MARKET EFFECTS BEARING ON FAIR USE
Jeanne C. Fromer(fn*)
Abstract: Copyright law, which promotes the creation of cultural and artistic works by protecting these works from being copied, excuses infringement that is deemed to be a fair use. Whether an otherwise infringing work is a fair use is determined by courts weighing at least four factors, one of which is the effect of the otherwise infringing work on the market for the copyrighted work. The Supreme Court's decision just over twenty years ago in Campbell v. Acuff-Rose Music, Inc. opened the door to a laudable analytical framework for the bearing of market effects on fair use. First, Campbell supports a more full-bodied investigation of the market effects-both harms and benefits-of defendants' works on plaintiffs' copyrighted works. Courts can eliminate conclusory reasoning by appreciating that both market harms and benefits can matter in assessing fair use. In so doing, courts avoid weighing only the mere possibility that a licensing market does or could exist for a copyrighted work as a reflection of market harm and ignoring the possibility that a use of a copyrighted work might confer benefits on the copyright holder. Second, Campbell implied two important ways to divide relevant from irrelevant market effects. One ought to exclude market effects from consideration if they are empirically unlikely or if there are effects unrelated to the protectable aspects of the copyrighted work, such as its ideas or the societal value attributed to the work. This analytical framework for market effects bearing on fair use advances copyright's goal of promoting the creation of artistic and cultural works from which society can benefit.
INTRODUCTION ................................................................................ 616
I. FAIR USE THROUGH CAMPBELL ........................................... 619
A. Copyright Law .................................................................... 619
B. Market Effects in Fair Use Pre-Campbell .......................... 623
C. Campbell's Treatment of Fair Use ..................................... 626
II. CONSIDERING BOTH MARKET HARMS AND BENEFITS ................................................................................... 629
III. CONSIDERING ONLY POTENTIAL AND COPYRIGHT-RELEVANT MARKET EFFECTS ............................................. 641
A. Empirically Plausible Markets ........................................... 642
B. Copyright-Relevant Markets .............................................. 646
CONCLUSION .................................................................................... 649
INTRODUCTION
Copyright law, which promotes the creation of cultural and artistic works by protecting these works from being copied, excuses infringement that is deemed to be a fair use.(fn1) A fair use of a copyrighted work is generally one that would promote the general advancement of art and culture, even if it falls within the scope of a third party's copyright protection. A court determines whether an otherwise infringing work is a fair use by weighing at least four factors, one of which is the effect of the otherwise infringing work on the market for the copyrighted work.(fn2) Many scholars have long been troubled by courts' conclusory, or circular, analyses of this factor.(fn3) A prominent treatise on fair use calls this factor "[t]he least understood, and, as a consequence, most misapplied."(fn4) Sometimes, courts will summarily conclude that a copyright owner is harmed by the infringer's failure to license the copyrighted work, which, on its own, counts against any alleged infringement being a fair use.(fn5) Other times, courts will just as abruptly exclude certain market effects, such as markets for criticism,(fn6) from their consideration of this fair use factor, thereby deeming these uses to be fair with regard to this factor.(fn7) With such short-circuited analyses, courts can expand or diminish the scope of what constitutes fair use without the penetrating justifications this factor's examination deserves.(fn8)
In Campbell v. Acuff-Rose Music, Inc.,(fn9) the Supreme Court issued a foundational ruling on the contours of the fair use doctrine when it held that transformative works, such as parodies, will frequently be fair uses and thus immune from classification as copyright infringement.(fn10) In applying the law's four-factor fair use analysis, the Court emphasized that transformative works are important contributions to society unless they cause relevant harm to the copyright owner's market (from which the Court excluded a market for criticism).(fn11)
I argue that the Campbell decision opened the door to a laudable analytical framework for the bearing of market effects on fair use. However, the Court obfuscated this framework by not underscoring its reasoning for this fair use factor, which has meant that many-though not all-courts continue to offer malnourished or unreasonable analyses of this factor.
This Article seeks to excavate Campbell's skeletal framework and to add analytical flesh and heft to it. Campbell can be read to improve consideration of market effects bearing on fair use in two ways. First, Campbell supports a more full-bodied investigation of the market effects-both harms and benefits-of defendants' works on plaintiffs' copyrighted works.(fn12) One can infer as much from a combination of Campbell's analytical steps: placing a strong emphasis on the value of transformative works, differentiating different sorts of market effects, and recognizing the strong connections between a copyrighted work and a transformative work making use of it. Implicit in this reasoning is the possibility that works that transform existing material can draw attention to, enhance, or affirm the original work's role in the marketplace.
Approximately twenty years after Campbell, some courts have begun to recognize that market benefits ought to count in favor of finding that a defendant's use is fair.(fn13) The recent fair use decision in the Southern District of New York on Google Book Search is one such example.(fn14) Similarly, copyright holders-including those that have been litigiously protective of their copyrighted material in the past, such as Disney(fn15)- are increasingly acting in ways that suggest they realize that certain unauthorized third-party uses of their copyrighted works can redound to their financial benefit. For instance, Disney has opted not to rein in those who have covered, parodied, or built on the songs, characters, and other material from its hit movie Frozen.(fn16)
A court's appreciation that market harms and benefits can both matter in assessing fair use helps eliminate conclusory reasoning. Some courts weigh against fair use the mere possibility that a licensing market does or could exist for a copyrighted work, as this possibility reflects market harm.(fn17) Others have been skeptical that a glimmer or even the full-fledged development of a licensing market is enough to damn a defendant's use, as either can be asserted for just about any category of work that a defendant might reasonably seek to classify as a fair use.(fn18)
To break out of the analytical circularity of weighing against fair use the possibility that the defendant's use could have been licensed, courts should focus on market benefit alongside market harm in assessing fair use. A full-bodied assessment of the effect of a defendant's use on a work-not merely its harmful effects-gets courts to look at all effects once they surpass a specified degree of speculativeness, be they licensing harms or sales benefits.
There is a second way in which Campbell ought to be read to solve fair use's circularity problem. Specifically, Campbell recognizes generally that certain market effects ought to be weighed in the fair use analysis, while others are irrelevant. The Campbell decision does not articulate the reason for excluding markets for criticism from the analysis of the harm to its market a copyright owner might suffer. Nonetheless, Campbell implied two important ways to divide relevant from irrelevant market effects. One ought to exclude market effects from consideration if they are empirically unlikely or if the effects are unrelated to the protectable aspects of the copyrighted work, such as its ideas or the societal value attributed to the work.(fn19) By providing a rule for which market effects to consider, fair use inquiries can be made analytically sturdy.
Part I sets out how Campbell opened the door-even if only obliquely-to consideration of a full-bodied set of market effects (market benefits alongside market harms) but only potential and copyright-relevant market effects. Part II sets out the case for considering both market harm and benefit together in light of the relevant law and scholarship, and shows how this consideration solves a lingering problem of conclusory reasoning and circularity in the fair use determination. Part III advocates for courts to consider only those market effects that are truly potential and copyright-relevant in assessing fair use to solve another persistent analytical deficiency in the fair use determination. Taken together, this framework for assessing market effects bearing on fair use is robust and helps promote copyright law's goal of promoting the creation and dissemination of artistic and cultural works.
I. FAIR USE THROUGH...
