Prince's work must "comment on Cariou, on Cariou's Photos, or on aspects of popular culture closely associated with Cariou or the Photos." Cariou v. Prince, 784 F.Supp.2d 337, 349 (S.D.N.Y.2011). We agree with Appellants that the law does not require that a secondary use comment on the original artist or work, or popular culture, and we conclude that twenty-five of Prince's artworks do make fair use Cariou's copyrighted [699] photographs. With regard to the remaining five artworks, we remand to the district court, applying the proper standard, to consider in the first instance whether Prince is entitled to a fair use defense.[3]

    BACKGROUND

    The relevant facts, drawn primarily from the parties' submissions in connection with their cross-motions for summary judgment, are undisputed. Cariou is a professional photographer who, over the course of six years in the mid-1990s, lived and worked among Rastafarians in Jamaica. The relationships that Cariou developed with them allowed him to take a series of portraits and landscape photographs that Cariou published in 2000 in a book titled Yes Rasta. As Cariou testified, Yes Rasta is "extreme classical photography [and] portraiture," and he did not "want that book to look pop culture at all." Cariou Dep. 187:8-15, Jan. 12, 2010.

    Cariou's publisher, PowerHouse Books, Inc., printed 7,000 copies of Yes Rasta, in a single printing. Like many, if not most, such works, the book enjoyed limited commercial success. The book is currently out of print. As of January 2010, PowerHouse had sold 5,791 copies, over sixty percent of which sold below the suggested retail price of sixty dollars. PowerHouse has paid Cariou, who holds the copyrights to the Yes Rasta photographs, just over $8,000 from sales of the book. Except for a handful of private sales to personal acquaintances, he has never sold or licensed the individual photographs.

    Prince is a well-known appropriation artist. The Tate Gallery has defined appropriation art as "the more or less direct taking over into a work of art a real object or even an existing work of art." J.A. 446. Prince's work, going back to the mid-1970s, has involved taking photographs and other images that others have produced and incorporating them into paintings and collages that he then presents, in a different context, as his own. He is a leading exponent of this genre and his work has been displayed in museums around the world, including New York's Solomon R. Guggenheim Museum and Whitney Museum, San Francisco's Museum of Modern Art, Rotterdam's Museum Boijmans van Beuningen, and Basel's Museum fur Gegenwartskunst. As Prince has described his work, he "completely tr[ies] to change [another artist's work] into something that's completely different." Prince Dep. 338:4-8, Oct. 6, 2009.

    Prince first came across a copy of Yes Rasta in a bookstore in St. Barth's in 2005. Between December 2007 and February 2008, Prince had a show at the Eden Rock hotel in St. Barth's that included a collage, titled Canal Zone (2007), comprising 35 photographs torn out of Yes Rasta and pinned to a piece of plywood. Prince altered those photographs significantly, by among other things painting "lozenges" over their subjects' facial features and using only portions of some of the images. In June 2008, Prince purchased three additional copies of Yes Rasta. He went on to create thirty additional artworks in the Canal Zone series, twenty-nine of which incorporated partial or whole images from Yes Rasta.[4] The portions of Yes Rasta [700] photographs used, and the amount of each artwork that they constitute, vary significantly from piece to piece. In certain works, such as James Brown Disco Ball, Prince affixed headshots from Yes Rasta onto other appropriated images, all of which Prince placed on a canvas that he had painted. In these, Cariou's work is almost entirely obscured. The Prince artworks also incorporate photographs that have been enlarged or tinted, and incorporate photographs appropriated from artists other than Cariou as well. Yes Rasta is a book of photographs measuring approximately 9.5″ × 12″. Prince's artworks, in contrast, comprise inkjet printing and acrylic paint, as well as pasted-on elements, and are several times that size. For instance, Graduation measures 72 3/4″ × 52 1/2″ and James Brown Disco Ball 100 1/2″ × 104 1/2″. The smallest of the Prince artworks measures 40″ × 30″, or approximately ten times as large as each page of Yes Rasta.

    Patrick Cariou, Photographs from Yes Rasta, pp. 11, 59

    Patrick Cariou, Photographs from Yes Rasta, pp. 11, 59

    [701]

    Richard Prince, James Brown Disco Ball

    Richard Prince, James Brown Disco Ball

    In other works, such as Graduation, Cariou's original work is readily apparent: Prince did little more than paint blue lozenges over the subject's eyes and mouth, and paste a picture of a guitar over the subject's body.

