Fair Use!

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Read the opinion, if you want.

Not Bad, Just Misunderstood

The concept of “transformative use” goes in for all kinds of abuse, some of which may be found on this very blog. It originally stood for the idea of taking all or part of a pre-existing copyrighted work and using it to make something new. It involves an artistic, rhetorical, expository or structural choice. When Judge Leval first invented the concept in 1990, he described it thus:

If, on the other hand, the secondary use adds value to the original—if the quoted matter 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. Transformative uses may include criticizing the quoted work, exposing the character of the original author, proving a fact, or summarizing an idea argued in the original in order to defend or rebut it.

Transformative use has expanded well beyond this initial conception, in part because Judge Leval also described a transformative use as using the underlying “matter in a different manner or for a different purpose from the original.”31Thus, Google has been held to have made a transformative use of books by digitizing them because doing so “transforms expressive text into a comprehensive word index.”
But whatever criticism has been leveled at “transformative use,” there is no question that Lovelace transforms Deep Throat in the strong sense of the term. It takes material from Deep Throat and uses it to tell the story of Linda Lovelace. The way the scenes are shot, and the way dialogue intercuts those scenes underscores the transformative nature of the uses.

That’s Nice, but There Are FOUR Fair-Use Factors, Not Just One

What’s interesting is what happens to the other three fair-use factors. Transformative use goes to the first factor, “purpose and character of the use,”32Which also includes whether the use is commercial in nature, but the court only gave that sub-factor modest weight. but that’s only one of four factors (as you know). But the court falls prey to the other main criticism of transformative use: that it tends to take over the entire-fair use analysis, as though all transformative uses are necessarily fair uses.
Take the court’s analysis of the second factor, “nature of the copyrighted work.” The court noted that Deep Throat was expressive and creative and thus the factor ought to favor Arrow Productions. But then devalues the factor because it “may be of less (or even of no) importance when assessed in the context of certain transformative uses.”33I don’t see what’s wrong with just admitting that an underlying work is expressive and that this factor favors the copyright owner, but then deciding that the transformative use is more important than the expressive nature. The problem with the court’s approach is that even mildly transformative works get the same boost as a highly transformative work, which undercuts the point of weighing the factors.
As for the third factor, “amount and substantiality of the use,” the court held this factor favored the defendants because they did “not copy the core of … Deep Throat. The heart, or core, of Deep Throat is that it is a pornographic film… Conversely, Lovelace has an entirely different purpose…” Again, why not just say that Lovelace took bits of Deep Throat appropriate to tell its story? Under the court’s reasoning, there’s little incentive, other than artistry, to avoid taking too much of an underlying copyrighted work, since any transformative use would not take the “core” of the underlying work. Again, this fails to distinguish between strongly and mildly transformative uses and undercuts the case-by-case weighing of the factors.
Finally, what about the fourth factor, “effect of the use on the market for or value of the work”? Didn’t Arrow Productions allege that it lost a licensing opportunity because of the defendants’ use of Deep Throat?34Remember, we have to take all of these allegations as true at this stage. The court simply ignores this factor, on grounds that a rights holder can never prevent a transformative use from entering a market. Again, there is no distinction between strongly and mildly transformative works.35The Second Circuit in Cariou, which the court here was supposed to follow, used a sliding scale—“the more transformative the secondary use, the less likelihood that the secondary use substitutes for the original”—while acknowledging that some transformative uses “might well harm, or even destroy, the market for the original.” But there, the court was referring to destruction of the market itself, as by a scathing parody or review, not the substitution of the secondary work for the original in that market. The reasoning is also circular: this fair-use factor fails because the court has already essentially concluded that the accused work is a fair use, when this factor is supposed to guide the court in making that very determination.
So, here’s my problem. In the court’s analysis, a finding of transformative use doesn’t just overwhelm the other factors—that’s permissible, in my view—but it negates the other factors. All transformative uses are automatically fair uses, regardless of the strength of the other factors. Even mildly transformative uses would gain this advantage.
The mistake isn’t so bad in this case because the transformative nature of Lovelace really is overwhelming. Even if you found the second factor to favor Arrow Productions (as would be proper), the third factor to be a push, and the fourth factor to favor Arrow Productions (more on that below), those don’t add up to enough to outweigh the transformative nature of Lovelace.36The four fair-use factors are to be weighed, and it’s perfectly permissible for one to overwhelm the others.
But what if the makers of Lovelace had treated those three re-created scenes less artistically? What if they had depicted the pornography more or less as it was in Deep Throat, had shown less context and had tied those scenes more clumsily to Lovelace’s character and biography? Not so badly as to prevent a finding of transformative use, but just enough to make it a very close question. Shouldn’t the court’s analysis change?
Perhaps the problem is that we tend to think of transformative use categorically: either it’s transformative or it’s not.37For example, in Cariou, the Second Circuit remanded five of the works, not because it couldn’t tell if they were transformative enough to overcome the other factors, but because it couldn’t determine whether they were transformative at all. But really what was going on was that some of Prince’s paintings were more transformative than others. But really, there are degrees of transformativeness. This case exemplifies that—Lovelace makes a strongly transformative use of Deep Throat. But, as I believe I show above, it’s easy to imagine weaker forms of transformative use.

