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By Purple Fox Legal

May 31, 2023

In today’s fast-growing digital world, it is more important than ever for artists, content creators, and small business owners to keep up with legal changes that might affect their work online. 

One hot topic is “copyright fair use” – a rule that helps balance the rights of original artists with the need for creative freedom.

However, the interpretation of the fair use rule is not fixed in stone. Recently, the U.S. Supreme Court made a big decision against the Andy Warhol Foundation that could change the way we think about fair use. The ruling might make a big difference to how copyright law works on social media and could affect how businesses handle copyright issues.

In this article, we will break down the basics of fair use, take a closer look at the recent U.S. Supreme Court copyright case, explore how copyright fair use affects artists, content creators, and small business owners, and discuss why it is so important to get legal advice when dealing with copyright issues. 

Exploring the Four Pillars of Fair Use

In the United States, the enactment of copyright laws are authorized by Article I, Section 8, Clause 8 of the U.S. Constitution, “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” 

Fair use represents the concept that there exist specific manners in which copyrights can be utilized, irrespective of whether the consent of the copyright owner has been obtained. This principle was expressly written into Section 107 of the U.S. Copyright Act of 1976. 

However, fair use is an often misunderstood legal principle. It is not a get-out-of-jail-free card as it is often characterized as. Copyright fair use is an affirmative defense to copyright infringement. 

By claiming fair use, one is admitting that they have infringed another’s work but asserts they should not be liable because the law provides a limited exception for the way they used the copyright in question.

Copyright fair use is evaluated through a balance test that takes into consideration four elements—

1. The objective and characteristics of the usage, which includes examining whether the use is commercially oriented or for non-profit educational aims as well as the degree to which the work was transformative;

2. The nature of the work that holds the copyright;

3. The quantity and significance of the portion utilized, compared to the entirety of the copyrighted work; and

4. The impact that such usage could potentially have on the prospective market or value of the copyrighted work.

Being on the right side of the above pillars can be the difference between fair use and incurring hefty legal costs.

Keep in mind that statutory damages run between $750 and $30,000 per violation of the six exclusive rights of copyright owners listed in Section 106 of the U.S. Copyright Act. 

An In-Depth Look at the Recent Supreme Court Decision on Copyright Fair Use

Prior to 2023, the last time the U.S. Supreme Court addressed copyright fair use for creative works was in 1994 when it issued its opinion for Campbell v. Acuff-Rose Music, Inc., which involved parody use of copyrights. For nearly thirty years, artists, content creators, and small business owners were forced to use contradictory guidance from different jurisdictions when evaluating copyright fair use disputes.

On May 18, 2023 the U.S. Supreme Court delivered a ruling finding against the Andy Warhol Foundation for the Visual Arts (AWF) in a lawsuit involving copyright infringement. Lynn Goldsmith, a photographer, initiated the legal battle by alleging that Andy Warhol (whose intellectual property was assigned to AWF following the artist’s death) violated her copyrights by creating a collection of silk screen prints using her original photograph of Prince, the late music artist, taken in 1981. 

The U.S. Supreme Court was asked to address one question–“[W]hether 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’ §107(1), weighs in favor of AWF’s recent commercial licensing to Condé Nast.” The Court was not asked to address the remaining three fair use factors.

The Supreme Court agreed with the Second Circuit Court of Appeal’s ruling favoring Goldsmith’s claims with a 7-2 vote. Justice Sonia Sotomayor delivered the majority opinion of the Court and determined that Warhol’s use of Goldsmith’s photo of Prince was not “transformative” under the first factor of the copyright fair use analysis in Section 107. 

After analyzing AWF’s licensing for Warhol’s piece “Orange Prince,” which was derived from Goldsmith’s initial photograph, the Court affirmed the Second Circuit’s ruling and held that the first copyright fair use factor favored Goldsmith.

The Supreme Court believes that the conditions for fair use under Section 107 were not met with regard to the first pillar. There was not enough transformation made to the original photograph Goldsmith had taken. The purpose and character of both creative works were too similar and AWF’s use was commercial in nature. 

How the Recent Supreme Court Decision May Affect DMCA Takedown Notices on Social Media

The recent Supreme Court decisions against the Andy Warhol Foundation in favor of photographer Lynn Goldsmith is poised to influence how Digital Millennium Copyright Act (DMCA) takedown notices function on social media platforms. The decision reinforced the need for stricter adherence to copyright laws, especially when transformative works are concerned.

While DMCA takedown notices were already a widely used tool for copyright owners to protect their rights, the sheer volume – with Google alone processing over 6.7 billion delisting requests as of May 2023 – indicates how easy it is for individuals and organizations to claim infringement. The affirmation of Goldsmith’s rights over her photograph could encourage copyright holders to become more proactive.

This surge in enforcement, however, may inadvertently dampen online content creation. Content creators, fearing litigation, might err on the side of caution and limit their usage of existing media, even in transformative or derivative works. As a result, this could potentially stifle innovation and creativity online.

Thus, while the upholding of copyright protections is essential, a careful balance must be struck to prevent an overly restrictive digital creative space. A nuanced approach to copyright enforcement could ensure the protection of original works while encouraging new content creation.

Understanding the Importance of Hiring Counsel in Copyright Fair Use Cases

In the increasingly digital and interconnected world, the line between content creation and copyright infringement can sometimes blur, emphasizing the importance of seeking legal counsel in cases dealing with copyright fair use. The recent Supreme Court ruling in favor of Lynn Goldsmith against the Andy Warhol Foundation demonstrates that even a significant transformation of a work does not necessarily constitute fair use.

Legal professionals specializing in copyright law can provide critical guidance in such complex matters. They possess a thorough understanding of the four-factor test that determines fair use – including the nature and purpose of the use, the nature of the copyrighted work, the portion used, and the effect on the market value of the work. Knowledge of these factors and their application is essential when considering using copyrighted materials, especially in a public or commercial context.

Moreover, in the event of a dispute, having competent legal representation can be invaluable. Cases of copyright infringement can result in significant financial and reputational damage. According to Hampton IP & Economic Consulting, copyright cases increased by 128% from 2010 to 2019, when over 6,000 copyright cases were filed in federal district court.

Hiring a counsel can help navigate the intricate landscape of copyright law, providing an understanding of the potential risks and repercussions involved. It ensures that creators can focus on innovation while being respectful of the rights of fellow artists, creatives, and entrepreneurs.