    [702]

    Patrick Carious, Photograph from Yes Rasta

    Patrick Carious, Photograph from Yes Rasta, p. 118

    [703]

    Richard Prince, Graduation

    Richard Prince, Graduation

    Between November 8 and December 20, 2008, the Gallery put on a show featuring twenty-two of Prince's Canal Zone artworks, and also published and sold an exhibition catalog from the show. The catalog included all of the Canal Zone artworks (including those not in the Gagosian show) except for one, as well as, among other things, photographs showing Yes Rasta photographs in Prince's studio. Prince never sought or received permission from Cariou to use his photographs.

    Prior to the Gagosian show, in late August, 2008, a gallery owner named Cristiane Celle contacted Cariou and asked if he would be interested in discussing the possibility of an exhibit in New York City. Celle did not mention Yes Rasta, but did express interest in photographs Cariou took of surfers, which he published in 1998 in the aptly titled Surfers. Cariou responded that Surfers would be republished in 2008, and inquired whether Celle might also be interested in a book Cariou had recently completed on gypsies. The two subsequently met and discussed Cariou's exhibiting work in Celle's gallery, including prints from Yes Rasta. They did not select a date or photographs to exhibit, nor [704] did they finalize any other details about the possible future show.

    At some point during the Canal Zone show at Gagosian, Celle learned that Cariou's photographs were "in the show with Richard Prince." Celle then phoned Cariou and, when he did not respond, Celle mistakenly concluded that he was "doing something with Richard Prince.... [Maybe] he's not pursuing me because he's doing something better, bigger with this person.... [H]e didn't want to tell the French girl I'm not doing it with you, you know, because we had started a relation and that would have been bad." Celle Dep. 88:15-89:7, Jan. 26, 2010. At that point, Celle decided that she would not put on a "Rasta show" because it had been "done already," and that any future Cariou exhibition she put on would be of photographs from Surfers. Celle remained interested in exhibiting prints from Surfers, but Cariou never followed through.

    According to Cariou, he learned about the Gagosian Canal Zone show from Celle in December 2008. On December 30, 2008, he sued Prince, the Gagosian Gallery, and Lawrence Gagosian, raising claims of copyright infringement. See 17 U.S.C. §§ 106, 501. The defendants asserted a fair use defense, arguing that Prince's artworks are transformative of Cariou's photographs and, accordingly, do not violate Cariou's copyrights. See, e.g., Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578-79, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). Ruling on the parties' subsequently-filed cross-motions for summary judgment, the district court (Batts, J.) "impose[d] a requirement that the new work in some way comment on, relate to the historical context of, or critically refer back to the original works" in order to be qualify as fair use, and stated that "Prince's Paintings are transformative only to the extent that they comment on the Photos." Cariou v. Prince, 784 F.Supp.2d 337, 348-49 (S.D.N.Y.2011). The court concluded that "Prince did not intend to comment on Cariou, on Cariou's Photos, or on aspects of popular culture closely associated with Cariou or the Photos when he appropriated the Photos," id. at 349, and for that reason rejected the defendants' fair use defense and granted summary judgment to Cariou. The district court also granted sweeping injunctive relief, ordering the defendants to "deliver up for impounding, destruction, or other disposition, as [Cariou] determines, all infringing copies of the Photographs, including the Paintings and unsold copies of the Canal Zone exhibition book, in their possession." Id. at 355.[5] This appeal followed.

    DISCUSSION
    I.

    We review a grant of summary judgment de novo. See Blanch v. Koons, 467 F.3d 244, 249-50 (2d Cir.2006). The well known standards for summary judgment set forth in Rule 56(c) apply. See Fed.R.Civ.P. 56. "Although fair use is a mixed question of law and fact, this court has on numerous occasions resolved fair use determinations at the summary judgment stage where ... there are no genuine issues of material fact." Blanch, 467 F.3d at 250 (quotation marks and brackets omitted); see also Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985); Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 137 (2d Cir.1998). This case lends itself to that approach.

    [705] II.

    The purpose of the copyright law is "[t]o promote the Progress of Science and useful Arts...." U.S. Const., Art. I, § 8, cl. 8. As Judge Pierre Leval of this court has explained, "[t]he copyright is not an inevitable, divine, or natural right that confers on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public." Pierre N. Leval, Toward a Fair Use Standard, 103 Harv. L.Rev. 1105, 1107 (1990) (hereinafter "Leval"). Fair use is "necessary to fulfill [that] very purpose." Campbell, 510 U.S. at 575, 114 S.Ct. 1164. Because "`excessively broad protection would stifle, rather than advance, the law's objective,'" fair use doctrine "mediates between" "the property rights [copyright law] establishes in creative works, which must be protected up to a point, and the ability of authors, artists, and the rest of us to express them — or ourselves by reference to the works of others, which must be protected up to a point." Blanch, 467 F.3d at 250 (brackets omitted) (quoting Leval at 1109).

