Keinitz v. Sconnie Nation, LLC: The Seventh Circuit's Necessary Resistance to Defining the Fair Use Doctrine Solely in Terms of Transformativeness.

• Date: 01 January 2017
• Author: Perwich, Alexander

1. INTRODUCTION II. HOW THE CIRCUIT SPLIT WAS CREATED: CAMPBELL, CARIOU, AND KIENITZ III. ANALYSES OF THE FIRST AND FOURTH FAIR USE FACTORS ARE IMPLICITLY CONNECTED, SO IT IS NOT APPROPRIATE TO FOCUS SOLELY ON TRANSFORMATIVENESS IV. FOCUSING ON MARKET EFFECT(S) ALLOWS A MORE OBJECTIVE METHOD TO ASSESS FAIR USE, WHICH WILL BALANCE OUT THE SUBJECTIVITY IMPOSED BY JUDGES THAT FOCUS SOLELY ON TRANSFORMATIVENESS V. THE KIENITZ MARKET-EFFECT FRAMEWORK BEST PROMOTES THE PROGRESS OF SCIENCE AND USEFUL TECHNOLOGY, WHICH IS IMPORTANT IN MODERN SOCIETY VI. CONCLUSION I. INTRODUCTION

   Under the fair use doctrine, use of a copyrighted work is not an infringement on a copyright if, after consideration of four factors, a court considers the use to be fair. (1) The four factors courts are required to consider are: (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 the use has on "the potential market for or value of the original copyrighted work." (2) A circuit split exists between the Second and Seventh circuit courts of Appeals regarding the proper focus and application of the fair use factors in the context of copyright litigation. (3) The purpose of this Comment is to explain why it is improper to focus solely on "transformativeness," and why courts must also consider market effects when determining whether a secondary work is fair use of a copyrighted work. For purposes of this Comment, the reader should associate "transformativeness" with the first fair use factor, and associate market effects with the fourth fair use factor.

   Part II of this Comment discusses the origin of the circuit split between the Second and Seventh Circuits. Part III explains how the "transformativeness" analysis and market effect analysis are implicitly connected, which is one reason it is not appropriate to focus solely on "transformativeness." Part IV explains how a market effects analysis helps maintain a balanced framework. Finally, Part V proposes that a market-effects analysis limits frivolous copyright infringement claims and promotes the progress of science and useful technology.

2. HOW THE CIRCUIT SPLIT WAS CREATED: CAMPBELL, CARIOU, AND KIENITZ

   In 1994, the United States Supreme Court issued the Campbell v. Acuff-Rose Music, Inc. (4) decision, which was the last time the Supreme Court provided its insight regarding fair use in copyright law. (5) In Campbell, the Court resolved whether 2 Live Crew's commercial parody of Roy Orbison's copyrighted song, "Oh, Pretty Woman," was fair use within the meaning of the Copyright Act of 1976, 17 U.S.C. [section] 107. (6) 2 Live Crew's manager contacted the copyright holder of the song, "Oh, Pretty Woman," and expressed a willingness to pay a fee for the band's use of the song. (7) The copyright holder refused permission. (8) 2 Live Crew eventually released a parody of "Oh, Pretty Woman," but still identified the sources of "Pretty Woman" as Orbison and its publisher, Acuff-Rose. (9)

   Although the use in Campbell was commercial, the Court found it to be fair use through parody. (10) The Court determined it was improper to hold the commercial nature of 2 Live Crew's parody of "Oh, Pretty Woman" as being "presumptively unfair." (11) It explained, "[n]o such evidentiary presumption is available to address either the first factor, the character and purpose of the use, or the fourth, market harm, in determining whether a "transformative use," such as parody, is a fair one." (12) The Court clearly kept the statutory fair use factors separate from the notion of "transformative use," but after the Campbell decision was rendered, the Second Circuit Court of Appeals improperly began treating "transformativeness" as the focus of the inquiry into fair use. (13)

   As evidenced in Cariou v. Prince, (14) the Second Circuit has essentially read "transformativeness" into the list of four fair use factors. (15) In Cariou, the court determined certain appropriations of artwork to be considered fair use. (16) An artist appropriated thirty copyrighted photographs, (17) and the court determined twenty-five of the appropriated photographs to be fair use while the other five photographs were remanded for determination consistent with the opinion. (18) In reaching this puzzling decision, the court seemingly imposed its own artistic evaluation to determine whether the appropriated photographs were fair use of the original photographs. (19) This is no surprise, though, because in the context of copyright litigation, courts too frequently impose their own interpretations as evidence that cannot be reasonably doubted. (20) Nonetheless, the court's decision certainly centered on the notion of "transformative use," which the court mistakenly believed to be the conclusion of the Supreme Court's decision in Campbell. (21)

