Laugh, and the whole world ... scowls at you? A defense of the United States' fair use exception for parody under TRIPs.

• Author: Knapp, John C.

INTRODUCTION

Though copyright protection in the United States is derived from the First Article of the Constitution and is governed by statutes enacted by Congress under that grant of power, (1) its limitations have more ambiguous origins. Often dichotomized as internal and external, (2) copyright limitations attempt to craft a compromise between the financial incentive to create, which is secured by granting authors the exclusive right to profit from their work, and the First Amendment free speech rights of others to comment on, disseminate, and otherwise use these copyrighted works. (3) Internal limitations, such as the idea-expression dichotomy and the requirement that works be original and in a fixed medium, derive from the Copyright Clause itself and define what can be protected. (4) External limitations, including those incorporated into copyright legislation, are imposed by other areas of law and policy and immunize from liability uses that would otherwise be considered infringements. (5)

One such external limitation is the fair use doctrine. In the United States, fair use is attributed to free speech principles found in the First Amendment (6) and, despite its recent codification in the Copyright Act, remains a common law equitable doctrine that judges apply on a fact-specific, case-by-case basis. (7) Consequently, the types of uses protected are not specifically named or enumerated, but are instead determined by considering several factors. While some types of fair use are rather well recognized, others remain controversial. (8) Recently, the status of parody as a fair use has been the subject of much controversy, both domestically and abroad. (9)

The European Community ("EC") has, on at least two occasions, expressed concern that the United States' fair use doctrine immunizes from liability uses that unjustifiably infringe authors' rights. (10) The EC has specifically argued that the exception made for parodies under the fair use doctrine is not confined to "special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder," (11) as required by international agreements on copyright law. (12) While the United States has defended the fair use doctrine and its protection of parodies as complying with such agreements, some commentators have noted that, in doing so, the United States has relied on a "less than accurate depiction of the fair use doctrine and how it operates in domestic courts." (13) Commentators have further concluded that the fair use protections afforded to parodies in the United States would not survive a direct challenge under Article 13 of the General Agreement on Trade Related Aspects of Intellectual Property Rights ("TRIPs"). (14)

This Article argues that while there is certainly some variance between the exceptions to copyright protection recognized in the United States and those recognized by the international community, the particular charges the EC has leveled at the United States are unwarranted and their concerns misplaced. This Article further argues that, at least as it has been enunciated by the United States Supreme Court ("Supreme Court"), the fair use doctrine regarding parodic uses does not conflict with the legitimate interests enshrined in TRIPs. What it does provide, and what may seem foreign to some in the international community, is traditional free speech protections. These protections prohibit copyright owners from removing from the public discourse speech that adversely affects the value of their property only to the extent that it is critical of that property. Such protection is necessary to ensure that the "marketplace of ideas" remains open and competitive, that copyright law continues to balance the financial incentives of authors to create and the rights of others to comment, and that copyright does not revert to its nefarious origins as a form of censorship. (15)

Part I will survey the current state of fair use in the United States, with particular attention to exceptions made for parodic works. Part II will explore the treatment of copyright exceptions under TRIPs. It will also review the specific criticisms the EC has raised concerning the United States' fair use doctrine, particularly with regard to parody, and evaluate the defenses the United States has offered in response. This section will also suggest that the United States' responses were unnecessarily evasive, and that the protection of parodic works could have been defended on the merits.

Part III will show that the use of copyright to "horizontally" censor works--that is, to remove from the public discourse works that are critical of the copyright holder's property--is not a "normal exploitation" and does not protect a "legitimate interest," as those terms are defined under TRIPs. (16) This argument will be further buttressed by reviewing two United States Court of Appeals copyright cases decided since the Supreme Court's most recent pronouncement on the status of parody under the fair use doctrine. Part IV will conclude by observing that recent developments in EC copyright law suggest that something like a free speech exception to copyright may be emerging. While it is too early to know what form such an exception will take, it would be surprising if it did not protect uses that harm the original only by criticizing it, just as the fair use doctrine in the United States does today.

1. FAIR USE AND PARODY IN THE UNITED STATES

   In Campbell v. Acuff-Rose, the Supreme Court was asked to determine whether a rap parody of Roy Orbison's song "Pretty Woman" was an infringement of the copyright in that song. (17) The defendants conceded that their use of the song was an infringement; however, they argued that the use was a parody and therefore, protected as a fair use of the original. (18) To decide if the rap version was in fact such a fair use, the Court looked to the four factors which the Copyright Act requires be considered in determining fair use. (19) However, the Court also made clear that these factors should not be treated as establishing bright-line rules; indeed, despite its codification in the Copyright Act, fair use essentially remains an equitable doctrine, informed by free speech principles and decided on a case-by-case basis. (20) Consequently, the Court emphatically rejected the analysis of the Court of Appeals for the Sixth Circuit, which had held that a finding under the first factor, ("purpose and character") that the use was commercial in nature was nearly dispositive in its determination that the parody was not a fair use. (21) The Court of Appeals relied on language in the Supreme Court's previous decision in Sony Corp. of America v. Universal City Studios, Inc., indicating that "every commercial use of copyrighted material is presumptively ... unfair...." (22) Observing that such a presumption would "swallow nearly all of the illustrative uses listed in the preamble paragraph of [section] 107" of the Copyright Act, (23) the Supreme Court reiterated that no such presumption was created by Sony; a work's commercial nature is only one element of the first factor inquiry into the use's purpose and character. (24)

   The Court of Appeals' erroneous prioritization of the commercial nature inquiry also affected its analysis of the fourth statutory factor, "the effect of the use upon the potential market for or value of the copyrighted work." (25) The Court of Appeals relied on the Supreme Court's decision in Harper & Row v. Nation Enterprises to conclude that the fourth factor was "undoubtedly the single most important element of fair use." (26) The Court of Appeals went on to reason that because the use was wholly commercial, they could "presume that a likelihood of future harm to Acuff-Rose exist[ed]." (27)

   The Supreme Court noted that the language from Sony on which the Court of Appeals relied concerned commercial uses that were verbatim duplications of the original. (28) In such circumstances, it is reasonable to presume that this duplicative use will act as a market replacement for the original, and thus will harm the market for the original. However, this is not the case where, as in Acuff-Rose, the use is transformative. (29) "The central purpose of [the first factor inquiry] is to see ... whether the new work merely 'supersede[s] the objects ... or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message." (30) In the latter case, "the parody and the original usually serve different market functions," and so harm must be proven, not presumed. (31) The Court was clear that this does not mean that parody will never harm the market for the original (or, as is more likely, for derivative works); indeed, the Court remanded the case for further evidence to be heard specifically on whether the market for derivative works had been harmed by the parody. (32)

   This distinction is extremely important for the present discussion. The Court's holding excluded from consideration under the fourth factor any harm to the market caused merely by the parodic work's critical nature. It likened such harm to that which might be inflicted by a scathing book review or other criticism of a work. (33) Indeed, the distinction between "potentially remediable displacement and unremediable disparagement is reflected in the rule that there is no protectible derivative market for criticism." (34) Such critical uses unquestionably fall under the fair use exception. To hold otherwise would be to allow copyright holders to use their property rights to quell criticism and unfavorable commentary about their works.

   Equally important for this discussion is the Court's treatment of its previous determination in Harper & Row that the fourth factor was "undoubtedly the single most important element of fair use." (35) While the Court, in...