    The doctrine was codified in the Copyright Act of 1976, which lists four non-exclusive factors that must be considered in determining fair use. Under the statute,

    [T]he fair use of a copyrighted work ... 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 —
    (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.

    17 U.S.C. § 107. As the statute indicates, and as the Supreme Court and our court have recognized, the fair use determination is an open-ended and context-sensitive inquiry. Campbell, 510 U.S. at 577-78, 114 S.Ct. 1164; Blanch, 467 F.3d at 251. The statute "employs the terms `including' and `such as' in the preamble paragraph to indicate the illustrative and not limitative function of the examples given, which thus provide only general guidance about the sorts of copying that courts and Congress most commonly had found to be fair uses." Campbell, 510 U.S. at 577-78, 114 S.Ct. 1164 (quotation marks and citation omitted). The "ultimate test of fair use ... is whether the copyright law's goal of `promoting the Progress of Science and useful Arts' ... would be better served by allowing the use than by preventing it." Castle Rock, 150 F.3d at 141 (brackets and citation omitted).

    The first statutory factor to consider, which addresses the manner in which the copied work is used, is "[t]he heart of the fair use inquiry." Blanch, 467 F.3d at 251. We ask

    whether the new work merely `supersedes the objects' of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message[,] ... in other words, whether and to what extent the new work is transformative.... [T]ransformative works ... lie at the heart of [706] the fair use doctrine's guarantee of breathing space....

    Campbell, 510 U.S. at 579, 114 S.Ct. 1164 (citations and some quotation marks omitted) (quoting Folsom v. Marsh, 9 F.Cas. 342, 348 *No. 4,901) (C.C.D.Mass.1841) (Story, J.). "If `the secondary use adds value to the original — if [the original work] is used as raw material, transformed in the creation of new information, new aesthetics, new insights and understandings — this is the very type of activity that the fair use doctrine intends to protect for the enrichment of society.'" Castle Rock, 150 F.3d at 142 (quoting Leval 1111). For a use to be fair, it "must be productive and must employ the quoted matter in a different manner or for a different purpose from the original." Leval at 1111.

    The district court imposed a requirement that, to qualify for a fair use defense, a secondary use must "comment on, relate to the historical context of, or critically refer back to the original works." Cariou, 784 F.Supp.2d at 348. Certainly, many types of fair use, such as satire and parody, invariably comment on an original work and/or on popular culture. For example, the rap group 2 Live Crew's parody of Roy Orbison's "Oh, Pretty Woman" "was clearly intended to ridicule the white-bread original." Campbell, 510 U.S. at 582, 114 S.Ct. 1164 (quotation marks omitted). Much of Andy Warhol's work, including work incorporating appropriated images of Campbell's soup cans or of Marilyn Monroe, comments on consumer culture and explores the relationship between celebrity culture and advertising. As even Cariou concedes, however, the district court's legal premise was not correct. The law imposes no requirement that a work comment on the original or its author in order to be considered transformative, and a secondary work may constitute a fair use even if it serves some purpose other than those (criticism, comment, news reporting, teaching, scholarship, and research) identified in the preamble to the statute. Id. at 577, 114 S.Ct. 1164; Harper & Row, 471 U.S. at 561, 105 S.Ct. 2218. Instead, as the Supreme Court as well as decisions from our court have emphasized, to qualify as a fair use, a new work generally must alter the original with "new expression, meaning, or message." Campbell, 510 U.S. at 579, 114 S.Ct. 1164; see also Blanch, 467 F.3d at 253 (original must be employed "in the creation of new information, new aesthetics, new insights and understandings" (quotation marks omitted)); Castle Rock, 150 F.3d at 142.

    Here, our observation of Prince's artworks themselves convinces us of the transformative nature of all but five, which we discuss separately below. These twenty-five of Prince's artworks manifest an entirely different aesthetic from Cariou's photographs. Where Cariou's serene and deliberately composed portraits and landscape photographs depict the natural beauty of Rastafarians and their surrounding environs, Prince's crude and jarring works, on the other hand, are hectic and provocative. Cariou's black-and-white photographs were printed in a 9 1/2″ × 12″ book. Prince has created collages on canvas that incorporate color, feature distorted human and other forms and settings, and measure between ten and nearly a hundred times the size of the photographs. Prince's composition, presentation, scale, color palette, and media are fundamentally different and new compared to the photographs, as is the expressive nature of Prince's work. See Campbell, 510 U.S. at 579, 114 S.Ct. 1164.