Causation and Usurpation of a Market

If the court had read paragraph 44 of the Complaint more carefully, it could have avoided this unnecessary (and inappropriate) bright-line rule. Arrow Productions does not actually allege that Lovelace’s use of the Deep Throat material caused Inferno to fail. It actually alleges only that Lovelace itself caused Inferno to fail. By the Complaint’s logic, it would have made no difference to Inferno’s fate whether or not Lovelace re-created those three Deep Throat scenes.
What if the Complaint had included the following allegation? “On information and belief, without the three re-created scenes, Lovelace never would have been made.” Could Arrow Productions have then argued that the infringement enabled Lovelace to be made, which in turn caused Inferno to fail? And would that argument have staved off a finding of fair use?
I don’t think so. The caselaw on the fourth factor is notoriously all over the map38Courts used to regard it as the most important factor but have now mostly pulled back from that. Also, courts used consider hypothetical licensing markets in their analysis, which made the fourth factor an automatic win for the rights holder, but have since realized their mistake., but logically, courts will probably expect some direct causation between the use of the original content and the ability of the secondary work to usurp the original’s place in the market. There’s no question that, one way or another, Lovelace usurped Inferno’s place in the market for non-documentary feature films about Lovelace, and it’s not crazy to assume that Lovelace doesn’t get made without the three re-created scenes, and it’s not crazy to assume that there was room in the market only for one product.
But can you really say that those three re-created scenes caused Lovelace to usurp the market? It seems to me the most you can say is that they were a contributing factor. For there to be a causal link, I think there’d need to be an allegation that the licensing terms that Inferno accepted were so onerous that they put Inferno at a financial disadvantage as compared to Lovelace, and that disadvantage is what caused Lovelace to succeed and Inferno to fail.
Even if you decide this indirect chain of events warrants consideration, how much weight are you going to give the fourth factor? Not enough to overcome the heavy weight we ought properly to assign the first factor, even with some weight given to the second.39Remember that all of this assumes the truth of Arrow Productions’ allegations, especially that Inferno’s biggest problem was Lovelace’s rise. How likely do you think it is that anyone associated with financing Inferno was going to blame the film’s failure to launch entirely or even significantly on Lovelace. Inferno had its chance to be first and had lots of other problems, most notably its decision to cast Lindsey Lohan in the lead, an ill-conceived bit of stunt casting, which cost the project about two years. I’m not even sure if the producers of Inferno would be willing to admit that the project is dead, just hibernating.

Co-Dependent Relationships

I complained that the court’s reasoning about the fourth factor was circular because it assumed that all transformative uses are fair uses, and therefore, since we can’t stop fair uses from occupying a market, the fourth factor drops out.
But can we eradicate all vestiges of circularity from our fourth-factor analysis when licensing markets are involved? Consider: Arrow Productions’ whole fourth-factor argument hinged on the fact that the producers of Inferno did get a license to use Deep Throat. But if Inferno’s planned uses of Deep Throat were fair uses, then it didn’t need a license in the first place, and the fact that it exercised an abundance of caution to get one40Companies do this all the time, e.g., getting a license to make a film about Sherlock Holmes when any right-thinking copyright lawyer would have said that Sherlock Holmes was 95% in the public domain. should become irrelevant.
Thus, to know whether Inferno is even relevant to Lovelace’s fair-use analysis, we have to conduct a fair-use analysis of Inferno’s planned uses. What if Inferno’s planned uses were much more considerable than Lovelace’s, such that Inferno would be wise to get a license? What if the finished Inferno film ended up hardly using any of Deep Throat?
To further complicate things: isn’t the license fee that Inferno’s producers negotiate itself a product of an assessment of how likely their use of Deep Throat would be a fair use? If Inferno’s producers has felt strongly about their fair-use case, it would have negotiated a small fee. Would we take that into account in our fourth-factor analysis? And in analyzing the Inferno licensing negotiations, do we take into account the fact that Lovelace didn’t take a license, to show that fourth factor weighs less against a finding of fair use?
The problem here isn’t so much circularity as co-dependent factors: to know how much weight to assign to Lovelace’s fourth factor, we have to know how strong Inferno’s fair use case was, and to know that, we need to know about the market for licensing Deep Throat to non-documentary feature films, which consists of only Inferno and Lovelace, and then only partially because neither had been made yet.
This is twice in recent years we’ve encountered a kind of “there can only be one” argument in support of an argument that a derivative market for the underlying work has been usurped, and we should learn to be skeptical. In Cariou, we were at first very persuaded by the trial court’s finding that the news of Prince’s art show directly caused the cancellation of Cariou’s. But we later found out that’s not what happened at all. What really happened was that the manager of a small gallery that proposed (but had by no means committed) to display Cariou’s work had gotten confused when she learned about Prince’s show, assumed her gallery was being snubbed, called Cariou to find out what was going on, and Cariou never called her back to clear up matters.
This is probably why courts insist on “usurpation” of a market, and not merely a temporary set-back. Even if Cariou did lose a chance to display his work at a gallery, does that necessarily mean the market for his work is forever closed to him? The loss of the opportunity can certainly go to damages, but I’m no longer very convinced that it should go a fair-use analysis.
Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.