   Within the year following the Cariou decision, the Seventh Circuit issued a decision in Kienitz v. Sconnie Nation LLC, (22) which brought attention to the problems posed by focusing the fair use analysis on "transformative use." (23) In Kienitz, the court determined certain t-shirts, which displayed an appropriated version of a copyrighted photograph, to be fair use of the copyrighted photograph. (24) Prior to reaching the court of appeals, the parties in Kienitz debated whether the t-shirts were a "transformative use" of certain copyrighted photos and, if so, just how "transformative" the use was required to be. (25) The Seventh Circuit immediately pointed out that "transformative use" was not one of the statutory fair use factors even though the Supreme Court discussed it in Campbell. (26) It further explained that the Second Circuit had run away with the Supreme Court's suggestion and erroneously concluded that "transformative use" is enough to bring a modified copy of a copyrighted work within the scope of the fair use defense. (27)

   In particular, Kienitz expressed skepticism with the Cariou approach because exclusively asking whether something is "transformative" would replace the four statutory fair use factors, (28) and could also override the protection for derivative works that is afforded under 17 U.S.C. [section] 106(2). (29) Ultimately, the Kienitz court found it best to stick with the statutory list of fair use factors, of which the most important was deemed to be the fourth (market effect) factor. (30) Regarding market effect, the court asked whether the secondary use of the copyrighted photographs was a "complement to the protected work rather than a substitute for it." (31) It determined the t-shirts were no substitute for the original photograph because there was no evidence the t-shirts reduced the demand for the original photograph or any additional use of the photograph the copyright-owner contemplated. (32)

   It is the perfect time for the United States Supreme Court to clarify the appropriate assessment to evaluate the four statutory fair use factors by resolving the circuit split between the Second and Seventh Circuits. (33) Unfortunately, the Supreme Court denied a petition to resolve the circuit split on March 23, 2015. (34)

3. ANALYSES OF THE FIRST AND FOURTH FAIR USE FACTORS ARE IMPLICITLY CONNECTED, SO IT IS NOT APPROPRIATE TO FOCUS SOLELY ON TRANSFORMATIVENESS

   The market-effect analysis of the fair use factors implicitly resolves the "transformative use" analysis because, under the fair use statute, (35) the consideration of the fourth factor is substantively connected to the consideration of the first factor. The Campbell decision, which is considered the seminal Supreme Court case regarding the fair use factors, should be seen as opening the door to the analytical framework regarding market effects on fair use. (36) However, as Jeanne C. Fromer articulates in Market Effects Bearing on Fair Use, the Court in Campbell obfuscated this [market-effects] framework by not underscoring the importance of the fourth fair use factor, which has meant that courts continue to offer varying analyses of the fourth factor. (37) The Cariou decision further buries the importance of the market-effects factor by focusing too narrowly on the "transformative" language introduced in Campbell. (38) In other words, the Cariou court essentially just took Campbell's instructive language and read it into the first factor of 17 U.S.C. [section] 107. (39)

   When the Kienitz decision was rendered, it received unmerited criticisms (40) because of the misunderstandings surrounding the Campbell and Cariou decisions, which were believed to endorse the first factor analytic framework in its focus on "transformative use." (41) However, such belief is misplaced because the Campbell decision did not actually endorse the "transformative use" framework. (42) Interestingly enough, the Campbell decision actually links the transformative nature of a use with the degree to which the market is affected, and it does so by discussing the notion of market substitution. (43) For instance, when a commercial use amounts to a mere duplication of the entirety of an original, it clearly supersedes the original and serves as a market replacement for it, making it likely that cognizable market harm to the original will occur. (44) Conversely, if the commercial use amounts to a "transformative use" of an original work, market substitution is less certain, and market harm under the fourth fair use factor may not be so readily inferred. (45) Therefore, the Campbell opinion actually indicates that determining whether a use of copyrighted material is transformative requires consideration of market effect. (46)

   The Cariou opinion from the Second Circuit largely ignored the substantive connection between the first and fourth fair use factors by making the "transformative use" inquiry the focus of its analysis. (47) In Cariou, the court essentially read the "transformative use" analytic...