    Prince's deposition testimony further demonstrates his drastically different approach and aesthetic from Cariou's. Prince testified that he "[doesn't] have any really interest in what [another artist's] [707] original intent is because ... what I do is I completely try to change it into something that's completely different.... I'm trying to make a kind of fantastic, absolutely hip, up to date, contemporary take on the music scene." Prince Dep. 338:4-339:3, Oct. 6, 2009. As the district court determined, Prince's Canal Zone artworks relate to a "post-apocalyptic screenplay" Prince had planned, and "emphasize themes [of Prince's planned screenplay] of equality of the sexes; highlight `the three relationships in the world, which are men and women, men and men, and women and women'; and portray a contemporary take on the music scene." Cariou, 784 F.Supp.2d at 349; see Prince Dep. 339:3-7, Oct. 6, 2009.

    The district court based its conclusion that Prince's work is not transformative in large part on Prince's deposition testimony that he "do[es]n't really have a message," that he was not "trying to create anything with a new meaning or a new message," and that he "do[es]n't have any ... interest in [Cariou's] original intent." Cariou, 784 F.Supp.2d at 349; see Prince Dep. 45:25-46:2, 338:5-6, 360:18-20, Oct. 6, 2009. On appeal, Cariou argues that we must hold Prince to his testimony and that we are not to consider how Prince's works may reasonably be perceived unless Prince claims that they were satire or parody. No such rule exists, and we do not analyze satire or parody differently from any other transformative use.

    It is not surprising that, when transformative use is at issue, the alleged infringer would go to great lengths to explain and defend his use as transformative. Prince did not do so here. However, the fact that Prince did not provide those sorts of explanations in his deposition — which might have lent strong support to his defense — is not dispositive. What is critical is how the work in question appears to the reasonable observer, not simply what an artist might say about a particular piece or body of work. Prince's work could be transformative even without commenting on Cariou's work or on culture, and even without Prince's stated intention to do so. Rather than confining our inquiry to Prince's explanations of his artworks, we instead examine how the artworks may "reasonably be perceived" in order to assess their transformative nature. Campbell, 510 U.S. at 582, 114 S.Ct. 1164; Leibovitz v. Paramount Pictures Corp., 137 F.3d 109, 113-14 (2d Cir.1998) (evaluating parodic nature of advertisement in light of how it "may reasonably be perceived"). The focus of our infringement analysis is primarily on the Prince artworks themselves, and we see twenty-five of them as transformative as a matter of law.

    In this respect, the Seventh Circuit's recent decision in Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687 (7th Cir.2012), is instructive. There, the court rejected the appellant's argument that copyright infringement claims cannot be disposed of at the motion-to-dismiss stage, and affirmed the district court's dismissal of such a claim under Fed.R.Civ.P. 12(b)(6). Brownmark Films, 682 F.3d at 690. Considering whether an episode of the animated television show South Park presented a parody (and therefore a protected fair use) of a viral internet video titled "What What (In The Butt)," the court concluded that "[w]hen the two works ... are viewed side-by-side, the South Park episode is clearly a parody of the original ... video." Id. at 692. For that reason, "the only two pieces of evidence needed to decide the question of fair use in [Brownmark were] the original version of [the video] and the episode at issue." Id. at 690.

    Here, looking at the artworks and the photographs side-by-side, we conclude [708] that Prince's images, except for those we discuss separately below, have a different character, give Cariou's photographs a new expression, and employ new aesthetics with creative and communicative results distinct from Cariou's. Our conclusion should not be taken to suggest, however, that any cosmetic changes to the photographs would necessarily constitute fair use. A secondary work may modify the original without being transformative. For instance, a derivative work that merely presents the same material but in a new form, such as a book of synopses of televisions shows, is not transformative. See Castle Rock, 150 F.3d at 143; Twin Peaks Prods., Inc. v. Publ'ns Int'l, Ltd., 996 F.2d 1366, 1378 (2d Cir.1993). In twenty-five of his artworks, Prince has not presented the same material as Cariou in a different manner, but instead has "add[ed] something new" and presented images with a fundamentally different aesthetic. Leibovitz, 137 F.3d at 114.

    The first fair use factor — the purpose and character of the use — also requires that we consider whether the allegedly infringing work has a commercial or nonprofit educational purpose. See, e.g., Blanch, 467 F.3d at 253. That being said, "nearly all of the illustrative uses listed in the preamble paragraph of § 107, including news reporting, comment, criticism, teaching, scholarship, and research... are generally conducted for profit." Campbell, 510 U.S. at 584, 114 S.Ct. 1164 (quotation marks omitted). "The commercial/nonprofit dichotomy concerns the unfairness that arises when a secondary user makes unauthorized use of copyrighted material to capture significant revenues as a direct consequence of copying the original work." Am. Geophysical Union v. Texaco Inc., 60 F.3d 913, 922 (2d Cir.1994). This factor must be applied with caution because, as the Supreme Court has recognized, Congress "could not have intended" a rule that commercial uses are presumptively unfair. Campbell, 510 U.S. at 584, 114 S.Ct. 1164 Instead, "[t]he 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. at 579, 114 S.Ct. 1164. Although there is no question that Prince's artworks are commercial, we do not place much significance on that fact due to the transformative nature of the work.

    We turn next to the fourth statutory factor, the effect of the secondary use upon the potential market for the value of the copyrighted work, because such discussion further demonstrates the significant differences between Prince's work, generally, and Cariou's. Much of the district court's conclusion that Prince and Gagosian infringed on Cariou's copyrights was apparently driven by the fact that Celle decided not to host a Yes Rasta show at her gallery once she learned of the Gagosian Canal Zone show. The district court determined that this factor weighs against Prince because he "has unfairly damaged both the actual and potential markets for Cariou's original work and the potential market for derivative use licenses for Cariou's original work." Cariou, 784 F.Supp.2d at 353.

    Contrary to the district court's conclusion, the application of this factor does not focus principally on the question of damage to Cariou's derivative market. We have made clear that "our concern is not whether the secondary use suppresses or even destroys the market for the original work or its potential derivatives, but whether the secondary use usurps the market of the original work." Blanch, 467 F.3d at 258 (quotation marks omitted) (emphasis added); NXIVM Corp. v. Ross Inst., 364 F.3d 471, 481-82 (2d Cir.2004). "The market for potential derivative uses [709] includes only those that creators of original works would in general develop or license others to develop." Campbell, 510 U.S. at 592, 114 S.Ct. 1164. Our court has concluded that an accused infringer has usurped the market for copyrighted works, including the derivative market, where the infringer's target audience and the nature of the infringing content is the same as the original. For instance, a book of trivia about the television show Seinfeld usurped the show's market because the trivia book "substitute[d] for a derivative market that a television program copyright owner ... would in general develop or license others to develop." Castle Rock, 150 F.3d at 145 (quotation marks omitted). Conducting this analysis, we are mindful that "[t]he more transformative the secondary use, the less likelihood that the secondary use substitutes for the original," even though "the fair use, being transformative, might well harm, or even destroy, the market for the original." Id.

    As discussed above, Celle did not decide against putting on a Yes Rasta show because it had already been done at Gagosian, but rather because she mistakenly believed that Cariou had collaborated with Prince on the Gagosian show. Although certain of Prince's artworks contain significant portions of certain of Cariou's photographs, neither Prince nor the Canal Zone show usurped the market for those photographs. Prince's audience is very different from Cariou's, and there is no evidence that Prince's work ever touched — much less usurped — either the primary or derivative market for Cariou's work. There is nothing in the record to suggest that Cariou would ever develop or license secondary uses of his work in the vein of Prince's artworks. Nor does anything in the record suggest that Prince's artworks had any impact on the marketing of the photographs. Indeed, Cariou has not aggressively marketed his work, and has earned just over $8,000 in royalties from Yes Rasta since its publication. He has sold four prints from the book, and only to personal acquaintances.

    Prince's work appeals to an entirely different sort of collector than Cariou's. Certain of the Canal Zone artworks have sold for two million or more dollars. The invitation list for a dinner that Gagosian hosted in conjunction with the opening of the Canal Zone show included a number of the wealthy and famous such as the musicians Jay-Z and Beyonce Knowles, artists Damien Hirst and Jeff Koons, professional football player Tom Brady, model Gisele Bundchen, Vanity Fair editor Graydon Carter, Vogue editor Anna Wintour, authors Jonathan Franzen and Candace Bushnell, and actors Robert DeNiro, Angelina Jolie, and Brad Pitt. Prince sold eight artworks for a total of $10,480,000, and exchanged seven others for works by painter Larry Rivers and by sculptor Richard Serra. Cariou on the other hand has not actively marketed his work or sold work for significant sums, and nothing in the record suggests that anyone will not now purchase Cariou's work, or derivative non-transformative works (whether Cariou's own or licensed by him) as a result of the market space that Prince's work has taken up. This fair use factor therefore weighs in Prince's favor.

    The next statutory factor that we consider, the nature of the copyrighted work, "calls for recognition that some works are closer to the core of intended copyright protection than others, with the consequence that fair use is more difficult to establish when the former works are copied." Campbell, 510 U.S. at 586, 114 S.Ct. 1164. We consider "`(1) whether the work is expressive or creative, ... with a greater leeway being allowed to a claim of fair use where the work is factual or informational, [710] and (2) whether the work is published or unpublished, with the scope for fair use involving unpublished works being considerably narrower.'" Blanch, 467 F.3d at 256 (quoting 2 Howard B. Abrams, The Law of Copyright, § 15:52 (2006)).

    Here, there is no dispute that Cariou's work is creative and published. Accordingly, this factor weighs against a fair use determination. However, just as with the commercial character of Prince's work, this factor "may be of limited usefulness where," as here, "the creative work of art is being used for a transformative purpose." Bill Graham Archives v. Dorling Kindersley Ltd., 448 F.3d 605, 612 (2d Cir.2006).

    The final factor that we consider in our fair use inquiry is "the amount and substantiality of the portion used in relation to the copyrighted work as a whole." 17 U.S.C. § 107(3). We ask "whether the quantity and value of the materials used[] are reasonable in relation to the purpose of the copying." Blanch, 467 F.3d at 257 (quotation marks omitted). In other words, we consider the proportion of the original work used, and not how much of the secondary work comprises the original.

    Many of Prince's works use Cariou's photographs, in particular the portrait of the dreadlocked Rastafarian at page 118 of Yes Rasta, the Rastafarian on a burro at pages 83 to 84, and the dreadlocked and bearded Rastafarian at page 108, in whole or substantial part. In some works, such as Charlie Company, Prince did not alter the source photograph very much at all. In others, such as Djuana Barnes, Natalie Barney, Renee Vivien and Romaine Brooks take over the Guanahani, the entire source photograph is used but is also heavily obscured and altered to the point that Cariou's original is barely recognizable. Although "[n]either our court nor any of our sister circuits has ever ruled that the copying of an entire work favors fair use[,].... courts have concluded that such copying does not necessarily weigh against fair use because copying the entirety of a work is sometimes necessary to make a fair use of the image." Bill Graham, 448 F.3d at 613. "[T]he third-factor inquiry must take into account that the extent of permissible copying varies with the purpose and character of the use." Id. (internal quotation marks omitted).

    The district court determined that Prince's "taking was substantially greater than necessary." Cariou, 784 F.Supp.2d at 352. We are not clear as to how the district court could arrive at such a conclusion. In any event, the law does not require that the secondary artist may take no more than is necessary. See Campbell, 510 U.S. at 588, 114 S.Ct. 1164; Leibovitz, 137 F.3d at 114. We consider not only the quantity of the materials taken but also "their quality and importance" to the original work. Campbell, 510 U.S. at 587, 114 S.Ct. 1164. The secondary use "must be [permitted] to `conjure up' at least enough of the original" to fulfill its transformative purpose. Id. at 588, 114 S.Ct. 1164 (emphasis added); Leibovitz, 137 F.3d at 114. Prince used key portions of certain of Cariou's photographs. In doing that, however, we determine that in twenty-five of his artworks, Prince transformed those photographs into something new and different and, as a result, this factor weighs heavily in Prince's favor.

    As indicated above, there are five artworks that, upon our review, present closer questions. Specifically, Graduation, Meditation, Canal Zone (2008), Canal Zone (2007), and Charlie Company do not sufficiently differ from the photographs of Cariou's that they incorporate for us confidently to make a determination about their [711] transformative nature as a matter of law. Although the minimal alterations that Prince made in those instances moved the work in a different direction from Cariou's classical portraiture and landscape photos, we can not say with certainty at this point whether those artworks present a "new expression, meaning, or message." Campbell, 510 U.S. at 579, 114 S.Ct. 1164.

    Certainly, there are key differences in those artworks compared to the photographs they incorporate. Graduation, for instance, is tinted blue, and the jungle background is in softer focus than in Cariou's original. Lozenges painted over the subject's eyes and mouth — an alteration that appears frequently throughout the Canal Zone artworks — make the subject appear anonymous, rather than as the strong individual who appears in the original. Along with the enlarged hands and electric guitar that Prince pasted onto his canvas, those alterations create the impression that the subject is not quite human. Cariou's photograph, on the other hand, presents a human being in his natural habitat, looking intently ahead. Where the photograph presents someone comfortably at home in nature, Graduation combines divergent elements to create a sense of discomfort. However, we cannot say for sure whether Graduation constitutes fair use or whether Prince has transformed Cariou's work enough to render it transformative.

    We have the same concerns with Meditation, Canal Zone (2007), Canal Zone (2008), and Charlie Company. Each of those artworks differs from, but is still similar in key aesthetic ways, to Cariou's photographs. In Meditation, Prince again added lozenges and a guitar to the same photograph that he incorporated into Graduation, this time cutting the subject out of his background, switching the direction he is facing, and taping that image onto a blank canvas. In Canal Zone (2007), Prince created a gridded collage using 31 different photographs of Cariou's, many of them in whole or significant part, with alterations of some of those photographs limited to lozenges or cartoonish appendages painted or drawn on. Canal Zone (2008) incorporates six photographs of Cariou's in whole or in part, including the same subject as Meditation and Graduation. Prince placed the subject, with lozenges and guitar, on a background comprising components of various landscape photographs, taped together. The cumulative effect is of the subject in a habitat replete with lush greenery, not dissimilar from many of Cariou's Yes Rasta photographs. And Charlie Company prominently displays four copies of Cariou's photograph of a Rastafarian riding a donkey, substantially unaltered, as well as two copies of a seated nude woman with lozenges covering all six faces. Like the other works just discussed, Charlie Company is aesthetically similar to Cariou's original work because it maintains the pastoral background and individual focal point of the original photograph — in this case, the man on the burro. While the lozenges, repetition of the images, and addition of the nude female unarguably change the tenor of the piece, it is unclear whether these alterations amount to a sufficient transformation of the original work of art such that the new work is transformative.

    We believe the district court is best situated to determine, in the first instance, whether such relatively minimal alterations render Graduation, Meditation, Canal Zone (2007), Canal Zone (2008), and Charlie Company fair uses (including whether the artworks are transformative) or whether any impermissibly infringes on Cariou's copyrights in his original photographs. We remand for that determination.

    [712] III.

    In addition to its conclusion that Prince is liable for infringing on Cariou's copyrights, the district court determined that the Gagosian defendants are liable as vicarious and contributory infringers. Cariou, 784 F.Supp.2d at 354. With regard to the twenty-five of Prince's artworks, which, as we have held, do not infringe on Cariou's copyrights, neither Lawrence Gagosian nor the Gallery may be liable as a vicarious or contributory infringer. See Faulkner v. Nat'l Geographic Enters., Inc., 409 F.3d 26, 40 (2d Cir.2005). If the district court concludes on remand that Prince is liable as a direct infringer with regard to any of the remaining five works, the district court should determine whether the Gagosian defendants should be held liable, directly or secondarily, as a consequence of their actions with regard to those works. See Copyright Act, 17 U.S.C. § 106(1), (2), (3), (5).

    CONCLUSION

    For the reasons discussed, we hold that all except five (Graduation, Meditation, Canal Zone (2007), Canal Zone (2008), and Charlie Company) of Prince's artworks make fair use of Cariou's photographs. We express no view as to whether the five are also entitled to a fair use defense. We REMAND with respect to those five so that the district court, applying the proper standard, can determine in the first instance whether any of them infringes on Cariou's copyrights or whether Prince is entitled to a fair use defense with regard to those artworks as well. The judgment of the district court is REVERSED in part and VACATED in part.[6] The case is REMANDED for further proceedings consistent with this opinion.

    WALLACE, J., Senior Circuit Judge, concurring in part and dissenting in part:

    I agree with the bulk of the majority decision as to the law, including the majority's determination that the district court incorrectly imposed a requirement that the allegedly infringing works comment on the original works to be entitled to a fair use defense. See Cariou v. Prince, 784 F.Supp.2d 337, 348-49 (S.D.N.Y.2011). I nevertheless part company with the majority.

    While we may, as an appellate court, determine that secondary works are fair use in certain instances, see Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 560, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985), in the usual case, after correcting an erroneous legal standard employed by the district court, we would remand for reconsideration. This standard, I suggest, should apply here where factual determinations must be reevaluated — and perhaps new evidence or expert opinions will be deemed necessary by the fact finder — after which a new decision can be made under the corrected legal analysis. But the majority short-circuits this time-tested search for a just result under the law. I would not apply the shortcut but would set aside the summary judgment, remand the entire case to the district court, and allow the district court to analyze [713] material evidence under the proper standard.

    Unlike the majority, I would allow the district court to consider Prince's statements in reviewing fair use. While not the sine qua non of fair use, see Blanch v. Koons, 467 F.3d 244, 255 n. 5 (2d Cir. 2006), I see no reason to discount Prince's statements as the majority does. While it may seem intuitive to assume that a defendant claiming fair use would typically give self-serving ex post facto testimony to support a defense, this Court has nevertheless relied on such statements when making this inquiry — even if just to confirm its own analysis. See id. at 252-53, 255; see also Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 142 (2d Cir.1998) (looking to statements of the allegedly infringing work's creators when analyzing the purpose and character of the secondary work). Thus, I view Prince's statements — which, as Prince acknowledges, consist of "his view of the purpose and effect of each of the individual [p]aintings" — as relevant to the transformativeness analysis.

    The majority relies on the Seventh Circuit's decision in Brownmark Films, LLC v. Comedy Partners, 682 F.3d 687 (7th Cir.2012), for the proposition that all the Court needs to do here to determine transformativeness is view the original work and the secondary work and, apparently, employ its own artistic judgment. In my view, Brownmark cannot be extended so far. Brownmark arose under an unusual procedural posture: a motion to dismiss based on a non-pleaded fair use affirmative defense converted into a motion for summary judgment on appeal. See id. The court in Brownmark determined that it needed only to review the allegedly infringing video against the original to determine that the secondary work was permissible parody. Id. at 692-93. It appears to me, however, that Brownmark left open the possibility that additional evidence could be relevant to the fair use inquiry in a different procedural context. See id. at 692 n. 2 (identifying that the defendant could have put forth additional evidence to bolster its fair use defense if the case arose from a typical summary judgment motion); id. at 692 (stating that the district court was only required to consider the original and secondary videos, "especially in light of [the plaintiff's] failure to make any concrete contention" as to the secondary video's potential market impact).

    Further, Brownmark apparently arose in the context of a clear case of parody — so obvious that the appeals court affirmed the district court's conclusion that fair use was evident from even a "fleeting glance" at the original and secondary works. Id. at 689-90. I do not believe that the transformativeness of Prince's works — which have not been presented as parody or satire — can be so readily determined. Because this case arises after extensive discovery and argument by the parties, I disagree that we must limit our inquiry to our own artistic perceptions of the original and secondary works.

    Indeed, while I admit freely that I am not an art critic or expert, I fail to see how the majority in its appellate role can "confidently" draw a distinction between the twenty-five works that it has identified as constituting fair use and the five works that do not readily lend themselves to a fair use determination. This, mind you, is done on a summary judgment review with no understanding of what additional evidence may be presented on remand. I also fail to see a principled reason for remanding to the district court only the five works the majority identifies as close calls, although I agree that they must be sent back to the trial court. If the district [714] court is in the best position to determine fair use as to some paintings, why is the same not true as to all paintings? Certainly we are not merely to use our personal art views to make the new legal application to the facts of this case. Cf. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 582, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994) ("`[I]t would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of [a work], outside of the narrowest and most obvious limits'"), quoting Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 251, 23 S.Ct. 298, 47 L.Ed. 460 (1903). It would be extremely uncomfortable for me to do so in my appellate capacity, let alone my limited art experience.

    In my view, because the district court takes the primary role in determining the facts and applying the law to the facts in fair use cases, after which we exercise our appellate review if called upon to do so, I conclude that as to each painting, "the district court is best situated to determine, in the first instance," whether Prince is entitled to a fair use defense in light of the correct legal standard. See majority opinion at 711-12. I mean no disrespect to the majority, but I, for one, do not believe that I am in a position to make these fact- and opinion-intensive decisions on the twenty-five works that passed the majority's judicial observation. I do not know what additional facts will become relevant under the corrected rule of law, nor am I trained to make art opinions ab initio.

    I would thus remand the entire case — all thirty of Prince's paintings — for further proceedings in the district court on an open record to take such additional testimony as needed and apply the correct legal standard. On this basis, therefore, I respectfully dissent.

    [1] The Honorable J. Clifford Wallace, United States Circuit Judge of the United States Court of Appeals for the Ninth Circuit, sitting by designation.

    [2] We refer to Gagosian Gallery and its owner Lawrence Gagosian collectively as "Gagosian" or the "Gallery."

    [3] The district court's opinion indicated that there are twenty-nine artworks at issue in this case. See Cariou, 784 F.Supp.2d at 344 nn. 5, 6. There are actually thirty.

    [4] Images of the Prince artworks, along with the Yes Rasta photographs incorporated therein, appear in the Appendix to this opinion. The Appendix is available at http://www.ca2.uscourts.gov/11-1197apx.htm.

    [5] At oral argument, counsel for Cariou indicated that he opposes the destruction of any of the works of art that are the subject of this litigation.

    [6] Because we reverse the district court with regard to the twenty-five of the artworks, and leave open the question of fair use with regard to the remaining five, we vacate the district court's injunction. In the event that Prince and Gagosian are ultimately held liable for copyright infringement, and in light of all parties' agreement at oral argument that the destruction of Prince's artwork would be improper and against the public interest, a position with which we agree, the district court should revisit what injunctive relief, if any, is appropriate. See eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006); Salinger v. Colting, 607 F.3d 68, 77 (2d Cir.2010).

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